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R-02-1304
J-02-1060 12/12/02 RESOLUTION NO. 02-1304 A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT TO ENTER INTO A GROUND LEASE AND A GROUND LEASE AGREEMENT, IN SUBSTANTIALLY THE ATTACHED FORM, WITH FLAGSTONE ISLAND GARDENS, LLC FOR THE DEVELOPMENT AND OPERATION OF A MEGA -YACHT MARINA, FISH MARKET, TWO HOTELS, RETAIL, DINING, AND CULTURAL AND PUBLIC FACILITIES ON APPROXIMATELY 10.8 ACRES OF CITY -OWNED WATERFRONT PROPERTY LOCATED ON WATSON ISLAND AND 13.4 ACRES OF SUBMERGED LAND ADJACENT TO WATSON ISLAND FOR A PERIOD OF FORTY-FIVE YEARS WITH AN OPTION TO EXTEND FOR TWO ADDITIONAL FIFTEEN -YEAR PERIODS; REQUIRING SAID LESSEE TO MAKE A TOTAL CAPITAL INVESTMENT IN SAID PROPERTY OF NOT LESS THAN $281,000,000, PAYING THE CITY OF MIAMI CONSTRUCTION RENT PAYMENTS IN THE AMOUNT OF $1,000,000, COMMENCING ON THE ISSUANCE OF FOUNDATION PERMITS, A MINIMUM ANNUAL LEASE PAYMENT OF NOT LESS THAN $2,000,000 COMMENCING AT THE OCCUPANCY DATE, 2.5% OF GROSS REVENUES FROM THE SALE OF TIMESHARE LICENSES AND 1% OF GROSS REVENUES FOR ALL OTHER PROJECT COMPONENTS COMMENCING ON THE 3RD ANNIVERSARY OF OCCUPANCY; SUBJECT TO ADDITIONAL CONDITIONS AS SET FORTH PROVIDED IN THE LEASE; AND FURTHER SUBJECT TO THE EXECUTION OF A PARTIAL MODIFICATION OF RESTRICTIONS TO DEED NO. 19447 BETWEEN THE CITY OF MIAMI AND THE BOARD OF TRUSTEES OF THE INTERNAL IMPROVEMENT TRUST FUND OF THE STATE OF FLORIDA. ATT ACS. , CITY CGN MISWON MEETING OF DEC 1 2 2002 Resolution No. 02-1304 WHEREAS, pursuant to applicable sections of the City Charter and Code pertaining to Unified Development Projects, FLAGSTONE ISLAND GARDENS, LLC submitted a proposal to the City of Miami for the development and operation of a mega -yacht marina, fish market, two hotels, timeshare licenses, cultural facilities including a maritime museum and public gardens, restaurants, retail shops, a parking garage and support facilities on approximately 10.8 acres of City -owned waterfront property and 13.4 acres of submerged land on Watson Island on a lease basis for a period of forty-five years with the option to extend for two additional fifteen -year periods; and WHEREAS, said proposal constituted an offer from said firm to provide planning, design, construction, leasing and management services for improvements to said City property, as well as a commitment for a total capital investment of not less than $281,000,000; and WHEREAS, under the terms of the proposed lease, the City shall receive construction rent payments in the amount of $1,000,000 commencing on the issuance of foundation permits, minimum annual lease payments $2,000,000 commencing at the occupancy date subject to an annual increase by the Consumer Price Index, 2.5% of gross revenue from the sale of timeshare Page 2 of 6 02-1304 licenses, and 1% of gross revenues commencing on the third anniversary of occupancy; and WHEREAS, said proposal was duly evaluated according to the provisions of the Charter and Code and accepted by the City by Resolution No. 01-873 on September 17, 2001, subject to approval of the voters and other required conditions; and WHEREAS, said proposed lease was subsequently approved by a majority of the voters of the City of Miami at a referendum held November 6, 2001, certified by the City Clerk and accepted by the Commission on November 15, 2001, as Resolution No. 01-1198; and WHEREAS, the City Manager and City Attorney have negotiated the attached Agreement to Enter into a Ground Lease and a Ground Lease Agreement which govern detailed arrangements with FLAGSTONE ISLAND GARDENS, LLC for the development, construction, leasing, management and operation of the described uses; WHEREAS, said proposed lease transaction, as a conveyance of former State of Florida property subject to a deed restriction, is subject to the execution of an agreement with the State for a Partial Modification of Restrictions to Deed Page 3 of 6 ff 2 -1304 No. 19447 between the City of Miami and the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section. Section 2. The City Manager is authorizedll to execute an Agreement to Enter into a Ground Lease and a Ground Lease Agreement, in substantially the attached form, with FLAGSTONE ISLAND GARDENS, LLC for the development and operation of a mega -yacht marina, fish market, two hotels, timeshare licenses, cultural facilities including a maritime museum and public gardens, restaurants, retail shops, a parking garage and support facilities on approximately 10.8 acres of City -owned waterfront property located on Watson Island and 13.4 acres of submerged land adjacent to Watson Island for a period of forty-five years with the option to extend for two additional fifteen -year 1� The herein authorization is further subject to compliance with all requirements that may be imposed by the City Attorney, including but not limited to those prescribed by applicable City Charter and Code provisions. Page 4 of 6 02-1304 periods with said lessee required to make total capital improvements in said property of not less than $281,000,000, pay lessee construction rent payments to the City of Miami in the amount of $1,000,000, commencing on the issuance of foundation permits, with minimum annual lease payments of $2,000,000, commencing at the occupancy date subject to an annual increase by the Consumer Price Index, 2.5% of gross revenue from the sale of timeshare units, and 1% of gross revenues commencing on the third anniversary of occupancy; and subject to additional conditions set forth in said lease, and further subject to the execution of an agreement with the State for a Partial Modification of Restrictions to Deed No. 19447 between the City of Miami and the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida. Section 3. This Resolution shall become effective immediately upon its adoption and signature of the Mayor Y If the Mayor does not sign this Resolution, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission. Page 5 of 6 '1%-13®A PASSED AND ADOPTED this 12th ATTEST: PRISCILLA A. THO SON CITY CLERK day of December , 2002. APPROVE F RM AND CO CTNESS:e/ RO VILARELLO I ATTORNEY 6771:tr:MJC:ROD:AS:BSS Page 6 of 6 02-1304 AGREEMENT TO ENTER INTO GROUND LEASE BETWEEN THE CITY OF M AMI, FLORIDA F-j►1 F FLAGSTONE ISLAND GARDENS LLC DATED AS OF 02-1304 GY8►S/20=3.16 TABLE OF CONTENTS PM ARTICLE 1. DEFINITIONS; INCORPORATION OF RECITALS AND EFFECTIVEDATE...........................................................................................................1 ARTICLE 2. NATURE OF THIS AGREEMENT; GROUND LEASE ATTACHED ........................2 2.1. Nature of this Agreement................................................................................................2 2.2. Ground Lease...................................................................................................................2 ARTICLE3. INSPECTION PERIOD....................................................................................................2 3.1. Termination of Access and Indemnification Agreement.............................................2 3.2. Inspections........................................................................................................................ 2 3.3. Environmental Inspections..............................................................................................3 3.4. Indemnification .................................................................................................................. 4 3.5. Insurance...........................................................................................................................4 ARTICLE 4. AGREEMENT CONDITIONS AND DELIVERIES.......................................................5 4.1. Flagstone's Acknowledgments and Deliveries............................................................5 4.2. Other Conditions and Deliveries....................................................................................7 4.3. Termination by City........................................................................................................10 4.4. Termination by Flagstone.............................................................................................10 4.5. Outside Date...................................................................................................................11 ARTICLE5. SECURITY DEPOSIT....................................................................................................11 5.1. Initial Security..................................................................................................................11 5.2. Additional Security.........................................................................................................12 5.3. Deposits; Letters of Credit............................................................................................12 ARTICLE 6. EXECUTION AND DELIVERY OF GROUND LEASE.............................................12 6.1. Conditions Precedent to Execution and Delivery -of Ground Lease ....................... 12 6.2. Right of Termination.......................................................................................................17 ARTICLE 7. DEVELOPMENT OF PROJECT..................................................................................18 7.1. Development Plans........................................................................................................18 7.2. Use and Ownership of Development Plans and Permits and Approvals in the event of Termination........................................................................19 7.3. Platting and Other Development Matters...................................................................19 7.4. License(s) for Pre -Development Work........................................................................20 7.5. Issuance to Flagstone of Marine Operating Permit for Existing Marina.............................................................................................................................. 21 GY&S/208223.16 G 2-1304 TABLE OF CONTENTS PA-0-0- 7.6. age 7.6. Marina Approvals...........................................................................................................22 ARTICLE 8. COORDINATION WITH CITY; APPROVAL PROCEDURES.................................26 8.1. Coordination with City ....................................................................................................26 8.2. Chief Executive Officer Approval Procedures............................................................27 8.3. Chief Executive Officer Approvals; Disclaimer..........................................................29 ARTICLE 9. DISCHARGE OF LIENS...............................................................................................29 9.1. No Liens...........................................................................................................................29 9.2. Discharging Liens...........................................................................................................30 ARTICLE10. CONDEMNATION..........................................................................................................30 10.1. Material Taking...............................................................................................................30 10.2. Less than a Material Taking.........................................................................................30 10.3. Award...............................................................................................................................30 ARTICLE 11. DEFAULT AND REMEDIES.........................................................................................31 11.1. Events of Flagstone's Default.......................................................................................31 11.2. Remedies for Flagstone's Default................................................................................32 11.3. City's Default...................................................................................................................32 ARTICLE 12. REPRESENTATIONS BY FLAGSTONE AND CITY; DEFENSE ANDRELEASE...............................................................................................................32 12.1. Flagstone's Representations........................................................................................32 12.2. City's Representations...................................................................................................33 12.3. Disclaimer of Representations by Flagstone............................................................. 33 ARTICLE13. MISCELLANEOUS.........................................................................................................34 13.1. Assignment......................................................................................................................34 13.2. Notices.............................................................................................................................34 13.3. Applicable Law................................................................................................................34 13.4. Severability......................................................................................................................34 13.5. Waiver..............................................................................................................................35 13.6. Third -Party Beneficiary ..................................................................................................35 13.7. Enforcement Costs.........................................................................................................35 13.8. Entire Agreement...........................................................................................................35 13.9. Headings..........................................................................................................................35 13.10. References......................................................................................................................36 GYSS/208223.16 02-1304 TABLE OF CONTENTS page \ / 1311. Brokers ............................................................................................................................. 36 1312. No Partnership or Joint Venture ................................................................................... 08 1313. -----.----.---.--.--._-------------------3m W � , ` t �0 4 AGREEMENT TO ENTER INTO GROUND LEASE The CITY OF MIAM, FLORIDA, a municipal corporation of the State of Florida and FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company, f/k/a and successor by merger to Flagstone Properties, LLC, a Florida limited liability company ("Flagstone"), hereby enter into this Agreement to Enter Into Ground Lease (this "Agreement"), as follows: RECITALS: WHEREAS, City owns that certain real property consisting of approximately 10.8 acres of upland (the "Upland Parcel") and 13.4 acres of adjacent submerged land (the "Submerged Parcel") in and about the northwest quadrant of Watson Island, located in Miami -Dade County ("Coun "), Florida, as more particularly described in Exhibit A attached hereto (the "Property'); and WHEREAS, City desires that the Property be developed as a mixed use waterfront development in accordance with that certain Mega Yacht Marina and Mixed Use Waterfront Development Opportunity — Watson Island Miami, Florida Request for Proposals, dated February, 2001 (as amended, the "Watson Island RFP"); and WHEREAS, in response to the Watson Island RFP, Flagstone submitted a proposal to City entitled "Island Gardens at Watson Island RFP" dated July 13, 2001 (the "Island Gardens Proposal"); and WHEREAS, on November 6, 2001, the Island Gardens Proposal was approved by voter referendum by the electorate of the City of Miami, which referendum granted Flagstone the right to negotiate with City the terms by which Flagstone would develop and ground lease the Property; and WHEREAS, City and Flagstone now desire to enter into this Agreement for the development and ground lease of the Property, subject to the terms and conditions contained herein. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained City and Flagstone agree as follows: ARTICLE 1. DEFINITIONS: INCORPORATION OF RECITALS AND EFFECTIVE DATE. The foregoing Recitals are true and correct and are incorporated herein by this reference. This Agreement shall be effective as of the date of execution hereof by the City, as set forth next to the place GY&5208223.14 Draft Dated 12/02/02 02-1304 designated for execution by the City on the last page hereof. The parties hereby agree that the "Effective Date" as used herein shall be deemed to be January 1, 2003. All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in Exhibit B attached hereto or in the form of Ground Lease attached hereto as Exhibit C. ARTICLE 2. NATURE OF THIS AGREEMENT., GROUND LEASE ATTACHED. 2.1. Nature of this Agreement. This Agreement constitutes an agreement to enter into a ground lease upon the terms and conditions set forth herein. This Agreement shall not constitute a lease of any portion of the Property and shall not impose any encumbrance on the Property nor entitle Flagstone or any other Person to file a lis pendens in connection with this Agreement or any alleged breach or default hereunder. The term of this Agreement shall commence upon the Effective Date and automatically terminate upon the Lease Delivery Date, unless sooner terminated in accordance with the terms hereof (except for any provisions hereof that expressly survive such termination). 2.2. Ground Lease. Attached as Exhibit C is the form of Ground Lease which (i) the parties have fully negotiated and approved, (ii) has been approved by the City Commission at a regularly scheduled meeting, and (iii) the parties intend to execute and deliver to each other, subject to the satisfaction of the conditions precedent set forth in ARTICLE 4 and ARTICLE 6 of this Agreement. ARTICLE 3. INSPECTION PERIOD. 3.1. Termination of Access and Indemnification Agreement. The parties hereby acknowledge and agree that the certain Access and Indemnification Agreement entered into between City and Flagstone is hereby terminated and of no further force or effect (except for any indemnification and confidentiality obligations which expressly survive such termination). 3.2. Inspections. Flagstone shall have until 5:00 P.M. (local time in the County) on the sixtieth (60) day after the Effective Date (the "Inspection Period") to perform, at Flagstone's sole cost and expense, such investigations and inspections as to the Property, the physical condition thereof, matters of zoning, title, survey and all other matters with respect to the Property, including, without limitation, environmental matters (collectively, the "Inspections"), which are in Flagstone's judgment relevant to Flagstone's determination whether to lease the Property (subject to the terms and conditions contained herein) or to terminate this Agreement. Prior to performing any on-site Inspections, Flagstone shall provide at least three (3) business days prior written notice to the Director of Real Estate and Economic Development, City of Miami, at 444 S.W. 2°' Avenue, 3`d Floor, Miami, FL 33130, Telephone: 2 GYBS/208223.16 ®4 305/416-1435, Facsimile: 305/416-2156 (or to such other City representative as designated by City). which written notice shall provide reasonable detail regarding the type and scope of Inspection(s) to be performed and the scheduled date and time of such Inspection and provide the Chief Executive Officer with the opportunity to have a representative from the City present at any such Inspections. Any written report, test, analysis, evaluation, appraisal, study or similar item with respect to the physical condition of the Property which is in the possession or control of City, shall, upon written request of Flagstone, be made available to Flagstone at reasonable times for review. Following any such Inspections, Flagstone shall promptly restore the Property to the condition existing immediately prior to such Inspections. Flagstone and its agents, employees, representatives and contractors shall keep the results of any Inspections confidential (provided, however, that Flagstone may disclose all information obtained with respect to the Inspections to its principals, officers, directors, bankers and investors (including potential bankers and investors, attorneys, contractors and advisors as long as such parties agree to keep the information confidential) and this obligation shall survive the termination of this Agreement. Flagstone shall promptly deliver copies of any of the reports prepared in connection with any of its Inspections directly to the Chief Executive Officer. The Inspections shall be conducted in accordance with all applicable laws utilizing licensed and insured professionals and Flagstone shall cause its inspectors to obtain, at Flagstone's sole cost and expense, any and all licenses and permits required to conduct the Inspections, as applicable. 3.3. Environmental Inspections. Notwithstanding anything contained herein to the contrary, with respect to any Inspections regarding environmental matters related to the Property (such Inspections shall be referred to herein as the "Environmental Inspections"), in addition to the requirements set forth in Section 3.2 above, the following shall apply: 3.3.1. Any Environmental Inspections shall be performed by those certain environmental firm(s) or consultant(s) listed on Exhibit 33.1 attached hereto and no other environmental firm(s) or consultant(s) shall be permitted to perform the Environmental Inspections without the prior written approval of the Chief Executive Officer, which may be given or withheld in his or her sole and absolute discretion. 3.3.2. Flagstone shall not perform any invasive environmental tests (such as drilling or soil or groundwater testing) unless the Chief Executive Officer has provided its prior written consent thereto, which consent may be withheld in City's sole and absolute discretion. Flagstone's request for any invasive environmental testing must be accompanied by the inspection report (including all test results 3 GY&S208223.16 02-1304 and analysis thereof) prepared by a reputable environmental engineering company which recommends such additional testing and sets forth the .basis thereof and the protocol for testing in reasonable detail. 3.3.3. Flagstone agrees that in the event the need arises to notify, under applicable laws, any federal, state or local public agencies of any conditions at the Property as a result of the Environmental Inspections performed by Flagstone, its agents, employees, contractors and/or other representatives, Flagstone shall notify the City Attorney only and such disclosures shall be made directly by the City (if deemed necessary thereby), and not Flagstone, to any such public agency. 3.4. Indemnification. Flagstone shall assume all risks associated with the Inspections and agrees to indemnify and hold harmless City, of, from and against any and all costs, losses, claims, damages, liabilities, expenses and other obligations (including, without limitation, reasonable attorney's fees and court costs) arising from, out of or in connection with or otherwise relating to the Inspections, including, without limitation, the entry by any one or more of Flagstone and its agents, employees, contractors and other representatives in or upon the Property for the purposes of the Inspections. The foregoing shall not apply to any diminution in the value of the land or cost or expenses which might arise due to the uncovering of the existence of adverse conditions (e.g., environmental conditions), provided, however, that the foregoing is not intended to relive Flagstone from liability if Flagstone, its agents, employees, contractors or other representatives cause such a condition to exist. The foregoing indemnification obligations of Flagstone shall survive any expiration or termination of this Agreement. 3.5. Insurance. Flagstone shall, prior to entering the Property and performing any Inspections, provide to City evidence of insurance by Flagstone and its contractors, as applicable, as specified on Exhibit 3.5 attached hereto, insuring against any liability by any one or more of Flagstone and its agents, employees, contractors or other representatives arising from, out of or in connection with or otherwise relating to the entry by any one or more of Flagstone and its agents, employees, contractors or other representatives in or upon the Property for the purposes of the Inspections. Flagstone shall provide City with a certificate from Flagstone and its contractors, as applicable evidencing such insurance coverage, naming City as an additional insured thereon and which insurance coverage shall be kept in force until the expiration or earlier termination of this Agreement. ARTICLE 4. AGREEMENT CONDITIONS AND DELIVERIES. 4.1. Fla stone's Acknowledements and Deliveries. 4 GYBS/208223.16 02-1304 4.1.1. Acceptance of Property. If for any reason whatsoever, in Flagstone's sole discretion, Flagstone determines during the Inspection Period that it does not wish to proceed forward with this Agreement, Flagstone shall have the absolute right to terminate this Agreement by giving written notice of such termination to City in the manner hereinafter provided for the giving of notices prior to the expiration of the Inspection Period (the "Termination Notice"). Upon City's receipt of the Termination Notice, the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force and effect and both parties shall be released and relieved of any liability or obligations hereunder (except for those indemnification and confidentiality obligations of Flagstone which specifically survive such termination). If Flagstone does not provide the Termination Notice prior to the expiration of the Inspection Period, then it shall be presumed conclusively that Flagstone has had adequate opportunity to review and has inspected and reviewed all portions of the Property, including, without limitation, the status of title, survey and the environmental condition of the Property, and, on the basis of its Inspections, Flagstone has determined that the condition of all portions of the Property is satisfactory to Flagstone, and, except for the City's obligations under Section 4.2.5 and Section 4.2.6 hereof, upon delivery of possession of the Property by City to Flagstone, Flagstone shall accept every portion of the Property in its "AS -IS, WHERE -IS, WITH ALL FAULTS" condition, without requiring any action, expense or other thing or matter on the part of City to be paid or performed, other than those obligations of City set forth on Exhibit 4.1.1. 4.1.2. Environmental Condition Acceptance Notice. On or before the expiration of the Inspection Period, Flagstone shall execute and deliver to the City the "Environmental Condition Acceptance Notice" in form and substance attached hereto as Exhibit 4.1.2. 4.1.3. Investors. As of the Effective Date, Exhibit 4.13 attached hereto is a true, correct and complete listing (the "Investor List") of the name, address and Social Security Number or U.S. Federal Taxpayer Identification Number (or in the case of foreign investors who do not have such Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number, if one exists, provided for in the country of their primary residence or domicile) of all of the currently existing Investors in the Project other than those Investors: (A) whose investments in the Project are made through an Existing Investment Fund; or (B) who are or will become Investors on account of a Going Public Transaction. (collectively, the "Non -Disclosed Investors") (it being understood and agreed that all Investors other than Non -Disclosed Investors shall be referred to herein as the "Disclosed Investors"). 61 GY&WO8223.16 02-1304 4.1.3.2. Flagstone acknowledges and agrees that, during the term of this Agreement, Mehmet Bayraktar shall at all times retain voting and beneficial control of Flagstone. During the term of this Agreement, Flagstone shall cause its Financial Advisor to require each Disclosed Investor (other than Flagstone or Mehmet Bayraktar) to complete the Investment Questionnaire. Based on the responses to the questions in the Investor Questionnaire and such other due diligence the Financial Advisor may perform in the normal course of its fiduciary duties, the Financial Advisor shall determine, in its good faith, commercially reasonable judgment, whether or not such Disclosed Investor is a Disqualified Person. Financial Advisor shall not propose to the City any Disclosed Investor which it has concluded is a Disqualified Person. Furthermore, the City itself shall have the right to object to any Disclosed Investor if it determines in its good faith commercially reasonable judgment that such Disclosed Investor is a Disqualified Person. The parties acknowledge and agree that no Disqualified Person shall hold a legal or beneficial interest in the Project. 4.1.4. Organizational Documents. As of the Effective Date, the documents listed in Exhibit 4.1.4 attached hereto constitute all of the existing organizational documents of Flagstone, including, without limitation, any operating and/or voting agreements among the members thereof (collectively, the "Organizational Documents"), and Flagstone has provided to the Chief Executive Officer true, correct and complete copies of all such Organizational Documents. Flagstone shall promptly provide City written notice of any amendments, modifications, additions or terminations of the Organizational Documents, together with written copies thereof. The member(s) or other Investor(s) of Flagstone shall not enter into any voting agreements the effect of which would cause Mehmet Bayraktar to relinquish voting and beneficial control of Flagstone; provided, however, major or material decisions requiring investor or shareholder consent, agreements among minority shareholders and/or other customary commercial arrangements are not intended to be prohibited by the foregoing. 4.1.5. Ezuressions of Interest. Exhibit 4.1.5 attached hereto contains a letter to the City from Flagstone's Financial Advisor and Holiday Fegnolio, which sets forth in favor of the City that, based upon the Island Gardens Proposal, this Agreement and the form of Ground Lease attached hereto as Exhibit C, such parties are highly confident that Flagstone will be able to raise its Initial Equity Requirement, which together with the projected financing should be sufficient to fully fund the development and construction of the Project Components as currently contemplated as well as the operation thereof through Project Stabilization. C -J GY&S/208223.16 02-1304 4.2. Other Conditions and Deliveries. 4.2.1. MUSP Approval. From and after the Effective Date, Flagstone shall use good faith reasonable efforts to obtain the approval of the Major Use Special Permit by the applicable governmental authority(ies) for the Major Project Components (such approval shall be referred to herein as the "MUSP Approval"). City shall reasonably and in good faith cooperate with such efforts, including, without limitation, executing all applications jointly as owner, if necessary. Flagstone shall obtain written approval of the Chief Executive Officer to the application for the MUSP, which shall include any applications for zoning changes or variances and/or amendments to the Comprehensive Plan currently in effect for the City of Miami (collectively, the "MUSP Application") prior to submission of the MUSP Application to any governmental and/or quasi -governmental agency (it being understood that, notwithstanding anything contained herein to the contrary the Chief Executive Officer may withhold his or her consent to any zoning changes, variances or Comprehensive Plan amendments included in the MUSP Application in his or her reasonable discretion). The parties agree to use reasonable, good -faith efforts to agree upon necessary modifications to the MUSP Application which result from any governmental or quasi -governmental process, provided that in no event shall the Chief Executive Officer be required to consent to any changes which would violate any material terms of the Watson Island RFP or deviate materially from the Island Gardens Proposal. Flagstone hereby agrees that it shall have submitted the MUSP Application to the appropriate Governmental Authority for approval thereof by no later than six (6) months from the Effective Date. 4.2.2. NOPC Approval. From and after the Effective Date, Flagstone shall use good faith reasonable efforts to obtain the approval of the State of Florida Department of Community Affairs ("DCA") to a "Notice of Proposed Change" ("NOPC") to the Downtown Development of Regional Impact Increment H ("Downtown DRI"), which amends the Downtown DRI to: (i) add the Marina as a new use thereunder, including the applicable simultaneous increase and decrease from an existing land use category to account for any impacts of the Marina slips on traffic, if necessary; and (ii) expand the boundaries of the Downtown DRI to include the Project (such approval shall be referred to herein as the "NOPC Approval"). Flagstone shall obtain written approval of the Chief Executive Officer to the application for the NOPC ("NOPC Application") prior to submission thereof to the City of Miami Downtown Development Authority ("DDA"). No other development orders or amendments thereto shall be applied for without the express prior written approval of the Chief Executive Officer. Any changes to the NOPC Application during the NOPC approval process, including, without limitation, any conditions that may be imposed by DDA or DCA in connection therewith must be approved by the Chief Executive Officer in advance of the approval of the NOPC. The parties agree to use reasonable, good -faith efforts to 7 GY&SQ08223.16 02-1304 agree upon necessary modifications to the NOPC Application which result from any governmental or quasi -governmental process, provided that in no event shall the Chief Executive Officer be required to consent to any changes which would violate any material terms of the Watson Island RFP or deviate materially from the Island Gardens Proposal. Attached hereto as Exhibit 4.2.2 is a letter from DCA with respect to the vested rights for the existing marina slips at the Property. Flagstone hereby agrees that it shall have submitted the NOPC Application to DCA for approval thereof by no later than six (6) months from the Effective Date. 4.2.3. MUSP/NOPC Application Date and Approval Date. The date of the later to occur of the filing of the MUSP Application and the NOPC Application shall be referred to herein as the "MUSP/NOPC Application Date". The date of the later to occur of the MUSP Approval and the NOPC Approval shall be referred to herein as the "MUSP/NOPC Approval Date". 4.2.4. First Source Hirin¢ Aereement. Within six (6) months from the Effective Date, Flagstone and the City shall execute four (4) counterpart originals of a "First Source Hiring Agreement" (to be prepared by Flagstone) for the Project (which is referred to in Section 34.1 of the Ground Lease), which First Source Hiring Agreement shall be in form and substance reasonably acceptable to the parties. 4.2.5. Partial Modification of Restrictions. From and after the Effective Date, City shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to obtain from the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida (the "Board of Trustees") a "Partial Modification of Restrictions" (the "Partial Modification of Restrictions") which modifies the restrictions set forth within Deed No. 19447 from the Board of Trustees in favor of the City filed for record April 11, 1949 in Deed -Book 3130, Page 257 of the Public Records of Dade County, Florida (`Board of Trustees Deed") in order to permit the Project. City's efforts to obtain the Partial Modification of Restrictions for the Project shall not be inconsistent with other actions and efforts by the City in connection with the City's obtaining of other partial modifications of restrictions from the Board of Trustees. City shall attempt to have this completed within six (6) months from the Effective Date, subject to Events of Closure. Flagstone's counsel may, at Flagstone's sole discretion, join in or assist such efforts by City to obtain the Partial Modification of Restrictions provided that Flagstone shall not take any actions or engage in any correspondence with respect thereto without the prior consent of the Chief Executive Officer. 8 GYBS/208223.16 02-1304 4.2.6. Removal of Existing Occupants. From and after the Effective Date, City shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to remove or otherwise enter into agreements which provide for the removal of those certain existing occupants of the Property more particularly described on Exhibit 4.2.6 attached hereto (the "Existing Occupants") on or before the Lease Delivery Date (it being understood that City shall provide to Flagstone any proposed agreement negotiated by the City with those certain tenants designated on Exhibit 4.2.6 as "fish markets" for such tenants to remain in place until immediately prior to the Lease Delivery Date prior to the execution by City thereof for Flagstone's review and comments; it being understood, however, that Flagstone shall have no rights of approval thereover). City shall attempt to enter into agreements for such removal or otherwise remove such Existing Occupants within six (6) months from the Effective Date, subject to Events of Closure. Flagstone may, at Flagstone's sole discretion, negotiate agreements with any Existing Occupants for the continued occupancy at the Marina (solely as a subtenant of Flagstone under the Ground Lease and only during the term thereof), and if such an agreement is reached by the applicable parties, then, notwithstanding anything contained herein to the contrary, City shall have no further responsibility under any such agreements negotiated by Flagstone with such Existing Occupant(s) (it being understood that: (i) in no event shall Flagstone be permitted to bind the City to any such agreement in the event that Flagstone and the City do not enter into a Ground Lease hereunder or in the event of any termination of such Ground Lease; and (ii) and any such agreement between Flagstone and an Existing Occupant(s) shall contain an acknowledgment by such Existing Occupant(s) that its rights under such agreement relate only to Flagstone's leasehold estate and such Existing Occupant(s) releases City from any and all claims of rights to occupy the Property or entitlements to compensation in lieu thereof in the event of a termination of the Ground Lease for any reason whatsoever). 4.2.7. Each party hereby agrees to keep the other party regularly apprised in writing as to what actions have been taken by such party in order to satisfy their respective conditions precedent set forth above and the status thereof. 4.3. Termination by City. In the event that: (i) Flagstone fails to file its MUSP Application and NOPC Application with the applicable Governmental Authorities or fails to execute and deliver to City a "First Source Hiring Agreement" which is reasonably acceptable to City within six (6) months from the Effective Date (which date shall not be extended for an Event of Closure) (the "MUSP/NOPC Application Deadline"); or (ii) Flagstone fails to obtain the MUSP Approval and NOPC Approval within twelve (12) months from the MUSP/NOPC Application Date (which date may be extended by Flagstone for an Event of Closure) (the "MUSP/NOPC Approval Deadline"), then City shall have the right (but 9 GYSS/208223.16 02-1304 not the obligation) to terminate this Agreement by written notice to Flagstone delivered on or before the fifth (5h) day after the expiration of the MUSP/NOPC Application Deadline or the MUSP/NOPC Approval Deadline, as applicable, whereupon the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force or effect and both parties shall be relieved of any liability or obligations hereunder, except with respect to any provisions hereof that are intended by the parties to survive such termination. Notwithstanding the foregoing, Flagstone shall have the right (but not the obligation) in its sole discretion to prevent a termination by the City and extend either the MUSP/NOPC Application Deadline or the MUSP/NOPC Approval Deadline for up to an additional twelve (12) months in the aggregate (for example, if Flagstone extends the MUSP/NOPC Application Deadline for an additional four (4) months, Flagstone shall thereafter only be permitted to extend the MUSP/NOPC Approval Deadline for up to an additional eight (8) months), provided, however, that: (a) Flagstone must provide written notice to the City of any such extension on or before the expiration of the applicable deadline; and (b) Flagstone shall continue to exercise reasonable diligence to apply for or obtain the MUSP Approval and NOPC Approval during any such extension period. To the extent that Flagstone applies for both MUSP Approval and NOPC Approval in a shorter time than six (6) months, then Flagstone shall have the ability to extend the MUSP/NOPC Approval Deadline by the difference between six (6) months and the time period actually used to apply for such approvals (e.g., if the MUSP/NOPC Application Date is four (4) months from the Effective Date, then Flagstone shall have fourteen (14) months to obtain the MUSP Approval and NOPC Approval (plus its aggregate 12 month extension, if necessary) before the City's right to terminate in Section 43 would be effective). 4.4. Termination by Flaestone. In the event that within six (6) months after the Effective Date (which date may be extended for an Event of Closure), City is unable to: (i) obtain the Partial Modification of Restrictions; and/or (ii) remove the Existing Occupants from the Property, then Flagstone shall have the right (but not the obligation) to terminate this Agreement by written notice to the City on or before the fifth (51°) day after the expiration of such six (6) month period, whereupon the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force or effect and both parties shall be relieved of any liability or obligations hereunder, except with respect to any provisions hereof that are intended by the parties to survive such termination. Notwithstanding the foregoing, the City shall have the right (but not the obligation) in its sole discretion to prevent a termination by Flagstone and extend the initial six (6) month period for up to an additional three (3) month period in order for the City to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property, provided, however, that: (a) the City shall provide written notice to Flagstone of such extension on or before the expiration of the initial six (6) month 10 GYBS/208223.16 0-1304 period; and (b) the City shall continue to exercise reasonable diligence to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property during such extension period. Flagstone shall have the right (but not the obligation) to extend the foregoing time periods for the City's satisfaction of the conditions precedents set forth in Section 4.2.5 and Section 4.2.6 for an additional six (6) month period; provided, however, that: (a) Flagstone shall provide written notice to City of such extension on or before the expiration of such nine (9) month period; and (b) the City shall continue to exercise reasonable diligence to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property during such extension period. 4.5. Outside Date. The parties agree that adding up all of the time periods for satisfaction of the conditions precedent set forth in this ARTICLE 4 plus all the applicable extensions therefor (including, without limitation, any extensions for Events of Closure) shall equal thirty-six months; therefore, the parties acknowledge and agree that notwithstanding anything contained herein to the contrary, either party shall have the absolute right to terminate this Agreement by providing written notice to the other party if the conditions precedent set forth in Section 4.2 above are not satisfied on or before thirty (36) months from the Effective Date. ARTICLE 5. SECURITY DEPOSIT. 5.1. Initial Security.Upon the execution and delivery by City to Flagstone of any License(s) referred to in Section 7.4 hereof, Flagstone shall either (a) deliver the amount of Three Hundred Thousand and No/100 Dollars ($300,000.00) (the "Initial Deposit") to Escrow Agent or (b) provide to City, at Flagstone's sole cost and expense, a Letter of Credit in the amount of Three Hundred Thousand and No/100 ($300,000.00) (the "Initial LOC"). Notwithstanding the foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of Credit so long as the Initial Security equals $300,000.00 in the aggregate. The Initial Deposit or the Initial LOC, as applicable, shall hereinafter be referred to as the "Initial Security" and shall provide security for the faithful performance by Flagstone of all of the provisions of this Agreement and/or the License(s) to be performed or observed by Flagstone. 5.2. Additional Security. Within three (3) business days after the last to occur of: (i) MUSP Approval; (ii) NOPC Approval; (iii) the removal of all of the Existing Occupants, as evidenced by written agreements with such Existing Occupants agreeing to such removal or final court orders authorizing the removal thereof; and (iv) the Partial Modification of Restrictions has been approved by the Board of Trustees, Flagstone shall either (a) deliver the additional amount of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the "Additional Deposit") to Escrow Agent or (b) provide to City, at Flagstone's 11 GYBS/208223.16 v2-1304 sole cost and expense, an additional Letter of Credit in the amount of Two Hundred Thousand and No/ 100 Dollars ($200,000.00) (the "Additional LOC") (the Additional Deposit or the Additional LOC, as applicable, hereinafter the "Additional Security"). Notwithstanding the foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of Credit so long as the Additional Security equals $200,000.00 in the aggregate. The Initial Security and the Additional Security (collectively, the "Agreement Security") shall provide security for the faithful performance by Flagstone of all of the provisions of this Agreement to be performed or observed by Flagstone. 5.3. Deposits, Letters of Credit. Any Security Deposit held by Escrow Agent shall be held in accordance with the Escrow Agreement, in form and substance attached hereto as Exhibit 53 (the "Escrow Agreement"), which Escrow Agreement shall be executed by City, Flagstone and Escrow Agent simultaneously with the execution of this Agreement. Any Letter of Credit elected by Flagstone pursuant to the provisions of this ARTICLE 5 (or a replacement thereof satisfactory to City) shall remain in effect until Lease Delivery, unless this Agreement is otherwise terminated in accordance with the provisions of ARTICLE 4 or ARTICLE 6 hereof. ARTICLE 6. EXECUTION AND DELIVERY OF GROUND LEASE. 6.1. Conditions Precedent to Execution and Delivery of Ground Lease. Within fifteen (15) days after the satisfaction of all of the following conditions precedent (or the written waiver by the Chief Executive Officer in his or her sole and absolute discretion of any such conditions precedent that are not satisfied), the City and Flagstone hereby agree to execute four (4) duplicate original counterparts of the Ground Lease, in form and substance attached hereto as Exhibit C for delivery to each party hereunder (the "Lease Delivery") (it being understood and agreed that: (i) the date of execution and delivery of the Ground Lease by the latter of the parties hereto to so execute shall be referred to herein as the "Lease Delivery Date"; and (ii) the Ground Lease shall become effective and commence on the Lease Delivery Date): 6.1.1. Construction Plans and Specifications. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion plans and specifications for the development and construction of the Project (the "Construction Plans and Specifications") which shall be in sufficient detail in order for in order for Flagstone to obtain foundation permits for at least two (2) Major Project Components (other than the Marina), which Construction Plans and Specifications shall be in accordance with the Project Approvals. Such Construction Plans and Specifications shall contain sufficient detail in order for the Chief Executive Officer to determine, using the Schedule of Values, the 12 GYBS/208223.16 ,2-1304 proposed Construction Budget and the GMP Contract(s) described in Section 6.1.6 hereof, that the Project can be completed in accordance with the MUSP Approval and the Hotels can be constructed as four or five star hotels or better, as defined in the American Automobile Association ("AAA") hotel rating standards, within the Construction Budget. 6.1.2. Closing of Construction Loanfs). Other. Flagstone shall have closed its Initial Construction Loan with an Approved Initial Construction Lender (as defined in the Ground Lease), which financing thereunder, together with the amount of Initial Equity Requirement, shall be sufficient to complete the development and construction of the Project and to fund any shortfalls in operations that may exist prior to Project Stabilization. At such closing, all of the conditions precedent to funding the first draw thereunder shall have been satisfied other than Lease Delivery. Flagstone shall also be satisfied, in its sole discretion, with negotiations concerning financial incentives and entitlements available under federal, state, county or local law. 6.1.3. Initial Equity Requirement. Flagstone shall have provided to the Chief Executive Officer written evidence satisfactory to the Chief Executive Officer in his or her reasonable judgment of the availability of the Initial Equity Requirement (which funds shall be available to Flagstone subject to typical conditions for the funding of equity in similar projects) which, when added to the equity expenditures heretofore made by Flagstone and the loan proceeds to be funded in connection with the Initial Construction Loan(s), is sufficient to complete the development and construction of the Project and to fund any shortfalls in operations that may exist prior to Project Stabilization. In connection with the foregoing, Flagstone and the Financial Advisor shall provide to the City an updated Investor List, certified to the City by the president or vice-president of Flagstone and an officer of Financial Advisor, under penalty of perjury, that such Investor List accurately sets forth each and all of the Disclosed Investors as of the Lease Delivery Date, together with a listing, to the best of Flagstone's and the Financial Advisor's knowledge, of the current address and Social Security Number or U.S. Federal Taxpayer Identification Number (or in the case of foreign investors who do not have such Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number, if one exists, provided for in the country of their primary residence or domicile) of such Disclosed Investors; it being understood and agreed that the provisions of Section 4.1.3 hereof shall apply to all Investors. 6.1.4. Development Team. Flagstone shall have (a) obtained the prior written approval of the Chief Executive Officer to the identities of all of the following individuals and/or entities: (i) the lead architect which is coordinating preparation of the conceptual and architectural plans for each of the Major Project Components; (ii) the lead landscape architect which is coordinating preparation of 13 GYBS/208223.16 02-1304 the landscape plans for each of the Major Project Components; and (iii) the construction manager(s) for the Project and/or for each of the Major Project Components, to the extent different (collectively, the "Development Team") and (b) provided written evidence that binding agreements with each of the members of the Development Team have been executed. Each member of the Development Team shall be subject to the prior written approval of the City, which approval shall not be unreasonably withheld and shall include, but not be limited to, the City's ability to withhold its approval of any Disqualified Person. Flagstone shall be permitted to supplement the Development Team with additional members without the prior consent of the City; provided, however, any replacements of an approved member of the Development Team shall be subject to the City's approval in accordance with the foregoing sentence. The City hereby approves the Persons listed on Exhibit 6.1.4 attached hereto. 6.1.5. Operations Team. Flagstone shall have (a) obtained the prior written approval of the Chief Executive Officer to the identities of the operator and, if applicable, the franchisor, for each of the Hotels and the Marina within the Project (the foregoing, together with Fairchild Tropical Garden and The Historical Museum of South Florida, shall be collectively referred to herein as the "Otwratine Team"), and (b) provided written evidence that binding agreements with each of the members of the Operating Team have been executed. Each member of the Operating Team shall be subject to the prior written approval of the City, which approval shall not be unreasonably withheld and shall include, but not be limited to, the City's ability to withhold its approval of any Disqualified Person. City hereby approves those certain hotel operators and/or franchisors set forth on Exhibit 6.1.5 attached hereto. City hereby agrees that, if Flagstone so elects, Flagstone shall be permitted to operate or manage the Hotel(s), Marina and/or Parking Garage either directly or through an Affiliate thereof. 6.1.6. Construction Contracts. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion one (1) or more binding guaranteed maximum price construction contract(s) (individually or collectively, the "GMP Contract(s)") which individually or in the aggregate provide for the development and construction of the Project Components in accordance with the MUSP Approval (at a cost which shall not exceed the aggregate costs for development and construction of the Project as set forth in the Construction Budget), together with a "Schedule of Values" for the Project to be approved by the Chief Executive Officer in his or her good faith, reasonable discretion. 6.1.7. Construction Budget. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion the budget setting forth in reasonable detail the 14 GY&S/208223.16 02-x.304 anticipated costs of development and construction of the Project Components (the "Construction Budget"). 6.1.8. Construction Schedule. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion the detailed schedule for development and construction of the Project Components and related infrastructure, including, without limitation, the anticipated commencement and completion of major components of the work. Flagstone may accelerate all or any portions(s) of such schedule without the Chief Executive Officer's approval; provided that Flagstone provide notice to the Chief Executive Officer of such acceleration. 6.1.9. Bonds/Letters of Credit. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion a copy of the Payment and Performance Bond and/or Letters of Credit (which shall have been issued at Flagstone's sole cost and expense) in an amount equal to 100% of the hard construction costs of the Project Components, which shall nage City as the owner or dual obligee, as appropriate. The forms of such Payment and Performance Bond and/or Letters of Credit and the surety or institution issuing the same shall be subject to the prior written approval of the Chief Executive Officer, which shall not be unreasonably withheld (provided that such surety or institution has a credit rating of A or higher with a financial strength to be mutually acceptable to the parties). Any Payment and Performance Bond may be enforced by City in accordance with its terms. 6.1.10. Hotel Management Agreements. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion (with appropriate consideration given to the manner in which similar issues are resolved by sophisticated lenders in similar transactions) binding hotel management agreements between Flagstone and the approved operators of each of the Hotels within the Project (unless the Hotel(s) is to be operated directly by Flagstone or an Affiliate, in which case any management agreement between Flagstone and such Affiliate shall not require the prior approval of City but Flagstone shall provide to the City binding franchise or license agreements between Flagstone or its Affiliate and a nationally or an internationally recognized hotel franchisor for such Hotel(s), which franchise or license agreement shall be subject to the City's reasonable approval). Each management agreement (or franchise or license agreement, if applicable) shall provide for, among other things: (i) the operation or management of a four or five star hotel or better, as defined in the AAA hotel rating standards; (ii) that the hotel operator or franchisor shall provide written notice to the Chief Executive Officer of any default by Flagstone under such hotel management agreement or franchise agreement, together with the reasonable opportunity to cure such default by the City; and (iii) an attornment provision whereby the hotel operator or franchisor agrees to attom to the City pursuant to a 15 GY&S/ OM3.16 02-1304 subordination. non -disturbance and attornment agreement acceptable to the Chief Executive Officer. in his or her reasonable discretion. In no event shall the City be required to provide non -disturbance to any operator or franchisor that is an Affiliate of Flagstone (or the applicable Major Subtenant of the Major Project Component which is subject to such operating or franchise agreement), unless a non -Affiliated minority interest in such Affiliate has the right, and so exercises such right, to take over control over such Affiliated -operator or franchisor, in which event City shall provide a subordination, non -disturbance and attornment agreement thereto acceptable to the Chief Executive Officer in his or her reasonable discretion. Any such affiliated operator or franchisor shall execute a subordination agreement reasonably acceptable to the Chief Executive Officer. 6.1.11. Insurance. All insurance policies required to be maintained by Flagstone under the Ground Lease (and applicable to the work that is then ongoing) shall have been obtained, as evidenced by the originals of such policies of insurance or certified duplicates thereof issued by the applicable insurance companies, which policies shall name the City as an additional insured thereunder. 6.1.12. No Default. There shall be no Event of Flagstone's Default (as defined in Section 11.1 of this Agreement). 6.1.13, Proiect Approvals. The Partial Modification of Restrictions, MUSP Approval, NOPC Approval and foundation permits for at least two (2) Major Project Components (other than the Marina) (the "Foundation Permits") shall have been issued by the applicable Government Authorities for the Project (collectively, the "Proiect Approvals'). The Project Approvals shall not be deemed to have been issued unless and until any and all appeals periods as provided by law shall have expired without an appeal, objection or challenge having been filed, or, if filed, when such objection, challenge or appeal has been dismissed or resolved finally and conclusively to the satisfaction of the Chief Executive Officer in his or her reasonable judgment. 6.1.14. Establishment of Skills Trainine and Employment Center Program. Chief Executive Officer shall have approved in its reasonable good -faith judgment sufficient evidence of the establishment of a "Skills Training and Employment Center Program" at a site near the Project in Miami, Florida which shall provide for training of the construction and operations personnel associated with the Project in accordance with the Proposal. 6.1.15. Trust Agreement. Flagstone and City shall have executed four (4) counterpart originals of the "Trust Agreement" for the "Civic Arts Endowment Trust" to be created for the Project 16 GY&S/20W3.16 02-1304 (which is referred to in Section 26.2 of the Ground Lease), which shall be in form and substance reasonably acceptable to the parties. 6.2. Right of Termination. 6.2.1. Termination. Flagstone agrees to use diligent good -faith efforts to cause the satisfaction of the conditions precedent set forth in Section 6.1 above and Flagstone shall promptly provide to the Chief Executive Officer, from time to time, such written documentation as may be reasonably requested by the Chief Executive Officer to evidence the same. In the event the conditions precedent set forth in Section 6.1 above are not satisfied (and the Chief Executive Officer has not waived the same in writing in his or her sole and absolute discretion) on or before twelve (12) months from the MUSP/NOPC Approval Date (the "Lease Deadline"), City or Flagstone, so long as the terminating party is not in default hereunder (which default has not been cured in accordance with any applicable notice and cure periods provided for in ARTICLE 11 hereof), shall have the right to terminate this Agreement, without cost or liability of either party to the other party, by written notice from the terminating party to the non -terminating party delivered within five (5) business days after the Lease Deadline, whereupon this Agreement shall be deemed terminated and of no further force or effect as of the date of such notice and both parties shall be relieved of any and all further liability or obligations hereunder except with respect to any provisions hereof that are intended by the parties to survive such termination. 6.2.2. Extension. Flagstone shall have the option to extend the Lease Deadline for up to an additional twelve (12) month period (subject to subsection (iii) below) upon prior written notice to the City; provided, however that, (i) Flagstone has been diligently pursuing satisfaction of these conditions, in good faith and in a commercially reasonable manner with the City hereby agreeing to give written notice to Flagstone and an opportunity to cure in accordance with Section 11.1.1 hereof if at any time it believes otherwise; (ii) no Event of Flagstone's Default has occurred and is continuing hereunder; and (iii) to the extent that Flagstone has previously exercised all or any portion of its initial extension option in accordance with Section 43 hereof, then the twelve (12) month period referred to above shall be automatically reduced by the total amount of such initial extension. To the extent that Flagstone has satisfied all of the conditions precedent set forth in this ARTICLE 6 by the Lease Deadline (as extended, if applicable in accordance with this Section 6.2.1) other than the issuance of the Foundation Permits for at least two (2) Major Project Components and the reason for the delay in the issuance of such Foundation Permits is directly attributable to an Event of Closure, then Flagstone shall be permitted to extend the Lease Deadline (as extended, if applicable in accordance with this Section 6.2.1) for a reasonable period of time in order to diligently pursue the issuance of such Foundation Permits (which extension period 17 GY&Sl208223.16 02-1304 shall in no event exceed six (6) months in the aggregate, which aggregation shall include any period of extension previously exercised by Flagstone in connection with a previous Event of Closure). 6.2.3. Outside Date. The parties agree that adding up all of the time periods for satisfaction of the conditions precedent set forth in this ARTICLE 6 plus all the applicable extensions therefor (including, without limitation, any extensions for Events of Closure) shall equal forty-eight (48) months; therefore, the parties acknowledge and agree that notwithstanding anything contained herein to the contrary, City shall have the absolute right to terminate this Agreement by providing written notice to Flagstone if the conditions precedent set forth in ARTICLE 6 above are not satisfied on or before forty- eight (48) months from the Effective Date. ARTICLE 7. DEVELOPMENT OF PROJECT. 7.1. Development Plans. Flagstone shall, at its sole cost and expense, design and prepare all plans required or desirable in connection with the design and construction of the Project, including, without limitation, (i) the Construction Plans and Specifications, (ii) all application materials required to complete the MUSP Application, (iii) all application materials necessary to complete the NOPC Application; (iv) all materials necessary or required in connection with obtaining the Project Approvals, the Mega -Yacht Marina Permits (as hereinafter defined) and all other permits and approvals necessary for the development and construction of the Project; and (v) any and all other necessary or desirable plans, drawings or renderings, including conceptual layouts and artistic or architectural renderings, elevations or plans (all of the foregoing collectively, the "Development Plans"). The Development Plans shall be consistent with the terms and provisions of this Agreement, the requirements of the Watson Island RFP, and the conditions and commitments set forth in the Island Gardens Proposal. 7.2. Use and Ownership of Development Plans and Permits and Approvals in the event of Termination. In the event of a termination of this Agreement due to an Event of Flagstone's Default, City shall be entitled to full, complete and unconditional use and ownership of the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepare the same and any Approved Lenders' rights therein; it being understood that City shall have no obligation to bring current any existing delinquencies but shall be obligated to make payments thereafter as they become due), the Project Approvals, the Mega -Yacht Marina Permits and all other permits and/or approvals obtained by Flagstone 18 GYBS/208223.16 02-1304 in connection with the Project without payment of any consideration therefor by City to Flagstone. Flagstone agrees that any agreement between the architect(s) and engineer(s) with respect to the Project shall provide that the City shall have the right to use such plans with respect to the Project without payment of any additional charge therefor. 7.3. Plattine and Other Develooment Matters. Flagstone and City shall cooperate with one another in connection with City's platting of the south side of Watson Island (which plat shall include the Property), and, if necessary, shall join in and consent to any reasonable easements, dedications or other conveyances or encumbrances which may be required by any Government Authority in connection with the approval of such plat provided that such agreements do not materially and adversely affect in Flagstone's reasonable opinion the use, value or utility of the Project as contemplated by the Development Plans. In addition, City shall have the right from time to time to enter into development related agreements which may impact or otherwise encumber Property, including, without limitation, easements, water and sewer agreements (including, without limitation, the amendment or'modification of such existing agreements), road vacations, etc., and Flagstone shall have no right to object to the same at Lease Delivery provided that such agreements do not materially and adversely affect in Flagstone's reasonable opinion the use of the Project as contemplated by the Development Plans. 7.4. License(s) for Pre -Development Work. 7.4.1. License(s). Subject to (i) obtaining the City Commission's prior written approval (which shall include, without limitation, approval as to the type and extent of work to be performed), and (ii) compliance with the Board of Trustees Deed (as the same may be modified in connection with Section 4.2.5 hereof) and Applicable Laws (including, without limitation, obtaining the appropriate permits necessary from the applicable Governmental Authority(ies)), City shall grant to Flagstone, for use by its agents, employees and contractors, a license to perform certain pre -approved dredging work on the Submerged Parcel and/or a license to perform certain pre -approved utility relocation and/or other pre -development work on the Uplands Parcel (individually and/or collectively referred to herein as the "License"), all of which pre -approved work (the "Pre -Development Work") shall be performed at Flagstone's sole cost and expense, and in a good and workmanlike manner in accordance with all applicable Governmental Requirements. Each License shall be for a term not to exceed twelve (12) months (in total for each License) and shall be revocable for any reason by City upon thirty (30) days prior written notice. During the term of any License, City, or any of its agents, successors or assigns, shall have the right to enter the Property during all reasonable hours to examine and inspect the same. Except in the event of an issuance of such Licenses, Flagstone agrees that, Flagstone has no 19 GYBS/208223.16 02-1304 right, title, interest or claim in, or to the use of, the Property, all of which are waived hereby, unless and until the occurrence of the Lease Delivery Date. Notwithstanding anything contained herein to the contrary, in no event shall any License granted in accordance with this Section 7.4_ hereof be deemed to permit any party other than Flagstone, for use by Flagstone and its agents, contractors and employees, from using the Property as provided for herein. In connection with the Pre -Development Work, City agrees that it shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to cooperate with Flagstone in coordinating any utility relocation within the Property with the Water and Sewer Department of Miami -Dade County. 7.4.2. No Consideration. The parties hereby acknowledge and agree that, during the term of the License, no consideration (i.e., construction rent or otherwise) will be due from Flagstone to City. In the event that this Agreement is terminated for any reason whatsoever, (i) Flagstone shall not be entitled to reimbursement for any of its costs and expenses incurred in connection with the Pre - Development Work or for the value of any such improvements made by Flagstone to the Property in connection therewith; and (ii) except as specifically set forth in a surviving indemnification section of this Agreement or to the extent necessary to correct any defective work performed by Flagstone or to complete any incomplete work which is necessary in order to provide uninterrupted services to any other property owners (such costs shall be deemed to be "Reimbursable Expenses"), City shall not be entitled to reimbursement for any costs or expenses that may be incurred by City in connection with the Pre - Development Work (it being understood that in no event shall the foregoing be deemed to impose any obligation of the part of the City to incur any such cost or expense, but to the extent that City does incur Reimbursable Expenses, Flagstone shall promptly reimburse the same to City within thirty (30) days after receipt of a written invoice, together with reasonable supporting documentation, therefor. Flagstone shall maintain and cause its contractors to maintain the insurance referred to in Article XI of the Ground Lease (which is applicable to the work that is then ongoing) with respect to any Pre -Development Work performed by Flagstone in connection with such License. 7.4.3. Indemnification and Waiver. Flagstone agrees to defend, indemnify and hold City harmless from any and all claims, demands, actions, whether legal, equitable or otherwise, costs, damages (including reasonable attorneys' fees and experts' fees) and any other liability incurred now or in the future as a result of any claim, injury, death or property damage, resulting directly or indirectly from Flagstone's entry upon the Property and performance of the Pre -Development Work thereon. Flagstone agrees that its access to and use of the Property for the Pre -Development Work shall be solely at its own risk and expense. As a material inducement for City to grant the License(s), Flagstone does hereby release, waive, discharge, covenant not to sue, acquit, satisfy and forever discharge City and its officers, 20 GY&Sl208223.16 02-1304 directors, employees, agents and attorneys and the affiliates and assigns of all of the foregoing of and from any and all liability, claims, counterclaims, defenses, actions, causes of actions, suits, controversies, agreements, promises and demands whatsoever, at law or in equity, which Flagstone or any of its members, officers, directors, employees, attorneys and agents and the affiliates and assigns of all of the foregoing had, now has, or hereafter can, shall or may have against City or its officers, directors, employees, attorneys and agents and the affiliates and assigns of all of the foregoing, for, upon, or by reason of any matter cause or thing whatsoever arising out of the License(s), the Pre -Development Work and/ or Flagstone's use of the Property. The foregoing indemnification obligations of Flagstone shall survive any expiration or termination of this Agreement. 7.5. Issuance to Flagstone of Marine Operating Permit for Existing Marina. The City currently holds Marina Facilities Annual Operating Permit No. MOP -000306-2002/2003 (B) — GEN for the existing marina on Watson Island (the "0Qyeratin Permit"), which Operating Permit is valid from October 1, 2002 through September 30, 2003 (a copy of such Operating Permit is attached hereto as Exhibit 7.5). Subsequent to the Effective Date, Flagstone shall file with the Miami -Dade County Department of Environmental Resources Management ("DERM") an application for the issuance of an Operating Permit for the existing marina in Flagstone's name in order for Flagstone to pursue the Mega - Yacht Marina Permits. City shall reasonably cooperate with Flagstone in obtaining the Operating Permit by, among other things, executing whatever documentation may be required by DERM (provided that in no event shall City be obligated to incur any cost or expense in connection therewith). This documentation shall include, but not be limited to, the issuance by the City of Miami of an Occupational License to Flagstone for the operation of the existing marina. After issuance of the Operating Permit in Flagstone's name, City shall continue to cooperate (which shall not include any obligation to incur any cost or expense) with Flagstone in connection with keeping the Operating Permit in good standing. In the event Flagstone desires to make minor repairs or improvements to the existing marina, and such repairs or minor modifications require DERM's approval, City shall, provided said repairs and renovations are approved by the Chief Executive Officer, execute whatever documentation may be reasonably required in order to obtain DERM's approval. Any income derived from the operation of the existing Marina prior to the Lease Delivery Date shall belong to the City. In the event that this Agreement is terminated for any reason other than the execution and delivery of the Lease, then, if so requested by City, Flagstone shall take whatever actions are necessary in order to promptly transfer the Operating Permit back to the City. 7.6. Marian Approvals. Flagstone shall use its "best efforts" (as such term is defined below) to obtain all permits and approvals from Governmental Authorities (collectively, the "Mega -Yacht Marina Permits") which are required to construct and operate a marina substantially similar in size and 21 GYBS/208223.16 02-1304 capacity as the marina depicted in the Island Gardens Proposal (a "Mega -Yacht Marina"). If deemed necessary or desirable by the Chief Executive Officer, any applications for Mega -Yacht Marina Permits shall be made with the City as the named applicant or co -applicant, as required by law. In the event Flagstone is able to obtain all of the Mega -Yacht Marina Permits, then the tette "Marina" as used in the Lease shall mean and refer to such Mega -Yacht Marina, and Flagstone shall develop and operate such Mega -Yacht Marina subject to and in accordance with the terms and conditions of the Lease. 7.6.1. Best Efforts. For purposes hereof, the term "best efforts" shall mean that Flagstone shall take all of the following actions: 7.6.1.1. Flagstone shall act in good faith, expend commercially reasonable amounts of funds, and use all due diligence (including retaining consultants, professionals and experts and taking their advice) in pursuing all necessary Mega -Yacht Marina Permits (and specifically in taking all of the actions described ip subsections 7.6.1.2 through 7.6.1.5 below). 7.6.1.2. Flagstone shall diligently develop such detailed plans and specifications, drawings, schematics, sketches and other documentation with respect to a Mega -Yacht Marina (as defined above) as may be necessary or appropriate in connection with pursuing the Mega -Yacht Marina Permits (collectively, the "Mega -Yacht Marina Plans"). 7.6.1.3. Flagstone shall submit the Mega -Yacht Marina Plans to the Chief Executive Officer for his or her approval in accordance with the Chief Executive Officer Approval Procedures. 7.6.1.4. After approval of the Mega -Yacht Marina Plans by the Chief Executive Officer, with whatever modifications as are agreed upon, all subject to and in accordance with the Chief Executive Officer Approval Procedures, Flagstone shall submit the Mega - Yacht Marina Plans to all Governmental Authorities necessary to obtain the Mega -Yacht Permits (it being understood that the applicable Governmental Authorities include, but are not necessarily limited to, the State of Florida Department of Environmental Protection, the Army Corps of Engineers (the "Corns"), the South Florida Water Management District ("SFWMD") and the Miami -Dade County Department of Environmental Resources Management ("DERM"), and respond to and accommodate, in a commercially reasonable manner, any reasonable requests by such Governmental 22 GY&S/206223.16 02-13®4 Authorities for modifications to the Mega -Yacht Marina Plans. The Chief Executive Officer shall be informed, in writing, of such modifications by Flagstone, which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the notice indicating that City is to provide approval or denial with comments within ten (10) business days pursuant to this Section 7.6.1.4. The Chief Executive Officer shall have ten (10) business days from the date of receipt of such notice to review the modifications and advise Flagstone in writing that the modifications are disapproved. If notice of disapproval is not delivered within the ten (10) Business Day period, Flagstone shall give a written reminder notice to the Chief Executive Officer. If notice of disapproval is not delivered within five (5) Business Days after such reminder notice is given, the modifications shall be deemed approved. The notice to review and the reminder notice shall each contain legends at the top of the first page, in a typeface larger than that used elsewhere in the request, identifying the applicable required response time. 7.6.1.5. If Flagstone is able to obtain consensus among the staff of the applicable Governmental Authorities for the Mega -Yacht Marina Plans, Flagstone shall (a) submit the Mega -Yacht Marina Plans (as same may be modified as described above) and an application for a Class I Permit for the Mega -Yacht Marina (the "Class I Permit Application') to the Miami -Dade County Board of County Commissioners (the "Board") for final approval for the construction and operation of the Mega -Yacht Marina substantially in accordance with such Mega -Yacht Marina Plans, and have its representatives attend the hearing before the Board concerning same and attempt to persuade the Board to approve same; and (b) submit to the other applicable Governmental Authorities, including the SFWMD and the Corps., the Mega Yacht Marina Plans and the appropriate application(s) required for the issuance of the applicable Mega -Yacht Marina Permits and Flagstone shall thereafter follow up with such application(s) including, but not limited to, appearing before the SFWMD Governing Board, until such Mega -Yacht Marina Permit(s) are issued by such Governmental Authorities. 7.6.2. Notice and Meetings with City.Flagstone shall provide City with at least seven (7) days prior written notice of any meeting with the staff of applicable Governmental Authorities. City shall have the right to have a representative present (by telephone or in person) at each such meeting. In addition, Flagstone shall provide City with copies of 23 GY&S/208223.16 02-1304 any written correspondences between Flagstone and such Governmental Authorities in connection with the "best efforts" steps described in Section 7.6.1 above. 7.6.2.2. Flagstone hereby agrees to have monthly meetings with City's designated representatives to discuss the status of Flagstone's "best efforts", and to keep City regularly apprised through written updates as to what "best efforts" have been and are being taken by Flagstone in order to satisfy its obligations in Section 7.6.1 above and the status thereof. If, after any such monthly meeting or after City receives any such written update, City believes, reasonably and in good faith, that Flagstone is not using its best efforts as described in subparagraph (c) above, City shall, within seven (7) Business Days after receiving any such meeting or written update, give written notice to Flagstone stating with particularity City's belief and the specific basis for such belief. If City fails to give such written notice within such seven (7) Business Day period, the actions by Flagstone which are described in such meeting or written update shall , be deemed to constitute best efforts as described in Section 7.6.1 above up to the last step taken by Flagstone as described in such meeting or written update, and City shall not be entitled to submit to arbitration the question of whether such actions by Flagstone constitute best efforts. 7.6.2.3. Notwithstanding the foregoing, Flagstone shall not be required to accept any unreasonable conditions for approval which would compromise the feasibility of the proposed Mega -Yacht Marina or place unreasonable financial or economic burdens on Flagstone (either in terms of increased costs or reduced income) or unreasonable covenants, conditions and/or restrictions with respect to the development and operation of the proposed Mega -Yacht Marina. 7.6.3. Notice of Failure to Obtain Mega -Yacht Marina Permits. In the event Flagstone is unable, after using such best efforts, to obtain all of the Mega -Yacht Marina Permits then Flagstone shall provide written notice thereof to City. If City agrees that Flagstone has used such best efforts and the Mega -Yacht Marina Permits cannot be obtained, then, the term "Marina" as used herein and in the Lease shall mean such marina as Flagstone is able to construct and operate based on the existing marina permits or such other permits and approvals from Governmental Authorities Flagstone is able to obtain, and Flagstone shall develop and/or operate such Marina subject to and in accordance with the terms and conditions of the Lease. If City does not agree that Flagstone has used such best efforts to obtain the Mega -Yacht Marina Permits, then no later than thirty (30) days after City's receipt of written 24 GYBS/208223.16 02-1304 notice from Flagstone, City shall provide written notice to Flagstone that City is submitting the matter to arbitration in accordance with Section 7.6.4 below; provided, however that City shall not be entitled to submit the matter to arbitration to the extent Section 7.6.2.2 provides otherwise. 7.6.4. Arbitration. If at any time (including, without limitation, at the time Flagstone provides written notice to City that Flagstone is unable to obtain the Mega -Yacht Marina Permits) City believes in its good -faith reasonable judgment that Flagstone has not or is not using "best efforts" to obtain the Mega -Yacht Marina Permits, then City shall refer such dispute to final and binding arbitration, before a single arbitrator (the "Arbitrator"), under the commercial arbitration rules of the American Arbitration Association in Miami -Dade County, Florida. In determining whether Flagstone has used its best efforts as described in Section 7.6.1 above, the Arbitrator may consider whether Flagstone should pursue any administrative appeals. In no event shall Flagstone be required to pursue litigation (although it may, at its option, elect to do so). The Arbitrator shall be selected by the parties and if the parties are unable to reach agreement on selection of the Arbitrator within ten (10) days after the notice of arbitration is served, then the Arbitrator will be selected by the American Arbitration Association. All documents, materials, and information in the possession of a party to this Agreement and in any way relevant to the claims or disputes shall be made available to the other parties for review and copying not later than 30 days after the notice of arbitration is served. To the extent that a party would be required to make confidential information available to any other, an agreement or an order shall be entered in the proceeding protecting the confidentiality of and limiting access to such information before a party is required to produce such information. Information produced by a party shall be used exclusively in the arbitration or litigation that may arise, and shall not otherwise be disclosed. The decision of the Arbitrator shall be final, binding and conclusive upon the parties and their respective administrators, personal representatives, legal representatives, heirs, successors and permitted assigns. ARTICLE S. COORDINATION WITH CITY; APPROVAL PROCEDURES. 8.1. Coordination with City. 8.1.1. Ombudsman. City shall appoint an internal representative who is experienced and qualified to (i) report directly to the Chief Executive Officer, (ii) have authority to coordinate, expedite and respond for the City on behalf of the Chief Executive Officer with respect to construction and development issues through the final permitting process; and (iii) have authority to coordinate on behalf of the City tenant -related issues among the various tenants of Watson Island (the "Ombudsman"). Among other things, the Ombudsman shall (i) lead and set schedules for the internal City review process 25 GYBS/208223.16 c —1304 with respect to Construction Plans and Specifications, (ii) after the Lease Delivery Date. expedite and help deliver construction inspection approvals (including building and fire department approvals), (iii) after the Lease Delivery Date, monitor and inspect the development and construction process on City's behalf and (iv) otherwise represent and assist the City in coordinating the City's roles and responses and approvals. 8.1.2. City Consultant. In addition to the Ombudsman, City, at the request of Flagstone, shall retain on its behalf but at the sole cost and expense of Flagstone (which costs shall be mutually acceptable to the parties), an outside, qualified construction, development and fire and building consultant(s) who shall be mutually agreeable to City and Flagstone (individually or collectively, the "Consultant") to coordinate and assist in the development process and advise Ombudsman and Chief Executive Officer. Responsibilities of the Consultant shall include the review of plans and development issues, assistance with permitting and inspection issues during the construction and development process and recommendations directly to Chief Executive Officer and Ombudsman. Flagstone shall provide on- site desk, telephone and storage space to the Consultant. 8.1.3. Cooperation. Flagstone shall cooperate fully with the Ombudsman and Consultant, and shall promptly forward to same complete copies of plans and specifications and other reports and information customarily provided to an institutional mortgage lender, and such other information and materials as may be reasonably requested by the Ombudsman, Consultant or City. No inspection performed by the Ombudsman and Consultant with respect to the Pre -Development Work shall impose upon City any responsibility or liability for any failure by Flagstone to observe any requirements or safety practices in connection with such construction work, or constitute an acceptance of any work which does not comply with the provisions of this Agreement. Ombudsman and Consultant shall provide copies to Flagstone of all reports and records concerning construction inspections. 8.2. Chief Executive Officer Approval Procedures. Any matter requiring Chief Executive Officer approval under this Agreement or in connection with the Project (any such matter, an "Approval - Requiring Matter") shall be subject to the procedures set forth in this 7_5. The following shall apply with respect to all approvals requested by Flagstone from the Chief Executive Officer: 8.2.1. Except for those instances in Section 33 where approval may be withheld by the Chief Executive Officer his or her "sole discretion" or "sole and absolute discretion", any other approvals to be given by the Chief Executive Officer hereunder shall not be unreasonably withheld; 26 GY&S/208223.16 02-1304 8.2.2. Approval or denial responses shall be given within fourteen (14) days (provided that for submissions which require the review of Construction Plans and Specifications or new modifications thereof which are not merely items that follow from or are consistent with prior approvals already given, thirty (30) days shall be given) of submission to Chief Executive Officer of the last piece of materially necessary written information; provided, however, that (i) submission of any Approval - Requiring Matter shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the request for approval indicating that City is to provide approval or denial with comments within fourteen (14) days (or thirty (30) days, as applicable) pursuant to this Section U.2, (ii) Flagstone shall promptly submit to City any additional information or materials requested by City (provided that such request: (a) shall be made by City no later than seven (7) calendar days of receipt by City of Flagstone's initial submission; (b) shall be for information which is materially necessary for the purpose of aiding the City's review of the original submission; and (c) shall be limited to no more than two (2) times for any such request for additional submission), and (iii) the fourteen (14) day approval period (or thirty (30) day, as applicable) shall not commence until such additional information and materials are received by City; 8.2.3. Notice of denial shall be accompanied by reasonably specific written comments as to the reasons for such denial and what alternatives might be acceptable to City. Denial of approval of any Approval -Requiring Matter may be based on any reasonable grounds; however, denial may not be given with respect to, or materially inconsistent with, any approval previously given to Flagstone; 8.2.4. Approval or denial with comments of any resubmission of an Approval - Requiring Matter shall be given within seven (7) business days provided that such resubmission of any Approval -Requiring Matter shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the request for approval indicating that City is to provide approval or denial with comments within seven (7) business days pursuant to this Section 8.2.4; 8.2.5. In the event that the City has not provided its approval or denial with comments to Flagstone in accordance with the time -frames set forth above, then Flagstone shall provide a written reminder notice to City which specifies that City has five (5) days to so respond to such submission, which reminder notice shall include a legend at the top of the first page in a type face larger than that used elsewhere in the reminder notice indicating that City is to provide approval or denial with comments within five (5) days pursuant to this Section 8.2.5. In the event that City does not then respond within such five (5) day period, such matter shall be deemed approved by City; and 27 GYBS/208223.16 2-13€ 4 8.2.6. If materials resubmitted by Flagstone in connection with any construction related issue, which conform to all written comments, are not subsequently approved, disagreements may be submitted to binding, expedited arbitration. 8.3. Chief Executive Officer Approvals: Disclaimer. Notwithstanding anything to the contrary contained in this Agreement, Flagstone acknowledges that any approvals by the Chief Executive Officer of any Approval -Requiring Matter shall in no event be deemed to be a guarantee of the City Commission's or any other governmental or quasi -governmental agencies' approval of such Approval - Requiring Matter. Any approval by the Chief Executive Officer of an Approval -Requiring Matter shall be made solely in City's capacity as the owner of the Property and not in any governmental capacity and Flagstone shall remain responsible for obtaining whatever permits, licenses and approvals may be necessary to improve the Property in accordance with any such Approval -Requiring Matter, as well as all Applicable Laws. In addition, approval by the Chief Executive Officer of any Approval -Requiring Matter shall not constitute a warranty or representation by City that the Project Components meet all government requirements or building codes nor that such plans will, if followed, result in properly designed or constructed Project Components or that any Project Component built in accordance therewith will be built in a good or workmanlike manner. Notwithstanding anything contained to the contrary in this Agreement, the parties recognize and agree that certain provisions of this Agreement may require the City and/or its boards, departments or agencies, acting in their governmental capacity, to consider certain changes in applicable City codes, ordinances, plans or regulations, as well as to consider other governmental actions. All such considerations and actions shall be undertaken in accordance with established requirements of state statute and City ordinances, in the exercise of the City's jurisdiction under the police power. Nothing in this Agreement is intended to limit or restrict the powers and responsibilities of the City in acting on applications for Project Approvals and/or other permits and approvals which may be required in connection with the Project by virtue of the fact that the City may have consented to such applications as a property owner hereunder. The parties further recognize and agree that these proceedings shall be conducted openly, fully, freely and fairly in full accordance with law and with both procedural and substantive due process to be accorded the applicant and any member of the public. Nothing contained in this Agreement shall entitle Flagstone to compel the City to take any such actions, save and except the consents to the filing of such applications for MUSP Approvals, land use approvals or other required approvals, as more fully set forth herein, and to timely process such applications. 28 GYBS/208223.16 02-1304 ARTICLE 9. DISCHARGE OF LIENS. 9.1. No Liens. Flagstone shall use reasonable efforts to not create or permit to be created any Liens upon the Property or any part thereof. 9.2. Dischamine Liens. If any Lien shall at any time be filed against the Property, or any part thereof, within forty-five (45) days after notice of the filing thereof, Flagstone shall cause the same to be discharged or transferred to bond in accordance with the requirements of law. If Flagstone fails to cause such Lien to be discharged or transferred to bond within such forty-five (45) day period, then City may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such Lien by deposit or by bonding proceedings, or by any other manner permitted by law (provided, however, that before City pays any amounts on behalf of Flagstone in connection herewith, City shall provide Flagstone five (5) days prior written notice of its intent to so do so hereunder). Any amount so paid by City and all costs and expenses incurred by City in connection with the discharge of such Lien shall be reimbursed to City by Flagstone, together with interest thereon at the highest lawful rate permitted by law from the date of City's making of any such payment or incurring of any such costs and expenses until paid. City shall notify Flagstone in writing of the dates and amounts of any such payments, and Flagstone shall reimburse City within seven (7) calendar days following receipt of such notification. ARTICLE 10. CONDEMNATION. 10.1. Material Taking. If at any time prior to the Lease Delivery Date the whole or any portion of the Property which would have a material impact on the Project (as reasonably determined by Flagstone and City) shall be taken by the exercise of the right of condemnation or by agreement between City, Flagstone and those authorized to exercise such right, this Agreement shall, upon the written election of either party, terminate and expire as of the date of such election. 10.2. Less than a Material Taking. If at any time prior to the Lease Delivery Deadline, a portion of the Property which does not have a material impact on the Project (as reasonably determined by Flagstone and City) shall be taken by any lawful power or authority by the exercise of the right of condemnation or by agreement between City, Flagstone and those authorized to exercise such right, this Agreement shall not terminate in connection with the exercise of such right and shall continue in full force and effect. 29 GY&S/208223.16 02-13+0 10.3. Award. The award or awards received in consideration of any taking (material or non- material) shall be allocated between the parties based upon the parties' respective interests under this Agreement and the Ground Lease. Each party shall bear its own expenses of negotiation and litigation with respect to the award or awards unless the parties agree to share certain expenses, in which event the shared expenses shall be allocated between (and paid from) the proceeds thereof, in the ratio in which the amount of the gross award payable to each party bears to the total thereof. ARTICLE 11. DEFAULT AND REMEDIES. 11.1. Events of Flaestone's Default. Each of the following events shall be an "Event of Flaestone's Default" hereunder: 11.1.1. The failure of Flagstone to perform or observe any of the covenants, conditions and agreements on the part of Flagstone to be performed hereunder within thirty (30) days after written notice of such failure; 11.1.2. If Flagstone (a) shall suffer or permit to be entered a decree or order of a court or agency or supervisory authority having jurisdiction determining it to be insolvent or providing for the appointment of a conservator, receiver, liquidator, trustee or any similar Person or entity appointed in connection with any insolvency, readjustment of debt, marshaling of assets and liabilities, bankruptcy, reorganization or similar proceedings of or relating to it or of or relating to all, or substantially all, of its property, or for the winding -up or liquidation of its affairs and such proceedings remain undismissed or pending and unstayed for a period of ninety (90) days or (b) shall suffer or permit to be instituted proceedings under any law relating to bankruptcy, insolvency or the reorganization or relief of debtors to be instituted against it and such proceedings remain undismissed or pending and unstayed for a period of ninety (90) days; 11.1.3. If Flagstone shall (a) consent to the appointment of a conservator, receiver, trustee, liquidator or custodian in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to it or of or relating to all, or substantially all, of its property or for the winding -up or liquidation of its affairs, (b) admit in writing its inability to pay its debts generally as they become due, (c) file a petition, or otherwise institute, or consent to the institution against it of, proceedings to take advantage of any law relating to bankruptcy, insolvency or reorganization or the relief of debtors, or (d) make an assignment for the benefit of its creditors; 30 GYBS/206223.16 02-1304 11.1.4. If Flagstone shall be dissolved without City having permitted a successor to the rights of Flagstone under this Agreement; or 11.1.5. Any express, material representation made hereunder shall prove to have been incorrect in any material respect when made. 11.2. Remedies for Flagstone's Default. If an Event of Flagstone's Default shall occur, City shall have the right to terminate this Agreement and require full distribution of the Agreement Security to City as liquidated damages as and for its sole remedy hereunder, it being agreed that the Agreement Security represents a reasonable endeavor by the parties to ascertain that said sums would be the minimal damages suffered by City upon the occurrence of an Event of Flagstone's Default hereunder. 11.3. City's Default. If City fails to perform or observe any of the covenants, conditions and agreements on the part of City to be performed hereunder within thirty (30) days after written notice of such failure, then Flagstone may, provided that an Event of Flagstone's Default has not occurred, at its option: (i) terminate this Agreement and require full distribution of the Agreement Security to Flagstone; or (ii) pursue the remedy of specific performance. Flagstone waives all other remedies it may have against City at law or in equity. ARTICLE 12. REPRESENTATIONS BY FLAGSTONE AND CITY, DEFENSE AND RELEASE. 12.1. Flagstone's Representations. Flagstone hereby represents and warrants to City that: 12.1.1. Existence and Capacity. Flagstone is a duly organized and validly existing limited liability company in good standing under the laws of State of Florida. Flagstone has full power and capacity to carry on its business as presently conducted by Flagstone, and to enter into this Agreement and the transactions contemplated by this Agreement. 12.1.2. Financial Resources and Evaluation of Project. To the best of Flagstone's knowledge: (i) Flagstone has access to sufficient funds to satisfy the Initial Equity Requirement; (ii) as of the Lease Delivery Date, Flagstone will have closed upon an Initial Construction Loan; and (iii) the total of such sums will be sufficient to carry out the development and construction of the Project and to operate the Project Components and comply with the terms and conditions of this Agreement and the Ground Lease. Flagstone has done such studies and has made such evaluations as it deems appropriate regarding the tourism and local markets in the area surrounding Watson Island and has deemed it desirable to invest in the Project, recognizing the risks inherent therein. Flagstone acknowledges that the City shall not be 31 GYBS/208223.16 02-1304 liable under this Agreement for any actions taken by the City, acting in its municipal capacity, including. without limitation, any actions which may adversely impact tourism, crime, the local economy, the success of this Project, etc., and that in no event shall any actions taken by the City in its municipal capacity be the basis for any cause of action or defense of any obligation by Flagstone hereunder. This section shall survive any termination of this Agreement. 12.1.3. Binding Obligations. This Agreement constitutes the valid and binding obligations of Flagstone, enforceable against Flagstone in accordance with its terms. 12.2. City's Representations. City hereby represents and warrants to Flagstone that the Property is free of any encumbrance or restriction other than those disclosed in Exhibit 12.2 attached hereto (the "Permitted Title Exceptions'). City shall maintain the Property in its present condition, ordinary wear and tear excepted, and except for the matters set forth in Section 73 and the Permitted Title Exceptions, City shall not permit any liens or other encumbrances to be filed against the Property. 12.3. Disclaimer of Representations by Flagstone. Flagstone hereby expressly acknowledges and agrees that, in connection with the Watson Island RFP or otherwise: 12.3.1. City makes and has made no warranty or representation whatsoever as to the condition or suitability of any portion of the Property for Flagstone's purposes; 12.3.2. City makes and has made no warranty, express or implied, with regard to the accuracy of any information furnished to Flagstone, and City shall not be bound by any statement of any broker, employee, agent or other representative of City; 12.3.3. City has made no representations, warranties or promises to Flagstone not explicitly set forth herein. 12.3.4. City makes and has made no representation or warranty, express or implied, with regard to the likelihood that the remainder of Watson Island will be developed or as to the precise type, or quality of improvements that will be constructed thereon or the timing of the same; and 12.3.5. City makes and has made no representation or warranty, express or implied, concerning any portion of the Property, their condition or any other thing or matter directly or indirectly related thereto or hereto including, without limitation, no warranty, merchantability, or fitness for any particular purpose or relating to the absence of latent or other defects. 32 GYBS/2OM3.16 02-304 12.3.6. Defense and Release. The parties believe that this Agreement and the form of Ground Lease attached hereto are consistent in all material respects with the Watson Island RFP and Island Gardens Proposal. Nevertheless, Flagstone acknowledges and agrees that the Watson Island RFP, the Island Gardens Proposal, this Agreement and/or the Ground Lease may be challenged by private third parties for various reasons. Flagstone agrees to defend City, its officials, employees, agents and representatives against any and all claims arising from, out of or in connection with or otherwise relating to any such challenge. Furthermore, Flagstone acknowledges and agrees that City shall have no liability whatsoever to Flagstone or any Investors in Flagstone and/or the Project in connection with any such challenge or otherwise and notwithstanding that the foregoing acknowledgement that City shall have no such liability, Flagstone hereby forever waives and releases City from any such liability, now or hereafter arising. The foregoing defense obligations of Flagstone and release shall survive any expiration or termination of this Agreement. ARTICLE 13. MISCELLANEOUS. 13.1. Assisnment. 13.1.1. By Flagstone. In no event shall Flagstone be permitted to assign its rights and/or obligations under this Agreement (it being understood that in no event shall the foregoing be deemed to prohibit Flagstone from obtaining equity investments therein, subject to the provisions of Section 6.13). 13.1.2. By City. In no event shall City be permitted to assign its rights and/or obligations under this Agreement. 13.2. Notices. Any notices or communications under this Agreement between the parties shall be in writing and delivered to the persons at the addresses specified for notices to such parties in the Ground Lease. All notices shall be deemed received when actually delivered, if delivered by hand, facsimile transmittal or by a nationally recognized overnight delivery service. Each party may substitute one or more times the persons and the addresses to whom notices and communications shall be sent to, but such change shall not be effective until the other party receives such communication in accordance with this Section 13.2. 13.3. Applicable Law. This Agreement shall be governed by the laws of the State of Florida. 13.4. Severability. If any term, covenant or condition of this Agreement or the application thereof to any Person or circumstances shall, to any extent, be determined by the appropriate judicial authority to be illegal, invalid, or unenforceable, the remaining terms, covenants and conditions of this 33 GYBS/208223.16 2-1304 Agreement, or application of such terms, covenants or conditions to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term, covenant, or condition of this Agreement shall be bound and enforced to the fullest extent possible by law. 13.5. Waiver. No waiver of any term, provision, condition or covenant of this Agreement by any party shall be deemed to imply or constitute a further waiver by such party of any other term, provision, condition or covenant of this Agreement. 13.6. Third -Party Beneficiary. Nothing contained in this Agreement shall be construed so as to confer upon any other party the rights of a third party beneficiary. 13.7. Enforcement Costs. If any civil action, arbitration or other legal proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees, court costs and all expenses (including, without limitation, all such fees, costs and expenses incident to arbitration, appellate, bankruptcy and post judgment proceedings), incurred in that civil action, arbitration or legal proceeding, in addition to any other relief to which such party or parties may be entitled. Attorneys' fees shall include, without limitation, paralegal fees, investigative fees, administrative costs and all other charges billed by the attorney to the prevailing party. 13.8. Entire Agreement. This Agreement represents the entire agreement between the parties hereto. It supersedes any and all previous agreements and understandings, whether written or oral, between the parties. No representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied or described in this Agreement shall be of any force or effect. No modification or amendment of this Agreement shall be binding upon the parties unless such modification or amendment is in writing and is signed by the party to be bound thereby. 13.9. Beadings. The titles of the several clauses and parts of this Agreement are inserted for convenience of reference only and shall be disregarded when construing or interpreting any of its provisions. 13.10. Refe_ rences. Except as otherwise specifically indicated, all references to Article, Section and Subsection numbers refer to Articles, Sections and Subsections of this Agreement and all references to Exhibits refer to the Exhibits attached hereto, which exhibits are incorporated herein by this reference. The words "herein", "hereof', "hereunder", "hereinafter" and words of similar import refer to this 34 GY&S/208223.16 02-1304 Agreement as a whole and not to any particular Article, Section or Subsection of this Agreement. Unless expressly stated to the contrary, reference to any Article includes all of the Sections contained therein, and reference to any Section includes the Subsections contained therein. The terms "include" and "including" shall be construed as if followed by the phrase "without being limited to." 13.11. Brokers. Each of the parties represents and warrants that such party has dealt with no broker or finder in connection with any of the transactions contemplated by this Agreement, and, insofar as such party knows, no broker or other Person is entitled to any commission or finder's fee in connection with any of these transactions. The parties each agree to indemnify, defend and hold harmless one another against any loss, liability, damage, cost, claim or expense incurred by reason of any brokerage commission or finder's fee alleged to be payable because of any act, omission or statement of the indemnifying party, which indemnification shall survive any termination of this Agreement. 13.12. No Partnership or Joint Venture. Nothing contained in this Agreement is intended or shall be construed in any manner or under any circumstances whatsoever as creating or establishing a partnership or a joint venture between City and Flagstone, or as constituting Flagstone as the agent or representative of City or City as the agent or representative of Flagstone for any purpose or in any manner whatsoever. 13.13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding upon any party so confirming. [SIGNATURES FOLLOWI 35 GYBS/208223.16 02-1304 IN WITNESS WHEREOF, City and Flagstone have caused this Agreement to be executed as required by law as of the date set forth beside the parties signatures below. THE CITY OF MIAMI, a municipal corporation of the State of Florida Attest: By: Name: Name: Title: Title: Date: APPROVED AS TO FORM: By: Name: Title: FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company Attest: By: Name: Name: Title: Title: Date: 36 GY&SJ208223.16 02-1304 Exhibit A Legal Description of the Property GY&Sr208223.16 2 - 13 0 4 LEGAL DESCRIPTION OF UPLAND PARCEL Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62'00' 00 seconds" ; thence South 59 3 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17 3 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North 173 12'21" West continuing along said bulkhead line a distance of 924.70 feet to the Southerly tight of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 893 10' 55" East, a distance of 73.08 feet; thence North 86 3 44' 00" East, a distance of 67.09 feet to non. tangent curve concave to the Northeast whose radial line bears North 393 29' 18" East having a radius of 160.00 feet and central angle of 22 3 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72 3 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46 3 17' 39" thence along said curve an arc length of 484.79 feet to a point of tangency; thence South 26 ' 22' 36" East continuing along the southwesterly right of way line of State Road A 1-A, a distance of 196.59 feet; thence South 54 ; 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35 3 54' 03" West, a distance of 132.74 feet; thence South 54 3 07' 39" West, a distance of 150.14 feet to the point of beginning. 02-1304 LEGAL DESCRIPTION OF SUBMERGED PARCEL Commence at a point marked by an 518" diameter iron rod and Cap Stamped F.D.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A, I -A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706- 112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62100'00"; thence South 59151'26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17' 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 493 3257" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and position by coordinatds North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 3 03'50" West, along the limits of said turning basin a distance of 428.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03 3 27'54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10,716.59 feet, a radial line to said point bears South 01 3 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02 3 04' 17" to a point of tangency; thence South 89 3 10' 55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point of intersection with an existing bulkhead line; thence South 17' 12'21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. 02-1304 Exhibit B Definitions Any capitalized term used but not defined in this Agreement, including, without limitation, this Exhibit B, shall have the meanings assigned to the same in the Ground Lease. 1.1 "AAA" shall have the meaning ascribed to such term in Section 6.1.10 of this Agreement. 1.2 "Additional Deposit" shall have the meaning ascribed to such term in Section 5.2 of the Agreement. 1.3 "Additional LOC" shall have the meaning ascribed to such term in Section 5.2 of the Agreement. 1.4 "Additional Security" shall mean and refer to either the Additional Deposit or the Additional LOC as elected by Flagstone pursuant to Section 5.2. 1.5 "Amement" shall mean and refer to this "Agreement to Enter into Ground Lease" by and between City and Flagstone. 1.6 "Agreement Security" shall mean and refer to the Initial Security and the Additional Security collectively. 1.7 "Approval -Requiring Matter" shall have the meaning ascribed to such term in 7_5 of this Agreement. 1.8 "Board of Trustees" shall have the meaning ascribed to such term in Section 4.2.5 of this Agreement. 1.9 "Chief Executive Officer" means the administrative head of the City's government who is authorized to execute this Agreement and other documents, including notices required hereunder. 1.10 "Chief Executive Officer Approval Procedures" shall mean and refer to the procedures for submittal by Flagstone and review and approval by the Chief Executive Officer of any Approval - Requiring Matter as described in Section 8.2 hereof. 1.11 "City" shall have the meaning ascribed to such term in the first paragraph of this Agreement. 1.12 "Construction Plans and Specifications" shall have the meaning ascribed to such term in Section 6.1.1 of this Agreement. 1.13 "DCA" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.14 "Development Plans" shall have the meaning ascribed to such term in Section 7.1 of this Agreement. 1.15 "Development Team" shall have the meaning ascribed to such term in Section 6.1.4 of this Agreement. 1.16 "Disclosed Investors" means all Investors other than Non -Disclosed Investors. GYBS/208223.16 a2 -12A4 1.28 "Initial Security" shall mean and refer to either the Initial Deposit or the Initial LOC as elected by Flagstone pursuant to Section 5.1. 1.29 veto s " means: (i) all Persons now or hereafter having an equity interest in the Project; (ii) any direct or indirect legal or beneficial owners of interests in all of the equity investors in the Project; and (iii) holders of any note, debenture, mortgage or other security instrument in any Project Component(s) and/or Flagstone, other than an Approved Lender (as defined in the Ground Lease). 1.30 "Investor List" shall have the meaning ascribed to such term in Section 4.13 of this Agreement 1.31 "Investor Ouestionnaire 'means a questionnaire prepared by the Financial Advisor as part of the initial screening process for Disclosed Investors, the form of which shall have been mutually agreed upon by the Financial Advisor, the Chief Executive Officer and Flagstone. 1.32 "Island Gardens Proposal" shall mean and refer to Flagstone's proposal to the City in response to the Watson Island RFP, entitled "Island Gardens at Watson Island RFP" dated July 13, 2001. 1.33 "Lease Delivery" shall have the meaning ascribed to such term in the first 'paragraph of ARTICLE 6 of this Agreement. 1.34 "Lease Delivery Date" shall have the meaning ascribed to such term in the first paragraph of ARTICLE 6 of this Agreement 1.35 "Lien" shall mean and refer to any and all liens, encumbrances, mortgages, pledges, security interests, collateral assignments or charges of any kind, which might be or become a lien upon the Property or any part thereof. 1.36 "Major Use Special Permit" has the meaning ascribed to it in Article 17 of Ordinance 11000, as amended, the Zoning Ordinance of the City of Miami, Florida. 1.37 "MUSP Application" means any and all of the information required or otherwise necessary in connection with the obtaining of the Major Use Special Permit. 1.38 "MUSP Approval" shall have the meaning ascribed to such term in Section 4.2.1 of this Agreement. 1.39 "NOPC" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.40 "NOPC Application" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.41 "NOPC Approval" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.42 "Operating Team" shall have the meaning ascribed to such term in Section 6.1.5 of this Agreement GYBS/208223.16 u2-1304 Form Ground Lease GY&S/206223.16 02-1304 GROUND LEASE BETWEEN THE CITY OF MIAMI, FLORIDA AND FLAGSTONE ISLAND GARDENS LLC DATED AS OF #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 TABLE OF CONTENTS ARTICLE I INCORPORATION, EXHIBITS AND DEFINITIONS..........................................................2 Section 1.1 Incorporation by Reference....................................................................................2 Section1.2 Exhibits..................................................................................................................3 Section 1.3 Singular, Plural And Gender..................................................................................4 Section 1.4 Section References.................................................................................................4 Section1.5 Defined Terms.......................................................................................................4 ARTICLEII DEMISE................................................................................................................................14 Section2.1 Demise.................................................................................................................14 Section 2.2 Leasehold Improvements.....................................................................................14 Section 2.3 Delivery of Title to Lessor...................................................................................15 ARTICLEIII TERM...................................................................................................................................15 Section3.1 Initial Term..........................................................................................................15 Section3.2 Extension Terms..................................................................................................16 ARTICLE IV DELIVERY OF POSSESSION AND DEVELOPMENT AND OPERATION OF THEPROJECT..............................................................................................................................17 Section 4.1 Delivery of Possession of Property ......................................................................17 Section4.2 Memorandum....................................................................................:..................17 Section 4.3 Development of the Project..................................................................................17 Section4.4 Operating Team...................................................................................................18 ARTICLE V RENT AND SECURITY DEPOSIT.....................................................................................19 Section 5.1 Construction Rent................................................................................................19 Section5.2 Base Rent.............................................................................................................19 Section 5.3 Percentage Rent. •••••••••••••••••••21 Section5.4 Security Deposit...................................................................................................22 Section5.5 Place Of Payment.................................................................................................24 Section5.6 Default Interest.....................................................................................................25 Section5.7 Late Charge..........................................................................................................25 Section 5.8 Rent To Be Without Deduction...........................................................................25 ARTICLE VI LEASEHOLD AND SUBLEASEHOLD MORTGAGES..................................................26 Section 6.1 Definition of Terms..............................................................................................26 Section 6.2 Prohibited Mortgages...........................................................................................33 Section 6.3 Permitted Mortgages............................................................................................34 Section 6.4 Notification of Lessor..........................................................................................34 Section6.5 Foreclosure...........................................................................................................35 Section6.6 New Lease............................................................................................................36 Section 6.7 Major Subleasehold Estates.................................................................................38 Section 6.8 Liability of Approved Mortgagee........................................................................39 Section 6.9 Assignment of Development Plans and Project Approvals.................................40 Section6.10 Survival................................................................................................................41 Section 6.11 Mezzanine Financing...........................................................................................41 Section 6.12 Purchase Money Financing.................................................................................43 ARTICLE VH USE OF SUBJECT PROPERTY.......................................................................................43 Section 7.1 Certain Conditions Of Leasing............................................................................43 Section 7.2 Major Subleases and Space Leases......................................................................43 Section 7.3 Permitted Uses; Long -Term Changes..................................................................44 Section 7.4 No Discrimination................................................................................................46 Section7.5 Use of the Property..............................................................................................46 Section 7.6 Leasehold Improvements to be Open to Public...................................................46 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone -1304 Section7.7 Safety...................................................................................................................47 Section 7.8 Continuous Operation..........................................................................................47 Section 7.9 Compliance with Laws.........................................................................................47 Section 7.10 Compliance with Insurance Requirements...........................................................48 Section7.11 Prohibited Uses....................................................................................................48 Section7.12 Casino Gambling.................................................................................................48 Section7.13 Signage.................................................................................................................51 Section 7.14 Cure of Defaults Under Approved Leasehold Mortgages and Approved Major Subleasehold Mortgages...........................................................................51 Section7.15 Enforceability.......................................................................................................52 ARTICLE VIII RESTRICTIONS ON TRANSFERS AND APPROVAL OF INVESTORS....................52 Section 8.1 Definition of Terms.............................................................................................. 52 Section8.2 Bayraktar Interests............................................................................................... 56 Section 8.3 Leasehold and Major Subleasehold Estates.........................................................57 Section 8.4 Chief Executive Officer Review and Approval Procedures.................................59 Section 8.5 Release from Liability..........................................................................................61 Section 8.6 No Consent Required for Affiliate or Related Party Transfer .............................61 Section 8.7 Mortgages, Leases and Subleases........................................................................62 Section8.8 Going Public........................................................................................................63 Section 8.9 .............................. Other Transactions for Which No Consent Is Required ........63 Section8.10 Violation..............................................................................................................63 Section 8.11 Acceptance of Rent from Transferee...................................................................63 Section 8.12 Lessor's Participation In Proceeds.......................................................................64 Section 8.13 Organizational Documents of Lessee..................................................................65 Section8.14 Investors...............................................................................................................65 Section 8.15 Chief Executive Officer's Right to Object...........................................................66 Section 8.16 Transfers of the City's Interest.............................................................................66 ARTICLE IX EASEMENTS AND LICENSES.........................................................................................67 Section 9.1 Utility Easements.................................................................................................67 Section 9.2 Easements in Favor of Lessee..............................................................................68 Section 9.3 Access Easement in favor of the Public...............................................................69 Section 9.4 Duration of Easements.........................................................................................69 Section 9.5 Dredging to Facilitate Safe Passage of Vessels...................................................69 Section 9.6 Confirmatory Instruments....................................................................................69 ARTICLE X PAYMENT OF IMPOSITIONS...........................................................................................70 Section 10.1 Payment of Impositions.......................................................................................70 Section 10.2 Taxes on Lessor...................................................................................................70 Section 10.3 Lessee's Right to Contest Impositions ..................... Section 10.4 Proof of Payment................................................................................................. 71 ARTICLEXI INSURANCE.......................................................................................................................71 Section 11.1 Insurance on the Leasehold Improvements..........................................................71 Section 11.2 Other Insurance To Be Carried............................................................................73 Section 11.3 Policies Obtained by Independent Contractors....................................................76 Section 11.4 Policies Obtained by Major Subtenants...............................................................77 Section 11.5 Delivery of Insurance Policies.............................................................................77 Section 11.6 Lessor's Right to Obtain...................................................................................... 78 Section 11.7 Insurer To Be Approved; Premium Receipts.......................................................78 Section 11.8 Waiver of Subrogation......................................................................................... 78 ARTICLE XII RECORDS AND AUDITING............................................................................................79 Section 12.1 Records of Sales...................................................................................................79 Section12.2 Audit....................................................................................................................80 u #217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone 02-1304 ARTICLE XIII REPRESENTATIONS AND COVENANTS...................................................................82 Section 13.1 Limited Representations by Lessor......................................................................82 Section13.2 Authority ..............................................................................................................83 Section 13.3 Lessee's Representations and Covenants.............................................................83 Section 13.4 Disclaimer of Lessor's Representations...............................................................84 Section13.5 Survival................................................................................................................85 ARTICLE XIV REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS ....................85 Section 14.1 Maintenance and Repair.......................................................................................85 Section 14.2 Alteration and Modification to Leasehold Improvements After Completion of Leasehold Improvements.............................................................87 ARTICLE XV LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS; REIMBURSEMENT OF LESSOR FOR AMOUNTS SO EXPENDED......................................87 Section 15.1 Performance of Lessee's Covenants to Pay Money.............................................87 Section 15.2 Lessor's Right to Cure Lessee's Default..............................................................88 Section 15.3 Reimbursement of Lessor and Lessee..................................................................88 ARTICLE XVI DAMAGE OR DESTRUCTION...................................................................................... 89 Section 16.1 Definitions of Terms............................................................................................89 Section 16.2 Net Insurance Proceeds; Obligation to Fund Restoration Work .......................... 90 Section 16.3 Restoration Work.................................................................................................91 Section 16.4 Termination .......................................... 93 Section 16.5 No Other Right to Terminate...............................................................................93 Section 16.6 Rights of Approved Leasehold Mortgagee..........................................................93 Section16.7 Major Subleases...................................................................................................93 Section 16.8 Deferral of Base Rent...........................................................................................94 ARTICLE XVII ARBITRATION..............................................................................................................95 Section 17.1 Binding Arbitration..............................................................................................95 Section17.2 Procedures............................................................................................................95 Section 17.3 No Delay in Completion of Work........................................................................99 Section 17.4 Right of Approved Mortgage to Participate.........................................................99 ARTICLE XVIII MECHANICS' LIENS...................................................................................................99 Section18.1 Definition.............................................................................................................99 Section 18.2 No Consent by Lessor........................................................................................100 Section 18.3 Notice of No Liability of Lessor........................................................................100 Section 18.4 Inclusion in Memorandum of Lease..................................................................100 Section 18.5 Discharge of Mechanics' Liens..........................................................................100 Section18.6 Right to Contest.................................................................................................101 Section18.7 Releases................................................................................:.............................102 ARTICLE XIX COVENANT AGAINST WASTE; INSPECTION ........................................................102 Section19.1 Waste..................................................................................................................102 Section 19.2 Inspection of Property........................................................................................102 Section 19.3 Major Subleases and Space Leases....................................................................103 ARTICLE XX ENVIRONMENTAL LIABILITY...................................................................................104 Section 20.1 Definition of Terms............................................................................................104 Section 20.2 Environmental Obligations of Lessee................................................................106 Section 20.3 Lessee's Liability for Contamination During Lease Term................................107 Section20.4 Indemnity ..........................................................................................................107 Section20.5 Notices...................................................................................................... Section 20.6 ..107 Lessor's Remedies.............................................................................................108 Section 20.7 Phase I Environmental Assessment at End of Lease Term................................108 Section 20.8 Major Subleases and Space Leases....................................................................109 Section 20.9 Survival of Lessee's Obligations.......................................................................110 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone „ 4 ARTICLE XXI PUBLIC UTILITY CHARGES......................................................................................110 Section 21.1 Lessee to Provide and Pay for Utilities.......................................................... 110 Section 21.2 Compliance with Utility Services......................................................................110 Section21.3 Permits...............................................................................................................110 Section 21.4 No Obligation for Utilities not on Property .......................................................111 Section 21.5 Notice and Disclaimer as to Utility Services and Other Services ...................... III ARTICLE XXH INDEMNIFICATION AND RELEASE OF LESSOR .................................................112 Section 22.1 General Indemnification of Lessor Without Limitation of Any Other Indemnity Given Hereunder...............................................................................112 Section22.2 Defense..............................................................................................................112 Section 22.3 Lessor's Participation.........................................................................................112 Section22.4 No Limitation.....................................................................................................113 Section 22.5 Challenges to Lease...........................................................................................113 Section22.6 Survival..............................................................................................................113 ARTICLE XXIII LIEN FOR RENT AND OTHER CHARGES.............................................................113 Section23.1 Lien for Rent......................................................................................................113 Section 23.2 Other Liens.........................................................................................................114 Section 23.3 Limitations.........................................................................................................114 ARTICLEXXIV CONDEMNATION.....................................................................................................115 Section 24.1 Definition of Terms............................................................................................115 Section 24.2 Entire Property Taken by Condemnation ...........................................................116 Section 24.3 Part of Property Taken by Condemnation ..........................................................117 Section 24.4 Takings for Temporary Period........................................................................... 118 Section 24.5 Event of Lessee's Default..................................................................................119 Section 24.6 Rights of Approved Leasehold Mortgagee ........................................................119 Section 24.7 Major Subleases.................................................................................................120 ARTICLE XXV DEFAULT PROVISIONS.............................................................................................120 Section 25.1 Events of Default by Lessee...............................................................................120 Section 25.2 Remedies in Event of Lessee's Default.............................................................123 Section 25.3 Events of Default - Lessor.................................................................................125 Section25.4 Mitigation...........................................................................................................126 ARTICLE XXVI COVENANTS OF LESSOR AND LESSEE...............................................................127 Section 26.1 Partial Modification of Restrictions...................................................................127 Section 26.2 Civic Arts Endowment Trust.............................................................................128 ARTICLE XXVII QUIET ENJOYMENT................................................................................................129 Section 27.1 Quiet Enjoyment................................................................................................129 ARTICLE XXVIII LESSEE NOT TO ENCUMBER LESSOR'S INTEREST .......................................129 ARTICLE XXIX LIMITATION OF LIABILITY....................................................................................129 Section 29.1 Limitation of Liability of Lessee.......................................................................129 Section 29.2 Limitation of Liability of Lessor........................................................................130 ARTICLE XXX ESTOPPEL CERTIFICATES.......................................................................................131 Section 30.1 Estoppel Certificates from Lessee......................................................................131 Section 30.2 Certificates from Lessor.....................................................................................132 ARTICLEXXXI NO WAIVER...............................................................................................................133 Section 31.1 Delays in Exercising Rights...............................................................................133 Section 31.2 Waivers to be in Writing....................................................................................133 Section31.3 Receipt of Rent..................................................................................................133 Section31.4 Consents.............................................................................................................133 ARTICLE XXXII SURRENDER AND HOLDING OVER....................................................................134 Section 32.1 Surrender at End of Term...................................................................................134 Section 32.2 Rights Upon Holding Over................................................................................135 iv #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-1304 Section32.3 No Waiver..........................................................................................................135 Section32.4 Survival..............................................................................................................135 ARTICLE XXXM MAJOR SUBLEASES, SPACE LEASES AND APPROVED TIME SHARE LICENSES...................................................................................................................................136 Section 33.1 Leasing and Subleasing.....................................................................................136 Section 33.2 Non -Disturbance and Attornment......................................................................136 Section33.3 Major Subleases.................................................................................................136 Section 33.4 No Cross -Defaults Among Major Subleases .....................................................138 Section33.5 Space Leases......................................................................................................138 Section 33.6 Approved Time Share Licenses.........................................................................140 ARTICLE XXXIV MINORITY AND WOMEN PARTICIPATION AND EQUAL EMPLOYMENT OPPORTUNITIES..........................................................................................141 Section 34.1 First Source Hiring Agreement..........................................................................141 Section 34.2 Minority and Women Participation and Equal Employment Opportunity . ....... 141 Section 34.3 Skills, Training and Employment Center ...........................................................142 Section34.4 Tax Credits.........................................................................................................143 ARTICLE XXXV OPERATING AGREEMENTS FOR HOTELS AND MARINA ..............................143 Section35.1 Approval............................................................................................................143 Section 35.2 Approved Operators...........................................................................................143 Section35.3 Terms..............................................................................................:..................143 Section 35.4 Non -Disturbance and Attornment Agreement ...................................................144 ARTICLE XXXVI UNAVOIDABLE DELAY.......................................................................................144 Section 36.1 Unavoidable Delay(s)........................................................................................144 Section 36.2 Manner of Notice of Unavoidable Delay(s) and Conditions With Respect to Performance of Obligations...........................................................................144 ARTICLEXXXVII NOTICES.................................................................................................................145 Section37.1 Notices...............................................................................................................145 Section 37.2 Notice to Approved Mortgagees........................................................................146 Section 37.3 Sufficiency of Service........................................................................................147 ARTICLE XXXVIII MISCELLANEOUS PROVISIONS.......................................................................147 Section38.1 Captions.............................................................................................................147 Section 38.2 Conditions and Covenants.................................................................................147 Section 38.3 Entire Agreement...............................................................................................147 Section 38.4 Modification.......................................................................................................147 Section 38.5 Time of Essence as to Covenants of Lease ........................................................147 Section38.6 Recording...........................................................................................................148 Section 38.7 Chief Executive Officer Approval Procedures..................................................148 Section38.8 Governing Law..................................................................................................150 Section 38.9 Jurisdiction and Venue.......................................................................................150 Section 38.10 Waiver of Jury Trial...........................................................................................151 Section 38.11 Conflict of Interest.............................................................................................151 Section 38.12 Covenants to Run with the Leasehold Estate.....................................................151 Section38.13 No Merger..........................................................................................................152 Section38.14 Brokerage...........................................................................................................152 Section38.15 Counterparts.......................................................................................................152 Section 38.16 No Third Party Beneficiaries.............................................................................152 Section 38.17 Attorney's Fees and Expenses...........................................................................153 Section 38.18 Invalidity of Provisions......................................................................................153 #217950 v3 - Final Version of Watson Island Ground Lease - C'ry of Mimi and Flagstone 02-1304 GROUND LEASE This Ground Lease ("Lease") made as of , 200_, between The City of Miami, a municipal corporation of the State of Florida ("Lessor" or "C '), having its offices at 3500 Pan American Drive, Miami, Florida 33133, and Flagstone Island Gardens LLC, a Delaware limited liability company (successor by merger to Flagstone Properties, LLC, a Florida limited liability company) ("Lessee"), whose principal office is located at 506 Celebration Avenue, Celebration, Florida 34747. Lessor and Lessee are sometimes hereinafter collectively referred to as the "Parties." STATEMENT OF BACKGROUND AND PURPOSE A. The City is the owner in fee simple of certain land located in the City of Miami, Miami - Dade County, Florida known as and hereinafter referred to as "Watson Island". Watson Island is shown on the sketch set forth in Exhibit A. B. A portion of land located in the northwest quadrant of Watson Island, consisting of approximately 10.79 acres, is legally described in Exhibit B and is hereinafter referred to as the "Upland Parcel". C. The City is also the owner in fee simple of certain submerged land, consisting of approximately 13.35 acres, located adjacent and contiguous to the Upland Parcel and legally described in Exhibit C. Such submerged land, together with the right to use and enjoy the waters located above same, is sometimes hereinafter referred to as the "Submerged Parcel." D. The respective locations of the Upland Parcel and the Submerged Parcel are shown on that certain survey prepared by Weidener Surveying and Mapping PA dated July 11, 2002 under Project No. 1712, a copy of which is attached hereto as Exhibit D. The Upland Parcel and the Submerged Parcel, together with all appurtenant rights belonging thereto, are sometimes hereinafter collectively referred to as the "Pro rt ." E. Pursuant to the authority expressly conferred in the City of Miami Charter, and general law, the City Commission of Miami (the "City Commission"), on December 14, 2000, adopted #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone c;2-1304 Resolution No. 00-1081, which authorized the publication of a Mega Yacht Marina and Mixed Use Waterfront Development Opportunity - Watson Island, Miami, Florida, Request for Proposals dated February, 2001, as amended (the "Watson Island RFP"), for the development of the Property as described in the Watson Island RFP. F. In response to the Watson Island RFP, Lessee submitted to Lessor a proposal entitled "Island Gardens at Watson Island RFP" dated July 13, 2001 (the "Island Gardens Proposal"). The Island Gardens Proposal was approved by voter referendum by the electorate of the City of Miami on November 6, 2001 and by the City Commission on November 15, 2001 under Resolution No. 01-1198. G. The Island Gardens Proposal consists of a proposal for the development on the Property of the Project. The Island Gardens Proposal contemplates that the Project will include, but not necessarily be limited to, the Major Project Components, consisting of the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage (as all of such terms are hereinafter defined), together with certain other amenities as are described with greater particularity in Exhibit E. The Major Project Components, together with such other amenities, are sometimes hereinafter collectively referred to as the "Proieet Components". The Conceptual Site Plan for the Project is set forth in Exhibit F. H. It is the mutual desire of the Parties that the Property be leased and demised by Lessor to Lessee for the purposes set forth in this Lease (including the development and construction of the Project pursuant to the terms and provisions set forth herein), subject to and upon the express terms and conditions contained herein. The Parties believe that this Lease is consistent in all material respects with the Watson Island RFP and the Island Gardens Proposal. In consideration of the foregoing and of the rent, covenants, and agreements hereinafter set forth, the Parties do hereby covenant and agree as follows: #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 ARTICLE I INCORPORATION, EXITS AND DEFE41fTIONS Section 1.1 Incorporation by Reference. The foregoing Statement of Background and Purpose is hereby incorporated into this Lease by this reference as if set out in full in the body of this Lease. Section 1.2 Exhibits. Attached hereto and forming a part of this Lease are the following Exhibits and Riders: Exhibit A — Sketch of Watson Island Exhibit B — Legal Description of Upland Parcel Exhibit C — Legal Description of Submerged Parcel Exhibit D — Copy of Survey Exhibit E -- Description of Project Components and Amenities Exhibit E-1 — Description of Public Art Exhibit F — Conceptual Site Plan Exhibit G — Definition of Gross Revenues Exhibit H — Definition of Marina; Marina Approval Procedures Exhibit I — Permitted Title Exceptions Exhibit J — List of Pre -Approved Hotel Franchisors Exhibit K — List of Pre -Approved Lenders Exhibit L — Approved Leasehold Mortgage Subordination, Non -Disturbance and Attornment Agreement Exhibit M — Approved Major Subleasehold Mortgage Subordination, Non -Disturbance and Attornment Agreement Exhibit N — Prohibited Uses Exhibit N-1 — Covenants as to Port of Miami #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 Exhibit O — List of Approved Financial Advisors Exhibit P — Organizational Documents Exhibit Q — Provisions Not Applicable to Private Lessor Exhibit R — Civic Arts Endowment Trust Exhibit S — Approved Major Subtenant Subordination, Non -Disturbance and Attornment Agreement Exhibit T — Form of First Source Hiring Agreement Rider — Development and Construction Rider Rider Exhibit 1 — Entrance Road Section 1.3 Singular, Plural And Gender. Any word contained in the text of this Lease shall be read as the singular or the plural, and as the masculine, feminine or neuter gender, as may be applicable in the particular context. Section 1.4 Section References All references herein to an "Article", "Section", "Subsection", "paragraph", "subparagraph", or "clause" shall be deemed to refer to the applicable "Article", "Section", "Subsection", `'paragraph", "subparagraph" or "clause" of this Lease, unless there is a specific reference to another document. Section 1.5 Defined Terms. Certain terms are defined in various Articles of this Lease. In addition, for the purposes of this Lease, the following words shall have the meanings attributed to them in this Section 1.5: (a) "Affiliate" means any Person which, either directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with another Person (where control means the possession, directly or indirectly, by a Person of the power, acting on one's own, to direct or cause the direction of the management decisions and policies of another Person, whether through the ownership or control of voting securities, beneficial interests, by contract or otherwise). (b) "AAA" means the American Automobile Association or any successor thereto. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (c) "ADplicable Laws" means any and all applicable laws. statutes, codes, ordinances, orders, rules, regulations, requirements, judgments, decrees and injunctions of any Governmental Authority, now existing or hereafter enacted, adopted, issued or amended from time to time, whether foreseen or unforeseen, ordinary or extraordinary, which may be applicable to the Property and/or the Leasehold Improvements or any part thereof. (d) "Approved Operators" has the meaning ascribed to it in Article XXXV. (e) "Approved Time Share License" means any Time Share License as defined in Section 721.05(35), Florida Statutes. (f) "Bayraktar Family" means Mehmet Bayraktar and/or any spouse, sibling and/or lineal descendant of Mehmet Bayraktar. (g) "Bavraktar Family Equity Contribution" means that equity in the Project provided by Mehmet Bayraktar personally or the Bayraktar Family, through one or more Persons which are wholly owned by the Bayraktar Family and over which Mehmet Bayraktar has Voting and Operational Control, shall equal not less than $22,400,000. The foregoing sum shall include all demonstrable hard costs and soft costs reasonably related to the Project expended or reimbursed by the foregoing parties prior to or after the date hereof. City of Miami. (h) "Base Rent" means the base rent to be paid by Lessee as set forth in Section 51. (i) "Business Days" means Monday through Friday, excluding legal holidays in the (j) "Certificate of Occupancv" means a certificate issued by the City of Miami Building and Zoning Department as defined within the Florida Building Code Section 106.1 and in accordance with City of Miami Ordinance No. 6145. (k) "Chief Executive Officer" means the administrative head of the City's government who is authorized to execute this Lease and other documents, including notices required hereunder. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (t) "Chief Executive Officer Approval Procedures" has the meaning ascribed to it in (m) "Construction Plans and Soecifications" means the detailed and complete plans and specifications for all proposed construction on the Property (including, without limitation, infrastructure, elevations, site plans, colors, signage plans, lighting, materials, access, utilities, security, setbacks, floor plans and landscaping) which are approved by Lessor for the Project or any applicable Major Project Component. - (n) "Construction Rent" has the meaning ascribed to it in Section 5.1. (o) "Debt Service Coverage Ratio" means the ratio of the net operating income on average of the Project (or the applicable portion thereof) during a consecutive twelve (12) month period over the annual debt service payable in connection with any and all applicable Approved Mortgages during such twelve (12) month period. (p) "Default Rate" means a per annum interest rate equal to the lesser of: (i) the LIBOR Rate, plus Seven Percent (7%), with such Default Rate being adjusted each time the LIBOR Rate is adjusted, effective on the date such adjustment in the LIBOR Rate becomes effective; or (ii) the highest rate permitted by Applicable Law. (q) "Development and Construction Rider" means the Development and Construction Rider attached hereto and made a part hereof. (r) "Development Plans" means those plans required in connection with the design and construction of the Project, including, without limitation: (i) the Construction Plans and Specifications, (ii) all application materials or other materials necessary or required in connection with obtaining the Project Approvals; and (iii) any and all other plans, drawings or renderings, including, without limitation, design development plans, conceptual layouts and artistic or architectural renderings, elevations or plans. (s) "Direct Space Lease" means any Space Lease where Lessee is the landlord. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0? -1304 M "Direct Space Tenant" means any Space Tenant occupying any portion of the Leasehold Improvements pursuant to a Direct Space Lease. (u) "Disqualified Person" means any Person who, as of the time when the applicable transaction occurs or approval or consent of the Chief Executive Officer is requested: (i) shall have committed a material breach under any material lease or other written agreement with Lessor; (ii) has had any criminal felony convictions within the immediately preceding ten (10) years; (iii) has a widespread reputation (as evidenced by newspaper articles or other media reports of the mainstream press which are not subsequently retracted) for corrupt or unlawful business dealings; or (iv) is named on any Terrorist List. (v) "Event of Lessee's Default" has the meaning ascribed to it in Section 25.1. (w) "Extension Option" has the meaning ascribed to it in Section 3.2. (x) "Extension Term" has the meaning ascribed to it in Section 3.2. (y) "Force Majeure Events" means any of the following items, events or conditions, provided that such item, event or condition has a reasonably demonstrable effect on the Project or its construction or operation: (i) lockouts; (ii) labor strikes; (iii) shortages in labor, materials or supplies other than occasional and ordinary shortages in the ordinary course of business (provided that any such shortages are not caused by any failure to timely order materials or supplies); (iv) casualty; (v) terrorist acts or threats; (vi) war; (vii) hurricanes; (viii) earthquakes or other natural catastrophes and other acts of God; or (ix) any similar item, event or condition beyond the reasonable control of Lessee. (z) "Governmental Authority" means any court, agency, authority, board (including, without limitation, any environmental protection, planning or zoning board), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi - governmental unit of the United States or the State of Florida, whether now or hereafter in existence, having jurisdiction over Lessee, Watson Island, the Property or any aspect of the development or operation of the Project; provided, however, that such term shall include the City only in its municipal capacity and not its proprietary capacity. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and FhWmnc 02-1304 (aa) "Gross Revenues" has the meaning ascribed to it in Exbibit G. (bb) "Hotel Retail Operations" means any Retail operations or facilities located within, near or as part of either Hotel, which operations or facilities are part of or integrated into the operation of such Hotel or are otherwise for the use, support or operation of such Hotel (including, but not limited to, any spa and fitness facilities made available for the usage of such Hotel's guests, whether or not such facilities are located within such Hotel). (cc) "Hotel(s)" shall mean, either individually orzollectively, Hotel A and/or Hotel B. (dd) "Hotel A" means a hotel which: (i) shall have 200 keys (subject to variations as provided for by Exhibit E , plus those keys described in clause (ii) below; (ii) may have (in addition to those keys described in clause (i) above) keys which are allocated to Approved Time Share Licenses, provided that the number of keys allocated to Approved Time Share Licenses shall not exceed 100 keys, less the total number of keys allocated for Approved Time Share Licenses in Hotel B (subject to variations as provided for by Exhibit E ; (iii) shall be built to, and operated pursuant to, the standards of a four (4) diamond hotel or better (as defined in the AAA's hotel rating standards); and (iv) shall participate in a franchise system of a national or international hotel brand approved by the Chief Executive Officer pursuant to Section 4.4. For purposes of the foregoing, the Parties understand and agree that the term "keys" does not include, and Hotel A may have, associated facilities and amenities, including, but not necessarily limited to: (A) spa and fitness areas; (B) administrative and office areas; (C) cabanas; (D) lounges; (D) conference and banquet facilities; and (E) customary non -lodging facilities available for seasonal use by Marina staff and employees (ee) "Hotel B" means a hotel which: (i) shall have 300 keys (subject to variations as provided for by Exhibit E , plus those keys described in clause (ii) below; (ii) may have (in addition to those keys described in clause (i) above) keys which are allocated to Approved Time Share Licenses, provided that the number of keys allocated to Approved Time Share Licenses shall not exceed 100 keys, less the total number of keys allocated for Approved Time Share Licenses in Hotel A (subject to variations as provided for by Exhibit E ; (iii) shall be built to, and operated pursuant to, the standards of a #217950 v3 - Final Version of Watton Island Ground Lease - City of Miami and Flagstone —1304 four (4) diamond hotel or better (as defined in the AAA's hotel rating standards); and (iv) shall participate in a franchise system of a national or international hotel brand approved by the Chief Executive Officer pursuant to Section 4.4. For purposes of the foregoing, the Parties understand and agree that the term "keys" does not include, and Hotel B may have, associated facilities and amenities, including, but not necessarily limited to: (A) spa and fitness areas; (B) administrative and office areas; (C) cabanas; (D) lounges; (D) conference and banquet facilities; and (E) customary non -lodging facilities available for seasonal use by Marina staff and employees. (ff) "Impositions" means all governmental assessments, fees, charges and levies imposed by any Governmental Authority, including, without limitation, assessments imposed by the City (in its municipal capacity), franchise fees, excises, license and permit fees, levies, charges and taxes (including ad valorem real estate taxes on the land under the Property and/or the Leasehold Improvements), personal property taxes, bed taxes, sales taxes, fire fees and parking surcharges of any kind now or hereafter enacted, whether general or special, ordinary or extraordinary, foreseen or unforeseen, any of which is properly levied against the Property, the Leasehold Improvements, the Leasehold Estate and/or any Major Subleasehold Estate, as applicable. (gg) "Initial Term 'has the meaning ascribed to it in Section 3.1. (hh) "Lease Term" has the meaning ascribed to it in Section 3. - (ii) "Leasehold Estate" means all of Lessee's right, title and interest as Lessee pursuant to this Lease, including, without limitation, the right, title and interest granted hereunder in and to the Property and the Leasehold Improvements. (jj) "Leasehold Improvements" means all the buildings, structures and improvements constituting the Project Components, including the improvements described in the approved Development Plans, and any improvements constructed thereafter from time to time, which are now or hereafter during the Lease Term located upon the Property and owned by Lessee or any Major Subtenant, as applicable; as well as any apparatus and equipment permanently attached and incorporated into such buildings, structures and improvements at any time, including all fixtures, fittings, appliances, machinery, garage #217950 v3 - Final Version of Watson Island Ground ase d L - City of Miami and Flagstone 02-1304 equipment, heating equipment, lighting equipment, cooling equipment, air conditioning and ventilating equipment, wiring, controls, communications equipment, plumbing, switchboards, antennae, elevators, escalators, floor coverings, refrigerating equipment, hot water heating and all other appliances and equipment, to the extent same are owned by Lessee or any Major Subtenant, as applicable; provided, however, that the term "Leasehold Improvements" does not include any Personal Property. (kk) "Lessee" has the meaning ascribed to it in the opening paragraph of this Lease, and shall include Lessee's successors and/or permitted assigns. (ll) "Lessor" or "Ciff" has the meaning ascribed to it in the opening paragraph of this Lease, and shall include Lessor's successors and/or permitted assigns. (mm) "LIBOR Rate" means the rate per annum (rounded upward to the nearest 1/16th of 1.00%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars with ninety (90) day maturities; provided, however, that: (i) if for any reason such rate is not available, the applicable rate shall be the rate per annum (rounded upward to the nearest 1/16th of 1.00%) appearing on a Reuters Screen LIBOR Page as the London interbank offered rate for deposits in U.S. Dollars with ninety (90) day maturities; (ii) if more than one such rate is specified on such Telerate Page or Reuters Screen LIBOR Page, the applicable rate shall be the arithmetic mean of all such rates; and (iii) if the LIBOR Rate by reference to either such Telerate Page or such Reuters Screen is unavailable, then the applicable rate shall be the arithmetic mean of the rates per annum at which U.S. Dollar deposits for a ninety (90) day term are offered by three (3) prime banks in the London interbank market. (nn) "Major Proiect Components" means, individually and collectively, the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage. (oo) "Major Sublease" means any sublease agreement pursuant to which Lessee subleases any Major Project Component to a Major Subtenant. .#217950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone 02-1304 (pp) "Major Subleasehold Estate" means all of an applicable Major Subtenant's right, title and interest as a sublessee pursuant to the applicable Major Sublease, including, without limitation, the right, title and interest granted thereunder to the Major Project Component demised thereby. (qq) "Iy aior Subtenant" means any Person using or occupying or entitled to use or occupy any Major Project Component under a Major Sublease in accordance with the provisions of this Lease. (rr) "Major Use Special Permit" has the meaning ascribed to it in Article 17 of Ordinance 11000, as amended, the Zoning Ordinance of the City of Miami, Florida. (ss) "Marina" shall have the meaning ascribed to it in Exhibit H. (tt) "Mega -Yachts" means marine vessels longer than eighty (80) feet. (uu) "Occupancy" means the fust date on which both Hotels are Open for Business; provided, however, that in no event shall the Occupancy Date be later than the earlier to occur of. (i) twelve (12) months after the First Hotel Opening Date; or (ii) the Promised Completion Date (as defined in the Development and Construction Rider). (w) "Open for Business" means that the applicable Major Project Component is open for business to the general public, as evidenced by the issuance of a temporary Certificate of Occupancy for such Major Project Component; provided, however, that the Retail Space shall be deemed "Open for Business" when at least sixty percent (60%) of the net rentable area thereof is occupied by Space Tenants and is open for business to the general public, as evidenced by the issuance of any applicable temporary Certificate(s) of Occupancy. (ww) "Operating ASMments" has the meaning ascribed to it in Article 35. (xx) "Operating Team" means: (i) the franchisor or licensor, if applicable, of Hotel A, and the operator or manager of Hotel A; (ii) the franchisor or licensor, if applicable, of Hotel B, and the operator or manager of Hotel B; (iii) the operator or manager of the Marina; (iv) Fairchild Tropical Garden; and (v) The Historical Museum of South Florida. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (yy) "Parking Garage" means a multi-level parking garage containing at least the minimum required number of dedicated parking spaces for the Hotels, the Marina and the Retail Space. (zz) "Partial Modification of Restrictions" means that certain Partial Modification of Restrictions approved by the Trustees with respect to the Project, which instrument modifies the restrictions set forth within Deed No. 19447 from the Trustees in favor of Lessor filed for record April 11, 1949 in Deed Book 3130, Page 257, of the Public Records of Miami -Dade County, Florida. (aaa) "Percentage Rent" means rent payable by Lessee to Lessor based on a percentage of Gross Revenues as set forth in Section 53. Exhibit I. (bbb) "Permitted Title Exceptions" means those certain title matters set forth in (ccc) "Permitted Uses" means those certain uses described in the description of the Project Components and amenities set forth in Exhibit E. (ddd) "Person" means any natural person, trust, firm, partnership, corporation, joint venture, association, company, or any other legal or business entity or investment enterprise. (eee) "Personal Property" means any and all items of personal property which are: (i) located on the Property and/or the Leasehold Improvements but not permanently attached thereto and incorporated therein; and (ii) any and all trade fixtures (i.e., fixtures which can be removed without permanently defacing or materially injuring any of the Leasehold Improvements) located on the Property and/or the Leasehold Improvements. (fid) "Possession Date" has the meaning ascribed to it in Section 4.1. (ggg) "Prohibited Uses" has the meaning ascribed to it in Section 7.11. (hhh) "Proiect" means all of the Leasehold Improvements (including, but not limited to, all of the Major Project Components) to be completed pursuant to the Development and Construction Rider and substantially in accordance with the approved Development Plans. (iii) "Project Approvals" means those approvals and permits from Governmental Authorities which are required in order to commence and complete construction of the Project, including, #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.304 but not necessarily limited to: (i) the approval of the "Notice of Proposed Change" which shall, among other things, include the Property within Increment Two of the Downtown Development of Regional Impact; (ii) a Major Use Special Permit which shall have been issued for the Project in connection with the Development Plans approved by the Chief Executive Officer; (iii) the Partial Modification of Restrictions; and (iv) with respect to the Marina, such applicable permits and approvals for the Marina as are specified in Exhibit H (it being understood and agreed, however, that Lessee shall not be required to obtain all Project Approvals for all Major Project Components in order to commence construction of a particular portion or phase of the Project or a particular Major Project Component). U) "Rent" shall be as set forth in Section 5 and shall include Construction Rent, Base Rent, Percentage Rent and any additional rent or other sums owing or which may be owing from Lessee to Lessor pursuant to the provisions of this Lease. (kkk) "Retail' means the sale of any and all commodities, food and beverages, merchandise or services to the consumer. (111) "Retail Space" means up to 221,000 square feet of first-class space for Retail facilities and operations (exclusive of any Hotel Retail Operations), as measured in accordance with Exhibit E. (mmm) "Space Lease" means any sublease or sub -sublease or other arrangement between Lessee or any Major Subtenant, as sublessor, and a Space Tenant, as sublessee, for the leasing of any portion of the Retail Space or any other space within the Leasehold Improvements (including, but not limited to, the Parking Garage and the Hotel Retail Operations) in accordance with Section 33.5. The term "Space Leases" includes Direct Space Leases, but does not include Major Subleases. (nnn) "Space Tenant" means any tenant, subtenant, licensee and other occupant (including, but not limited to, any Direct Space Tenant) of any portion of the Leasehold Improvements pursuant to a Space Lease. The term "Space Tenant" does not include any Major Subtenant. (000) "Terrorist List" means any list issued by a Governmental Authority of individuals and/or entities engaged in terrorist activities, including, but not limited to, the following: (i) #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone v2-1304 list of Specially Designated Terrorists (SDTs) issued by the Office of Foreign Assets Control ("OFAC") pursuant to Executive Order 12947; (ii) list of Specially Designated Global Terrorist (SDGTs) issued by OFAC pursuant to Executive Order 13224; and (iii) list of Foreign Terrorist Organizations (FTOs) issued by the Secretary of State. (ppp) "Trustees" means the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida. (qqq) "Unavoidable Delay(s)" means delays on account of Force Majeure Events. Such term shall be deemed to exclude: (i) delays on account of any lack of funds or economic conditions; and (ii) typical ordinary delays in obtaining any permits or other approvals from Governmental Authorities. Such term shall be deemed to include: (i) delays in the completion of the Project on account of any injunction or other order issued by any court having jurisdiction of the Property; and (ii) any extraordinary delays in obtaining any permits or other approvals from Governmental Authorities. (rrr) "Voting and Operational Control", as used with respect to any Person, means that such Person: (i) owns, directly or through one or more intermediary Persons, not less than Twenty Percent (20%) of the ownership interests of another Person; and (ii) has voting and day-to-day control over the operation, management and decision-making of such other Person, subject to usual and customary consent rights of other investors with respect to certain "major" decisions or actions. (sss) "Work" means all construction to be performed by Lessee under this Lease, including any repairing, restoring, removing, or replacing of the Leasehold Improvements. ARTICLE II DEMISE Section 2.1 Demise Subject to and in accordance with the terms and conditions of this Lease and the Permitted Title Exceptions, Lessor, for and in consideration of the Rent and of the covenants and agreements made by Lessee to be kept, observed and performed hereunder, does demise and lease the Property to Lessee, and Lessee does lease the Property from Lessor. 11217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 09-x.304 Section 2.2 Leasehold Improvements So long as this Lease remains in force, the Leasehold Improvements shall be owned in fee simple by Lessee and be the sole property of Lessee, and Lessor shall have no interest therein. Upon expiration of the Lease Term or sooner termination of this Lease, the Leasehold Improvements (as well as any Personal Property which is to be delivered to Lessor pursuant to Section 32.1(a) below) shall become the sole property of Lessor in fee simple, and free and clear of all encumbrances other than: (i) the lien of any Impositions assessed but not yet due and payable (for which Lessee shall remain obligated to pay to the extent that they are allocable to the period prior to the termination of this Lease); (ii) any rights surviving an early termination of this Lease (i.e., prior to the stated expiration date of the Lease Term) which are granted hereunder or under an applicable Subordination, Non -Disturbance and Attornment Agreement to any Approved Mortgagees (as defined in Section 8.1), Major Subtenants, holders of Approved Timeshare Licenses, and Space Tenants (it being understood that any and all rights to possession or occupancy of the Property and/or the Leasehold Improvements or any portion thereof shall in no event extend beyond the stated expiration date of the Lease Term, as same may be extended pursuant to Section 3.2); and (iii) the Permitted Title Exceptions and any other title matters consented to in writing by the Chief Executive Officer or Lessor during the Lease Term. The provisions of this Section 2.2 shall not affect the rights and obligations of the Parties under Article XVI or Article XXIV. Section 2.3 Delivery of Title to Lessor.. Upon the expiration or sooner termination of this Lease, Lessee shall execute, acknowledge and deliver to Lessor a proper instrument in writing, releasing and quit -claiming to Lessor all right, title, and interest of Lessee in and to the Leasehold Improvements (as well as any Personal Property which is to be delivered to Lessor pursuant to Section 32.1(a) below). #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone r ARTICLE III TERM Section 3.1 Initial Tenn. This Lease shall be for an initial term of forty-five (45) years (the "Initial Term"), commencing on the Possession Date and ending on the date which is forty-five (45) years thereafter, unless this Lease is terminated at an earlier date pursuant to the terms hereof. Section 3.2 Extension Terms. Lessee is hereby granted two (2) consecutive options (each, an "Extension Option") to extend this Lease for a period of fifteen (15) years for each such Extension Option (each such fifteen (15) year period, an "Extension Term" and collectively, the "Extension Terms"). Provided that Lessee has properly and timely exercised an Extension Option, the term of the Lease shall be extended for the period of the applicable Extension Term (the Initial Term, together with any exercised Extension Term(s), shall be referred to herein as the "Lease Term"). During any such Extension Term, the terms, covenants and conditions of this Lease shall remain unmodified and in full force and effect (other than any such terms, covenants or conditions which are no longer applicable), including the Rent provisions of Section 5. (a) Exercise of First Extension Option. For purposes hereof, the term "First Extension Option Exercise Period" shall mean the period of time commencing on the thirtieth (301°) anniversary of the Possession Date and ending on the forty-second (42nd) anniversary of the Possession Date. The first (1S1) Extension Option shall be deemed to have been properly and timely exercised if: (i) Lessee provides written notice to the Chief Executive Officer of Lessee's exercise thereof at any time during the First Extension Option Exercise Period, and (ii) no Material Uncured Lessee Default (as hereinafter defined) then exists. (b) Exercise of Second Extension Option. For purposes hereof, the term "Second Extension Option Exercise Period" shall mean the period of time commencing on the first day of the first (1") Extension Term and ending on the twelfth (12th) anniversary thereof. If the first (1st) Extension Option is duly exercised, then Lessee may exercise the second (2nd) Extension Option, which shall be #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 1 02-1304 deemed to have been duly and timely exercised if: (i) Lessee provides written notice to the Chief Executive Officer of Lessee's exercise thereof at any time during the Second Extension Option Exercise Period: and 60 no Material Uncured Lessee Default then exists. (c) Exercise is Irrevocable. Once received by Lessor, any such notice of extension described above shall be irrevocable by Lessee. (d) Material Uncured Lessee's Default. For purposes hereof, the term "Material Uncured Lessee's Default" means an Event of Lessee's Default: (i) which is material in nature; and (ii) whose occurrence would cause a landlord, acting in a commercially reasonable manner and in good faith, to elect to terminate this Lease (regardless of whether Lessor has not elected to terminate this Lease in connection therewith). Notwithstanding the foregoing, no Material Uncured Lessee Default shall be deemed to exist at given point in time if it is cured at any time prior to the expiration of the Initial Term or the first Extension Term, as applicable (whether or not the cure has been effected within the applicable cure period for the default giving rise to such Event of Lessee's Default), so long as Lessee shall have pursued such cure diligently and in good faith. ARTICLE IV DELIVERY OF POSSESSION AND DEVELOPMENT AND OPERATION OF THE PROJECT Section 4.1 Delivery of Possession of Property. Simultaneously with the execution and delivery of this Lease by the Parties, Lessor shall deliver possession of the Property to Lessee; it being understood and agreed that the date of execution and delivery of this Lease by the latter of the Parties shall be deemed to be the "Possession Date" hereunder. Section 4.2 Memorandum. At the time of the mutual execution and delivery of this Lease, the Chief Executive Officer and Lessee, upon request of either Party, shall execute a memorandum in recordable form. setting forth the beginning and termination dates of the Initial Term, describing the right to the extension of this Lease pursuant to Section 3.2, and including such other items as are contemplated by Article XVIII. 217950 0 - Final Version of Watson Island Ground Lease - Cita of !Miami and Flagstone 02-1304 Section 4.3 Development of the P[Qig t. Lessee shall cause the Project Components to be constructed on the Property substantially in accordance with all applicable Development Plans and %,, ith the Project Approvals and the terms and conditions set forth in the Development and Construction Rider. Section 4.4 Operating Team. (a) Selection. Lessee's selection of each member of the Operating Team shall be subject to the prior written approval of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures. provided, however, that Fairchild Tropical Garden and The Historical Museum of South Florida shall be deemed to have been approved by Lessor. (b) Replacement. The replacement of any such member of the Operating Team (including Fairchild Tropical Garden and The Historical Museum of South Florida) by Lessee shall be subject to the prior written approval of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures. Lessee acknowledges and agrees that the inclusion of Fairchild Tropical Garden and The Historical Museum of South Florida were important factors in the City's selection of the Island Gardens Proposal. (c) No Approval Required for Lessee or Affiliates. Notwithstanding the foregoing, no approval by the Chief Executive Officer shall be required for Lessee and/or any of its Affiliates to be the initial or replacement operator or manager of either or both Hotels or the Marina so long as the franchisor or licensor for the applicable Hotel or the Marina is approved by the Chief Executive Officer in accordance with the provisions of this Section 4.4. (d) Pre -Approved Hotel Franchisors. For purposes hereof, the term "Pre -Approved Hotel Franchisor" means any of the franchisors or licensors listed in Exhibit J, as well as any of their successors. Notwithstanding anything to the contrary contained herein, the initial selection of any Pre - Approved Hotel Franchisor as the franchisor or licensor for Hotel A and/or Hotel B is hereby pre - approved by, and shall not require any further approval of or consent by, the Chief Executive Officer on behalf of Lessor. Furthermore, the subsequent replacement from time to time of any then -existing franchisor or licensor (whether or not a Pre -Approved Hotel Franchisor) with any Pre -Approved Hotel n217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 6=1304 Franchisor shall not require any further approval of or consent by the Chief Executive Officer on behalf of Lessor, so long as such replacement is made prior to the fifth (5`h) anniversary of the Possession Date. (e) Operator. If the franchisor or licensor of either Hotel or the Marina is approved (or deemed pre -approved) by the Chief Executive Officer pursuant to this Section 4.4, then any operator of such Hotel which: (i) is an Affiliate of such franchisor or licensor; or (ii) is a Person which has been retained by such franchisor or licensor for a substantial number of the hotels in its franchise or license system (or is an Affiliate of any such Person) shall not be subject to the Chief Executive Officer's approval. (f) Manager. If an operator of either Hotel or the Marina has been approved (or is, pursuant to subparagraph (e) above, not required to be approved) by the Chief Executive Officer, then any individual who is employed by such operator as the general manager and any other employee of such Hotel or the Marina shall not be required to be approved by the Chief Executive Officer. ARTICLE V RENT AND SECURITY DEPOSIT Section 5.1 Construction Rent. Commencing on the first (I") day of the first full month following the Possession Date, and ending on the day preceding the Occupancy Date, Lessee shall pay to Lessor rent in the amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) per annum, payable in advance on the first day of each month in equal monthly installments of $83,333.33 (the "Construction Rent"). Section 5.2 Base Rent. (a) Monthly Installments. Commencing on the Occupancy Date, Lessee shall pay to Lessor rent in the amount of TWO MILLION AND NO/ 100 DOLLARS ($2,000,000.00) per annum, payable in advance on the first day of each month in equal monthly installments of $166,666.67 ("Base Rent"); provided, however, that if the Occupancy Date occurs on a day other than the first (1') of the +217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 month, Lessee shall, on the Occupancy Date, pay to Lessor the pro rata portion of Base Rent due for an-, partial month in which the Occupancy Date occurs. (b) Amount Pavable If First Hotel Opens Before Occupancy Date. Notwithstanding the provisions of subparagraph (a) above, if the First Hotel Opens for Business prior to the Occupancy Date, then commencing on the first day of the month after the month in which the First Hotel Opens for Business and continuing until the Occupancy Date, Lessee shall pay to Lessor (in addition to Construction Rent) an additional amount of $41,666.67 per month in advance on the first (I") day of each month. Such amount has been computed based upon one -twelfth (1/12th) of one-half (1/2) of the additional $1,000,000 of Base Rent to be paid by Lessee as allocated to the opening of the first Hotel. (c) CPI Adjustment. For purposes hereof: (i) "Consumer Price Index' means the monthly index published by the Bureau of Labor Statistics of the United States Department of Labor as "The Consumer Price Index for All Items, Miami -Ft. Lauderdale (Base Year 1982-84 = 100)" or its successor; provided, however, that if such index is discontinued during the Lease Term and there is no successor index, "Consumer Price Index" shall mean such other index as the parties shall mutually agree as reasonably replacing such index. (ii) `Reference Year Base Rent" means the per annum Base Rent amount for the twelve (12) month period commencing on the Occupancy Date. (d) CPI Adjustment. Commencing on the first anniversary of the Occupancy Date and on each anniversary thereafter during the Lease Term, the per annum Base Rent amount shall be adjusted to an amount equal to the product of the Reference Year Base Rent multiplied by a fraction, the numerator of which is the Consumer Price Index number as of three (3) months prior to the beginning of the applicable adjustment date, and the denominator of which is the Consumer Price Index number as of three (3) months prior to the Occupancy Date. (e) Floor and Caa. In no event shall any such annual adjustment to the Base Rent result in an increase which is less than One Percent (1%), or more than Five Percent (5%), of the Base Rent amount immediately prior to the effective date of such adjustment. x217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (f) Notice of CPI Adjustment. If any such Consumer Price Index adjustment is to be made, then Lessor shall notify Lessee in writing of the amount of the increased Base Rent for the tvvelye (12) month period commencing on the date of the adjustment. and if Lessor fails to so notify Lessee prior to the commencement of such twelve (12) month period, Lessee shall continue paying the previously applicable Base Rent installments until such time as Lessee is notified in writing of the appropriate increase in Base Rent, and within thirty (30) days thereafter, Lessee shall pay Lessor any deficiency in the Base Rent installments otherwise paid by Lessee prior to such notification. Section 5.3 Percentage Rent. In addition to the Base Rent above, Lessee shall pay Percentage Rent to Lessor as follows: (a) Gross Revenues Other Than from the Sale of Approved Time Share Licenses. Lessee shall pay to Lessor Percentage Rent in an amount equal to one percent (1%) of Gross Revenues (except for Gross Revenues from the sale of Approved Time Share Licenses as described in subparagraph (b) below) earned during the period from and after the third (3rd) anniversary of the Occupancy Date (the "Percentaee Rent Commencement Date") and continuing thereafter throughout the Lease Term. Such Percentage Rent shall be payable in monthly installments, in arrears, on the first (I") day of each month, commencing on the first (15`) day of the month which is two months after the Percentage Rent Commencement Date. Each such monthly installment shall be in an amount equal to the Percentage Rent payable under this Section 5.3(a) for the month which is two (2) months before the due date of such installment (e.g., an installment due on July I shall be for the Percentage Rent for the preceding May). (b) Gross Revenues from the First Sale of Approved Time Share Licenses. (i) Defined Term. For purposes hereof, the term "First Salle" means the closing (i.e., delivery of evidence of ownership by Lessee or the applicable Major Subtenant to the licensee thereof,. as opposed to entering into a contract for sale, taking reservations or deposits, etc.) of the sale or transfer of any Approved Time Share License at either Hotel A, Hotel B or the Marina to the first licensee thereof (it being understood that such term shall not apply to, and no Percentage Rent shall be payable with respect to, any subsequent re -sales or transfers of the same Approved Time Share License). 4217950 %3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.304 (ii) Percentage_Rent. In addition to the Percentage Rent specified in Section 5.3(al above, Lessee shall pay to Lessor Percentage Rent in an amount equal to Two and One -Half Percent (2.5%) of Gross Revenues with respect to the First Sale of each Approved Time Share License (as such Gross Revenues are defined and described in Exhibit G earned during the period from and after such First Sales commence. Such Percentage Rent shall be payable in monthly installments. in arrears (in the same manner as provided for by Section 5.3(a) above), on the first (151) day of each month. commencing on the first day of the month which is two (2) months after the month in which such First Sales commence. (c) Statements Concerning Percentage Rent. Together with each installment of Percentage Rent, Lessee shall provide Lessor with a statement of its Gross Revenues for the applicable month signed by the managing member or any duly elected officer of Lessee. Such statement shall show Gross Revenues and an itemization of any exclusions or deductions therefrom for such month, as well as year-to-date amounts for the current calendar year. Within one hundred twenty (120) days after the end of each calendar year, Lessee shall deliver to Lessor audited statements of the Gross Revenues for the preceding calendar year prepared by a nationally recognized accounting firm reasonably acceptable to the Chief Executive Officer, along with the additional amount of Percentage Rent, if any, which is due from Lessee to Lessor for that preceding calendar year. In the event that the statement of Gross Revenues for the preceding calendar year indicates that the estimated Percentage Rent paid by Lessee for the preceding calendar year is greater than the actual Percentage Rent due Lessor, then the Parties shall reconcile the estimated Percentage Rent paid and the actual Percentage Rent due in the form of a credit to Lessee against next accruing monthly Rent installments due hereunder (or a refund if there are no more monthly Rent installments due hereunder). (d) Major Subleases. Each Major Sublease shall require that the applicable Major Subtenant furnish similar statements to Lessee in the same manner as provided for by subparagraph (c) above. Upon Lessee's receipt of such statements, Lessee shall promptly furnish copies thereof to Lessor. Section 5.4 Security Deposit. 2211950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (a) Definition of "LOC Deposit". For purposes of this Article, the term "LOC Deposit" means an irrevocable and unconditional, clean standby letter of credit, including replacements thereof, in form and substance reasonably satisfactory to the Chief Executive Officer and issued by one of the financial institutions listed in Exhibit K or such other financial institution as is reasonably satisfactory to the Chief Executive Officer, which letter of credit shall: (i) name Lessor as beneficiary. (ii) allow Lessor to make partial and multiple draws thereunder up to the face amount, as determined by Lessor; (iii) require such financial institution to pay within no more than one (1) Business Day to Lessor the amount of a draw upon receipt by such financial institution solely of a sight draft signed by Lessor and presented at a location within Miami -Dade County, Florida (which shall include a certification signed by the Chief Executive Officer on behalf of Lessor that an Event of Lessee's Default has occurred and is continuing); (iv) provide for an automatic payment to Lessor upon expiration thereof unless a replacement Letter of Credit is issued to Lessor within thirty (30) days prior to the expiration thereof (if such provision is, when requested, commercially available from the issuer); and (v) provide that Lessor can freely transfer it upon an assignment or other transfer of its interest in the Property to the assignee or transferee, without charge and without recourse, and without having to obtain the consent of Lessee or such financial institution (if such provision is, when requested, commercially available from the issuer). (b) Amount. Simultaneously upon the execution hereof, Lessee shall either (i) deliver the amount of $2,000,000 (the "Cash Deposit") to Lessor, or (ii) provide to Lessor, at Lessee's sole cost and expense, the LOC Deposit, which shall be in the amount of $2,000,000 (the Cash Deposit or the LOC Deposit, as applicable, shall hereinafter be referred to as the "Security Deposit"). Notwithstanding the foregoing, Lessee shall be permitted to utilize any combination of Cash Deposit or LOC Deposit so long as the Security Deposit equals $2,000,000 in the aggregate. Any LOC Deposit held by Lessor or Cash Deposit held by Escrow Agent (as defined in that certain Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003) as security under such Agreement to Enter into Ground Lease, shall be credited toward such $2,000,000 amount (and Lessee -217950 Q - Final Version of Watson island Ground Lease - City of Miami and Flagstone 02-1304 shall authorize Escrow Agent to transfer such Cash Deposit, if applicable, directly to Lessor as part of the Security Deposit upon the mutual execution and delivery of this Lease). (c) Application. If an Event of Lessee's Default occurs hereunder, Lessor may, at its option and without prejudice to any other right or remedy that Lessor may have hereunder, apply or require distribution of all or any portion of the Security Deposit for the payment of any sum to which Lessor may become entitled by reason of such Event of Lessee's Default, including, without limitation, reasonable attorneys' fees and costs which Lessor may incur in connection therewith. If Lessor so applies or requires the distribution to Lessor of all or any portion of the Security Deposit, Lessee shall, within thirty (30) days after demand therefor, deposit cash with Lessor in an amount sufficient to restore any such deficiency or amend or replace any LOC Deposit, whichever is applicable, to the full amount thereof, and Lessee's failure to do so shall, at Lessor's option, constitute an Event of Lessee's Default hereunder. In the event Lessor applies or requires distribution of all or any portion of an' LOC Deposit where no Event of Lessee's Default then existed, Lessor shall be deemed to have improperly requested and received such application or distribution, and Lessee shall be entitled to recover from Lessor the amount which was improperly requested and received, or to reduce the Security Deposit by an equivalent amount. (d) Release. Notwithstanding anything contained herein to the contrary, at any time after all of the Major Project Components are Open for Business and so long as no Event of Lessee's Default has occurred and is then continuing and no event has then occurred which with the passage of time and/or giving of notice would constitute an Event of Lessee's Default, Lessor shall, within fifteen (15) days after written request of Lessee, return and/or release the amount of the Security Deposit currently held by Lessor to Lessee (less such portion thereof as Lessor may have appropriated and applied in accordance with the provisions of this Section 5.4), whereupon no further or other security deposit shall be required hereunder. Section 5.5 Place Of Payment. Lessee shall pay all Rent to Lessor in lawful money of the United States of America at a place Lessor shall from time to time designate by written notice to Lessee, #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 and in the absence of such designation, at the office of the Finance Director of the Cit} of 4tiami at the address set forth in Section 37.1. Section 5.6 Default Interest If any Rent or other sums due from Lessee to Lessor hereunder are not paid when due and payable, then such unpaid Rent or other sums shall bear interest at the Default Rate from and after the date when same became due and payable until the date paid. Such interest payment shall be deemed to be additional Rent and shall not be deemed a consent by Lessor to late payments, nor a waiver of Lessor's right to insist upon timely payments at any time, nor a waiver of any remedies to which Lessor is entitled as a result of the late payment. Section 5.7 Late Charlie. If any Rent or other sums due from Lessee to Lessor hereunder are not paid when due and payable, and Lessee thereafter fails to cure such default within the applicable cure period hereunder (such that an Event of Lessee's Default occurs on account thereof), then, on each such occasion, Lessee shall pay to Lessor a late fee equal to Four Percent (4%) of the past due sum, as compensation to Lessor for the inconvenience of the collection and processing of each such late payment. Such late fee shall be in addition to any interest payable under Section 5.6. Such late fee shall be deemed to be additional Rent and shall not be deemed a consent by Lessor to late payments, nor a waiver of Lessor's right to insist upon timely payments at any time, nor a waiver of any remedies to which Lessor is entitled as a result of the late payment. Section 5.8 Rent To Be Without Deduction This Lease shall be deemed and construed to be a triple net lease, and Lessor shall receive all Rent, and all other payments to be made by Lessee, free from any charges, assessments, Impositions, expenses, defenses, set -offs or deductions of any nature, except as may be otherwise specifically provided for herein (including, but not limited to, Lessee's set-off rights described in Section 25.3(b)(iii) and Section 26.1(c) below). Lessor shall not be called upon to make any expenditure for the maintenance, repair or preservation of all or any portion of the Property. #217950 v3 - Final Version of Watson Island Ground Lease - Ciry of Miami and Flagstone 02-1304 ARTICLE VI LEASEHOLD AND SUBLEASEHOLD MORTGAGES Section 6.1 Definition of Terms. For purposes of this Article VI, the following terms shall have the meanings attributed to them in this Section: (a) "Approved Leasehold Mortgage" means any mortgage, deed of trust or similar security instrument (as same may be supplemented, extended, split, consolidated, or otherwise amended or modified from time to time, all without Lessor's consent) encumbering the Leasehold Estate or any portion thereof, so long as: (i) such instrument does not encumber the City's fee simple estate; (ii) such instrument secures an Approved Construction Loan or an Approved Permanent Loan or Approved Mezzanine Financing; (iii) the funding availability pursuant to any Approved Construction Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not result in the Initial Equity Requirement not being satisfied; and (iv) the funding availability pursuant to any Approved Permanent Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not cause the Maximum Project Debt to Value Ratio to be exceeded. For purposes of clauses (iii) and (iv) above, the term "funding availability" shall not include any provision for a future advance which is entirely within the lender's discretion to make, and any such future advance shall be treated as a separate loan for such purposes. Notwithstanding the foregoing, the term "Approved Leasehold Mortgage" shall also include any other such mortgage, deed of trust or security instrument approved in writing by the Chief Executive Officer pursuant to the terms hereof. (b) "Approved Leasehold Mortgagee" means the holder of an Approved Leasehold Mortgage. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone __.;_1304 (c) "Approved Major Subleasehold Mortgage means any mortgage, deed of trust or similar security instrument (as same may be supplemented, extended, split, consolidated, or otherwise amended or modified from time to time, all without Lessor's consent) encumbering any Major Subleasehold Estate or any portion thereof, so long as: (i) such instrument does not encumber the City's fee simple estate; (ii) such instrument secures an Approved Construction Loan or an Approved Permanent Loan or any Approved Mezzanine Financing; (iii) the funding availability pursuant to any Approved Construction Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not result in the Initial Equity Requirement not being satisfied; and (iv) the funding availability pursuant to any Approved Permanent Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not cause the Maximum Project Component Debt to Value Ratio to be exceeded. For purposes of clauses (iii) and (iv) above, the term "funding availability" shall not include any provision for a future advance which is entirely within the lender's discretion to make, and any such future advance shall be treated as a separate loan for such purposes. Notwithstanding the foregoing, the term "Approved Manor Subleasehold Mortgaee" shall also include any other such mortgage, deed of trust or security instrument approved in writing by the Chief Executive Officer pursuant to the terms hereof. (d) "Approved Major Subleasehold Mortgagee" means the holder of an Approved Major Subleasehold Mortgage. (e) "Approved Mortgage" means any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage. (f) "Approved Mortgagee" means any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee. (g) "Approved Lender" means any Person meeting any of the following criteria: 7217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone (i) any insurance company, bank or trust company, pension or retirement fund or trust, governmental agency or fund, or other financial or lending institution or other lender which is regulated by, or makes any loans which are regulated by, state or federal laws of the United States, provided; however, that in the case of a first priority Approved Leasehold Mortgage or a first priority Approved Subleasehold Mortgage, the Financial Standards must be satisfied; (ii) any similar type of foreign domiciled entity or institution or other lender which is regulated by, or makes any loans which are regulated by, the country of its domicile provided: however, that in the case of a first priority Approved Leasehold Mortgage or a first priority Approved Subleasehold Mortgage, the Financial Standards must be satisfied; (iii) any Person which is listed in the "S&P 500" or the "Fortune 500", or any Affiliate of such Person; (iv) any of the lenders listed in Exhibit K (whether or not they independently satisfy the requirements of clauses (i), (ii) or (iii) above), provided that such lender continues to satisfy the Financial Standards; (v) any other lender which may be approved in writing from time to time by the Chief Executive Officer as an "Approved Lender"; and (vi) in the case of Mezzanine Financing, any Approved Mezzanine Financer; (vii) any successor of any Person described in clauses (i) through (vi) above; (viii) any assignee of any Person described in clauses (i) through (vii) above, so long as such assignee independently meets any of the criteria set forth in clauses (i) through (vii) above. Notwithstanding the foregoing, the criteria set forth in clauses (i) through (vi) above shall not apply to: (A) any loan participants not in privity with or having direct legal rights with respect to the borrower; or (B) any certificateholder or similar Person holding an interest from time to time in a securitized loan, conduit loan or similar loan. 0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone tf ?-1,104 (ix) "Financial Standards" means that, at the time any applicable loan is made, the lender making such loan shall have assets in excess of $50,000,000,000 and shall have a credit rating of not less than "A"; provided, however, that the foregoing requirements: (i) may be satisfied by aggregating the assets of such lender with those of all of its Affiliates; and (ii) need not be satisfied by any co -lenders, so long the lender (together with all of its Affiliates as described in clause (i) above) designated by such co -lenders as the "agent" or "lead lender' or any similar designation satisfies such requirements. (h) "Approved Construction Loan" means any loan extended by an Approved Lender to Lessee or any Major Subtenant for the primary purpose of the initial construction and completion of the Project or any applicable Major Project Component or any other portion thereof, which loan is secured by an Approved Mortgage. (i) "Approved Mezzanine Financer" means: (i) any company, corporation, fund or other entity, whether public or private, which: (A) has a portfolio of obligations similar in type or size to the applicable Mezzanine Financing, which portfolio has a value in excess of $250,000,000 at the time such Mezzanine Financing is made; (B) is prepared to "front-end" its commitments (i.e., make advances or place funds into escrow for the purpose of funding initial or early Project costs); (C) is not named, and has no controlling investor therein, named on any Terrorist List at the time of the making of such Mezzanine Financing; and (D) has not had (nor has any controlling investor therein had) any criminal felony convictions within the immediately preceding ten (10) years prior to the making of such Mezzanine Financing; or (ii) any other Person meeting the criteria for an Approved Lender as set forth in the definition thereof. 0) "Approved Mezzanine Financing" means any financing extended by an Approved Mezzanine Financer to Lessee or any Major Subtenant with respect to the Project or any Major Project Component(s), which financing: #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (i) is secured primarily by assets other than the Property (such as a pledge or hypothecation of shares or other interests in the borrowing entity), but may (in addition to being secured by such collateral), be secured by a subordinate mortgage encumbering the Leasehold Estate or any ;Major Subleasehold Estate, as applicable; and (ii) may include an equity participation (including any preferred equity or other ownership interest in Lessee or the applicable Major Subtenant, as applicable), or a participation in profits or other "equity kicker". (k) "Approved Permanent Loan" means any loan extended by an Approved Lender to Lessor or any Major Subtenant after the initial construction and completion of the Project or any applicable Major Project Component, which loan is secured by an Approved Mortgage, including, but not limited to: J (i) any permanent or mini -permanent loan (whether a new loan or a conversion of any Approved Construction Loan); and any loan made in connection with any subsequent construction, demolition, renovation and/or rehabilitation from time to time of any portion of the Leasehold Improvements. (1) -Initial Equity Requirement' means that: (i) the Bayraktar Family Equity Contribution shall have been made; and (ii) Lessee, either directly or through one or more Investors (as defined in Section 8.1), shall have contributed not less than $112,000,000 (with the amount of the Bayraktar Family Equity Contribution being counted toward such sum) in equity into the Project; provided, however, that in the event that the budgeted Project cost exceeds $320,000,000, such required equity contribution by Lessee shall be an amount not less than thirty-five percent (35%) of such budgeted Project cost. The foregoing equity contribution amounts shall include all demonstrable hard costs and soft costs reasonably related to the Project expended or reimbursed by Lessee and/or the Bayraktar Family prior to or after the 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone u2-1344 date hereof. In no event shall the required Bayraktar Family Equity Contribution amount be affected by any increase in Project costs. (m) "Maximum Project Debt to Value Ratio" means that: (i) the aggregate principal indebtedness of all Approved Permanent Loans secured by Approved Leasehold Mortgages, and all Approved Permanent Loans secured by Approved Major Subleasehold Mortgages, shall not exceed (exclusive of advances to protect security and overdue and default interest) Seventy Five Percent (75%) of the Fair Market Value of the Project; and (ii) the aggregate principal indebtedness of all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Leasehold Mortgages and all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Major Subleasehold Mortgages shall not exceed (exclusive of advances to protect security and overdue and default interest) Eighty Five Percent (85%) of the Fair Market Value of the Project, unless the prospective Debt Service Coverage Ratio for all such Approved Permanent Loans and Approved Mezzanine Financings combined will, based on reasonable pro formas, be less than 1.3, in which case such percentage shall be Seventy Five Percent (75%) instead of Eighty Five Percent (85%). (n) "Maximum Project Component Debt to Value Ratio" means, with respect to any applicable Major Project Component, that: (i) the aggregate principal indebtedness of all Approved Permanent Loans secured by Approved Major Subleasehold Mortgages with respect to such Major Project Component shall not exceed (exclusive of advances to protect security and overdue and default interest) Seventy Five Percent (75%) of the Fair Market Value of such Major Project Component; and (ii) the aggregate principal indebtedness of all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Major Subleasehold Mortgages with respect to such Major Project Component shall not exceed (exclusive of advances to protect security and overdue and default interest) Eighty Five Percent (85%) of the Fair Market Value of such Major Project Component, unless the prospective Debt Service Coverage Ratio for all such Approved Permanent Loans 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ;2-1304 and Approved Mezzanine Financings combined will, based on reasonable pro formas, be less than 1.3, in which case such percentage shall be Seventy Five Percent (75%) instead of Eighty Five Percent (85%). (o) "Fair Market Value" means the fair market value of the Project or any Major Project Component, as applicable, based on the most current "as -built" appraisal, prepared by an MAI appraiser licensed to perform appraisal services within the State of Florida, obtained by an Approved Mortgagee as a condition to making any loan or advance (including any future advance) by such Approved Mortgagee secured or to be secured by an Approved Mortgage. In the event that the most current appraisal is more than two (2) years old, either Party may require a new appraisal or an update and recertification of the prior appraisal. The cost of such new or recertified appraisal shall be the responsibility of Lessee, but any such new or recertified appraisal shall be certified to Lessor as well as to Lessee. (p) "Foreclosure Transfer" means a foreclosure sale with respect to an Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage or as a result of the assignment or transfer of the Leasehold Estate or applicable Major Subleasehold Estate in lieu of foreclosure or other similar transaction. (q) "Approved Foreclosure Transferee" means any Person (including, but not limited to, any Approved Lender or any Affiliate, designee, nominee or assignee thereof) acquiring the Leasehold Estate or any Major Subleasehold Estate pursuant to a Foreclosure Transfer; provided, however, that such Person must: (i) not appear on a Terrorist List at the time of such Foreclosure Transfer; (ii) not have had (or be controlled by a Person who has had) any criminal felony convictions within the immediately preceding ten (10) years prior to such Foreclosure Transfer; (iii) have substantial experience in owning or operating projects which are comparable to the Project or the applicable Major Project Component, or retain, within a reasonable period of time, an operator having such experience to operate the Project or the applicable Major Project Component; and X217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (iv) assume in writing all of the obligations of Lessee hereunder, or all of the obligations of any applicable Major Subtenant under the applicable Major Sublease, accruing from and after the effective date of such Foreclosure Transfer, and provide a copy of such assumption agreement to the Chief Executive Officer within ten ( 10) days after the effective date of such Foreclosure Transfer. (r) "Approved Subsequent Foreclosure Purchaser" means any Person acquiring the Leasehold Estate or any Major Subleasehold Estate from an Approved Foreclosure Transferee, provided that such Person must: (i) not appear on a Terrorist List at the time of such acquisition; (ii) not have had (or be controlled by a Person who has had) any criminal felony convictions within the immediately preceding ten (10) years prior to such acquisition; (iii) have substantial experience in owning or operating projects which are comparable to the Project or the applicable Major Project Component, or retain, within a reasonable period of time, an operator having such experience to operate the Project or the applicable Major Project Component; and (iv) assume in writing all of the obligations of Lessee hereunder, or all of the obligations of any applicable Major Subtenant under the applicable Major Sublease, accruing from and after the effective date of such acquisition, and provide a copy of such assumption agreement to the Chief Executive Officer within ten (10) days after the effective date of such acquisition. Section 6.2 Prohibited Mortgages. (a) Leasehold Estate. Other than pursuant to an Approved -Leasehold Mortgage, Lessee may not mortgage, pledge or otherwise encumber all or any part of Lessee's interest in the Leasehold Estate (and no such mortgage, pledge or other encumbrance shall be valid or effective) without Lessor's prior written consent, which may be withheld in its sole and absolute discretion. (b) Major Subleasehold Estate. Other than pursuant to an Approved Major Subleasehold Mortgage, no Major Subtenant may mortgage, pledge or otherwise encumber all or any part of such Major Subtenant's interest in its Major Subleasehold Estate (and no such mortgage, pledge or #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0t2-1304 other encumbrance shall be valid or effective), without Lessor's prior written consent, which may be withheld in its sole and absolute discretion. Section 6.3 Permitted Mortgages. (a) Leasehold Estate. Lessee is freely permitted to grant any and all Approved Leasehold Mortgages. (b) Major Subleasehold Estates. Each Major Sublessee is freely permitted to grant any and all Approved Major Subleasehold Mortgages. (c) Mortgages Encumbering_ Space Leasehold Estates. Nothing contained herein shall be deemed to prevent: (i) any Space Tenant from granting any mortgage, deed of trust or other similar security instrument encumbering its right, title and interest in, to and under the applicable Space Lease; or (ii) any holder of any such mortgage, deed of trust or other instrument from foreclosing upon such instrument or accepting an assignment or transfer in lieu thereof and thereafter assigning or transferring the collateral under such instrument to another Person, all subject to and in accordance with the terms and conditions of the applicable Space Lease. (d) Amendments. Upon the request of any actual or prospective Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee or any Approved Mezzanine Financer, Lessor and Lessee shall enter into a modification or amendment of this Lease to incorporate such commercially reasonable modifications, additions or deletions to this Lease as such party may reasonably request so as to render this Lease and any applicable Major Sublease "financeable" based on criteria for "financeability" typically imposed in comparable transactions, provided that such modification or amendment does not: (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease and the Subordination, Non -Disturbance and Attornment Agreements described below or impose any additional material burdens on Lessor. Section 6.4 Notification of Lessor. Notwithstanding any actual or constructive notice that Lessor may have of an Approved Leasehold Mortgage or an Approved Major Subleasehold Mortgage, no 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 such Approved Leasehold Mortgagee, Approved Major Subleasehold Mortgagee or other Approved Lender shall have the rights or benefits described in this Article, nor shall the provisions of this Article be binding upon Lessor with respect to any such mortgage or any assignment thereof, unless or until such Approved Leasehold Mortgagee, Approved Major Subleasehold Mortgagee or other Approved Lender shall deliver to Lessor a copy of such applicable Approved Leasehold Mortgage or Subleasehold Mortgage and/or any other applicable security documents encumbering the collateral thereunder, together with an executed Subordination, Non -Disturbance and Attornment Agreement, substantially in form and substance as that attached hereto as Exhibit L for Approved Leasehold Mortgages and Exhibit M for Approved Major Subleasehold Mortgages; provided, however, that the Chief Executive Officer shall not unreasonably withhold his or her consent to any commercially reasonable modifications to such forms as may be reasonably requested by the applicable Leasehold Mortgagee or Major Subleasehold Mortgagee so as to render this Lease and any applicable Major Sublease "financeable" based on criteria for "financeability" typically imposed in comparable transactions; provided, that such modifications do not: (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease and the Subordination, Non -Disturbance and Attornment Agreements described below. Nothing contained in any such mortgage or contained herein, whether express or implied, shall have the effect of subordinating any interest or estate of Lessor in and to the Property, to the lien of such mortgage. Section 6.5 Foreclosure. (i) Leasehold Estate. Subject to and in accordance with the provisions of the applicable Subordination, Non -Disturbance and Attornment Agreement, any Approved Foreclosure Transferee may become the legal owner of the Leasehold Estate through a Foreclosure Transfer. Thereafter, such Approved Foreclosure Transferee may freely assign or transfer the Leasehold Estate without Lessor's consent to any Approved Subsequent Foreclosure Purchaser. Any subsequent 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 assignment or transfer thereof by such Approved Subsequent Foreclosure Purchaser to any other Person must comply with the provisions of Article VIII hereof. (b) Major Subleasehold Estate. Subject to and in accordance with the provisions of the applicable Subordination, Non -Disturbance and Attornment Agreement, any Approved Foreclosure Transferee may become the legal owner of the applicable Major Subleasehold Estate through a Foreclosure Transfer. Thereafter, such Approved Foreclosure Transferee may freely assign or transfer such Major Subleasehold Estate without Lessor's consent to any Approved Subsequent Foreclosure Purchaser. Any subsequent assignment or transfer thereof by such Approved Subsequent Foreclosure Purchaser to any other Person must comply with the provisions of Article VIII hereof. Section 6.6 New Lease. (a) Leasehold Estate. (i) Obtaining New Lease. If this Lease shall (x) terminate for any reason other than an Event of Lessee's Default for the failure, beyond the applicable cure period, to pay Base Rent, Percentage Rent, Impositions or the cost of Insurance, as to which Event of Lessee's Default, the Approved Mortgagee was provided notice and an opportunity to cure in accordance with this Agreement and any applicable SNDA and failed to so cure within the time provided for therein, or (y) be rejected or disaffirmed pursuant to bankruptcy law or other law affecting creditor's rights, any Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have the right, exercisable by written notice to Lessor within thirty (30) days after the effective date of such termination, to enter into a new lease of the Property with Lessor (the "New Lease"), provided that such Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have remedied all defaults on the part of Lessee involving the payment of money to Lessor, and shall continue to pay all Rent that would come due under this Lease but for such termination. The term of the New Lease shall begin on the date of the termination of this Lease and shall continue for the remainder of the term of the Lease Term, including any Extension Terms. Such New Lease shall otherwise contain the same terms and conditions as those set forth herein, except for requirements which are no longer applicable or have already been performed; provided, however, that: (i) 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 002-1344 such New Lease shall require the lessee thereunder promptly to commence, and expeditiously to continue. to remedy all other defaults on the part of the Lessee hereunder to the extent susceptible of being remedied; and (ii) such New Lease shall permit such Approved Leasehold Mortgagee or Approved Foreclosure Transferee to assign the New Lease to an Approved Subsequent Foreclosure Purchaser without Lessee's consent. The Person obtaining such New Lease shall be subrogated to the rights of Lessor against Lessee as to any monetary defaults of Lessee which are cured by such Person as a condition to obtaining such New Lease, and any other defaults which are remedied by such Person as provided by clause (i) above (but not as to any other matters). It is the intention of the parties hereto that such New Lease shall have the same priority relative to other rights or interests to or in the Property as this Lease. The provisions of this Section shall survive the termination of this Lease and shall continue in full force and effect thereafter to the same extent as if this Section were a separate and independent contract among Lessor, Lessee and the Approved Leasehold Mortgagee. From the date on which any Approved Leasehold Mortgagee or any Approved Foreclosure Transferee shall serve upon Lessor the aforesaid notice of the exercise of its rights to a New Lease, such Approved Leasehold Mortgagee or Approved Foreclosure Transferee may use and enjoy the Property without hindrance by Lessor but subject to compliance with the terms of this Lease as aforesaid. (ii) Execution of Other Documents. Simultaneously with the making of such New Lease, the party obtaining such New Lease, Lessor, all Major Subtenants, all Approved Major Subleasehold Mortgagees, the holders of any and all Approved Time Share Licenses (through their duly appointed agent) and their respective lenders, and any Space Tenants (to the extent such Space Tenants are entitled to enter into Subordination, Non -Disturbance and Attornment Agreements pursuant to Section 33.5(d), and have done so) and their respective lenders shall execute, acknowledge and deliver such new instruments, including new mortgages and other security documents, new Major Subleases, new Approved Time Share Licenses, new Space Leases, and new Subordination, Non -Disturbance and Attornment Agreements, as the case may be, and shall make such payments and adjustments among themselves, as shall be necessary and proper for the purpose of restoring to each of such parties as nearly #2t7950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone -130 as reasonably possible, the respective interest and status with respect to the Property which was possessed by the respective parties prior to the termination of this Lease (including, but not limited to, any rights and obligations under any applicable Subordination, Non -Disturbance and Attornment Agreements entered into pursuant to the provisions of this Lease). (iii) No Termination by Lessee of any Major Sublease or Space Lease. Between the date of termination of this Lease and the date of execution and delivery of the New Lease, if the Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have requested such New Lease as provided for in this Section 6.6, Lessee shall not cancel or terminate any Major Sublease or Space Lease or accept any cancellation, termination or surrender thereof (unless such termination shall be effective as a matter of law on the termination of this Lease) without the prior written consent of such Approved Leasehold Mortgagee or Approved Foreclosure Transferee. (iv) No Condition to Cure Uncurable Defaults. Nothing contained in this Lease shall require any Approved Leasehold Mortgagee or Approved Foreclosure Transferee as a condition to its exercise of its right to enter into a New Lease to cure any default of Lessee or any Major Subtenant not reasonably susceptible of being cured by such Approved Leasehold Mortgagee or Approved Foreclosure Transferee, in order to comply with the provisions of Section 6.6. (v) Subordination, Non -Disturbance and Attornment Ag[eement. The Subordination, Non -Disturbance and Attornment described in Exhibit L shall include provisions addressing other matters concerning any New Lease, among other things: (i) the disclaimer of any representation or warranty by Lessor as to title to, the condition of, or other matters with respect to the Property and/or the Leasehold Improvements, to the extent provided for herein; (ii) the responsibility of the applicable Approved Leasehold Mortgage to remove Lessee from possession with Lessor's cooperation; and (iii) procedures for obtaining a New Lease where more than one Approved Leasehold Mortgagee requests same. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-304 Section 6.7 Major Subleasehold Estates. Lessee agrees (and Lessor acknowledges) that each Major Sublease shall contain provisions therein comparable to those set forth in Section 6.6 for the benefit of each Approved Major Subleasehold Mortgagee. Section 6.8 Liability of Approved Mortgagee. (a) Leasehold Estate. No Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall become liable for the performance or observance of any covenants or conditions to be performed or observed by Lessee, unless and until such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee acquires possession of the Leasehold Estate, becomes the owner of the Lessee's interest hereunder, or enters into a New Lease with Lessor pursuant to Section 6.7 above. Thereafter, such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall be liable for the performance and observance of those covenants and conditions only for so long as such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee remains in possession, owns such interest or is lessee under such New Lease (and thereafter to the extent of any proceeds from the transfer or conveyance of such interest, but only as to any such covenants and conditions accruing to the date of such transfer or conveyance). (b) Major Subleasehold_ Estate. No Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall become liable for the performance or observance of any covenants or conditions to be performed or observed by the applicable Major Subtenant, unless and until such Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee acquires possession of the applicable Major Subleasehold Estate, becomes the owner of the Major Subtenant's interest under the applicable Major Sublease, or enters into a new sublease pursuant to provisions in the applicable Major Sublease described in Section 6.7.above. Thereafter, such Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall be liable for the performance and observance of those covenants and conditions only for so long as such Approved Major #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone !2 -1304 Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee owns such interest or is sublessee under such new sublease (and thereafter to the extent of any proceeds from the transfer or conveyance of such interest, but only as to any such covenants and conditions accruing to the date of such transfer or conveyance). Section 6.9 Assignment of Development Plans and Project Approvals. (a) Grant of Right to Use. Lessee hereby grants Lessor the right to use the Development Plans and the ability to grant to other professionals the right to use the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepared the Development Plans and to the rights of any Approved Mortgagees therein) and all Project Approvals. Lessor agrees not to enforce such use right until after the occurrence and during the continuance of an Event of Lessee's Default. Furthermore, such use right shall be subject, subordinate and inferior to any rights with respect to the Development Plans and the Project Approvals which are granted to any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee as security for any applicable loan. If required by any Approved Mortgagee, Lessor shall join in any pledge of such rights as security for any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage solely to subordinate Lessor's interest in the same to the interest of such Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage. (b) OwnershiRUpon Termination of Lease. In the event of termination of this Lease on account of an Event of Lessee's Default, Lessor shall be entitled to the full, complete and unconditional use and ownership of the Development Plans and the ability to grant to other professionals the right to use the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepared the Development Plans), and full, complete and unconditional ownership of the Project Approvals, without payment of any consideration therefor by Lessor to Lessee, provided that these rights shall be subject, subordinate and inferior to the rights therein of any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage (or any applicable Approved Foreclosure Transferee), to the 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-1304 extent that a New Lease is entered into pursuant to Section 6.6 or a new Major Sublease is entered into pursuant to the comparable provisions of any Major Sublease. (c) Comparable Assignment in Major Subleases. Lessee covenants that each Major Sublease shall include an assignment (which assignment shall be comparable to that set forth in subparagraph (b) above) of such Major Subtenant's rights in and to any portion of the Development Plans and the Project Approvals, as the same pertain to the Major Sublease, such that the rights granted by Lessee herein shall include Lessee's rights to use any such Development Plans and Project Approvals which were prepared in connection with such Major Subleasehold Estate. Lease. Section 6.10 Survival. The provisions of this Section 6.9 shall survive any termination of this Section 6.11 Mezzanine Financing. (a) Secured By Approved Mortgage. Any Mezzanine Financing may be secured in whole or in part by an Approved Mortgage. In such case, the applicable Mezzanine Financer shall be deemed to be an Approved Mortgagee and entitled to all the rights and benefits hereunder of an Approved Mortgagee. (b) Secured by a Pledge. Any Mezzanine Financing made by an Approved Mezzanine Financer may be secured in whole or in part by a pledge or hypothecation of, or any other security interest in, any membership interests, shares or other ownership and/or voting interests in or rights of Lessee or any applicable Major Subtenant. Mezzanine Financing made by an Approved Mezzanine Financer, and any such pledge, hypothecation or other granting of any such security interest, may be made freely and without Lessor's consent; provided that if such Mezzanine Financing is secured by an Approved Mortgage, it shall be in compliance with the applicable provisions of this Article VI. Furthermore, subject to subparagraph (c) below, any Approved Mezzanine Financer or Approved Lender (or any assignee who meets the criteria for an Approved Mezzanine Financer or Approved Lender, and any nominee or designee of an Approved Mezzanine Financer or Approved Lender) may, at any time, without Lessor's consent: (i) realize upon any such pledge, hypothecation or security interest in 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 accordance with the terms of any applicable security agreements or instruments (or accept an assignment. conveyance or transfer in lieu thereof) and become the owner and holder of the applicable membership interests, shares or other ownership and/or voting interests in or rights of Lessee or any applicable Major Subtenant (collectively, a "Realization Upon Mezzanine Collateral"); and (ii) thereafter sell, convey, assign or transfer same to any other Person(s), provided that: (A) such Person(s) or Investors (as defined in Section 8.1) therein satisfy the requirements of Section 8.14 and Section 8.15; and (B) such sale, conveyance, assignment or transfer does not violate the terms and conditions of Section 8.2. (c) Transfer of Control Upon Realization of Collateral. In the case of any Realization Upon Mezzanine Collateral which results in a Transfer of Lessee Control or a Transfer of Major Subtenant Control, as applicable (as such terms are defined in Section 8.1): (i) such event shall deemed a Foreclosure Transfer (even if the applicable Approved Mezzanine Financing is not secured by an Approved Mortgage, or if the Approved Mezzanine Financer holds an Approved Mortgage but elects not to exercise its rights and remedies thereunder), and any Person which obtains Voting and Operational Control of Lessee or the applicable Major Subtenant, as applicable, shall be deemed a Foreclosure Transferee (provided that such Person satisfies the requirements of clauses (i), (ii) and (iii) in the definition of a Foreclosure Transferee), and such Person shall thereupon be entitled to all of the rights and benefits afforded hereunder to a Foreclosure Transferee, including, without limitation, the right to transfer its interest in Lessee or the applicable Major Subtenant to an Approved Subsequent Foreclosure Purchaser. (d) Absolute Grant of Equity As a Condition to Mezzanine Financing. In the event any Approved Mezzanine Financer requires, as a condition to extending any Mezzanine Financing, that Lessee or any applicable Major Subtenant, as applicable, grant to such Approved Mezzanine Financer an absolute ownership or equity interest, direct or indirect, in Lessee or any applicable Major Subtenant (i.e., where such grant does not serve as collateral or security for any Approved Mezzanine Financing), such grant may be made, provided that such grant of ownership does not violate the terms and conditions of #217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone 02-1304 Article VIII (it being understood, however, that such Mezzanine Financer shall be deemed to be a Non - Disclosed Investor, as defined in Section 8.1). Section 6.12 Purchase Money Financing. Notwithstanding anything to the contrary contained herein: (i) Lessee shall have the right to take back a purchase money mortgage in connection with any Leasehold Estate Transfer (as defined in Article VIII) and to exercise all of its rights and remedies thereunder, but subject to the superior rights of any Approved Mortgagee; and (ii) any Major Subtenant shall have the right to take back a purchase money mortgage in connection with any Major Subleasehold Estate Transfer (as defined in Article VIII) and to exercise all of its rights and remedies thereunder, but subject to the superior rights of any Approved Mortgagee. The indebtedness secured by any such purchase money mortgage encumbering the Leasehold Estate shall be included in any calculation of the Maximum Project Debt to Value Ratio. The indebtedness secured by any such purchase money mortgage encumbering any Major Subleasehold Estate shall be included in any calculation of the Maximum Project Component Debt to Value Ratio with respect to such Major Subleasehold Estate. No such purchase money mortgage may be assigned by the holder thereof to another Person unless such other Person qualifies as an Approved Lender under the criteria set forth in the definition thereof. ARTICLE VII USE OF SUBJECT PROPERTY Section 7.1 Certain Conditions Of Leasing. Lessee shall be subject to and bound by the covenants and agreements set forth in this Article VII. Such covenants and agreements shall run with the Leasehold Estate and burden any interests subordinate thereto. Section 7.2 Major Subleases and Space Leases. (a) Comparable Covenants in Major Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in Section 7.3(a) and Section 7.4 through Section 7.11. Lessee shall use reasonable, good faith efforts to #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. (b) Comparable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in Section 73(a) and Section 7.4 through Section 7.11; and (ii) use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements on any of its Space Tenants, or to prevent Lessee from requiring any Major Subtenant to impose such more stringent requirements. (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Section 7.3(a) and Section 7.4 through Section 7.11 on account of any breach thereof by any Space Tenant. Section 7.3 Permitted Uses; Long -Term Changes. (a) Permitted Uses. The Property shall be used solely for the Permitted Uses and no other use whatsoever (subject, however, to the provisions of Section 7.12 below), unless the Chief Executive Officer, in his or her sole discretion, approves any additional or other uses and such uses are lawful and have received all necessary approvals from applicable Governmental Authorities. (b) of the Possession Date, Lessee may make a to change any134Permitted Uses (other than those Uses, such as g), inc ing, but not limited t9l, t Project Components other than the At any time after the tenth (10`h) in writing to the Chief Executive Officer are ancillary to income -generating Permitted Permitted Uses with respect to each of the Major if such Permitted Use: (i) is unable to achieve a trailing Debt Service Coverage Ratio of 1 for a pe ' of three (3) consecutive years with respect to all mortgages encumbering the applicable ajor Subleasehold Estate or po thereof; or (ii) otherwise has failed to achieve a return sufficien o support reasonable debt service. Provided t any such change in #217950 v3 -Final Version of Watso stand Ground Lease -City of Miami and Flagstone L4, the Permitted Uses: (A) receives all necessary approvals from applicable Governmental Authorities (including the City in its municipal capacity); and (B) complies with Applicable Law (including, but not limited to, passage of a public referendum, if then required by Applicable Law), the Chief Executive Officer shall approve or disapprove such change in accordance with the Chief Executive Officer Approval Procedures; subject, however, to any appropriate adjustment in Base Rent and/or Percentage Rent on account of any such change in the Permitted Uses as the Parties shall mutually agree upon (with each Party acting reasonably and in good faith). For purposes of this provision, the reasonable discretion of the Chief Executive Officer shall include such policy considerations as are deemed appropriate by the Mayor and/or the City Commission at such time. (c) Changes As to Hotels Where There is Another Hotel on Watson Island. In addition, in the event that Lessor, at any time during the Lease Term, enters into a lease agreement or other agreement for the construction and/or operation of another hotel on Watson Island, or Lessor (in either its proprietary or municipal capacity) otherwise authorizes, permits or causes the construction and/or operation of any such hotel on Watson Island, Lessee may make a request in writing to the Chief Executive Officer to change any of the Permitted Uses with respect to either or both of the Hotels. Provided that any such change in the Permitted Uses: (A) receives all necessary approvals from applicable Governmental Authorities (including the City in its municipal capacity); and (B) complies with Applicable Law (including, but not limited to, passage of a public referendum, if then required by Applicable Law), the Chief Executive Officer shall approve or disapprove such change in accordance with the Chief Executive Officer Approval Procedures; subject, however, to any appropriate adjustment in Base Rent and/or Percentage Rent on account of any such change in the Permitted Uses as the Parties shall mutually agree upon (with each Party acting reasonably and in good faith). For purposes of this provision, the reasonable discretion of the Chief Executive Officer shall include,. such policy considerations as are deemed appropriate by the Mayor and/or the City Commission at such time. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Section 7.4 No Discrimination. Lessee shall not discriminate in violation of any Applicable Laws upon the basis of race, color, religion, sex, or national origin in the sale, lease or rental, or in the use or occupancy, of the Property or the Leasehold improvements. Section 7.5 Use of the Property. Lessee shall not use or occupy the Property at any time or do anything on the Property, or permit anything to be done in, brought into or kept on the Property, which: (i) violates any insurance policies required to be maintained hereunder; (ii) causes or is likely to cause injury to the Property; or (iii) constitutes a common law or statutory nuisance, public or private. Section 7.6 Leasehold Improvements to be Open to Public. As a general matter, the Project is intended to be "open to the public" as much as practical. Accordingly, during the Lease Term, the Project shall be open to the general public without discrimination, subject to reasonable operational rules, regulations and restrictions typically imposed by operators of mixed uses projects similar to the Project; provided, however, that: (i) the businesses operating on the Property may charge fees for goods, commodities or services (including, without limitation, Marina slips and guest rooms at the Hotels, whether or not subject to an Approved Time Share License program) as they may establish from time to time, so long as such services are made available to the general public on a nondiscriminatory basis upon the payment of such fees; (ii) Lessee may operate or allow the operation of membership clubs (unless they are specifically listed herein as Prohibited Uses) which may charge membership fees, so long as such clubs are made available to the general public on a nondiscriminatory basis upon the payment of such membership fees; and (iii) nothing contained herein shall be deemed to require public access to any vessels at the Marina except as specifically required by clauses (i) and (ii) above, or to any areas not typically made available to the public (e.g., service areas, storage areas, "back of the house" areas, etc.). Section 7.7 jgfet 1. Lessee shall take commercially reasonable actions to ensure that the Property is a safe environment for the general public. Lessor, as owner of the Property, shall have no responsibility for, or liability whatsoever to Lessee, the Major Subtenants, the Space Tenants and any other Person having any interest in the Leasehold Estate in connection with provision of security services to the Property. #2 t 7950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Section 7.8 Continuous Operation. Subject to any interruptions or closures on account of any Force Majeure Events, emergencies or other exigent circumstances or on account of any repairs or alterations required or permitted hereunder, Lessee shall at all times during the Lease Term: (i) operate the Property in such manner as will, in Lessee's good faith reasonable business judgment, be reasonably likely to maximize the Gross Revenues produced by the Project; and (ii) keep the Project open for business on a continual basis during the usual days and hours for such business as are customary for the applicable type of use (it being understood, however, that certain businesses and activities are seasonal in nature and therefore may be closed or operate for fewer days or hours during certain periods of the year). The foregoing provisions shall not be deemed to require Lessee to ensure that all of the available facilities at the Property are open or leased to third parties at all times, inasmuch as: (A) there will need to be occasional adjustments of usage of facilities; and (B) there will be some portion of space that will be remain vacant from time to time given then -existing market conditions and turnover of Space Tenants. Furthermore, Lessor acknowledges and agrees that it is likely that most (if not all) of the businesses operating on the Property will be operated by Persons other than Lessee. Section 7.9 Compliance with Laws. (a) Compliance. Lessee shall throughout the Lease Term, at Lessee's sole expense, promptly comply in all material respects with all Applicable Laws now in effect or that may hereafter be adopted by any Governmental Authority (including, without limitation, the Minority and Women Business Affairs and Procurement Program Ordinance of the City of Miami). Specifically, but without limitation, Lessee shall construct and maintain the Leasehold Improvements to accommodate the disabled and comply in all material respects with the applicable requirements of the Americans with Disabilities Act of 1990, as amended, as well as other Applicable Laws pertaining to handicapped access, including, without limitation, the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (b) Notice. Lessee agrees to give Lessor prompt notice of the receipt by Lessee of any written complaints related to violation of any Applicable Law and of the commencement of any proceedings or investigations which relate to compliance with any Applicable Law. (c) Right to Contest Compliance. Lessee shall have the right in good faith to contest by appropriate legal proceeding and without cost or expense to Lessor, the validity of any Applicable Law. If compliance with any Applicable Law may legally be held in abeyance (i) without the incidence of any lien, charge or liability of any kind against the title to the Property or the Leasehold Estate (unless Lessee transfers such lien to bond or delivers an appropriate indemnity to Lessor), and (ii) without subjecting Lessee or Lessor to any liability of whatsoever nature for failure so to comply, Lessee may postpone compliance until the final determination of any proceedings, provided that all proceedings shall be prosecuted with all due diligence and dispatch. Section 7.10 Compliance with Insurance Requirements. Lessee shall observe and comply in all material respects with the requirements of all policies of public liability, fire and all other policies of insurance in force with respect to the Leasehold Improvements. Section 7.11 Prohibited Uses. Notwithstanding anything contained herein to the contrary, Lessee hereby agrees that the Property shall not be used for any of the uses set forth on Exhibit N attached hereto (collectively, the "Prohibited Uses") without the Chief Executive Officer's express prior written consent, which may be withheld in his or her sole discretion. Section 7.12 Casino Gambling. In the event that casino gambling or other forms of gambling or games of chance which are presently illegal in the City of Miami shall in the future become legal for similar properties, and Lessee or any Major Subtenant desires to offer the same on any portion of the Project: (i) Lessee or such Major Subtenant (or the applicable casino or other operator) shall be entitled to make application for a license therefor in the same manner as similarly situated parties in conjunction with properties that are not leased by the City; (ii) any such application by Lessee or such Major Subtenant (or the applicable casino operator or other operator) for any such license or approval required by the City (in its municipal capacity) shall by considered by the City on the same basis as the City shall #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 consider comparable proposals for properties in which the City is not a ground lessor; (iii) in the City's role as ground lessor of the Project, the City shall not object to Hotel A and Hotel B, at Lessee's option, being treated as a single hotel (e.g., for requirements as to the minimum number of hotel rooms or keys); provided, however, that this clause (iii) shall not prevent the City from refraining from according such treatment to the two hotels in the City's role in licensing, approving or overseeing gaming activity; and (iv) in its role as Lessor hereunder, the City may condition any approval of such gaming activities on receiving, over and above the Base Rent and Percentage Rent payable under this Lease, the Casino Rent (as hereinafter defined). (a) Casino Rent. For purposes hereof, the term "Casino Rent" means the fair market rent attributable to the operation of casino gaming or other games of chance on the Property, taking into consideration the rent payable on account of comparable gaming activities at those properties within the United States which are most comparable to the Project, but with any appropriate adjustments for regional differences, as determined in accordance with the procedure set forth in subparagraph (b) below. Casino Rent shall not be treated as or be in lieu of a tax or levy by a municipal body on gaming activity. (b) Procedure for Determining Casino Rent. The procedure for determining the Casino Rent shall be as follows: (i) Selection of Lessor's Extort and Lessee's Expert. Lessor shall select an expert who shall be paid by Lessor ("Lessor's Expert"), and Lessee shall select an expert who shall be paid by Lessee ("Lessee's Expert'). Each expert shall be reasonably experienced or have consultants who are reasonably experienced with appraisal considerations involving casino operations. (ii) Selection of Third Expert. The third expert (the "Third Expert") shall be jointly selected by Lessor's Expert and Lessee's Expert. The cost of the Third Expert shall be evenly split between Lessee and Lessor. If Lessor's Expert and Lessee's Expert fail to agree on the Third Expert within thirty (30) days after their appointment, the Third Expert shall be appointed by the President of the American Institute of Real Estate Appraisers ("AIREA") on the application of either Lessee's Expert or 0217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Lessor's Expert. Such application shall be made by Lessor's Expert or Lessee's Expert, as applicable, on fifteen (15) days' prior written notice to the other. The Third Expert appointed by the President of the AIREA may or may not be a member of the AIREA, in the discretion of such President, but in any event shall, in the judgment of such President, have appropriate experience for such appointment and shall not have undue connections or influence with either Lessor or Lessee. (iii) Procedure if Either Parte Fails to Select Expert. If either Lessor or Lessee shall fail to appoint an expert within forty-five (45) days after demand from the other to make the appointment, then the expert appointed by the party making the demand shall appoint the second expert, and the two experts so appointed shall appoint the Third Expert. If the first two experts so appointed shall fail to agree on such third expert within thirty (30) days after their appointment, the Third Expert shall be appointed by the President of AIRWA in the same manner provided in clause (ii) above. (iv) Proposals. Within thirty (30) days after appointment of all three (3) experts, Lessee's Expert and Lessor's Expert shall each prepare and submit a proposal for Casino Rent, together with written evidence supporting such proposal, to the Third Expert. (v) Selection of One Proposal. The Third Expert shall have fifteen (15) days to discuss the respective proposals with -each submitting expert and an additional thirty (30) days thereafter to select between the two (2) proposals; it being understood that the Third Expert may only select one (1) expert's proposal or the other and may not select portions of both or attempt to combine proposals. The proposal for Casino Rent selected by the Third Expert shall be binding and conclusive on Lessor and Lessee. (vi) Extension of Time Frames. Notwithstanding anything contained herein to the contrary, either Lessor or Lessee shall be entitled to extend any of the timeframes set forth in subparagraphs (ii) through (v) above for up to an additional thirty (30) day period if deemed necessary or desirable by either Party. #217950 0 - Final Version of Watson [stand Ground Lease - City of Miami and Flagstone 02-1304 Section 7.13 Signage. (a) Lessee's Installation of Signage on Property. Lessee, at its sole cost and expense, shall be permitted to install signage within the Property (including, but not limited to, any signage required by any franchisors or licensors with respect to the Hotels), subject to: (i) the prior written approval of the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures as to design, location, size and materials of any exterior signage; and (ii) Lessee's obtaining all applicable permits from the applicable Governmental Authorities as may be required in connection therewith. (b) Lessee's Installation of Signage Outside Property. Any request to install signage outside of the Property, including, without limitation, any request to the State of Florida Department of Transportation ("FDOT") for signage in State rights-of-way, must be approved in advance in writing by the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures. Such signage shall, to the extent permissible by FDOT, be consistent as to design, location, size and materials with other signage approved by Lessor for Watson Island. (c) Participation in Cost of Watson Island Pathfinder Signage System. Lessee shall participate in and pay, no later than thirty (30) days after receipt of a written invoice(s) from Lessor therefor, its proportionate share of the reasonable cost of an island -wide pathfinder signage system to provide uniform and efficient direction to all destinations on Watson Island. (d) MUSP. The exact form of all signage shall be subject to and in compliance with the requirements of the Major Use Special Permit for the Project. Section 7.14 Cure of Defaults Under Approved Leasehold Mortgages and -Approved Major Subleasehold Mortgages. (a) Approved Leasehold Mortgages. Upon receiving written notice from any Approved Leasehold Mortgagee of any material default under any its Approved Leasehold Mortgage, Lessee shall use diligent efforts to cure such default in the manner and to the extent required by such Approved Leasehold Mortgage. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone (b) Approved Major Subleasehold Mortgage. Lessee shall require each Major Subtenant to require each of such Major Subtenant's Approved Major Subleasehold Mortgagees to send a copy to Lessee of any written notice of a material default under the applicable Approved Major Subleasehold Mortgage. Upon Lessee's receipt of any such written notice, Lessee shall use diligent efforts to cause such default to be cured in the manner and to the extent required by such Approved Major Subleasehold Mortgage; provided, however, that Lessee shall not be required to cure any such default which cannot reasonably be cured by Lessee or cannot be cured without having possession of the applicable Major Project Component. (c) No Third Party Beneficiaries. The Parties specifically acknowledge and agree that no Approved Mortgagees, Major Subtenants or other Persons shall be third -party beneficiaries of the provisions of this Section 7.15. Section 7.15 Enforceability. It is intended and agreed hereby that the restrictive covenants contained in this Article VII shall be binding upon the Parties and their successors in interest and assigns, as covenants running with the land and shall be for the benefit and in favor of, and enforceable by, either Lessor and/or Lessee; provided however, that such covenants shall be binding on Lessor and Lessee, and their respective successors in interest and assigns, only for such period as each shall have (i) fee title to the Property, as to the City, and (ii) the Leasehold Estate, as to Lessee. ARTICLE VIII RESTRICTIONS ON TRANSFERS AND APPROVAL OF INVESTORS Section 8.1 Definition of Terms For purposes of this Article VIII, the following terms shall have the meanings attributed to them in this Section: (a) As to Leasehold Estate. (i) "Leasehold Estate Transfer" means any direct or indirect, voluntary or involuntary, sale, transfer, or assignment of any right, title or interest in and to this Lease or the Leasehold Estate. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone c,2--1304 (ii) "Lessee Interest Assignment" means: (A) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of any legal or beneficial interest in, or any grant of a security interest with respect to, Lessee; (B) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of all or substantially all of the assets of Lessee; or (C) any merger or consolidation with or of, or recapitalization or other similar transaction with respect to, Lessee or any Person having any legal or beneficial interest in Lessee. (iii) "Lessee Transfer of Control" means any Lessee Interest Assignment which results in a change in Voting and Operational Control of Lessee. (b) As to Major Subleasehold Estates: (i) "Major Subleasehold Estate Transfer" means any direct or indirect, voluntary or involuntary, sale, transfer, or assignment of any right, title or interest in and to any Major Sublease or any Major Subleasehold Estate. "Major Subtenant Interest Assignment' means: (A) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of any legal or beneficial interest in, or any grant of a security interest with respect to, any Major Subtenant; (B) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of all or substantially all of the assets of such Major Subtenant; or (C) any merger or consolidation with or of, or recapitalization or other similar transaction with respect to, such Major Subtenant or any Person having any legal or beneficial interest in such Major Subtenant. (iii) "Major Subtenant Transfer of Control' means any Major Subtenant Interest Assignment which results in a change in Voting and Operational Control of the -applicable Major Subtenant. (c) Other Terms. (i) "Bavraktar Permitted Transfer Date" means the later to occur of: (i) five (5) years after the Possession Date; or (ii) three (3) years after the date on which the last of the Major Project Components shall have Opened for Business. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-304 (ii) "Major Sublease Unrestricted Transfer Date" means the date on which: (i) the Project shall have achieved a trailing Debt Service Coverage Ratio of 1.3 with respect to all applicable Approved Leasehold Mortgages; and (ii) the applicable Major Project Component shall have achieved a trailing Debt Service Coverage Ratio of 1.3 with respect to all applicable Approved Major Subleasehold Mortgages encumbering the Major Subleasehold Estate with respect to such Major Project Component. - - (iii) "Allocated Rent" means: (i) the total Base Rent payable by Lessee to Lessor hereunder during any applicable calendar year, multiplied by a fraction, the numerator of which is the total acreage of the Property subleased pursuant to any applicable Major Sublease; and the denominator of which is the total acreage of the Property and (ii) the total Percentage Rent payable by Lessee to Lessor hereunder during any calendar year which is attributable to the Major Project Component operated pursuant to such Major Sublease. The foregoing definition of Allocated Rent shall not bind the Chief Executive Officer in the approval of any Major Sublease hereunder. (iv) "Lessee's Net Worth" means the net worth of Lessee, taking into account the Major Sublease Rent Present Value and such other assets as Lessee may then have. (v) "Major Sublease Rent Present Value" means the present value (based on a commercially reasonable interest factor agreed upon by the Parties) of the estimated aggregate rental stream (including base rent, percentage rent and all other rents) required to be paid to Lessee under all of the Major Subleases during the then remaining balance of the respective teams thereof. (vi) "Ground Lease Rent Present Value" means the present value (based on a commercially reasonably interest factor agreed upon by the Parties) of the total estimated Base Rent and Percentage Rent payable from Lessee to Lessor during the then remaining balance of the Lease Term. (vii) "Sufficient Lessee Economic Interest" means that either of the following requirements is met: (A) the aggregate rental stream (including base rent, percentage rent and all other rents) required to be paid to Lessee under each Major Sublease during each calendar year of the term thereof exceeds, by Twenty Percent (20%) or more, the Allocated Rent with respect to such Major ##217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Sublease which is payable by Lessee to Lessor hereunder during such calendar year; or (B) Lessee's Net Worth exceeds, by Twenty Percent (20%) or more, the Ground Lease Rent Present Value. (viii) "Existing Investment Fund" means any existing, widely recognized investment vehicle (such as a widely recognized mutual fund, real estate investment trust, pension fund, insurance company or other investment fund) which has or obtains any direct or indirect legal or beneficial interest in the Project, which investment vehicle: (i) also invests in investments other than the Project and/or other projects which are owned and/or operated by the Bayraktar Family; and (ii) was not formed for the specific purpose of investing in the Project. (ix) "Investors" means: (i) all Persons now or hereafter having an equity interest in the Project; (ii) any direct or indirect legal or beneficial owners of interests in all of the equity investors in the Project; and (iii) holders of any note, debenture, mortgage or other security instrument encumbering any Major Project Component(s) and/or any interest in Lessee, other than any Approved Mortgagee. (x) "Non -Disclosed Investors" means those Investors: (i) whose investments in the Project are made through an Existing Investment Fund; or (ii) who are or will become Investors on account of any transaction described in Section 8.8. Investors. (xi) "Disclosed Investors" means all Investors other than Non -Disclosed (xii) . "Financial Advisor" means any financial advisor for the Project designated by Lessee. Such financial advisor initially shall be HSBC (U.S.). Securities Inc. Any replacement thereof shall be subject to the Chief Executive Officer's prior written approval in accordance with the Chief Executive Officer Approval Procedures, but the Chief Executive Officer shall approve any such financial advisor which is: (i) not a Disqualified Person; and (ii) is listed in Exhibit U or otherwise has a level of business experience and expertise comparable to that of HSBC (U.S.) Securities Inc. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (xiii) -Investor Ouestionnaire" means a questionnaire prepared by the Financial Advisor as part of the initial screening process for Disclosed Investors, the form of which shall have been mutually agreed upon by the Financial Advisor, the Chief Executive Officer and Lessee. Section 8.2 Bayraktar Interests. (a) All Transfers by BWaktar Prohibited PRIOR TO Bayraktar Permitted Transfer Date. Lessee recognizes and agrees that: (i) the experience of Lessee and Mehmet Bayraktar was given special consideration by Lessor in the selection process which resulted in the award of this Lease; (ii) the qualifications and identity of Lessee and Mehmet Bayraktar are of particular concern to the community and Lessor; and (iii) it is partially because of such qualifications and identity that Lessor is entering into this Lease. Accordingly, at all times prior to the Bayraktar Permitted Transfer Date: (A) the Bayraktar Family Equity Contribution shall be maintained; (B) Mehmet Bayraktar shall retain Voting and Operational Control of Lessee; (C) Mehmet Bayraktar or Lessee shall retain Voting and Operational Control of each Major Subtenant then in existence; and (D) Lessee shall own more than Fifty Percent (50%) of the ownership interests in each Major Subtenant then in existence. Furthermore, at all times prior to the Bayraktar Permitted Transfer Date, there shall be no Leasehold Estate Transfer, Lessee Transfer of Control or Major Subleasehold Estate Transfer. Any waiver of the foregoing requirement shall require the Chief Executive Officer's prior written consent, which may be granted or withheld in his or her sole and absolute discretion. (b) Transfers by Bavraktar Permitted AFTER ftraktar Permitted Transfer Date. From and after the Bayraktar Permitted Transfer Date: (i) the Bayraktar Family may divest itself of any and all equity it has in the Project; and (ii) Mehmet Bayraktar may divest himself of Voting and Operational Control of Lessee and/or any Major Subtenant. No such actions shall require Lessor's prior written consent; provided, however, that any: (i) any such action shall be in compliance with the provisions of Section 8.15 and Section 8.15; and (ii) such action which results in a Leasehold Estate Transfer, a Lessee Transfer of Control, a Major Subleasehold Estate Transfer or a Major Subtenant Transfer of Control shall comply with the applicable provisions of this Article VIII. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Section 8.3 Leasehold and Maior Subleasehold Estates. (a) Leasehold Estate Transfer or Lessee Transfer of Control AFTER Bayraktar Permitted Transfer Date. From and after the Bayraktar Permitted Transfer Date, any Leasehold Estate Transfer or Lessee Transfer of Control shall be permitted, provided that: (i) Approval. The Chief Executive Officer shall have given, in accordance with the Transfer Review Procedures (as hereinafter defined), his or her prior written approval (which approval shall be in his or her sole discretion prior to the Bayraktar Permitted Transfer Date), of.- (i) the new Lessee, in the case of a Leasehold Estate Transfer; or (ii) the Person obtaining or having Voting and Operational Control of Lessee, in the case of any Lessee Transfer of Control; (ii) Assumption. In the case of a Leasehold Estate Transfer, the new Lessee shall assume, by written instrument in recordable form and reasonably satisfactory to the City Attorney, all of the obligations of Lessee under this Lease; (iii) Voting_and Operational Control. At least one Person shall have Voting and Operational Control of the new Lessee (in the case of a Leasehold Estate Transfer) or of Lessee (in the case of a Lessee Transfer of Control), and such Person shall have (or shall have retained an operator having) not less than ten (10) years of experience in owning or operating projects which are comparable to the Project; (iv) No Disqualified Person. The new Lessee (in the case of a Leasehold Estate Transfer) or the Person acquiring Voting and Operational Control of Lessee (in the case of a Lessee Transfer of Control) shall not be a Disqualified Person; and (v) Investors. The requirements of Section 8.14 and Section 8.15 shall be satisfied as to all Investors in the new Lessee (in the case of a Leasehold Estate Transfer) or all new Investors in Lessee (in the case of a Lessee Transfer of Control). (b) Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control AFTER Bayraktar Permitted Transfer Date and BEFORE the Maior Sublease Unrestricted Transfer Date. During any period from and after the Bayraktar Permitted Transfer Date and before the Major Sublease 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Unrestricted Transfer Date, any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control shall be permitted, provided that: (i) Approval. The Chief Executive Officer shall have given, in accordance with the Transfer Review Procedures, his or her prior written approval, in his or her sole discretion, of. (i) the new Major Subtenant, in the case of a Major Subleasehold Estate Transfer; or (ii) the Person obtaining or having Voting and Operational Control of the applicable Major Subtenant, in the case of any Major Subtenant Transfer of Control; (ii) Assumption. In the case of a Major Subleasehold Estate Transfer, the new Major Subtenant shall assume, by written instrument in recordable form and reasonably satisfactory to the City Attorney, all of the obligations of the applicable Major Subtenant under the applicable Major Sublease; (iii) Voting and Operational Control. At least one Person shall have Voting and Operational Control of the new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or of the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control), and shall have (or shall have retained an operator having) not less than ten (10) years of experience in owning or operating large scale projects which are comparable to the applicable Major Project Component; (iv) Sufficient Lessee Economic Interest. There exists a Sufficient Lessee Economic Interest with respect to such Major Sublease; (v) No Disqualified Person. The new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or the Person acquiring Voting and Operational Control of the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control) shall not be a Disqualified Person; and (vi) Investors. The requirements of Section 8.14 and Section 8.15 shall be satisfied as to all Investors in the new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or all new Investors in the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control). #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (c) Maior Subleasehold Estate Transfer or Maior Subtenant Transfer of Control AFTER Bavraktar Permitted Transfer and also AFTER Maior Sublease Unrestricted Transfer Date. From and after the Major Sublease Unrestricted Transfer Date, any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control shall be permitted, provided that the requirements set forth in clauses (i) through (vi) of subparagraph (b) above are satisfied (although the Chief Executive Officer's approval is required, it shall not be unreasonably withheld). Section 8.4 Chief Executive Officer Review and Approval Procedures. In the event of a proposed Leasehold Estate Transfer or Lessee Transfer of Control described in Section 83(a) or any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control described in Section 83(b) the following procedures (collectively, the "Transfer Review Procedures'.') shall apply: (a) Notice to Chief Executive Officer. Not less than forty-five (45) days prior to any such proposed transaction, Lessee shall give or cause to be given to the Chief Executive Officer written notice of (and request from the Chief Executive Officer's written approval) of the applicable Person described in Section 83(a)(i) or Section 8.3 (b)(i), as applicable (the "Proposed Transferee") of which Lessee or its officers shall have knowledge, together with the following information: (i) the name and address of the Proposed Transferee; (ii) a description of the nature and character of the experience and business operations of the Proposed Transferee; (iii) disclosure of the ownership of such Proposed Transferee (with back up third -party written information, if possible); (iv) a proposed form of any assignment and assumption agreement, if required pursuant to Section 8.3(a)(ii) or Section 83(b)(ii); and (v) banking references and/or financial information with respect to the Proposed Transferee reasonably sufficient to enable the Chief Executive Officer to determine the financial responsibility of the Proposed Transferee. Such notice and information shall also be accompanied by an administrative fee of One Thousand Dollars ($1,000.00) paid to Lessor in order to reimburse Lessor for all of its internal costs and expenses, including, without limitation, reasonable costs incurred in connection with the review of financial materials, meetings with representatives of the proposed transferee, and review and approval of the required assignment documents. 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �1`J,04 (b) Response by Chief Executive Officer. Within thirty (30) days of the Chief Executive Officer's receipt of the written notice and information described in subparagraph (a) above, the Chief Executive Officer shall give Lessee written notice either: (i) that the Chief Executive Officer has approved to the Proposed Transferee; or (ii) the Chief Executive Officer is refusing to approve the Proposed Transferee, in which case the Chief Executive Officer shall, as part of such written notice, include a statement (with specificity and reasonable back up information for his or her conclusion and as to which of the five (i) criteria described in clauses (i) through (v) of subparagraph (a) above are not satisfied and why) of the reasons for such refusal to approve the Proposed Transferee. If the Chief Executive Officer fails to timely give such written approval, he or she shall be deemed to have approved the Proposed Transferee. The Chief Executive Officer's determination shall be made reasonably and in good faith solely on the basis of such five (5) criteria. Any such approval shall not waive any of Lessor's rights to approve any subsequent Proposed Transferee for which approval is required under this Article VIII. (c) Payment of All Sums Then Due. All Rent, Impositions, insurance, permitting and other charges due and owing as of the date of the transaction and required to be paid by Lessee under this Lease shall have been paid by Lessee and all other covenants and agreements to be kept and performed by Lessee shall have been complied with as of the date of the transaction (but for purposes of satisfying the foregoing requirement, the Proposed Transferee may rely upon an estoppel certificate from Lessor given pursuant to Section 30.2). (d) Assumption of Obligations. If applicable pursuant to Section 8.3(a)(i) or Section 8.3(b)t the Proposed Transferee shall, for itself and its successors and assigns, and especially for the benefit of Lessor, by written instrument in recordable form and reasonably satisfactory to the City Attorney, expressly assume all of the obligations of Lessee under this Lease, or all obligations of the Major Subtenant under any applicable Major Sublease, as applicable. The Proposed Transfer shall deliver to Lessor, or shall cause to be delivered to Lessor, within thirty (30) days after the effective date of the 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--304 transfer, true and correct copies of all of the instruments effectuating the transfer, including any applicable instrument of assignment and assumption. Section 8.5 Release from Liability. Upon compliance with any applicable provisions of Section 8.3 and/or Section 8.4, the applicable transferor shall, in the case of a Leasehold Estate Transfer or a Major Subleasehold Estate Transfer, be released from all liability under this Lease or the applicable Major Sublease, as applicable, for actions or obligations arising or accruing subsequent to such transfer. Section 8.6 No Consent Required for Affiliate or Related Party Transfer. Notwithstanding anything to the contrary contained herein, any Lessee Interest Assignment or Major Subtenant Interest Assignment: (i) resulting from the death of any Person, provided that such Person's interest is transferred to the spouse, any sibling(s) and/or any lineal descendant(s) (collectively, "Permitted Relatives") of the deceased Person or to one or more trusts or legal entities for the benefit of any of the Permitted Relatives; (ii) made by any Person to one or more trusts or legal entities for the benefit of such Person's Permitted Relatives, provided that the transferring Person has control over the management and decision making of such trusts or legal entities; or (iii) made by any Person to Affiliate(s) of such Person, may be completed at any time without the Chief Executive Officer's consent, provided that: (a) Notice. Lessee or the applicable Major Subtenant shall give the Chief Executive Officer prior written notice thereof (or in the case of clause (i), prompt written notice thereof); (b) No Release. Any Person liable for the obligations of Lessee under this Lease or any Major Subtenant under any Major Sublease (or in the case of clause (i), such Person's estate) shall not be released from such liability on account of any such Lessee Interest Assignment or Major Subtenant Interest Assignment; (c) No Change in Voting and Operational Control. Such Lessee Interest Assignment or Major Subtenant Interest Assignment shall not result in any change in the Person(s) having Voting and Operational Control of Lessee or the applicable Major Subtenant (except in the case of the death of any natural Person(s) who has Voting and Operational Control), although such Voting and Operational Control may be exercised through different or additional intermediary Person(s); #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (d) No Disqualified Person. Any applicable transferee shall not be a Disqualified Person; and (e) Investors. The provisions of Section 8.14 and Section 8.15 below shall apply to any new Investors on account of any such Lessee Interest Assignment or Major Subtenant Interest Assignment. In connection with any such Lessee Interest Assignment or Major Subtenant Interest Assignment, nothing contained herein shall be deemed to prevent Lessee or any Major Subtenant from complying, if it so elects, with the applicable provisions of Section 8.4, in which case the transferor (provided that the Chief Executive Officer approves the Proposed Transfer pursuant to the Transfer Review Procedures) shall be released from liability as provided for by Section 8.5. Section 8.7 Mortgages. Leases and Subleases. The provisions of this Article VIII shall not apply to or prohibit: (i) any Approved Mortgages, Foreclosure Transfers (including any such Foreclosure Transfer described in Section 6.11(c) above), transfers to Approved Subsequent Purchasers (including any such transfer described in Section 6.11(c) above) or any other transactions governed by this Article VI; or (ii) any Major Subleases, Space Leases or other leasing or subleasing transactions governed by Article XXXIII (except that Section 8.14 and Section 8.15 shall be applicable to any Investors in any Major Subtenants). Section 8.8 Going Public. Notwithstanding anything to the contrary contained herein, no consent of the Chief Executive Officer shall be required for, and the provisions of this Article VIII shall not apply to: (i) the public offering of securities by any Person which is effected pursuant to a registration statement filed with the Securities & Exchange Commission under the Securities Act of 1933 or any successor act (or pursuant to any comparable or similar procedure used outside the United States); provided, however, that if such public offering with respect to Lessee or any Major Subtenant occurs prior to the Bayraktar Permitted Transfer Date, Mehmet Bayraktar must retain Voting and Operational Control of Lessee or such Major Subtenant, as applicable; and (ii) any subsequent transaction in which such securities are publicly traded. 9217950 A - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 004 Section 8.9 Other Transactions for Which No Consent Is Required. Except for the procedures as to Investors set forth in Section 8.14 and Section 8.15, any Lessee Interest Transfer or Major Subtenant Interest Transfer or other transaction not constituting a Lessee Transfer of Control or a Major Subtenant Transfer of Control (including, but not necessarily limited to, any transfer or conveyance of any portion of the Leasehold Improvements which is subject to any Direct Space Lease) shall not require any consent by Lessor pursuant to this Article VIII. Section 8.10 Violation. Any Leasehold Estate Transfer, Lessee Transfer of Control, Subleasehold Estate Transfer or Major Subtenant Transfer of Control made in violation of the terms of this Article is strictly prohibited and shall be null and void and no force and effect and shall be deemed an Event of Lessee's Default hereunder. Section 8.11 Acceptance of Rent from Transferee. The acceptance by Lessor of the payment of Rent following any Leasehold Estate Transfer, Lessee Transfer of Control, Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control prohibited by this Article shall not be deemed to be a consent by Lessor to any of the foregoing for which such consent is required, nor shall the same be deemed to be a waiver of any right or remedy of Lessor hereunder. Section 8.12 Lessor's Participation In Proceeds. (a) Leasehold Estate Transfer or Lessee Transfer of Control. Upon the first time that there occurs either a Leasehold Estate Transfer or a Lessee Transfer of Control (whether occurring in a single transaction or in a series of transactions over a five (5) year period), Lessor shall be entitled to receive, within five (5) Business Days thereafter, a sum equal to One Tenth of One Percent (0.1%) of the total purchase price payable in consideration of such Leasehold Estate Transfer or Lessee Transfer of Control. No such sum shall be due and payable in connection with any subsequent Leasehold Estate Transfer or Lessee Transfer of Control. (b) Maior Subleasehold Estate Transfer or Major Subtenant -Transfer of Control. With respect to each Major Project Component, upon the first time that there occurs either a Major Subleasehold Estate Transfer with respect to such Major Project Component or a Major Subtenant #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Transfer of Control (whether occurring in a single transaction or in a series of transactions over a five (5) year period) with respect to the Major Subtenant for such Major Project Component, Lessor shall be entitled to receive, within five (5) Business Days thereafter, a sum equal to One Tenth of One Percent (0.1 %) of the total purchase price payable in consideration of such Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control. No such sum shall be due and payable in connection with any subsequent Major Subleasehold Estate Transfer with respect to such Major Project Component or Major Subtenant Transfer of Control for such Major Project Component. (c) Excluded Transactions. Notwithstanding the provisions of subparagraphs (a) and (b) above, no such sum described therein shall be due and payable in connection with: (i) any of the transactions or events described in Section 8.6. Section 8.7 and/or Section 8.9; (ii) any public offering described in Section 8.8 where the securities being offered constitute debt and the proceeds from the sale of such securities are used to retire indebtedness secured by one or more Approved Mortgages; (iii) any other public offering described in Section 8.8 to the extent the proceeds from the sale of such securities are used for capital raises for the construction, operation or maintenance of the Project or other uses for the Project, as opposed to the "cash out" of any Investors; or (iv) any public trading of securities described in Section 8.8dil other than an initial public offering. (d) No Double Counting. Notwithstanding the provisions of subparagraph (a) and (b) above: (i) the sums described in subparagraph (b) shall not be payable with respect to any Major Project Component if sum described in paragraph (a) has been previously paid with respect to the entire Project; and (ii) to the extent any sum described in subparagraph (b) has been paid as to any particular Major Project Component, such sum shall be deducted from any amount thereafter payable under subparagraph (a) with respect to the entire Project. Section 8.13 Organizational Documents of Lessee. As of the Possession Date, the documents listed in Exhibit P attached hereto constitute all of the organizational documents of Lessee, including, without limitation, any operating and/or voting agreements among the members thereof (collectively, the "Organizational Documents"), and Lessee hereby represents and warrants to Lessor that Lessee has #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2-30� provided to Lessor true, correct and complete copies of all such Organizational Documents. Lessee shall promptly provide Lessor with written notice of any amendments, modifications, additions or terminations of the Organizational Documents, together with written copies thereof. Prior to the Bayraktar Permitted Transfer Date, the member(s) or other Investor(s) of Lessee shall not enter into any voting agreements, the effect of which would cause Mehmet Bayraktar to relinquish Voting and Operational Control of Lessee. Section 8.14 Investors. (a) Non -Disclosed Investors. Lessee shall not be required to disclose or provide to the City the identity of or any documents or other information (including, but not limited to, financial statements or other information) concerning Non -Disclosed Investors. (b) Disclosed Investors. (i) Information to be Provided to Chief Executive Officer. With respect to each initial Disclosed Investor and each proposed subsequent Disclosed Investor, Lessee shall deliver or cause to be delivered to the Chief Executive Officer the following information: (A) the name and address of the Investor; and (B) the Social Security Number or U.S. Federal Taxpayer Identification Number of the Investor, if one exists (or in the case of foreign investors who do not have a Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number (if one exists) provided for in the country of their primary residence or domicile). Disclosed Investors shall not be required to provide any financial statements or information to Lessor. (ii) Investment Questionnaire. Lessee shall cause the Financial Advisor to require each Disclosed Investor to complete the Investment Questionnaire. Based on the responses to the questions in the Investor Questionnaire and such other due diligence the Financial Advisor may perform in the normal course of its fiduciary duties, the Financial Advisor shall determine, in its good faith, commercially reasonable judgment, whether or not such Disclosed Investor is a Disqualified Person. The Financial Advisor shall not propose to Lessee (and Lessee shall not allow) any Disclosed Investor which #217950 A - Final Version of Watson Island Ground Lease - City of Miami and Flagstone a2 -t304 the Financial Advisor has concluded is a Disqualified Person. The Parties acknowledge and agree that no Disqualified Person shall hold a legal or beneficial interest in the Project. Section 8.15 Chief Executive Officer's Right to Object. Notwithstanding anything to the contrary contained in this Section, the Chief Executive Officer shall have the right to object to any Disclosed Investor (and therefore require that such Disclosed Investor not have any equity investment in the Project), if such Person is a Disqualified Person. Any such objection shall be made by a written notice given by the Chief Executive Officer to Lessee within twenty (20) days after Lessee (and, if applicable, the Financial Advisor) provides the information required by subparagraph (i) above. Such notice shall state the specific basis for the objection. Section 8.16 Transfers of the City's Interest. (i) Conveyance of Interest. During the Lease Term, Lessor may convey its fee and reversionary interest in the Property or its interest in this Lease to another Person or Persons, provided that: (i) Lessor gives Lessee prior written notice thereof; (ii) such other Person or Persons shall assume in writing all of Lessor's obligations hereunder; (iii) if more than one Person acquires any such interest, only one such Person shall be irrevocably designated in writing by all such Persons to take any actions which shall be binding of all such Persons as Lessor hereunder; and (iv) in the event such other Person is not a Governmental Authority, the provisions set forth in Exhibit 0 shall no longer be applicable. (ii) Subject to this Lease. Any conveyance or transfer by Lessor of its fee or reversionary interest shall be made subject to the terms and conditions set forth . in this Lease and the rights of Lessee and any Person claiming by, through or under Lessee; provided, however that, any approvals to be made by the "Chief Executive Officer" hereunder shall be made by the transferee of Lessor's interest hereunder in the same manner as described in Section 38.7. The Person to which Lessor assigns or conveys such fee or reversionary interest shall, for itself and its successors and assigns and especially for the benefit of Lessee, by written instrument in recordable form, expressly assume all of the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 obligations of Lessor under this Lease arising and accruing after the date of the transfer and agree to be subject to all terms and conditions hereof to which Lessor is subject. (iii) Mortgage of Fee Interest. The lien, operation and effect of any mortgage encumbering Lessor's fee simple estate or other interest in the Property or any portion thereof shall, at all times and for purposes, be subject, subordinate and inferior to this Lease (including all of the terms, covenants, conditions and provisions hereof) and the Leasehold Estate and all rights of Lessee hereunder and any Major Subtenant, Space Tenant or other Person claiming by, through or under Lessee, including, without limitation, holders of Approved Time Share Licenses and their respective lenders. ARTICLE IX EASEMENTS AND LICENSES Section 9.1 Utility Easements. (a) In Favor of Lessor. Lessee agrees to grant to Lessor and/or any public utility company, pursuant to separate instruments, non-exclusive perpetual easements for the installation, operation, maintenance, repair, replacement, relocation, and removal of utility lines and facilities (together with access incidental thereto) such as water lines, fire lines, gas mains, electrical power lines, telephone lines, storm and sanitary sewers and other utility lines and facilities (collectively, "Utility Facilities"), and such other easements as Lessor and/or such public utility companies may reasonably require from time to time. All such easements shall be over, under and/or across: (i) those portions of the Property shown on the approved Construction Plans and Specifications; or (ii) such other locations on the Property as may be requested by Lessor or such public utility companies from time to time, so long as such locations are reasonably acceptable to Lessee, considering, among other things, whether such locations cause unreasonable interference with the construction, use and operation of the Project or undue expense to Lessee. The instruments granting such easements shall provide, among other things, that the grantee(s) thereunder shall not exercise their rights thereunder in such a manner as would cause unreasonable interference with the construction, use and operation of the Project or undue expense to #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Lessee. Any such easement instrument shall include appropriate indemnification from Lessor and insurance obligations on the part of Lessor with respect to any Persons entering onto the Property and/or the Leasehold Improvements pursuant to the easement rights granted therein. (b) For the Benefit of Lessee. Subject to the rights of adjacent property owners (other than Lessor) and other lessees of property on Watson Island (and to the condition that the same shall not cause any undue expense or interference to such parties), Lessor agrees to grant unto any applicable provider of Utility Facilities servicing the Property and/or the Leasehold Improvements, and such provider's employees, contractors or agents and their respective successors and assigns, the non-exclusive right and easement to install, operate, maintain, repair, relocate, replace and remove Utility Facilities underground within all portions of Watson Island owned by Lessor, provided that such Utility Facilities are shown on the approved Construction Plans and Specifications, or are located at such other locations as may be requested by Lessee and approved by Lessor from time to time during the Lease Term. Section 9.2 Easements in Favor of Lessee. In order to facilitate the construction, use and operation of the Project consistent with the Watson Island RFP and the Island Gardens Proposal, Lessor agrees to consider in good faith granting to Lessee, any Major Subtenant, any Space Tenant and their respective employees, agents, contractors, invitees, licensees, guests, and customers, and their respective successors and assigns, such other easements and access rights as Lessee may reasonably require from time to time, all subject to and in accordance with such terms, covenants and conditions as may be reasonably imposed by Lessor and with Applicable Laws. Section 9.3 Access Easement in favor of the Public. Lessor shall execute and deliver and cause to be recorded in the Public Records of Miami -Dade County, Florida an instrument, in form and substance mutually satisfactory to Lessor and Lessee, pursuant to which Lessor shall grant an easement in favor of the public over, across and upon the waters (the "Adjacent Waters") above the submerged land adjacent to the Marina which is owned by the City (the "Adjacent Submerged Land"), for the purpose of affording to marine vessels using the Marina: (i) ingress and egress to and from the Marina; and (ii) the ability to turn around and otherwise maneuver in connection with entering and exiting and docking at the #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Marina, all so as to facilitate the proper use and operation of the Marina consistent with the Watson Island RFP and the Island Gardens Proposal. Section 9.4 Duration of Easements. Unless a shorter term is provided, each of the rights and easements granted or reserved in this Article shall be for the Lease Term. Section 9.5 Dre &iz to Facilitate Safe Passage of Vessels. Lessee shall obtain any permits from applicable Governmental Authorities which are required to complete such dredging of the Adjacent Submerged Land as may be required to facilitate the safe passage of marine vessels arriving at and departing from the Marina over, across and upon the Adjacent Waters. All such dredging shall be completed in accordance with such permits and Applicable Laws. Lessor shall reasonably cooperate with Lessee in conjunction with Lessee's obtaining all such permits, and shall not object to Lessee's completion of such dredging in accordance with such permits and Applicable Laws. Section 9.6 Confirmatory Instruments. Each Party covenants and agrees that from time to time at the request of the other Party, it shall execute and deliver such additional documents or instruments confirming the rights and easements granted and reserved in this Article, or more precisely showing their location, as such requesting Party shall reasonably deem to be necessary or desirable. ARTICLE X PAYMENT OF IMPOSITIONS Section 10.1 Payment of Impositions. Lessee shall pay, or cause to be paid, all Impositions before they become delinquent (i.e., before any penalty, fine or interest is added to the amount due, but without any requirement that the amount due be paid by any date which will take advantage of any discounts available for early payment). If by law any Imposition is payable or may, at the option of the taxpayer, be paid in installments (whether or not interest shall accrue on the unpaid balance of the Imposition), Lessee may pay the same (and any accrued interest on the unpaid balance of the Imposition) in installments, but same shall in all events be paid before they become delinquent. Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included before the Possession 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Date and a part of which is included after the Possession Date shall be adjusted as between Lessor and Lessee as of the Possession Date, so that Lessee shall pay (before same becomes delinquent) that proportion of the Imposition attributable to that part of the fiscal period included in the Lease Term, and Lessor shall pay the remainder, if applicable. Any Imposition relating to a fiscal period of the taxing authority, a part of which is included within the Lease Term and a part of which is included in a period of time after Lease Term, shall be adjusted as between Lessor and Lessee as of the termination of the Lease Term, so that Lessee shall pay that proportion of the Imposition attributable to that part of the fiscal period included in the Lease Term, and Lessor shall pay the remainder, if applicable. Section 10.2 Taxes on Lessor. Any sales, excise, transaction, use or privilege tax now or hereafter imposed by any Governmental Authority upon Lessor or the Property on account of, attributed to, or measured by Rent or other charges payable by Lessee shall be paid by Lessee to Lessor as additional Rent, even though the taxing statute or ordinance may purport to impose such tax against Lessor. Nothing herein contained shall require Lessee to pay municipal, state or federal income taxes assessed against Lessor, or corporate excess profits or franchise taxes imposed upon Lessor unless the method of taxation prevailing at the commencement of the term hereof shall be altered so that such taxes shall be assessed in lieu of or as a substitute for the whole or any part of the Impositions, in which event, such income, profits or franchise taxes shall be included within the term "Impositions" for purposes hereof, and Lessee shall pay and discharge the same as herein provided. Section 10.3 Lessee's Right to Contest Impositions. Notwithstanding anything to the contrary contained herein, Lessee shall have and retain the right to contest in good faith by legal proceedings, diligently pursued, any Imposition, or any valuation in connection therewith, provided that: (i) to the extent required by Applicable Laws, Lessee shall first make all contested payments under protest; (ii) Lessee shall pursue such action in accordance with Applicable Laws such that neither the Property nor the Leasehold Improvements nor any part thereof or interest therein would be in any danger of being sold, forfeited, lost or interfered with; and (iii) all expenses incurred in connection with such proceedings shall be paid by Lessee. Such legal proceedings shall include appropriate proceedings to review tax #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 assessments and appeals from orders in connection therewith and appeals from any judgments, decrees or orders. Section 10.4 Proof of Payment. Lessee shall furnish (or arrange for an outside service to furnish) to Lessor, within thirty (30) days after the date when any Imposition is paid by or on behalf of Lessee, official receipts of the appropriate taxing authority, photocopies thereof or other proof of payment satisfactory to Lessor. ARTICLE XI INSURANCE Section 11.1 Insurance on the Leasehold Improvements. Beginning on the Possession Date and at all times during the Lease Term, Lessee shall, at Lessee's sole cost and expense but for the benefit of Lessor and Lessee as their interests may appear, maintain the following insurance: (a) Property Insurance. "All risk" property insurance with extended coverage against loss or damage by earthquake, mudslide, windstorm, flood with such endorsement for amended coverage, vandalism, malicious mischief, sprinkler leakage and special coverage, including flammable materials used for cooking. (i) Amounts. Such coverage shall be in the following amounts: (i) as to windstorm, $100,000,000; (ii) as to flood, $12,500,000; and (iii) as to all other perils, One Hundred Percent (100%) of the replacement cost of the Leasehold Improvements (exclusive of foundation and excavation costs), Lessee's alterations, improvements, fixtures, equipment, furniture, trade fixtures and floor coverings, including the expense of the removal of debris as a result of damage by an insured peril (collectively, the "Insured Procerty") on the Property. (ii) Deductibles. The maximum deductibles for such coverage shall be as follows: (i) as to flood and windstorm, Five Percent (5%) of the completed building value; and (ii) as to all other perils, One Percent (1%) of the insured value. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �-1304 (iii) Loss Payees and Insureds. Lessor, Lessee and any Approved Leasehold Mortgagee shall be named as loss payees. Lessee shall be the first named insured, and Lessor and any Approved Mortgagee shall be named as additional insureds. (iv) Special Considerations for Casualty and Windstorm Insurance. Notwithstanding the foregoing, the Parties acknowledge and agree that coastal properties are often precluded from being insured by private insurers and that any casualty and windstorm insurance may have to be written through the Florida Joint Underwriters Association and/or other governmental or other insurance pool which may include certain prohibitions such as no replacement cost coverage. (v) Determination of Replacement Cost. Unless expressly waived in writing by the Chief Executive Officer, the replacement cost of the insured property shall be determined every seven (7) years during the Lease Term by an insurance appraiser selected and paid for by Lessee, provided that Lessee shall obtain Lessor's approval (which approval shall not be unreasonably withheld) of the appraiser before commencement of the appraisal. The appraiser selected by Lessee shall submit to Lessor and Lessee a written report of the appraised replacement cost. If Lessor or Lessee is not satisfied with such report, the dissatisfied parry shall serve upon the other a notice of dissatisfaction within thirty (30) days after receipt of the report, and the Parties shall in good faith attempt to resolve any disputes concerning the appraised replacement cost. During this period of the dispute, Lessee shall continue to maintain insurance in an amount equal to that maintained before the dispute arose. Promptly upon receipt of the appraiser's report and resolution of any such dispute, Lessee shall procure and deliver to Lessor written confirmation from the insurer(s) evidencing the increase in insurance which may be required to comply with the provisions above. (b) Business Interruption Insurance. Business interruption insurance with limits not less than an amount equal to: (i) the Base Rent for a twelve (12) month period; plus (ii) an amount equal to the average annual Percentage Rent payable during the three (3) year period immediately preceding the issuance or renewal of such insurance (or, in the case of each of the first (3) three years from and after the date on which Percentage Rent is first payable hereunder, the amount of annual Percentage Rent 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone `-1304 estimated by Lessee in good faith which will be payable during such year). Lessor, Lessee and any Approved Leasehold Mortgagee shall be named as loss payees. Lessee shall be the first named insured. (c) Boiler and Machinery Insurance. Boiler and machinery insurance covering repair and replacement of all boilers and machinery serving or benefiting the Leasehold Improvements. The policies of insurance shall be endorsed so as to provide use and occupancy coverage for the Leasehold Improvements in such amount as may be reasonably acceptable to Lessor. Lessor, Lessee and any Approved Leasehold Mortgagee shall be named as loss payees. Lessee shall be the first named insured, and Lessor and any Approved Leasehold Mortgagee shall be named as additional insureds. Section 11.2 Other Insurance To Be Carried. Lessee shall also, at Lessee's sole cost and expense but for the mutual benefit of Lessor (with Lessor being named as an additional insured thereunder) and Lessee (with leasehold mortgage clauses for the benefit of any Approved Mortgagee, which clauses shall be consistent with the terms of this Lease), maintain the following insurance: (a) CGL Insurance. Commercial General Liability insurance on a commercial general liability coverage form with "broad form" coverage, or its equivalent, including contractual liability, products and completed operations, personal injury, liquor legal liability, garage keepers liability (which coverage shall not be required until the Parking Garage is operating), and products and completed operations, personal injury, and premises coverage against sums adjudicated to be payable by the insured on account of bodily injury, death or property damage occurring in or about the Property (it being understood, however, that such coverage does not extend to damage to property in the insured's care, custody and control). (i) Amounts. The limits of such coverage shall not be less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate single limit for bodily injury and property damage. No deductible in excess of $50,000 will be carried under this coverage without the Chief Executive Officer's prior written consent, which shall not be unreasonably withheld. t#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (ii) Umbrella Policy. Lessee shall further maintain an excess liability umbrella policy whose limits shall not be less than a combined single limit of Five Million Dollars ($5,000,000). (iii) Adjustments in Amounts. Such insured amounts as provided in clauses (i) and (ii) above shall be adjusted as of the fourth (0) anniversary of the January 1 following the Possession Date, and every three (3) years thereafter by any increase and/or decrease (which decrease shall not result in an amount less than the amounts initially required as set forth above) in the Consumer Price Index (as defined in Section 5.2) from the Possession Date to the date on which the adjustment is to be made. (b) Builder's Risk. During periods of excavation and/or construction or during periods of alteration or during periods of restoration in the event of damage or destruction or condemnation or during periods of razing or demolition at, in or on the Property, the Leasehold Improvements or any part of it, an all risk Builder's Risk policy (including extended coverage for fire, lightning, earth movement, flood, collapse, business interruption, hurricane, boiler and machinery) `..'. covering the interests of Lessor and Lessee. Such policy shall insure that portion of the Leasehold Improvements which is affected by such excavation and/or construction for not less than 100% replacement cost on a completed value basis (including foundations and pilings), and shall include coverage for the increased cost of construction due to the enforcement of any laws, as well as the contingent liability from the operation of buildings, and coverage for the demolition cost of undamaged portions of buildings. (i) E & O Coverage. In addition, Lessee shall cause all of the key or primary professionals retained by it in connection with any construction (e.g., architects and engineers) to procure errors and omission coverage reasonably satisfactory to Lessee for Lessee's and Lessor's benefit, in such amounts as are customarily carried by such professionals in Miami -Dade County, Florida. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2-1304 (ii) "Wrap -Up" Policy. Lessor acknowledges and agrees that the coverage required by this subparagraph (b) and any other coverages required hereunder may be obtained through a so-called "wrap-up" policy. (c) Pollution/Environmental Impairment Liability. Pollution/Environmental Impairment Liability Insurance coverage on a claims made basis with limits of One Million Dollars ($1,000,000) per occurrence (with the policy period extending at least six (6) years from and after the expiration of sooner termination of this Lease), providing coverage for the damage caused by spillage of any fuel, petroleum, products or any other "hazardous substances", "hazardous materials" or "toxic substances" (as defined in any and all state, local, or federal laws, rules, regulations and orders pertaining to environmental, public health or welfare matters), whether those substances are solid, liquid or gaseous. Such policy of insurance shall also provide coverage for the cost of cleanup of the affected area and for the removal, transportation and safe disposal of any contaminated area. Lessor and Lessee shall be named as loss payees. Lessee shall be the first named insured, and Lessor and any Approved Leasehold Mortgagee shall be named as additional insureds. (d) Worker's Compensation. Worker's compensation and occupational disease coverage in the amounts and types required by Chapter 440, F.S., or any successor thereto. Only Lessee shall be named as an insured. (e) Automobile Liability. Automobile liability insurance covering all owned, non - owned and hired vehicles used in conjunction with operations covered by this Lease. The policy or policies of insurance shall contain such limits as may be reasonably requested by Lessor from time to time but not less than Five Hundred Thousand ($500,000). Such insured amount as provided above shall be increased as of the fourth (0) anniversary of the January I following the Possession Date, and every three years thereafter by any increase in the Consumer Price Index from the Possession Date to the date in which the adjustment is to be made. (f) Other Coverage. In the event that any other type of legislation may be enacted imposing special liability upon Lessor or Lessee by virtue of its use for any special purposes, before #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone v2-1304 Lessee shall so use the Property and/or the Leasehold Improvements or any part of it for such purposes, Lessee shall provide insurance in form and substance, and with insurers and limits reasonably satisfactory to Lessor and meeting commercial standards insuring the interests of Lessor and Lessee and naming Lessor as additional insured. Section 11.3 Policies Obtained by Independent Contractors. Lessee may cause its independent contractors to provide some or all of the insurance coverages required hereunder. To the extent that such independent contractors carry such coverages, Lessee shall not be required to carry such coverages, so long as the coverages obtained by Lessee and such independent contractors together satisfy the requirements of this Article XI. Lessor, Lessee and any Approved Mortgagees shall be named as additional insureds as to any such coverages obtained by Lessee's independent contractors. Section 11.4 Policies Obtained by Major Subtenants. Lessee may, at its option, include provisions in any Major Sublease requiring the applicable Major Subtenant to carry insurance coverages as to the applicable Major Project Component corresponding to those required to be obtained hereunder by Lessee. To the extent that Major Subtenants (or their Space Tenants) carry such coverages, Lessor shall not be required to carry such coverages as to such Major Project Component, so long as the coverages obtained by all of the Major Subtenants (or their Space Tenants) and Lessee together satisfy the requirements of this Article XI. Lessor, Lessee and any Approved Mortgagees shall be named as additional insureds as to any such coverages obtained by Major Subtenants or Space Tenants. Section 11.5 Delivery of Insurance Policies. All public liability and worker's compensation policies shall be retained by Lessee. Subject to the rights of any Approved Mortgagee, all other policies of insurance required to be furnished shall be held jointly by Lessor and Lessee. Insurance company certificates evidencing the existence of all of these policies of insurance shall be delivered to Lessor. (a) Required Policy Provisions. All policies of insurance required to be provided and obtained shall provide that they shall not be amended or canceled on less than thirty (30) days' prior written notice to Lessor and all insureds and beneficiaries of the policies; provided, however, that if thirty (30) days' notice is ever commercially unavailable, then the required number of days' notice shall be #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 reduced to such number as is commercially available. All such policies shall contain waiver of subrogation rights endorsements as required below. Lessor shall have no obligation to pay premiums or make contributions to the insuring company or any other Person or satisfy any deductible. (b) Delivery. On or before the Possession Date and then not less than thirty (30) days prior to the expiration date of any policy required to be carried pursuant to this Article, Lessee shall deliver to Lessor and any Approved Leasehold Mortgagee the applicable respective policies and insurance company certificates evidencing all policies of insurance and renewals required to be furnished hereunder. Receipt of any documentation of insurance by Lessor or by any of its representatives which indicates less coverage than required does not constitute a waiver of Lessee's obligation to fulfill the insurance requirements herein. Section 11.6 Lessor's Right to Obtain. If Lessee fails to pay insurance premiums when due or to comply with other insurance requirements set forth in this Lease, Lessor shall have the right, at its option, to order insurance policies and to advance such sums as are required to maintain or procure such insurance, and to the extent of the money so advanced, Lessor shall be entitled to reimbursement by Lessee pursuant to Article XV hereof. Unless there would ensue a lapse of coverage, Lessor shall, before making any such advance, provide Lessee with ten (10) days' prior written notice and the opportunity to obtain the required policies. Section 11.7 Insurer To Be Approved; Premium Receipts. All policies of insurance of the character described in Sections 11.1 and 11.2 shall be shall be effected under policies issued by insurers permitted to do business in the State of Florida and rated in Best's Insurance Guide, -or any successor thereto (or, if there is none, an organization having a national reputation for rating insurance companies) as having a general policyholder rating of "A" and a financial rating of at least "VII". On written request by Lessor, Lessee shall provide photocopies of receipts showing the payment of premiums for all insurance policies required to be maintained by this Lease. Section 11.8 Waiver of Subrogation. ?217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �Z_130� (a) Mutual Waiver. Each Party waives all rights to recover against the other Pam' for any damage arising from any cause covered by any insurance required to be carried by the waiving Party, or any insurance actually carried by the waiving Party; provided, however, that such waiver shall apply only to the extent the applicable insurers issue the appropriate waiver of subrogation rights endorsements described in subparagraph (b) below. (b) Endorsements. Each Party shall cause its insurer(s) to issue appropriate waiver of subrogation rights endorsements to all policies of insurance carried in connection with the Property. (c) Maior Subtenants. Lessee shall require all Major Subtenants to execute and deliver to Lessor a waiver of claims similar to the waiver in this paragraph and to obtain such waiver of subrogation rights endorsements, and Lessor shall execute and deliver to each Major Subtenant such waiver of claims and obtain such waiver of subrogation endorsements. ARTICLE XII RECORDS AND AUDITING Section 12.1 Records of Sales. (a) Maintenance of Records. During the Lease Term, Lessee shall maintain and keep, or cause to be maintained and kept at the Property, a full, complete and accurate record and account of all Gross Revenues (on an accrual basis) arising or accruing by virtue of the operations conducted at or from the Property, for each day of the Lease Term, together with audited annual financial statements, federal and state (if applicable) income tax returns, Florida sales tax returns and other returns or evidence reasonably acceptable to Lessor of the payment of all other required Impositions, statements of revenues and fees charged, agreements entered into by Lessee with respect to the Project, bank statements and deposit slips, cash receipt journals, general ledgers and any other appropriate documentation as may be reasonably required by generally accepted accounting practices for the applicable industry(ies). #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (e) "Insurance Trustee" means an insurance trustee mutually acceptable to Lessor, Lessee, and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any Restoration Work. (f) "Insurance Escrow Agreement" means any escrow agreement among an Insurance Trustee, Lessor, Lessee and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any Restoration Work, which escrow agreement provides for such Net Insurance Proceeds and any another funds deposited for the purpose of completing such Restoration Work to be deposited in escrow with such Insurance Trustee and to be disbursed to fund the completion of such Restoration Work, all under such terms, conditions and procedures as are set forth therein. (g) "New Loan" means any new Construction Loan obtained by Lessee or any affected Major Subtenant from an Approved Lender for the purpose of completing any Restoration Work. Section 16.2 Net Insurance Proceeds, Obligation to Fund Restoration Work. (a) Adjustment of Net Insurance Proceeds. Upon the occurrence of any Damage, Lessee shall promptly and diligently pursue the adjustment of any applicable insurance and take reasonable measures to require any affected Major Subtenant to do the same, to the end that all applicable Net Insurance Proceeds shall be made available to complete the applicable Restoration Work. (b) Rights of Approved Mortgagees. If any Approved Leasehold Mortgagee or affected Approved Major Subleasehold Mortgagee shall have entered into a Subordination, Non - Disturbance and Attornment Agreement, or comparable agreement, with Lessor, providing for rights to receive and/or control the disbursement of such Net Insurance Proceeds, such rights shall control over the provisions of this Lease. In such event, to the extent that any such Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee agrees to permit such Net Insurance Proceeds to be used for such Restoration Work, all such sums shall be deposited with an Insurance Trustee pursuant to an Insurance Escrow Agreement. (c) Insurance Trustee. The Insurance Trustee may (but shall not be required to) be an Approved Mortgagee. Each Approved Leasehold Mortgagee may elect to be the Insurance Trustee in .4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 the order of the priority of the applicable Approved Leasehold Mortgages. If no such Approved Leasehold Mortgagee elects to be the Insurance Trustee, then each affected Approved Major Subleasehold Mortgagee may elect to be the Insurance Trustee in the order of the priority of the applicable Approved Major Subleasehold Mortgages. (d) New Loan. If any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee does not permit all or any portion of the Net Insurance Proceeds to be applied to the Restoration Work, Lessee or the affected Major Subtenant shall nonetheless be required to cause the Restoration Work to be performed and shall deposit funds adequate to fund the Restoration Work with an Insurance Trustee pursuant to an Insurance Escrow Agreement; provided, however, that Lessee or such Major Subtenant may elect to obtain a New Loan for such purposes, in which event Lessee or such Major Subtenant shall use prompt and diligent efforts to obtain such New Loan. (e) Other Shortfalls. To the extent that the Net Insurance Proceeds are inadequate in amount to fund the completion of such Restoration Work for reasons other than those described in subparagraph (d) above, Lessee or any affected Major Subtenant shall be required to fund such shortfall, including, without limitation, a shortfall related to a deductible in the applicable insurance policy. Such shortfall shall be deposited with an Insurance Trustee pursuant to the applicable Insurance Escrow Agreement within sixty (60) days of the date of adjustment of Net Insurance Proceeds, unless the parties thereto agree to any alternative mechanism for funding such shortfall. Section 16.3 Restoration Work. (a) Plans. Lessee shall diligently proceed to cause plans and specifications for the Restoration Work, together with a proposed construction schedule, to be prepared and submitted to the Chief Executive Officer. Such plans and specifications shall be designed to restore the Property to substantially the condition prior to such Damage, or as similar as is practicable and reasonable. Unless such plans and specifications are materially different from original Construction Plans and Specifications applicable to the portion of the Leasehold Improvements to be restored, the Chief Executive Officer shall have no approval rights with respect to such plans and specifications. If such plans and specifications are 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �# 04 (b) Availability of Records for Inspection. At all times during the Lease Term. upon providing fourteen (14) days' prior written notice to Lessee. all then existing records and accounts and all other supporting records which are located at the Property pursuant to Section 12.1 shall be available for inspection and audit by Lessor and its duly authorized agents or representatives during the hours of 8:00 a.m. to 5:00 p.m., Monday through Friday. All such records and accounts shall be in accordance with generally accepted accounting principles. (c) Accounting Control Equipment. Lessee must provide point of sale machines or such other cash registers or accounting control equipment deemed reasonably necessary for proper control of cash and payments, whether such transaction is a cash or credit transaction. (d) Required Period for Preserving Records. Lessee shall keep and preserve, or cause to be kept and preserved, such records for not less than sixty (60) months after the payment of the Percentage Rent due under the terms hereof to which such records relate. For the same period of time, Lessee shall also retain copies of all sales and tax returns covering its operations at the Property, and any other governmental tax or other returns which show Lessee's sales therein, and shall, upon demand, deliver photographic copies or computer disks thereof to Lessor at no cost to Lessor. (e) Cooperation. Lessee shall cooperate with Lessor's internal auditors (or such other auditors designated by Lessor) in order to facilitate Lessor's examination of records and accounts. Lessee shall allow Lessor or Lessor's auditors to inspect all or any part of the compilation procedures for the aforesaid monthly reports. Such inspection shall be reasonable and is at the sole discretion of Lessor. Section 12.2 Audit. (a) Audit by Lessee. Lessee shall deliver or cause to be delivered within one hundred (120) days after the end of each calendar year to Lessor's Office of Asset Management, currently located at 444 SW 2 Avenue, Suite 325, Miami, FL 33130, audited financial statements for such calendar year, prepared and certified by a nationally recognized auditor employed at Lessee's sole cost and expense (the "Auditor"). Such Auditor shall certify that: (i) it made a complete examination of the books, state sales tax returns, and federal income tax returns of Lessee, all Major Subtenants and all Direct Space Tenants #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone u2--1304 which are Affiliates of Lessee, and (ii) such statement is prepared in accordance with generally accepted accounting principles and practices and represents the Gross Revenues of Lessee. the Major Subtenants and such Direct Space Tenants for the period indicated therein (on an accrual basis). Within twenty (20) days after the delivery of such audited statements, Lessee shall pay to Lessor any unpaid balance of the Rent or underpayment of Percentage Rent, if any. and Lessor shall credit any overpayments, if any, towards the next payment of Rent due. (b) Lessor's Remedies for Failure to Deliver Audit. In the event Lessee fails to prepare or deliver the required Audited Financial Statement to Lessor within the time set forth in subparagraph (a) above, Lessor, upon thirty (30) days' written notice to Lessee, may elect to exercise either or both of the following remedies: (i) to treat any continuing omission as a default of this Lease, subject to applicable notice and cure periods specified in Section 25.1fi); and/or (ii) to cause an audit and/or accounting pursuant to the provisions of this Lease to be made by any auditor of Lessor's choosing at the sole cost and expense of Lessee. Such audit shall be binding on Lessee. Lessee shall pay the reasonable cost of such audit within thirty (30) days of receipt of an invoice for same. (c) Audit by Lessor. In addition to the audit rights specified in subparagraph (b) above, Lessor shall have the right, upon fifteen (15) days' prior written notice to Lessee, to cause a complete audit by a nationally recognized auditor to be made of the accounting records of Lessee, the Major Subtenants, and any Direct Space Tenants which are Affiliates of Lessee, in connection with the sales on, from or related to the Property for the period covered by any Percentage Rent statement furnished by Lessee to Lessor. Any such audit shall be made at Lessor's sole cost and expense and must be completed within sixty (60) months of Lessee's delivery of such applicable Percentage Rent statement to Lessor. If such audit shall disclose an underpayment of Rent, Lessee shall pay Lessor any unpaid balance within thirty (30) days of receipt of notice from Lessor that such balance is due. If such audit shall disclose an overpayment, Lessor shall credit such overpayment towards the next payment of Rent due. (d) Continuing Right to Examine. The acceptance by Lessor of payments of Percentage Rent shall be without prejudice to Lessor's right to conduct an examination of Lessee's books and records 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 of its Gross Revenues and inventories of merchandise on the Property in order to verify the amount of annual Gross Revenues made by Lessee in and from the Property. Neither the receipt by Lessor of any statement or any payment of Percentage Rent for any period, nor the failure of Lessor to make any audit for any such period shall bind Lessor as to the correctness of any statement or payment, nor bar Lessor from collecting at any time thereafter the correct Percentage Rent due for such period. Notwithstanding the foregoing, Lessor shall not re-examine an accounting period which has previously been audited, unless it has reasonable cause to do so, and Lessor shall in no event go back further than sixty (60) months from Lessee's delivery of any applicable Percentage Rent statement. (e) Major Subleases and Space Leases. (i) Major Subleases and No -Direct Space Leases. In each Major Sublease, Lessee shall include comparable provisions which shall require that the applicable Major Subtenant comply with the provisions of this Article XXII or require, as to any portion of the applicable Major Project Component covered by Space Leases, that all of such Major Subtenant's Spaces Tenants comply with same. So long as Lessee is using good faith efforts to enforce such compliance by Major Subtenants, Lessee shall be relieved from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. (ii) Direct Space Leases. In each Direct Space Lease, Lessee shall include comparable provisions which shall require that the applicable Direct Space Tenant comply with the foregoing reporting and auditing procedures. So long as Lessee is using good faith efforts to enforce such compliance by such Direct Space Tenants, Lessee shall be relieved from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. (iii) Affiliates. Notwithstanding the foregoing, in the case of Major Subtenants or Direct Space Tenants which are Affiliates of Lessee, only actual compliance by such Major Subtenants or Direct Space Tenants shall relieve Lessee from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. :;217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone v2 -13Q4 ARTICLE XIII REPRESENTATIONS AND COVENANTS Section 13.1 Limited Representations by Lessor. Lessor makes the following representations, covenants and warranties, which shall survive the execution of this Lease and the taking of possession of the Property by Lessee: (a) Marketable Title. Lessor is indefeasibly seized of marketable, fee simple title to the Property, and is the sole owner of and has good right, title and authority to convey and transfer the Leasehold Estate to Lessee, free and clear of all liens and encumbrances other than the Permitted Title Exceptions and subject to the terms and conditions of the Partial Modification of Restrictions. From and after the Possession Date, Lessor shall take no action and shall record no documents in the Public Records which would materially impair Lessee's estate, rights or interest in and to the Leasehold Estate or otherwise be binding on Lessee or run with the Leasehold Estate, without the prior written consent of Lessee. (b) No Parties in Possession. No party except Lessee shall, on the Possession Date, be in or have any right to possession of the Property. (i) No Pending Litigation. There is no suit, action, claim, audit, arbitration, or legal, administrative, judicial or other proceeding (including, without limitation, any of the foregoing relating to violations of any Applicable Laws, litigation, investigation or proceeding pending, or, to the knowledge or belief of Lessor, threatened, which relates to, affects, or involves the Property, or which would impair or otherwise adversely affect Lessor's ability to perform its obligations under this Lease, any of which would have a material adverse effect on the Property or the Project, or which is or could become a lien upon the Property. (c) Compliance with Laws. The execution and delivery of this Lease has been duly authorized and is in accordance with and pursuant to all Applicable Laws (including, without limitation, those of Lessor) and the Constitution of the State of Florida. a217950 v3 - Final Version of Watson island Ground Lease - City of !Miami and Flagstone Section 13.2 Authority. Each Party represents to the other that: (i) such Party has, and has exercised, the applicable legal requirements necessary to adopt. execute and deliver this Lease and perform its obligations hereunder; and (ii) this Lease has been duly executed and delivered by such Part-, and constitutes a valid and binding obligation of such Party, enforceable in accordance with its terms, conditions and provisions. Section 13.3 Lessee's Representations and Covenants. (a) Funding of Proiect. To the best of Lessee's knowledge: (i) Lessee has access to sufficient funds to satisfy the Initial Equity Requirement (as defined in Section 6.1); (ii) as of the Possession Date, Lessee will have closed upon an Approved Construction Loan (as defined in Section 6.1�; and (iii) the total of such sums will be sufficient to carry out the development and construction of the Project and to operate the Project Components and comply with the terms and conditions of this Lease. (b) Due Diligence. Lessee has done such studies and has made such evaluations as it deems appropriate regarding the tourism and local markets in the area surrounding Watson Island and has deemed it desirable to invest in the Project, recognizing the risks inherent therein. (c) No Liability for Municipal Actions. Lessee acknowledges that Lessor shall not be liable under this Agreement for any actions taken by the City, acting in its municipal capacity, including, without limitation, any actions which may adversely impact tourism, crime, the local economy, the success of the Project, etc., and that in no event shall any actions taken by the City in its municipal capacity be the basis for any cause of action or defense of any obligation by Lessee hereunder. (d) No Other Business Activities. Lessee covenants that at all times during the Lease Term, Lessee shall not engage in any business activities unrelated to the development, construction, use and operation of the Project as contemplated by this Lease. Section 13.4 Disclaimer of Lessor's Representations. (a) "As Is" Condition. Lessee acknowledges that it has examined the Property, and hereby accepts the Property in its present "AS -IS, WHERE -IS" condition and without any additional representations or warranties of any kind or nature by Lessor whatsoever, express or implied, as to the #217950 %,3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Property, the condition thereof, or the accuracy of any information furnished to Lessee with respect thereto. Lessee assumes the sole responsibility for the condition and demolition of the present improvements and other structures located on the Property in order that Lessee may construct, operate. maintain and manage the Leasehold Improvements upon the Property; and Lessor shall not be required at any time to make any repairs, replacements, changes (structural or otherwise), additions or alterations to the Property, the Leasehold Improvements and/or any other property of any kind demised by this Lease. (b) No Other Representations. Lessee hereby expressly acknowledges and agrees that except as and to the extent expressly provided to the contrary in Section 13.1 and Section 13.2 or in the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003: (i) Lessor makes and has made no warranty or representation whatsoever as to the condition or suitability of any portion of the Property for Lessee's purposes; (ii) Lessor makes and has made no warranty, express or implied, with regard to the accuracy of any information furnished to Lessee, and Lessor shall not be bound by any statement of any broker, employee, agent or other representative of Lessor; (iii) Lessee has made a complete and thorough independent examination and inspection of all portions of the Property utilizing such experts and consultants as Lessee deemed appropriate and, on the basis of its inspection, Lessee is thoroughly familiar with all portions of the Property (including, without limitation, whether or not hazardous or toxic materials are or have heretofore been located on or under or generated from any portion of the Property), and all other matters relevant to Lessee; (iv) Lessee has determined that the condition of all portions of the Property is satisfactory to Lessee; and (v) Lessor makes and has made no warranty, express or implied, concerning any portion of the Property, its condition, the use to which it may be put, any environmental matters, or any other thing or matter directly or indirectly related thereto or hereto, including, without limitation, NO WARRANTY OF MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE, OR RELATING TO THE ABSENCE OF LATENT OR OTHER DEFECTS. Section 13.5 Survival. The provisions of this Article shall survive the expiration or sooner termination of this Lease. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone i;--1304 ARTICLE XIV REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS Section 14.1 Maintenance and Repair. (a) Maintenance. Throughout the Lease Term, Lessee shall, at Lessee's sole cost and expense, maintain or cause to be maintained in a first-class, good, clean, safe and orderly condition and repair the Property and the Leasehold Improvements. Such maintenance shall include, without limitation, the docks, seawalls and submerged areas, subject to Lessee's obtaining such permits, approvals and authorizations from all applicable Governmental Authorities are as necessary to perform such maintenance of such docks, seawalls and submerged areas. (b) Repairs. Throughout the Lease Term, Lessee shall, at Lessee's sole cost and expense, promptly make or cause to be made to the Leasehold Improvements all necessary repairs, renewals and replacements, interior and exterior, structural and nonstructural, whether made necessary or caused by fire or other casualty (but subject to the provisions of Article XVII, or by ordinary wear and tear. All repairs, renewals and replacements shall be of good quality sufficient for the proper maintenance and operation of the Leasehold Improvements and shall be constructed and installed in compliance with all Applicable Laws. (c) Removal of Dangerous Condition. Promptly after receiving written notice from Lessor or any other Person of any dangerous condition from time to time existing on the Property, Lessee shall, at Lessee's sole cost and expense, do or cause to be done all things necessary to remove such condition, including, but not limited to, taking appropriate measures to prevent or repair any erosion, collapse or other unstable condition on the Property. (d) Accumulation of Debris. Lessee shall not permit the accumulation of waste, dirt, rubbish, debris or refuse matter upon the Property or the Leasehold Improvements. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2 -1304 (e) Insurance. Lessee shall not permit anything to be done upon the Propem or the Leasehold Improvements which would invalidate or prevent the procurement of all insurance policies required pursuant to the provisions of article XI. (f) No Lessor Repair or Maintenance Obligations., Nothing contained in the Lease shall impose on Lessor the obligation to make any repairs or expend any monies for the maintenance of the Property, or the renewal, replacement or repair of the Leasehold Improvements; provided, however that if Lessee fails to do any of the foregoing in accordance with the terms of this Lease, then Lessor, upon reasonable prior written notice to Lessee, may elect, in its sole discretion, to perform or cause the same to be performed on Lessee's behalf and all of the costs and expenses reasonably incurred in connection with the foregoing shall be deemed to be additional Rent due from Lessee to Lessor hereunder. Section 14.2 Alteration and Modification to Leasehold Improvements After Completion of Leasehold Improvements. (a) Definition of Terms. For purposes of this Section 14.2, the following terms shall have the meanings attributed to them below: (i) "Exterior Alterations" means any alteration or addition to any Project Component (from that which was originally constructed pursuant to the Development Plans) which results in a material change to the original exterior elevation, design or overall appearance of such Project Component (including the basic landscaping scheme thereof) and is visible from the MacArthur Causeway; provided, however, that such term shall not include periodic maintenance activities such as replanting, repainting exteriors and replacing damaged, worn or obsolete fixtures. (ii) "Major Interior Alterations" means any alteration or addition to any Project Component (whether done as a single project or as a series of projects within a twelve (12) month period) whose cost exceeds ten percent (10%) of the Fair Market Value (as defined in Section 6.1) of such Major Project Component immediately prior to the commencement of such alteration or addition. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2-1304 (b) Chief Executive Officer Approval. Lessee shall not make or permit any Exterior Alterations or Major Interior Alterations to be made unless and until detailed plans and specifications for same have been approved in writing by the Chief Executive Officer, in accordance with the Chief Executive Officer Approval Procedures. ARTICLE XV LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS; REIMBURSEMENT OF LESSOR FOR AMOUNTS SO EXPENDED Section 15.1 Performance of Lessee's Covenants to Pay Money. Lessee covenants that if it shall at any time default in the payment of any Impositions pursuant to the provisions of Article X, or shall fail to make any other payment to any third party required to be paid hereunder, and any such failure shall continue for thirty (30) days after written notice by Lessor to Lessee ("Notice of Non -Payment of Imposition"), then Lessor may, but shall not be obligated to, and without further notice to or demand upon Lessee and without waiving or releasing Lessee from any obligations of Lessee in this Lease contained, pay any such Imposition or make any other payment which Lessee has improperly failed to pay as set forth in the Notice of Non -Payment of Imposition. No such action shall be taken, however, if Lessee is duly contesting the payment of same as permitted by the provisions hereof, including, but not necessarily limited to, Section 7.1, Section 103 and Section 18.3. Section 15.2 Lessor's Right to Cure Lessee's Default. Notwithstanding anything herein to the contrary, if there shall be any default by Lessee, beyond notice and any applicable cure period, under this Lease, any Approved Mortgage or any Major Sublease (including, but not limited to, any default involving Lessee's failure to keep the Leasehold Improvements in good condition and repair, to make any renewals or replacements or to remove any dangerous condition, all in accordance with any applicable requirements set forth in this Lease), then upon prior written notice to Lessee, Lessor may, but shall have no obligation to, cure any such default in addition to any and all of Lessor's other remedies hereunder. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-130.4 Section 15.3 Reimbursement of Lessor and Lessee. All sums advanced by Lessor pursuant to the provisions of Sections 15.1 and 15.2, and all necessary and incidental costs, expenses and reasonable attorneys' fees in connection with the performance of any acts, together with interest at the Default Rate from the date of the making of such advances to the date reimbursed to Lessor by or behalf of Lessee, shall be deemed additional Rent, and shall be promptly paid by Lessee, in the respective amounts so advanced, to Lessor. Such reimbursement shall be made on demand, or, at the option of Lessor, may be added to any Rent then due or becoming due under this Lease, and Lessee covenants to pay the sum or sums with interest as provided above. In the event of nonpayment of such reimbursement, Lessor shall have, in addition to any other right or remedy of Lessor, the same rights and remedies as in the case of default by Lessee in the payment of any installment of Rent (subject to applicable notice and cure periods hereunder). ARTICLE XVI DAMAGE OR DESTRUCTION Section 16.1 Definitions of Terms. For the purposes of this Article XVI, the following words shall have the meanings attributed to them in this Section: (a) "Casual " means any casualty to the Leasehold Improvements or any portion thereof. (b) "Dama¢e" means any damage to the Leasehold Improvements or any portion thereof on account of a Casualty. (c) "Net Insurance Proceeds" means the actual amount of insurance proceeds paid following a Casualty, less all costs and expenses, including reasonable attorneys' fees incurred by Lessee, any affected Major Subtenant and/or Lessor, with respect to the collection thereof. (d) "Restoration Work" means the repair, restoration or replacement of that portion of the Leasehold Improvements which has sustained Damage. 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 W-1304 (e) "Insurance Trustee" means an insurance trustee mutually acceptable to Lessor, Lessee, and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any Restoration Work. (f) "Insurance Escrow Agreement" means any escrow agreement among an Insurance Trustee, Lessor, Lessee and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any Restoration Work, which escrow agreement provides for such Net Insurance Proceeds and any another funds deposited for the purpose of completing such Restoration Work to be deposited in escrow with such Insurance Trustee and to be disbursed to fund the completion of such Restoration Work, all under such terms, conditions and procedures as are set forth therein. (g) "New Loan" means any new Construction Loan obtained by Lessee or any affected Major Subtenant from an Approved Lender for the purpose of completing any Restoration Work. Section 16.2 Net Insurance Proceeds, Obligation to Fund Restoration Work. (a) Adjustment of Net Insurance Proceeds. Upon the occurrence of any Damage, Lessee shall promptly and diligently pursue the adjustment of any applicable insurance and take reasonable measures to require any affected Major Subtenant to do the same, to the end that all applicable Net Insurance Proceeds shall be made available to complete the applicable Restoration Work. (b) Rights of Approved Mortgagees. If any Approved Leasehold Mortgagee or affected Approved Major Subleasehold Mortgagee shall have entered into a Subordination, Non - Disturbance and Attornment Agreement, or comparable agreement, with Lessor, providing for rights to receive and/or control the disbursement of such Net Insurance Proceeds, such rights shall control over the provisions of this Lease. In such event, to the extent that any such Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee agrees to permit such Net Insurance Proceeds to be used for such Restoration Work, all such sums shall be deposited with an Insurance Trustee pursuant to an Insurance Escrow Agreement. (c) Insurance Trustee. The Insurance Trustee may (but shall not be required to) be an Approved Mortgagee. Each Approved Leasehold Mortgagee may elect to be the Insurance Trustee in #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone c2-1304 the order of the priority of the applicable Approved Leasehold Mortgages. If no such Approved Leasehold Mortgagee elects to be the Insurance Trustee, then each affected Approved Major Subleasehold Mortgagee may elect to be the Insurance Trustee in the order of the priority of the applicable Approved Major Subleasehold Mortgages. (d) New Loan. If any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee does not permit all or any portion of the Net Insurance Proceeds to be applied to the Restoration Work, Lessee or the affected Major Subtenant shall nonetheless be required to cause the Restoration Work to be performed and shall deposit funds adequate to fund the Restoration Work with an Insurance Trustee pursuant to an Insurance Escrow Agreement; provided, however, that Lessee or such Major Subtenant may elect to obtain a New Loan for such purposes, in which event Lessee or such Major Subtenant shall use prompt and diligent efforts to obtain such New Loan. (e) Other Shortfalls. To the extent that the Net Insurance Proceeds are inadequate in amount to fund the completion of such Restoration Work for reasons other than those described in subparagraph (d) above, Lessee or any affected Major Subtenant shall be required to fund such shortfall, including, without limitation, a shortfall related to a deductible in the applicable insurance policy. Such shortfall shall be deposited with an Insurance Trustee pursuant to the applicable Insurance Escrow Agreement within sixty (60) days of the date of adjustment of Net Insurance Proceeds, unless the parties thereto agree to any alternative mechanism for funding such shortfall. Section 16.3 Restoration Work. (a) Plans. Lessee shall diligently proceed to cause plans and specifications for the Restoration Work, together with a proposed construction schedule, to be prepared and submitted to the Chief Executive Officer. Such plans and specifications shall be designed to restore the Property to substantially the condition prior to such Damage, or as similar as is practicable and reasonable. Unless such plans and specifications are materially different from original Construction Plans and Specifications applicable to the portion of the Leasehold Improvements to be restored, the Chief Executive Officer shall have no approval rights with respect to such plans and specifications. If such plans and specifications are #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02_1304 materially different from such original Construction Plans and Specifications, then same shall be subject to the Chief Executive Officer's approval in accordance with the Chief Executive Officer Approval Procedures. (b) Completion of Restoration Work. (i) After: (A) such submission and approval, if applicable, of such plans and specifications; (B) the applicable Insurance Escrow Agreement has been entered and the applicable Net Insurance Proceeds and other funds deposited have been deposited with the applicable Insurance Trustee or otherwise made available for disbursement in accordance with such Insurance Escrow Agreement; and (C) any necessary permits have been obtained from applicable Governmental Authorities (which permits Lessee or any affected Major Subtenant shall use diligent efforts to obtain), Lessee or such affected Major Subtenant shall complete such Restoration, all subject to and in accordance with such requirements and conditions as applicable Approved Leasehold Mortgagees and Approved Major Subleasehold Mortgagees, if any, may impose in accordance with the applicable Approved Leasehold Mortgages and Approved Major Subleasehold Mortgages and the Insurance Escrow Agreement. (ii) Lessee or the affected Major Subtenant shall commence the Restoration Work on such date (the "Restoration Commencement Date") as the Insurance Trustee or any Approved Lender making the New Loan, if applicable, first begins disbursing portions of such Net Insurance Proceeds or loan proceeds to Lessee for such purpose (it being understood that such disbursement may be conditioned upon such requirements as any such Approved Leasehold Mortgage or Approved Major Subleasehold Mortgagee may be entitled to impose). (iii) The Insurance Escrow Agreement shall provide, among other things, that the applicable Insurance Trustee shall, with notice thereof to all parties thereto, disburse the Net Insurance Proceeds and other available funds as the Restoration Work progresses upon certificates of the architect or engineer supervising the Restoration Work that the disbursements then requested, plus all previous disbursements, do not exceed the cost of the Restoration Work already completed and paid for, and that the balance in the escrow fund, plus any amounts to be contributed by Lessee, is sufficient to pay for the 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Utz -130 reasonably estimated cost of completing the Restoration Work; provided, however, that the foregoing "funds in balance" requirement may be superseded by any similar requirement which any Approved titortgagee is entitled to impose. (iv) Subject to Unavoidable Delays, Lessee shall, from and after the Restoration Commencement Date, diligently and in good faith prosecute such Restoration Work to completion. (v) Subject to the rights of any Approved Mortgagee, any Net Insurance Proceeds remaining after completion of and payment for such Restoration Work shall be disbursed to and be the sole property of Lessee. Section 16.4 Termination. Notwithstanding the provisions of Section 16.4, if any Damage occurs with ten (10) years of the end of the then applicable Lease Term and the budget for the Restoration Work is, as to any particular Major Project Component, greater than Three Percent (3%) of the replacement cost for such Major Project Component, Lessee may, by giving written notice thereof to Lessor with ninety (90) of the adjustment of any applicable insurance, terminate this Lease, effective as of the date of the Casualty; provided, however, that any such termination shall be subject to the prior written consent of any Approved Leasehold Mortgage. Upon any such termination of this Lease: (i) Lessee shall remain obligated to pay to Lessor all Base Rent, Percentage Rent and other sums accruing under this Lease to (but not including) the date of the Casualty; (ii) the Parties shall be relieved of all further obligations under this Lease, other than those obligations which expressly survive such termination; and (iii) any applicable Net Insurance Proceeds shall be applied as follows: (a) first, to pay any principal, interest and other sums owed to each and every Approved Leasehold Mortgagee; (b) second, to pay for the cost for debris removal; and (c) third, to pay any accrued and unpaid liabilities of Lessee under this Lease to the date of termination. The remaining balance of such Net Insurance Proceeds shall be allocated between Lessor and Lessee in accordance with their respective interests in the Project. 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.304 Section 16.5 No Other Right to Terminate. Except for Lessee's right to terminate this Lease pursuant to Section 16.5 above, Lessee waives the provisions of any Applicable Law which may grant Lessee the right to terminate this Lease in the event of a Casualty. Section 16.6 Rights of Approved Leasehold Mortgagee. The provisions of this Article XVI shall be subject to the rights of any Approved Leasehold Mortgagee and to the provisions of any Approved Leasehold Mortgage, and in the event of any conflict between the provisions of this Article and the provisions of any Approved Leasehold Mortgage, the provisions of the Approved Leasehold Mortgage shall control. Section 16.7 Major Subleases. Lessee shall cause each Major Sublease to contain comparable casualty provisions as those set forth in this Article XVI with respect to each Major Project Component; provided, however, that each such Major Sublease may, but shall not be required to, have provisions comparable to Section 16.9 below. Lessor agrees that any such comparable provisions shall be binding upon Lessor. Section 16.8 Deferral of Base Rent. (a) No Abatement of Base Rent or Percentage Rent. Lessee's obligations with respect to the payment of Base Rent and/or Percentage Rent shall in no event be abated on account of any Casualty, but Base Rent and Percentage Rent, as to any portion of the Leasehold Improvements which has sustained Damage, shall be deferred upon the terms and conditions set forth in subparagraph (b) below. (b) Deferral of Base Rent and Percentage Rent. If, during any period from and after the occurrence of a Casualty and until the applicable Restoration Work has been completed and the applicable portion of the Leasehold Improvements once again Opens for Business: (i) Lessor does not receive sufficient insurance proceeds under any business interruption insurance policy to cover the Base Rent and/or Percentage Rent payable during such period; and (ii) any failure by Lessor to receive such insurance proceeds is not due to Lessee's failure to maintain same in accordance with Section 11.1(b), Lessee shall be entitled, during the Deferral Period (as hereinafter defined) to defer the payment of Base Rent and Percentage Rent not covered by such business interruption insurance proceeds. In addition, #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Lessee shall not be required to pay any Base Rent and/or Percentage Rent to the extent Lessor receives business interruption insurance proceeds covering same. The term "Deferral Period" shall mean the period of time commencing when the Casualty occurs and ending on the date when the applicable Restoration Work has been completed and the applicable portion of the Leasehold Improvements once again Opens for Business, or on such earlier date as Lessee shall have received any written notice from any applicable insurance company in the form of a pleading or similar document whereby such insurance company specifically rejects Lessee's claim for such insurance. The amount of Base Rent and Percentage Rent so deferred during the Deferral Period is hereinafter collectively referred to as the "Deferred Amount". (c) Resumption of Payments. Once the Deferral Period ends, Lessee shall pay each month, together with the Base Rent and Percentage Rent then due and payable, an amount equal to fifty percent (50%) of a fraction, the numerator of which is the total Deferred Amount and the denominator of which is the number of months of the deferral. Such monthly installments of the Deferred Amount shall continue until the Deferred Amount is paid in full. ARTICLE XVII ARBITRATION Section 17.1 Binding Arbitration. Any controversy, dispute or breach arising out of or related to this Lease (including all monetary and non -monetary matters) shall be submitted to binding arbitration in accordance with the provisions of this Article XVII; provided, however, that: (i) no such controversy, dispute or breach with respect to the payment of Base Rent or Percentage Rent shall be submitted to binding arbitration; and (ii) any controversy, dispute or breach with respect to the obligations of Lessor or Lessee under Exhibit H shall be submitted to binding arbitration in accordance with the provisions of Exhibit H. The matters to be submitted to binding arbitration in accordance with this Article XVII shall include, without limitation: (i) whether Lessor or Lessee's actions hereunder are "reasonable" where this Lease requires such actions to be 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 reasonable; and (ii) whether either Party has complied with any provisions hereof requiring that any approval by such Party "shall not be unreasonably withheld or delayed". Section 17.2 Procedures. Any binding arbitration pursuant to this Article XVII shall be governed by the following procedures: (a) Demand. Either Party (the "Demanding Party") may make written demand upon the other Party (the "Non -Demanding Party") to commence arbitration. Such demand shall include a statement of the question to be arbitrated. (b) Selection of Proposed Arbitrators. Upon any such demand being made by either Party, the Demanding Party shall, within five (5) Business Days thereafter, make a written request to the President of the Florida Chapter of the American Arbitration Association that he or she independently provide, within thirty (30) days after such request is made, a list (the "List of Proposed Arbitrators") with the names and addresses of eleven (11) proposed arbitrators (the "Proposed Arbitrators"). The Non -Demanding Party shall be copied on any such written request. (c) Qualifications. Every Proposed Arbitrator must be a member of the American Arbitration Association or any successor organization, and no Proposed Arbitrator shall: (i) be a person who is or has been an employee of either Lessor or Lessee during the five (5) year period immediately preceding his or her appointment; (ii) be neutral and independent of the Parties; (iii) be affiliated with either Parties' auditors; (iv) be affiliated with any contractor of Lessee; or (v) have a conflict of interest with either Party or any bias towards or against either Party. (d) Selection of Arbitrator. Within three (3) Business Days after its receipt of the List of Proposed Arbitrators, the Non -Demanding Party shall give written notice to the Demanding Parry of three (3) Proposed Arbitrators that the Non -Demanding Party strikes from the List of Proposed Arbitrators. Within three (3) Business Days after its receipt of such written notice, the Demanding Party shall send written notice to the Demanding Party of three (3) additional Proposed Arbitrators that the Demanding Party strikes from the List of Proposed Arbitrators. Commencing with the Non -Demanding 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone o2_i304 Party, each Party shall thereafter have successive one (1) Business Day periods in which to strike one (1) additional Proposed Arbitrator from the List of Proposed Arbitrators, until there is only one (1) Proposed Arbitrator remaining on the List of Proposed Arbitrators. The remaining Proposed Arbitrator shall constitute the sole arbitrator hereunder (the "Arbitrator"). Neither Party shall be required to have or provide a reason for striking a particular Proposed Arbitrator. If either Party fails to strike a Proposed Arbitrator within the time specified above, then the other Party may exercise the unused strike or strikes prior to its next strike or strikes. (e) Code of Ethics. The Arbitrator selected hereunder shall agree to observe the Code of Ethics for Arbitrators in Commercial Disputes promulgated by the American Arbitration Association and the American Bar Association, or at any successor code. (f) Hearing. Within thirty (30) days following the selection of the Arbitrator, the Arbitrator shall commence a hearing in accordance with the following procedures: (i) All actions, hearings and decisions of the Arbitrator shall be conducted, based upon and made in accordance with the Commercial Arbitration Rules (or in the case of construction related issues, the Construction Industry Rules of the American Arbitration Association) of the American Arbitration Association or any successor organization, or any other rules then prevailing in substitution of such rules. (ii) The Parties shall be entitled to such pre -hearing discovery as they may agree upon, or as otherwise determined by the Arbitrator. (iii) Each Party shall make a good faith effort to cooperate with the other in all respects in connection with the exchange of documents relevant to the matter being arbitrated. (iv) To the extent that either Party would be required to make confidential information available to the other Party, an agreement or an order shall be entered in the proceeding protecting the confidentiality of and limiting access to such information before such Party is required to produce such information. Information produced by either Party shall be used exclusively in the arbitration or litigation that may arise, and shall not otherwise be disclosed. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 the Arbitrator. (v) A court reporter shall make a transcript of the hearing. (vi) The hearing shall be held in the City of Miami at a place designated by (vii) The Parties and the Arbitrator shall use their best efforts to conclude the hearing within ten (10) days of its commencement. (viii) Each Party shall have the right to be represented by counsel, to call witnesses and to cross-examine witnesses on the question at issue, and to submit evidence. (ix) The Arbitrator shall have the right to question witnesses at the hearing, but not to call witnesses. (x) Each Party shall be entitled to one (1) continuance for up to a maximum fifteen (15) days as a matter of right. (xi) No additional request for continuance may be made in any manner to the Arbitrator unless there has been consent given in writing by the other Party. (xii) The Arbitrator shall not grant any continuance without a request from a Party in compliance with this subparagraph (e). (xiii) The Arbitrator may render a decision at the close of the hearing or may request briefs on any or all issues. Any and all such briefs, including reply briefs, shall be filed on the terms and on the schedule set by the Arbitrator, but in no event later than forty-five (45) days following the commencement of the hearing. (xiv) The Arbitrator shall render a determination within thirty (30) days from the conclusion of the hearing, or in the event briefs are submitted, within thirty (30) days after receipt of such briefs. (xv) In determining any matter before it, the Arbitrator shall apply the terms and provisions of this Lease, and shall not have the power to vary, modify or reform any such terms and provisions in any respect. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 exemplary damages. Arbitrator's decision. (xvi) The Arbitrator shall not be authorized to make an award of punitive or (xvii) Each Party shall bear its own fees and costs and those of the Arbitrator. (xviii) The Arbitrator shall provide a written explanation of the basis for the (xix) The Arbitrator's decision shall be final and binding on the Parties and may be enforced according to the laws of the State of Florida, and judgment upon the award rendered by the Arbitrator shall be entered in any court having jurisdiction thereof. Section 17.3 No Delay in Completion of Work. There shall be no interruption of Work pending the completion of any arbitration proceeding hereunder, unless the dispute or matter which is subject to arbitration involves the nature of the Work or whether the Work was required by the Construction and Development Rider (in which case Lessee may suspend the Work until the dispute is resolved, and same shall be deemed an Unavoidable Delay). Section 17.4 Right of Approved Mortgage to Participate. Notwithstanding anything to the contrary contained herein, a copy of each notice given under this Article XVII shall be given to each and every Approved Leasehold Mortgagee and every Approved Major Subleasehold Mortgagee to the extent the matter being arbitrated involves the Major Project Component encumbered thereby, and each such Approved Mortgagee shall have the right, upon providing written notice to both Parties at any time prior to the commencement of the Arbitrator's hearing, to participate in the hearing and to have all rights afforded to each Party with respect thereto. In addition, to the extent that any applicable Approved Mortgage provides for consents rights on the part of any such Approved Mortgagee as to the selection of the Arbitrator, Lessee shall not exercise its rights to strike any Proposed Arbitrator from the List of Arbitrators without such Approved Mortgagee's consent in accordance with the provisions of such Approved Mortgage. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone v2-1304 ARTICLE XVIII MECHANICS' LIENS Section 18.1 Definition. For purposes of this Article XVII:, the term "Mechanic's Lien" means any mechanic's, laborer's, vendor's, materialman's, construction or other similar statutory lien, whether pursuant to Chapter 713, F.S., or otherwise. Section 18.2 No Consent by Lessor. Nothing in this Lease shall be construed as: (i) constituting the consent or request of Lessor, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of or to the Property or the Leasehold Improvements or any part thereof; or (ii) giving Lessee any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials, which, in the case of either clause (i) or clause (ii) above, would give rise to the filing of any Mechanic's Lien against Lessor's fee simple interest in the Property or any part thereof, the assets of Lessor, or Lessor's interest in any Rent. Section 18.3 Notice of No Liability of Lessor. Notice is hereby given, and Lessee shall cause all construction agreements, Major Subleases and Space Leases to provide, that to the extent enforceable under Florida law: (i) Lessor shall not be liable for any work performed or to be performed at or on the Property or the Leasehold Improvements or any part thereof for Lessee, any Major Subtenant or any Space Tenant, or for any materials furnished or to be furnished to the Property or the Leasehold Improvements or any part thereof for any of the foregoing; and (ii) no Mechanic's Lien for such work or materials shall attach to or affect Lessor's fee simple interest in the Property or any part thereof or any assets of Lessor or Lessor's interest in any Rent. Section 18.4 Inclusion in Memorandum of Lease. Any short form or memorandum of this Lease shall include the foregoing prohibition on Mechanic's Liens for the purposes of giving constructive notice under Section 713. 10, F.S., and a copy thereof shall be conspicuously posted on the Property. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Section 18.5 Discharge of Mechanics' Liens. Lessee shall not cause, suffer or permit any Mechanics' Liens to be filed against the fee simple title to the Property, or against the Leasehold Estate or the Leasehold Improvements by reason of any labor, services or materials supplied or claimed to have been supplied to Lessee, any Major Subtenant or any Space Tenant. If any such Mechanics' Lien is filed, Lessee shall cause it to be discharged of record by payment, deposit, bond (including any notice of bond in the case of any work which is covered by as payment and performance bond), order of a court of competent jurisdiction or otherwise, within ninety (90) days after the date Lessee has knowledge of its filing. If Lessee shall fail to do so within such ninety (90) day period, and such failure shall continue for an additional thirty (30) days after written notice thereof by Lessor to Lessee, then in addition to any other right or remedy available to Lessor hereunder, Lessor may, but shall not be obligated to, discharge such Mechanics' Lien, either by paying the amount claimed to be due or by procuring the discharge of the lien by deposit in court or bonding. All such amounts paid by Lessor in connection therewith, including, without limitation, interest, costs and allowances, shall constitute additional Rent due and payable under this Lease and shall be repaid to Lessor by Lessee immediately upon rendition of an invoice or bill by Lessor. Section 18.6 Richt to Contest. Notwithstanding the provisions of Section 18.2, Lessee shall not be required to pay or discharge any Mechanics' Lien so long as Lessee shall: (i) in good faith and with diligence proceed to contest such Mechanics' Lien by appropriate proceedings; (ii) give Lessor written notice of its intention to contest the validity of the lien; and (iii) upon written request of Lessor, furnish and keep in effect a surety bond of a responsible and substantial surety company reasonably acceptable to Lessor or other security reasonably satisfactory to Lessor in an amount sufficient to pay one hundred ten percent (110%) of the amount of the contested lien claim with all interest on it and costs and expenses, including reasonable attorneys' fees, to be incurred in connection with it (provided, however, that no such bond shall be required if the amount contested is less than $25,000). If, despite Lessee's efforts to contest such Mechanics' Lien, Lessor reasonably believes that a court judgment or order foreclosing such lien is about to be entered or granted and so notifies Lessee in writing, Lessee shall, within ten (10) days of 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 notice to such effect from Lessor (but not later than three (3) Business Days prior to the entry or granting of judgment or order of foreclosure), cause such Mechanics' Lien to be discharged of record. If Lessee fails to do so within such period, Lessor may thereafter discharge the lien and look to the security furnished by Lessee for reimbursement of Lessor's cost in so doing. Nothing contained herein shall be deemed to prevent Lessee from contesting any action or proceeding on account of any Work for which a Mechanics' Lien was filed and thereafter bonded off or transferred to security other than the Property or the Leasehold Improvements pursuant to Applicable Laws. Section 18.7 Releases. To the extent permitted under Florida law, Lessee shall obtain releases or waivers of any contractor, subcontractors and any other Persons furnishing work and materials discharging all liens and claims for all Work and materials furnished and similar releases from the architect or other recipient in the case of payments out of the funds to the architect or other recipient. ARTICLE XIX COVENANT AGAINST WASTE: INSPECTION Section 19.1 Waste. Except as otherwise permitted by this Lease, Lessee covenants not to allow any waste (as defined by any Applicable Law) with respect to the Property or the Leasehold Improvements or any part thereof. The provisions of this Section shall not apply to any demolition or disfigurement required in connection with repairs, renovations, upgrading or new construction, or to the deposit of clean fill at the Property or the removal of fill from the Property for such purposes. Section 19.2 Inspection of PropgM. (a) Right of Inspection. Lessor, its agents, employees and authorized representatives may enter the Property at any time in response to an emergency, and at reasonable times upon reasonable prior written notice, as Lessor deems necessary to, incident to, or connected with the performance of Lessor's duties and obligations hereunder or in the exercise of its rights and functions, including, without limitation, to inspect the operation, sanitation, safety, maintenance and use of the same, or any portions of the same, and to assure itself that Lessee is in full compliance with its obligations under this Lease (but 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone v2-1304 Lessor shall not thereby assume any responsibility for the performance of any of Lessee's obligations hereunder, nor any liability arising from the improper performance thereof). In furtherance and not in limitation of the foregoing, Lessor and its agents, employees and authorized representatives shall have the right of access to the Property to conduct from time to time an ADA inspection or audit of the Property or the Leasehold Improvements, and Lessee agrees to cooperate in the conduct of such investigation or audit. (b) - Compliance. If any inspection or audit detects a violation of Lessee's obligation to comply and to keep the Property and/or the Leasehold Improvements in compliance with the requirements of the Lease, then Lessee shall bear the cost and take whatever action is reasonably necessary to comply, and bring the Property and/or the Leasehold Improvements into compliance, with this Lease and any reasonable fee or cost incurred by Lessor for such investigation or audit shall be borne by Lessee and shall be paid by Lessee as additional Rent under this Lease on demand by Lessor. (c) Action by Lessor. If Lessee fails to keep the Property or the Leasehold Improvements in compliance with the requirements of this Lease (including, without limitation, the requirement that the Property and the Leasehold Improvements be in compliance with the ADA) and an Event of Lessee's Default has occurred and is continuing on account thereof, then Lessor, upon reasonable prior written notice to Lessee, may take whatever action is reasonably necessary to bring the Property and/or the Leasehold Improvements into compliance, to the extent required by Applicable Laws. Lessee agrees to provide Lessor access to the Property and the Leasehold Improvements and pay, as additional Rent, all costs reasonably incurred by Lessor in bringing the Property and/or the Leasehold Improvements into compliance. Lessor, however, shall have no affirmative obligation to bring the Property or the Leasehold Improvements into compliance and nothing herein shall be construed as creating such an obligation on Lessor. (d) Minimizing Interference with Business Operations. Any inspection or audit described in this Section 19.2 shall be done in such a manner so as to reasonably minimize any interference with any business operations on the Property. 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 62-1304 Section 19.3 Major Subleases and Space Leases. (a) Comparable Covenants in Major Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in this Article XIX. Lessee shall use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. — (b) Comparable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in this Article XIX; and use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements of any of its Space Tenants, or to prevent Lessee from requiring any Major Subtenant to impose such more stringent requirements. (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Article XIX on account of any breach thereof by any Major Subtenant or Space Tenant. ARTICLE XX ENVIRONMENTAL LIABILITY Section 20.1 Definition of Terms. For purposes of this Article XX, the following terms shall have the meanings attributed to them in this Section: (a) "Hazardous Materials" means (i) petroleum and its constituents; (ii) radon gas, asbestos in any form which is or could become friable, urea formaldehyde, foam insulation, transformers or other shipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 of federal, state or local safety guidelines, whichever are more stringent; (iii) any substance, gas, material or chemical which is or may hereafter be defined as or included in the definition of "hazardous substances", "hazardous materials", "hazardous wastes", "pollutants or contaminants", "solid wastes" or words of similar import under any Environmental Law; and (iv) any other chemical, material, gas or substance, the exposure to or release of which is regulated by any Governmental Authority. (b) "Environmental Laws" means all applicable requirements relating to the protection of human health or the Environment, including, without limitation, requirements relating to reporting, licensing, permitting, investigation and remediation of any Release or Threat of Release of Hazardous Materials, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials or pertaining to the protection of the health and safety of employees or the public, as such requirements are contained in all applicable federal, state and local environmental, public health, and safety laws, regulations, orders, permits, licenses, approvals, ordinances and directives, now or hereafter in effect, including, but not limited to, all applicable requirements of the Clean Air Act (42 U.S.C. §7401 et sect.); the Clean Water Act; the Resource Conservation, and Recovery Act, as amended by the hazardous and Solid Waste Amendments of 1984 (42 U.S.C. §6901 et seg.); the Safe Drinking Water Act; the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §9061 et seg.); the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seg.); the Occupational Health and Safety Act; the Toxic Substances Control Act; the Federal Water Pollution Prevention and Removal Act, as amended (33 U.S.C. § 1251 et se .); the Florida Pollutant Discharge Prevention and Removal Act (Florida Statutes, Chapter 376); the Water Resources Restoration and Preservation Act; the Florida Air and Water Pollution Control Act; the Florida Safe Drinking Water Act; Florida Environmental Reorganization Act of 1975 (Florida Statutes, Chapter 103). (c) "Environment" means soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata and ambient air. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (d) "Costs" means all costs incurred in connection with correcting any violations of any Environmental Laws and/or the Clean Up of Existing Contamination, including the Original Phase I and II Assessments, if applicable. (e) "Existing_ Contamination" means any Hazardous Materials revealed by the Original Phase I and II Assessments, if applicable. (f) "Original Phase I and II Assessments" means the environmental investigation and testing on the Property undertaken by Lessee, as may be applicable, pursuant to the Access and Indemnification Agreement between the Parties, and the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003. (g) "Release" means any releasing, seeping, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping into the Environment. (h) "Threat of Release" means a substantial likelihood (as determined by an environmental consultant selected by Lessee and reasonably acceptable to Lessor) of a Release which requires action to prevent or mitigate damage to the Environment which may result from such Release. (i) "Clean Un" means any remediation and/or disposal of Hazardous Materials at or from the Property which is ordered by any federal, state, or local environmental regulatory agency, if necessary, to avoid injury to persons or property in connection with the Existing Contamination, if any. Section 20.2 Environmental Obligations of Lessee. Lessee hereby covenants and agrees that during the Lease Term it shall not: (a) cause or permit any Hazardous Materials to be generated, produced, brought, used, stored, treated, discharged, released, spilled or disposed of upon, in, under or about the Property or Watson Island by Lessee or any of Lessee's Affiliates, or by any Major Subtenants or Space Tenants, or by any subsidiaries, assignees or invitees thereof, or by any of the employees, agents, contractors or subcontractors of any of the foregoing (all the foregoing collectively, "Related Parties"), which is, in any case, in violation of the Environmental Laws, or (b) otherwise cause or permit the violation of any Environmental Law in connection with the Property. Upon termination or expiration #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 of the Lease, Lessee shall, at its sole cost and expense, cause all Hazardous Materials, including their storage devices, placed in or about the Property by Lessee or its Related Parties, or at their direction to be removed from the Property and transported for use, storage or disposal in accordance and compliance with all applicable Environmental Laws. Section 20.3 Lessee's Liability for Contamination During Lease Term. Lessee shall undertake at Lessee's sole cost and expense, any necessary action, including any remediation and/or disposal reasonably required, as determined by Lessee in good faith, as a result of a Release of a Hazardous Material occurring on or from the Property in connection with any activity or acts of Lessee or any of its Related Parties, during the Lease Term. Section 20.4 Indemnity. Lessee shall defend, indemnify, and hold harmless Lessor and its agents, officials, and employees, to the fullest extent permitted by law, from and against all expenses of remediation, disposal or other similar type of clean up or action necessary for compliance with the Environmental Laws, and any and all claims, causes of action, or demands, in law or in equity, including, but not limited to, all lien claims, administrative claims, claims for injunctive relief, claims of property damage, natural resources damages, environmental response and clean up costs, fines, penalties, and expenses (including, without limitation, counsel fees, consultant fees and expert fees, costs and expenses incurred in investigation and defending against the assertion of such liabilities), which may be sustained, suffered or incurred by Lessee, its agents, officials or employees in connection with failure by Lessee or its Related Parties to fully comply with the provisions of this Article. The Parties acknowledge and agree that the indemnification provided above in this Section is conditioned upon the failure of Lessee to fully comply with the provisions of this Article and that such indemnification does not cover any Costs of clean-up required by the presence of any Hazardous Materials on the Property or other portions of Watson Island resulting solely from the acts or negligence of any third party or parties other than Lessee or Lessee's Related Parties. Section 20.5 Notices. If Lessee or Lessor receives any written notice of a Release, Threat of Release or environmental condition at the Property or a written notice with regard to air emissions, water 0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 discharges, noise emissions, recycling, or any violation of any Environmental Law (any such notice, an "Environmental Complaint") independently or by notice from any Governmental Authority, or with respect to any litigation regarding environmental conditions at or about the Property, then such Party shall give prompt written notice of the same to the other Party detailing all relevant facts and circumstances. Section 20.6 Lessor's Remedies. Promptly after becoming aware of any violation of any Environmental Law at the Property, Lessee shall commence to remediate in accordance with its obligations hereunder and thereafter diligently pursue the completion thereof in a reasonable time (and in any event in accordance with Environmental Laws). If Lessee fails to do so, Lessor may give written notice of such failure to Lessee, and if such failure continues for five (5) days after Lessee receives such notice, Lessor shall have the right, but not the obligation, to enter onto the Property and to take such action as it reasonably deems necessary or advisable to cleanup, remove, resolve or minimize the impact of or otherwise deal with any Hazardous Materials, Release, Threat of Release or Environmental Complaint upon its obtaining knowledge of such matters independently or by receipt of any notice from any Person or Governmental Authority, and all of the reasonable costs and expenses of Lessor in connection therewith shall be deemed to be additional Rent due from lessee to Lessor hereunder. Section 20.7 Phase I Environmental Assessment at End of Lease Term. (a) End -Term Audit. At anytime within the twelve (12) months before the expiration or earlier termination of the Lease Term, upon written request by Lessor, Lessee, at Lessee's sole cost and expense, shall cause a Phase I environmental audit (the "End -Term Audit") of the Property and the Leasehold Improvements to be completed by a professional environmental consultant_ approved by the Chief Executive Officer. If practicable, such consultant shall be the same firm which completed the Original Phase I and II Audits or its successor. If the End -Term Audit indicates the presence of Hazardous Materials which were either (i) not present as indicated in either the Original Phase I and II Assessments or (ii) if present as indicated in either or both of such Original Phase I and II Assessments, were previously subject to and satisfied by all Clean -Up requirements, it shall first be determined whether the presence of such contamination is due to the acts or negligence of Lessee, Lessor, or a third party. If it #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02 -130 4 is determined that the presence of such contamination is due to the acts, omissions or negligence of Lessee and/or its Related Parties, Lessee shall pay or cause to be paid all reasonable Costs associated with the required remediation and clean-up. (b) Cooperation. In the event that it is determined that neither Lessor, nor Lessee and/or its Related Parties, is responsible for the presence of such contamination, but that the presence of such new Hazardous Materials was caused by the acts or negligence of a third party, Lessor and Lessee shall reasonably cooperate with each other in all matters relating to the identification and clean-up responsibilities of such third party contaminator and its Clean -Up responsibilities; provided, however, that such obligation to cooperate shall not be deemed to impose on either Party the obligation to expend any funds. Section 20.8 Major Subleases and Space Leases. (a) Comparable Covenants in. Major Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in this Article XX. Lessee shall use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. (b) ComQarable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in this Article XX; and use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements of any of its Space Tenants, or to prevent Lessee from requiring any Major Subtenant to impose such more stringent requirements. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Article XX on account of any breach thereof by any Space Tenant. Section 20.9 Survival of Lessee's Obligations. The respective rights and obligations of Lessor and Lessee under this Article XX shall survive the expiration or termination of this Lease. ARTICLE XXI PUBLIC UTILITY CHARGES Section 2 1. 1 Lessee to Provide and Pay for Utilities. Lessee shall pay, or cause to be paid, all proper charges, including connection and tapping fees, for the use of gas, electricity, light, heat, water, sewer, storm sewer, power, fire lines, television, cable, telephone, protective services and other communication services, and for all other public or private utility services, which shall be used, rendered or supplied upon or in connection with the Property and the Leasehold Improvements or any part thereof, at any time during the Lease Term (or its proportionate share of any such charges for any such services supplied both to the Property and the Leasehold Improvements and to other properties and/or improvements). Section 21.2 Compliance with Utility Services. Lessee shall, at its sole cost and expense, comply with all contracts relating to any utility services and do all other things required for the maintenance and continuance of all utility services as are necessary for the proper maintenance and operation of the Property and the Leasehold Improvements. Section 21.3 Permits. Lessee shall, at its sole cost and expense, procure any and all necessary permits, licenses or other authorizations required for the lawful and proper installation and maintenance upon the Property of wires, pipes, conduits, tubes and other equipment and appliances for use in supplying any such utility services or substitutes to the Property and the Leasehold Improvements. Lessor shall, at no cost to Lessor, cooperate with and assist Lessee in such endeavor. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2-1304 Section 21.4 No Obligation for Utilities not on Property. In no event shall Lessee be responsible for the installation, upgrading or alteration of any utility lines or facilities located or to be located on any portions of Watson Island other than the Property. Section 21.5 Notice and Disclaimer as to Utility Services and Other Services. Lessor (in its proprietary capacity only) shall not be required to supply any services or utilities whatsoever to the Property or the Leasehold Improvements. However, Lessor and its successors, assignees or franchisees may enter into contracts for the provision of services to Watson Island, including, but not necessarily limited to, water supply, sewer, gas, electric current, cable, television or telephone services. Neither Lessor nor any operator or concessionaire, as provider of such service (a "Service Provider"), guarantees or warrants, expressly or impliedly, the merchantability or fitness for use, or the quality of any such services. Lessee acknowledges that neither Lessor nor any Service Provider nor any successor, assignee or franchisee thereof shall be responsible or liable for losses, injuries or deaths resulting from such services or the failure or interruption of such services, except to the extent any of the foregoing is caused by or arises out of the gross negligence of Lessor or any of its agents, servants and employees. Notwithstanding anything contained herein to the contrary, the failure of such services at any time or from time to time shall in no event be deemed to be a defense to an Event of Lessee's Default hereunder unless the same is deemed to be in connection with a Force Majeure Event hereunder. ARTICLE XXII INDEMNIFICATION AND RELEASE OF LESSOR Section 22.1 General Indemnification of Lessor Without Limitation of Any Other Indemnity Given Hereunder. Lessee shall indemnify, defend and save harmless Lessor and Lessor's successors, permitted assigns, officials, employees and agents (the "Lessor Indemnified Parties") from and against any and all claims, actions, proceedings, damages, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys' fees and costs) by or on behalf of any Person, arising out of, resulting from, or in any way connected to: (i) any development, construction or other work in or about 0217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2--104 the Property and/or the Leasehold Improvements; (ii) a hazardous condition of or present on the Leasehold Improvements and/or Property; (iii) any breach or default on the part of Lessee in the performance of any of Lessee's obligations pursuant to the terms of this Lease; (iv) any act or negligence of Lessee or any of its officers, employees, agents, servants, representatives, contractors, invitees, or licensees; or (v) any accident, injury, or damage caused to any Person occurring during the Lease Term in or on the Property; provided, however, that Lessor shall not be indemnified, defended or held harmless from any of the foregoing to the extent caused by Lessor's intentional acts or gross or wanton negligence upon the Property (collectively, the "Indemnified Matters"). Section 22.2 Defense. In case any action or proceeding is brought against Lessor by reason of any of the Indemnified Matters, Lessee, upon sixty (60) days' written notice from Lessor, shall, at its expense, resist or defend the action or proceeding by counsel reasonably satisfactory to Lessor. Section 22.3 Lessor's ParticiRation. If Lessee is required to defend any action or proceeding pursuant to this Article XXII to which action or proceeding Lessor is made a party, Lessor shall also be entitled to appear, defend, or otherwise take part in the matter involved, at its election, and at the sole expense of Lessor by counsel located within Miami -Dade County, Florida of its own choosing, provided that: (i) such action by Lessor shall not limit or make void any liability of any insurer of Lessor or Lessee with respect to the claim or matter in question; and (ii) Lessor shall not, without Lessee's prior written consent, settle any such action or proceeding or interfere with Lessee's defense or prosecution of such action or proceeding. Section 22.4 No Limitation. The foregoing agreements of indemnity are in addition to and not by way of limitation of any other covenants in this Lease to indemnify Lessor. Section 22.5 Challenges to Lease. Lessee acknowledges and agrees that the Watson Island RFP, the Island Gardens Proposal, Agreement to Enter Into Ground Lease between the Parties having an effective date of January 1, 2003, and this Ground Lease may be challenged by private third parties for various reasons. Lessee further acknowledges and agrees that: (i) Lessor shall have no liability whatsoever to Lessee or any Investors (as defined in Article VIII) in Lessee and/or the Project in 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ii2-1304 connection with any such challenge, and Lessee hereby forever waives and releases Lessor from any such liability, now or hereafter arising; and (ii) Lessee shall, at its expense, undertake the defense of (but not indemnify Lessor against) any action brought against Lessor seeking to set aside or invalidate this Lease on the theory that this Lease constitutes a material deviation from the Watson Island RFP and/or the Island Gardens Proposal. Lessor may participate in any such defense, but neither Party shall settle or compromise any such action without the prior written consent of the other Party. Section 22.6 Survival. The provisions of this Article XXH shall survive the expiration or sooner termination of this Lease. ARTICLE XXIH LIEN FOR RENT AND OTHER CHARGES Section 23.1 Lien for Rent. Subject to the limitations set forth in Section 23.3, the whole amount of the Rent, and each and every installment, and the amount of all taxes, assessments, water rates, insurance premiums and other charges and Impositions paid by Lessor under the provisions of this Lease, and all costs and reasonable attorneys' fees which may be incurred by Lessor in enforcing the provisions of this Lease or in carrying out any of the provisions of this Lease, shall be and are deemed to constitute a valid lien upon the Leasehold Improvements and the Leasehold Estate, which lien may be enforced by all remedies available at law and in equity. Section 23.2 Other Liens. Subject to the limitations set forth in Section 23.3. Lessor shall be entitled to have and enforce any and all common law, statutory or other liens for non-payment of Rent or other sums due hereunder. To the extent that any such liens would not otherwise be subject to the limitations set forth in Section 233, Lessor hereby irrevocably waives same. Section 23.3 Limitations. All of the liens described in this Article XXXIIII shall be subject to the following limitations: (i) each such lien shall, for all purposes and in all respects, be subject and subordinate to the lien, operation, effect, terms and provisions of any Approved Mortgage and to the rights of any Approved Mortgagee, and no such lien may be enforced against any portion of the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 Leasehold Improvements or the Leasehold Estate at any time such portion is encumbered by any Approved Mortgage without the applicable Approved Mortgagee's prior written consent in its sole discretion; (ii) no such lien shall attach to or be enforceable against any portion of the Project subject to any Approved Time Share Licenses; (iii) no such lien shall attach to or be enforceable against any Personal Property which is owned by an equipment lessor or other third party lessor of Personal Property and leased to Lessee, any Major Subtenant and Space Tenant or any other Person; (iii) each such lien shall, for all purposes and in all respects, be subject and subordinate to the lien and security interest of any third party providing financing secured by Personal Property owned by Lessee, any Major Subtenant or any Direct Space Tenant which is an Affiliate of Lessee, and without the prior written consent of such third party in its sole discretion, no such lien may be enforced against any such Personal Property unless and until such lien and security interest is fully released; and (iv) no such lien shall attach to or be enforceable against any other Personal Property, including any Personal Property owned by any other Space Tenant. Upon the request of any such third party lessor of Personal Property or third party providing financing secured by Personal Property, Lessor shall execute any documentation reasonably required by such third party consistent with the foregoing limitations (it being understood that nothing contained herein shall be deemed to prohibit or impair any such leasing or financing with respect to Personal Property. ARTICLE XXIV CONDEMNATION Section 24.1 Definition of Terms. For purposes of this Article, the following words shall have the meanings attributed to them in this Section: (a) "Condemnation" means the acquisition by a governmental or quasi -governmental agency with the power of eminent domain, by the exercise of that power, of title to all or part of the Property and/or Leasehold Improvements, or other conveyance of the Property in lieu of eminent domain. "Condemnation" shall also include any case of inverse condemnation as may be determined by a court of 0217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 62--1304 competent jurisdiction. A Condemnation shall not be deemed a Leasehold Estate Transfer or Major Subleasehold Estate Transfer (as defined in Section 8.1). (b) -Total Taking" means the Condemnation of the entirety of the Property. The term "Total Taking" shall also include the Condemnation of a portion of the Property and Leasehold Improvements that renders restoration of the remaining Property for continued use economically unfeasible in the sole and reasonable opinion of Lessee. (c) "Partial Taking" means the Condemnation of a portion of the Property and/or the Leasehold Improvements where it is economically feasible in the sole and reasonable opinion of Lessee to effect restoration of the balance of the Property for continued use. (d) "Temporary Taking" means a Total Taking or Partial Taking for a period of time less than the remainder of the Lease Term as of the Date of Taking. (e) "Date of Taking" means the date upon which title to any of the Property and/or Leasehold Improvements transfers to the governmental or quasi -governmental agency which is Condemning the Property. (f) "Condemnation Award" means the actual amount paid for the Property and/or the Leasehold Improvements, or portion thereof, which is taken by Condemnation, including, but not limited to, the decline in value of any Property and/or Leasehold Improvements not taken, if any. In the event of Condemnation by the United States Government, or other Governmental Authority where reasonable attorney's fees and costs are not paid in addition to the Condemnation Award, Condemnation Award shall mean such actual amount paid, less all reasonable attorney's fees and costs incurred in connection with securing such award. (g) "Fee Value" means the present value of the Base Rent and Percentage Rent payable pursuant to this Lease for the remaining balance of the Lease Term, and the fair market value of Lessor's reversionary interest in the Property and the Leasehold Improvements, both as of the Date of Taking. The Parties stipulate and agree that for purposes of the foregoing, the Percentage Rent payable pursuant to this Lease for the remaining balance of the Lease Term shall be deemed to be an amount 0217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ot?--1304 equal to the average annual Percentage Rent payable during the three (3) year period immediately preceding the Date of Taking, multiplied by the number of years (including any portion thereof) left for the remaining balance of the Lease Tenn. (h) "Leasehold Value" means the fee simple fair market value of the Property and Leasehold Improvements as of the Date of Taking, less the Fee Value. Section 24.2 Entire Property Taken by Condemnation. In the event of a Total Taking: (a) Termination. This Lease shall be deemed terminated as of the Date of Taking; (b) Remaining Obligations. Lessee shall remain obligated to pay to Lessor all Base Rent, Percentage Rent and other sums accruing under this Lease to (but not including) the Date of Taking, and the Parties shall be relieved of all further obligations under this Lease, other than those obligations which expressly survive such termination); and (c) Apportionment of Condemnation Award. Unless otherwise agreed to' in writing by Lessor and Lessee (with the prior written consent of any Approved Leasehold Mortgagee), the Condemnation Award shall be apportioned by a court of competent jurisdiction based on Lessor's and Lessee's property rights as set forth herein. Specifically, (i) Lessor shall be entitled to receive the Fee Value (which sum shall be paid directly to Lessor and shall not be required to be held in escrow); and (ii) Lessee shall be entitled to the remainder of any Condemnation Award not payable to Lessor, including, but not necessarily limited to, the Leasehold Value; provided, however, that to the extent that any Approved Leasehold Mortgagee has any rights under any Subordination, Non - Disturbance and Attornment Agreement described herein and/or control the disbursement of such sums, such rights shall control over any provisions of this Lease. Section 24.3 Part of Property Taken by Condemnation. In the event of a Partial Taking: (a) Continuation of Lease, Reduction of Base Rent. This Lease shall remain in full force and effect as to all of the Property not taken by Condemnation, except that the Base Rent, after the Date of Taking, shall be reduced on an equitable basis for the remainder of the Lease Term (it being 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone o2-1304 understood that after the Date of Taking, Percentage Rent shall continue to be payable subject to and in accordance with the terms and conditions of this Lease for that portion of the Property not included in the Condemnation); and (b) Apportionment of Condemnation Award. Unless otherwise agreed to in writing by Lessor and Lessee (with the prior written consent of any Approved Leasehold Mortgagee), the Condemnation Award shall be apportioned by a court of competent jurisdiction based on Lessor's and Lessee's property rights as set forth herein. Specifically, (i) Lessee shall receive and be obligated to apply the amount necessary to restore the balance of the Project to as new a condition as existed immediately prior to the Taking; and (ii) the balance of the Condemnation Award shall be divided among Lessor and Lessee based upon their proportionate shares and remaining interests in this Lease, the Leasehold Improvements taken, the fee interest, the remainder interest, and the diminution in value of the Project; provided, however, that to the extent that any Approved Leasehold Mortgagee has any rights under any applicable Subordination, Non -Disturbance and Attornment Agreement described herein to receive and/or control the disbursement of such sums, such rights shall control over any provisions of this Lease. Section 24.4 Takings for Temporary Period. Where the Condemnation is for a temporary period of time, the provisions of this Section shall apply: (a) No Termination: Force Majeure. In the event of a Temporary Taking, this Lease shall not terminate and Lessee shall continue to perform and observe all of its obligations (including, but not limited to, payment of Base Rent and Percentage Rent as provided throughout this Lease without adjustment) as though the Temporary Taking had not occurred and Lessee shall be entitled to the entirety of the Condemnation Award for the Temporary Taking; provided, however, that to the extent Lessee may be prevented from performing its obligations (excluding payment of Base Rent and Percentage Rent as provided throughout this Lease without adjustment) by the terms of the Condemnation or by the conditions resulting from the Condemnation, including Lessee's use of all or any part of the Property, same shall be deemed to constitute an Event of Force Majeure. X217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (b) Temporary Taking For Same Period As Lease Term. In the event of a Total Taking or Partial Taking for a period of time which extends for exactly the remainder of the Lease Term as of the Date of Taking, Lessor and Lessee shall each receive that portion of the award as though the Condemnation had not been for a limited period of time, all subject to and in accordance with the provisions of Section 24.2 or Section 24.3, as applicable. (c) Temporary Taking For Period Beyond Lease Term,_In the event of a Total Taking or Partial Taking for a period of time which extends beyond the remainder of the Lease Term as of the Date of Taking, Lessee shall be entitled to that portion of the Condemnation Award equal to what Lessee would have received had the Condemnation not been for a limited period of time, all subject to and in accordance with the provisions of Section 24.2 or Section 243, as applicable; provided, however, that Lessee shall not be entitled to any monies awardable for any time period after the Lease Term would otherwise have ended. Section 24.5 Event of Lessee's Default. Notwithstanding any provisions contained herein to the contrary, in the Event of Lessee's Default described in Section 25.1(a), Section 25.1(b) or Section 25.1(c) (subject to an Approved Mortgagee's exercise of any applicable cure rights therefor) prior to or at the time of a final judgment or other determination as to the amount of the Condemnation Award, or payment of the Condemnation Award, Lessor shall be entitled to receive such portion of the Condemnation Award as is necessary to cure such Event of Lessee's Default, in addition to such other portion of the Condemnation Award to which Lessor is otherwise entitled under this Article XXIV. Section 24.6 Rights of Approved Leasehold Mortgagee. (a) Consent and Participation Rights, Lessor and Lessee shall not settle or compromise the amount or division of any Condemnation Award in any Condemnation proceeding without any Approved Leasehold Mortgagee's prior written consent. Any such Approved Leasehold Mortgagee shall be entitled to appear in any such Condemnation proceeding and make claim for the share of any award to which Lessee is entitled by the terms of this Article. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.304 (b) Assienment. Lessee may assign to any Approved Leasehold Mortgagee any and all rights of Lessee with respect to Condemnation Awards and proceedings. (c) Provisions of Approved Leasehold Mortgne. The provisions of this Article XXIV shall be subject to the rights of any Approved Leasehold Mortgagee pursuant to an Subordination, Non -Disturbance and Attornment Agreement described herein. Section 24.7 Maior Subleases. Lessee shall cause each Major Sublease to contain comparable condemnation provisions as those set forth in this Article with respect to each Major Project Component. ARTICLE XXV DEFAULT PROVISIONS Section 25.1 Events of Default by Lessee. Each of following events is defined as an "Event of Lessee's Default": (a) Base Rent. If Lessee shall fail to pay any installment of Base Rent when and as due and payable, and such failure shall continue for a period of fifteen (15) days after written notice from Lessor to Lessee; (b) Percentage Rent. If Lessee shall fail to pay any installment of Percentage Rent when and as due and payable, and such failure shall continue for a period of thirty (30) days after written notice from Lessor to Lessee; (c) Other Sums of Money. If Lessee shall fail to pay any other sums of money due hereunder when and as due and payable, and such failure shall continue for a period of forty five (45) days after written notice from Lessor to Lessee; (d) VoluntM Bankruptcy. If, at any time during the Lease Term, Lessee shall file: (i) a consent to or petition for the appointment of a receiver, trustee or liquidator of itself or all its assets; (ii) a voluntary petition in bankruptcy or a pleading, memorandum, affidavit or other paper in any court of record admitting in writing its inability to pay its debts as they come due; (iii) a general assignment for 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 the benefit of creditors; or (iv) an answer admitting the material allegations of, or its consenting to, or defaulting in answering, a petition filed against it in any bankruptcy proceeding; (e) Involuntary Bankruptcy. If, at any time during the Lease Term, there shall be filed against Lessee or any of its constituent entities, in any court of competent jurisdiction pursuant to any statute of the United States or of any State, a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a portion of Lessee's or any of Lessee's constituent entities' property, including, without limitation, the -Leasehold Estate or the Leasehold Improvements, and any such proceeding against Lessee or any of its constituent entities shall not be dismissed within ninety (90) days following the commencement thereof (which period may be extended up to an additional sixty (60) days) so long as Lessee is diligently pursuing such dismissal; (f) Seizure. If the Leasehold Estate or the Leasehold Improvements shall be seized under any levy, execution, attachment or other process of court where the same shall not be vacated or stayed on appeal or otherwise within sixty (60) days thereafter, or if the Leasehold Estate or the Leasehold Improvements are sold by judicial sale and such sale is not vacated, set aside or stayed on appeal or otherwise within any period for vacating, setting aside, staying or appealing same, if any such period is applicable; (g) Certain Defaults Under Major Subleases. If: (i) any Major Subtenant defaults in the performance of or otherwise breaches any covenant under its Major Sublease which is specifically required by the provisions of this Lease to be included in such Major Sublease (including, but not limited to, those covenants described in Article VII hereof), or which is otherwise a material provision of such Major Sublease; (ii) such Major Subtenant fails to cure such default within the applicable notice and cure period for same under such Major Sublease; and (iii) Lessee fails to cause such default to be cured within forty five (45) days after the expiration of such notice and/or cure period, or if such default is not reasonably capable of being cured within such forty five (45) day period, Lessee shall have failed to commence to cure such default within such forty five (45) day period or thereafter failed to continue diligently prosecuting all action reasonably necessary to cure the default (it being understood that if ¢2 17950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0;2-1304 legally authorized possession of the applicable Major Project Component is required in order to cure such default, such forty five (45)day cure period shall not be deemed to have commenced until Lessee is able, through diligent efforts, to obtain such possession); (h) Certain Defaults Under Operating Agreements. If. (i) Lessee or any Major Subtenant defaults under any applicable Operating Agreement for the operation and management of the applicable Major Project Component; (ii) such Operating Agreement is properly terminated by any such operator or manager on account of such default; and (iii) an Operating Agreement with a replacement operator approved by the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures is not executed and delivered within ninety (90) days after Lessee or any Approved Mortgagee is able to take possession of such Major Project Component; (i) Unggrmitted Transfer. If any Leasehold Estate Transfer or Lessee Transfer of Control shall be made in violation of the provisions of Article VIII, or if Lessee consents in writing to any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control as to which any approval or consent of the Chief Executive Officer is required under the provisions of Article VIII, without Lessee's having first obtained such approval or consent of the Chief Executive Officer, and any such transaction is not unwound or nullified within thirty (30) days after its occurrence; 6) Insurance. If any insurance required to be maintained by Lessee hereunder lapses or is cancelled, and the same is not replaced within five (5) Business Days after Lessee receives written notice thereof from Lessor, provided, however, that no such Event of Lessee's shall give right to any right on the part of Lessor to terminate this Lease or Lessee's possession of the Property; or (k) Other Defaults. If Lessee shall fail to perform any of the other covenants, conditions and agreements of this Lease on the part of Lessee to be performed (other than those described in subparagraphs (a) through 0) above), and such failure shall continue for a period of sixty (60) days after written notice from Lessor to Lessee (stating with particularity the respects in which Lessor contends that Lessee has failed to perform any such covenants, conditions and agreements), or if such default is not reasonably capable of being cured within such sixty (60) day period, Lessee shall have failed to #217950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone 02-1304 commenced to cure such default within such sixty (60) day period and thereafter to continue diligently prosecuting all action reasonably necessary to cure the default (it being understood that if legally authorized possession of any applicable Major Project Component is required in order to cure such default, such sixty (60) day cure period shall not be deemed to have commenced until Lessee is able, through diligent efforts, to obtain such possession). Section 25.2 Remedies in Event of Lessee's Default. Lessor may treat any one or more of the Event(s) of Lessee's Default as a breach of this Lease, and thereupon at its option, by serving written notice on Lessee and any and all Approved Mortgagees of the Event of Lessee's Default, Lessor shall have, in addition to every other right or remedy existing at law or equity (to the extent consistent with any limitations on remedies specified herein), any one or more of the following remedies: (a) Completion of Work. During the development or construction of the Leasehold Improvements, Lessor shall have the right, but not the obligation, to carry out or complete the Work on behalf of Lessee without terminating this Lease, utilizing the proceeds of any applicable payment and performance bonds for the benefit of Lessor. In connection with the foregoing, Lessee hereby grants to Lessor an exclusive license to occupy the Premises in order to perform the Work. Notwithstanding the foregoing, all rights of Lessor under this subparagraph (a) shall be subject and subordinate in all respects to the rights of any Approved Mortgagee with respect to completing the Work and the proceeds of any payment and performance bonds. (b) Termination of Right to Possession: Termination of Lease. After use of appropriate summary process or other legal process, Lessor may either: (a) terminate this Leaser or (ii) terminate Lessee's right to possession of the Property (without terminating this Lease) and re-enter the Property or the Leasehold Improvements and without further demand or notice, remove all persons and all or any property therefrom, by summary eviction proceedings or by any suitable action or proceeding at law, without being liable to indictment, prosecution or damages therefor, and repossess and enjoy the Property and the Leasehold Improvements. If Lessor elects to terminate the right of possession (without terminating this Lease), thereafter, Lessor may make such alterations and repairs as may be necessary in ;4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone <2-1304 order to relet the Property or the Leasehold Improvements and relet the Property or the Leasehold Improvements. Lessor shall not be liable in any way whatsoever for failure to relet the Property or the Leasehold Improvements or, in the event that the Property or the Leasehold Improvements or any part or parts thereof are relet, for failure to collect the rent thereof under such reletting. Lessee, for Lessee and Lessee's successors and assigns, hereby irrevocably constitutes and appoints Lessor as Lessee's and their agent to collect the Rents due and to become due under all Major Subleases or Space Leases or any parts thereof. Notwithstanding any such reletting without termination, Lessor may at any time thereafter elect to terminate this Lease for such previous breach. (i) Lessee's Right to Cure. Notwithstanding the foregoing, Lessee shall have the right to cure any Event of Lessee's Default at any time prior to the issuance of a final order or judgment granting Lessor possession of the Property (subject to any pending appeal brought within the applicable appeals period), so long as Lessee also pays to Lessor any applicable interest due on previously unpaid sums at the Default Rate for the period from the due date thereof until the date paid in full, and all reasonable court costs and attorneys' fees. (ii) No Acceleration of Rent. The Parties specifically acknowledge and agree that Lessor shall not be entitled to accelerate any Rent due hereunder on account of an Event of Lessee's Default. (c) Demand On Major Subtenants. Subject to the rights of any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgagee, Lessor may demand that each Major Subtenant and each Direct Space Tenant pay the applicable rent due under such Major Sublease or Direct Space Lease directly to Lessor, and to exercise any and all of Lessee's rights and remedies thereunder if such Major Subtenant or Direct Space Tenant, as applicable, fails to pay rent directly to Lessor or otherwise comply with the terms of such Major Sublease or Direct Space Lease. Each Major Sublease and Direct Space Lease shall include a provision whereby the applicable Major Subtenant or Direct Space Tenant acknowledges and agrees that Lessor has the rights described in this subparagraph (d). t'217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (d) Injunctive Relief. Lessor may seek injunctive relief against, or a court order restraining, any affirmative violation of any of Lessee's covenants hereunder. (e) Damages. Lessor shall have the right to seek recovery from Lessee of all actual damages to Lessor proximately caused by any Event of Lessee's Default for which Lessor has terminated Lessee's right to possession of the Property and the Leasehold Improvements or terminated this Lease in accordance with the provisions of this Article XXV. In no event shall Lessor be entitled to recover consequential or punitive damages from Lessee. — (f) Other Remedies. No remedy conferred upon or reserved to Lessor shall be considered exclusive of any other remedy, but shall be cumulative and in addition to every other remedy given under this Lease or existing at law or in equity or by statute, and every power and remedy given by this Lease to Lessor may be exercised from to time and as often as occasion may arise, or as may be deemed expedient by Lessor, provided, however, all such remedies shall be consistent with Ehe limitations of Lessor's rights with respect to termination of this Lease and any other limitations set forth in this Article 25. (g) SNDA's. Lessor acknowledges and agrees that certain rights and remedies of Lessor specified herein will, in certain respects, be limited by the provisions of any applicable Subordination, Non -Disturbance and Attornment Agreements entered into by Lessor with respect to the Project as contemplated herein, including any such agreements with Approved Leasehold Mortgagees, Approved Subleasehold Mortgages, Major Subtenants, Space Tenants and holders of Approved Time Share Licenses. Section 25.3 Events of Default — Lessor. (a) Events of Lessor's Default. An "Event of Lessor's Default" shall be deemed to have occurred upon the failure of Lessor to perform any of the covenants, conditions and agreements of this Lease which are to be performed by Lessor and the continuance of such failure for a period of thirty (30) days after notice thereof in writing from Lessee to Lessor (which notice shall specify the respects in which Lessee contends that Lessor has failed to perform any of such covenants, conditions and !217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone "2-1304 agreements); provided, however, that if such default is one which cannot be cured within thirty (30) days, no such Event of Lessor's Default shall be deemed to have occurred if Lessor shall have commenced such cure within such thirty (30) day period and thereafter shall have continued diligently to prosecute all actions necessary to cure such default. (b) Lessee's Remedies in Event of Lessor's Default. If an Event of Lessor's Default shall occur, Lessee may treat same as a breach of this Lease, and thereupon at its option, by serving written notice on Lessor, Lessee shall have, in addition to every other right or remedy existing at law or equity, one or more of the following remedies: (i) Termination. The right and option to terminate this Lease and all of its obligations hereunder upon prior written notice to Lessor (except those which specifically survive termination of this Lease); (ii) Injunctive or Other Relief. The right to specific performance, injunction or other similar relief available to it under applicable law against Lessor (including any or all of the members of its governing body, and its officers, agents or representatives); and (iii) Damages. The right to obtain actual damages resulting from such default, but only to the extent that any such damages are not first or cannot be redressed through the relief described in clause (ii) above. Notwithstanding the foregoing, in no event shall any member of such governing body or any of its officers, agents or representatives be personally liable for any of the City's obligations to Lessee hereunder. In no event shall Lessee be entitled to recover consequential or punitive damages from Lessor. (iv) Setoff. Notwithstanding anything to the contrary contained herein, Lessee shall be entitled to set off against next accruing Rent payments the amount of any such damages awarded to Lessee payable by Lessor pursuant to any judgment or order by a court of competent jurisdiction, which judgment or order is no longer appealable. (v) Waiver of Sovereign Immunity. To the maximum extent permitted by Applicable Laws, Lessor hereby waives the right to raise any defense to Lessee's seeking or obtaining 9217950 0 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone 002-1304 such damages, or otherwise to claim that Lessee is not entitled to seek or obtain such damages, based on the principle of sovereign immunity or any similar principle or requirement of Applicable Law. Section 25.4 Mitigation. Lessor and Lessee hereby expressly acknowledge and agree that each shall have an affirmative obligation to reasonably mitigate respective damages as a consequence of a default by the other. ARTICLE XXVI COVENANTS OF LESSOR AND LESSEE Section 26.1 Partial Modification of Restrictions. (a) Lessor's Compliance. Lessor shall comply with all the terms and conditions of the Partial Modification of Restrictions. (b) Proof of Payments. Upon written request of Lessee from time to time, Lessor shall provide Lessee and any Approved Mortgagee with adequate proof that any payments required to be made by Lessor thereunder are being made in a timely manner. (c) Right to Make Payments. Lessor shall use reasonable good faith efforts to obtain from the Trustees (or other applicable Governmental Authority) written confirmation that the Trustees (or such other applicable Governmental Authority) shall provide to Lessee written notice of any failure by Lessor to make any payments when due as required pursuant to such Partial Modification of Restrictions and a reasonable period of time within which to afford Lessee the opportunity to cure such default; provided that if the Trustees do not agree to the same: (i) Lessor shall not be deemed to be in default under this Lease in connection therewith; and (ii) Lessor shall use reasonable good faith efforts to provide copies to Lessee of any such written notices it receives from the Trustees. If Lessor fails to make any such payments when due, then Lessee or any Approved Mortgagee may make the payment, in which case Lessee may set off the amount of such payment against the next accruing Rent payments due. If Lessor anticipates not making the payment to the Trustees when due, Lessor shall notify Lessee and any Approved Mortgagee thirty (30) days prior to the applicable due date (it being understood that Lessor's it 217950 v3 -Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 failure to make any such payment shall be deemed a default by Lessor hereunder, subject to the applicable cure period). If Lessee or any Approved Mortgagee makes the payment to the Trustees, then, at Lessee's option or any Approved Mortgagee's option and upon providing advance written notice to Lessor, Lessee or any Approved Mortgagee may continue to make the annual payments to the Trustees, in which case Lessee may deduct the amount of the payments made to the Trustees from the next accruing Rent payments upon submitting proof of such payment to the reasonable satisfaction of Lessor. Section 26.2 Civic Arts Endowment Trust. (a) Creation. Lessee shall create a "Civic Arts Endowment Trust" for the Project (the "Trust"). Creation of the Trust, and conditions or restrictions applicable to the Trust shall be set forth in and governed by a separate written agreement in form and substance reasonably acceptable to Lessor and Lessee. Such agreement shall be entered into prior to the Possession Date. (b) Control. Lessee shall retain control of the Trust, but the Trust's managing board shall include, but not necessarily be limited to, a member from each of the City, Fairchild Tropical Garden and The Historical Museum of South Florida. (c) Funding. Lessee shall fund the Trust in accordance with the provisions of Exhibit R. (d) Investment of Funds. Funds contributed to the Trust shall be invested in such manner as is directed by the managing board of the Trust. (e) Use of Income. The income earned from the investment of the funds in the Trust (but not the corpus of the Trust) shall be used for operations, maintenance and repair of all civic spaces within the Project, which shall deemed to include all areas of the Project open to the public other than the Parking Garage, the Retail Space, rooms within the Hotels, and other areas of the Project which are subject to membership or user fees, such as spa and fitness facilities. Such income shall be used, among other things, to maintain the gardens and reflecting pools and the sculptures and other physical objects of art located within the public spaces within the Project in good condition and repair, which art shall be more specifically described on Exhibit E-1 attached hereto (the "Public Art"), and for "public -art" related purposes within the Project, such as visual or performance related art and/or art related festivals or #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 3V� 2-1 functions. Notwithstanding anything contained herein to the contrary, in no event shall any funds from the Trust be used for the maintenance of areas of the Project which do not constitute civic spaces (as described above) nor shall such funds in any way reduce or be credited against the Rent and other obligations hereunder. ARTICLE XXVII QUIET ENJOYMENT Section 27.1 Quiet Enjoyment. Lessor represents, warrants and covenants that Lessee, upon paying the Rent and all Impositions and other charges, and performing all the covenants and conditions of this Lease, shall lawfully and quietly hold, occupy and enjoy the Property during the Lease Term without hindrance or molestation by Lessor (solely in its proprietary capacity) or any Persons claiming under Lessor (solely in its proprietary capacity). ARTICLE XXVM LESSEE NOT TO ENCUMBER LESSOR'S INTEREST Lessee shall have no right or power to, and shall not in any way encumber the title of Lessor in and to the Property, or the title of Lessor's remainder or residual interest in the Leasehold Improvements. The fee simple estate of Lessor in the Property and the residual interest of Lessor in the Leasehold Improvements shall not be in any way subject to any claim by way of lien or otherwise, whether claimed by operation of law or by virtue or any express or implied lease or contract or other instrument made by Lessee and any claim to the lien or otherwise upon the Property or in the Leasehold Improvements arising from any act or omission of Lessee shall accrue only against Lessee's interest in the Leasehold Improvements. ARTICLE XXIX LIMITATION OF LIABILITY Section 29.1 Limitation of Liability of Lessee. 4217950 0 -Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (a) General Limitation on Liability. It is expressly understood and agreed by and between the Parties, anything herein to the contrary notwithstanding, that each and all of the representations, covenants, undertakings and agreements herein made on the part of Lessee are made and intended not as personal representations, covenants, undertakings and agreements by the members, officers, agents and investors of Lessee or any officers, agents, shareholders, directors, members, partners, investors or any other Person of any of Lessee's constituent entities or for the purpose or with the intention of binding any of the foregoing personally; but are made and intended for the purpose of binding Lessee and the Leasehold Estate only. (b) Limited Carve -out. Notwithstanding the foregoing, in the event of: (i) an actual and intentional fraud committed by any of Lessee's members or officers in any written document prepared by Lessee and submitted to Lessor; or (ii) any misappropriation of Net Insurance Proceeds or Condemnation Awards by Lessee (should same be paid directly to Lessee), any such members or officers committing the fraud or causing such misappropriation shall have personal liability to the extent of any actual damages sustained to Lessor proximately caused by such fraud or misappropriation, and the property and assets of such member or officer committing the fraud or causing the misappropriation shall be subject to levy of execution or enforcement procedure for the satisfaction of Lessor's remedies hereunder, but only to the extent that Lessor is unable to look to the Leasehold Improvements for recovery of such damages. The provisions of this subparagraph (b) shall not apply to any Approved Foreclosure Transferee or any Approved Subsequent Foreclosure Purchaser. Section 29.2 Limitation of Liability of Lessor. It is expressly understood and agreed by and between the Parties, anything herein to the contrary notwithstanding, that each and all of the representations, covenants, undertakings and agreements herein made on the part of Lessor while in form purporting to be the representations, covenants, undertakings and agreements of Lessor are nevertheless, each and every one of them, made and intended not as personal representations, covenants, undertakings and agreements by Lessor, or any commission member, employee, official, representative, attorney or agent of Lessor or for the purpose or with the intention of binding any of the foregoing personally; but are #217950 0 - Final Version of Watson [sland Ground Lease - City of Miami and Flagstone 02-1304 made and intended for the purpose of binding the Lessor's fee simple interest in the Property only. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, NEITHER LESSOR NOR ANY COMMISSION MEMBER, EMPLOYEE, OFFICIAL, REPRESENTATIVE, ATTORNEY OR AGENT OF LESSOR, SHALL BE PERSONALLY LIABLE, DIRECTLY OR INDIRECTLY, UNDER OR IN CONNECTION WITH THIS LEASE, OR ANY DOCUMENT, INSTRUMENT OR CERTIFICATE SECURING OR OTHERWISE EXECUTED IN CONNECTION WITH THIS LEASE, OR ANY AMENDMENTS OR MODIFICATIONS TO ANY OF THE FOREGOING MADE AT ANY TIME OR TIMES, HERETOFORE OR HEREAFTER, OR IN RESPECT OF ANY MATTER, CONDITION, INJURY OR LOSS RELATED TO THIS LEASE OR THE PROPERTY AND ONLY LESSOR'S INTEREST IN THE PROPERTY (OR PROCEEDS THEREOF) SHALL BE AVAILABLE TO SATISFY ANY CLAIMS AGAINST LESSOR; AND LESSEE AND EACH OF ITS SUCCESSORS AND ASSIGNEES WAIVES AND DOES HEREBY WAIVE ANY SUCH PERSONAL 'LIABILITY. As used in this Lease, the term "Lessor" means only the current owner or owners of the fee title to the Property. Each lessor is obligated to perform the obligations of Lessor under this Lease only during the time such lessor owns such interest or title. Any lessor who transfers its title or interest is relieved of all liability with respect to the obligations of Lessor under this Lease to be performed on or after the date of transfer. However, each lessor shall deliver to its transferee all funds previously paid by Lessee if such funds have not yet been applied under the terms of this Lease. ARTICLE XXX ESTOPPEL CERTIFICATES Section 30.1 Estoppel Certificates from Lessee. Lessee shall, at any time and from time to time, so long as this Lease shall remain in effect, upon not less than fifteen (15) and not more than (30) days' prior written request by Lessor, execute, acknowledge and deliver to Lessor, or any other Person specified by Lessor, a written statement (which may be relied on by such Person) (a) certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full X217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone force and effect as modified, stating the modifications and if so requested, that the annexed copy of the Lease is a true, correct and complete copy of the Lease) and (ii) the date to which the Rent and other charges have been paid, if any, and (b) stating (i) whether Lessee has given Lessor written notice of any default, or any event that, with the giving of notice or the passage of time, or both, would constitute a default, by Lessor in the performance of any covenant, agreement, obligation or condition contained in this Lease, and (ii) whether, to the actual knowledge of Lessee (but without independent inquiry), Lessor is in default in the performance of any covenant, agreement, obligation or condition contained in this Lease, and, if so, specifying in detail each such default. Section 30.2 Certificates from Lessor. Lessor shah, at any time and from time to time, so long as this Lease shall remain in effect, upon not less than fifteen (15) and not more than thirty (30) days' prior written request by Lessee, execute, acknowledge and deliver to Lessee, and/or any other Person(s) specified by Lessee (including, but not limited to, any Approved Mortgagee and any proposed transferee of the Leasehold Estate or any Major Subleasehold Estate), a written statement addressed to Lessee and such other Person(s) (which may be relied on by such Person(s)) (a) certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full force and effect as modified, stating the modifications and if so requested, that the annexed copy of the Lease is a true, correct and complete copy of the Lease) and (ii) the date to which the Rent and other charges have been paid in advance, if any, and (b) stating (i) whether an Event of Lessee's Default has occurred or whether Lessor has given Lessee notice of any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Lessee's Default, and (ii) whether, to the actual knowledge of Lessor (but without independent inquiry), Lessee is in default in the performance of any covenant, agreement, obligation oc condition contained in this Lease, and, if so, specifying in detail each such default or Event of Lessee's Default. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2-1304 ARTICLE XXXI NO WAIVER Section 31.1 Delays in Exercising Rights. No delay or omission of Lessor or Lessee to exercise any right or power arising from any default shall impair any right or power, nor shall it be construed to be a waiver of any default or any acquiescence in it. Section 31.2 Waivers to be in Writing. No waiver of any breach or violation of any of the covenants or conditions contained in this Lease shall be implied but must be evidenced by a written instrument signed by the waiving Party, and no waiver of any breach of any of the covenants or conditions of this Lease shall be construed to be a waiver of any other breach or to be a waiver of, acquiescence in, or consent to any further or succeeding breach of the same or similar covenant or condition. No failure on the part of Lessor to enforce any covenant or provision contained in this Lease, and no waiver of any right under this Lease by Lessor, shall discharge or invalidate such covenant or provision or affect the right of Lessor to enforce same in the event of a subsequent breach or default, except to the extent Lessor has specifically waived same in writing. Receipt of Rent. The receipt of Rent by Lessor, with knowledge of any breach of this Lease by Lessee or of any default on the part of Lessee in the observance or performance of any of the conditions, agreements or covenants of this Lease, shall not be deemed to be a waiver of any provision of this Lease. The receipt by Lessor of any Rent or any other sum of money or any other consideration paid by Lessee after the termination of this Lease or the entry of a judgment granting possession of the Property to Lessor, shall not reinstate or continue the Lease Term unless so agreed to in writing and signed by the Chief Executive Officer and Lessee. Section 31.4 Consents. Consent of Lessor to any act or matter must be in writing and shall apply only with respect to the particular act or matter to which the consent is given and shall not relieve Lessee from the obligation, wherever required under this Lease, to obtain the consent of Lessor to any other act or matter. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 ARTICLE XXXII SURRENDER AND HOLDING OVER Section 32.1 Surrender at End of Term. (a) Delivery of Property. Upon the expiration or sooner termination of this Lease, Lessee shall peaceably and quietly leave, surrender and deliver to Lessor, in their "as is" condition, the entire Property in accordance with Section 2.2, together with the following items: (i) the Leasehold Improvements; (ii) all alterations, changes, additions and other improvements made upon the Property; and (iii) any and all Personal Property owned by Lessee or any Major Subtenant or Affiliate of either, but only to the extent such Personal Property has been permanently affixed to the Property or the Leasehold Improvements for use in connection with the operation and/or maintenance of the Property and the Leasehold Improvements. In addition, Lessor shall have the right to assume, as of the pxpiration or sooner termination of this Lease, all remaining lessee obligations under any leases of Personal Property where Lessee or any Major Subtenant or any Affiliate of either is the lessee of the Personal Property, but subject to any consent rights of the applicable Personal Property lessor. Such assumption shall be made pursuant to written assumption agreement(s) in form and substance mutually acceptable to Lessor and Lessee or the applicable Major Subtenant or Affiliate, which assumption agreement(s) shall include, among other things, an appropriate indemnity from Lessor for the period from and after the date of assumption. (b) Delivery of Other Items. At the time of the surrender, Lessee shall also deliver to Lessor all of the following to the extent within Lessee's possession or immediatecontrol (i.e., in the possession of a manager for Lessee or similar Person having a contractual duty to supply such documents to Lessee), all without representation, warranty or recourse: (i) Lessee's original executed counterparts, if available (and if not, then true and correct copies), of all Major Subleases and Space Leases then in effect pursuant to Article XXXIH hereof; (ii) any and all security deposits and rent advances under all Major Subleases and Direct Space Leases then in effect pursuant to Article XXXHI hereof, (iii) any service and 0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 maintenance contracts then affecting the Property or the Leasehold Improvements; (iv) recent maintenance records for the Property and the Leasehold Improvements; (v) all currently effective original licenses and permits then pertaining to the Property or the Leasehold Improvements; (vi) permanent or temporary Certificates of Occupancy then in effect for the Property or the Leasehold Improvements; (vii) all warranties and guarantees then in effect that Lessee shall have received in connection with any work or services performed or building equipment installed on the Property or in the Leasehold Improvements, together with a duly executed quit -claim assignment thereof to Lessor in a recordable form approved by the City Attorney; and (viii) all financial reports specifically required by this Lease which are less than sixty (60) months old and which were not previously furnished to Lessor. Section 32.2 Rights Upon Holding Over. At the expiration of the Lease Term, or any earlier termination of this Lease, Lessee shall yield up immediate possession of the Property and the Leasehold Improvements to Lessor but in the event that Lessee fails to do so, Lessee shall pay to Lessor for the whole time such possession is withheld beyond the date of expiration or termination of this Lease a sum per day equal to Two Hundred (200) percent times 1/365th of the aggregate of the Rent paid or payable to Lessor for the immediately preceding calendar year as set forth in Article V. Section 32.3 No Waiver. The provisions of this Article shall not be held to be a waiver by Lessor of any right of entry or reentry as set forth in this Lease, nor shall the receipt of a sum, or any other act in apparent affirmance of the tenancy, operate as a waiver of the right to terminate this Lease for any breach of Lessee under this Lease (subject to any applicable notice and/or cure periods). Section 32.4 Survival. The provisions of this Article shall survive the expiration or earlier termination of this Lease. ARTICLE XXXIII MAJOR SUBLEASES, SPACE LEASES AND APPROVED TIME SHARE LICENSES Section 33.1 Leasing and Subleasin¢. Except as provided by this Article XXXIII. Lessee shall not sublease or license or grant any other use or occupancy rights with respect to the Property, the 0217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone U2-1304 Leasehold Improvements or the Leasehold Estate without the Chief Executive Officer's prior written consent, which may be granted or withheld in the Chief Executive Officer's sole discretion. Section 33.2 Non -Disturbance and Attomment. On Lessee's request, Lessor shall enter into Subordination, Non -Disturbance and Attomment Agreements with each Major Subtenant substantially in form and substance attached hereto as Exhibit S; provided, however, that the Chief Executive Officer shall not unreasonably withhold his or her consent to any commercially reasonable modifications to such form as may be requested by the applicable Major Subtenant, any Approved Major Subleasehold Mortgagee or any Approved Mezzanine Financer providing Approved Mezzanine Financing to such Major Subtenant. Section 33.3 Major Subleases. Subject to the provisions of this Article XXXIII and Article VIII, Lessee shall have the right at any time during the Lease Term to enter into a Major Sublease for each of the five (5) Major Project Components with a Major Subtenant, provided that: (i) the provisions of Article VIII are satisfied as to each such Major Subtenant; and (ii) each such Major Sublease shall meet the requirements set forth in subparagraph (a) below. (a) Requirements for Major Subleases. Lessee shall provide to Lessor copies of all Major Subleases and amendments thereto. Each Major Sublease (as well as a material modification or amendment thereof) shall be subject to the Chief Executive Officer's prior written approval in accordance with the Chief Executive Officer Approval Procedures. Each Major Sublease shall: (i) Term. Be for a term equal to or less than the presently existing Lease Term (i.e., which shall include any properly exercised Extension Options and shall not include any unexercised Extension Options but may have corresponding Extension Options); this Lease; (ii) Covenants. Include the covenants required by the applicable Sections of (iii) Subordination. Provide that such Major Sublease shall be subject and subordinate to the terms of this Lease (but subject to the provisions of any applicable Subordination, Non - Disturbance and Attornment Agreement); 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-004 (iv) Bank and Records. Provide that the applicable Major Subtenant shall maintain full and accurate books of account and records of such Major Subtenant's business, operation or enterprise, in accordance with the requirements under Article XII, and that Lessor shall have the same rights, including, without limitation, the audit rights, set forth therein with respect to such Major Subleases; (v) Mortgagee Cure Rights. Include provisions permitting any Approved Leasehold Mortgagee to cure defaults by Lessee thereunder, and any applicable Approved Major Subleasehold Mortgagee to cure defaults by such Major Subtenant thereunder; (vi) Lessor Cure Rights. Include provisions permitting Lessor to cure defaults by Lessee thereunder; (vii) No Action Causing Default under Lease. Provide that such Major Subtenant shall not take any action or fail to act which would result in an Event of Legsee's Default hereunder; (viii) Compliance With Laws and Insurance. Provide that such Major Subtenant shall comply in all material respects with all Applicable Laws as to the applicable Major Project Component, and any and all requirements of public liability, fine and other policies of insurance which may be applicable to its operations, activities, rights and obligations under such Major Sublease; (ix) Maintenance of Insurance. Provide that such Major Subtenant shall maintain the insurance coverages set forth in Article XI with respect to the applicable Major Project Component governed by the Major Sublease; (x) Casualty and Condemnation. Include casualty and condemnation provisions with respect to the applicable Major Project Component which are substantially similar to those contained in this Lease; (xi) Use Restrictions. Include restrictions on Major Subtenant Transfers of Control with respect to the applicable Major Subtenant and Major Subleasehold Estate Transfers with '1217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Oj-1304 respect to the applicable Major Subleasehold Estate which are substantially similar to those contained in Article VIII; (xii) Notice of Default under Operating Agreements and Mortgages. Require the Lessee and the applicable Major Subtenant to provide Lessor with notice of default or any allegation of default by such Major Subtenant and/or any counterparty under any Operating Agreement(s) or Approved Major Subleasehold Mortgage(s) or of any expressed intention of either party to any such agreement to terminate same; (xiii) Advance Rent. Provide that in no event shall Lessee be permitted to accept more than two (2) months rent in advance of the then current month under any Major Sublease. and (xiv) Rentals. Provide for such rentals as are necessary to maintain a Sufficient Lessee Economic Interest (as defined in Section 8.1). Section 33.4 No Cross -Defaults Among Major Subleases. No default or Event of Lessee's Default under any Major Sublease shall constitute or give rise to a default under any other Major Sublease. Section 33.5 Space Leases. (a) AARoroval of Certain Space Leases. Any single Space Lease for more than 50,000 net rentable square feet shall require the prior written consent of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures. (b) Right to Enter into Space Leases. Lessee and/or any Major Subtenant shall have the right to enter into any other Space Leases with respect to each of the Major Project Components or any other Project Components without Lessor's consent, provided that all such Space Leases shall: (i) be for a Permitted Use and not for any Prohibited Use; (ii) be entered into in a non-discriminatory fashion; (iii) be negotiated at arm's length; (iv) have adequate security deposits in the good faith judgment of Lessee or the applicable Major Subtenant; (v) be on lease forms previously supplied to Lessor or on another form typically required by any national tenant (but in each case with such modifications as shall 0217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone `-1304 c; have been negotiated with the applicable Space Tenant); (vi) be within the tenant improvement guidelines prepared by Lessee reasonably and in good faith and submitted by Lessee to Lessor from time to time (or as to Space Leases with national tenants, as required by such national tenants); (vii) be with the rental rate guidelines prepared by Lessee reasonably and in good faith and submitted by Lessee to Lessor from time to time (it being understood that such guidelines shall generally provide for market rents to be charged, unless specified circumstances or conditions are applicable to particular Space Leases as agreed upon by Lessor and Lessee reasonably and in good faith); (viii) result in a complementary tenant mix, including a variety of restaurants with varied price points; and (ix) result in first-class operations befitting the Project. (c) Assignment of Rents. As security for the prompt payment of Rent hereunder, Lessee hereby: (i) assigns to Lessor all of its right, title and interest in and to any and all existing and future Major Subleases and Space Leases and all rents due and to become due thereunder; and (ii) grants to Lessor the right to collect such rents and apply same to the Rent due hereunder; provided, however, that Lessee shall be entitled to collect and receive such rents in accordance with the terms of such Major Sublease and Space Leases unless and until an Event of Lessee's Default has occurred and is continuing. Lessor's rights under this subparagraph (c) shall be (and are hereby made) subject, subordinate and inferior in all respects and for all purposes to any right, title and interest of each and every Approved Mortgagee in and to all such Major Subleases and Space Leases and all such rents due and to become due thereunder. Upon the written request of any such Approved Mortgagee, Lessor shall execute such instruments as such Approved Mortgagee may request for the purpose of confirming the foregoing subordination. (d) Non -Disturbance. Upon Lessor's request, Lessee shall enter into a Subordination, Non -Disturbance and Attornment Agreement with any Space Tenant which meets one or more of the following criteria: (i) such Space Tenant will occupy more than 50,000 net rentable square feet; (ii) such Space Tenant will have a Space Lease having a term exceeding five (5) years; or (iii) such Space Tenant is a national tenant which requires non -disturbance protection. The form of such Subordination, Non -Disturbance and Attornment Agreement shall be comparable to the form for Major 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Subtenants set forth in Exhibit S; provided, however, that the Chief Executive Officer shall not unreasonably withhold his or her consent to any commercially reasonable modifications to such form as may be requested by the applicable Space Tenant (with due consideration to the particular requirements of any national tenant). Section 33.6 Approved Time Share Licenses. (a) Acknowledgment. The Parties acknowledge and agree that Lessee or the applicable Major Subtenant is entitled to create and sell Approved Time Share Licenses at the Marina and/or within the Hotels (subject to the limitation of the number of keys allocated therefor as described in the definitions of Hotel A and Hotel B and in Exhibit E). (b) SNDA's. In order to assure the marketability and continued existence of all such Approved Time Share Licenses at all times during the Lease Term, Lessor agrees that Lessor, Lessee and any applicable Approved Mortgagees shall, upon Lessee's request from time to time, enter into one or more Subordination, Non -Disturbance and Attornment Agreements with the holders of Approved Time Share Licenses and their respective lenders. Each such Subordination, Non -Disturbance and Attornment Agreement shall: (i) be in form and substance reasonably satisfactory to all of the parties thereto; (ii) be binding upon and inure to the benefit of each holder of such Approved Time Share Licenses; (iii) provide, among other things, that for the entire duration of the Lease Term, the possessory and other rights of each such holder of an Approved Time Share License shall not be disturbed or impaired on account of any termination of this Lease or any termination of any applicable Major Sublease prior to the stated expiration date of the Lease Term. (c) Lessor Protections. Subject to the provisions of clause (iii) of subparagraph (b) above, the Parties acknowledge and agree that the Subordination, Non -Disturbance and Attornment Agreements described in subparagraph (b) above shall in no event: (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease. :217950 v3 - Final Version of Watson [stand Ground Lease - City of Miami and Flagstone ARTICLE XXXIV MINORITY AND WOMEN PARTICIPATION AND EQUAL EMPLOYMENT OPPORTUNITIES Section 34.1 First Source Hiring Agreement. Simultaneously with the execution hereof by Lessee, Lessee shall enter into a First Source Hiring Agreement with the City, in form and substance substantially as set forth in Exhibit T. Section 34.2 Minority and Women Participation and Equal Employment Opportunity. During the Lease Term, Lessee agrees that it will: (a) take reasonable affirmative action in the recruitment and recruitment advertising to attract and retain qualified minority and female contractors and subcontractors; (b) provide a reasonable opportunity in the recruitment, recruitment advertising and hiring for contractors and subcontractors residing within the City of Miami; (c) take reasonable affirmative action to retain employees regardless of race, color, place or birth, religion, national origin, sex, age, marital status, veteran and disability status; (d) maintain equitable principles in the recruitment, recruitment advertising, hiring, upgrading, transfer, layoff, termination, compensation and all other terms, conditions and privileges of employment; (e) monitor and review personnel practices to guarantee that equal opportunities are being provided to all employees, regardless of race, color, place of birth, religion, national origin, sex, age, marital status, veteran and disability status; (f) post in conspicuous places, available to employees and applicants for employment, notices in a form to be provided by Lessor setting forth provisions of this non-discrimination clause; (g) in all solicitations or advertisements for employees placed by or on behalf of Lessee, state that all qualified applicants will receive consideration for employment without regard to race, creed, color or national origin; and (h) send to each labor union or representative of workers with which the construction contractor or other operator within the Project has a collective bargaining agreement or other contract or understanding a notice in a form to be provided by Lessor, advising the union or representative of Lessee's commitments and posting copies of the notice conspicuous places available to employees and applicants for employment. =217950 Q -Final Version of Watson Island Ground Lease - City of Miami and Flagstone E �- 1304 Section 34.3 Skills Training and Employment Center. Lessee shall establish and maintain a "Skills Training Center" during the construction of the Project and a "Career Training Center" at all times during the Term to provide for training of the construction and operations personnel associated with the Project at the Property or other location(s) within the City. The Skills Training Center shall be run by a construction management team to be assembled by Lessee and shall provide for the advancement of skills for the construction personnel at the Project, which shall include, without limitation, a curriculum of safety, fundamental skills for untrained workers, advance skills for trained workers, additional skills for certificates in alternate trades and management of construction operations. Such Skills Training Center shall provide opportunities for the chronically unemployed within Miami -Dade County, with priority (as a general proposition) being given to residents of the City. The Career Training Center will provide accredited course for all employees of the Project (which shall be offered at no -cost to participants), including, without limitation, hospitality training, retail training, catering and dining training, marina operations training, public space management, customer service training, multiple language skills, historical ambassador training, botanical training, educational teaching for cultural facilities and emergency services training (for immediate care prior to arrival of professional emergency services). Section 34.4 Tax Credits. To the extent available, Lessor agrees to cooperate with Lessee, at no cost or expense to Lessor, in connection with Lessee's efforts to obtain any tax credit under Applicable Laws associated with employment, such as the State of Florida "Enterprise Zone" program and/or the Miami -Dade County "Empowerment Zone" program. In no event shall the foregoing agreement to cooperate be deemed to apply to any municipal programs offered or operated by the City, but nothing contained herein shall be deemed to prevent Lessee from submitting any applications to the City with respect to any such municipal programs for which Lessee may be eligible. z217950 950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone �i2-1304 ARTICLE XXXV OPERATING AGREEMENTS FOR HOTELS AND MARINA Sectior. 35.1 Approval. During the Lease Term, any operating and management agreement entered into by Lessee or any Major Subtenant for the operation and management of the Hotels and Marina (collectively, the "Operating Agreements'), and any material amendments or modifications thereto, shall be subject to the prior written approval of Lessor in accordance with the C)tief Executive Officer Approval Procedures (it being understood that the Chief Executive Officer shall not object to any terms and conditions which are customary in the industry and/or are typically required by any nationally or internationally recognized operator or manager, provided that such terms and conditions do not violate any City policies, legal or otherwise). Section 35.2 Approved Operators. Any such Operating Agreement shall only be with a member of the Operating Team approved in accordance with the provisions of Section 4.4 (the "Approved Operators)'). >" :E Section 35.3 Terms. Each such Operating Agreements shall: (i) be subject and subordinate to the terms of this Lease; and (ii) be for a term which is equal to or less than the presently existing Lease Term (i.e., which shall include any properly exercised Extension Options and shall not include any unexercised Extension Options but may have corresponding Extension Options). Section 35.4 Non -Disturbance and Attornment Ag eement. Upon request, Lessor and the Approved Operator(s) shall enter into a Non -Disturbance and Attornment Agreement in form and substance to be mutually acceptable to the parties thereto. ARTICLE XXXVI UNAVOIDABLE DELAY Section 36.1 Unavoidable Delay(s). For the purpose of any of the provisions of this Lease (except the payment of Rent), neither Lessor nor Lessee, as the case may be, nor any successor in interest, 0217950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone i►2--130 shall be considered in breach of or in default of any obligations under this Lease in the event of an Unavoidable Delay(s), in accordance with the provisions of Section 36.2 below. In addition, each cure period specified in Section 25.1 or elsewhere in this Lease shall be extended on account of any Unavoidable Delays. Section 36.2 Manner of Notice of Unavoidable Delay(s) and Conditions With Respect to Performance of Obligations. In the event of Unavoidable Delay(s), the time for performance of obligations, covenants, and/or agreements which are affected by the Unavoidable Delay(s) shall be extended for the period of time of the Unavoidable Delay(s) or for such period of time as may be necessary under the circumstances, provided that the Party seeking the benefit of the provisions of this Section shall: (a) Notice. As soon as reasonably possible, but no later than ten (10) days after such Party shall have become aware of the Unavoidable Delay(s), give notice, in writing, to the other Party of the Unavoidable Delay(s), which notice shall specify which of the obligations, covenants, and/or agreements of this Lease the notifying Party is unable to perform at the time of such notice and how the Unavoidable Delay(s) has affected the Party's performance of such obligations, covenants, and/or agreements; (b) Performance. As soon as reasonably possible as the event or circumstance giving rise to such Unavoidable Delay(s) ceases to exist, the Party claiming such Unavoidable Delay(s) shall commence and shall continue diligently the performance of such obligations, covenants; and/or agreements so delayed. ARTICLE XXXVII NOTICES Section 37.1 Notices. All notices, consents, approvals and other communications under this Lease shall be in writing and shall be deemed to have been duly given or made: (i) upon delivery if hand delivered; (ii) one (1) Business Day after delivery to any nationally recognized overnight courier service 0217950 0 - Final Version of Watson Island Ground Lease - Cit} of :Miami and Flagstone 02-130 for next Business Day delivery, fee prepaid; (iii) on the date of any facsimile transmission (if made before 5:00 p.m., Miami time, otherwise on the next Business Day), with transmission verified and a hard copy of the transmission promptly sent by U.S. Priority Mail; or (iv) three (3) Business Days after deposit with the United States Postal Service as registered or certified mail, postage prepaid, and in each case addressed as follows (or to such other addresses as either party may subsequently designate in writing to the other): If to Lessor, at: Chief Executive Officer (City Manager), City of Miami, Florida 3500 Pan American Drive Miami, FL 33133 with a copy to: Department of Economic Development, City of Miami 444 SW 2 Avenue Miami, FL 33130 with a copy to: City Attorney, City of Miami 444 SW 2 Avenue Miami, FL 33130 All Rent payments shall be made to (unless otherwise designated in writing by Lessor): Finance Director, City of Miami 444 SW 2 Avenue Miami, FL 33130 if to Lessee, at: Flagstone Island Gardens LLC 506 Celebration Avenue Celebration, Florida 34747 Attn: Mehmet Bayraktar with a copy to: Shutts & Bowen LLP 1500 Miami Center 201 South Biscayne Boulevard Miami, Florida 33131 Attn: Kevin D. Cowan, Esq., and Terry B. Fein, Esq. with a copy to: Latham & Watkins 885 Third Avenue New York, New York 10022 Attn: Richard L. Chadakoff, Esq. X217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Each party from time to time may change its address or add addresses for purposes of receiving declarations or notices by giving notice of the changed address, to become effective ten (10) days following the giving of such notice. Section 37.2 Notice to Approved Mortgagees. All notices, demands or requests which may be required to be given by Lessor or Lessee to any Approved Mortgagee shall be sent in writing, in the manner or manners set forth in Section 37.1 for the giving of notices, addressed to the Approved Mortgagee at such place as the Approved Mortgagee may from time to time designate in a written notice to Lessor and Lessee. Copies of all notices shall simultaneously be sent to the other of Lessor or Lessee, as the case may be. Section 37.3 Sufficiency of Service. Service of any demand or notice as in this Article provided shall be sufficient for all purposes. ARTICLE XXXVIH MISCELLANEOUS PROVISIONS Section 38.1 Captions. The captions of this Lease are for convenience and reference only and in no way define, limit or describe the scope or intent of this Lease, nor in any way affect this Lease. Section 38.2 Conditions and Covenants. All the provisions of this Lease shall be deemed and construed to be conditions as well as covenants, as though the words specifically expressing or importing covenants and conditions were used in each separate provision. Section 38.3 Entire Agreement. This Lease (together with all of the Exhibits and other attachments (if any) hereto and any future easement agreements or other documents contemplated hereby, collectively contains the entire agreement between the Parties concerning the Property. This Lease shall supersede and control over any and all prior agreements and negotiations between the Parties, whether oral or in writing (which are hereby expressly merged into this Lease). To the extent of any conflict between this Lease and the Watson Island RFP and/or the Island Gardens Proposal, this Lease shall »217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-2-1304 control. This Lease shall supersede and control over any and all prior agreements and negotiations between the Parties, whether oral or in writing (which are hereby expressly merged into this Lease). Section 38.4 Modification. None of the covenants, terms or conditions of this Lease to be kept and performed by either party to this Lease shall in any manner be waived, modified, changed or abandoned except by a written instrument duly signed, acknowledged and delivered by both Lessor and Lessee. Section 38.5 Time of Essence as to Covenants of Lease. Subject to any extensions expressly provided with respect thereto, time is of the essence as to the performance of each and every of the provisions of this Lease by Lessee and Lessor. Section 38.6 Recording. The Parties shall, at the request of either Party, execute a short -form lease or memorandum of lease and have it properly acknowledged for the purpose of recording in the Public Records of Miami -Dade County, Florida. Such short -form lease or memorandum of lease shall include those provisions hereof as may be reasonably requested by either of the Parties, provided that the financial terms of this Lease shall not be contained therein if Lessee so requests. Lessee shall bear the cost of any such recordation thereof. Section 38.7 Chief Executive Officer Approval Procedures. Except for those circumstances in this Lease which expressly provide to the contrary or specifically call for an approval to be given or withheld in the "sole discretion' or "sole and absolute discretion' of the Chief Executive Officer, the following provisions shall apply to any matter for which approval is required hereunder to be obtained from the Chief Executive Officer (individually and collectively, an "Aooroval-Requiring Matter"), and shall be deemed to be the "Chief Executive Officer Approval Procedures": (a) Standard of Approval. Approval shall not be unreasonably withheld, delayed or conditioned and shall be considered by the Chief Executive Officer in good faith; (b) Disqualified Persons. Where approval of a particular Person is required, the Chief Executive Officer may withhold such approval if such Person is a Disqualified Person; 0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (c) Response Time. Response by the Chief Executive Officer shall be given within fourteen (14) days of submission to the Chief Executive Officer of all information which is fundamentally required in order to make a decision; provided, however, in the case of any request for approval of the Construction Plans and Specifications: (i) response as to any initial Construction Plans and Specifications shall be given within twenty five (25) days of submission; (ii) response to any changes, modifications, additions or supplements thereto and any additional details with respect thereto which are required to be approved shall be given within ten (10) days of submission of same, and shall be limited to a review of only such changes, modifications, additions, supplements or additional detail, and the Chief Executive Officer shall not raise any objections to any matters or items previously approved in accordance with this Section 38.7 (except to the extent that the Chief Executive Officer learns that any such matter or item was approved contrary to the requirements of Applicable Laws or the Major Special Use Permit for the Project). (d) Request for Approval. Any submission for approval shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a typeface larger than that used elsewhere in the request for approval indicating that Lessor is to provide comments within fourteen (14) days (or other applicable period) pursuant to this Section, together with a copy of such submission to the City's Ombudsman and the City's Consultant (as such terms are defined in the Development and Construction Rider); and (e) Reasons for Denial, If Applicable. In the case of the denial of any request, such denial shall be made with reasonably specific written comments as to why and as to _what alternatives might be acceptable (with the understanding that denial may be based on any reasonable grounds). (f) Chief Executive Officer Approvals, Disclaimer. (i) Notwithstanding anything to the contrary contained in this Lease, Lessee acknowledges that any approvals by the Chief Executive Officer of any Approval -Requiring Matter shall in no event be deemed to be a guarantee of the approval of such Approval -Requiring Matter by the City Commission or any other Governmental Authority. Any approval by the Chief Executive Officer of an 4217950 Q - Final Version of Watson Island Ground Lease - Citc of Miami and Flagstone 02.. 2r i 3 V A Approval -Requiring Matter shall be made solely in the City's capacity as the owner of the Property and not in any governmental capacity, and Lessee shall remain responsible for obtaining whatever permits, licenses and approvals may be necessary to improve the Property in accordance with any such Approval - Requiring Matter, as well as all Applicable Laws. (ii) In addition, approval by the Chief Executive Officer of any Approval - Requiring Matter shall not constitute a warranty or representation by City that the Project Components meet all building codes or other Applicable Laws, or that such plans, will, if followed, result in properly designed or constructed Project Components, or that any Project Component built in accordance therewith will be built in good or workmanlike manner. (iii) Notwithstanding anything to the contrary contained in this Lease, the Parties recognize and agree that certain provisions of this Lease may require the City and/or its boards, departments or agencies, acting in their governmental capacity, to consider certain changes in applicable City codes, ordinances, plans, regulations or policies, as well as to consider other governmental actions. All such considerations and actions shall be undertaken in accordance with established requirements of state statute and City ordinances, in the exercise of the City's jurisdiction under the police power. (iv) Northing in this Lease is intended to limit or restrict the powers and responsibilities of the City in acting on applications for MUSP Approval and applications for other Project Approvals by virtue of the fact that the City may have consented to such applications as a property owner hereunder. The Parties further recognize and agree that these proceedings shall be conducted openly, fully, freely and fairly in full accordance with law and with both procedural and substantive due process to be accorded the applicant and any member of the public. Nothing contained in this Lease shall entitle Lessee to compel the City to take any such actions, save and except the consents to the filing of such applications for MUSP Approvals, land use approvals or the required approvals, as more fully set forth herein, and to timely process such applications.. Section 38.8 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of Florida, without application of its conflicts of law principles. 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Section 38.9 Jurisdiction and Venue. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Lease occurred in Miami -Dade County, Florida. Except in connection with matters to be resolved in accordance with Article XVII hereof, the Parties agree that any disputes, civil action or legal proceeding arising out of or relating to this Lease shall be brought in the courts of record of the State of Florida in Miami -Dade County, Florida or the United States District Court, Southern District of Florida, Miami -Dade County Division. Each Party consents to the jurisdiction of such courts in any such civil action or legal proceeding and waives any objection to the laying of venue of any such civil action or legal proceeding in such court. Service of any court paper may be effected on such party by mail, as provided in this Lease, or in such other manner as may be provided under applicable laws, rules of procedure or local rules. Section 3 8. 10 Waiver of Jury Trial. The Parties hereby knowingly, irrevocably, voluntarily and intentionally waive any right either may have to a trial by jury in respect of any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Lease or any amendment or modification of this Lease, or any other agreement executed by and between the parties in connection with this Lease, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any Party hereto. This waiver of jury trial provision is a material inducement for Lessor and Lessee to enter into the subject transaction. Section 38.11 Conflict of Interest. Lessee agrees to comply with the conflict of interest provisions of the Miami City Code, Miami -Dade County Code and the State of Florida. No member, official, or employee of Lessor shall have any personal interest, direct or indirect, in this -Lease, nor shall any member, official, or employee participate in any decision relating to this Lease which affects his or her personal interests or the interests of any other Person in which he or she is, directly or indirectly, interested. No member, official, or employee of Lessor shall be personally liable to Lessee, its successors and assigns, or anyone claiming by, through or under Lessee or any successor in interest to the Property, in the event of any default or breach by Lessor or for any amount which may become due to Lessee, its 4217950 0 - Final Version of Watson Island Ground Lease - Cit` of Miami and Flagstone i 2- 1304 successors and assigns, or any successor in interest to the Property, or on any obligation under the terms of this Lease. Section 38.12 Covenants to Run with the Leasehold Estate. All covenants, agreements conditions and undertakings in this Lease shall extend and inure to the benefit of and be binding upon the successors and assigns of each of the Parties and be construed as covenants running with the Leasehold Estate and the Leasehold Improvements. Subject to all provisions respecting the rights of assignment or subleasing, this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties. Wherever in this Lease reference is made to any of the Parties, it shall (unless expressly provided to the contrary in such reference) be held to include and apply to, wherever applicable, also the successors and assigns of each Party. Section 38.13 No Merger. Without the express written consent of all Approved Leasehold Mortgages and Subleasehold Mortgagees, there shall be no merger of this Lease or any interest therein or of the Leasehold Estate, with the fee estate in the Property or any portion thereof by reason of the fact that this Lease or such interest therein or the Leasehold Estate may ever be held directly or indirectly by or for the account of any Person who shall also hold the fee estate in the Property or any portion thereof or any interest of Lessor under this Lease. Section 38.14 Brokerage. Each Party represents and warrants to the other that it has not dealt with any broker or finder in connection with the transactions contemplated and each Party agrees to indemnify, defend and hold the other harmless of and from any and all manner of claims, including, but not limited to, reasonable attorneys' fees and expenses, incurred by the other Party and arising out of any claim by any broker or finder if it is ultimately determined that the indemnifying Party has breached the foregoing representation and warranty. Section 38.15 Counterparts. This Lease may be executed in any number of counterparts, each of which shall constitute an original of this Lease, and all of which shall constitute but one Lease. Section 38.16 No Third Party Beneficiaries. Nothing in this Lease shall confer upon any person, other than the Parties hereto and their respective successors and permitted assigns, any rights or :217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 remedies under or by reason of this Lease; provided, however, that each Approved Mortgagee, Approved Foreclosure Transferee and Approved Subsequent Foreclosure Purchaser shall be a third party beneficiary hereunder to the extent such Persons are granted rights hereunder. Section 38.17 Attorney's Fees and Expenses. In the event of any litigation between the parties, all expenses, including reasonable attorneys' fees and court costs at both the trial and appellate levels, incurred by the prevailing party, shall be paid by the non -prevailing party. The term "attorneys' fees", as used in this Lease, shall be deemed to include, without limitation, any paraprofessional fees, investigative fees, administrative costs and other charges billed by the attorney to the prevailing party (including any fees and costs associated with collecting such amounts). The provisions of this Section 38.17 shall survive the expiration or any sooner termination of this Lease. Section 38.18 Invalidity of Provisions. If any provision of this Lease or the application of it to any Person or circumstances shall to any extent be finally determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease, and the application of such provision to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 4217950 0 - Final Version of Watson Island Ground Lease - City of ;Miami and Flagstone 02--1304 IN WITNESS WHEREOF, Lessor has caused this Lease to be executed in its name and on its behalf by the Chief Executive Officer of the City of Miami, Florida and the City Clerk of the City of Miami, Florida, and Lessee has executed this Lease, as of the date and year first above written. Signed, sealed and delivered LESSOR: in the presence of: CITY OF MIAMI, a municipal corporation of the State of Florida Name: Name: ATTEST: City Clerk APPROVED AS TO INSURANCE REQUIREMENTS: , Chief Division of Risk Management Signed, sealed and delivered in the presence of: Name: Name: By: , Chief Executive Officer APPROVED AS TO FORM AND CORRECTNESS: City Attorney LESSEE: FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company By: _ Name: Title: X217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT A SKETCH OF WATSON ISLAND 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02 -130 4 DEC -04-2002 WEO 09:19 AM FAX NO, P. 01 �a 7w 7N IV H O I 1!) i 11NlFOWW/Y � I N I Q I � •V `1 1� R 171 pt is as 2G as 2G lel PAW 111 • M•W AT IVVnU 829:2$ AN PWWwn w11M/0 TW4 • VAt-FAXNWA M 4.ON ?M • CUM • OURAYM am«*0940 02-1304 EXHIBIT B UPLAND PARCEL #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 LEGAL DESCRIPTION OF UPLAND PARCEL Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridgey of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62' 00' 00 seconds" ; thence South 59 ' 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17 3 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North 17' 12'21" West continuing along said bulkhead line a distance of 924.70 feet to the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 89' 10' 55" East, a distance of 73.08 feet; thence North 86 3 44' 00" East, a distance of 67.09 feet to non - tangent curve concave to the Northeast whose radial line bears North 393 29' 18" East having a radius of 160.00 feet and central angle of 22' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72 3 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46' 17' 39" thence along said curve an arc length of 484.79 feet to a point of tangency; thence South 26 3 22'36" East continuing along the southwesterly right of way line of State Road ArI-A, a distance of 196.59 feet; thence South 54 ' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54' 03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. tit -1304 EXHIBIT C SUBMERGED PARCEL 0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 LEGAL DESCRIPTION OF SUBMERGED PARCEL Commence at a point marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A 1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706- 112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62 3 00' 00"; thence South 59 3 51' 26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17 3 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 49 3 3257" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and position by coordinates , North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 3 03' 50" West, along the limits of said turning basin a distance of 428.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03 3 27' 54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10,716.59 feet, a radial line to said point bears South 01 3 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02 3 04' 17" to a point of tangency; thence South 89 3 10' 55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point of intersection with an existing bulkhead line; thence South 17 3 12' 21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. 2��304 EXHIBIT D SURVEY #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone U;2-1304 EXHIBIT E DESCRIPTION OF PROJECT COMPONENTS AND AMENITIES I. General Description. 1. The Major Project Components, consisting of the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage. 2. A fish market (the "Fish Market"). 3. A Maritime Gallery containing a minimum of 4,000 square feet. 4. Areas of public access and assembly, as more particularly described in the Island Gardens Proposal, which shall include, without limitation, the following: a. a roof garden to contain not less than Five Percent (5%) less than the proposed amount of square feet as described in the Island Gardens Proposal with swimming pools, cabanas, and garden room for special occasion rental, which shall supply the hospitality amenities for the Hotel guests and be available to the public on a fee basis; b. salt water gardens; and C. a 100' setback to include a grand promenade along the sea wall (the "100' Setback") For purposes of hereof. 5. Public Art as more particularly described in Exhibit E-1 attached hereto. - 6. A boat basin for model boats adjacent to the entry boulevard for the Project. 7. Adequate facilities for passenger pick-up and drop-off by water taxi service and/or ferry service. 8. Any and all other infrastructure, landscaping and improvements which are more particularly described in the Island Gardens Proposal (it being understood, however, that the details concerning such infrastructure, landscaping and improvements, including any #217950 0 - Final Version of Watson [stand Ground Lease - City of Miami and Flagstone 02-1304 adjustments thereto, shall be as set forth in the approved Construction Plans and Specifications). U. Number of Hotel Kevs. 1. The total number of keys of allocated to Approved Time Share Licenses for the two Hotels in the aggregate may, at Lessee's option, be increased by up to five percent (5%) above the maximum aggregate amount of 100 keys as set forth in the definitions of Hotel A and Hotel B (i.e., from 100 keys to 105 keys). 2. The total number of keys (other than those allocated to Approved Time Share Licenses) in each Hotel may, at Lessee's option, be increased or decreased by up to five percent (5%) above the respective maximums set forth in the respective definitions of Hotel A and Hotel B (i.e., 200 keys in the case of Hotel A and 300 keys in the case of Hotel B); provided, however, that if the application of such Five Percent (5%) maximum would result in less than a full floor of keys in either Hotel, then such Five Percent (5%) maximum may be exceeded by such additional amount as will result in a full floor of keys in each Hotel. 3. The foregoing increases or decreases may be made without Lessor's consent, but subject to the Chief Executive Officer's review and approval of the applicable Construction Plans and Specifications as provided for by the provisions of the Lease. 4. As an example of how the foregoing variances would be applied, assume that: (i) Hotel A and Hotel B will each have 18 keys per floor; (ii) Hotel B will have 60 keys allocated to Time Share Licenses; and (iii) Lessee desires to have the maximum number of keys it can have in each Hotel. A. Applying the Five Percent (5%) maximum with respect to the number of keys in Hotel B (other than those allocated to Approved Time Share Licenses), Lessee may have up to 315 keys (other than those allocated to Approved Time Share Licenses), plus the 70 keys allocated to Approved Time Share Licenses. The total number of keys in Hotel B would be 385 keys. However, with 18 keys per floor, 385 keys would result in having less than a full floor of keys. Since it would require 396 keys to reach a full floor of keys (i.e., 21 floors of 18 keys #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 each), Lessee may have a maximum of 396 keys in Hotel B, of which 70 keys are allocated Approved Time Share Licenses. B. Based on the same assumptions, Hotel A may have a maximum of 35 keys allocated to Approved Time Share Licenses (for a total of 105 in the aggregate for both Hotels). Applying the Five Percent (5%) maximum with respect to the number of keys in Hotel A (other than those allocated to Approved Time Share Licenses), Lessee may have up to 210 keys (other than those allocated to Approved Time Share Licenses), plus the 35 keys allocated to Approved Time Share Licenses. The total number of keys in Hotel B would be 245 keys. However, with 18 keys per floor, 245 keys would result in having less than a full floor of keys. Since it would require 252 keys to reach a full floor of keys (i.e., 14 floors of 18 keys each), Lessee may have a maximum of 252 keys in Hotel A, of which 35 are allocated Approved Time Share Licenses. II. Marina. The Marina may include, among other things: (i) fractional ownership provided that the same can be structured as an Approved Time Share License; and (ii) slips, dockage or other accommodations for (in addition to other marine vessels) water taxis, as well as amphibious aircraft, seaplanes and other air-sea amphibious craft (so long as such amphibious aircraft, seaplanes and other air- sea amphibious craft are not brought or allowed upon the Upland Parcel). III. 100' Setback. Lessee may construct and operate within the 100' Setback such facilities and improvements as are approved to be within the 100' Setback pursuant to the Major Use Special Permit for the Project and any and all other applicable Project Approvals (including any such Project Approvals required by the City in its municipal capacity). Such facilities and improvements may be constructed and operated within the 100' Setback without the prior written consent of Lessor (in its capacity as lessor under this Lease) or the Chief Executive Officer, subject only to the Chief Executive Officer's approval of specific Construction Plans and Specifications for same in accordance with the Chief Executive Officer Approval Procedures. The Parties acknowledge and agree that in no event shall the foregoing waiver of Lessor's right, in its capacity as lessor under this Lease, to object or consent to the construction and operation of such facilities and improvements within the 100' Setback be deemed to #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 be a waiver of any and all rights of Lessor (or any of its applicable planning boards or agencies) to object to same in its municipal or regulatory capacity. IV. Measurement of Retail Space. The 221,000 square feet of Retail Space shall be calculated based on "Usable Area' within each store under the Standard Method for Measuring Floor Area in Office Buildings (American National Standard) approved on June 7, 1996 by American National Standards Institute, Inc. and the Building Owners and Managers Association International (ANSUBOMA Z65.1-1996); it being understood and agreed, however, that in addition to such 221,000 square feet: (i) there may be common area factor which shall mean any area outside of a store or restaurant of up to Twenty Five Percent (25%) of such 221,000 square feet; and (ii) such Twenty Five Percent (25%) common area factor shall not be permitted to include common areas not directly related to the Retail Space (i.e., it shall exclude general Project common areas). , #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 1 02-304 EXHIBIT E-1 DESCRIPTION OF PUBLIC ART #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ng -1304 U Ow DEC-04-2OC2 W7 -D 00!43 1V 'AM BIPM FAY, N.O. 01 AWARDS 197 ")%mr R. r- r-, F,,.4,W,, p.. 1 pe CKt, a, r:�r 'emrric! Fate dstt�r. 1`t:0sr5� PUBLIC CoMbilSSro.'VS iQdr{J.rn[: Art_C xf;- yr-,nj,k fir! it 1�+rJlti t'+esW F'.br s-1-LI-CrED PUBLIC rOLLLCTIotir.4 fiY�7:111r3s_ �rL �aufrtr, i�/r!r Rc,ct B:usrd:'.y'r'�wr�ta�sevs; ?r!:"w»•i 8:'rms:.�,i,rncr i.fyj:JJ7C of ./f'l�rGf!(45w'A�d ,�ww // :.tMi!'J "�-s�17Y.1 .it :ills LQr!idAf,0�rd11iEfi,=l+tc?i8 c..� �lfk?•7� r'o�r4�T.'�Sacrtsrx..Y..riv2n,���r,»rrxrrjy �rar.'�; rltau,,rc,�xre!sr G.+Lk*hdw Mxfom g` , In , 'New i y,k, `.:Y• r*""lb'vm ,N.LrrYAY wrd .f'wjtxrr Crde?:, lr'Zf%dVJGr, FN7';* K val, •Lft;7pir•'Arc ;iSatrz:r+a. llra�na '�ATZC'f? !'�vre.> dr.9ra C'anlu�n�e�m:eeJ, !rlve:rrr �, .�!�u;b Xlwin .te �rlwi .-s t; � a►Sct�. Li9tir`af�'a 1�crrww f .nn, tUrodr !1'axc'!;haal ar F�c��pr., Pratid:r.:e -'r4aYXS f COa'r�y}'ar:, S3�f Drr�r. tza" 11Yxxw if : lrl, �aK Prr,'ar 13��sab, Fpy�j °riacdrlriru hicrt:w , r rl, i':a��haltier iibrxx:x.=:r.�:b1::setw, fin�ou� �rr!fi1!:�.Y�l:J(Mq Ftdjcav] Wlt? 6rY MAWIM of <'l.ehsiirs A:t N. 3a,,A og PACE la' RCUD AT I I'42D07 4:47:02 A!0 [Easb m bnndard Timej' SYR:FAXSERUEki S' DUIS:770 ' CSID:; DURATION {mm•sse02.17 02--1304 DEC -04-20C2 (,)-TJ 09 ' 4 Al1CW om DtlJrm FAQ; f 0. 0-� Art i tternador.Allr acz1airncd arlist, her work. is in ml". -)r pahlic Cr,Lccc ems irlclu ling the ll4ctcoaeli- tan Mwculsr ui :lrt in NOW Ycrk, Iht Art Jnsttture ut C.hicarq 4it ria 14ILseuc• Cf Liar Arcs, ar,�-i thr. h1sr, ;] Design Mumum.Smi.ch3o:.iaa T:1au• tuuu:,, Ncw ''rift. Her acclaimed public ^.rt pieces indude Radiant Sire, a 150 :r,nt lnng u.,L• torr.. posed or 11;000 z+ald tustrc rile., nc the Herald 59112re 511bway, complex m New Ya:lc, Codex Sacramento at the Surwnpnro Ctnual L:5,uy. and A Walk on the Beach, :'x ccleb- cul L',000 Sl" 100r Of C.Onco'-,rsG i, Mk,mi hitecnarional ALpmrr. nka Poem has participated ir•. a numacc of c{,iennbnis4ie lc.liLiuuns,-3=09ther ,Fotmcd by Fire. Carnekie yfueum of Ar:, Attsburzb. D& - Sign Resource, Cooper -Hewitt i<iuscuru, Nv, YGLL, Lsulust U Ekg-Ancc, Guggenhei-n Aluseurt, New York: Repert:, NatoaO i13s,eum a" tiinr Win, Rin •ir janaieo, Brad]; .ir.d k=hi:Cctuce aid A,., rnu:rrariom: Co trmpor:-uy A: r l•;a►, Yokohama. japan, A remspectirc of C iia T)nres'y wnicit is bo ing oegsx-lized by thQ Bwa lVIaso u:i1 ii 1 \-rismi Beach ane is scheduled to '-3n�d to muacum! in the Uziired SL^rtcs, Europe, and Lar,- AMerrica. H—'r m:ock he, beta retievmd bs :._c Nay York Timex, 7T'e WU Saner.1OUIr al. T'he Nc"v Y0,1.6 , rbc 1929 .goon Fes. , MxuupDlis laiabizine and die LOs AnRelea Tiaw. Oka Dornr is he fnt or a number of mwac i;; and gzar.a: The 1<1eaa Fcesr.lxtior.; The New York State• Council for ihn tuts, and the Lydia Mum Xf,&n prize at the i lrtlai: Etme of t e Ar -,s. A narivr. r.f ALiessn Iieaeh, 01 ,aDoncr rcecired her BS/Design and N�-A from rhe Linin L—%ty of h11ChiRaa. In 1994 she u-96 bcnCx-&i zilk t -.r L>i„- tinvsiihed Al.zmeua kvmtd dam tbu S:hsr3l ui 51. A'Trusu: oft-bc'90drsorlian-1-ju in 1•fiaai Beach, Shc 40 series or thr. adviaorr Council o: the Umtiesair.� of'_4f=higau�c!:cxil X PACE 213 t RCVD AT 1200021:47:02 MA (EaM Standard Tinx) I SYR:FAXSERVEM S x DNIS17031 CS@;'NATION (mm•ssi;02-12 02--1304 DEC-04-2OC2 WD 09'44 1` AWIA Wwrou-cuff FAX h0. =. 0� Lraaa cwdnez Car-'Wds tl_•e bQULlL aiz� tjmi;li;-31a7.• usvxj 'Ie': with the mcdium of ph!)cognrhv. One of her most colcbtslted vv,o_ILs ;A Af-,m Cunt7nuoat, a crmrl;c:ir,.t froom t6c MA,,' 1=1sde t'1ct L-1 Pual;c pscc3 ?ra�_aul Fexaat.utrn:l`.: o« Vic- at lifatni IntCrut:onat a.:�oCES Coll- ' Cotttse Tj (Sing an e.%attab :mum -las.: tall LS a base for rhe wevic. the ar:i�t crPVAH a .mlllYl ehrz rR.lrcts LPC'n 4L2 Ldei: Of C[arCI ;,,,Cl d.Spa=cL;jU:1L s:1d Lhcic sip I: BUAILCC ro clu, -Vo% Tbc .48 �i.tlel, 40' x 30' samf blasted photogrrpil:c mora; on ,¢6w uas ccrnpleted on Jan•.a-g t99„. A r1riP;,.-jt v: a Cittu:, FcJuu-s$t:p, t -WstionaJ Lnd�wmytl: for the "m aa-srd and a 1``a�f�right Bays Grant. her artvmtk has been K^tdidf exh�hrrPrl in (be United Sr7fr-t aid sbccomd. Hee -0ch is sncluclvd m :nc permartcuL wliec?ituiS O` rhe :dumi An Mn,Scw., rhe lxrc a Georgie Pompidou, !'arts, A3usearn of A•icldoru Am tcw York, Irttsrn�tirmsE i .Pntl” r:.f P'10tnp.'-)p.'Now York, tnr Yr'xk, rhe Nx:Eurr of Contorr,Prn,ut A,.: C-1kAVu, Cencrr krCvei:it•: Yhorngraphi,'1u_50n, -'1r.70na, '-'useum of Moccm Ar-, San Fimclsco, C:cntro Cultural Ane l^rmrnrnporuteA 19'elrico Lo:.tnsoloe Cauaty ALuscu-- of :ut, I��a _1rgtlzs, Cai;focna PAGE 391 RCUO AT 24120071:47:02 MA [Easkm hadard Time] I SVR:FAXSERVER115 s 01115:7703' CSIs: I DURATION (rem -W:02.12 0'2--1304 EXHIBIT F CONCEPTUAL SITE PLAN #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone u2-1304 �� aa.itaaa�e Ila j f��� a� 3i'i� 02-1304 41 1,J. f a 13; Fi. rill, ti fa f r 1 I 41 1,J. f a 13; Fi. 02-1304 t2' Aw 1 I 02-1304 � 7�,k -! j� � ; 3 5 est Rif I � i Ij'a�.f sirs` �� i jj j p7 f, jj `etill I' 02-1304 Ips a WA. j } Y - 02-1304 44 02-1304 ga"€r�4�i1•E� a �y�! , A � �[ a�'3i��a�i� �Z��'a�.•gie^ iaa�t$�,a� ii ������ ggpp ♦♦ � 7 a p � {7p pcp q a pT3g. e �'i���al ��1� 9T�i ��ad� �a��_�� a�� r3e$i e:,i :��'i =•3: �Z9�li��,L� 02-1304 Al, g fill-,� A e 1 v11*411 e a 11 g AMWAXI i l i r i E!It fill f i �a i-e.a�� 1363 t�SCi4,'K :1 41v'�'it$5� 30 02-1304 1 i1 `��i��ail�la�a,�s]� !� r� T 4i s!� T � wry Ism III 111 all 6133 Q j r, l q Sa Ti 3 ill, i a a {opR +_� �S '111143. ��i$c�'iijl,`'•y;� ��a.53r5i'a5���,E��J6�, anolull t i 02-13©4 02-1304 ,!';J! '-1 i! ! � 3E�iF g 4F3 iey g i'�' {t4F1ja ai3d � �9sa ���°3'��n1,�3���i���Y X11 iFSR�.d a'r3 t3ty.n`a,,�{�E{l�li9 3 a 02-1304 C I V I C A R T A N D re Dediooled m GI INQfpfwllri a w MA�erroaa/ !El6 'MOF frslorilfg /ba Saffmar y the r t arogr m tdr 7Neaq ihr ` ,u*�! anbr/Rooialuaaa 'w' 0i the wtasrdirfe y the 100'prwfuwdr y Pd., a' fa lir M --t H-" of Ae a.H.r p..i g At nmrrar y the Creast DiYiYd wth the Fairchild hwx4 OA. D_ rfrpim the kuraafn of the Mile Taros, a m//eama y aldflleda/e wad a'tro°" Aw and ad rriiirb rflt Ar Str*usr pane4 w// Flgrare PV nos rmmaad objrcu d*4 /fW Ar rttae/awa a iofYouc*rr If Ar kd as air of wit aka ukaiow y swizered ad embedded ^�rrrf J_ will J9 rJok fo urtoio aaw w Ar Maw &,*W any ho b then s iwRg a y Cover in the hou. the dsgaed b a",We Ae SpMor anan of tad tut app a Hod aid Alfirv., h..or .d gory of b /At Fitt Afwjw Maewi 500 tear quotations abvrt the pool an/raw., the exp— of being port lgay of harl"as. eX1QOfIftO "tOaad6w ofrat T -M- Th-Ap-1 Agog, Durnnrapog rhe a( the Jut,, aaam,lrS&°dend rink,, • aP Program d dvk m that the hob deck fm, min her lyras a aAd. y the, pars of atvx bks, ad artyad, kir at lea. and P(,Y�k at m oaa AP roar for -69 at1901— the the Can"tan fiaw a emrilada Those In,m/kd O M d k ,hreakk ►be aotM as Ar m& meth A__-uar�" J of w, —&k-SInne- a &-7—mrX, -,ybe OAa Doter the brtegm and 0 An aellsMholT and trier, f6A, are Of the MW14 great carwd in ,bre ad this &&SIrm O/ Orr �( fiuntmn into tht uPenane .• Prtemlaag mondt pr feamo, prrpote, and bopes of 41=419 "Meer) of comaon.; mJw1ry aguwIlarr, Scattered mhMS60-1 the lima HitProwtk a exare drmkpmemr. ltfnm, If1 IM/Oa16 Rggmg, saA deck and Nth the morrurme dant w a c of the and torrum, there core irkrdeu b remind :hong whnh "Pretext These saflplafes, frnerYrt are all Agay of Mum I taf/pa rPamir wd/ gxeas of the aimmle of de ndnraaa of ore wwaks, k1lIlf, dratmem fnm the -1-Aw- /w In the tea h..,k Ihn ew/Ynor arehag iagfirtd by A.4mc %r,.,twnb; borainrt ted hwtnoias, tarot; i00 pas y h- y of M. aha 'Y�tia/ pkra, the mora, aid ,e4erwvr, china, IN ._J on daurr rrwrdlatbtt *ag/ahngfl f;leW The rtcor kd thrrimh tx y the Canbbeattt����"��.�� eatirfalt Indian deckle; bo�o", huge, Yak y the ePfgramf will 4=100 u M fvi m /rdnndra4 wit th�a�m conttrbaaed b rr I located Or the owK- head, abom the aha rad",alp fOR7LPaem, roes f varet . do/4 aatwe, fµ mail[ rr.r, and dA,4 Ymb/e/r,t,y, describe lbe I" dwmrter and the dao maks M=w SAW the a the Remit A"we, ,"emwat,ng ,mea. All &*&,; el, wind be blsmq of of the saptanr a 14 u &do tdrte paar4 wl/ be kg,- are hoped to many a rvm. Rtrr,s the pwl Miami's mar. fat in gran - Holotarut Al monad iR bk to all am a mateor- akpth Or feeling abwr broom amides a illme kpT and Hgbest sae/ rima 50 .wtm Beach, thu —f--- Ore pond life ea Mune• and rawertd rbad o/ fat abow I& daeE ORI, /eYmmn wtd become a for Audi about bow those u-6riche& AI spin Ibol Ike dJT umlar tar,mn of tbiJ graamioa of Poopk ham wilted and 4md onae &j al y sac is Sha g/aalest mom -g memorial and firm the akon&oa/ enhaktoots m a. here orrery their is" then roll eapaeena, to the rtmt Of akarmum amforu wl/ ww* ofa at. ham a umw/ar mafe,y ,mmegramt alb ham the acrid alba mbry of thou thtte forme, .41/ buome to the Vietnam War made Meanie ore of ibe rpoWX for the - Erk a Kobw Memoral m molt ddwsle m/lawl promited lard oly to Gardens but of the Witthr �bn, DC axon is the work( fall short of a" JPmt of All—,han/f. la1e L -r -/art y fkmhleawar. C7 G69 O fes+ A K D E N S ✓ 'IOfT Al SEI' CQNIIrENTAIo. c tib as Ienane4 to all ado (Z� A.t ane o urate GARDENS: Wonkin P a J a aeee, enter the Meg Yacht heart-anarhi wth the Fairchild hwx4 OA. D_ Marina harbor w/I e.NPeaeRaJ u Land Tropical G arden, SWInne Prrpau,t 1•a fk6e �"• M" G+:. hat[ am of tag Garden; the Tomt At fgn"hadm asp each Sea Memoaa! sell trate !/ie %ttr r )1 ra (ht Jeu mall. Fria Truk wa Fauntat, .11 he Co""', tb�r r ria/�•b+r top to mothers most dtdi wed is there uAw Raomm at bland Gard6f. 1 %rex r.e dr y we �e arabin her hand an ham liar their hm, o+A,rRa y ouureldmd mange aginst the .feat of the mmature ;wrdeRl sell rrpn,ret t/r tolkrsun b- K 1G,hr e=.Lxa . fps' Cardr(u D.,fIM bbtromand Henry Caribbrar,IndMiami oftp4w,uniqueto Fhlgkr atop the Tbet foa.1w. lack motmew that Thee.ewa..ara..rr �"' . xuMA.0 by northern tower nelh a mmmemorate, all of people nae a le%t b ,oma Dob"s r k .e sw.r a rok of plasm for hm Abate bit al tea ahtther to ,Ll,am, qlntan. BL.— r Entlme _*,y nwhead haking down they befmhermrn, Ak, )axth .bub sY rra,gdy,a,r.dd to:Llalm,. Thereff war .w1ar, " pawrf, America.. I.I.ropwn. ».x41 scows t3ti,r nail be pall of all fmm/grant; Or and Ore—w Atli dll oterall naw art, e., been. FolbwA the P d ham m-lecren.r of dv .+w,w.rWraRfy,�,I,. o ur/pmxre program I/- deeply rerdwad unique floral rypem that f=r• :.d ".r dR L_"wU commemorate all installation o/ the hom farml the,, rr w"ae0"'1— . acv who how perroRmfied the Holotarut Al monad iR into the herr ,I South nth hwory of Miami .wtm Beach, thu Fkndwa ,,wrdem.. Created by mare oy /eYmmn wtd become a Them room r wa aho Miami moll umlar tar,mn of tbiJ become a leuimomal to Proeecalem mom -g memorial and the difarwy k/ m1wrej l-- mnlemporary ttalptort ham a umw/ar mafe,y n+vnow =Oke up thtte forme, .41/ buome to the Vietnam War Mutt', nti�rRry !coal of not only I,lmrd Memoral m it comet the idea of Gardens but of the Witthr �bn, DC stet art rola tis y r JPmt of All—,han/f. la1e L -r -/art y lr/asd Garrknc s M.wa Ob Ow. PMP_I y f-lguer PI— 7re0f1'9/_ .'9 J_mor. EYHIBITG GROSS REVENUES Gross Revenues, whether in cash or on credit, shall be accounted for on an accrual basis. As used in this Lease, the term "Gross Revenues" shall have the respective meanings ascribed to it in this Exhibit G with respect to the applicable Project Components described below, subject in each case to: (i) the specific exclusions listed below with respect to each Project Component; and (ii) the General Exclusions listed below (collectively, the "Exclusions"). I. Hotels. A. With respect to the Hotels, the term "Gross Revenues" shall mean all Hotel Operational Revenues and all Hotel Space Lease Rents, as hereinafter defined. If a Hotel is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to such Hotel or portion thereof, to all such Hotel Operational Revenues and Hotel Space Lease Rents received by Lessee. If a Hotel or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer. as to such Hotel or portion thereof, to all such Hotel Operational Revenues and Hotel Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to such Hotel is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Hotel Operational Revenues of such Space Tenant. B. The term "Hotel Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale of every kind or nature derived directly or indirectly from the operation of the Hotels (including all departments and parts thereof), and all services provided at or from the Hotel and all facilities of the Hotel (other than such receipts, revenues, income and proceeds attributable to the operation by Space Tenants of the Hotels of their respective businesses), subject to the applicable Exclusions. #217950 v3 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02-1304 I . Such term shall include, but not necessarily be limited to, those Hotel Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) rentals of Hotel guest rooms (including any Approved Time Share Licenses being operated as guest rooms); (ii) "profits" attributable to the operation of Approved Time Share Licenses as Hotel guest rooms in addition to the rental amounts described in clause (i) above (i.e., any assessments, service charges or other charges, fees or income collected from the owners of Approved Time Share Licenses, which exceed the total of: (A) common expenses or other expenses attributable to the operation of such Approved Time Share Licenses (similar to condominium assessments); and (B) other expenses attributable to the operation of any such Approved Time Share Licenses as Hotel guest rooms pursuant to the Uniform System, as hereinafter defined); (iii) food and beverage sales or operations; bar and lounge sales or operations; rentals of meeting room facilities; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Hotel guests and patrons; (iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Hotel Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Hotel other than with respect to the Space Leases at the Hotel, to the extent such amount is properly included in gross revenues pursuant to the Uniform System. 2. Such term shall exclude the following: (i) all taxes required by law to be collected from guests or patrons of the Hotels or with respect to goods or services sold at or from the Hotel, such as sales taxes or "bed" taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Hotels (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or FF&E and of other items not in the ordinary course of the applicable Hotel's business; (iv) #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone o2i -1304 proceeds of loans; (v) proceeds of insurance, other than from any 'business interruption", "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; (vii) travel agency commissions; (viii) interest received or accrued with respect to the funds in any FF&E reserve or the other operating accounts of the Hotels; and (ix) the other general exclusions described below. C. The term "Hotel Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Hotels under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. 1. Such term shall include, but not necessarily be limited to: (i) "base rents" and "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in gross revenues pursuant to the Uniform System. 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iv) any taxes required by law to be collected from Space Tenants at the Hotels on account of any Hotel Space Lease Rents or other rentals payable by such Space #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. E. For purposes of the Gross Revenues definition for Hotels, the term "Uniform System" refers to the latest edition (currently the Ninth Revised Edition) of the Uniform System of Accounts for the Lodging Industry as adopted by the American Hotel and Lodging Association, from time to time. II. Approved Time Share Licenses. With respect to Approved Time Share Licenses, the term "Gross Revenues" shall mean all proceeds with respect to each First Sale (as defined in Section 5.3(b) above), after deducting therefrom: (i) repayment of the allocated capital cost (including the required return); and (ii) marketing program costs. III. Marina. A. With respect to the Marina, the term "Gross Revenues" shall mean all Marina Operational Revenues and all Marina Space Lease Rents (if any), as hereinafter defined. If the Marina or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Marina not so subleased, to all such Marina Operational Revenues and Marina Space Lease Rents received by Lessee. If the Marina or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Marina so subleased, to all such Marina Operational Revenues and Marina Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to the Marina is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Marina Operational Revenues of such Space Tenant. B. The term "Marina Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale of every kind or nature derived directly or indirectly from the operation of the Marina (including all departments and parts thereof), and all services provided at or from the Marina and #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 all facilities of the Marina (other than such receipts. revenues, income and proceeds attributable to the operation by Space Tenants, if any, of the Marina of their respective businesses), subject to the applicable Exclusions. Such term shall include, but not necessarily be limited to, those Marina Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) rentals and revenues of all kinds payable by non-commercial guests, licensees and/or occupants of boat slips, storage or other space at the Marina (including any Approved Time Share Licenses at the Marina being operated as "guest' facilities); (ii) `'profits" attributable to the operation of Approved Time Share Licenses as "guest" facilities in addition to the rental amounts described in clause (i) above (i.e.. any assessments, service charges or other charges, fees or income collected from the owners of Approved Time Share Licenses, which exceed the total of: (A) common expenses or other expenses attributable to the operation of such Approved Time Share Licenses (similar to condominium assessments); and (B) other expenses attributable to the operation of any such Approved Time Share Licenses as "guest" facilities pursuant to the generally accepted accounting principles applied on a consistent basis ("GAAP"); (iii) gasoline sales; food and beverage sales or operations; facilities or property rentals; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Marina guests and patrons; (iv) revenues from any Gambling Boats (as defined in Exhibit N) operated directly -by Lessee; (v) proceeds from any "business interruption", "business income", "use and occupancy" or other, a Major Subtenant or a Direct Space Tenant which is an Affiliate of Lessee loss of income insurance with respect to Marina Operational Revenues, to the extent not paid over to Lessor; and (iv) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Marina other than with respect to the Space Leases at the Marina, to the extent such amount is properly included in as an income item under GAAP. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 2. Such term shall exclude the following: (i) all taxes required by law to be collected from guests or patrons of the Marina or with respect to goods or services sold at or from the Marina, such as sales taxes or "bed" taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Marina (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of -the Marina's business; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption", "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; (vii) travel agency commissions; (viii) interest received or accrued with respect to the funds in any reserve or operating accounts of the Marina; and (ix) the other general exclusions described below. C. The term "Marina Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Marina under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. For purposes hereof, such Space Leases shall include Space Leases for any portion of the Marina on the Upland and any Space Leases for commercial operations on the Submerged Land, including, but not necessarily limited to, Space Leases for Gambling Boats. Such term shall include, but not necessarily be limited to: (i) "base rents" and "percentage rents" payable under such Space Leases-, provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in income pursuant to GAAP. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent'; (iii) any taxes required by law to be collected from Space -Tenants at the Marina on account of any Marina Space Lease Rents or other rentals payable by such Space Tenants; (iv) any credit card commissions payable on account of any payment of rents made by credit card; and (v) to the extent applicable, the other exclusions described below. IV. Retail Space. , A. With respect to the Retail Space, the term "Gross Revenues" shall mean all Retail Operational Revenues (if any) and all Retail Space Lease Rents, as hereinafter defined. If the Retail Space or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Retail Space not so subleased, to all such Retail Operational Revenues and Retail Space Lease Rents received by Lessee. If the Retail Space or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Retail Space so subleased, to all such Retail Operational Revenues and Retail Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to the Retail Space is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Retail Operational Revenues of such Space Tenant. B. The term "Retail Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale, if any, of every kind or nature derived directly or indirectly from the operation of the Retail Space (including all departments and parts thereof), and all services provided at or from the Retail Space and all facilities of the Retail Space (other than such receipts, revenues, income and proceeds #217950 v3 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone 102-1304 attributable to the operation by Space Tenants, if any, of the Retail Space of their respective businesses, subject, however, to the proviso in Paragraph fV.A above as to Space Tenants which are Affiliates of the Major Subtenant for the Retail Space), subject to the applicable Exclusions. 1. Such term shall include, but not necessarily be limited to, those Retail Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) food and beverage sales or operations; facilities or property rentals; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Retail Space patrons; (iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Retail Space Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding of settlement thereof which arose out of the operation of the Retail Space other than with respect to the Space Leases within the Retail Space, to the extent such amount is properly included in as an income item under GAAP. 2. Such term shall exclude the following: (i) all taxes required by law to be collected from patrons of the Retail Space or with respect to goods or services sold at or from the Retail Space, such as sales taxes (but only to the extent such taxes are actually remitted to duly - constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Retail Space (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of the business of operating the Retail Space; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption", "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; and (vii) the other general exclusions described below. C. The term "Retail Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Retail Space to the landlord under their respective Space Leases. #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone . ;;�-130 I . Such term shall include, but not necessarily be limited to: (i) "base rents' and '`percentage rents' payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in income pursuant to GAAP. 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iv) any taxes required by law to be collected from Space Tenants within the Retail Space on account of any Retail Space Lease Rents or other rentals payable by such Space Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. V. Parking Garage, A. With respect to the Parking Garage, the term "Gross Revenues" shall mean all Parking Operational Revenues and all Parking Lease Rents, as hereinafter defined. If the Parking Garage or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Parking Garage not so subleased, to all such Parking Operational Revenues and Parking Lease Rents received by Lessee. If the Parking Garage or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone u2-9.304 Parking Garage so subleased, to all such Parking Operational Revenues and Parking Lease Rents received by the applicable Nlajor Subtenant; provided, however, that if any Space Tenant with respect to the Parking Garage is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Parking Operational Revenues of such Space Tenant. B. The term "Parkine Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale, if any, of every kind or nature derived directly or indirectly from the operation of the Parking Garage, and all services provided at or from the Retail Space and all facilities of the Parking Garage (other than such receipts, revenues, income and proceeds attributable to the operation by Space Tenants, if any, within the Parking Garage of their respective businesses), subject to the applicable Exclusions. 1. Such term shall include, but not necessarily be limited to, those Parking Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) parking charges or fees and service charges payable by patrons and users of parking spaces and other facilities within the Parking Garage, pursuant to any subleases, licenses or other arrangements for the use of same, regardless of the duration of the term of such sublease, license or other arrangement (collectively, "Parking Licenses"), excluding, however, of any portion there of such charges or fees or other sums collected by or paid over to any third -party manager or operator of the Parking Garage or any portion thereof; facilities or property rentals; income from vending machines; income from parking -;.(iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Parking Garage Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Parking Garage other than with respect to the Space Leases within the Parking Garage, to the extent such amount is properly included in as an income item under GAAP. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 2. Such term shall exclude the following: (i) all taxes required by lav to be collected from patrons or users of the Parking Garage or with respect to goods or services sold at or from the Retail Space, such as sales taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Parking Garage (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of the business of operating the Parking Garage; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption", "business income", "use and occupancy" or other loss of income insurance: (vi) credit card commissions; and (vii) the other general exclusions described below. C. The term "Parkine Lease Rents" shall mean all rents actually paid by Space Tenants of the Parking Garage under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. For purposes hereof, the term "Space Lease" includes, but is not necessarily limited to, any sublease or other arrangement pursuant to which all or a portion of the Parking Garage is leased by Lessee or the applicable Major Subtenant to another Person which operates parking facilities within the Parking Garage. For purposes hereof, the term "Space Lease" does not include any Parking License. 1. Such term shall include, but not necessarily be limited to: (i) "base rents' and "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any -"business interruption', "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in income pursuant to GAAP. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iv) any taxes required by law to be collected from Space Tenants within the Parking Garage on account of any Parking Lease Rents or other rentals payable by such Space Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. VI. Other Project Comaonents. To the extent that there is any Project Component not included in the foregoing categories, the calculation of Gross Revenues shall be treated in the same manner as the category which is closest in character to the particular Project Component and with such modifications as are appropriate, all as mutually agreed upon by Lessor and Lessee reasonably and in good faith. VII. General Exclusions. A. The term "Gross Revenues" shall in no event include any of the following items: (i) exchanges of merchandise between different locations of Lessee or a controlled party or Major Subtenants where such exchanges are made solely for the operation of such Person's business and not for the purpose of consummating a sale which has been made at, in, or on the Property; (ii) returns to shippers and manufacturers for credit; (iii) sale of trade fixtures or operating equipment after use thereof in the conduct of Lessee's or any other Person's business on the Property; (iv) all sums and credits received in settlement of claims for loss or damage to merchandise and all credit company charges; (v) sales made from the Property of goods or items which are to be shipped directly to the purchaser from another location that are wholesale, or not retail; (vi) proceeds from any financing, sale or assignment of the Leasehold Estate, any #217950 0 - Final Version of Watson Island Ground Lease - Cin- of Miami and Flagstone �;2-1304 Major Subleasehold Estate, or any portion thereof or interest therein, or any other similar transaction; (vii) collection of insurance proceeds; (viii) collection of Condemnation Awards; (ix) monies that are collected for event that are done for charities wherein the amounts collected are paid to the charitable sponsor or not-for-profit organizations; and (x) any rebates, tax credits (including, but not limited to, those described in Section 34.4) or other credits, direct payments or other incentives of any kind given by any Governmental Authority or otherwise authorized by Applicable Laws, including, but not limited to, any of the foregoing authorized pursuant to the State of Florida Qualified Target Industry Tax Refund program B. Gross Revenues shall be reduced by the following items: (i) amounts of any refunds or allowances made on merchandise claimed to be defective or unsatisfactory, or discounts to customers, provided that such amounts had been previously included as part of Gross Revenues (but if such refunds, allowances or discounts are in the form of credits to customers, such credits shall be included in Gross Revenues when issued); (ii) uncollected or uncollectible credit accounts (those accounts which are more than ninety (90) days delinquent), provided that such amounts are included in Gross Revenues upon payment, if made; and (iii) all reasonable costs of collection associated with collecting Gross Revenues. VII. Rentals. As used in this Exhibit G. the term "rents" shall be deemed to include any lump -sum payments or series of payments (regardless of whether the same is classified as rent or otherwise) made in consideration of the opportunity to lease or enter into a concession or similar arrangement. IX. No Double Counting. Lessee may from time to time establish facilities or perform services on the Property (e.g., master laundry facilities) for which Major Subtenants, Space Tenants and/or customers, guests, invitees and other users (collectively, "Users") are charged. Such services and facilities are hereinafter collectively referred to as "Direct Lessee Services". The charges by Lessee for such Direct Lessee Services are hereinafter referred to as "Direct Lessee Charees". The Parties acknowledge and agree that Major Subtenants, Space Tenants or other Persons may pass on the cost of Direct Lessee Charges to other Persons, including other Space Tenants and Users, for services and #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 facilities which are the same or substantially the same as the Direct Lessee Services (collectively, "User Services"), either with or without a surcharge or other additional charges. The amounts charged for such User Services are hereinafter collectively referred to as "User Charges". In such cases, User Charges shall (to the extent they are covered by the definition of Gross Revenues above) be included in the calculation of Percentage Rent, and the corresponding Direct Lessee Charges shall be excluded from the calculation of Percentage Rent. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone . 02-130 EXHIBIT H DEFINITION OF MARINA; MARINA APPROVAL PROCEDURES (a) Lessee shall use its "best efforts" (as such term is defined below) to obtain all permits and approvals from Governmental Authorities (collectively, the "Mega -Yacht Marina Permits") which are required to construct and operate a marina substantially similar in size and capacity as the marina depicted in the Island Gardens Proposal (a "Mega -Yacht Marina"). (b) In the event Lessee is able to obtain all of the Mega -Yacht Marina Permits, then the term "Marina" as used in this Lease shall mean and refer to such Mega -Yacht Marina, and Lessee shall develop and operate such Mega -Yacht Marina subject to and in accordance with the terms and conditions of this Lease. (c) For purposes hereof, the term "best efforts" shall mean that Lessee shall take all of the following actions: (i) Lessee shall act in good faith, expend commercially reasonable amounts of funds, and use all due diligence (including retaining consultants, professionals and experts and taking their advice) in pursuing all necessary Mega -Yacht Marina Permits (and specifically in taking all of the actions described in clauses (ii) through (v) below). (ii) Lessee shall diligently develop such detailed plans and specifications, drawings, schematics, sketches and other documentation with respect to a Mega -Yacht Marina (as defined above) as may be necessary or appropriate in connection with pursuing the Mega -Yacht Marina Permits (collectively, the "Mega -Yacht Marina Plans"). (iii) Lessee shall submit the Mega -Yacht Marina Plans to the Chief Executive Officer for his or her approval in accordance with the Chief Executive Officer Approval Procedures. (iv) After approval of the Mega -Yacht Marina Plans by the Chief Executive Officer, with whatever modifications are agreed upon, all subject to and in accordance with the Chief Executive Officer Approval Procedures, Lessee shall submit the Mega -Yacht Marina Plans to all #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone —1304 13®4 02 Governmental Authorities necessary to obtain the Mega -Yacht Permits (it being understood that the applicable Governmental Authorities include, but are not necessarily limited to, the State of Florida Department of Environmental Protection, the Army Corps of Engineers (the "Corps"). the South Florida Water Management District ("SFWMD") and the Miami -Dade County Department of Environmental Resources Management (DERM)), and respond to and accommodate, in a commercially reasonable manner, any reasonable requests by such Governmental Authorities for modifications to the Mega -Yacht Marina Plans. The Chief Executive Officer shall be informed, in writing, of such modifications by Lessee. The Chief Executive Officer shall have ten (10) Business Days from the date of receipt of such notice to review the modifications and advise Lessee in writing that the modifications are disapproved. If notice of disapproval is not delivered within the ten (10) Business Day period, Lessee shall give a written reminder notice to the Chief Executive Officer. If notice of disapproval is not delivered within five (5) Business Days after such reminder notice is given, the modifications shall be deemed approved. The notice to review and the reminder notice shall each contain legends at the top of the first page, in a typeface larger than that used elsewhere in the request, identifying the applicable required response time. (v) If Lessee is able to obtain consensus among the staff of the applicable Governmental Authorities for the Mega -Yacht Marina Plans, Lessee shall (a) submit the Mega - Yacht Marina Plans (as same may be modified as described above) and an application for a Class I Permit for the Mega -Yacht Marina (the "Class I Permit Application") to the Miami -Dade County Board of County Commissioners (the `Board") for final approval for the construction and operation of the Mega -Yacht Marina substantially in accordance with such Mega -Yacht Marina Plans, and have its representatives attend the hearing before the Board concerning same and attempt to persuade the Board to approve same; and (b) submit to the other applicable Governmental Authorities, including the SFWMD and the Corps, the Mega Yacht Marina Plans and the appropriate application(s) required for the issuance of the applicable Mega -Yacht Marina #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 09 -1304 010 Permits and Lessee shall thereafter follow up with such application(s) including, but not limited to, appearing before the SFWMD Governing Board, until such Mega -Yacht Marina Permit(s) are issued by such Governmental Authorities. (d) Lessee shall not be required to use such best efforts for more than twenty four (24) months after the Possession Date or such lesser period as to takes to complete the steps described in subparagraph (c) above. (e) Lessee shall provide Lessor with at least seven (7) days prior written notice of any meeting with the staff of applicable Governmental Authorities. Lessor shall have the right to have a representative present (by telephone or in person) at each such meeting. In addition, Lessee shall provide Lessor with copies of any written correspondences between Lessee and such Governmental Authorities in connection with the "best efforts" steps described in subparagraph (c) above. (f) Lessee hereby agrees to have monthly meetings with Lessor's designated representatives to discuss the status of Lessee's "best efforts", and to keep Lessor regularly apprised through written updates as to what "best efforts" have been and are being taken by Lessee in order to satisfy its obligations in subparagraph (c) above and the status thereof. If, after any such monthly meeting or after Lessor receives any such written update, Lessor believes, reasonably and in good faith, that Lessee is not using its best efforts as described in subparagraph (c) above, Lessor shall, within seven (7) Business Days after any such meeting or receiving any such written update, give written notice to Lessee stating with particularity Lessor's belief and the specific basis for such belief. If Lessor fails to give such written notice within such seven (7) Business Day period, the actions by Lessee which are described in such meeting or written update shall be deemed to constitute best efforts as described in subparagraph (c) above up to the last step taken by Lessee as described in such meeting or written update, and Lessor shall not be entitled to submit to arbitration the question of whether such actions by Lessee constitute best efforts. (g) Notwithstanding the foregoing, Lessee shall not be required to accept any unreasonable conditions for approval which would compromise the feasibility of the proposed Mega -Yacht Marina or place unreasonable financial or economic burdens on Lessee (either in terms of increased costs or reduced #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 income) or unreasonable covenants, conditions and/or restrictions with respect to the development and operation of the proposed Mega -Yacht Marina. (h) In the event Lessee is unable, after using such best efforts, to obtain all of the Mega - Yacht Marina Permits, then Lessee shall provide written notice thereof to Lessor. If Lessor agrees, reasonably and in good faith, that Lessee has used such best efforts and that the MegaYacht Marina Permits cannot be obtained, then term "Marina" as used herein shall mean such marina as Lessee is able to construct and operate based on the existing Marina permits or such other permits and approvals from Governmental Authorities Lessee is able to obtain. If Lessor does not agree that Lessee has used such best efforts to obtain the Mega -Yacht Marina Permits, and Lessee disputes same, then no later than thirty (30) days after Lessor's receipt of written notice from Lessee, Lessor shall provide written notice to Lessee that Lessor is submitting the matter to arbitration in accordance with subparagraph (i) below; provided, however, that Lessor shall not be entitled to submit the matter to arbitration to the extent subparagraph (f) provides otherwise. (i) If at any time (including, without limitation, at the time Lessee provides written notice to Lessor that Lessee is unable to obtain the Megayacht Marina Permits) Lessor believes, reasonably and in good faith, that Lessee has not or is not using "best efforts" to obtain the Mega -Yacht Marina Permits, then Lessor shall refer such dispute to binding arbitration in accordance with Article VII. In determining whether Lessee has used its best efforts as described in subparagraph (c) above, the Arbitrator may consider whether Lessee should pursue any administrative appeals. In no event shall Lessee be required to pursue litigation (although it may, at its option, elect to do so). 0) Nothing contained herein shall be deemed from preventing Lessee, if Lessee is unable to obtain the Mega -Yacht Marina Permits after using its best efforts as described herein, from later pursuing the Mega -Yacht Marina Permits, and if Lessee is thereafter able to obtain the Mega -Yacht Marina Permits and elects to develop and operate the Mega Yacht Marina, then the term "Marina" as used herein shall, from and after the date Lessee obtains the last of the Mega -Yacht Marina Permits, mean and refer to the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone q^2--1304 Mega -Yacht Marina, and Lessee shall develop and operate such Mega -Yacht Marina subject and in accordance with the terms and conditions of this Lease. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT I PERMITTED TITLE EXCEPTIONS #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT J LIST OF PRE -APPROVED HOTEL FRANCHISORS • Hilton group, including, but not limited to, Conrad Hotels • Starwood group, including, but not limited to, W Hotels, St. Regis Hotels, Starwood Luxury Collection • Rosewood Hotels • Hyatt group, including, but not limited to, Park Hyatt • Raffles Group, including, but not limited to, Raffles Hotels*(to be verified by the Chief Executive Officer) • Marriott group, including, but not limited to, Bulgari Hotels • The Peninsula Group*(to be verified by the Chief Executive Officer) • Le Meridien Group*(to be verified by the Chief Executive Officer) • Dorchester Group Hotels *(to be verified by the Chief Executive Officer) • Four Seasons Group, including, but not limited to, The Regent hotels • The Rocco Forte group, including, but not limited to, RF Hotels *(to be verified by the Chief Executive Officer) • Kempinski Hotels & Resorts*(to be verified by the Chief Executive Officer) • Orient Express Hotels *(to be verified by the Chief Executive Officer) • Oberoi Hotels & Resorts *(to be verified by the Chief Executive Officer ) • Six Continents Hotels • Mandarin Oriental *Notwithstanding anything contained to the contrary herein, the Chief Executive Officer has the right to remove those operators and/or franchisors indicated above with an asterisk ("*") next to their name by providing written notice to Lessee thereof if the Chief Executive Officer determines in his or her reasonable discretion by no later than January 15, 2003 that the same are not appropriate for inclusion in the "Pre -Approved List of Operators and/or Franchisors" hereunder. NOTE: ADDITIONAL ENTITIES TO BE AGREED UPON AND ADDED TO THE FOREGOING LIST PRIOR TO FEBRUARY 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT K LIST OF PRE -APPROVED LENDERS [Note: To be agreed upon by the Parties and attached prior to February 1, 2003] #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT L APPROVED LEASEHOLD MORTGAGEE SNDA [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City, of Miami and Flagstone 02-1304 EXHIBIT M APPROVED SUBLEASEHOLD MORTGAGEE SNDA [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 13o4 EXHIBIT N PROHIBITED USES Without limiting the generality of the foregoing, the following uses of the Property shall not be permitted: (a) any unlawful or illegal business, including, without limitation, casino gambling, or games of chance or reward, unless otherwise approved by Lessor in accordance with Section 7.3 of the Lease; provided, however, that the foregoing shall not be deemed to prevent the use of the Marina as a departure and arrival point for vessels which have casino gambling or other games of chance on board (collectively, "Gambling Boats"), so long as such vessels operate in accordance with all Applicable Laws. (b) the rental and/or operation of jet skis and/or any similar motorized personal watercraft, except for the noncommercial use by owners, users and staff of Mega - Yachts using the Marina and their families and guests; (c) any adult entertainment and/or adult service establishments as defined in Article 25 of Ordinance 11000, as amended, of the Zoning Ordinance of the City of Miami or any peep show store, head shop store, topless or strip club or adult book store (which shall mean a store which sells or offers for sale sexually explicit printed materials, audio or videotapes or films or sexual devices) or any other similar store or club or any establishment selling, exhibiting or distributing pornographic materials; (d) hauling and/or dry land storage of vessels; (e) any residential uses, including, without limitation, time share and interval ownership other than Approved Time Share Licenses; provided, however, that #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 the foregoing shall not be deemed to prohibit the Hotels from having the associated facilities and amenities described in the definitions of Hotel A and Hotel B; (f) private clubs (including, without limitation, private yacht clubs, other than any private clubs which are aboard vessels at the Marina or which otherwise do not operate on the Upland Parcel), except for ancillary uses such as staff lounges on the Upland Parcel; provided, however, that the foregoing shall not be deemed to prohibit: (i) the charging of fees or any other activities permitted by Section 7.6 of the Lease; or (ii) an "executive floor" club or similar arrangement offered or operated at either or both of the Hotels; (g) Any use which emits an unreasonable degree of obnoxious odor, noise, or sound 9 which can be heard or smelled outside of any building within the Project; provided, however, that, the foregoing shall not be deemed to prevent (i) the provision of outdoor music at the Hotels and Retail Space (and the restaurants and banquet spaces located therein) to the extent permitted under all Applicable Laws; or (ii) the use of any Major Project Component for an "outdoor special event" such as a festival or art fair, which may include outdoor music in connection therewith; (h) Any operation primarily used as a warehouse operation and any assembling, manufacturing, distilling, refining, smelting, agricultural, or mining operation; (i) Any dumping, disposing, incineration, or reduction of garbage (exclusive of garbage compactors located near the rear of any building); 0) Any fire sale, bankruptcy sale (unless pursuant to a court order) or auction house operation; #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (k) Any central laundry, dry cleaning plant, or Laundromat; provided, however, that this prohibition shall not be applicable to any such on-site service in connection with the operations of the Hotels or Marina; (() Any automobile, truck, trailer or recreational vehicle sales, leasing or repair facilities; provided, however, that the foregoing shall not be deemed to prevent: (i) sales, leasing or charters of or repair services for yachts or other marina vessels; or (ii) the interval rental of automobiles on a daily or weekly basis; (m) Any veterinary hospital or animal raising facilities or pet supply shops; (n) Any mortuary or funeral home; (o) Any health club or spa fitness center or workout facility or massage parlor other than such facilities which are made available to guests of the Hotels (whether or not such facilities are located inside or outside the Hotels, and whether or not such facilities are also made available to persons who are not guests of the Hotels); (p) Any training or educational facility, including, but not limited to, beauty schools, barber colleges, reading rooms, places of instruction or other operations catering primarily to students or trainees rather than to customers; provided however, this prohibition shall not be applicable to on-site employee training by an occupant incidental to the conduct of its business within the Premises or to any retail store that offers training or instruction as an ancillary service to its retail operations; (q) Any store engaged in the sale of fireworks or drug paraphernalia; (r) Any car wash other than a car wash service operated by the parking valet for Hotel or Marina guests and their families, guests, staff and employees; provided, however, that the foregoing shall not be deemed to prohibit the washing of marina vessels); #217950 0 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone 02-1304 '1 (s) Any liquor store or grocery store except in connection with a gourmet shop or sundry store or provisioning store serving guests and patrons of the Hotels and the Marina; or (t) Any use which would constitute a material breach of the covenants described in Exhibit N-1. #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT N-1 COVENANTS AS TO PORT OF MIAMI [Note: To be agreed upon by the Parties and attached prior to February 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 - 130 EXHIBIT O LIST OF PRE -APPROVED FINANCIAL ADVISORS [Note: To be agreed upon by the Parties and attached prior to February 1, 2003] #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone a2--13®4 EXHIBIT P ORGANIZATIONAL DOCUMENTS [ADDITIONAL DOCUMENTS TO BE SUPPLIED] #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone0 —1304 EXHIBIT O PROVISIONS NOT APPLICABLE TO PRIVATE LESSOR [TO BE SUPPLIED] #217950 0 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone 02-1.304 EXHIBIT R Lessee shall fund the Trust each calendar year based on a following percentages of Lessee's net operating income for the Project during each such calendar ye r as reflected in the operating statements of Lessor and each applicable Major Subtenant: [AMO AND DURATION OF FUNDING AND TIMING OF DISTRIBUTION OF CORPUS TO BE MU UALLY AGREED UPON BY THE PARTIES CONSISTENT WITH ISLAND GARDENS COMMISSION MEETING]. It is understood and for any such calendar year, Lessee shall not be re such calendar year). 7eed OSAL PRIOR TO DECEMBER 12, 2002 that if there is a negative net operating income uired to make any such contribution to the Trust for #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT S MAJOR SUBLEASE SNDA [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 EXHIBIT T FORM OF FIRST SOURCE HIRING AGREEMENT [Note: To be agreed upon by the Parties and attached prior to July 1, 2003] #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 DEVELOPMENT AND CONSTRUCTION RIDER This Development and Construction Rider (this "Rider") between The City of Miami, a municipal corporation of the State of Florida ("Lessor" or "City"), and Flagstone Island Gardens LLC, a Delaware limited liability company (successor by merger to Flagstone Properties, LLC, a Florida limited liability company) ("Lessee") is intended to be incorporated in and be a part of the Ground Lease ("Lease") to which it is attached. In the event of any inconsistencies between the terms and provisions of this Rider and the terms and provisions of the Lease and/or any other exhibits or riders thereto, then the terms of this Rider shall prevail. All capitalized terms used but not defined herein shall have the meanings assigned to the same in the Lease. 1.1 Construction of Project Components. (a) Lessee shall cause the Project Components to be constructed on the Property, pursuant to and substantially in accordance with all of the terms and conditions of the Construction Plans and Specifications (which shall be subject to the review and approval of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures) and all Applicable Laws, including, without limitation, the Project Approvals (as amended from time to time). All of the Project Components shall be constructed, maintained and operated in accordance with all Applicable Laws, including, without limitation, Environmental Laws. (b) The City has approved [TO BE SUPPLIED] as the Construction Manager for the Project ("Construction Manager'). Lessee may replace such Construction Manager but: (i) such replacement shall have qualifications, experience and reputation which are comparable to or better than the respective individual(s) or entity(ies) being replaced; and (ii) the Chief Executive Officer shall have provided his or her prior written approval thereto. Any such approval shall: (i) be given or withheld reasonably and in good faith, (ii) be delivered within fourteen (14) days after Lessee makes a written request for approval (with a legend thereon advising City of required turnaround time) together with information as to #217950 v3 - Final Version of Watson Island Ground Lease - Civ, of Miami and Flagstone c-2-1304 qualifications, background, experience and reputation of such proposed replacement; and (iii) be deemed to have been given if Lessor does not respond within the stated time. If the Chief Executive Officer disapproves such replacement pursuant to the foregoing procedures, the Chief Executive Officer shall provide a written statement setting forth with particularity all reasons for disapproval. The Construction Manager may subcontract with individual contractors, subcontractors and/or vendors as it deems reasonably necessary or beneficial in connection with different components and subcomponents. 1.2 Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, construction shall commence not more than ninety (90) days after both (i) the Lease Delivery Date has occurred and (ii) Lessee has received foundation building permits for at least two (2) Major Project Components (the "Promised Commencement Date"). Furthermore, from and after the Promised Commencement Date, Lessee shall use reasonable, good faith, diligent efforts to obtain all other permits, including, but not limited to, all other foundation permits as soon as reasonably practical after receipt of the first two (2) foundation permits. (b) Once started, construction shall be diligently and continuously pursued by Lessee until completion, subject to Unavoidable Delays. Lessee agrees that construction of all of the Project Components shall be substantially completed in a good and workmanlike manner and in accordance with good construction practices no later than thirty-six (36) months after the earlier to occur of: (i) the date construction commenced on the first (I") Major Project Component; or (ii) the Promised Commencement Date, subject to Unavoidable Delays (the "Promised Completion Date"). For purposes of this Agreement, each Major Project Component shall be considered substantially completed on the date that all of the following conditions are satisfied: (i) the Major Project Component is sufficiently complete so that the Lessee or the Major Subtenant therefor can legally occupy and utilize such Major Project Component for its intended use; (ii) all applicable governmental agencies having jurisdiction over the Work have issued a final Certificate of Occupancy (with no unreasonable conditions), with respect thereto, including landscaping and common areas: and (iii) completion of the Work has been approved by #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone the Ombudsman or the Consultant (as hereinafter defined), which approval shall be given or withheld in good faith and shall not be unreasonably withheld, delayed or conditioned. 1.3 Ombudsman and Consultant. (a) Lessor shall appoint an internal representative who is experienced and qualified to (i) report directly to the Chief Executive Officer, and (ii) have authority to coordinate, expedite and respond for the City on behalf of the Chief Executive Officer through the final permitting process (the "Ombudsman"). Among other things, the Ombudsman shall (i) lead and set schedules for the internal City review process with respect to Construction Plans and Specifications, (ii) expedite and help deliver construction inspection approvals (including building and fire department approvals), (iii) monitor and inspect the development and construction process on Lessor's behalf, and (iv) otherwise represent and assist the City in coordinating the City's roles and responses and approvals. (b) In addition to the Ombudsman, Lessor shall, at Lessee's request, retain on Lessor's behalf outside, qualified construction development and fire and building consultant(s) to coordinate and assist in the development process and advise the Ombudsman and the Chief Executive Officer in connection therewith (collectively, the "Consultant"). The person(s) selected as the Consultant shall be mutually acceptable to Lessor and Lessee. The fees and costs charged by the Consultant (the amount of which shall be mutually acceptable to the Parties) shall be paid for by Lessee, and Lessor shall have no responsibility or liability for same; provided, however, that the arrangements for payment if the fees and costs and the amounts thereof shall be subject to Lessee's prior written approval before the Consultant begins any work. Responsibilities of the Consultant shall include reviewing plans and development issues, permitting and inspection issues during the construction and development process and making recommendations directly to the Chief Executive Officer and the Ombudsman. Lessee shall provide on-site desk, telephone and storage space to the Consultant. The Consultant shall not serve any role in connection with the City's capacity as a governmental body. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • �2-130 4 (c) Lessee shall cooperate fully with the Ombudsman and the Consultant, and shall promptly forward to same complete copies of draw requests and other reports and information customarily provided to an institutional mortgage lender, and such other information and materials as may be reasonably requested by the Ombudsman, the Consultant or Lessor. Lessee agrees to provide the Ombudsman and the Consultant with access to all portions of the Property, including, without limitation, access to inspect the Project Components, including, without limitation, review of the preparation work and work in progress. No such inspection by the Ombudsman and the Consultant shall impose upon Lessor responsibility or liability for any failure by Lessee to observe any requirements or safety practices in connection with such construction work, or constitute an acceptance of any work which does not comply with the provisions of this Rider. The Ombudsman and the Consultant shall provide copies to Lessee of all reports and records concerning construction inspections. 1.4 Landscapine and Roadways. (a) Lessee shall be required to install landscaping on the Property and roadways, if any, as set forth in the Construction Plans and Specifications. The landscaping and roadways shall be completed by Lessee with respect to those portions of the Property surrounding Project Components to be constructed by no later than the issuance of a final Certificate of Occupancy for such Project Components. The roadways, if any, shall be completed by the time the first Hotel Opens for Business. (b) Coordination of Horizontal Control. Final horizontal control elevation ("Horizontal Control") shall mean the lowest occupiable elevation of any Project Component, including loading dock. Lessor acknowledges and agrees that Horizontal Control shall be reasonably acceptable to Lessee, based on (i) reasonable and competitively priced insurance availability, (ii) regulatory agencies' approvals, (iii) financing entities' approvals, (iv) feasibility of accommodating direct connections to basement back of house of each individual component, or in the case of the Marina, a direct access to the lower of the proposed two level marina pier, and (v) feasibility of accommodating reasonable and #217950 v3 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone customary east -west directional pedestrian slopes at ground floors and entry and exit roadways, without the need of stairs or handicapped ramps, in order to accommodate sheet drainage flow. Subject to applicable permitting requirements. Lessee shall provide transition features such as drainage culverts, pumps, and/or utility modifications, if required, at north -south transitions to roadways on the perimeter of the Property. Such features may be located within the roadways or on adjacent City owned property. 1.5 Pre -Construction Maintenance. At all times prior to construction of any Project Components, the Property on which such Project Components are located shall be maintained in a reasonably neat manner (taking into account the work being performed). 1.6 Maintenance of Construction Site. Lessee shall maintain its construction site in a safe condition and a reasonably orderly manner and shall remove all major debris on a regular basis (including debris that has accumulated on adjacent lands, parcels or streets if created by Lessee; it being understood that in no event shall the same be deemed to be permission to store debris on any such adjacent lands, parcels or streets) and store all equipment in a neat manner when not in use. 1.7 Construction Traffic, Coordination. (a) Lessee shall keep driving lanes or extension roads and pedestrian access walkways located on or near the Property free from storage of equipment, building materials and dirt. Lessee may relocate roads and walkways and barriers located with the Property to other reasonable locations within three (3) days advance notice to the Ombudsman and the Consultant Inspector. (b) If so requested by Lessee, Lessor may, in its discretion and for a fee to be determined by Lessor, provide Lessee with a nonexclusive, temporary license to use other property within Watson Island, if available (i.e., such property is not being leased by any party or otherwise being used by Lessor) for Lessee's construction -related storage or parking. Parking of vehicles for workers within the Project shall be in accordance with Applicable Laws, and if such parking will be on roadways, it must be #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone U^2-1304 done in such a manner as will not interfere with the safety and passage of others. The surface of the public streets must be kept reasonably clean of mud and dust brought on to the streets during construction. During the construction of the Project Components, Lessee shall take reasonable and customary action to coordinate traffic to and from the Property, materials delivery, scheduling and temporary access, storage and utilities. 1.8 Avoidance of Nuisance. To the extent practical in connection with a Project of this size and scope, Lessee shall take such precautions as may be reasonably necessary to minimize the impact of noise, dust, truck traffic, nuisances and other consequences of construction activities. Lessor may, at Lessee's sole cost and expense, install a barrier or fence around attractive nuisances if Lessee fails to do so within ten (10) days after Lessor's demand therefor. Such construction fence may be relocated by Lessee from time to time, at Lessee's expense. Initially, such construction fence will (i) extend north from the wall of Children's Museum along the FDOT right-of-way to the Intracoastal, and (ii) be an eight (8) feet high chain link fence, in order to minimize resistance and avoid the necessity of removal during hurricane warnings; provided that such fence shall have a decorative cover which shall shield the construction site from view from the MacArthur Causeway. Such cover must be detached during a hurricane warning. 1.9 Other Construction. The Project is the largest and most complex to be done on Watson Island. As such, Lessee expects Lessor, to the extent it has the legal right to do so, to assist in causing other developments and construction on Watson Island to be accommodating when necessary for Lessee's development and construction. Lessee acknowledges, recognizes and agrees, however, that: (a) the development and construction of other projects on Watson Island may occur simultaneously with the development and construction of the Project, and the development and construction of the Project will not materially interfere with other projects on Watson Island; (b) the cooperation and coordination among Lessee, Lessor and the developers of other projects on Watson Island shall be necessary with respect to site access, temporary and permanent utility delivery and other construction -related activities; (c) Lessee #217950 v3 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02 -1304 shall comply with all schedules and procedures established by Lessee and Lessor with respect to the foregoing; and (d) occasional delays with respect to site access, temporary and permanent utility delivery and other services may occur from time to time during the development and construction of the various projects on Watson Island (although same may constitute Unavoidable Delays subject to and in accordance with the terms and conditions of the Lease). Lessee shall be responsible for compliance with all of the foregoing requirements and for ensuring that all of its contractors, subcontractors, agents, employees and workers comply with the same. 1.10 Payment and Performance Bond. If Lessee fails to commence and/or complete construction timely and perform all other construction obligations in accordance with the terms of this Rider, Lessor may (in its good faith, reasonable judgment and not thereby waiving any other remedies hereunder) subject to the rights of all Approved Mortgagees, elect to make effective all or any portion of the Payment and Performance Bond (as defined in the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003) as satisfaction of Lessee's failure to perform its obligations hereunder. Upon completion of Construction of the Major Project Components substantially in accordance with the Construction Plans and Specifications, and performance by Lessee of all other construction obligations hereunder, the Payment and Performance Bond (or such remaining lesser portion thereof) shall be returned to Lessee. Use of the Payment and Performance Bond by Lessor shall be in addition to all other remedies of Lessor hereunder, which remedies are cumulative and non-exclusive. 1.11 Damage to Other Improvements; Interference. Construction and other activities conducted by Lessee shall not result in any damage to any improvements constructed by Lessor or other private developers on Watson Island, and shall not unreasonably interfere with adjacent parties' rights of access to and from their developments. Lessee shall indemnify, defend and hold harmless Lessor, other private developers on Watson Island and all Lessor Indemnified Parties from and against any and all claims, damages, expenses (including reasonable attorney's fees and court costs) and liabilities of any #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 nature whatsoever asserted against, or incurred by the same, in connection with any damage to improvements constructed by Lessor or other private developers on Watson Island. 1.12 Underground Utilities. Lessee shall cause, at its sole cost and expense, the utility lines on the south side of Watson Island pertaining to the Property to be installed underground (whether or not such utility lines are located within or outside of the Property boundaries) up to FDOT right-of-way and to the north wall of the Children's Museum (this line continuing west to point of intersection with the Visitors Center). In the event that the Lessor relocates any existing above -ground utility lines on the south side of Watson Island pertaining to the Property underground prior to the execution of the Lease and same are pre -approved in writing by Lessee (including, but not limited to, all necessary drawings, budgets, schedules, etc.), then upon terms to be agreed upon prior to such relocation, Lessee shall reimburse the Lessor for the costs incurred by Lessor in connection with such underground relocation. Lessor shall cooperate with Lessee to the extent Lessee can obtain or deliver the aforesaid facilities at a cost saving to Lessee and with no adverse effect to Lessor. 1.13 Liability. Lessor shall not be responsible or liable in damages (whether direct, indirect, consequential or otherwise) to any Person arising out of or in connection with any defects in the Construction Plans and Specifications or any revisions thereto approved in accordance with the Chief Executive Officer Approval Procedures, any loss or any damage to any Person arising out of the approval or disapproval of the Construction Plans and Specifications, any loss or damage arising from non- compliance of the Construction Plans and Specifications with any Applicable Laws, or any defects in construction of the Project Components on the Property by Lessee. The Chief Executive Officer's approval of the Construction Plans and Specifications shall not be considered to be permission to encroach on any other parcel or to interfere with another property owner's or occupant's right to use and enjoy other parcels not within the Property. Unless caused by Lessor's own gross negligence or willful misconduct, Lessor shall not be responsible for any injury or damage to any property or to any Person happening on, in or about the Property, nor for any injury or damage to the Property or the Project #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Components, and Lessor shall not in any event be responsible for damages to vehicles and their contents, belonging to Lessee or any other Person or for damages suffered by merchandise, furniture, improvements or other things of value found on or in the vicinity of the Property. 1.14 Entrance Road. Lessee agrees to design, construct and maintain, at Lessee's sole cost and expense, an entrance road for the Project across a portion of Watson Island. The configuration of such entrance road shall be substantially as shown in Rider Exhibit 1. Prior to commencing the construction of such entrance road, Lessee shall prepare Construction Plans and Specifications for such entrance road, which Construction Plans and Specifications shall be subject to Lessor's prior written approval in accordance with the terms hereof. Lessor shall grant to Lessee such temporary easement over (or otherwise permit Lessee to have access to) such areas of Watson Island as are reasonably, required by Lessee to complete the construction of such entrance road. Upon the completion of such construction, Lessor shall, in accordance with Applicable Laws, elect either: (i) to cause such entrance road to be dedicated (by deed of conveyance) to the perpetual use of the public; or (ii) to grant to Lessee, all Major Subtenants, all Spaces, all holders of Approved Time Share Licenses and other occupants and users of the Property and/or the Leasehold Improvements, and all of their guests, invitees, employees, agents, contractors (and other Persons typically granted such rights), as appropriate, together with the successors and assigns of all such Persons, an easement over, across and upon such entrance road for ingress and egress to and from the Property and the Leasehold Improvements, and an easement over, across and upon such entrance road and areas adjacent thereto for the maintenance and repair of such entrance road from time to time. 1.15 Joinders. Provided that Lessor does not incur any liability or expense of account thereof, Lessor agrees to give its reasonable cooperation to Lessee with respect to (and if necessary or appropriate, join in and consent to) any applications for Project Approvals or other licenses, authorizations or permits from any Governmental Authorities requested by Lessee from time to time. #217950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02-1304 2r130 RIDER EXHIBIT 1 SKETCH OF ENTRANCE ROAD #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone HA2 -1304 Exhibit 3.3.1 Approved Environmental Consultants PBS & J (Post Buckley) - Contact: William Pitcher Langan - Contact: Christina Gonzalez K & B Kaderabek & Barreiro Consultants, Inc. -Contact: Thomas Kaderabek GY&S/208223.16 02-1304 Exhibit 3.5 Insurance 1. Commercial General Liability insurance on a commercial general liability coverage form with "broad form" coverage, or its equivalent, including contractual liability, products and completed operations, personal injury, and premises coverage against those sums that the insured becomes legally obligated to pay as damages in connection with any and all claims, demands or actions, bodily injury, death or property damage occurring in the Property, the limits of which shall not be less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. 2. Pollution/Environmental Impairment Liability insurance coverage to be provided by Flagstone's contractors performing the Inspections on a claims basis (provided that such policy period must be for a minimum of six (6) years from and after the date of the Inspections) with limits of One Million Dollars ($1,000,000) per occurrence, providing coverage for the damage caused by spillage of any fuel, petroleum, products or any other "hazardous substances", "hazardous materials" or "toxic substances" (as defined in any and all state, local, or federal laws, rules, regulations and orders pertaining to environmental, public health or welfare matters), whether those substances are solid, liquid or gaseous. Said policy of insurance shall also provide coverage for the cost of cleanup of the affected area and for the removal, transportation and safe disposal of any contaminated area. 3. Automobile Liability insurance covering all owned, non -owned, and hired vehicles used in conjunction with Inspections of the Property. The policy or policies of insurance shall contain such limits as may be reasonably requested by the City from time to time but- not less than Five Hundred Thousand Dollars ($500,000). Worker's Compensation insurance in the amounts and types required by Chapter 440, Florida Statues. Only Flagstone need be named as insured. 4. The limits set forth in paragraphs (1), (2) and (3) above shall be issued by an Insurance Company maintaining an "A" rating and Financial Strength of" T'. GY&S/208223.16 02-x.304 Exhibit 4.1.1 Title Matters For purposes hereof, all references to "Schedules" shall refer to those certain Schedules attached to that certain Chicago Title Insurance Company ("Title Insurer") A.L.T.A. Commitment for Leasehold Owner's Policy with an Effective Date of June 9, 2002 at 11:00 PM (a copy of which is attached hereto). 1. For purposes of deleting Items 3, 4 and 5 of Schedule B -Section 1 and Item 2.e of Schedule B -Section 2 (as well modifying Item 2.g of Schedule B -Section 2), City shall provide Title Insurer confirmation that there are no outstanding taxes and/or municipal liens (i.e., proof of payment or exemption from taxation). 2. For purposes of deleting Item 7 of Schedule B -Section 1 and Items 1, 2.a, 2.d and 4 of Schedule B -Section 2, City shall provide Title Insurer a No Lien, Possession and Gap Affidavit executed on behalf of the City (stating, among other things, that there are no parties in possession or having a right to possession of any portion of the Property), in form and content reasonably satisfactory to Title Insurer. 3. Item of Schedule B -Section 1 and Item 8 of Schedule B -Section 2 refer to the 1949 deed from the Board of Trustees of the Internal Improvement Fund (the "Trustees"). City shall use reasonable, good -faith efforts to obtain from the Trustees: (i) a release of the right of entry with respect to the oil, gas and mineral reservations contained in this deed (provided that the same not be deemed to require City to incur any monetary obligation other than normal and customary application fees which may be charged in connection therewith); and (ii) a termination and/or release of Items 17 and 18 of Schedule B -Section 2, in form and content reasonably satisfactory to Title Insurer to delete the same. 4. City shall provide to Title Insurer the resolution and letter described in Item 11 of Schedule B -Section 1, in form and content reasonably satisfactory to Title Insurer so as to delete this item. 5. City shall provide to Title Insurer the affidavit described in Item 13 of Schedule B - Section 1, in form and content reasonably satisfactory to Title Insurer so as to delete this item. 6. As to Items 9 and 10 of Schedule B -Section 2, City shall use reasonable, good -faith efforts to obtain from the Miami -Dade Water and Sewer Authority Department ("WASA"), written confirmation that the water and sewer facilities described in these documents have- been properly completed, conveyed and/or dedicated and accepted by WASA, etc. (if such is the case at the time of execution as of the Lease Delivery Date), and that the City has otherwise fully complied with the terms and conditions of these documents. GY&S/4223.11 3 O 4 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE A Office Pile Number Policy or Policies to be issued: LEASEHOLD OWNER'S POLICY 1992 with Florida Modifications Proposed Insured: Effective Date June 9, 2002 at11:00 PM Flagstone Properties, LLC, a Florida limited liability company 300204602 Commitment Number To be determined 2. The estate or interest in the land described or referred to in this Commitment and covered herein is Fee Simple, and title thereto is at the effective date hereof vested in: The City of Miami, a municipal corporation (Fee Titleholder) The Land is described as follows: PARCEL L AKA EXHIBIT A-1 Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.O.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 8200.00; thence South 59' 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17':12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North _' 12' 21" West continuing along said bulkhead line a distance of 824.70 feet to the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 69 3 10' 55" East, a distance of 73.08 feet; thence North 86' 44' 00" East, a distance of 67.09 feet to non -tangent curve concave to the Northeast whose radial line bears North 393 29' 18" East having a radius of 160.00 feet and central angle of 22' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46' 17' 39" East along said curve an arc length of 484.79 feet to a point of tangency; thence South 26 3 22'36" East continuing along the southwesterly right of way line of State Road A -1-A, a distance of 196.59 feet; thence South 54' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54' 03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. PARCEL 2 AKA EXHIBIT A-2 Note: This Commitment consists of insert pages labeled in Schedule A, Schedule B -Section 1, and Schedule B -Section 2. This Commitment is of no force and effect unless all schedules are included, along with any Rider pages incorporated by reference in the insert pages. 0`2 — 1304 ARA 4/99 S8 30020-3502 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE A Commence at a point marked by an 5/8" diameter iron rod and Cap Stamped F.O.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A - 1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 97060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62' 00' 00"; thence South 59 51' 26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17' 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 49 ' 32' 57" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and by coordinates North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 103' 50" West, along the limits of said turning basin a distance of 438.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03 ' 27' 54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10.716.59 feet, a radial line of said point bears South 01 ' 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02 ' 04' 17" to a point of tangency; thence South 89 ' 10'55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point,of intersection with an existing bulkhead line; thence South 17' 12' 21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 69' 10'55" East, a distance of 73.08 feet; thence North 86' 44'00" East, a distance of 67.09 feet to non -tangent curve concave to the Northeast whose radial line bears North 39' 29' 18" East having a radius of 160.00 feet and central angle of 22' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46 ' 17' 39" East along said curve an are length of 484.79 feet to a point of tangency; thence South 26' 22' 36" East continuing along the southwesterly right of way line of State Road A -1-A, a distance of 196.59 feet; thence South 54' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54'03" West, a distance of 132.74 feet; thence South 54' 0739" West, a distance of 150.14 feet to the point of beginning. Note: This Commitment consists of insert pages labeled in Schedule A, Schedule B -Section 1, and Schedule B -Section 2. This Commitment is of no force and effect unless all schedules are included, along with any Rider pages o incorporated by reference in the insert pages. 00 2-130 ARA 4/99 SB 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 1 Commitment Number The following are requirements to be complied with: Instruments) necessary to create the estate or interest to be insured must be properly executed, delivered and duly filed for record. a)Recordation of Lease or Memorandum thereof by and between the City of Miami and Flagstone Properties, LLC. NOTE: The Company must be provided with a copy of the proposed Lease Agreement and Memorandum thereof and issue the right to add requirements and/or exemption. Payment of the full consideration to, or for the account of, the grantors or mortgagors. Payment of all taxes, charges, assessments, levied and assessed against subject premises, which are due and payable. 4 Proof of payment of real property taxes for the year 2000 and all years prior thereto. 5 Proof of payment of any and all municipal liens which may be due and payable, and liens for water, sewer and gas service. 6 Upon receipt of a survey certified in accordance with Chapter 627.7842 Florida Statutes, the survey exception and unrecorded easement exception shall be deleted. The Policies issued hereunder will be subject to a Special Exception for matters disclosed by said survey. The surveyor must certify on the survey the legal description shown on Schedule A closes. 7 Upon receipt of a Non -Lien and Possession Affidavit pursuant to Chapter 627.7842 Florida Statutes all exception as to mechanic's liens and persons in possession shall be deleted. The Policies issued hereunder will be subject to a Special Exception for the rights of parties disclosed by said affidavit. 8 Proof of proper incorporation and continued good standing of the Proposed Insured and a resolution authorizing the execution of the lease or memorandum of lease required at Item No. 1(a) above. 9 Waiver of deed restrictions set forth in that deed from The Trustees of the Internal Improvement Fund ("TIIF") Deed No. 190447, filed April 11, 1949 in Deed Book 3130, page 257, Clerk's File No. Y- 29610. 10 Surveyor's Certificate indicating that the lands described on Schedule A, Item No. 3 lie entirely within the boundaries of the lands described in that Deed filed at Deed Book 3130, Page 257. 11 Resolution from the City of Miami authorizing the lesse and a letter from the City of Miami attorney confirming compliance with the City of Miami charter and all other applicable laws regarding the alienation of city property. 12 The amount of requested insurance must be furnished and this Commitment is subject to such further requirements and/or exceptions as may then be deemed necessary. �] 13 Affidavit that the Lease recorded in Official Records Book i 110, Page 49, in Deed Book 2779, Page 390 � t+_ has expired and is no longer in effect. '-J 14 LLC requirement for Flagstone Properties, LLC, a Florida limited liability company. ARe1 4199 SB 2-304 A.L.T.A. COMMITMENT CHICAGO TITLE_INSURANCE COMPANY SCHEDULE B - Section 1 End of Schedule B - Section 1 ARB1 4199SS 300204602 02-1304 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 2 Commitment Number II. Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the Public Records or attaching subsequent to the effective date hereof but prior to the date the proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment. Standard Exceptions: a.Rights or claims of parties in possession not shown by the Public Records. b. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the premises. c.Easements, or claims of easements, not shown by the Public Records. d.Any lien, or right to a lien, for service, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the Public Records. e.Taxes or special assessments which are not shown as existing liens by the Public Records. f.Any claim that any portion of said lands are sovereign lands of the State of Florida, including submerged, filled or artificially exposed lands and lands accreted to such lands. g.Taxes and assessments for the year 2001 and subsequent years. 3 Standard exceptions (b) and (c) may be removed from the policy when a satisfactory survey and surveyor's report and inspection of the premises is made. 4 Standard exceptions (a) and (d) may be removed upon receipt of a satisfactory affidavit -indemnity from the party shown in title and in possession stating who is in possession of the lands and whether there are improvements being made at date of commitment or contemplated to commence prior to the date of closing which will not have been paid for in full prior to the closing. 5 All matters as shown on the plat recorded in Plat Book 74, Page 4. 6 Terms of Biscayne Bay Management Plan filed May 29, 1981 in Official Records Book 11114, Page 822 and under Clerk's File No. 81R-143810. 7 The property herein described being artificially filled land in what was formerly navigable water is subject to any and all rights of the United States government arising by reasons of the United States government control over navigable waters in the interest of navigation and commerce. 8 Oil, gas and mineral reservations and deed restrictions set forth in that Deed from The Trustees of the Internal Improvement Fund to the City of Miami, filed April 11, 1949 in Deed Book 3130, page 257 and under Clerk's File No. Y-29610. 9 Agreement for Water Facilities filed March 13, 1998, in Official Records Book 18016, Page 2892. 10 Agreement for Sanitary Sewage Facilities filed April 14, 1998, in Official Records Book 18058, Page 112. 11 Resolution No. 98-23, filed Januay 19, 1999, in Official Records Book 18699, Page 1236. 12 Restrictions, easements and other matters set forth on the plat of Location and Survey of a portion of NOTE: On loan policies, junior and subordinate matters, if any, will not be reflected in Schedule B. ARB2 4199 58 02-1304 2_13o 13 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 2 Section 8706 designated as part of State Road A -1-A, as recorded in Plat Book 56, Page 71 and in Plat Book 67, Page 137 of the Public Records of Miami - Dade County, Florida. Restrictions, easements and other matters set forth on the Plat of Right of Way Map, as recorded in Plat Book 68, Page 44, as recorded in Public Records of Miami - Dade County, Florida. 14 Easement in favor of the United States of America, set forth in that Perpetual Easement (Turning Basin) filed April 4, 1963 in Official Records Book 3618, Page 757 of the Public Records of Miami - Dade County, Florida. 15 Easements in favor of the United States of America set forth in that Grant of Easement for Miami Harbor Turning Basin, filed April 22, 1963, in Official Records Book 3622, Page 751 and grant of Easement For Main Skip Channel Miami Harbor, filed April 22, 1963 in Official Records Book 3622, Page 755 both of the Public Records of Broward County, Florida. 16 Grant of Easement filed in Deed Book 2185, Page 478 of the Public Records of Miami - Dade County, Florida. 17 Dedication filed March 20, 1980 in Official Records Book 10695, Page 264 of the Public Records of Miami - Dade County, Florida. 18 Waiver of Deed Restrictions, conditionally waiving deed restrictions at Deed Book 3130, Page 257, filed March 20, 1980 in Official Records Book 10695, Page 270. 19 Resolution 80-525, filed July 22, 1980 in Official Records Book 10816, Page 1001. 20 Perpetual right of way easement in favor of the United States of America, filed August 5, 1963 in Official Records Book 3768, Page 155, under Clerk's File No. 63R-127109. 21 Lease executed by and between the City of Miami and Flagstone Properties, LLC, dated _ and filed in Official Records Book , Page _. End of Schedule B - Section 2 AR82 4199 SB NOTE: On loan policies, junior and subordinate matters, if any, will not be reflected in Schedule B. 02-1304 Exhibit 4.1.2 Environmental Condition Acceptance Notice GY&S/2082 3.16 `�-304 Exhibit 4.1.3 Investor List Flagstone Island Gardens LLC Mehmet Bayraktar GY&Sl208223.16 (2-1304 Exhibit 4.1.4 List of Organizational Documents GY&S/208223.16 02-1304 Exhibit 4.1.5 Exuressions of Interest GYBS/208223.16 �,2-130 Exhibit 4.2.2 Bindine Letter from DCA GY&S/208223.16 �2-130 V ov 4�1�. STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS "Dedicated to making Florida a better place to call home" JEB BUSH STEVEN M. SEIBERT Secretary Govemor November 15 , 2002 0 EMERGENCY MANAGEMENT HOUSING 3 COMMUNITY DEVELOPMENT N -� � -< 2555 Shumard Oak Boulevard C=) c� •= D Judith A. Burke, Esquire Tallahassee, FL 32399-2100 z IC11 Shutts and Bowen, LLP -Q - (850)413.9969 1500 Miami Center F�3 o 201 South Biscayne Boulevard Miami, FL 33131 rn RE: Binding Letter of Vested Rights and Interpretation of Development of Regional Impact ("DRI") Status File No. BLIVR 11003-001 FINAL ORDER NO: DCA02-BL-288 Dear Ms. Burke: We have evaluated your Application for a Binding Letter of Vested Rights, dated September 25, 2002 ("Application"), and received on September 27, 2002. Based on the information contained in the application and supporting documentation, we enter the following Findings of Facts, Conclusions of Law, and Order. Per your request, the Binding Letter includes a determination as to the Watson Island Marina ("Marina") site's vested rights. FINDINGS OF FACT Preliminary Findings O 1. The applicant is Flagstone Properties, LLC, ("Applicant"), which is represented in its application by Judith A. Burke as its authorized representative. The application describes the project as redevelopment of a forty-two (42) wet slip marina providing mooring for watercraft, encompassing 13.4 acres of submerged land, which is owned by the City of Miami. 2555 SHUMARD OAK BOULEVARD • TALLAHASSEE, FLORIDA 32399-2 100 Phone: 850.a88.8466/Suncom 278.846" FAX: 850.921.0781/Suncom 291.0781 Internet address: htLp _!,vww.dca.state. fl. us CRITICAL STATE CONCERN FIELD OFFICE COMMUNITY PLANNING EMERGENCY MANAGEMENT HOUSING 3 COMMUNITY DEVELOPMENT 2796 Overseas Highway, Suite 212 2555 Shumard Oak Boulevard 2555 Shumard Oak Boulevard 2555 Shumard Oak Boulevard Marathon, FL 3._ 0-2227 Tallahassee, =!- 123915-2100 Tallahassee, FL 32399-2100 Tallahassee. FL 32399.2100 (3054289-2402 (850)4B8.235-3 - (850)413.9969 (850)488-7956 02-1304 2. All communications made by the applicant, all material submitted by the applicant in the Application, and all other relevant written materials are incorporated herein by reference. 3. On October 11, 2002, a notice of the applicant's request for Binding Letter was published in the Florida Administrative Weekly. In addition, the South Florida Regional Planning Council, the City of Miami, and Miami -Dade County were notified of the application's receipt. 4. The project site is located wholly in the City of Miami ("City"), Miami -Dade County, in Section 31,Township 53, Range 42. 5. The project site consists of 13.4 acres of submerged land. As represented in the Application, the existing improvements will lie wholly within the 13.4 area. 6. A brief summary of the development on the project site is as follows: The site is comprised of a forty-two (42) wet slip marina, which provides mooring for various watercraft used for sport, pleasure, and/or commercial fishing. The Marina was constructed prior to July 1, 1973. - It was constructed in 1956 and has been in continuous operation since that date. The Marina includes a double row of mooring pilings, but does not include any docks or finger piers. The Applicant would like to develop a mega -yacht marina ("Project"), a forty-two (42) wet slip marina in the same footprint. Vested Rights 7. For Purposes of identifying the types of uses, which were permitted, the applicant submitted documentation beginning in 1956. There were no City government approvals pertinent to the scope of review as to vested rights as they relate to marinas. The statement was made, however, that the Marina was "completed in accordance with all applicable federal, state, and local statutes, rules regulation's and ordinances in effect as of 1956." In 1967, the City adopted an ordinance that required a permit for any waterfront improvements. As the Marina was constructed prior to 1967, a building permit was not required. Aerial photographs from 1966 along with relevant documentation indicate that the Marina was developed, and had remained in the same condition since prior to July 1, 1973. 8. In 1975, the State of Florida required Dredge and Fill Permits for coastal construction. The Marina was constructed prior to 1975 and thus did not require such a permit. 9. In 1980, the Miami -Dade County adopted an ordinance requiring a Class I Coastal Construction Permit for construction or renovations over any tidal waters, submerged bay bottomland, or wetlands in the County. The Marina did not require such a permit since it was constructed prior to 1980. 02-1304 10. In 1990, Miami -Dade County instituted a Marine Facilities Operating Permit ("MOP") program. Every year since the inception of the program, the Marina had received an MOP for forty-three (43) commercial vessels. 11. The submerged land is unplatted. No subdivision plats were approved for development between August 1, 1967 and July 1, 1973. 12. There are currently no pending development permits or other authorizations for the Project. 13. There are no development permits or authorizations that have been requested by the Project. 14. There are no development permits or authorizations that have been denied for the Project. 15. There has been no conveyance or agreement to convey property to the state or local government as prerequisite for approval of a zoning change. 16. The Marina has not been registered with the Division of Florida Land Sales and Condominiums. 17. As proposed in the Application, all of the Project will lie within the footprint of the existing Marina. 18. T he Project is classified as a marina for purposes of DRI guidelines and standards. 19. The Project has not received any prior binding letters of interpretation from the Department. CONCLUSIONS 'OF LAW Pursuant to Section 380.06(4)(f), Florida Statutes, a development with vested rights may demolish and reconstruct within the same approximate footprint of its vested development without divesting this vested rights if the change in the size of the developmentdoesnot exceed the substantial deviation criteria set forth in Section 380.06(19)(b), Florida Statutes. Under Section 380.06(4)(f), F.S., the existing Marina on the subject site is vested. q Demolition of the existing Marina and subsequent construction of the Project on the subject site will retain vesting from DRI review. 02-1304 ORDER It is hereby ordered that the subject site has vested rights with respect to the forty-two (42) slips for the mega -yacht marina project. The proposed Project, as described in the September 25, 2002, application for binding letter, is deemed to be entitled to vested rights with respect for DRI review. The development evaluated in this binding letter shall be considered cumulatively with any future development in terms of the guidelines and standards contained in Chapter 28-24, F.A.C., and Section 380.0651, F.S., and its associated regional impacts. Should any of the above representations made in the application be substantially changed, further review of the project may be required. This letter shall expire and become void as of November 15, 2005, unless the proposed development has been substantially commenced by this date. This date may be extended by mutual agreement of the Department, local government of jurisdiction, and the developer. This determination does not obviate the need to comply with all other applicable state or local government permitting procedures. Any questions regarding this determination may, be directed to Colin M. RAopnario�4 As5idant General Counsel, at (850) 488-0410. K. " SoW Timmerman, Director Division of Community Planning cc: David Dahlstrom, South Florida Regional Planning Council Carlos Gimenez, City Manager, City of Miami Ruth Ellis Myers, Miami -Dade County FILING AND ACKNOWLEDGEMENT FILED, on this date, with the designated Agency de), receipt *which is hereby Paula P. Ford ate Agency Clerk 02-1304 NOTICE OF RIGHTS The applicant has the opportunity for a formal administrative proceeding regarding this binding letter pursuant to Sections 120.569 & 120.569 & 120.57(1), F.S. If you dispute any issue of material fact stated in the binding letter, then you may file a petition requesting a formal administrative hearing before the an administrative law judge of the Division of Administrative Hearings pursuant to Sections 120.569 & 120.57(1), F.S. and Chapter 28-106, Parts I and II, F.A.C. At a formal administrative hearing, you may be represented by counsel or other qualified representative, and you will have the opportunity to present evidence and argument on all the issues involved, to conduct cross examination and submit rebuttal evidence, to submit proposed findings of fact and orders, and to file exceptions to any recommended order. If you desire a formal administrative hearing, you must file with the agency clerk of the Department of Community Affairs a written pleading entitled `petition for administrative proceedings' within 30 days of receipt of this notice. A petition is filed when it is received by the Agency Clerk in the Department's Office of General Counsel, 2555 Shumard Oak Boulevard, Tallahassee, Florida 32399-2100. The petition must meet the filing requirements in Rule 28-106.104(2), F.A.C. and must be submitted in accordance with Rule 28-106.201(2), F.A.C. The petition must include the signature of someone authorized to act on your behalf. A petition must specifically request an administrative proceeding, it must admit or deny each material fact contained in the binding letter, and it -must state any defenses upon which you rely. You waive the right to an administrative proceeding if you don not file a petition with the agency clerk within the time frames described above. You may also decide that no formal administrative proceeding is required for this binding Letter. If you do not request a formal administrative proceeding, this binding letter constitutes final agency action and is subject to judicial review of the binding letter pursuant o Section 120.68, F.S., and Florida Rules of Appellate Procedure 9.03(b)(1)(c) and 9.110. To initiate an appeal of this binding letter, a notice of appeal must be filed with the Department's Agency Clerk, 2555 Shumard Oak Boulevard, Tallahassee, Florida 32399-2100, and with the appropriate district court of appeal within 30 days of the day this binding letter is filed with the agency clerk. The notice of appeal filed with the district court of appeal must be accompanied by the filing fee specified in Section 35.22(3),F.S., and must be substantially in the form prescribed by Florida Rule of Appellate Procedure 9.900(a). You waive your right to judicial review if the notice of appeal is not timely filed with tHe: agency clerk and the appropriate district court of appeal. Mediation under Section 120.573, F.S., is available with respect to the issues resolved by this binding letter. A request for mediation must include the information required by Rule 28- 106.402, F.A.C. Choosing mediation does not affect the right to an administrative hearing. Exhibit 4.2.6 Existine Occupants John J. Waterman ('Blue Sea II" - 2 vessels) - slips 36 & 37 2. Lazaro Sanchez (Casablanca Seafood - 5 vessels) - slips 23, 25, 26, 27 & 28 — "Fish Market" Inelda deArmas (De Armas Seafood - 3 vessels) - slips 32, 33, 34 — "Fish Market" 4. Bruce Purdy (Blackbeard Charters - 3 vessels) - slips 38, 40, and 42 GY&S/208223.16 02-1304 Exhibit 5.3 Escrow Asreement GY&Sl208223.16 02-1304 . Exhibit 6.1.4 Pre -Approved Candidates for Development Team • Eric Kuhne & Associates Spillis Candella GY&S/208223.16 �2-1304 Exhibit 6.1.5 Pre -Approved Hotel Operators and/or Franchisors • Hilton group, including but not limited to Conrad Hotels • Starwood group, including but not limited to W Hotels, St. Regis Hotels, Starwood Luxury Collection • Rosewood Hotels • Hyatt group, including but not limited to Park Hyatt • Raffles Group, including but not limited to Raffles Hotels* (to be verified by the Chief Executive Officer) • Marriott group, including but not limited to Bulgari Hotels • The Peninsula Group* (to be verified by the Chief Executive Officer) • Le Meridien Group* (to be verified by the Chief Executive Officer) • Dorchester Group Hotels* (to be verified by the Chief Executive Officer) • Four Seasons Group, including but not limited to The Regent Hotels • The Rocco Forte group, including but not limited to RF Hotels* (to be verified by the Chief Executive Officer) • Kempinski Hotels & Resorts* (to be verified by the Chief Executive Officer) • Orient Express Hotels* (to be verified by the Chief Executive Officer) • Oberoi Hotels & Resorts* (to be verified by the Chief Executive Officer) • Six Continents Hotels • Mandarin Oriental *Notwithstanding anything contained to the contrary herein, the Chief Executive Officer has the right to remove those operators and/or franchisors indicated above with an asterisk ("*") next to their name by providing written notice to Flagstone thereof if the Chief Executive Officer determines in his or her reasonable discretion by January 15, 2003 that the same are not appropriate for inclusion in the "Pre -Approved List of Operators and/or Franchisors" hereunder. GY&S/208223.16 02-1344 Exhibit 5.5.1 EicistinQ Marina Permit 02-1304 GY&S/208223.16 MIAMI-DADE COUNTY, FLS .DA MIAM I BE PERMIT NO: MOP -000306-202/2003 (B) -o= ENVIRONMENTAL RESOURCES MANAGEMENT WATSON ISLAND MARINA NATURAL RESOURCES ONtsION 1220 MAC ARTHn CSNY 33 $.W. 2nd AVENUE MIAMI, FL 33132- MIAMI, FLORIDA 33130-1540 (305)372-8864 PEBMITTEBs FAX (305)372-5630 ' Mr. Stephen H Bogner CITY OF MIAMI MIAMARINA AT BAYSIDB 401 BISCAYNE BLVD t•: MIAMI, FL 33132- t"► =' MARINE FACILITIES ANi4UAL OPERATING PERMIT DESCRIPTION OF FACILITY/BQDIPMENT This document, issued under the provisions of Chapter 24, Miami -Dade County Code (Ordinance Number 89-104), shall be valid from 01 -OCT -2002 through 30 -SEP -2003. The above namedpermittee, is hereby authorized to operate the marine facility at the above location which consists of the following: Commercial Facility. Commercial vessel operations with more than one boat located in any recreational or commercial marina in Dade County will require individual permits. Total. wet slips: 43 Total dry slips: 0 Total commercial vessels: 40.. Total recreational vessels: 3 Number of liveaboards: 0 Days of week in operations 5 This facility is subject to conditions listed below and in the following pages (if any) of this permit. SPECIFIC CONDITIONS 1. This facility must be operated in accordance with the "Best Management Practices" attached hereto and incorporated herein by reference as part of this permit. 2. All applicable conditions from previously executed local, state, and federal permits issued for the above -referenced marine facility shall be enforced. 3. All,.fixed or floating,non-wafter depeadeit structures in, on, over, or upon tidal waters, unless previously approved by a Class Y permit, are prohibited. 4. All permanent sewage pumpout systems and portable pumpout systema required at this facility pursuant to DERM, state, or federal permits shall be maintained on site and in fully operable condition at all times in order to convey sewage to the sanitary sewer system. Designated slips for pumpout stations small be -kept open at all times except while a'vessel is discharging sewage to the pumpout system. Tbere shall be no overboard discharge of sewage to tidal.waters from vessels at this facility. This prohibition also includes discharges from approved coast Guard Type. 1 or 2 flow-through marine sanitation. devices. All vessel occupants shall use shoreside facilities unless the vessel is equipped with a Coast Guard approved holding tank system or is directly connected to the facility's sewage pumpout system. S. The facility owner/operator is required to maintain a submerged land lease from the state of Florida if any vessels or structures are located over state-owned submerged lands. Use of state-owned submerged lands without a lease or other form of consent from the State of Florida is Miami -Dade County Department of Environmental Resources Management d"a, ;, , John N. Rea ow, P.E., D etor Page 1 of 2 -1304 prohibited. S. Unless otherwise approved .-.y DERM, fueling of vessels at this fac- -cy shall be prohibited. Facilities approved for fueling operations shall maintain on-site spill prevention, containment, and recovery equipment and materials including, but not limited to, absorbent pads, booms, and sweeps and.ehall maintain staff trained in the deployment and operation of said equipment at all times. 'Fueling at approved facilities shall be conducted only at the designated fueling location in order to contain any spills that may occur. A floating containment boom large enough to enclose the area of the vessel being fueled, but with a minimum length of fifty (50) feet, shall be available at all times during fueling operations. Said equipment shall be deployed and operated in the most effective manner possible when spills occur. 7. The maximum number of vessels that may be stored, docked or moored at this facility may not exceed the number of slips as referenced above in this Operating Permit. This condition shall not apply to appurtenant vessels such as dinghies and tenders that are associated, by ownership, design and common usage, with a primary vessel docked, moored or stored at the facility, and therefore, are affixed to/carried by and stored on the primary vessel. GENERAL CONDITIONS 8. The applicant, by acceptance of this document, agrees to operate and maintain the subject operation so as to comply with the requirements and standards of Chapter 24 of the Code of Miami-Dade County. 9. if for any reason, the applicant does not comply with or will be unable to comply with any condition or limitation specified on this document the applicant shall immediately notify and provide the department with the following information: (a) a description of and cause of non-compliance; and (b) the period of non-compliance including exact dates and times; or, if not corrected, the anticipated time the non-compliance is expected to continue, and steps taken to reduce, eliminate, and prevent recurrence of the non-compliance. The applicant shall be responsible for any and all damages which may result and may be subject to enforcement action by the department for penalties or revocation of this document. 10. As provided in Section 24-30 of the Code of Miami-Dade County, the prior written approval of the Department of Environmental Resources Management shall be obtained for any alteration to this facility. 11. The issuance of this document does not convey any vested rights or any exclusive privileges. Nor does it authorize any injury to public or private property or any invasion of personal rights, nor any infringement of federal, state or local laws or regulations. Nor does it relieve the applicant from liability for harm or injury to human health or welfare or property. 12. This document is required to be posted in a conspicuous location at the facility site during the entire period of operation. 13. This document is not transferable. Upon sale or legal transfer of the property or facility covered by this document, the applicant shall notify the department within thirty(30) days. The new owner must apply for a permit within thirty (30) days. The applicant shall be liable for any non-compliance of the source until the transferree applies for and receives a transfer of this document. 14. The applicant, by acceptance of this document, specifically agrees to allow access to the named source at reasonable times by department personnel presenting credentials for the purposes of inspection and testing to determine compliance with this .document and department rules. 15-. This docutaent does not indicate a waiver of or approval .of any other department permit that may be required for.other aspects of this facility. 16. This document does not constitute an approval by DERM or certification that the applicant is in compliance'with applicable laws, ordinances, rules or regulations. The applicant acknowledges that separate enforcement actions may be initiated by DERM and that this document does not constitute compliance with orders issued in conjunction with enforcement. actions for correction of violations. . 17. Failure to comply -with any condition of this document, or the standards as set forth in Chapter 24, code of Miami -Dade County may subject the applicant to the penalty provisions of said Chapter including civil penalties up to $25,000 per day per offense and/or criminal penalties of $500 per day and/or sixty (60) days in jail. Page 2 of 2 Exhibit 12.2 Permitted Title Exceptions GYBS/208223.16 u2-1304 TO FROM The Honorable Mayor and Members of the City Commission Manager RECOMMENDATION CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM DATE: December 3, 2002 43 A FILE : SUBJECT: Resolution Approving "Agreement to Enter into Ground Lease" and "Ground Lease Agreement" with Flagstone Properties, LLC REFERENCES: for the Development of Watson Island ENCLOSURES: For Commission Meeting of Dec. 12, 2002 Lease Agreement, Summary of Agreements It is respectfully recommended that the City Commission adopt the attached Resolution authorizing the City Manager to execute an Agreement to Enter into Ground Lease and Ground Lease Agreement, in substantially the attached form with Flagstone Properties, LLC for the development and operation of a Mega Yacht Marina, Fish Market and upland uses on approximately 10.8 acres of city -owned waterfront property and 13.4 acres of submerged land, a total of 24.2 acres on the northwest quadrant of Watson Island for a term of forty-five (45) years with a two (2) options to renew for additional fifteen (15) year periods. Upland uses in the development include two (2) hotels, timeshare units, cultural facilities including a maritime museum and public gardens, restaurants, retail shops, a parking garage and support facilities. The Lessee is required to make a total capital investment of not less than $281,000,000. The City will begin receiving annual payments of $1,000,000 upon receipt of foundation permits to commence construction. At the time of occupancy, minimum annual lease payments of $2,000,000 will begin and 1% of gross revenues for all project components will be added in the third anniversary of occupancy. Gross revenues from the sale of timeshare units will be shared with the city at a higher rate of 2.5%. All lease payments are subject to annual CPI adjustment. BACKGROUND Following the directives of the City Charter and Code, staff is completing the Unified Development Project process initiated last year for the development and operation of a mega - yacht marina and a fish market on City -owned property on Watson Island. The proposal of Flagstone Properties, LLC was duly evaluated according to the provisions of the Charter and Code and accepted by the City. The proposed lease transaction was subsequently approved by a majority of Miami voters on November 6, 2001. The City administration has completed negotiations with Flagstone Properties, LLC, and the attached agreements, if approved, would govern the detailed arrangements for the development, construction, leasing, management and operation of the mega -yacht marina, fish market and all upland components. Terms of the agreements are detailed on the attached summary. The proposed lease, as a conveyance of former State of Florida property subject to a deed restriction, will require approval by the Governor and Cabinet sitting as the Board of Trustees for the Internal Improvement Trust. Execution of the attached Ground Lease is subject-tq_execution of an agreement with the State for a partial modification of said deed restriction. DB/KC/MJN ov ' 02-1304 EXECUTIVE SUMMARY OF PROPOSED TRANSACTION BETWEEN THE CITY OF MIAMI ("CITY") AND FLAGSTONE ISLAND GARDENS LLC ("FLAGSTONE") WITH RESPECT TO THE FUTURE DEVELOPMENT OF THE ISLAND GARDENS PROPOSAL FOR WATSON ISLAND ("PROJECT") 1. The Project. Two hotels, retail (including a fish market) and mega -yacht marina on approximately 10.79 acres of upland and 13.35 acres of submerged land. 2. Agreement to Enter into Lease. The City and Flagstone will enter into an agreement ("Agreement") setting forth conditions for the future execution of a long- term ground lease ("Lease") to Flagstone. a. Initial Flagstone Milestones: i. Due Diligence -- Flagstone will review title, survey and environmental conditions for a 60 -day period. ii. MUSP Submission — Within 6 months, Flagstone must apply for MUSP from the City Commission. iii. NOPC —Within 6 months, Flagstone must apply for approval from DCA to a "Notice of Proposed Change" to amend the Downtown DRI to add the Marina as a new use, if necessary, and to expand the boundaries of the Downtown DRI to include the Project. iv. First Source Hiring Agreement — Within 6 months, Flagstone must execute a First Source Hiring Agreement acceptable to City. b. Initial City Milestones. City has six months from execution to accomplish the following, with a 3 month extension. Flagstone can extend deadline for an additional 6 months in its discretion. i. Modification of Deed Restrictions — the City will use good faith efforts to cause the State Trustees of the Internal Improvement Trust Fund to release deed restrictions in order to permit the development and operation of the Project. The City has commenced discussions, but probably cannot complete the modification until 3 to 6 months following approval of the Agreement. This should be accomplished by July 31, 2003. The Agreement does not include a financial commitment by the City. ii. Tenant Relocation — the City will use good faith efforts to remove all present occupants, including legal action, if necessary. Presently, all but four occupants have been relocated or have otherwise vacated. The City expects Flagstone to assist in 02-1304 resolving the last four tenants. This condition is expected to be resolved by July 31, 2003. The City has no financial obligation. C. Flagstone Approvals. Flagstone has 12 months after application to obtain MUSP Approval and NOPC Approval. d. Project Mobilization Milestones: Flagstone has 12 months after obtaining MUSP and NOPC Approval to satisfy the following conditions: i. Construction Plans and Specifications reviewed and approved by City sufficient to obtain at least 2 foundation permits; ii. Closing of Initial Construction Loan and equity of 40% of Project cost available; iii. Operations Team (hotels and marina operators and Fairchild Tropical Garden and The Historical Museum of South Florida), assembled, subject to reasonable approval of City; iv. Construction contracts, construction budget, construction schedule and payment and performance bonds, approved by City; V. Hotel Management Agreements — approved by the City; vi. Insurance — must be issued and in place. vii. Foundation Permits for at least 2 Major Project Components (i.e., hotels, retail space or parking garage) must be issued; viii. Skills Training and Employment Center Program must be established; ix. Trust Agreement for Civic Arts Endowment Trust must be executed. Flagstone has a floating twelve (12) month extension period to use for any of its above deadlines so long as Flagstone is proceeding diligently and in good faith. Outside date for delivery of possession of property is 48 months from execution of Agreement. e. Pre -Development Work. Subject to obtaining City Commission approval of a license(s), Flagstone can perform dredging work on the submerged lands and certain utility relocation and other pre -development work on the uplands parcel (revocable on 30 days notice and for a term not to exceed 1 year for the submerged lands and one year for the uplands). If Flagstone defaults, any improvements belong to City. f. Security Deposit. Upon issuance of any license by City for pre - development work described above, Flagstone will make a $300,000 security deposit. Upon MUSP and NOPC Approval, Flagstone will increase the security deposit to $500,000. 2 02-1304 3. Lease Provisions. a. Term. Initially 45 years, with two 15 -year options to extend. b. Rent: Construction Rent -- during construction -- $1,000,000 per year. ii. Base Rent — on opening of 2 hotels or 12 months after opening of 1 Hotel, base rent shall be $2,000,000 per year (provided if one hotel opens early, in addition to construction rent, Flagstone will pay an additional $500,000 until the earlier of the 2°d hotel opening or 12 months after the 1" hotel opening). iii. Percentage Rent — commencing on the third anniversary of occupancy, 1% of gross rental revenues and 2.5% of gross sales revenues of timeshare licenses. C. Security. $2 Million through completion of construction. d. Development Covenants of Lease: i. Commencement of Construction. Construction to commence within 90 days of lease execution and to be completed within 3 years, subject to force majeure. ii. Financing: (1) Leasehold Financing — all financing will be pursuant to permitted lenders and be subordinate to the interest of the City. City to provide non -disturbance agreements to approved lenders, major subtenants, space lessees over 50,000 square feet and holders of time share licenses. (2) Debt to Equity ratio not to exceed 60/40 during construction; thereafter 75/25 but certain approved mezzanine financing can go to 85/15. iii. Limitation on Uses — uses will be limited to those set forth in Flagstone's proposal and will specifically prohibit illegal businesses, adult entertainment, commercial rental of jet skis, hauling and/or dry storage of vessels, residential uses (other than timeshare licenses), and private clubs. The City has agreed that, if gambling is legalized in the future for similar properties in Miami, then gambling would not be prohibited as a use under the Lease, 3 02--1304 provided the rent would be increased to a new market rate based on such usage. iv. Ownership Transfers. (1) Mehmet Bayraktar will be required to maintain his initial investment of $22.4 Million and control Flagstone until the earlier of (x) five years from lease commencement, or (y) three years of operations. (2) Flagstone will be required to control each Major Subtenant until project stabilization (1.3 debt coverage test). (3) Following project stabilization, Flagstone permitted to transfer control of Subtenants to third parties. (4) Lessee always required to maintain equity equal to 20% of base rent payable to the City and to cure defaults under Major Subleases. (5) The City will be paid a transfer fee in connection with the first transfer of each Major Project Component, or a controlling interest therein, in the amount of 1/10'h of 1% of gross revenues from such transfer. V. Property Expenses. The lease will be triple net. Flagstone pays all expenses of the Project. 4 02-1304 43A ISLAND GARDENS AGREEMENT TO ENTER INTO LEASE & THE LEASE Submitted Into the publi6 record in ccnnectic �'th item 3 w cn /` Priscilla A. Thompson City Clerk • 11 AGREEMENT TO ENTER INTO GROUND LEASE BETWEEN THE CITY OF MIAMI, FLORIDA QM FLAGSTONE ISLAND GARDENS LLC DATED AS OF Submitted Into the public record in connection wi h item=_on Priscilla A. Thompson City Clerk GYSS/208223.16 02-1 04 ubrnitted Into the public ord in connection wi h TABLE -OF CONTENTS item on Priscilla =A. ihrarnps e City CIeTK ARTICLE 1. DEFINITIONS; INCORPORATION OF RECITALS AND EFFECTIVEDATE...........................................................................................................1 ARTICLE 2. NATURE OF THIS AGREEMENT; GROUND LEASE ATTACHED ........................2 2.1. Nature of this Agreement................................................................................................2 2.2. Ground Lease................................................................................................ \............--....2 ARTICLE3. INSPECTION PERIOD................:...................................................................................2 3.1. Termination of Access and Indemnification Agreement.............................................2 3.2. Inspections........................................................................................................................2 3.3. Environmental Inspections...........................................:..................................................3 3.4. Indemnification..................................................................................................................4 3.5. Insurance...........................................................................................................................4 ARTICLE 4. AGREEMENT CONDITIONS AND DELIVERIES.......................................................5 4.1. Flagstone's Acknowledgments and Deliveries............................................................5 4.2. Other Conditions and Deliveries....................................................................................7 4.3. Termination by City........................................................................................................10 4.4. Termination by Flagstone . ........................ ..�u�r1'tltfed IYiirO tft�'p�9�laC ..............10 4.5. Outside Date . ............................................... record -in -connection -with ...............11 ARTICLE 5. SECURITY DEPOSIT.................................iteral On �r'iSCill�� �Joio� Tho�rr��son..............11 5.1. Initial Security....................................................................::._:..1104. C11aft............. 11 5.2. Additional Security.........................................................................................................12 5.3. Deposits; Letters of Credit............................................................................................12 ARTICLE 6. EXECUTION AND DELIVERY OF GROUND LEASE.............................................12 6.1. Conditions Precedent to Execution and Delivery of Ground Lease ....................... 12 6.2. Right of Termination.......................................................................................................17 ARTICLE 7. DEVELOPMENT OF PROJECT..................................................................................18 7.1. Development Plans........................................................................................................18 7.2. Use and Ownership of Development Plans and Permits and Approvals in the event of Termination........................................................................19 7.3. Platting and Other Development Matters...................................................................19 7.4. License(s) for Pre -Development Work........................................................................20 7.5. Issuance to Flagstone of Marine Operating Permit for Existing Marina. ........................................ ..................................................................................... 21 GYBS/208223.16 02-1304 TABLE OF:CONTENTS Paae 7.6. Marina Approvals...........................................................................................................22 ARTICLE 8. COORDINATION WITH CITY; APPROVAL PROCEDURES.................................26 8.1. Coordination with City....................................................................................................26 8.2. Chief Executive Officer Approval Procedures............................................................27 8.3. Chief Executive Officer Approvals; Disclaimer..........................................................29 ARTICLE9. DISCHARGE OF LIENS...............................................................................................29 9.1. No Liens...........................................................................................................................29 9.2. Discharging Liens...........................................................................................................30 ARTICLE10. CONDEMNATION..........................................................................................................30 10.1. Material Taking.....................................................................................................:.........30 10.2. Less than a Material Taking.........................................................................................30 10.3. Award...............................................................................................................................30 ARTICLE 11. DEFAULT AND REMEDIES.........................................................................................31 11.1. Events of Flagstone's Default.......................................................................................31 11.2. Remedies for Flagstone's Default................................................................................32 11.3. City's Default...................................................................................................................32 ARTICLE 12. REPRESENTATIONS BY FLAGSTONE AND CITY; DEFENSE ANDRELEASE...............................................................................................................32 12.1. Flagstone's Representations........................................................................................32 12.2. City's Representations...................................................................................................33 12.3. Disclaimer of Representations by Flagstone.............................................................33 ARTICLE 13. MISCELLANEOUS.........................................................................................................34 13.1. Assignment......................................................................................................................34 13.2. Notices..............................................................................................................................34 13.3. Applicable Law................................................................................................................34 13.4. Severability..................................:...................................................................................34 13.5. Waiver.............................................................Sift mitted-Into-the-public.............. 35 13.6. Third -Party Beneficiary .................................record. in. connection. a1 .............35 13.7. Enforcement Costs.......................................item 7� on 35 PrisciiIa A. Thompson 13.8. Entire Agreement.......................................................................... 35 City 13.9. Headings................................................................................................................35 13.10. References.........................:............................................................................................36 GYBS/208223.16 02-1304 • • • •TABLE OF CONTENTS Page 13.11. Brokers...........................................................................................:.................................36 13.12. No Partnership or Joint Venture...................................................................................36 13.13. Counterparts...................................................................................................................36 Submitted Into the public record in connection wi item �on �y Priscilla A. Tho np on -- City Clark GYBS/208223.16 02`".30.4 Submitted Into, the public record in connection it item� 0n Priscilla A. Tho p on AGREEMENT TO ENTER INTO GROUND LEASE City Clerk The CITY OF MDM, FLORIDA, a municipal corporation of the State of Florida and FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company, f/k/a and successor by merger to Flagstone Properties, LLC, a Florida limited liability company ("Flagstone"), hereby enter into this Agreement to Enter Into Ground Lease (this "Agreement"), as follows: RECITALS: WHEREAS, City owns that certain real property consisting of approximately 10.8 acres of upland (the "Upland Parcel") and 13.4 acres of adjacent submerged land (the "Submerged Parcel") in and about the northwest quadrant of Watson Island, located in Miami -Dade County ("County"), Florida, as more particularly described in Exhibit A attached hereto (the "Property"); and WHEREAS, City desires that the Property be developed as a mixed use waterfront development in accordance with that certain Mega Yacht Marina and Mixed Use Waterfront Development Opportunity — Watson Island Miami, Florida Request for Proposals, dated February, 2001 (as amended, the "Watson Island RFP"); and WHEREAS in response to the Watson Island RFP, Flagstone submitted a proposal to City P g P P entitled "Island Gardens at Watson Island RFP" dated July 13, 2001 (the "Island Gardens Proposal"); and WHEREAS, on November 6, 2001, the Island Gardens Proposal was approved by voter referendum by the electorate of the City of Miami, which referendum granted Flagstone the right to negotiate with City the terms by which Flagstone would develop and ground lease the Property; and WHEREAS, City and Flagstone now desire to enter into this Agreement for the development and ground lease of the Property, subject to the terms and conditions contained herein. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained City and Flagstone agree as follows: ARTICLE 1. DEFINITIONS; INCORPORATION OF RECITALS AND EFFECTIVE DATE. The foregoing Recitals are true and correct and are incorporated herein by this reference. This Agreement shall be effective as of the date of execution hereof by the City, as set forth next to the place GY&S/208223.14 Draft Dated 12/02/02 ,02-1304 • • is • designated for execution by the City on the last page hereof Submitted lnto,the public record in connection �w"Ih, item �3�+- on�y o.s Priscilla A. Th m son City Clerk The parties hereby agree that the "Effective Date" as used herein shall be deemed to be. January 1, 2003. All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in Exhibit,B attached hereto or in the form of Ground Lease attached hereto as Exhibit C. ARTICLE 2. NATURE OF THIS AGREEMENT: GROUND_ LEASE ATTACHED. 2.1. Nature of this Agreement. This Agreement constitutes an agreement to enter into a ground lease upon the terms and conditions set forth herein. This Agreement shall not constitute a lease of any portion of the Property and shall not impose any encumbrance on the Property nor entitle Flagstone or any other Person to file a lis pendens in connection with this Agreement or any alleged breach or default hereunder. The term of this Agreement shall commence upon the Effective Date and automatically terminate upon the Lease Delivery Date, unless sooner terminated in accordance with the terms hereof (except for any provisions hereof that expressly survive such termination). 2.2. Ground Lease. Attached as Exhibit C is the form of Ground Lease which (i) the parties have fully negotiated and approved, (ii) has been approved by the City Commission at a regularly scheduled meeting,. and (iii) the parties intend to execute and deliver to each other, subject to the satisfaction of the conditions precedent set forth in ARTICLE 4 and ARTICLE 6 of this Agreement. ARTICLE 3. INSPECTION PERIOD. 3.1. Termination of Access and Indemnification Aareement. The parties hereby acknowledge and agree that the certain Access and Indemnification Agreement entered into between City and Flagstone is hereby terminated and of no further force or effect (except for any indemnification and confidentiality obligations which expressly survive such termination). 3.2. Inspections. Flagstone shall have until 5:00 P.M. (local time in the County) on the sixtieth (60) day after the Effective Date (the "Inspection Period") to perform, at Flagstone's sole cost and expense, such investigations and inspections as to the Property, the physical condition thereof, matters of zoning, title, survey and all other matters with respect to the Property, including, without limitation, environmental matters (collectively, the "Inspections'), which are in Flagstone's judgment relevant to Flagstone's determination whether to lease the Property (subject to the terms and conditions contained herein) or to terminate this Agreement. Prior to performing any on-site Inspections, Flagstone shall provide at least three (3) business days prior written notice to the Director of Real Estate and Economic Development, City of Miami, at 444 S.W. 2nd Avenue, 3`d Floor, Miami, FL 33130, Telephone: 2 GYBS/208223.16 02-1304 Submitted Into the public record in connection wi h item _k3,�- on Priscilla A. Thompson City Clerk 305/416-1435. Facsimile: 305/416-2156 (or to such other City representative as designated by City). which written notice shall provide reasonable detail regarding the type and scope of Inspection(s) to be performed and the scheduled .date and time of such Inspection and provide the Chief Executive Officer with the opportunity to have a representative from the City present at any such Inspections. Any written report, test, analysis, evaluation, appraisal, study or similar item with respect to the physical condition of the Property which is in the possession or control of City, shall, upon written request of Flagstone, be made available to Flagstone at reasonable times for review. Following .any such Inspections, Flagstone shall promptly restore the Property to the condition existing immediately prior to such Inspections. Flagstone and its agents, employees, representatives and contractors shall keep the results of any Inspections confidential (provided, however, that Flagstone may disclose all information obtained with respect to the Inspections to its principals, officers, directors, bankers and investors (including potential bankers and investors, attorneys, contractors and advisors as long as such parties agree to keep the information confidential) and this obligation shall survive the termination of this Agreement. Flagstone shall promptly deliver copies of any of the reports prepared in connection with any of its Inspections directly to the Chief Executive Officer. The Inspections shall be conducted in accordance with all applicable laws utilizing licensed and insured professionals and Flagstone shall cause its inspectors to obtain, at Flagstone's sole cost and expense, any and all licenses and permits required to conduct the Inspections, as applicable. 3.3. Environmental Inspections. Notwithstanding anything contained herein to the contrary, with respect to any Inspections regarding environmental matters related to the Property (such Inspections shall be referred to herein as the "Environmental Inspections"), in addition to the requirements set forth in Section 3.2 above, the following shall apply: 3.3.1. Any Environmental Inspections shall be performed by those certain environmental firm(s) or consultant(s) listed on Exhibit 33.1 attached hereto and no other environmental firm(s) or consultant(s) shall be permitted to perform the Environmental Inspections without the prior written approval of the Chief Executive Officer, which may be given or withheld in his or her sole and absolute discretion. 3.3.2. Flagstone shall not perform any invasive environmental tests (such as drilling or soil or groundwater testing) unless the Chief Executive Officer has provided its prior written consent thereto, which consent may be withheld in City's sole and absolute discretion. Flagstone's request for any invasive environmental testing must be accompanied by the inspection report (including all test results 3 GY&S/208223.16 02-1-04 and analysis thereof) prepared by a reputable environmental engineering company which recommends such additional testing and sets forth the basis thereof and the protocol for testing in reasonable detail. 3.3.3. Flagstone agrees that in the event the need arises to notify, under applicable laws, any federal, state or local public agencies of any conditions at the Property as a result of the Environmental Inspections performed by Flagstone, its agents, employees, .contractors and/or other representatives, Flagstone shall notify the City Attorney only and such disclosures shall be made directly by the City (if deemed necessary thereby), and not Flagstone, to any such public agency. 3.4. Indemnification. Flagstone shall assume all risks associated with the Inspections and agrees to indemnify and hold harmless City, of, from and against any and all costs, losses, claims, damages, liabilities, expenses and other obligations (including, without limitation, reasonable attorney's fees and court costs) arising from, out of or in connection with or otherwise relating to the Inspections, including, without limitation, the entry by any one or more of Flagstone and its agents, employees, contractors and other representatives in or upon the Property for the purposes of the Inspections. The foregoing shall not apply to any diminution in the value of the land or cost or expenses which might arise due to the uncovering of the existence of adverse conditions (e.g., environmental conditions), provided, however, that the foregoing is not intended to relive Flagstone from liability if Flagstone, its agents, employees, contractors or other representatives cause such a condition to exist. The foregoing indemnification obligations of Flagstone shall survive any expiration or termination of this Agreement. 3.5. Insurance. Flagstone shall, prior to entering the Property and performing any Inspections, provide to City evidence of insurance by Flagstone and its contractors, as applicable, as specified on Exhibit 3.5 attached hereto, insuring against any liability by any one or more of Flagstone and its agents, employees, contractors or other representatives arising from, out of or in connection with or otherwise relating to the entry by any one or more of Flagstone and its agents, employees, contractors or other representatives in or upon the Property for the purposes of the Inspections. Flagstone shall provide City with a certificate from Flagstone and its contractors, as applicable evidencing such insurance coverage, naming City as an additional insured thereon and which insurance coverage shall be kept in force until the expiration or earlier termination of this Agreement. ARTICLE 4. AGREEMENT CONDITIONS AND DELIVERIbmitted Into the public record in connection' 4th 4.1. Flagstone's Acknowledements and Deliveries. item _V.3Av on /j 03 3 r,iiie A. Tho pson City Clerk 4 GY&S/208223.16 02-x.3®4 Z5UDMntea Into the public record in connectionODA 'th • item on a Priscilla A. Thompson City Clerk 4.1.1. Acceptance of Property. If for any reason whatsoever, in Flagstone's sole discretion, Flagstone determines during the Inspection Period that it does not wish to proceed forward with this Agreement, Flagstone shall have the absolute right to terminate this Agreement by giving written notice of such termination to City in the manner hereinafter provided for the giving of notices prior to the expiration of the Inspection Period (the "Termination Notice"). Upon City's. receipt of the Termination Notice, the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force and effect and both parties shall be released and relieved of any liability or obligations hereunder (except for those indemnification and confidentiality obligations of Flagstone which specifically survive such termination). If Flagstone does not provide the Termination Notice prior to the expiration of the Inspection Period, then it shall be presumed conclusively that Flagstone has had adequate opportunity to review and has inspected and reviewed all portions of the Property, including, without limitation, the status of title, survey and the environmental condition of the Property, and, on the basis of its Inspections, Flagstone has determined that the condition of all portions of the Property is satisfactory to Flagstone, and, except for the City's obligations under Section 4.2.5 and Section 4.2.6 hereof, upon delivery of possession of the Property by City to, Flagstone, Flagstone shall accept every portion of the Property in its "AS -IS, WHERE -IS, WITH ALL FAULTS" condition, without requiring any action, expense or other thing or matter on the part of City to be paid or performed, other than those obligations of City set forth on Exhibit 4.1.1. 4.1.2. Environmental Condition Acceptance Notice. On or before the expiration of the Inspection Period, Flagstone shall execute and deliver to the City the "Environmental Condition Acceptance Notice" in form and substance attached hereto as Exhibit 4.1.2. 4.1.3. Investors. As of the Effective Date, Exhibit 4.1.3 attached hereto is a true, correct and complete listing (the "Investor List") of the name, address and Social Security Number or U.S. Federal Taxpayer Identification Number (or in the case of foreign investors who do not have such Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number, if one exists, provided for in the country of their primary residence or domicile) of all of the currently existing Investors in the Project other than those Investors: (A) whose investments in the Project are made through an Existing Investment Fund; or (B) who are or will become Investors on account of a Going Public Transaction. (collectively, the "Non -Disclosed Investors") (it being understood and agreed that all Investors other than Non -Disclosed Investors shall be referred to herein as the "Disclosed Investors"). 5 GY&S/208223.16 Submitted Into the public ® r record in connectio 4wfthhitem�i3a, on Prisc,14,'o A. Th meson 4.1.3.2. Flagstone acknowledges and agrees that, during the termCoW&Irk Agreement, Mehmet Bayraktar shall at all times retain voting and beneficial control of Flagstone. During the. term of this Agreement, Flagstone shall cause its Financial Advisor to require each Disclosed Investor (other than Flagstone or Mehmet Bayraktar) to complete the Investment Questionnaire. Based on the responses to the questions in the Investor Questionnaire and such other due diligence the Financial Advisor may perform in the normal course of its fiduciary duties, the Financial Advisor shall determine, in its good faith, commercially reasonable judgment, whether or not such Disclosed Investor is a Disqualified Person. Financial Advisor shall not propose to the City any Disclosed Investor which it has concluded is a Disqualified Person. Furthermore, the City itself shall have the right to object to any Disclosed Investor if it determines in its good faith commercially reasonable judgment that such Disclosed Investor is a Disqualified Person. The parties acknowledge and agree that no Disqualified Person shall hold a legal or beneficial interest in the Project. 4.1.4. Oreanizational Documents. As of the Effective Date, the documents listed in Exhibit 4.1.4 attached hereto constitute all of the existing organizational documents of Flagstone, including, without limitation, any operating and/or voting agreements among the members thereof (collectively, the "Organizational Documents"), and Flagstone has provided to the Chief Executive Officer true, correct and complete copies of all such Organizational Documents. Flagstone shall promptly provide City written notice of any amendments, modifications, additions or terminations of the Organizational Documents, together with written copies thereof. The member(s) or other Investor(s) of Flagstone shall not enter into any voting agreements the effect of which would cause Mehmet Bayraktar to relinquish voting and beneficial control of Flagstone; provided, however, major or material decisions requiring investor or shareholder consent, agreements among minority shareholders and/or other customary commercial arrangements are not intended to be prohibited by the foregoing. 4.1.5. Expressions of Interest. Exhibit 4.1.5 attached hereto contains a letter to the City from Flagstone's Financial Advisor and Holiday Fegnolio, which sets forth in favor of the City that, based upon the Island Gardens Proposal, this Agreement and the form of Ground Lease attached hereto as Exhibit C, such parties are highly confident that Flagstone will be able to raise its Initial Equity Requirement, which together with the projected financing should be sufficient to fully fund the development and construction of the Project Components as currently contemplated as well as the operation thereof through Project Stabilization. 6 GY&S/208223.16 0 -.iO4 Submitted Into the public record in connectionIpston item _104n—on !a I'riscille fie. ilo 4.2. Other Conditions and Deliveries. City Clerk 4.2.1. MUSP Approval. From and after the Effective Date, Flagstone shall use good faith reasonable efforts to obtain the approval of the Major Use Special Permit by the applicable governmental authority(ies) for the Major Project Components (such approval shall be referred to herein as the "MUSP Approval'). City shall reasonably and in good faith cooperate with such efforts, including, without limitation, executing all applications jointly as owner, if necessary. Flagstone shall obtain written approval of the Chief .Executive Officer to the application for the MUSP, which shall include any applications for zoning changes or variances and/or amendments to the Comprehensive Plan currently in effect for the City of Miami (collectively, the "MUSP Application") prior to submission of the MUSP Application to any governmental and/or quasi -governmental agency (it being understood that, notwithstanding anything contained herein to the contrary the Chief Executive Officer may withhold his or her consent to any zoning changes, variances or Comprehensive Plan amendments included in the MUSP Application in his or her reasonable discretion)., The parties agree to use reasonable, good -faith efforts to agree upon necessary modifications to the MUSP Application which result from any governmental or quasi -governmental process, provided that in no event shall the Chief Executive Officer be required to consent to any changes which would violate any material terms of the Watson Island RFP or deviate materially from the Island Gardens Proposal. Flagstone hereby agrees that it shall have submitted the MUSP Application to the appropriate Governmental Authority for approval thereof by no later than six (6) months from the Effective Date. I 4.2.2. NOPC Approval. From and after the Effective Date, Flagstone shall use good faith reasonable efforts to obtain the approval of the State of Florida Department of Community Affairs ("DCA") to a "Notice of Proposed Change" ("NOPC") to the Downtown Development of Regional Impact Increment II ("Downtown DRI"), which amends the Downtown DRI to: (i) add the Marina as a new use thereunder, including the applicable simultaneous increase and decrease from an existing land use category to account for any impacts of the Marina slips on traffic, if necessary; and (ii) expand the boundaries of the Downtown DRI to include the Project (such approval shall be referred to herein as the "NOPC Approval'). Flagstone shall obtain written approval of the Chief Executive Officer to the application for the NOPC ("NOPC Application") prior to submission thereof to the City of Miami Downtown Development Authority ("DDA"). No other development orders or amendments thereto shall be applied for without the express prior written approval of the Chief Executive Officer. Any changes to the NOPC Application during the NOPC-approval process, including, without limitation, any conditions that may be imposed by DDA or DCA in connection therewith must be approved by the Chief Executive Officer in advance of the approval of the NOPC. The parties agree to use reasonable, good -faith efforts to 7 GY&S/208223.16 021304 • Submitted Into the public ® record 'n con ti uv'th ® item _3A- on 1.,% /s 0.2. Frisch'! A. Thompson City Clerk agree upon necessary modifications to the NOPC Application which result from any governmental or quasi -governmental process, provided that in no event shall the Chief Executive Officer be required to consent to any changes which would violate any material terms of the Watson Island RFP or deviate materially from the Island Gardens Proposal. Attached hereto as Exhibit 4.2.2 is a letter from DCA with respect to the vested rights for the existing marina slips at the Property. Flagstone hereby agrees that it shall have submitted the NOPC Application to DCA for approval thereof by no later than six (6) months from the Effective Date. 4.2.3. MUSP/NOPC Application Date and Approval Date. The date of the later to occur of the filing of the MUSP Application and the NOPC Application shall be referred to herein as the "MUSP/NOPC Application Date". The date of the later to occur of the MUSP Approval and the NOPC Approval shall be referred to herein as the "MUSP/NOPC Approval Date". 4.2.4. First Source Hiring Agreement. Within six (6) months from the Effective Date, Flagstone and the City shall execute four (4) counterpart originals of a "First Source Hiring Agreement" (to be prepared by Flagstone) for the Project (which is referred to in Section 34.1 of the Ground Lease), which First Source Hiring Agreement shall be in form and substance reasonably acceptable to the parties. 4.2.5. Partial Modification of Restrictions. From and after the Effective Date, City shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to obtain from the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida (the "Board of Trustees") a "Partial Modification of Restrictions" (the "Partial Modification of Restrictions") which modifies the restrictions set forth within Deed No. 19447 from the Board of Trustees in favor of the City filed for record April 11, 1949 in Deed Book 3130, Page 257 of the Public Records of Dade County, Florida ("Board of Trustees Deed") in order to permit the Project. City's efforts to obtain the Partial Modification of Restrictions for the Project shall not be inconsistent with other actions and efforts by the City in connection with the City's obtaining of other partial modifications of restrictions from the.Board of Trustees. City shall attempt to have this completed within six (6) months from the Effective Date, subject to Events of Closure. Flagstone's counsel may, at Flagstone's sole discretion, join in or assist such efforts by City to obtain the Partial Modification of Restrictions provided that Flagstone shall not take any actions or engage in any correspondence with respect thereto without the prior consent of the Chief Executive Officer. 8 o2-1304 GYBS/208223.16 • C� • 4.2.6. Removal of Existing Occupants. Submitted Into the public record in connection wi h item Priscilla A. Thompson City Clerk From and after the Effective Date, City shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to remove or otherwise enter into agreements which provide for the removal of those certain existing occupants of the Property more particularly described on Exhibit 4.2.6 attached hereto (the "Existing Occupants") on or before the Lease Delivery Date (it being understood that City shall provide to Flagstone any proposed agreement negotiated by the City with those certain tenants designated on Exhibit 4.2.6 as "fish markets" for such tenants to remain in place until immediately prior to the Lease Delivery Date prior to the execution by City thereof for Flagstone's review and comments; it being understood, however, that Flagstone shall have no rights of approval thereover). City shall attempt to enter into agreements for such removal or otherwise remove such Existing Occupants within six (6) months from the Effective Date, subject to Events of Closure. Flagstone may, at Flagstone's sole discretion, negotiate agreements with any Existing Occupants for the continued occupancy at the Marina (solely as a subtenant of Flagstone under the Ground Lease and only during the term thereof), and if such an agreement is reached by the applicable parties, then, notwithstanding anything contained herein to the contrary, City shall have no further responsibility under any such agreements negotiated by Flagstone with such Existing Occupant(s) (it being understood that: (i) in no event shall Flagstone be permitted to bind the City to any such agreement in the event that Flagstone and the City do not enter into a Ground Lease hereunder or in the event of any termination of such Ground Lease; and (ii) and any such agreement between Flagstone and an Existing Occupant(s) shall contain an acknowledgment by such Existing Occupant(s) that its rights under such agreement relate only to Flagstone's leasehold estate and such Existing Occupant(s) releases City from any and all claims of rights to occupy the Property or entitlements to compensation in lieu thereof in the event of a termination of the Ground Lease for any reason whatsoever). 4.2.7. Each party hereby agrees to keep the other parry regularly apprised in writing as to what actions have been taken by such party in order to satisfy their respective conditions precedent set forth above and the status thereof. 4.3. Termination by City. In the event that: (i) Flagstone fails to file its MUSP Application and NOPC Application with the applicable Governmental Authorities or fails to execute and deliver to City a "First Source Hiring Agreement" which is reasonably acceptable to City within six (6) months from the Effective Date (which date shall not be extended for an Event of Closure) (the "MUSP/NOPC Application Deadline"); or (ii) Flagstone fails to obtain the MUSP Approval and NOPC Approval within twelve (12) months from the MUSP/NOPC Application Date (which date may be extended by Flagstone for an Event of Closure) (the "MUSP/NOPC Approval Deadline"), then City shall have the right (but 9 GYBS/208223.16 02-13-04 Submitted Into the public record in connection wi item 3r.- on is /y Z,0.2, Priscilla A. Thompson ClIg Clerk not the obligation) to terminate this Agreement by written notice to Flagstone delivered on or before fifth (5`h) day after the expiration of the MUSP/NOPC Application Deadline or the MUSP/NOPC Approval Deadline, as applicable, whereupon the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force or effect and both parties shall be relieved of any liability or obligations hereunder, except with respect to any provisions hereof that are intended by the parties to survive such termination. Notwithstanding the foregoing, Flagstone shall have the right (but not the obligation) in its sole discretion to prevent a termination by the City and extend either the MUSP/NOPC Application Deadline or the MUSP/NOPC Approval Deadline for up to an additional twelve (12) months in the aggregate (for example, if Flagstone extends the MUSP/NOPC Application Deadline for an additional four (4) months, Flagstone shall thereafter only be permitted to extend the MUSP/NOPC Approval Deadline for up to an additional eight (8) months), provided, however, that: (a) Flagstone must provide written notice to the City of any such extension on or before the expiration of the applicable deadline; and (b) Flagstone shall continue to exercise reasonable diligence to apply for or obtain the MUSP Approval and NOPC Approval during any such extension period. To the extent that Flagstone applies for both MUSP Approval and NOPC Approval in a shorter time than six (6) months, then Flagstone shall have the ability to extend the MUSP/NOPC Approval Deadline by the difference between six (6) months and the time period actually used to apply for such approvals (e.g., if the MUSP/NOPC Application Date is four (4) months from the Effective Date, then Flagstone shall have fourteen (14) months to obtain the MUSP Approval and NOPC Approval (plus its aggregate 12 month extension, if necessary) before the City's right to terminate in Section 43 would be effective). 4.4. Termination by Flagstone. In the event that within six (6) months after the Effective Date (which date may be extended for an Event of Closure), City is unable to: (i) obtain the Partial Modification of Restrictions; and/or (ii) remove the Existing Occupants from the Property, then Flagstone shall have the right (but not the obligation) to terminate this Agreement by written notice to the City on or before the fifth (5`h) day after the expiration of such six (6) month period, whereupon the Initial Security shall be returned to Flagstone and thereafter this Agreement shall be deemed terminated and of no further force or effect and both parties shall be relieved of any liability or obligations hereunder, except with respect to any provisions hereof that are intended by the parties to survive such termination. Notwithstanding the foregoing, the City shall have the right (but not the obligation) in its sole discretion to prevent a termination by Flagstone and extend the initial six (6) month period for up to an additional three (3) month period in order for the City to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property, provided, however, that: (a) the City shall provide written notice to Flagstone of such extension on or before the expiration of the initial six (6) month 10 GY&S/208=16 02-1304 Submitted Into the public record in connection wi •item j_i - ons a.Y Priscilla A. Th/y pson City Clerk ® period; and (b) the City shall continue to exercise reasonable diligence to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property during such extension period. Flagstone shall have the right (but not the obligation) to extend the foregoing time periods for the City's satisfaction of the conditions precedents set forth in Section 4.2.5 and Section 4.2.6 for an additional six (6) month period; provided, however, that: (a) Flagstone shall provide written notice to City of such extension on or before the expiration of such nine (9) month period; and (b) the City shall continue to exercise reasonable diligence to obtain the Partial Modification of Restrictions and/or remove the Existing Occupants from the Property during such extension period. 4.5. Outside Date. The parties agree that adding up all of the time periods for satisfaction of the conditions precedent set forth in this ARTICLE 4 plus all the applicable extensions therefor (including, without limitation, any extensions for Events of Closure) shall equal thirty-six months; therefore, the parties acknowledge and agree that notwithstanding anything contained herein to the contrary, either party shall have the absolute right to terminate this Agreement by providing written notice to the other party if the conditions precedent set forth in Section 4.2 above are not satisfied on or before thirty (36) months from the Effective Date. ARTICLE 5. SECURITY DEPOSIT. 5.1. Initial Securitv.Upon the execution and delivery by City to Flagstone of any' License(s) referred to in Section 7.4 hereof, Flagstone shall either (a) deliver the amount of Three Hundred Thousand and No/100 Dollars ($300,000.00) (the "Initial Deposit") to Escrow Agent or (b) provide to City, at Flagstone's sole cost and expense, a Letter of Credit in the amount of Three Hundred Thousand and No/100 ($300,000.00) (the "Initial LOC"). Notwithstanding the foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of Credit so long as the Initial Security equals $300,000.00 in the aggregate. The Initial Deposit or the Initial LOC, as applicable, shall hereinafter be referred to as the "Initial Security" and shall provide security for the faithful performance by Flagstone of all of the provisions of this Agreement and/or the License(s) to be performed or observed by Flagstone. 5.2. Additional Security. Within three (3) business days after the last to occur of: (i) MUSP Approval; (ii) NOPC Approval; (iii) the removal of all of the Existing Occupants, as evidenced by written agreements with such Existing Occupants agreeing to such removal or final court orders authorizing the removal thereof, and (iv) the Partial Modification of Restrictions has been approved by the Board of Trustees, Flagstone shall either (a) deliver the additional amount of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the "Additional Deposit") to Escrow Agent or (b) provide to City, at Flagstone's 11 GYBS/208223.16 02 30 4 Submitted Into the public record in connectio w'th item Sac- on , oa Priscilla A. Thompson City Clerk sole cost and expense, an additional Letter of Credit in the amount of Two Hundred Thousand and No/ 100 Dollars ($200,000.00) (the "Additional LOC") (the Additional Deposit or -the Additional LOC, as applicable, hereinafter the "Additional Security"). Notwithstanding the foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of Credit so long as the Additional Security equals r $200,000.00 in the aggregate. The Initial Security and the Additional Security (collectively, the "Agreement Security") shall provide security for the faithful performance by Flagstone of all of the provisions of this Agreement to be performed or observed by Flagstone. 5.3. Deposits; Letters of Credit. Any Security Deposit held by Escrow Agent shall be held in accordance with the Escrow Agreement, in form and substance attached hereto as Exhibit 53 (the "Escrow Agreement"), which Escrow Agreement shall be executed by City, Flagstone and Escrow Agent simultaneously with the execution of this Agreement. Any Letter of Credit elected by Flagstone pursuant to the provisions of this ARTICLE 5 (or a replacement thereof satisfactory to City) shall remain II in effect until Lease Delivery, unless this Agreement is otherwise terminated in accordance with the provisions of ARTICLE 4 or ARTICLE 6 hereof. ARTICLE 6. EXECUTION AND DELIVERY OF GROUND LEASE. 6.1. Conditions Precedent to Execution and Delivery of Ground Lease. Within fifteen (15) days after the satisfaction of all of the following conditions precedent (or the written waiver by the Chief Executive Officer in his or her sole and absolute discretion of any such conditions precedent that are not satisfied), the City and Flagstone hereby agree to execute four (4) duplicate original counterparts of the Ground Lease, in form and substance attached hereto as Exhibit C for delivery to each party hereunder (the "Lease Delivery") (it being understood and agreed that: (i) the date of execution and delivery of the Ground Lease by the latter of the parties hereto to so execute sha'.) be referred to herein as the "Lease Delivery Date"; and (ii) the Ground Lease shall become effective and commence on the Lease Delivery Date): 6.1.1. Construction Plans and Specifications. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion plans and specifications for the development and construction of the Project (the "Construction Plans and Specifications") which shall be in sufficient detail in order for in order for Flagstone to obtain foundation permits for at least two (2) Major Project Components (other than the Marina), which Construction Plans and Specifications shall be in accordance with the Project Approvals. Such Construction Plans and Specifications shall contain sufficient detail in order for the Chief Executive Officer to determine, using the Schedule of Values, the 02-1304 12 GYBS/208223.16 Submitted Into the public record in connection wi item Oe-, on i,. Priscilla A. Tha pson City Clerk proposed Construction Budget and the GMP Contract(s) described in Section 6.1.6 hereof, that the Project can be completed in accordance with the MUSP Approval and the Hotels can be constructed as four or five star hotels or better, as defined in the American Automobile Association ("AAA") hotel rating standards, within the Construction Budget. 6.1.2. Closing of Construction Loan(s); Other. Flagstone shall have closed its Initial Construction Loan with an Approved Initial Construction Lender (as defined in the Ground Lease), which financing thereunder, together with the amount of Initial Equity Requirement, shall be sufficient to complete the development and construction of the Project and to fund any shortfalls in operations that may exist prior to Project Stabilization. At such closing, all of the conditions precedent to funding the first draw thereunder shall have been satisfied other than Lease Delivery. Flagstone shall also be satisfied, in its sole discretion, with negotiations concerning financial incentives and entitlements available under federal, state, county or local law. 6.1.3. Initial Equitv Requirement. Flagstone shall have provided to the Chief Executive Officer written evidence satisfactory to the Chief Executive Officer in his or her reasonable judgment of the availability of the Initial Equity Requirement (which funds shall be available to Flagstone subject to typical conditions for the funding of equity in similar projects) which, when added to the equity expenditures heretofore made by Flagstone and the loan proceeds to be funded in connection with the Initial Construction Loan(s), is sufficient to complete the development and construction of the Project and to fund any shortfalls in operations that may exist prior to Project Stabilization. In connection with the foregoing, Flagstone and the Financial Advisor shall provide .to the City an updated Investor List, certified to the City by the president or vice-president of Flagstone and an officer of Financial Advisor, under penalty of perjury, that such Investor List accurately sets forth each and all of the Disclosed Investors as of the Lease Delivery Date, together with a listing, to the best of Flagstone's and the Financial Advisor's knowledge, of the current address and Social Security Number or U.S. Federal Taxpayer Identification Number (or in the case of foreign investors who do not have such Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number, if one exists, provided for in the country of their primary residence or domicile) of such Disclosed Investors; it being understood and agreed that the provisions of Section 4.1.3 hereof shall apply to all Investors. 6.1.4. Development Team. Flagstone shall have (a) obtained the prior written approval of the Chief Executive Officer to the identities of all of the following individuals and/or entities: (i) the lead architect which is coordinating preparation of the conceptual and architectural plans for each of the Major Project Components; (ii) the lead landscape architect which is coordinating preparation of 13 Y&SWJ.16 ted Into Suh1��:et-� � the public record i n connection w'th item _Ja_ on /� s os Priscilla A. Thompson the landscape plans for each of the Major Project Components; and (iii) the construction ma ager(sltock the Project and/or for each of the Major Project Components, to the extent different (collectively, the J J J P "Development Team") and (b) provided written evidence that binding agreements with each of the members of the Development Team have been executed. Each member of the Development Team shall be subject to the prior written approval of the City, which approval shall not be unreasonably withheld and shall include, but not be limited to, the City's ability to withhold its approval of any Disqualified Person. Flagstone shall be permitted to supplement the Development Team with additional members without the prior consent of the City; provided, however, any replacements of an approved member of the Development Team shall be subject to the City's approval in accordance with the foregoing sentence. The City hereby approves the Persons listed on Exhibit 6.1.4 attached hereto. 6.1.5. Operations Team. Flagstone shall have (a) obtained the prior written approval of the Chief Executive Officer to the identities of the operator and, if applicable, the franchisor, for each of the Hotels and the Marina within the Project (the foregoing, together with Fairchild Tropical Garden and The Historical Museum of South Florida, shall be collectively referred to herein as the "Operating Team"), and (b) provided written evidence that binding agreements with each of the members of the Operating Team have been executed. Each member of the Operating Team shall be subject to the prior written approval of the City, which approval shall not be unreasonably withheld and shall include, but not be limited to, the City's ability to withhold its approval of any Disqualified Person. City hereby approves those certain hotel operators and/or franchisors set forth on Exhibit 6.1.5 attached hereto. City hereby agrees that, if Flagstone so elects, Flagstone shall be permitted to operate or manage the Hotel(s), Marina and/or Parking Garage either directly or through an Affiliate thereof. 6.1.6. Construction Contracts. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion one (1) or more binding guaranteed maximum price construction contract(s) (individually or collectively, the "GMP Contracts)") which individually or in the aggregate provide for the development and construction of the Project Components in accordance with the MUSP Approval (at a cost which shall not exceed the aggregate costs for development and construction of the Project as set forth in the Construction Budget), together with a "Schedule of Values" for the Project to be approved by the Chief Executive Officer in his or her good faith, reasonable discretion. 6.1.7. Construction Budget. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion the budget setting forth in reasonable detail the 14 GYBS/208223.16 02—t304 • • 1] n anticipated costs of development and construction of the Budget"). Submitted Into the public •record in connection with item saw on i, os Priscilla A. Thompson City Clerk Project Components (the "Construction 6.1.8. Construction Schedule. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion the detailed schedule for development and construction of the Project Components and related infrastructure, including, without limitation, the anticipated commencement and completion of major components of the work. Flagstone may accelerate all or any portions(s) of such schedule without the Chief Executive Officer's approval; provided that Flagstone provide notice to the Chief Executive Officer of such acceleration. 6.1.9. Bonds/Letters of Credit. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion a copy of the Payment and Performance Bond and/or Letters of Credit (which shall have been issued at Flagstone's sole cost and expense) in an amount equal to 100% of the hard construction costs of the Project Components, which shall name City as the owner or dual obligee, as appropriate. The forms of such Payment and Performance Bond and/or Letters of Credit and the surety or institution issuing the same shall be subject to the prior written approval of the Chief Executive Officer, which shall not be unreasonably withheld (provided that such surety or institution has a credit rating of A or higher with a financial strength to be mutually acceptable to the parties). Any Payment and Performance Bond may be enforced by City in accordance with its terms. 6.1.10. Hotel Management Agreements. The Chief Executive Officer shall have received and approved in his or her good faith, reasonable discretion (with appropriate consideration given to the manner in which similar issues are resolved by sophisticated lenders in similar transactions) binding hotel management agreements between Flagstone and the approved operators of each of the Hotels within the Project (unless the Hotel(s) is to be operated directly by Flagstone or an Affiliate, in which case any management agreement between Flagstone and such Affiliate shall not require the prior approval of City but Flagstone shall provide to the City binding franchise or license agreements between Flagstone or its Affiliate and a nationally or an internationally recognized hotel franchisor for such Hotel(s), which franchise or license agreement shall be subject to the City's reasonable approval). Each management agreement (or franchise or license agreement, if applicable) shall provide for, among other things: (i) the operation or management of a four or five star hotel or better, as defined in the AAA hotel rating standards; (ii) that the hotel operator or franchisor shall provide written notice to the Chief Executive Officer of ..any default by Flagstone under such hotel management agreement or franchise agreement, together with the reasonable opportunity to cure such default by the City; and (iii) an attornment provision whereby the hotel operator or franchisor agrees to attorn to the City pursuant to a 15 GYBS/208223.16 02--x.304 Submitted Into the public ®record in c,onnectio vvi h item 13o-- on /-u !a OJ - Priscilla A. Thomson C�V Clerk subordination. non -disturbance and attornment agreement acceptable to the Chief Executive O _t er. in his or her reasonable discretion. In no event shall the City be required to provide non -disturbance to any operator or franchisor that is an Affiliate of Flagstone (or the applicable Major Subtenant of the Major Project Component which is subject to such operating or franchise agreement), unless a non -Affiliated minority interest in such Affiliate has the right, and so exercises such right, to take over control over such Affiliated -operator or franchisor, in which event City shall provide a subordination, non -disturbance and attornment agreement thereto acceptable to the Chief Executive Officer in his or her reasonable discretion. Any such affiliated operator or franchisor shall execute a subordination agreement reasonably acceptable to the Chief Executive Officer. 6.1.11. Insurance. All insurance policies required to be maintained by Flagstone under the Ground Lease (and applicable to the work that is then ongoing) shall have been obtained, as evidenced by the originals of such policies of insurance or certified duplicates thereof issued by the applicable insurance companies, which policies shall name the City as an additional insured thereunder. 6.1.12. No Default. There shall be no Event of Flagstone's Default (as defined in Section 11.1 of this Agreement). 6.1.13. Project Approvals. The Partial Modification of Restrictions, MUSP Approval, NOPC Approval and foundation permits for at least two (2) Major Project Components (other than the Marina) (the "Foundation Permits") shall have been issued by the applicable Government Authorities for the Project (collectively, the "Project Approvals"). The Project Approvals shall not be deemed to have been issued unless and until any and all appeals periods as provided by law shall have expired without an appeal, objection or challenge having been filed, or, if filed, when such objection, challenge or appeal has been dismissed or resolved finally and conclusively to the satisfaction of the Chief Executive Officer in his or her reasonable judgment. 6.1.14. Establishment of Skills Training and Employment Center Program. Chief Executive Officer shall have approved in its reasonable good -faith judgment sufficient evidence of the establishment of a "Skills Training and Employment Center Program" at a site near the Project in Miami, Florida which shall provide for training of the construction and operations personnel associated with the Project in accordance with the Proposal. 6.1.15. Trust Agreement. Flagstone and City shall have executed four (4) counterpart originals of the "Trust Agreement" for the "Civic Arts Endowment Trust" to be created for the Project 16 GY&S/208223.16 02-x.304 (which is referred to in Section 26.2 of the Ground Lease), which shall be in form and substance reasonably acceptable to the parties. Submitted into the public record in connectio With item c3 6� On /y !� op6.2. Right of Termination. Priscilla A. Th °mpSOn City Clerk 6.2.1. Termination. Flagstone agrees to use diligent good -faith efforts to cause the satisfaction of the conditions precedent set forth in Section 6.1 above and Flagstone shall promptly provide to the Chief Executive Officer, from time to time, such written documentation as may be reasonably requested by the Chief Executive Officer to evidence the same. In the event the conditions precedent set forth in Section 6.1 above are not satisfied (and the Chief Executive Officer has not waived the same in writing in his or her sole and absolute discretion) on or before twelve (12) months from the MUSP/NOPC Approval Date (the "Lease Deadline"), City or Flagstone, so long as the terminating party is not in default hereunder (which default has not been cured in accordance with any applicable notice and cure periods provided for in ARTICLE 11 hereof), shall have the right to terminate this Agreement, without cost or liability of either party to the other party, by written notice from the terminating party to the non -terminating party delivered within five (5) business days after the Lease Deadline, whereupon this Agreement shall be deemed terminated and of no further force or effect as of the date of such notice and both parties shall be relieved of any and all further liability or obligations hereunder except with respect to any provisions hereof that are intended by the parties to survive such termination. 6.2.2. Extension. Flagstone shall have the option to extend the Lease Deadline for up to an additional twelve (12) month period (subject to subsection (iii) below) upon prior written notice to the City; provided, however that, (i) Flagstone has been diligently pursuing satisfaction of these conditions, in good faith and in a commercially reasonable manner with the City hereby agreeing to give written notice to Flagstone and an opportunity to cure in accordance with Section 11.1.1 hereof if at any time it believes otherwise; (ii) no Event of Flagstone's Default has occurred and is continuing hereunder; and (iii) to the extent that Flagstone has previously exercised all or any portion of its initial extension. option in accordance with Section 43 hereof, then the twelve (12) month period referred to above shall be automatically reduced by the total amount of such initial extension. To the extent that Flagstone has satisfied all of the conditions precedent set forth in this ARTICLE 6 by the Lease Deadline (as extended, if applicable in accordance with this Section 6.2.1) other than the issuance of the Foundation Permits for at least two (2) Major Project Components and the reason for the delay in the issuance of such Foundation Permits is directly attributable to an Event of Closure, then Flagstone shall be permitted to extend the Lease Deadline (as extended, if applicable in accordance with this Section 6.2.1) for a reasonable period of time in order to diligently pursue the issuance of such Foundation Permits (which extension period GY&S/20ff.16 Submitted Into the publIC ® record in connection with ® item on /.x, s o s - Priscilla A. Tho pson City Clerk shall in no event exceed six (6) months in the aggregate, which aggregation shall include any period of extension previously exercised by Flagstone in connection with a previous Event of Closure). 6.2.3. Outside Date. The parties agree that adding up all of the time periods for satisfaction of the conditions precedent set forth in this ARTICLE 6 plus all the applicable extensions therefor (including, without limitation, any extensions for Events of Closure) shall equal forty-eight (48) months; therefore, the parties acknowledge and agree that notwithstanding anything contained herein to the contrary, City shall have the absolute right to terminate this Agreement by providing written notice to Flagstone if the conditions precedent set forth in ARTICLE 6 above are not satisfied on or before forty- eight (48) months from the Effective Date. ARTICLE 7. DEVELOPMENT OF PROJECT. 7.1. Development Plans. Flagstone shall, at its sole cost and expense, design and prepare all plans required or desirable in connection with the design and construction of the Project, including, without limitation, (i) the Construction Plans and Specifications, (ii) all application materials required to complete the MUSP Application, (iii) all application materials necessary to complete the NOPC Application; (iv) all materials necessary or required in connection with obtaining the Project Approvals, the Mega -Yacht Marina Permits (as hereinafter defined) and all other permits and approvals necessary for the development and construction of the Project; and (v) any and all other necessary or desirable plans, drawings or renderings, including conceptual layouts and artistic or architectural renderings, elevations or plans (all of the foregoing collectively, the "Development Plans"). The Development Plans shall be consistent with the terms and provisions of this Agreement, the requirements of the Watson Island RFP, and the conditions and commitments set forth in the Island Gardens Proposal. 7.2. Use and Ownership of Development Plans and Permits and Approvals in the event of Termination. In the event of a termination of this Agreement due to an Event of Flagstone's Default, City shall be entitled to full, complete and unconditional use and ownership of the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepare the same and any Approved Lenders' rights therein; it being understood that City shall have no obligation to bring current any existing delinquencies but shall be obligated to make payments thereafter as they become due), the Project Approvals, the Mega -Yacht Marina Permits and all other permits and/or approvals obtained by Flagstone 0 02-1304 18 GY&S/208223.16 Subm ied into the public record in connectio with item L10,r, on M Oak - Ds -- Priscilla A. Th mon City Clerk in connection with the Project without payment of any consideration therefor by City to Flagstone. Flagstone agrees that any agreement between the architect(s) and engineer(s) with respect to the Project shall provide that the City shall have the right to use such plans with respect to the Project without payment of any additional charge therefor. 7.3. Platting and Other Development Matters. Flagstone and City shall cooperate with one another in connection with City's platting of the south side of Watson Island (which plat shall include the Property), and, if necessary, shall join in and consent to any reasonable easements, dedications or other conveyances or encumbrances which may be required by any Government Authority in connection with the approval of such plat provided that such agreements do not materially and adversely affect in Flagstone's reasonable opinion the use, value or utility of the Project as contemplated by the Development Plans. In addition, City shall have the right from time to time to enter into development related agreements which may impact or otherwise encumber Property, including, without limitation, easements, water and sewer agreements (including, without limitation, the amendment or modification of such existing agreements), road vacations, etc., and Flagstone shall have no right to object to the same at Lease Delivery provided that such agreements do not materially and adversely affect in Flagstone's reasonable opinion the use of the Project as contemplated by the Development Plans. 7.4. License(s) for Pre -Development Work. 7.4.1. License(s). Subject to (i) obtaining the City Commission's prior written approval (which shall include, without limitation, approval as to the type and extent of work to be performed), and (ii) compliance with the Board of Trustees Deed (as the same may be modified in connection with Section 4.2.5 hereof) and Applicable Laws (including, without limitation, obtaining the appropriate permits necessary from the applicable Governmental Authority(ies)), City shall grant to Flagstone, for use by its agents, employees and contractors, a license to perform certain pre -approved dredging work on the Submerged Parcel and/or a license to perform certain pre -approved utility relocation and/or other pre -development work on the Uplands Parcel (individually and/or collectively referred to herein as the "License"), all of which pre -approved work (the "Pre -Development Work") shall be performed at Flagstone's sole cost and expense, and in a good and workmanlike manner in accordance with all applicable Governmental Requirements. Each License shall be for a term not to exceed twelve (12) months (in total for each License) and shall be revocable for any reason by City upon thirty (30) days prior written notice. During the term of any License, City, or any of its agents, successors or assigns, shall have the right to enter the Property during all reasonable hours to examine and inspect the same. Except in the event of an issuance of such Licenses, Flagstone agrees that, Flagstone has no 19 GYBS/208223.16 02-1304 Subrr�itt�:,. W the public . �ecord in connection vii h Item _D in PriSGilla A. o`h''o##``,, psonn right, title, interest or claim in, or to the use of, the Property, all of which are waived hereb}�i�le�M until the occurrence of the Lease Delivery Date. Notwithstanding anything contained herein to the contrary, in no event shall any License granted in accordance with this Section 7.4 hereof be deemed to permit any party other than Flagstone, for use by Flagstone and its agents, contractors and employees, from using the Property as provided for herein. In connection with the Pre -Development Work, City agrees' that it shall use good faith reasonable efforts (which shall in no event be deemed to include any financial obligation on the part of the City) to cooperate with Flagstone in coordinating any utility relocation within the Property with the Water and Sewer Department of Miami -Dade County. 7.4.2. No Consideration. The parties hereby acknowledge and agree that, during the term of the License, no consideration (i.e., construction rent or otherwise) will be due from Flagstone to City. In the event that this Agreement is terminated for any reason whatsoever, (i) Flagstone shall not be entitled to reimbursement for any of its costs and expenses incurred in connection with the Pre - Development Work or for the value of any such improvements made by Flagstone to the Property in connection therewith; and (ii) except as specifically set forth in a surviving indemnification section of this Agreement or to the extent necessary to correct any defective work performed by Flagstone or to complete any incomplete work which is necessary in order to provide uninterrupted services to any other property owners (such costs shall be deemed to be "Reimbursable Expenses"), City shall not be entitled to reimbursement for any costs or expenses that may be incurred by City in connection with the Pre - Development Work (it being understood that in no event shall the foregoing be deemed to impose any obligation of the part of the City to incur any such cost or expense, but to the extent that City does incur i Reimbursable Expenses, Flagstone shall promptly reimburse the same to City within thirty (30) days after t receipt of a written invoice, together with reasonable supporting documentation, therefor. Flagstone shall maintain and cause its contractors to maintain the insurance referred to in Article XI of the Ground Lease (which is applicable to the work that is then ongoing) with respect to any Pre -Development Work performed by Flagstone in connection with such License. 7.4.3. Indemnification and Waiver. Flagstone agrees to defend, indemnify and hold City harmless from any and all claims, demands, actions, whether legal, equitable or otherwise, costs, damages (including reasonable attorneys' fees and experts' fees) and any other liability incurred now or in the future as a result of any claim, injury, death or property damage, resulting directly or indirectly from Flagstone's entry upon the Property and performance of the Pre -Development Work thereon. Flagstone agrees that its access to and use of the Property for the Pre -Development Work shall be solely at its own risk and expense. As a material inducement for City to grant the License(s), Flagstone does . hereby release, waive, discharge, covenant not to sue, acquit, satisfy and forever discharge City and its officers, 20 GYBS/208223.16 02-13%f _X Submitted Into the punllc record in connection wi h ® item 3�- on iy Is a Priscilla A. Tho p -on City Clerk directors, employees, agents and attorneys and the affiliates and assigns of all of the foregoing of and from any and all liability, claims, counterclaims, defenses, actions, causes of actions, suits, controversies, agreements, promises and demands whatsoever, at law or in equity, which Flagstone or any of its members, officers, directors, employees, attorneys and agents and the affiliates and assigns of all of the foregoing had, now has, or hereafter can, shall or may have against City or its officers, directors, employees, attorneys and agents and the affiliates and assigns of all of the foregoing, for, upon, or by reason of any matter cause or thing whatsoever arising out of the License(s), the Pre -Development Work and/ or Flagstone's use of the Property. The foregoing indemnification obligations of Flagstone shall survive any expiration or termination of this Agreement. 7.5. Issuance to Flagstone of Marine Operating Permit for Existing Marina. The City currently holds Marina Facilities Annual Operating Permit No. MOP -000306-2002/2003 (B) — GEN for the existing marina on Watson Island (the "OWratin Pg ermit"), which Operating Permit is valid from October 1, 2002 through September 30, 2003 (a copy of such Operating Permit is attached hereto as Exhibit 7.5). Subsequent to the Effective Date, Flagstone shall file with the Miami -Dade County Department of Environmental Resources Management ("DERM") an application for the issuance of an Operating Permit for the existing marina in Flagstone's name in order for Flagstone to pursue the Mega - Yacht Marina Permits. City shall reasonably cooperate with Flagstone in obtaining the Operating Permit by, among other things, executing whatever documentation may be required by DERM (provided that in no event shall City be obligated to incur any cost or expense in connection therewith). This documentation shall include, but not be limited to, the issuance by the City of Miami of an Occupational License to Flagstone for the operation of the existing marina. After issuance of the Operating Permit in Flagstone's name, City shall continue to cooperate (which shall not include any obligation to incur any cost or expense) with Flagstone in connection with keeping the Operating Permit in good standing. In the event Flagstone desires to make minor repairs or improvements to the existing marina, and such repairs or minor modifications require DERM's approval, City shall, provided said repairs and renovations are approved by the Chief Executive Officer, execute whatever documentation may be reasonably required in order to obtain DERM's approval. Any income derived from the operation of the existing Marina prior to the Lease Delivery Date shall belong to the City. In the event that this Agreement is terminated for any reason other than the execution and delivery of the Lease, then, if so requested by City, Flagstone shall take whatever actions are necessary in order to promptly transfer the Operating Permit back to the City. 7.6. Marina Approvals. Flagstone shall use its "best efforts" (as such term is defined below) to obtain all permits and approvals from Governmental Authorities (collectively, the "Mega -Yacht Marina Permits") which are required to construct and operate a marina substantially similar in size and 21 GY&S/208223.16 �=0 4 Submitted into the public - record in connection yvith item on !y oa. Priscilla A. Tgomrp_son 40 capacity as the marina depicted in the Island Gardens Proposal (a "Mega -Yacht Marina"). Iflti�eMk necessaryor desirable b the Chief Executive Officer, any applications for Mega -Yacht Marina Permits y shall be made with the City as the named applicant or co -applicant, as required by law. In the event Flagstone is able to obtain all of the Mega -Yacht Marina Permits, then the term "Marina" as used in the Lease shall mean and refer to such Mega -Yacht Marina, and Flagstone shall develop and, operate such Mega -Yacht Marina subject to and in accordance with the terms and conditions of the Lease. 7.6.1. Best Efforts. For purposes hereof, the term "best efforts" shall mean that Flagstone shall take all of the following actions: 7.6.1.1. Flagstone shall act in good faith, expend commercially reasonable amounts of funds, and use all due diligence (including retaining consultants, professionals and experts and taking their advice) in pursuing all necessary Mega -Yacht Marina Permits (and specifically in taking all of the actions described in subsections 7.6.1.2 through 7.6.1.5 below). 7.6.1.2. Flagstone shall diligently develop such detailed plans and specifications, drawings, schematics, sketches and other documentation with respect to a Mega -Yacht Marina (as defined above) as may be necessary or appropriate in connection with pursuing the Mega -Yacht Marina Permits (collectively, the "Mega -Yacht Marina Plans"). 7.6.1.3. Flagstone shall submit the Mega -Yacht Marina Plans to the Chief Executive Officer for his or her approval in accordance with the Chief Executive Officer Approval Procedures. 7.6.1.4. After approval of the Mega -Yacht Marina Plans by the Chief Executive Officer, with whatever modifications as are agreed upon, all subject to and in accordance with the Chief Executive Officer Approval Procedures, Flagstone shall submit the Mega - Yacht Marina Plans to .all Governmental Authorities necessary to obtain the Mega -Yacht Permits (it being understood that the applicable Governmental Authorities include, but are not necessarily limited to, the State of Florida Department of Environmental Protection, the Army Corps of Engineers (the "Corps"), the South Florida Water Management District ("SFWMD") and the Miami -Dade County Department of Environmental Resources Management ("DERTW ), and respond to and accommodate, in a commercially reasonable manner, any reasonable requests by such Governmental 22 GY&S/208223.16 02` 1304 Submitted Into the public ®record in connection with item 3a on m- is oa- Priscilla A. Thompson City. Clerk Authorities for modifications to the Mega -Yacht Marina Plans. The Chief Executive Officer shall be informed, in writing, of such modifications by Flagstone, which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the notice indicating that City is to provide approval or denial with comments within ten (10) business days pursuant to this Section 7.6.1.4. The Chief Executive Officer shall have ten (10) business days from the date of receipt of such notice to review the modifications and advise Flagstone in writing that the modifications are disapproved. If notice of disapproval is not delivered within the ten (10) Business Day period, Flagstone shall give a written reminder notice to the Chief Executive Officer. If notice of disapproval is not delivered within five (5) Business Days after such reminder notice is given, the modifications shall be deemed approved. The notice to review and the reminder notice shall each contain legends at the top of the first page, in a typeface larger than that used elsewhere in the request, identifying the applicable required response time. 7.6.1.5. If Flagstone is able to obtain consensus among the staff of the applicable Governmental Authorities for the Mega -Yacht Marina Plans, Flagstone shall (a) submit the Mega -Yacht Marina Plans (as same may be modified as described above) and an application for a Class I Permit for the Mega -Yacht Marina (the "Class I Permit Application") to the Miami -Dade County Board of County Commissioners (the "Board") for final approval for the construction and operation of the Mega -Yacht Marina substantially in accordance with such Mega -Yacht Marina Plans, and have its representatives attend the hearing before the Board concerning same and attempt to persuade the Board to approve same; and (b) submit to the other applicable Governmental Authorities, including the SFWMD and the Corps., the Mega Yacht Marina Plans and the appropriate application(s) required for the issuance of the applicable Mega -Yacht Marina Permits and Flagstone shall thereafter follow up with such application(s) including, but not limited to, appearing before the SFWMD Governing Board, until such Mega -Yacht Marina Permit(s) are issued by such Governmental Authorities. 7.6.2. Notice and Meetings with Citv.Flagstone shall provide City with at least seven (7) days prior written notice of any meeting with the staff of applicable Governmental Authorities. City shall have the right to have a representative present (by telephone or in person) at each such meeting. In addition, Flagstone shall provide. City with copies of 23 GYBS/208223.16 �1 -1.3®4 Subs iUsd Into the public •recd, = i> i onnectio w'th item �l�- On / soy Priscilla A. Tho pson City Clerk any written correspondences between Flagstone and such Governmental Authorities in connection with the "best efforts" steps described in Section 7.6.1 above. 7.6.2.2. Flagstone hereby agrees to have monthly meetings with City's designated representatives to discuss the status of Flagstone's "best efforts", and to keep City regularly apprised through written updates as to what "best efforts" have been and are being taken by Flagstone in order to satisfy its obligations in Section 7.6.1 above and the status thereof. If, after any such monthly meeting or after City receives any such written update, City believes, reasonably and in good faith, that Flagstone is not using its best efforts as described in subparagraph (c) above, City shall, within seven (7) Business Days after receiving any such meeting or written update, give written notice to Flagstone stating with particularity City's belief and the specific basis for such belief. If City fails to give such written notice within such seven (7) Business Day period, the actions by Flagstone which are described in such meeting or written update shall be deemed to constitute best efforts as described in Section 7.6.1 above up to the last step taken by Flagstone as described in such meeting or written update, and City shall not be entitled to submit to arbitration the question of whether such actions by Flagstone constitute best efforts. 7.6.2.3. _Notwithstanding the foregoing, Flagstone shall not be required to accept any unreasonable conditions for approval which would compromise the feasibility of the proposed Mega -Yacht Marina or place unreasonable financial or economic burdens on Flagstone (either in terms of increased costs or reduced income) or unreasonable covenants, conditions and/or restrictions with respect to the development and operation of the proposed Mega -Yacht Marina. 7.6.3. Notice of Failure to Obtain Meea-Yacht Marina Permits. In the event Flagstone is unable, after using such best efforts, to obtain all of the Mega -Yacht Marina Permits then Flagstone shall provide written notice thereof to City. If City agrees that Flagstone has used such best efforts and the Mega -Yacht Marina Permits cannot be obtained, then, the term "Marina" as used herein and in the Lease shall mean such marina as Flagstone is able to construct and operate based on the existing marina permits or such other permits and approvals from Governmental Authorities Flagstone is able to obtain, and Flagstone shall develop and/or operate such Marina subject to and in accordance with the terms and conditions of the Lease. If City does not agree that Flagstone has used such best efforts to obtain the Mega -Yacht Marina Permits, then no later than thirty (30) days after City's receipt of written 24 GY&S/208223.16 02-1304 Su:. :Into the public recon,.� connectio ith item Op- on Priscilla A. Thompson City Clerk notice from Flagstone, City shall provide vi�i�itten notice to Flagstone that City is submitting the matter o arbitration in accordance with Section 7.6.4 below; provided, however that City shall not be entitled to submit the matter to arbitration to the extent Section 7.6.2.2 provides otherwise. 7.6.4. Arbitration. If at anytime (including, without limitation, at the time Flagstone provides written notice to City that Flagstone is unable to obtain the Mega -Yacht Marina Permits) City believes in its good -faith reasonable judgment that Flagstone has not or is not using "best efforts' to obtain the Mega -Yacht Marina Permits, then City shall refer such dispute to final and binding arbitration, before a single arbitrator (the "Arbitrator"), under the commercial arbitration rules of the American Arbitration Association in Miami -Dade County, Florida. In determining whether Flagstone has used its best efforts as described in Section 7.6.1 above, the Arbitrator may consider whether Flagstone should pursue any administrative appeals. In no event shall Flagstone be required to pursue litigation (although it may, at its option, elect to do so). The Arbitrator shall be selected by the parties and if the parties are unable to reach agreement on selection of the Arbitrator within ten (10) days after the notice of arbitration is served, then the Arbitrator will be selected by the American Arbitration Association. All documents, materials, and information in the possession of a party to this Agreement and in any way relevant to the claims or disputes shall be made available to the other parties for review and copying not later than 30 days after the notice of arbitration is served. To the extent that a party would be required to make confidential information available to any other, an agreement or an order shall be entered in the proceeding protecting the confidentiality of and limiting access to such information before a party is required to produce such information. Information produced by a party shall be used exclusively in the arbitration or litigation that may arise, and shall not otherwise be disclosed. The decision of the Arbitrator shall be final, binding and conclusive upon the parties and their respective administrators, personal representatives, legal representatives, heirs, successors and permitted assigns. ARTICLE S. COORDINATION WITH CITY: APPROVAL PROCEDURES. 8.1. Coordination with City. 8.1.1. Ombudsman. City shall appoint an internal representative who is experienced and qualified to (i) report directly to the Chief Executive Officer, (ii) have authority to coordinate, expedite and respond for the City on behalf of the Chief Executive Officer with respect to construction and development issues through the final permitting process; and (iii) have authority to coordinate on behalf of the City tenant -related issues among the various tenants of Watson Island (the "Ombudsman"). • Among other things, the Ombudsman shall (i) lead and set schedules for the internal City review process 25 02-1304 GYBS/208223.16 Submitted Into the public record in connection ith itemAi-4-on i� oa Priscilla A. Thompson City Clerk with respect to Construction Plans and Specifications, (ii) after the Lease Delivery Date. expedite and help deliver construction inspection approvals (including building and fire department approvals), (iii) after the Lease Delivery Date, monitor and inspect the development and construction process on City's behalf and (iv) otherwise represent and assist the City in coordinating the City's roles and responses and approvals. 8.1.2. City Consultant. In addition to the Ombudsman, City, at the request of Flagstone, shall retain on its behalf but at the sole cost and expense of Flagstone (which costs shall be mutually acceptable to the parties), an outside, qualified construction, development and fire and building consultant(s) who shall be mutually agreeable to City and Flagstone (individually or collectively, the "Consultant") to coordinate and assist in the development process and advise Ombudsman and Chief Executive Officer. Responsibilities of the Consultant shall include the review of plans and development issues, assistance with permitting and inspection issues during the construction and development process and recommendations directly -to Chief Executive Officer and Ombudsman. Flagstone shall provide on- site desk, telephone and storage space to the Consultant. 8.1.3. Cooperation. Flagstone shall cooperate fully with the Ombudsman and Consultant, and shall promptly forward to same complete copies of plans and specifications and other reports and information customarily provided to an institutional mortgage lender, and such other information and materials as may be reasonably requested by the Ombudsman, Consultant or City. No inspection performed by the Ombudsman and Consultant with respect to the Pre -Development Work shall impose upon City any responsibility or liability for any failure by Flagstone to observe any requirements or safety practices in connection with such construction work, or constitute an acceptance of any work which does not comply with the provisions of this Agreement. Ombudsman and Consultant shall provide copies to Flagstone of all reports and records concerning construction inspections. 8.2. Chief Executive Officer Approval Procedures. Any matter requiring Chief Executive Officer approval under this Agreement or in connection with the Project (any such matter, an "Approval - Requiring Matter") shall be subject to the procedures set forth in this 7_5. The following shall apply with respect to all approvals requested by Flagstone from the Chief Executive Officer: 8.2.1. Except for those instances in Section 3.3 where approval may be withheld by the Chief Executive Officer his or her "sole discretion" or "sole and absolute discretion", any other approvals to be given by the Chief Executive Officer hereunder shall not be unreasonably withheld; 02- 04 26 GYBS/208223.16 Submitted Into the public ® recordin connection with item �%3�- on �y ,p oy Priscilla A. Tho pson 8.2.2. Approval or denial responses shall be given within fourteen (14) days (p9AdJerlC that for submissions which require the review of Construction Plans -and Specifications or new modifications thereof which are not merely items that follow from or are consistent with prior approvals already given, thirty (30) days shall be given) of submission to Chief Executive Officer of the last piece of materially necessary written information; provided, however, that (i) submission of any Approval - Requiring Matter shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the request for approval indicating that City is to provide approval or denial with comments within fourteen (14) days (or thirty (30) days, as applicable) pursuant to this Section 8.2.2, (ii) Flagstone shall promptly submit to City any additional information or materials requested by City (provided that such request: (a) shall be made by City no later than seven (7) calendar days of receipt by City of Flagstone's initial submission; (b) shall be for information which is materially necessary for the purpose of aiding the City's review of the original submission; and (c) shall be limited to no more than two (2) times for any such request for additional submission), and (iii) the fourteen (14) day approval period (or thirty (30) day, as applicable) shall not commence until such additional information and materials are received by City; 8.2.3. Notice of denial shall be accompanied by reasonably specific written comments as to the reasons for such denial and what alternatives might be acceptable to City. Denial of approval of any Approval -Requiring Matter may be based on any reasonable grounds; however, denial may not be given with respect to, or materially inconsistent with, any approval previously given to Flagstone; 8.2.4. Approval or denial with comments of any resubmission of an Approval - Requiring Matter shall be given within seven (7) business days provided that such resubmission of any Approval -Requiring ,Matter shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a type face larger than that used elsewhere in the request for approval indicating that City is to provide approval or denial with comments within seven (7) business days pursuant to this Section 8.2.4; 8.2.5. In the event that the City has not provided its approval or denial with comments to Flagstone in accordance with the time -frames set forth above, then Flagstone shall provide a written reminder notice to City which specifies that City has five (5) days to so respond to such submission, which reminder notice shall include a legend at the top of the first page in a type face larger than that used - elsewhere in the reminder notice indicating that City is to provide approval or denial with comments within five (5) days pursuant to this Section 8.2.5. In the event that City does not then respond within such five (5) day period, such matter shall be deemed approved by City; and 27 02x-1304 GYBS/208223.16 C • • Submitted Into the public ®record in connection with item oy Priscilla A. Thompson City Clerk 8.2.6. If materials resubmitted by Flagstone in connection with any construction related issue, which conform to all written comments, are not subsequently approved, disagreements may be submitted to binding, expedited arbitration. 8.3. Chief Executive Officer Approvals; Disclaimer. Notwithstanding anything to the contrary contained in this Agreement, Flagstone acknowledges that any approvals by the Chief Executive Officer of any Approval -Requiring Matter shall in no event be .deemed to be a guarantee of the City Commission's or any other governmental or quasi -governmental agencies' approval of such Approval - Requiring Matter. Any approval by the Chief Executive Officer of an Approval -Requiring Matter shall be made solely in City's capacity as the owner of the Property and not in any governmental capacity and Flagstone shall remain responsible for obtaining whatever permits, licenses and approvals may be necessary to improve the Property in accordance with any such Approval -Requiring Matter, as well as all Applicable Laws. In addition, approval by the Chief Executive Officer of any Approval -Requiring Matter shall not constitute a warranty or representation by City that the Project Components meet all government requirements or building codes nor that such plans will, if followed, result in properly designed or constructed Project Components or that'any Project Component built in accordance therewith will be built in a good or workmanlike manner. Notwithstanding anything contained to the contrary in this Agreement, the parties recognize and agree that certain provisions of this Agreement may require the City and/or its boards, departments or agencies, acting in their governmental capacity, to consider certain changes in applicable City codes, ordinances, plans or regulations, as well as to consider other governmental actions. All such considerations and actions shall be undertaken in accordance with established requirements of state statute and City ordinances, in the exercise of the City's jurisdiction under the police power. Nothing in this Agreement is intended to limit or restrict the powers and responsibilities of the City in acting on applications for Project Approvals and/or other permits and approvals which may be required in connection with the Project by virtue of the fact that the City may have consented to such applications as a property owner hereunder. The parties further recognize and agree that these proceedings shall be conducted openly, fully, freely and fairly in full accordance with law and with both procedural and substantive due process to be accorded the applicant and any member of the public. Nothing contained in this Agreement shall entitle Flagstone to compel the City to take any such actions, save and except the consents to the filing of such applications for MUSP Approvals, land use approvals or other required approvals, as more fully set forth herein, and to timely process such applications. 28 n2-1304 GYBS/208223.16 • • • ARTICLE 9. DISCHARGE OF LIENS. Submitted Into the public record in connection wiTn - item 3A_ on - P A. Thompson City Clerk 9.1. No Liens. Flagstone shall use reasonable efforts to not create or permit to be created any Liens upon the Property or any part thereof. r� 9.2. Discharging Liens. If any Lien shall at any time be filed against the Property, or any part thereof, within forty-five (45) days after notice of the filing thereof, Flagstone shall cause the same to be discharged or transferred to bond in accordance with the requirements of law. If Flagstone fails to cause such Lien to be discharged or transferred to bond within such forty-five (45) day period, then City may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such Lien by deposit or by bonding proceedings, or by any other manner permitted by law (provided, however, that before City pays any amounts on behalf of Flagstone in connection herewith, City shall provide Flagstone five (5) days prior written notice of its intent to so do so hereunder). Any amount so paid by City and all costs and expenses incurred by City in connection with the discharge of such Lien shall be reimbursed to City by Flagstone, together with interest thereon at the highest lawful rate permitted by law from the date of City's making of any such payment or incurring of any such costs and expenses until paid. City shall notify Flagstone in writing of the dates and amounts of any such payments, and Flagstone shall reimburse City within seven (7) calendar days following receipt of such notification. ARTICLE 10. CONDEMNATION. 10.1. Material Taking. If at any time prior to the Lease Delivery Date the whole or any portion of the Property which would have a material impact on the Project (as reasonably determined by Flagstone and City) shall be taken by the exercise of the right of condemnation or by agreement between City, Flagstone and those authorized to exercise such right, this Agreement shall, upon the written election of either party, terminate and expire as of the date of such election. 10.2. Less than a Material Taking. If at any time prior,to the Lease Delivery Deadline, a portion of the Property which does not have a material impact on the Project (as reasonably determined by Flagstone and City) shall be taken by any lawful power or authority by the exercise of the right of condemnation or by agreement between City, Flagstone and those authorized to exercise such right, this Agreement shall not terminate in connection with the exercise of such right and shall continue in full force and effect. 0 0 2 -130' 4 29 GY&S/208223.16 • Subrin .:..�.,o Into the public • . record in x connectio wl h item �y on J> Priscilla A. Thompson ON Clerk 10.3. Award. The award or awards received in consideration of any taking (materia or -non- material) shall be allocated between the parties based upon the parties' respective interests under this Agreement and the Ground Lease. Each party shall bear its own expenses of negotiation and litigation with respect to the award or awards unless the parties agree to share certain expenses, in which event the shared expenses shall be allocated between (and paid from) the proceeds thereof, in the ratio in which the amount of the gross award payable to each party bears to the total thereof. ARTICLE 11. DEFAULT AND REMEDIES. 11.1. Events of Flagstone's Default. Each of the following events shall be an "Event of Flagstone's Default" hereunder: 11.1.1. The failure of Flagstone to perform or observe any of the covenants, conditions and agreements on the part of Flagstone to be performed hereunder within thirty (30) days after written notice of such failure; 11.1.2. If Flagstone (a) shall suffer or permit to be entered a decree or order of a court or agency or supervisory authority having jurisdiction determining it to be insolvent or providing for the appointment of a conservator, receiver, liquidator, trustee or any similar Person or entity appointed in connection with any insolvency, readjustment of debt, marshaling of assets and liabilities, bankruptcy, reorganization or similar proceedings of or relating to it or of or relating to all, or substantially all, of its property, or for the winding -up or liquidation of its affairs and such proceedings remain undismissed or pending and unstayed for a period of ninety (90) days or (b) shall suffer or permit to be instituted proceedings under any law relating to bankruptcy, insolvency or the reorganization or relief of debtors to be instituted against it and such proceedings remain undismissed or pending and unstayed for a period of ninety (90) days; 11.1.3. If Flagstone shall (a) consent to the appointment of a conservator, receiver, trustee, liquidator or custodian in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to it or of or relating to all, or substantially all, of its property or for the winding -up or liquidation of its affairs, (b) admit in writing its inability to pay its debts generally as they become due, (c) file a petition, or otherwise institute, or consent to the institution against it of, proceedings to take advantage of any law relating to bankruptcy, insolvency or reorganization or the relief of debtors, or (d) make an assignment for the benefit of its creditors; 30 GY&S/208223.16 Submitted Into the public ® record in connection with ® item 5a- on y > o:x- Priscilla A. Thompson City Clerk 11.1.4. If Flagstone shall be dissolved without City having permitted a successor to the rights of Flagstone under this Agreement; or 11.1.5. Any express, material representation made hereunder shall prove to have been incorrect in any material respect when made. 11.2. Remedies for Flagstone's Default. If an Event of Flagstone's Default shall occur, City shall have the right to terminate this Agreement and require full distribution of the Agreement Security to City as liquidated damages as and for its sole remedy hereunder, it being agreed that the Agreement Security represents a reasonable endeavor by the parties to ascertain that said sums would be the minimal damages suffered by City upon the occurrence of an Event of Flagstone's Default hereunder. 11.3. City's Default. If City fails to perform or observe any of the covenants, conditions and agreements on the part of City to be performed hereunder within thirty (30) days after written notice of such failure, then Flagstone may, provided that an Event of Flagstone's Default has not occurred, at its option: (i) terminate this Agreement and require full distribution of the Agreement Security to Flagstone; or (ii) pursue the remedy of specific performance. Flagstone waives all other remedies it may have 0 against City at law or in equity. ARTICLE 12. REPRESENTATIONS BY FLAGSTONE AND CITY; DEFENSE AND RELEASE. 12.1. Flagstone's Representations. Flagstone hereby represents and warrants to City that: 12.1.1. Existence and Capacity. Flagstone is a duly organized and validly existing limited liability company in good standing under the laws of State of Florida. Flagstone has full power and capacity to carry on its business as presently conducted by Flagstone, and to enter into this Agreement and the transactions contemplated by this Agreement. 12.1.2. Financial Resources and Evaluation of Proiect. To the best of Flagstone's knowledge: (i) Flagstone has access to sufficient funds to satisfy the Initial Equity Requirement; (ii) as of the Lease Delivery Date, Flagstone will have closed upon an Initial Construction Loan; and (iii) the total of such sums will be sufficient to carry out the development and construction of the Project and to operate the Project Components and comply with the terms and conditions of this Agreement and the Ground Lease. Flagstone has done such studies and has made such evaluations as it deems appropriate regarding the tourism and local markets in the area surrounding Watson Island and has deemed it desirable to invest in the Project, recognizing the risks inherent therein. Flagstone acknowledges that the City shall not be 31 GY&S/208223.16 02-x.304 Sub;{ ,_ ntc the public ®recoral w, c-,cnnecti®n Ith item _1130- on I. -As /> o Prisciil A. t'h6rnpson- City Clerk liable under this Agreement for any actions taken by the City, acting in its municipal capacity, including. without limitation, any actions which may adversely impact tourism, crime, the local economy, the success of this Project, etc., and that in no event shall any actions taken by the City in its municipal capacity be the basis for any cause of action or defense of any obligation by Flagstone hereunder. This section shall survive any termination of this Agreement. 12.1.3. Binding Obligations. This Agreement constitutes the valid and binding obligations of Flagstone, enforceable against Flagstone in accordance with its terms. 12.2. City's Representations. City hereby represents and warrants to Flagstone that the Property is free of any encumbrance or restriction other than those disclosed in Exhibit 12.2 attached hereto (the "Permitted Title Exceptions'). City shall maintain the Property in its present condition, ordinary wear and tear excepted, and except for the matters set forth in Section 7.3 and the Permitted Title Exceptions, City shall not permit any liens or other encumbrances to be filed against the Property. 12.3. Disclaimer of Representations by Flagstone. Flagstone hereby expressly acknowledges and agrees that, in connection with the Watson Island RFP or otherwise: 12.3.1. City makes and has made no warranty or representation whatsoever as to the condition or suitability of any portion of the Property for Flagstone's purposes; 12.3.2. City makes and has made no warranty, express or implied, with regard to the accuracy of any information furnished to Flagstone, and City shall not be bound by any statement of any broker, employee, agent or other representative of City; 12.3.3. City has made no representations, warranties or promises to Flagstone not explicitly set forth herein. 12.3.4. City makes and has made no representation or warranty, express or implied, with regard to the likelihood that the remainder of Watson Island will be developed or as to the precise type, or quality of improvements that will be constructed thereon or the timing of the same; and 12.3.5. City makes and has made no representation or warranty, express or implied, concerning any portion of the Property, their condition or any other thing or matter directly or indirectly related thereto or hereto including, without limitation, no warranty, merchantability, or fitness for any particular purpose or relating to the absence of latent or other defects. 32 02-1304 GY&S/208223.16 Submitted Into the public • record in connection wi h item _V / /3 o y Priscilla A. Thompson City Clerk 12.3.6. Defense and Release. The parties believe that this Agreement and the form of Ground Lease attached hereto are consistent in all material respects with the Watson Island RFP and Island Gardens Proposal. Nevertheless, Flagstone acknowledges and agrees that the Watson Island RFP, the Island Gardens Proposal, this Agreement and/or the Ground Lease may be challenged by private third parties for various reasons. Flagstone agrees to defend City, its officials, employees, agents and representatives against any and all claims arising from, out of or in connection with or otherwise relating to any such challenge. Furthermore, Flagstone acknowledges and agrees that City shall have no liability whatsoever to Flagstone or any Investors in Flagstone and/or the Project in connection with any such challenge or otherwise and notwithstanding that the foregoing acknowledgement that City shall have no such liability, Flagstone hereby forever waives and releases City from any such liability, now or hereafter arising. The foregoing defense obligations of Flagstone and release shall survive any expiration or termination of this Agreement. ARTICLE 13. MISCELLANEOUS. 13.1. Assignment. 13.1.1. By Flagstone. In no event shall Flagstone be permitted to assign its rights and/or obligations under this Agreement (it being understood that in no event shall the foregoing be deemed to prohibit Flagstone from obtaining equity investments therein, subject to the provisions of Section 6.13). 13.1.2. By City. In no event shall City be permitted to assign its rights and/or obligations under this Agreement. 13.2. Notices. Any notices or communications under this Agreement between the parties shall be in writing and delivered to the persons at the addresses specified for notices to such parties in the Ground Lease. All notices shall be deemed received when actually delivered, if delivered by hand, facsimile transmittal or by a nationally recognized overnight delivery service. Each party may substitute one or more times the persons and the addresses to whom notices and communications shall. be sent to, but such change shall not be effective until the other party receives such communication in accordance with this Section 13.2. 13.3. Applicable Law. This Agreement shall be governed by the laws of the State of Florida. 13.4. Severability. If any term, covenant or condition of this Agreement or the application thereof to any Person or circumstances shall, to any extent, be determined by the appropriate judicial authority to be illegal, invalid, or unenforceable, the remaining terms, covenants and conditions of this 33 GYBS/208223.16 02-1304 5uk,: ....d Into the public ® recon in connectiowith item 113x- on Priscilla A. I hompson City Clerk Agreement, or application of such terms, covenants or conditions to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term, covenant, or condition of this Agreement shall be bound and enforced to the fullest extent possible by law. 13.5. Waiver. No waiver of any term, provision, condition or covenant of this Agreement by any party shall be deemed to imply or constitute a further waiver by such party of any other term, provision, condition or covenant of this Agreement. 13.6. Third -Party Beneficiary. Nothing contained in this Agreement shall be construed so as to confer upon any other party the rights of a third party beneficiary. 13.7. Enforcement Costs. If any civil action, arbitration or other legal proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees, court costs and all expenses (including, without limitation, all such fees, costs and expenses incident to arbitration, appellate, bankruptcy and post judgment proceedings), incurred in that civil action, arbitration or legal proceeding, in addition to any other relief to which such party or parties may be entitled. Attorneys' fees shall include, without limitation, paralegal fees, investigative fees, administrative costs and all other charges billed by the attorney to the prevailing party. 13.8. Entire Agreement. This Agreement represents the entire agreement between the parties hereto. It supersedes any and all previous agreements and understandings, whether written or oral, between the parties. No representations, inducements, promises or agreements; oral or otherwise, between the parties not embodied or described in this Agreement shall be of any force or effect. No modification or amendment of this Agreement shall be binding upon the parties unless such modification or amendment is in writing and is signed by the party to be bound thereby. 13.9. Headings. The titles of the several clauses and parts of this Agreement are inserted for convenience of reference only and shall be disregarded when construing or interpreting any of its provisions. 13.10. References. Except as otherwise specifically indicated, all references to Article, Section and Subsection numbers refer to Articles, Sections and Subsections of this Agreement and all references to Exhibits refer to the Exhibits attached hereto, which exhibits are incorporated herein by this reference. The words "herein", "hereof', "hereunder", "hereinafter" and words of similar import refer to this 34 GYBS/208223.16 tie -1304 Submitted Into the public record in connectio 'th item on /y /j a Y Priscilla A. Thompson City Clerk . Agreement as a whole and not to any particular Article, Section or Subsection of this Agreement. nless expressly stated to the contrary, reference to any Article includes all of the Sections contained therein, and reference to any Section includes the Subsections contained therein. The terms "include" and "including" shall be construed as if followed by the phrase "without being limited to." 13.11. Brokers. Each of the parties represents and warrants that such party has dealt with no broker or finder in connection with any of the transactions contemplated by this Agreement, and, insofar as such party knows, no broker or other Person is entitled to any commission or finder's fee in connection with any of these transactions. The parties each agree to indemnify, defend and hold harmless one another against any loss, liability, damage, cost, claim or expense incurred by reason of any brokerage commission or finder's fee alleged to be payable because of any act, omission or statement of the indemnifying party, which indemnification shall survive any termination of this Agreement. 13.12. No Partnership or Joint Venture. Nothing contained in this Agreement is intended or shall be construed in any manner or under any circumstances whatsoever as creating or establishing a partnership or a joint venture between City and Flagstone, or as constituting Flagstone as the agent or representative of City or City as the agent or representative of Flagstone for any purpose or in any manner 0 whatsoever. 13.13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Confirmation of execution by electronic transmission of a facsimile signature page shall be binding upon any party so confirming. • [SIGNATURES FOLLOW] 35 02-13®4 GY&S/208223.16 • U, 1 ] Submitted Into the public record in connection with item _cO3 on iY /y o.) - Priscilla A. Thompson City Clerk IN WITNESS WHEREOF, City and Flagstone have caused this Agreement to be executed as required by law as of the date set forth beside the parties signatures below. THE CITY OF MIAMI, a municipal corporation of the., State of Florida Attest: By: Name: Name: Title: Title: Date: APPROVED AS TO FORM: By:_ Name: Title: Attest: Name: Title: U 36 FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company By:_ Name: Title: Date: 02-1304 GYBS/208223.16 • • Subr i -d ed onto the public record in cdnnec/on item !/3on i.S Priscilla A. Thompson Exhibit A City Clerk Leal Description of the Propertv 02-1304 GYBS/208223.16 • • C7 Submitted Into the public record in connection with item moo— on s N oy Priscilla A. Tho pson City Clerk LEGAL DESCRIPTION OF UPLAND PARCEL Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the oiiginal center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62' 00'00 seconds" ; thence South 59 ' 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17 ' 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North 17' 12' 21" West continuing along said bulkhead line a distance of 924.70 feet to the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 89' 10'55" East, a distance of 73.08 feet; thence North 86 ' 44' 00" East, a distance of 67.09 feet to non - tangent curve concave to the Northeast whose radial line bears North 39' 29' 18" East having a radius of 160.00 feet and central angle of 22 ' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72 ' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46 ' 17' 39" thence along said curveAn arc length of 484.79 feet to a point of tangency; thence South 26 122' 36" East continuing along the southwesterly right of way line of State Road A 1-A, a distance of 196.59 feet; thence South 54 ' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54' 03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. 0 Submitted Into the public record in connectio ith iteral f, IC,_,on 1.11 oY Priscilla A. Thompson City Clerk LEGAL DESCRIPTION OF SUBMERGED PARCEL Commence at a point marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway mining Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706- 112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432:69 feet and a central angle of 62 3 00' 00"; thence South 59 3 51' 26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17 3 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 493 32'57" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and position by coordinates North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 3 03'50" West, along the limits of said turning basin a distance of 428.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03 3 27' 54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10,716.59 feet, a radial line to said point bears South 01 3 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02 3 04' 17" to a point of tangency; thence South 89 3 10' 55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point of intersection with an existing bulkhead line; thence South 17 3 12' 21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. Subrnila:�d Into the public record i5 € connection w'th items _�- on o� Priscilla A. Thompson Exhibit B City Clerk Definitions Any capitalized term used but not defined in this Agreement, including, without limitation, this Exhibit B, shall have the meanings assigned to the same in the Ground Lease. 1.1 "AAA" shall have the meaning ascribed to such term in Section 6.1.10 of this Agreement. 1.2 "Additional Deposit" shall have the meaning ascribed to such term in Section 5.2 of the Agreement. 1.3 "Additional LOC" shall have the meaning ascribed to such term in Section 5.2 of the Agreement. 1.4 "Additional Security" shall mean and refer to either the Additional Deposit or the Additional LOC as elected by Flagstone pursuant to Section 5.2. 1.5 "Agreement" shall mean and refer to this "Agreement to Enter into Ground Lease" by and 02-1304 GYBS/208223.16 between City and Flagstone. 1.6 "Agreement Security" shall mean and refer to the Initial Security and the Additional Security collectively. 1.7 "AARnroval-Requiring Matter" shall have the meaning ascribed to such term in 7_5 of this Agreement. 1.8 "Board of Trustees" shall have the meaning ascribed to such term in Section 4.2.5 of this Agreement. 1.9 "Chief Executive Officer" means the administrative head of the City's government who is authorized to execute this Agreement and other documents, including notices required hereunder. 1.10 "Chief Executive Officer Approval Procedures" shall mean and refer to the procedures for submittal by Flagstone and review and approval by the Chief Executive Officer of any Approval - Requiring Matter as described in Section 8.2 hereof. 1.11 "C&" shall have the meaning ascribed to such term in the first paragraph of this Agreement. 1.12 "Construction Plans and Specifications" shall have the meaning ascribed to such term in Section 6.1.1 of this Agreement. 1.13 "DCA" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.14 "Development Plans" shall have the meaning ascribed to such term in Section 7.1 of this Agreement. 1.15 "Development Team" shall have the meaning ascribed to such term in Section 6.1.4 of this _ Agreement. 1.16 "Disclosed Investors" means all Investors other than Non -Disclosed Investors. 02-1304 GYBS/208223.16 Submitted Into the public in connection with •record item Oet, onj 1s oa- Priscilla A. Thompson City Clerk 1.17 "Disqualified Person" means any Person who: (i) shall have committed a material breach under any lease or other written agreement with City; (ii) has had any criminal felony convictions within the immediately preceding ten (10) years; (iii) has a widespread reputation (as evidenced by newspaper articles or other media reports of the mainstream press which are not subsequently retracted) for corrupt or unlawful business dealings; or (iv) is named on any list issued by a Governmental Authority of individuals and/or entities engaged in terrorist activities, including, but not limited to, the following: (a) list of Specially Designated Terrorists (SDTs) issued by the Office of Foreign Assets Control ("OFAC") pursuant to Executive Order 12947; (b) list of Specially Designated Global Terrorist (SDGTs) issued by OFAC pursuant to Executive Order 13224; and (c) list of Foreign Terrorist Organizations (FTOs) issued by the Secretary of State. 1.18 "Downtown DRI" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.19 "Effective Date" shall have the meaning ascribed to such term in ARTICLE 1 of this Agreement. 1.20 "Escrow Agent" shall mean and refer to Shutts & Bowen LLP, whose address is 1500 Miami Center, 201 South Biscayne Boulevard, Miami, Florida 33131. 1.21 "Escrow Agreement" shall have the meaning ascribed to such term in Section 5.3 of this Agreement. 1.22 "Event of Closure" shall mean and refer to any time periods that the City of Miami, Miami-Dade County or the State of Florida (or any of its applicable departments or agencies) are closed due to a significant event (such as Acts of God or terrorism, etc.) and such closure has a reasonably demonstrable effect on Flagstone's ability to obtain its Project Approvals hereunder or the City's ability to satisfy its conditions precedent in Section 4.2.5 and/or Section 4.2.6 hereof; provided, however that in no event shall the term "Event of Closure" as used in this Agreement be deemed to: (i) allow any extensions for more than six (6) months in the aggregate; and/or (ii) include, without limitation, normal and customary closures of such governmental offices for weekends and holidays. 1.23 "Event of Flagstone's Default" shall mean and refer to those events which shall constitute a default by Flagstone under this Agreement and which are set forth in Section 11.1 hereof. 1.24 "Flagstone" tone" shall have the meaning ascribed to such term in the first paragraph of this Agreement. 1.25 "Ground Lease" shall mean and refer to the ground lease for the Property to be executed by the parties as provided herein, a form of which shall be attached hereto as Exhibit C. 1.26 "Initial Deposit" shall have the meaning ascribed to such term in Section 5.1 of the Agreement. 1.27 "Initial LOC" shall have the meaning ascribed to such term in Section 5.1 of the Agreement. n04 GY&S/208223.16 sul_ nto the public recon: �'i i;onnectio w th ® item _1&,on !� oa Priscilla A. Tho pson City Clerk 1.28 "Initial Securitv" shall mean and refer to either the Initial Deposit or the Initial LOC as elected by Flagstone pursuant to Section 5.1. 1.29 "Investor(s)" means: (i) all Persons now, or hereafter having an equity interest in the Project; (ii) any direct or indirect legal or beneficial owners of interests in all of the equity investors in the Project; and (iii) holders of any note,�debenture, mortgage or other security instrument in any Project Component(s) and/or Flagstone, other than an Approved Lender (as defined in the Ground Lease). 1.30 "Investor List" shall have the meaning ascribed to such term in Section 4.13 of this Agreement 1.31 "Investor Ouestionnaire" means a gyestionnaire prepared by the Financial Advisor as part of the initial screening process for Disclosed Investors, the form of which shall have been mutually agreed upon by the Financial Advisor, the Chief Executive Officer and Flagstone. 1.32 "Island Gardens Proposal" shall mean and refer to Flagstone's proposal to the City in response to the Watson Island RFP, entitled "Island Gardens at Watson Island RFP" dated July 13, 2001. 1.33 "Lease Delivery" shall have the meaning ascribed to such term in the first paragraph of ARTICLE 6 of this Agreement. 1.34 "Lease Delivery Date" shall have the meaning ascribed to such term in the first paragraph of ARTICLE 6 of this Agreement 1.35 Lien shall mean and refer to any and all liens, encumbrances, mortgages, pledges, security interests, collateral assignments or charges of any kind, which might be or become a lien upon the Property or any part thereof. 1.36 "Magor Use Special Permit" has the meaning ascribed to it in Article 17 of Ordinance 11000, as GYBS/208223.16 amended, the Zoning Ordinance of the City of Miami, Florida. 1.37 "MUSP Application" means any and all of the information required or otherwise necessary in n connection with the obtaining of the Major Use Special Permit. 1.38 "MUSP Approval" shall have the 'meaning ascribed to such term in Section 4.2.1 of this Agreement. 1.39 "NOPC" shall have the, meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.40 "NOPC Application" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.41 "NOPC Approval" shall have the meaning ascribed to such term in Section 4.2.2 of this Agreement. 1.42 "Operating Team" shall have the meaning ascribed to such term in Section 6.1.5 of this Agreement 021304 GYBS/208223.16 11 Security collectively. 1.54 "Watson Island RFP" shall mean and refer to that certain Mega Yacht Marina and Mixed Use Waterfront Development Opportunity - Watson Island Miami, Florida Request for Proposals dated February, 2001, as amended. 02-004 GY&S/208223.16 Submitted Into the public ® • record in connection with item al.3r, on /, Priscilla A. Thompson Clerk R 1.43 t� t "Organizational Documents" shall have the meaning ascribed to such term in Section 4.1.4 o i Agreement. 1.44 "Partial Modification of Restrictions" shall have the meaning ascribed to such term in Section 4.2.5 of this Agreement. 1.45 "Payment and Performance Bond" shall mean and refer to such payment and performance bonds which are required to be obtained, or caused to be obtained, by Flagstone pursuant to Section 6.1.9 hereof prior to issuance of the 'master building permit for the Property, which payment and performance bonds shall be in favor of City, in amounts acceptable to City with respect to the work to be performed by the general contractor(s) for the Project and such of the subcontractors as shall be required by City, shall be issued by a company approved by City and shall otherwise be in form and substance acceptable to City. 1.46 "Person" means any natural person, trust, firm, partnership, corporation, joint venture, association, company, or any other legal or business entity investment enterprise. 1.47 "Project„ shall mean and refer to the development of the Property and the construction of the Project Components therein. 1.48 "Project Approvals" shall have the, meaning ascribed to such term in Section 6.1.13 of this Agreement. 1.49 "Project Components" means those certain components and amenities of the Project more particularly set forth on Exhibit E of the Ground Lease. 1.50 "Property" shall have the meaning ascribed to such term in the first recital of this Agreement. 1.51 "Relocated Occupants" shall have the meaning ascribed to such term in Section 4.2.6 of this Agreement. 1.52 "Security Deposit" shall mean and refer to any of the Initial Deposit, the Additional Deposit or the Final Deposit, if elected by Flagstone. 1.53 "Total Security" shall mean and refer to the Initial Security, the Additional Security and the Final 11 Security collectively. 1.54 "Watson Island RFP" shall mean and refer to that certain Mega Yacht Marina and Mixed Use Waterfront Development Opportunity - Watson Island Miami, Florida Request for Proposals dated February, 2001, as amended. 02-004 GY&S/208223.16 • • • Submitted Into the public record in connection with item —qja- on /p - A or Priscilla A. Thompson Exhibit C City Clerk Form Ground Lease 0.2-1304 GYBS/208223.16 • ® Submitted Into the public record in connectis h iters mon I' 1? 10 Priscilla Aa Thompson City Clerk GROUND LEASE BETWEEN THE CITY OF MIAMI, FLORIDA FLAGSTONE ISLAND GARDENS LLC DATED AS OF #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1.3U4 Submitted Into the public record in connection v.'th item _V_44- on li aY TABLE OF CONTENTS Priscilla A. Thompson City Clerk ARTICLE I INCORPORATION, EXHIBITS AND DEFINITIONS..........................................................2 Section 1.1 Incorporation by Reference....................................................................................2 Section1.2 Exhibits..................................................................................................................3 Section 1.3 Singular, Plural And Gender..................................................................................4 Section 1.4 Section References.................................................................................................4 Section1.5 Defined Terms.......................................................................................................4 ARTICLEII DEMISE ................................................................................................................................14 Section2.1 Demise.................................................................................................................14 Section 2.2 Leasehold Improvements.....................................................................................14 Section 2.3 Delivery of Title to Lessor...................................................................................15 ARTICLEIII TERM........................................................................................................................:..........15 Section3.1 Initial Term..........................................................................................................15 Section3.2 Extension Terms..................................................................................................16 ARTICLE IV DELIVERY OF POSSESSION AND DEVELOPMENT AND OPERATION OF THEPROJECT..............................................................................................................................17 Section 4.1 Delivery of Possession of Property ......................................................................17 Section4.2 Memorandum.......................................................................................................17 Section 4.3 Development of the Project..................................................................................17 Section4.4 Operating Team...................................................................................................18 ARTICLE V RENT AND SECURITY DEPOSIT.....................................................................................19 Section 5.1 Construction Rent................................................................................................19 • Section 5.2 Section 5.3 Base Rent...............:.............................................................................................19 Percentage Rent...................................................................................................21 Section 5.4 Security Deposit...................................................................................................22 Section5.5 Place Of Payment...............................................................................................:.24 Section 5.6 Default Interest.....................................................................................................25 Section5.7 Late Charge..........................................................................................................25 Section 5.8 Rent To Be Without Deduction...........................................................................25 ARTICLE VI LEASEHOLD AND SUBLEASEHOLD MORTGAGES..................................................26 Section 6.1 Definition of Terms..............................................................................................26 Section 6.2 Prohibited Mortgages...........................................................................................33 Section 6.3 Permitted Mortgages............................................................................................34 Section 6.4 Notification of Lessor..........................................................................................34 Section6.5 Foreclosure...........................................................................................................35 Section6.6 New Lease............................................................................................................36 Section 6.7 Major Subleasehold Estates.................................................................................38 Section 6.8 Liability of Approved Mortgagee....................................................:...................39 Section 6.9 Assignment of Development Plans and Project Approvals.................................40 Section6.10 Survival................................................................................................................41 Section 6.11 Mezzanine Financing...........................................................................................41 Section 6.12 Purchase Money Financing..................................................................................43 ARTICLE VII USE OF SUBJECT PROPERTY.......................................................................................43 Section 7.1 Certain Conditions Of Leasing............................................................................43 Section 7.2 Major Subleases and Space Leases......................................................................43 Section 7.3 Permitted Uses; Long -Term Changes..................................................................44 Section 7.4 Section 7.5 No Discrimination...;'...........................................................................................46 Use of the Property... .46 Section 7.6 Leasehold Improvements to be Open to Public...................................................46 i #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Son tted Into the public • reccr�.l �� connectionXpi;h item i13a►� __on J WY Prisciiia A. Thoi'1"ll: sari City Clerk Section7.7 Section 7.8 Safety...................:...............................................................................................47 Continuous Operation..........................................................................................47 Section 7.9 Compliance with Laws..........................................................................................47 Section 7.10 Compliance with Insurance Requirements...........................................................48 . Section7.11 Prohibited Uses....................................................................................................48 Section7.12 Casino Gambling.................................................................................................48 Section7.13 Signage.................................................................................................................51 Section 7.14 Cure of Defaults Under Approved Leasehold Mortgages and Approved Major Subleasehold Mortgages...........................................................................51 Section 7.15 Enforceability....................................................................................................... 52 ARTICLE VIII RESTRICTIONS ON TRANSFERS AND APPROVAL OF INVESTORS....................52 Section 8.1 Defmition of Terms.............................................................................................. 52 Section 8.2 Bayraktar Interests...............................................................................................56 Section 8.3 Leasehold and Major Subleasehold Estates.........................................................57 Section 8.4 Chief Executive Officer Review and Approval Procedures ................................. 59 Section 8.5 Release from Liability ..........................................................................................61 Section 8.6 No Consent Required for Affiliate or Related Party Transfer .............................61 Section 8.7 Mortgages, Leases and Subleases........................................................................62 Section8.8 Going Public........................................................................................................63 Section 8.9 Other Transactions for Which No Consent Is Required......................................63 Section8.10 Violation..............................................................................................................63 Section 8.11 Acceptance of Rent from Transferee...................................................................63 Section 8.12 Lessor's Participation In Proceeds.......................................................................64 Section 8.13 Organizational Documents of Lessee..................................................................65 Section8.14 Section 8.15 Investors............................................................................................................65 Chief Executive Officer's Right to Object...........................................................66 Section 8.16 Transfers of the City's Interest.............................................................................66 ARTICLE IX EASEMENTS AND LICENSES.........................................................................................67 Section 9.1 Utility Easements.................................................................................................67 Section 9.2 Easements in Favor of Lessee..............................................................................68 Section 9.3 Access Easement in favor of the Public...............................................................69 Section 9.4 Duration of Easements.........................................................................................69 Section 9.5 Dredging to Facilitate Safe Passage of Vessels...................................................69 Section 9.6 Confirmatory Instruments....................................................................................69 ARTICLE X PAYMENT OF IMPOSITIONS...........................................................................................70 Section 10.1 Payment of Impositions.......................................................................................70 Section 10.2 Taxes on Lessor...................................................................................................70 Section 10.3 Lessee's Right to Contest Impositions................................................................. 71 Section 10.4 Proof of Payment................................................................................................. 71 ARTICLE XI INSURANCE.......................................................................................................................71 Section 11.1 Insurance on the Leasehold Improvements.......................................................... 71 Section 11.2 Other Insurance To Be Carried............................................................................73 Section 11.3 Policies Obtained by Independent Contractors....................................................76 Section 11.4 Policies Obtained by Major Subtenants. 77 Section 11.5 Delivery of Insurance Policies.............................................................................77 Section 11.6 Lessor's Right to Obtain......................................................................................78 Section 11.7 Insurer To Be Approved; Premium Receipts.......................................................78 Section 11.8 Waiver of Subrogation.........................................................................................78 ARTICLE XII RECORDS AND AUDITING..................................................................:.........................79 Section 12.1 Records of Sales...................................................................................................79 Section12.2 Audit....................................................................................................................80 ii #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 record in connecti0 vuith • • item mon 01 Priscilla A. Til meson City Clerk 02-1304 ARTICLE XIII REPRESENTATIONS AND COVENANTS................................................................... s by Lessor Section 13.1 Limited Representations ......................................................................82 Section13.2 Authority ..............................................................................................................83 Section 13.3 Lessee's Representations and Covenants.............................................................83 Section 13.4 Disclaimer of Lessor's Representations...............................................................84 Section13.5 Survival.................:..............................................................................................85 ARTICLE XIV REPAIRS, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS .................... 85 Section 14.1 Maintenance and Repair.......................................................................................85 Section 14.2 Alteration and Modification to Leasehold Improvements After Completion of Leasehold Improvements.............................................................87 ARTICLE XV LESSORS RIGHT TO PERFORM LESSEE'S COVENANTS; REIMBURSEMENT OF LESSOR FOR AMOUNTS SO EXPENDED..................:...................87 Section 15.1 Performance of Lessee's Covenants to Pay Money ............................................. 87 Section 15.2 Lessor's Right to Cure Lessee's Default.............................................................. 88 Section 15.3 Reimbursement of Lessor and Lessee..................................................................88 ARTICLE XVI DAMAGE OR DESTRUCTION......................................................................................89 Section 16.1 Definitions of Terms............................................................................................89 Section 16.2 Net Insurance Proceeds; Obligation to Fund Restoration Work .......................... 90 Section 16.3 Restoration Work.................................................................................................91 Section16.4 Termination..........................................................................................................93 Section 16.5 No Other Right to Terminate...............................................................................93 Section 16.6 Rights of Approved" Leasehold Mortgagee..........................................................93 Section16.7 Major Subleases...................................................................................................93 Section 16.8 Deferral of Base Rent...........................................................................................94 ARTICLEXVII ARBITRATION..............................................................................................................95 Section 17.1 Binding Arbitration..............................................................................................95 Section17.2 Procedures............................................................................................................95 Section 17.3 No Delay in Completion of Work........................................................................99 Section 17.4 Right of Approved Mortgage to Participate.........................................................99 ARTICLE XVIII MECHANICS' LIENS...................................................................................................99 Section18.1 Definition.............................................................................................................99 Section 18.2 No Consent by Lessor........................................................................................100 Section 18.3 Notice of No Liability of Lessor........................................................................100 Section 18.4 Inclusion in Memorandum of Lease..................................................................100 Section 18.5 Discharge of Mechanics' Liens..........................................................................100 Section18.6 Right to Contest.................................................................................................101 Section18.7 Releases..............................................................................................................102 ARTICLE XIX COVENANT AGAINST WASTE; INSPECTION ........................................................102 Section19.1 Waste..................................................................................................................102 Section 19.2 Inspection of Property........................................................................................102 Section 19.3 Major Subleases and Space Leases....................................................................103 ARTICLE XX ENVIRONMENTAL LIABILITY...................................................................................104 Section 20.1 Definition of Terms, ............................................................................................ 104 Section 20.2 Environmental Obligations of Lessee................................................................106 Section 20.3 Lessee's Liability for Contamination During Lease Term................................107 Section20.4 Indemnity ...........................................................................................................107 Section20.5 Notices...............................................................................................................107 Section 20.6 Lessor's Remedies.............................................................................................108 Section 20.7 Section 20.8 Phase I J Environmental Assessment at End of Lease Term..............................108 Major Subleases Space Leases....................................................................109 Section 20.9 Survival of Lessee's Obligations.......................................................................110 iii #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 .,.G -d Into the puvm, reg w a III COnneC$10gt; item a- On �a Priscilla A. Thompson City Clerk ARTICLE XXI PUBLIC UTILITY CHARGES...................................................................................... 110 0 Section 21.1 Lessee to Provide and Pay for Utilities..............................................................110 Section 21.2 Compliance with Utility Services......................................................................110 Section21.3 Permits...............................................................................................................110 Section 21.4 No Obligation for Utilities not on Property .......................................................111 Section 21.5 Notice and Disclaimer as to Utility Services and Other Services ......................111 ARTICLE XXII INDEMNIFICATION AND RELEASE OF LESSOR .................................................112 Section 22.1 General Indemnification of Lessor Without Limitation of Any Other Indemnity Given Hereunder...............................................................................112 Section 22.2 Defense......'....'.... Section 22.3 Lessor's Participation.........................................................................................112 Section22.4 No Limitation................................................................:....................................113 Section 22.5 Challenges to Lease. - ....................................................................................... 113 Section22.6 Survival..............................................................................................................113 ARTICLE XXIII LIEN FOR RENT AND OTHER CHARGES.............................................................113 Section23.1 Lien for Rent...................................................................................................... 113 Section23.2 Other Liens.........................................................................................................114 Section23.3 Limitations..........................................................................................................114 ARTICLE XXIV CONDEMNATION.....................................................................................................115 Section 24.1 Definition of Terms............................................................................................115 Section 24.2 Entire Property Taken by Condemnation ...........................................................116 Section 24.3 Part of Property Taken by Condemnation ..........................................................117 Section 24.4 Takings for Temporary Period...........................................................................118 Section 24.5 Event of Lessee's Default..................................................................................119 Section 24.6 Rights of Approved Leasehold Mortgagee ........................................................119 Section 24.7 Major Subleases.................................................................................................120 ARTICLE XXV DEFAULT PROVISIONS.............................................................................................120 Section 25.1 Events of Default by Lessee...............................................................................120 Section 25.2 Remedies in Event of Lessee's Default.............................................................123 Section 25.3 Events of Default - Lessor.................................................................................125 Section25.4 Mitigation...........................................................................................................126 ARTICLE XXVI COVENANTS OF LESSOR AND LESSEE...............................................................127 Section 26.1 Partial Modification of Restrictions...................................................................127 Section 26.2 Civic Arts Endowment Trust.............................................................................128 ARTICLE XXVII QUIET ENJOYMENT................................................................................................129 Section 27.1 Quiet Enjoyment................................................................................................129 ARTICLE XXVIII LESSEE NOT TO ENCUMBER LESSOR'S INTEREST.......................................129 ARTICLE XXIX LIMITATION OF LIABILITY.......................:............................................................129 Section 29.1 Limitation of Liability of Lessee.......................................................................129 Section 29.2 Limitation of Liability of Lessor........................................................................130 ARTICLE XXX ESTOPPEL CERTIFICATES.......................................................................................131 Section 30.1 Estoppel Certificates from Lessee ...................................................... ................131 Section 30.2 Certificates from Lessor.....................................................................................132 ARTICLEXXXI NO WAIVER...............................................................................................................133 Section 31.1 Delays in Exercising Rights...............................................................................133 Section 31.2 Waivers to be in Writing....................................................................................133 Section31.3 Receipt of Rent..................................................................................................133 Section31.4 Consents.............................................................................................................133 ARTICLE XXXII SURRENDER AND HOLDING OVER....................................................................134 Section 32.1 Surrender at End of Term...................................................................................134 Section 32.2 Rights Upon Holding Over................................................................................135 iv #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Subr- ,61-o the public ® 06cord :. ; ;1onnection with Item' 3a- On /4 s o�- Priscilla A. Thompson v #!217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02" -1304 Clty Cl�s� Section 32.3 No Waiver. .............................................................................................. ........ Section32.4 Survival..............................................................................................................135 ARTICLE XXXM MAJOR SUBLEASES, SPACE LEASES AND APPROVED TIME SHARE LICENSES...................................................................................................................................136 Section 33.1 Leasing and Subleasing......................................................................................136 Section 33.2 Non -Disturbance and Attornment......................................................................136 Section33.3 Major Subleases.................................................................................................136 Section 33.4 No Cross -Defaults Among Major Subleases .....................................................138 Section33.5 Space Leases......................................................................................................138 Section 33.6 Approved Time Share Licenses.........................................................................140 ARTICLE XXXIV MINORITY AND WOMEN PARTICIPATION AND EQUAL EMPLOYMENT OPPORTUNITIES..........................................................................................141 Section 34.1 First Source Hiring Agreement...................................:......................................141 Section 34.2 Minority and Women Participation and Equal Employment Opportunity. ....... 141 Section 34.3 Skills, Training and Employment Center ...........................................................142 Section34.4 Tax Credits.........................................................................................................143 ARTICLE XXXV OPERATING AGREEMENTS FOR HOTELS AND MARINA ..............................143 Section35.1 Approval............................................................................................................143 Section 35.2 Approved Operators...........................................................................................143 Section35.3 Terms.................................................................................................................143 Section 35.4 Non -Disturbance and Attonnment Agreement...................................................144 ARTICLE XXXVI UNAVOIDABLE DELAY.......................................................................................144 Section 36.1 Unavoidable Delay(s)........................................................................................144 Section 36.2 Manner of Notice of Unavoidable Delay(s) and Conditions With Respect to Performance of Obligations...........................................................................144 ARTICLE XXXVII NOTICES................................................................................................................. 145 Section37.1 Notices...............................................................................................................145 Section 37.2 Notice to Approved Mortgagees........................................................................146 Section 37.3 Sufficiency of Service........................................................................................147 ARTICLE XXXVIII MISCELLANEOUS PROVISIONS.......................................................................147 Section38.1 Captions.............................................................................................................147 Section 38.2 Conditions and Covenants.................................................................................147 Section 38.3 Entire Agreement...............................................................................................147 Section38.4 Modification.......................................................................................................147 Section 38.5 Time of Essence as to Covenants of Lease ........................................................147 Section38.6 Recording...........................................................................................................148 Section 38.7 Chief Executive Officer Approval Procedures ..................................................148 Section38.8 Governing Law..................................................................................................150 Section 38.9 Jurisdiction and Venue.......................................................................................150 Section 3 8. 10 Waiver of Jury Trial...........................................................................................151 Section 3 8. 11 Conflict of Interest.............................................................................................151 Section 38.12 Covenants to Run with the Leasehold Estate.....................................................151 Section38.13 No Merger..........................................................................................................152 Section38.14 Brokerage...........................................................................................................152 Section38.15 Counterparts.......................................................................................................152 Section 38.16 No Third Party Beneficiaries.............................................................................152 Section 38.17 Attorney's Fees and Expenses...........................................................................153 Section 38.18 Invalidity of Provisions......................................................................................153 v #!217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02" -1304 rSa. bvnitfed Into the public record in connectio wi h item q3 c-- on I to o y Priscilla A. Tho pson GROUND LEASE City Clerk This Ground Lease ("Lease") made as of , 200_, between The City of Miami, a municipal corporation of the State of Florida ("Lessor" or "C"), having its offices at 3500 Pan American Drive, Miami, Florida 33133, and Flagstone Island Gardens LLC, a Delaware limited liability company (successor by merger to Flagstone Properties, LLC, a Florida limited liability company) ("Lessee"), whose principal office is located at 506 Celebration Avenue, Celebration, Florida 34747. Lessor and Lessee are sometimes hereinafter collectively referred to as the "Parties." STATEMENT OF BACKGROUND AND PURPOSE A. The City is the owner in fee simple of certain land located in the City of Miami, Miami - Dade County, Florida known as and hereinafter referred to as "Watson Island". Watson Island is shown on the sketch set forth in Exhibit A. B. A portion of land located in the northwest quadrant of Watson Island, consisting of approximately 10.79 acres, is legally described in Exhibit B and is hereinafter referred to as the "Upland Parcel". C. The City is also the owner in fee simple of certain submerged land, consisting of approximately 13.35 acres, located adjacent and contiguous to the Upland Parcel and legally described in Exhibit C. Such submerged land, together with the right to use and enjoy the waters located above same, is sometimes hereinafter referred to as the "Submerged Parcel." D. The respective locations of the Upland Parcel and the Submerged Parcel are shown on that certain survey prepared by Weidener Surveying and Mapping PA dated July 11, 2002 under Project No. 1712, a copy of which is attached hereto as Exhibit D. The Upland Parcel and the Submerged Parcel, together with all appurtenant rights belonging thereto, are sometimes hereinafter collectively referred to as the "Property." E. Pursuant to the authority expressly conferred in the City of Miami Charter, and general law, the City Commission of Miami (the "City Commission"), on December 14, 2000, adopted #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • • Resolution No. 00-1081, which authorized the publication of a Mega Submitted Into the public record in connectionith item—%t,—on , >--- Priscilla A. Th m son City Clerk Yacht Marina and Mixed Use Waterfront Development Opportunity - Watson Island, Miami, Florida, Request for. Proposals dated February, 2001, as amended (the "Watson Island RFP"), for the development of the Property as described in the Watson Island RFP. F. In response to the Watson Island RFP, Lessee submitted to Lessor a proposal entitled "Island Gardens at Watson Island RFP" dated July 13, 2001 (the "Island Gardens Proposal"). The Island Gardens Proposal was approved by voter referendum by the electorate of the City of Miami on November 6, 2001 and by the City Commission on November 15, 2001 under Resolution No. 01-1198. G. The Island Gardens Proposal consists of a proposal for the development on the Property of the Project. The Island Gardens Proposal contemplates that the Project will include, but not necessarily be limited to, the Major Project Components, consisting of the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage (as all of such terms are hereinafter defined), together with certain other amenities as are described with greater particularity in Exhibit E. The Major Project Components, together with such other amenities, are sometimes hereinafter collectively referred to as the "Proiect Components". The Conceptual Site Plan for the Project is set forth in Exhibit F. H. It is the mutual desire of the Parties that the Property be leased and demised by Lessor to Lessee for the purposes set forth in this Lease (including the development and construction of the Project pursuant to the terms and provisions set forth herein), subject to and upon the express terms and conditions contained herein. The Parties believe that this Lease is consistent in all material respects with the Watson Island RFP and the Island Gardens Proposal. In consideration of the foregoing and of the rent, covenants, and agreements hereinafter set forth, the Parties do hereby covenant and agree as follows: #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0.2-1304 • ARTICLE I Vlty/ c:IerKc INCORPORATION. EX WITS AND DEFINITIONS 'Section 1.1 Incorporation by Reference. The foregoing Statement of Background and Purpose is hereby incorporated into this Lease by this reference as if set out in full in the body of this Lease. Section 1.2 Exhibits. Attached hereto and forming a part of this Lease are the following #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02—t304 Exhibits and Riders: Exhibit A -- Sketch of Watson Island Exhibit B -- Legal Description of Upland Parcel Exhibit C — Legal Description of Submerged Parcel Exhibit D — Copy of Survey Exhibit E -- Description of Project Components and Amenities Description Public Art Exhibit E-1 — of Exhibit F -- Conceptual Site Plan Exhibit G — Definition of Gross Revenues Exhibit H — Definition of Marina; Marina Approval Procedures Exhibit I -- Permitted Title Exceptions Exhibit J -- List of Pre -Approved Hotel Franchisors Exhibit K -- List of Pre -Approved Lenders Exhibit L — Approved Leasehold Mortgage Subordination, Non -Disturbance and Attornment Agreement Exhibit M — Approved Major Subleasehold Mortgage Subordination, Non -Disturbance and Attornment Agreement Exhibit N — Prohibited Uses Exhibit N-1 — Covenants as to Port of Miami #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02—t304 L Exhibit O Exhibit P Exhibit Q Exhibit R -- List of Approved Financial Advisors Organizational Documents Submitted Into the public record in connection with item 9�3o_ona-- Priscilla A. I nompson City Clerk Provisions Not Applicable to Private Lessor — Civic Arts Endowment Trust Exhibit S — Approved Major Subtenant Subordination, Non -Disturbance and Attornment Agreement Exhibit T — Form of First Source Hiring Agreement Rider — Development and Construction Rider Rider Exhibit 1 — Entrance Road Section 1.3 Singular, Plural And Gender. Any word contained in the text of this Lease shall be read as the singular or the plural, and as the masculine, feminine or neuter gender, as may be applicable in the particular context. Section 1.4 Section References All references herein to an "Article", "Section", "Subsection", "paragraph", "subparagraph", or "clause" shall be deemed to refer to the applicable "Article", "Section", "Subsection", "paragraph", "subparagraph" or "clause" of this Lease, unless there is a specific reference to another document. Section 1.5 Defined Terms. Certain terms are defined in various Articles of this Lease. In addition, for the purposes of this Lease, the following words shall have the meanings attributed to them in this Section 1.5: (a) "Affiliate" means any Person which, either directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with another Person (where control means the possession, directly or indirectly, by a Person of the power, acting on one's own, to direct or cause the direction of the management decisions and policies of another Person, whether through the ownership or control of voting securities, beneficial interests, by contract or otherwise). (b) "AAA" means the American Automobile Association or any successor thereto. 4217950 v3 - Final Version of Watson island Ground: Lease - City of Miami and Flagstone • • U (c) "Applicable Laws" means any and all applicable auDMll:mea into tree pudic record in connection ith item -"3a• on Priscilla A. Thompson City Clerk laws. statutes, codes. ordinances, orders, rules, regulations, requirements, judgments, decrees and injunctions of any Governmental Authority, now existing or hereafter enacted, adopted, issued or amended from time to time, whether foreseen or unforeseen, ordinary or extraordinary, which may be applicable to the Property and/or the Leasehold Improvements or any part thereof. (d) "Approved Operators" has the meaning ascribed to it in Article XXXV. (e) "Approved Time Share License" means any Time Share License as defined in Section 721.05(35), Florida Statutes. (f) "Bayraktar Family" means Mehmet Bayraktar and/or any spouse, sibling and/or lineal descendant of Mehmet Bayraktar. (g) "Bayraktar Family Equity Contribution" means that equity in the Project provided by Mehmet Bayraktar personally or the Bayraktar Family, through one or more Persons which are wholly owned by the Bayraktar Family and over which Mehmet Bayraktar has Voting and Operational Control, shall equal not less than $22,400,000. The foregoing sum shall include all demonstrable hard costs and soft costs reasonably related to the Project expended or reimbursed by the foregoing parties prior to or after the date hereof. City of Miami. (h) "Base Rent" means the base rent to be paid by Lessee as set forth in Section 5.2. (i) "Business Days" means Monday through Friday, excluding legal holidays in the 0) "Certificate of Occupancy" means a certificate issued by the City of Miami Building and Zoning Department as defined within the Florida Building Code Section 106.1 and in accordance with City of Miami Ordinance No. 6145. (k) "Chief Executive Officer" means the administrative head of the City's government who is authorized to execute this Lease and other documents, including notices required 0 hereunder. #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 I ], Section 38.7. Submitted Into the puullu record in connection with • 0 item On ly /' s �' Priscilla A. Thompson City Clerk (1) "Chief Executive Officer Approval Procedures" has the meaning ascribed to it in (m) "Construction Plans and Specifications" means the detailed and complete plans and specifications for all proposed construction on the Property (including, without limitation, infrastructure, elevations, site plans, colors, signage plans, lighting, materials, access, utilities, security, setbacks, floor plans and landscaping) which are approved by Lessor for the Project or an), applicable Major Project Component. (n) "Construction Rent' has the meaning ascribed to it in Section 5.1. (o) "Debt Service Coverage Ratio" means the ratio of the net operating income on average of the Project (or the applicable portion thereof) during a consecutive twelve (12) month period over the annual debt service payable in connection with any and all applicable Approved Mortgages during such twelve (12) month period. (p) "Default Rate" means a per annum interest rate equal to the lesser of: (i) the LIBOR Rate, plus Seven Percent (7%), with such Default Rate being adjusted each time the LIBOR Rate is adjusted, effective on the date such adjustment in the LIBOR Rate becomes effective; or (ii) the highest rate permitted by Applicable Law. (q) "Development and Construction Rider" means the Development and Construction Rider attached hereto and made a part hereof. (r) . "Development Plans" means those plans required in connection with the design and construction of the Project, including, without limitation: (i) the Construction Plans and Specifications, (ii) all application materials or other materials necessary or required in connection with obtaining the Project Approvals; and (iii), any and all other plans, drawings or renderings, including, r without limitation, design development plans, conceptual layouts and artistic or architectural renderings, elevations or plans. 0 (s) "Direct Space Lease" means any Space Lease where Lessee is the landlord. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 2 Submitted Into the public ® record in connection w"th . item 4/3o- on I,.%- Priscilla }Priscilla A. Thompson City Clerk (t) "Direct Space Tenant" means any Space Tenant occupying any portion of the Leasehold Improvements pursuant to a Direct Space Lease. (u) "Disqualified Person" means any Person who, as of the time when the applicable transaction occurs or approval or consent of the Chief Executive Officer is requested: .(i) shall have committed a material breach under any material lease or other written agreement with Lessor; (ii) has had any criminal felony convictions within the immediately preceding ten (10) years; (iii) has a widespread reputation (as evidenced by newspaper articles or other media reports of the mainstream press which are not subsequently retracted) for corrupt or unlawful business dealings; or (iv) is named on any Terrorist List. (v) "Event of Lessee's Default" has the meaning ascribed to it in Section 25.1. (w) "Extension Option" has the meaning ascribed to 'it in. Section 3.2. (x) "Extension Term" has the meaning ascribed to it in Section 3.2. 0 (y) "Force Majeure Events" means any of the following items, events or conditions, provided that such item, event or condition has a reasonably demonstrable effect on the Project or its construction or operation: (i) lockouts; (ii) labor strikes; (iii) shortages in labor, materials or supplies other than occasional and ordinary shortages in the ordinary course of business (provided that any such shortages are not caused by any failure to timely order materials or supplies); (iv) casualty; (v) terrorist acts or threats; (vi) war; (vii) hurricanes; (viii) earthquakes or other natural catastrophes and other acts of God; or (ix) any similar item, event or condition beyond the reasonable control of Lessee. (z) "Governmental Authority" means any court, agency, authority, board (including, without limitation, any environmental protection, planning or zoning board), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi - governmental unit of the United States or the State of Florida, whether now or hereafter in existence, having jurisdiction over Lessee, Watson Island, the Property or any aspect of the development or operation of the Project; provided, however, that such term shall include the City only in its municipal capacity and not its proprietary capacity. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 2 t 3 O 4 Submitted Into the public ® • record in connection with item ��3�, on 40J. - Priscilla A. Thompson (aa) "Gross Revenues" has the meaning ascribed to it in Exhibit G. City Clerk (bb) "Hotel Retail Operations" means any Retail operations or facilities located within, near or as part of either Hotel, which operations or facilities are part of or integrated into the operation of such Hotel or are otherwise for the use, support or operation of such Hotel (including, but not limited to, any spa and fitness facilities made available for the usage of such Hotel's guests, whether or not such facilities are located within such Hotel). (cc) "Hotel(s)" shall mean, either individually of collectively, Hotel A and/or Hotel B. (dd) "Hotel A" means a hotel which: (i) shall have 200 keys (subject to variations as provided for by Exhibit E), plus those keys described in clause (ii) below; (ii) may have (in addition to those keys described in clause (i) above) keys which are allocated to Approved Time Share Licenses, provided that the number of keys allocated to Approved Time Share Licenses shall not exceed 100 keys, less the total number of keys allocated for Approved Time Share Licenses in Hotel B (subject to variations as provided for by Exhibit E ; (iii) shall be built to, and operated pursuant to, the standards of a four (4) diamond hotel or better (as defined in the AAA's hotel rating standards); and (iv) shall participate in a franchise system of a national or international hotel brand approved by the Chief Executive Officer pursuant to Section 4.4. For purposes of the foregoing, the Parties understand and agree that the term "keys" does not include, and Hotel A may have, associated facilities and amenities, including, but not necessarily limited to: (A) spa and fitness areas; (B) administrative and office areas; (C) cabanas; (D) lounges; (D) conference and banquet facilities; and (E) customary non -lodging facilities available for seasonal use by Marina staff and employees (ee) "Hotel B" means a hotel which: (i) shall have 300 keys (subject to variations as provided for by Exhibit E , plus those keys described in clause (ii) below; (ii) may have (in addition to those keys described in clause (i) above) keys which are allocated to Approved Time Share Licenses, provided that the number of keys allocated to Approved Time Share Licenses shall not exceed 100 keys, less the total number of keys allocated for Approved Time Share Licenses in Hotel A (subject to variations as provided for by Exhibit E ; (iii) shall be built to, and operated pursuant to, the standards of a #217950 A - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-130 Submitted into the public record in connection with ® item 3a- on I> -1i 0.X - Priscilla A. Thompson City Clerk four (4) diamond hotel or better (as defined in the AAA's hotel rating standards); and (iv) shall participate in a franchise system of a national or international hotel brand approved by the Chief Executive Officer pursuant to Section 4.4. For purposes of the foregoing, the Parties understand and agree that the term "keys" does not include, and Hotel B may have, associated facilities and amenities, including, but not necessarily limited to: (A) spa and fitness areas; (B) administrative and office areas; (C) cabanas; (D) lounges; (D) conference and banquet facilities; and (E) customary non -lodging facilities available for seasonal use by Marina staff and employees. (ff) "Impositions" means all governmental assessments, fees, charges and levies imposed by any Governmental Authority, including, without limitation, assessments imposed by the City (in its municipal capacity), franchise fees, excises, license and permit fees, levies, charges and taxes (including ad valorem real estate taxes on the land under the Property and/or the Leasehold Improvements), personal property taxes, bed taxes, sales taxes, fire fees and parking surcharges of any kind now or hereafter enacted, whether general or special; ordinary or extraordinary, foreseen or unforeseen, any of which is properly levied against the Property, the Leasehold Improvements, the Leasehold Estate and/or any Major Subleasehold Estate, as applicable. (gg) "Initial Term" has the meaning ascribed to it in Section 3.1. (hh) "Lease Term" has the meaning ascribed to it in Section 3.2. (ii) "Leasehold Estate" means all of Lessee's right, title and interest as Lessee pursuant to this Lease, including, without limitation, the right, title and interest granted -hereunder in and to the Property and the Leasehold Improvements. W) "Leasehold Improvements" means all the buildings, structures and improvements constituting the Project Components, including the improvements described in the approved Development Plans, and any improvements constructed thereafter from time to time, which are now or hereafter during the Lease Term located upon the Property and owned by Lessee or any Major Subtenant, as applicable; as well as any apparatus and equipment permanently attached and incorporated into such buildings, structures and improvements at any time, including all fixtures, fittings, appliances, machinery, garage #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 t • • • Sub: Witten Into the public •record in connection with item ,3 w on /y a..-- Priscilla rPriscilla A. Thompson City Clerk equipment, heating equipment, lighting equipment, cooling equipment, air conditioning and ventilating equipment, wiring, controls, communications equipment, plumbing, switchboards, antennae, elevators, escalators, floor coverings, refrigerating equipment, hot water heating and all other appliances and equipment, to the extent same are owned by Lessee or any Major Subtenant, as applicable; provided, however, that the term "Leasehold Improvements" does not include any Personal Property. (kk) "Lessee" has the meaning ascribed to it in the opening paragraph of this Lease, and shall include Lessee's successors and/or permitted assigns. (11) "Lessor" or "City" has the meaning ascribed to it in the opening paragraph of this Lease, and shall include Lessor's successors and/or permitted assigns. (mm) "LIBOR Rate" means the rate per annum (rounded upward to the nearest 1/16th of 1.00%) appearing on Telerate Page 3750 (or any successor page) as the London, interbank offered rate for deposits in U.S. Dollars with ninety (90) day maturities; provided, however, that: (i) if for any reason such rate is not available, the applicable rate shall be the rate per annum (rounded upward to the nearest 1/16th of 1.00%) appearing on a Reuters Screen LIBOR Page as the London interbank offered rate for deposits in U.S. Dollars with ninety (90) day maturities; (ii) if more than one such rate is specified on such Telerate Page or Reuters Screen LIBOR Page, the applicable rate shall be the arithmetic mean of all such rates; and (iii) if the LIBOR Rate by reference to either such Telerate Page or such Reuters Screen is unavailable, then the applicable rate shall be thearithmetic mean of the rates per annum at which U.S. Dollar deposits for a ninety (90) day term are offered by three (3) prime banks in the London interbank market. (nn) "Major Project Components" means, individually and collectively, the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage. (oo) "Major Sublease" means any sublease agreement pursuant to which Lessee subleases any Major Project Component to a Major Subtenant. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone .g • • Subrnitte into the pub erecoro", z-onnecti®n with ItelnOP _ton Priscilla A. Th raps®n City Clerk (pp) "Maior Subleasehold Estate" means all of an applicable Major Subtenant s right. title and interest as a sublessee pursuant to the applicable Major Sublease, including, without limitation, the right, title and interest granted thereunder to the Major Project Component demised thereby. (qq) "Major Subtenant" means any Person using or occupying or entitled to use or occupy any Major Project Component under a Major Sublease in accordance with the provisions of this Lease. (rr) "Major Use Special Permit" has the meaning ascribed to it in Article 17 of Ordinance 11000, as amended, the Zoning Ordinance of the City of Miami, Florida. (ss) "Marina" shall have the meaning ascribed to it in Exhibit H. (tt) "Mega -Yachts" means marine vessels longer than eighty (80) feet. (uu) "Occupancy Date" means the first date on which both Hotels are Open for Business; provided, however, that in no event shall the Occupancy Date be later than the earlier to occur of. (i) twelve (12) months after the First Hotel Opening Date; or (ii) the Promised Completion Date (as defined in the Development and Construction Rider). (vv) "Open for Business" means that the applicable Major Project Component is open for business to the general public, as evidenced by the issuance of a temporary Certificate of Occupancy for such Major Project Component; provided, however, that the Retail Space shall be deemed "Open for Business" when at least sixty percent (60%) of the net rentable area thereof is occupied by Space Tenants and is open for business to the general public, as evidenced by the issuance of any applicable temporary Certificate(s) of Occupancy. (ww) "Operating Agreements" has the meaning ascribed to it in Article 35. (xx) "Operating, Team" means: (i) the franchisor or licensor, if applicable, of Hotel A, and the operator or manager of Hotel A; (ii) the franchisor or licensor, if applicable, of Hotel B, and the operator or manager of Hotel B; (iii) the operator or manager of the Marina; (iv) Fairchild Tropical Garden; and (v) The Historical Museum of South Florida. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 1804 Submitted anto the public rd in connection with W—h Y3a.- on ig-Adox Priscilla A. Thou `1�son City Clerk (yy) "Parking Garage" means a multi-level parking garage containing at least the minimum required number of dedicated parking spaces for the Hotels, the Marina and the Retail Space. (zz) "Partial Modification of Restrictions" means that certain Partial Modification of Restrictions approved by the Trustees with respect to the Project, which instrument modifies the restrictions set forth within Deed No. 19447 from the Trustees in favor of Lessor filed for record April 11, 1949 in Deed Book 3130, Page 257, of the Public Records of Miami -Dade County, Florida. (aaa) "Percentage Rent" means rent payable by Lessee to Lessor based on a percentage of Gross Revenues as set forth in Section 53. Exhibit I. (bbb) "Permitted Title Exceptions" means those certain title matters set forth in (ccc) "Permitted Uses" means those certain uses described in the description of the Project Components and amenities set forth in Exhibit E. (ddd) "Person" means any natural person, trust, firm, partnership, corporation, joint venture, association, company, or any other legal or business entity or investment enterprise. (eee) "Personal Property" means any and all items of personal property which are: (i) located on the Property and/or the Leasehold Improvements but not permanently attached thereto and incorporated therein; and (ii) any and all trade fixtures (i.e., fixtures which can be removed without permanently defacing or materially injuring any of the Leasehold Improvements) located on the Property and/or the Leasehold Improvements. (flT) "Possession Date" has the meaning ascribed to it in Section 4.1. (ggg) "Prohibited Uses" has the meaning ascribed to it in Section 7.11. (hhh) "Project" means all of the Leasehold Improvements (including, but not limited to, all of the Major Project Components) to be completed pursuant to the Development and Construction Rider and substantially in accordance with the approved Development Plans. 0 (iii) "Project Approvals" means those approvals and permits from Governmental Authorities which are required in order to commence and complete construction of the Project, including, #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public •record in connection wi h Item jl on /, 6Y Priscilla A. Tho I psora but not necessarily limited to: (i) the approval of the "Notice of Proposed Change' which sl(aallyaGn%k other things, include the Property within Increment Two of the Downtown Development of Regional Impact; (ii) a Major Use Special Permit which shall have been issued for the Project in connection with the Development Plans approved by the Chief Executive Officer, , (iii) the Partial Modification of Restrictions; and (iv) with respect to the Marina, such applicable permits and approvals for the Marina as are specified in Exhibit H (it being understood and agreed, however, that Lessee shall not be required to obtain all Project Approvals for all Major Project Components in order to commence construction of a particular portion or phase of the Project or a particular. Major Project Component). & "Rent" shall be as set forth in Section 5 and shall include Construction Rent. Base Rent, Percentage Rent and any additional rent or other sums owing or which may be owing from Lessee to Lessor pursuant to the provisions of this Lease. (kkk) "Retail" means the sale of any and all commodities, food and beverages, merchandise or services to the consumer. (Ill) "Retail Space" means up to 221,000 square feet of first-class space for Retail facilities and operations (exclusive of any Hotel Retail Operations), as measured in accordance with Exhibit E. (mmm) "Space Lease' means any sublease or sub -sublease or other arrangement between Lessee or any Major Subtenant, as sublessor, and a Space Tenant, as sublessee, for the leasing of any portion of the Retail Space or any other space within the Leasehold Improvements (including, but not limited to, the Parking Garage and the Hotel Retail Operations) in accordance with Section 33.5. The term "Space Leases" includes Direct Space Leases, but does not include Major Subleases. (nnn) "Space Tenant" means any tenant, subtenant, licensee and other occupant (including, but not limited to, any Direct Space Tenant) of any portion of the Leasehold Improvements pursuant to a Space Lease. The term "Space Tenant" does not include any Major Subtenant. (000) "Terrorist List" means any list issued by a Governmental Authority of individuals and/or entities engaged in terrorist activities, including, but not limited to, the following: (i) #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone .02-1304 Submitted Into the public record in connection with Item 34- on Priscilla A. Tho pson City Clerk list of Specially Designated Terrorists (SDTs) issued by the Office of Foreign Assets Control (" FAC") i pursuant to Executive Order 12947; (ii) list of Specially, Designated Global Terrorist (SDGTs) issued by OFAC pursuant to Executive Order 13224; and (iii) list of Foreign Terrorist Organizations (FTOs) issued by the Secretary of State. (ppp) "Trustees" means the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida. (qqq) "Unavoidable Delay(s)" means delays on account of Force Majeure Events. Such term shall be deemed to exclude: (i) delays on account of any lack of funds or economic conditions; and (ii) typical ordinary delays in obtaining any permits or other approvals from Governmental Authorities. Such term shall be deemed to include: (i) delays in the completion of the Project on account of any injunction or other order issued by any court having jurisdiction of the Property; and (ii) any extraordinary delays in obtaining any permits or other approvals from Governmental Authorities. (rrr) "Voting and Operational Control", as used with respect to any Person, means that such Person: (i) owns, directly or through one or more intermediary Persons, not less than Twenty Percent (20%) of the ownership interests of another Person; and (ii) has voting and day-to-day control over the operation, management and decision-making of such other Person, subject to usual and customary consent rights of other investors with respect to certain "major" decisions or actions. (sss) "Work" means all construction to be performed by Lessee under this Lease, including any repairing, restoring, removing, or replacing of the Leasehold Improvements. ARTICLE II DEMISE Section 2.1 Demise Subject to and in accordance with the terms and conditions of this Lease and the Permitted Title Exceptions, Lessor, for and in consideration of the Rent and of the covenants and agreements made by Lessee to be kept, observed and performed hereunder, does demise and lease the ! Property to Lessee, and Lessee does lease the Property from Lessor. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • C • Section 2.2 Leasehold Improvements Submitted Into the public ® record in connection with item on ty o�' Priscilla A. Thompson City Clerk So long as this Lease remains in force, the Leasehold Improvements shall be owned in fee simple by Lessee and be the sole property of Lessee, and Lessor shall have no interest therein. Upon expiration of the Lease Term or sooner termination of this Lease, the Leasehold Improvements (as well as any Personal Property which is to be delivered to Lessor pursuant to Section 32.1(a) below) shall become the sole property of Lessor in fee simple, and free and clear of all encumbrances other than: (i) the lien of any Impositions assessed but not yet due and payable (for which Lessee shall remain obligated to pay to the extent that they are allocable to the period prior to the termination of this Lease); (ii) any rights surviving an early termination of this Lease (i.e., prior to the stated expiration date of the Lease Tenn) which are granted hereunder or under an applicable Subordination, Non -Disturbance and Attornment Agreement to any Approved Mortgagees (as defined in Section 8.1), Major Subtenants, holders of Approved Timeshare Licenses, and Space, Tenants (it being understood that any and all rights to possession or occupancy of the Property and/or the Leasehold Improvements or any portion thereof shall in no event extend beyond the stated expiration date of the Lease Term, as same may be extended pursuant to Section 3.2); and (iii) the Permitted Title Exceptions and any other title matters consented to in writing by the Chief Executive Officer or Lessor during the Lease Term. The provisions of this Section 2.2 shall not affect the rights and obligations of the Parties under Article XVI or Article XXIV. Section 2.3 Delivery of Title to Lessor.. Upon the expiration or sooner termination of this Lease, Lessee shall execute, acknowledge and deliver to Lessor a proper instrument in writing, releasing and quit -claiming to Lessor all right, title, and interest of Lessee in and to the Leasehold Improvements (as well as any Personal Property which is to be delivered to Lessor pursuant to Section 32.1(x) below). #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone '02"13" iO4 •Submitted Into the public - record in connection W'th item 3� on Priscilla A. Thompson ARTICLE III City Cleric TERM Section 3.1 Initial Term. This, Lease shall be for an initial term of forty-five (45) years (the "Initial Term"), commencing on the Possession Date and ending on the date which is forty-five (45) years thereafter, unless this Lease is terminated at an earlier date pursuant to the terms hereof. Section 3.2 Extension Terms. Lessee is hereby granted two (2) consecutive options (each, an "Extension Option") to extend this Lease for a period of fifteen (15) years for each such Extension Option (each such fifteen (15) year period, an "Extension Term" and collectively, the "Extension Terms"). Provided that Lessee has properly and timely exercised an Extension Option, the term of the Lease shall be extended for the period of the applicable Extension Term (the Initial Term, together with any exercised Extension Term(s), shall be referred to herein as the "Lease Term"). During any such Extension Term, the terms, covenants and conditions of this Lease shall remain unmodified and in full force and effect (other than any such terms, covenants or conditions which are no longer applicable), including the Rent provisions of Section 5.. (a) Exercise of First "Extension Option. For purposes hereof, the term "First Extension Option Exercise Period" shall mean the period of time commencing on the thirtieth (30`h) anniversary of the Possession Date and ending on the forty-second (42nd) anniversary of the Possession Date. The first (l') Extension Option shall be deemed to have been properly and timely exercised if: (i) Lessee provides written notice to the Chief Executive Officer of Lessee's exercise thereof at any time during the First Extension Option Exercise Period, and (ii) no Material Uncured Lessee Default (as hereinafter defined) then exists. (b) Exercise of Second Extension Option. For purposes hereof, the term "Second Extension Option Exercise Period" shall mean the period of time commencing on the first day of the first (1') Extension Term and ending on the twelfth (12th) anniversary thereof. If the first (l st) Extension Option is duly exercised, then Lessee may, exercise the second (2nd) Extension Option, which shall be #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • deemed to have been duly and timely exercised if: Ouui49ILLUU MLU i111-- PUUiav record in connectio with ® stem 43 ,L, �. �. oar Priscilla A. Tho meson City Clerk (i) Lessee provides written notice to the Chief Executive Officer of Lessee's exercise thereof at any time during the Second Extension Option Exercise Period, and (ii) no Material Uncured Lessee Default then exists. (c) Exercise is Irrevocable. Once received by Lessor, any such notice of extension described above shall be irrevocable by Lessee. (d) Material Uncured Lessee's Default. For purposes hereof, the term "Material Uncured Lessee's Default" means an Event of Lessee's Default: (i) which is material in nature, and (ii) whose occurrence would cause a landlord; acting in a commercially reasonable manner and in good faith. to elect to terminate this Lease (regardless of whether Lessor has not elected to terminate this Lease in connection therewith). Notwithstanding the foregoing, no Material Uncured Lessee Default -shall be deemed to exist at given point in time if itis cured at any time prior to the expiration of the Initial Term or the first Extension Term, as applicable (whether or not the cure has been effected within the applicable cure period for the default giving rise to such Event of Lessee's Default), so long as Lessee shall have 0 pursued such cure diligently and in good faith. ARTICLE IV DELIVERY OF POSSESSION AND DEVELOPMENT AND OPERATION OF THE PROJECT Section 4.1 Delivery of Possession of Property. Simultaneously with the execution and delivery of this Lease by the Parties, Lessor shall deliver possession of the Property to Lessee; it being understood and agreed that the date of execution and delivery of this Lease by the latter of the Parties shall be deemed to be the "Possession Date" hereunder. Section 4.2 Memorandum. At the time of the mutual execution and delivery of this Lease, the Chief Executive Officer and Lessee, upon request of either Party, shall execute a memorandum in recordable form, setting forth the beginning and termination dates of the Initial Term, describing the right to the extension of this Lease pursuant to Section 3.2, and including such other items as are contemplated by Article XVIII. 4217950 �3 -Final Version of Watson Island Ground Lease - City of Miami and Flagstone V • • • Section 4.3 Development of the Project. Submitted Into the public *record ii connection ,pith item on /r !� o>- Priscai6a A. Tho psora Lessee shall cause the Project ComporQtytCterk constructed on the Property substantially' in accordance with all applicable Development Plans and with the Project Approvals and the terms and conditions set forth in the Development and Construction Rider. Section 4.4 Operating Team. (a) Selection. Lessee's selection of each member of the Operating Team shall be subject to the prior written approval of the Chief Executive Officer in accordance with the Chief 11 Executive Officer Approval Procedures;', provided, however, that Fairchild Tropical Garden and The Historical Museum of South Florida shall, be deemed to have been approved by Lessor. (b) Replacement. The replacement of any such member of the Operating Team (including Fairchild Tropical Garden and The Historical Museum of South Florida) by Lessee shall be subject to the prior written approval of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures. Lessee acknowledges and agrees that the inclusion of Fairchild Tropical Garden and The Historical Museum of South Florida were important factors in the City's selection of the Island Gardens Proposal. (c) No Approval Required for Lessee or Affiliates. Notwithstanding the foregoing, no approval by the Chief Executive Officer shall be required for Lessee and/or any of its Affiliates to be the initial or replacement operator or manager of either or both Hotels or the Marina so long as the franchisor or licensor for the applicable Hotel or the Marina is approved by the Chief Executive Officer in accordance with the provisions of this Section 4.4. (d) Pre -Approved Hotel Franchisors. For purposes hereof, the term "Pre -Approved Hotel Franchisor" means any of the franchisors or licensors listed in Exhibit J, as well as any of their successors. Notwithstanding anything to the contrary contained herein, the initial selection of any Pre - Approved Hotel Franchisor as the franchisor or licensor for Hotel A and/or Hotel B is hereby pre - approved by, and shall not require any further approval of or consent by, the Chief Executive Officer on behalf of Lessor. Furthermore, the subsequent replacement from time to time of any then -existing franchisor or licensor (whether or not a Pre -Approved Hotel Franchisor) with any Pre -Approved Hotel 217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-13'04 0 0 Franchisor shall not require any further approval of or consent by the Chief Executive Officer on behalf of Lessor, so long as such replacement is made prior to the fifth (5h) anniversary of the Possession Date. (e) Operator. If the franchisor or licensor of either Hotel or the Marina is approved (or deemed pre -approved) by the Chief Executive Officer pursuant to this Section 4.4, then any operator of such Hotel which: (i) is an Affiliate of such franchisor or licensor: or (ii) is a Person which has been retained by such franchisor or licensor for a substantial number of the hotels in its franchise or license system (or is an Affiliate of any such Person) shall not be subject to the Chief Executive Officer's approval. (f) Manager. If an operator of either Hotel or the Marina has been approved (or is, pursuant to subparagraph (e) above, not required to be approved) by the Chief Executive Officer, then any individual who is employed by such operator as the general manager and any other employee of such Hotel or the Marina shall not be required to be approved by the Chief Executive Officer. ARTICLE V 0 RENT AND SECURITY DEPOSIT Section 5.1 Construction Rent. Commencing on the first (15t) day of the first full month following the Possession Date, and ending on the day preceding the Occupancy Date, Lessee shall pay to Lessor rent in the amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) per annum, payable in advance on the first day of each month in equal monthly installments of $83,333.33 (the "Construction Rent"). Section 5.2 Base Rent. (a) Monthly Installments. Commencing on the Occupancy Date, Lessee shall pay to Lessor rent in the amount of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) per annum, payable in advance on the first day of each month in equal monthly installments of $166,666.67 ("Base Rent"); provided, however, that if the Occupancy Date occurs on a day other than the first (15`) of the Submitted Into the public record in connection wit item �' Dn % Q Y 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Priscilla A. Tho P on City Clerk 02--x.304. month, Lessee shall, on the Occupancy Date, pay to Lessor the pro rata portion of Base Rent due for anv partial month in which the Occupancy Date occurs. (b) Amount Pavable If First Hotel Opens Before Occupancy Date. Not-,vithstanding the provisions of subparagraph (a) above, if the First Hotel Opens for Business prior to the Occupancy Date, then commencing on the first day of the month after the month in which the First Hotel Opens for Business and continuing until the Occupancy Date, Lessee shall pay to Lessor (in addition to Construction Rent) an additional amount of $41,666.67 per month in advance on the first (I") day of each month. Such amount has been computed based upon one -twelfth (1/12th) of one-half (1/2) of the additional $1,000,000 of Base Rent to be paid by Lessee as allocated to the opening of the first Hotel. (c) CPI Adjustment. For purposes hereof: (i) "Consumer Price Index" means the monthly index published by the Bureau of Labor Statistics of the United States Department of Labor as "The Consumer Price Index for All Items, Miami -Ft. Lauderdale (Base Year 1982-84 = 100)" or its successor; provided, however. that if such index is discontinued during the Lease Term and there is no successor index, "Consumer Price Index" shall mean such other index as the parties shall mutually agree as reasonably replacing such index. (ii) "Reference Year Base Rent" means the per annum Base Rent amount for the twelve (12) month period commencing on the Occupancy Date. (d) CPI Adjustment. Commencing on the first anniversary of the Occupancy Date and on each anniversary thereafter during the Lease Term, the per annum Base Rent amount shall be adjusted to an amount equal to the product of the Reference Year Base Rent multiplied by a fraction, the numerator of which is the Consumer Price Index number as of three (3) months prior to the beginning of the applicable adjustment date, and the denominator of which is the Consumer Price Index number as of three (3) months prior to the Occupancy Date. (e) Floor and Cao. In no event shall any such annual adjustment to the Base Rent result in an increase which is less than One Percent (1%), or more than Five Percent (5%), of the Base Rent amount immediately prior to the effective date of such adjustment. Submitted Into the public record in connectio wi h 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone item �3cv on j• p, d Priscilla A. Tho pson City Clerk 02-13®4 • n 1 (f) Notice of CPI Adiustment. If any such Consumer Price Index adjustment is to be 10 made, then Lessor shall notify Lessee in writing of the amount of the increased Base Rent for the twelve (12) month period commencing on the date of the adjustment, and if Lessor fails to so notify Lessee prior to the commencement of such twelve (12) month period. Lessee shall continue paving the previously applicable Base Rent installments until such time as Lessee is notified in writing of the appropriate increase in Base Rent, and within thirty (30) days thereafter, Lessee shall pay Lessor any deficiency in the Base Rent installments otherwise paid byl"Lessee prior to such notification. Section 5.3 Percentage Rent. In addition to the Base Rent above, Lessee shall pay Percentage Rent to Lessor as follows: (a) Gross Revenues Other Than from the Sale of APprroved Time Share Licenses. Lessee shall pay to Lessor Percentage Rent in an amount equal to one percent (1%) of Gross Revenues (except for Gross Revenues from the salei'of Approved Time Share Licenses as described in subparagraph (b) below) earned during the period from'and after the third (3rd) anniversary of the Occupancy Date (the "Percentage Rent Commencement Date.") and continuing thereafter throughout the Lease Term. Such Percentage Rent shall be payable in monthly installments, in arrears, on the first (15`) day of each month, commencing on the first (I") day of the month which is two months after the Percentage Rent Commencement Date. Each such monthly installment shall be in an amount equal to the Percentage Rent payable under this Section 5.3(a) for the month which is two (2) months before the due date of such installment (e.g., an installment due on Julv 1 shall be for the Percentage Rent for the preceding May). (b) Gross Revenues from the First Sale of Approved Time Share Licenses. (i) Defined Term. For purposes hereof, the term "First Sale" means the closing (i.e., delivery of evidence of ownership by Lessee or the applicable Major Subtenant to the licensee thereof. as opposed to entering into a contract for sale, taking reservations or deposits, etc.) of the sale or transfer of any Approved Time Share License at either Hotel A, Hotel B or the Marina to the first licensee thereof (it being understood that such term shall not apply to, and no Percentage Rent shall be payable with respect to, any subsequent re -sales or transfers of the same Appromad-S@i r�Ticepse)nto the.OuRflapublic record in connectioPD Rh 4217950 N3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone (tern _ on 1?roa.- PrisCilla A. Thoon City Clerk 02--1304 • r: (ii) Percentage Rent. In addition to the Percentage Rent specified in Section above. Lessee shall pay to Lessor Percentage Rent in an amount equal to Two and One -Half Percent (2.5%) of Gross Revenues with respect to the First Sale of each Approved Time Share License (as such Gross Revenues are defined and described in Exhibit G) earned during the period from and after such First Sales commence. Such Percentage Rent shall be payable in monthly installments. in arrears (in the same manner as provided for by Section 5.3(a) above), on the first (I") day of each month. commencing on the first day of the month which is two (2) months after the month in which such First Sales commence. (c) Statements Concerning Percentage Rent. Together, with each installment of Percentage Rent, Lessee shall provide Lessor with a statement of its Gross Revenues for the applicable month signed by the managing member or any duly elected officer of Lessee. Such statement shall show Gross Revenues and an itemization of any exclusions or deductions therefrom for such month, as well as year-to-date amounts for the current calendar year. Within one hundred twenty (120) days after the end of each calendar year, Lessee shall deliver to Lessor audited statements of the Gross Revenues for the preceding calendar year prepared by a nationally recognized accounting firm reasonably acceptable to the Chief Executive Officer, along with the additional amount of Percentage Rent, if any, which is due from Lessee to Lessor for that preceding calendar year. In the event that the statement of Gross Revenues for the preceding calendar year indicates that the estimated Percentage Rent paid by Lessee for the preceding calendar year is greater than the actual Percentage Rent due Lessor, then the Parties shall reconcile the estimated Percentage Rent paid and the actual Percentage Rent due in the form of a credit to Lessee against next accruing monthly Rent installments due hereunder (or a refund if there are no more monthly Rent installments due hereunder). (d) Major Subleases. Each Major Sublease shall require that the applicable Major Subtenant furnish similar statements to Lessee in the same manner as provided for by subparagraph (c) above. Upon Lessee's receipt of such statements, Lessee shall promptly furnish copies thereof to Lessor. Section 5.4 Securi!y Deposit. Submitted Into the Public record in corlrlectice� ��` #217950 v3 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone Iteral _q` L-_1 on S01 6_0 Priscilla A. Tho �lporl City Clerk 02 .1TO4 (a) Definition of "LOC Deposit". For purposes of this Article, the term "LOC Deposit" means an irrevocable and unconditional, clean standby letter of credit, including replacements thereof, in form and substance reasonably satisfactory to the Chief Executive Officer and issued by one of the financial institutions listed in Exhibit K or such other financial institution as is reasonably satisfactory to the Chief Executive Officer, which letter of credit shall: (i) name Lessor as beneficiary, (ii) allow Lessor to make partial and multiple draws thereunder up to the face amount, as determined by Lessor; (iii) require such financial institution to pay within no more than one (1) Business Day to Lessor the amount of a draw upon receipt by such financial institution solely of a sight draft signed by Lessor and presented at a location within Miami -Dade County, 'Florida (which shall include a certification signed by the Chief Executive Officer on behalf of Lessor that an Event of Lessee's Default has occurred and is continuing); (iv) provide for an automatic payment to'Lessor upon expiration thereof unless a replacement Letter of Credit is issued to Lessor within thirty (30) days prior to the expiration thereof (if such provision is, when requested, commercially available from the issuer); and (v) provide that Lessor can freely transfer it upon an assignment or other transfer of its interest in the Property to the assignee or transferee, without charge and without recourse, and without having to obtain the consent of Lessee or such financial institution (if such provision is, when requested, commercially available from the issuer). (b) Amount. Simultaneously upon the execution hereof, Lessee shall either (i) deliver the amount of $2,000,000 (the "Cash Deposit") to Lessor, or (ii) provide to Lessor, at Lessee's sole cost and expense, the LOC Deposit, which shall be in the amount of $2,000,000 (the Cash Deposit or the LOC Deposit, as applicable, shall hereinafter be referred to as the "Security Deposit") Notwithstanding the foregoing, Lessee shall be permitted to utilize any combination of Cash Deposit or LOC Deposit so long as the Security Deposit equals $2,000,000 in the aggregate. Any LOC Deposit held by Lessor or Cash Deposit held by Escrow Agent (as defined in that certain Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003) as security under such Agreement to Enter into Ground Lease, shall be credited toward such $2,000,000 amount (and Lessee Submitted Into the public 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record In connection V!t item 0c, --On v- a d�' Frlscllla A. -Tho p on City Clerk 02-120 ii shall authorize Escrow Agent to transfer such Cash Deposit, if applicable, directly to Lessor as part of the 0 Security Deposit upon the mutual execution and delivery of this Lease). (c) Application. If an Event of Lessee's Default occurs hereunder, Lessor mav, at its option and without prejudice to any other right or remedy that Lessor may have hereunder, apply or require distribution of all or any portion of the Security Deposit for the payment of any sum to which Lessor may become entitled by reason of such Event of Lessee's Default, including, without limitation, reasonable attorneys' fees and costs which Lessor may incur in connection therewith. If Lessor so applies or requires the distribution to Lessor of all or any portion of the Security Deposit, Lessee shall, within thirty (30) days after demand therefor, deposit cash with Lessor in an amount sufficient to restore anv such deficiency or amend or replace any LOC Deposit, whichever is applicable, to the full amount thereof, and Lessee's failure to do so shall, at Lessor's option, constitute an Event of Lessee's Default hereunder. In the event Lessor applies or requires distribution of all or any portion of an LOC Deposit where no Event of Lessee's Default then existed, Lessor shall be deemed to have improperly requested and received such application or distribution, and Lessee shall be entitled to recover from Lessor the amount which was improperly requested and received, or to reduce the Security Deposit osit bY anequivalent amount. (d) Release. Notwithstanding anything contained herein to the contrary, at any time after all of the Major Project Components are Open for Business and so long as no Event of Lessee's Default has occurred and is then continuing and no event has then occurred which with the passage of time and/or giving of notice would constitute an Event of Lessee's Default, Lessor shall, within fifteen (15) days after written request of Lessee, return and/or release the amount of the Security Deposit currently held by Lessor to Lessee (less such portion thereof as Lessor may have appropriated and applied in accordance with the provisions of this Section 5.4), whereupon no further or other security deposit shall be required hereunder. Section 5.5 Place Of Pant. Lessee shall pay all Rent to Lessor in lawful money of the United States of America at a place Lessor shall from time to time designate by written notice to Lessee, 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted into the public record in connection it itemoa— Priscilla A. Thompson i� 02-1304 City Clerk and in the absence of such designation, at the office of the Finance Director of the Cite of Miami at the 1 address set forth in Section 37.1. Section 5.6 Default Interest If any Rent or other sums due from Lessee to Lessor hereunder are not paid when due and payable, then such unpaid Rent or other sums shall bear interest at the Default 11 Rate from and after the date when same became due and payable until the date paid. Such interest payment shall be deemed to be additional Rent and shall not be deemed a consent by Lessor to late payments, nor a waiver of Lessor's right to insist upon timely payments at any time, nor a waiver of any remedies to which Lessor is entitled as a result of the late payment. Section 5.7 Late Charge. If any Rent or other sums due from Lessee to Lessor hereunder are not paid when due and payable, and Lessee thereafter fails to cure such default within the applicable cure period hereunder (such that an Event of Lessee's Default occurs on account thereof), then, on each such occasion, Lessee shall pay to Lessor a late fee equal to Four Percent (4%) of the past due sum, as compensation to Lessor for the inconvenience of the collection and processing of each such late payment. Such late fee shall be in addition to any interest payable under Section 5.6. Such late fee shall be deemed to be additional Rent and shall not be deemed a consent by Lessor to late payments, nor a waiver of Lessor's right to insist upon timely payments at any time, nor a waiver of any remedies to which Lessor is entitled as a result of the late payment. Section 5.8 Rent To Be Without Deduction This Lease shall be deemed and construed to be a triple net lease, and Lessor shall receive all Rent, and all other payments to be made by Lessee, free from any charges, assessments, Impositions, expenses, defenses, set -offs or deductions of any nature, except as may be otherwise specifically provided for herein (including, but not limited to, Lessee's set-off rights described in Section 25.3(b)(iii) and Section 26.1(c) below). Lessor shall not be called upon to make any expenditure for the maintenance; repair or preservation of all or any portion of the Property. Submitted Into the public record in connectlo W'th item -Y,.&---on } u o Priscilla A. `rho pson City Clerk 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02 3 • ARTICLE VI LEASEHOLD AND SUBLEASEHOLD MORTGAGES Section 6.1 Definition of Terms. For purposes of this Article VI, the following terms shall have the meanings attributed to them in this Section: (a) "Approved Leasehold Mortgage" means any mortgage, deed of trust or similar security instrument (as same may be supplemented, extended, split, consolidated, or otherwise amended or modified from time to time, all without Lessor's consent) encumbering the Leasehold Estate or any portion thereof, so long as: (i) such instrument does not encumber the City's fee simple estate; (ii) such instrument secures an Approved Construction Loan or an Approved Permanent Loan or Approved Mezzanine Financing; (iii) the funding availability pursuant to any Approved Construction Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not result in the Initial Equity Requirement not being satisfied; and (iv) the funding availability pursuant to any Approved Permanent Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not cause the Maximum Project Debt to Value Ratio to be exceeded. For purposes of clauses (iii) and (iv) above, the term "funding availability" shall not include any provision for a future advance which is entirely within the lender's discretion to make, and any such future advance shall be treated as a separate loan for such purposes. Notwithstanding the foregoing, the term "Approved Leasehold Mortgage" shall also include any other such mortgage, deed of trust or security instrument approved in writing by the Chief Executive Officer pursuant to the terms hereof. (b) "Approved Leasehold Mortgagee" means the holder of an Approved Leasehold Mortgage. Submitted Into the public record in connectio "- Prit-cilla 'i item —04-1- on � A. iho `o p5on 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone City Clerk (c) "Approved Major Subleasehold Mortgage" means any mortgage, deed of trust or similar security instrument (as same may be supplemented, extended, split, consolidated, or otherwise amended or modified from time to time, all without Lessor's consent) encumbering any %Iajor Subleasehold Estate or any portion thereof, so long as: (j) such instrument does not encumber the City's fee simple estate; (ii) such instrument secures an Approved Construction Loan or an Approved Permanent Loan or any Approved Mezzanine Financing; (iii) the funding availability pursuant to any Approved Construction Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not result in the Initial Equity Requirement not being satisfied; and i (iv) the funding availability pursuant to any Approved Permanent Loan, together with the funding availability pursuant to any Approved Mezzanine Financing, will not cause the Maximum Project Component Debt to Value Ratio to be exceeded. For purposes of clauses (iii) and (iv) above, the term "funding availability" shall not include any provision for a future advance which is entirely within the lender's discretion to make, and any such future advance shall be treated as a separate loan for such purposes. Notwithstanding the foregoing, the term "Approved Major Subleasehold Mortgage" shall also include any other such mortgage, deed of trust or security instrument approved in writing by the Chief Executive Officer pursuant to the terms hereof. (d) "Approved Major Subleasehold Mortgagee" means the holder of an Approved Major Subleasehold Mortgage. (e) "Approved Mortgage'' means any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage. (f) "Approved Mortgagee" means any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee. (g) "Approved Lender" means any Person meeting any of the following criteria: Submitted Into the public #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record 4-, connectio9pson iter; __0w on to�- PrisGilla A. `Tho City Clerk a2--1304 (i) any insurance company, bank or trust company, pension or retirement fund or trust, governmental agency or fund, or other financial or lending institution or other lender which is regulated by, or makes any loans which are regulated by, state or federal laws of the United States, provided; however, that in the case of a first priority Approved Leasehold Mortgage or a first priority Approved Subleasehold Mortgage, the Financial Standards must be satisfied; (ii) any similar type of foreign domiciled entity or institution or other lender which is regulated by, or makes any loans which are regulated by, the country of its domicile provided: however, that in the case of a first priority Approved Leasehold Mortgage or a first priority Approved Subleasehold Mortgage, the Financial Standards must be satisfied; (iii) any Person which is listed in the "S&P 500" or the "Fortune 500", or any Affiliate of such Person; (iv) any of the lenders listed in Exhibit K (whether or not they independently satisfy the requirements of clauses (i), (ii) or (iii) above), provided that such lender continues to satisfy the Financial Standards; (v) any other lender which may be approved in writing from time to time by the Chief Executive Officer as an "Approved Lender"; and (vi) in the case of Mezzanine Financing, any Approved Mezzanine Financer; (vii) any successor of any Person described in clauses (i) through (vi) above; (viii) any assignee of any Person described in clauses (i) through (vii) above, so long as such assignee independently meets any of the criteria set forth in clauses (i) through (vii) above. Notwithstanding the foregoing, the criteria set forth in clauses (i) through (vi) above shall not apply, to: (A) any loan participants not in privity with or having direct legal rights with respect to the borrower; or (B) any certificateholder or similar Person holding an interest from time to time in a securitized loan, conduit loan or similar loan. Submitted Into the public record in connection Wi h item �3a,. on o Priscilla A. Thompson 4217950 v3 -Final Version of Watson Island Ground Lease - Cityof Miami and Flagstone __ City Clerk (ix) "Financial Standards" means that, at the time any applicable loan is 00 made, the lender making such loan shall have assets in excess of $50,000,000,000 and shall have a credit rating of not less than "A"; provided, however, that the foregoing requirements: (i) may be satisfied by aggregating the assets of such lender with those of all of its Affiliates; and (ii) need not be satisfied by any co -lenders, so long the lender (together with all of its Affiliates as described in clause (i) above) designated by such co -lenders as the "agent" or "lead lender" or any similar designation satisfies such requirements. (h) "Approved Construction Loan" means any loan extended by an Approved Lender to Lessee or any Major Subtenant for the primary purpose of the initial construction and completion of the Project or any applicable Major Project Component or any other portion thereof, which loan is secured by an Approved Mortgage. (i) "Approved Mezzanine Financer" means: (i) any company, corporation, fund or other entity, whether public or private, which: (A) has a portfolio of obligations similar in type or size to the applicable Mezzanine Financing, which portfolio has a value in excess of $250,000,000 at the time such Mezzanine Financing is made; (B) is prepared to "front-end" its commitments (i.e., make advances or place funds into escrow for the purpose of funding initial or early Project costs); (C) is not named, and has no controlling investor therein, named on any Terrorist List at the time of the making of such Mezzanine Financing; and (D) has not had (nor has any controlling investor therein had) any criminal felony convictions within the immediately preceding ten (10) years prior to the making of such Mezzanine Financing; or (ii) any other„Person meeting the criteria for an Approved Lender as set forth in the definition thereof. 0) "Approved Mezzanine Financing” means any financing extended by an Approved Mezzanine Financer to Lessee or any Major Subtenant with respect to the Project or any Major Project Component(s), which financing: Submitted Into the public record in connection Zvi item Oce on i� 1 sa.- #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Priscilla A. Thompson City Clerk (i) is secured primarily by assets other than the Property (such as a pledge or hypothecation of shares or other interests in the borrowing entity), but may (in addition to being secured by such collateral), be secured by a subordinate mortgage encumbering the Leasehold Estate or any Major Subleasehold Estate, as applicable; and (ii) may include an equity participation (including any preferred equity or other ownership interest in Lessee or the applicable Major Subtenant, as applicable), or a participation in profits or other "equity kicker". iI (k) "Approved Permanent Loan" means any loan extended by an Approved Lender to Lessor or any Major Subtenant after the initial construction and completion of the Project or any applicable Major Project Component, which loan is secured by an Approved Mortgage, including, but not limited to: (i) any permanent or mini -permanent loan (whether a new loan or a conversion of any Approved Construction Loan); and (ii) any loan made in connection with any subsequent construction, demolition, renovation and/or rehabilitation from time to time of any portion of the Leasehold Improvements. (1) "Initial Equity Requirement" means that: (i) the Bayraktar Family Equity Contribution shall have been made; and (ii) Lessee, either directly or through one or more Investors (as defined in Section 8.1), shall have contributed not less than $112,000,000 (with the amount of the Bayraktar Family Equity Contribution being counted toward such sum) in equity into the Project; provided, however, that in the event that the budgeted Project cost. I exceeds $320,000,000, such required equity contribution by Lessee shall be an amount not less than thirty-five percent (35%) of such budgeted Project cost. The foregoing equity contribution amounts shall include all demonstrable hard costs and soft costs reasonably related to the Project expended or reimbursed by Lessee and/or the Bayraktar Family prior to or after the Submitted Into the public record jl'a connect'on `pith 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone item— Priscilla A. Thompson City Clerk 02-1304 date hereof. In no event shall the required Bayraktar Family Equity Contribution amount be affected by anv increase in Project costs. (m) "Maximum Project Debt to Value Ratio" means that: (i) the aggregate principal indebtedness of all Approved Permanent Loans secured by Approved Leasehold Mortgages, and all Approved Permanent Loans secured by Approved Major Subleasehold Mortgages, shall not exceed (exclusive of advances to protect security and overdue and default interest) Seventy Five Percent (75%) of the Fair Market Value of the Project; and (ii) the aggregate principal indebtedness of all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Leasehold Mortgages and all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Major Subleasehold Mortgages shall not exceed (exclusive of advances to protect security and overdue and default interest) Eighty Five Percent (85%) of the Fair Market Value of the Project, unless the prospective Debt Service Coverage Ratio for all such Approved Permanent Loans and Approved Mezzanine Financings combined will, based on reasonable pro formas, be less than 1.3, in which case such percentage shall be Seventy Five Percent (75%) instead of Eighty Five Percent (85%). (n) "Maximum Project Component Debt to Value Ratio' means, with respect to any applicable Major Project Component, that: (i) the aggregate principal indebtedness of all Approved Permanent Loans secured by Approved Major Subleasehold Mortgages with respect to such Major Project Component shall not exceed (exclusive of advances to protect security and overdue and default_ interest) Seventy Five Percent (75%) of the Fair Market Value of such Major Project Component; and (ii) the aggregate principal indebtedness of all Approved Permanent Loans and Approved Mezzanine Financings secured by Approved Major Subleasehold Mortgages with respect to such Major Project Component shall not exceed (exclusive of advances to protect security and overdue and default interest) Eighty Five Percent (85%) of the Fair Market Value of such Major Project Component, unless the prospective Debt Service Coverage Ratio for all such Approved Permanent Loans Submitted Into the publiC X217950 0 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone gn onneCtl® Wl h record itern®n rat or pl.°is :lila A. Tho on 02 304 City Clerk and Approved Mezzanine Financings combined will, based on reasonable pro formas, be less than 1.3, in which case such percentage shall be Seventy Five Percent (75%) instead of Eighty Five Percent (83%). (o) "Fair Market Value" means the fair market value of the Project or any Major Project Component, as applicable, based on the most current "as -built' appraisal, prepared by an MAI appraiser licensed to perform appraisal services within the State of Florida, obtained by an Approved Mortgagee as a condition to making any loan or advance (including any future advance) by such Approved Mortgagee secured or to be secured by an Approved Mortgage. In the event that the most current appraisal is more than two (2) years old, either Party may require a new appraisal or an update and recertification of the prior appraisal. The cost of such new or recertified appraisal shall be the responsibility of Lessee, but any such new or recertified appraisal shall be certified to Lessor as well as to Lessee. (p) "Foreclosure Transfer" means a foreclosure sale with respect to an Approved Leasehold Mortgage or Approved Major' Subleasehold Mortgage or as a result of the assignment or transfer of the Leasehold Estate or applicable Major Subleasehold Estate in lieu of foreclosure or other similar transaction. (q) "Approved Foreclosure Transferee" means any Person (including, but not limited to, any Approved Lender or any Affiliate, designee, nominee or assignee thereof) acquiring the Leasehold Estate or any Major Subleasehold Estate pursuant to a Foreclosure Transfer; provided, however, that such Person must: (i) not appear on a Terrorist List at the time of such Foreclosure Transfer; (ii) not have had (or be controlled by a Person who has had) any criminal felony convictions within the immediately preceding ten (10) years prior to such Foreclosure Transfer; (iii) have substantial experience in owning or operating projects which are comparable to the Project or the applicable Major Project Component, or retain, within a reasonable period of time, an operator having such experience to operate the Project or the applicable Major Project Component; and 'SubMitted.Into the public record in corlrsecfiol� wit 4217950 v3 -Final Version of Watson Island Ground Lease City of Miami and Flagstone Item el3e, 'on�- Priscilla A. Tho p on �.._ City Clerk 02-x.304 • • (iv) assume in writing all of the obligations of Lessee hereunder, or all of the obligations of any applicable Major Subtenant under the applicable Major Sublease, accruing from and after the effective date of such Foreclosure Transfer, and provide a copy of such assumption agreement to the Chief Executive Officer within ten (10) days after the effective date of such Foreclosure Transfer. (r) "Approved Subsequent Foreclosure Purchaser" means any Person acquiring the Leasehold Estate or any Major Subleasehold Estate from an Approved Foreclosure Transferee, provided that such Person must: (i) not appear on a Terrorist List at the time of such acquisition; (ii) not have had (or be controlled by a Person who has had) any criminal felony convictions within the immediately preceding ten (10) years prior to such acquisition; (iii) have substantial experience in owning or operating projects which are comparable to the Project or the applicable Major Project Component, or retain, within a reasonable period of time, an operator having such experience to operate the Project or the applicable Major Project 0 Component; and (iv) assume in writing all of the obligations of Lessee hereunder, or all of the obligations of any applicable Major Subtenant under the applicable Major Sublease, accruing from and after the effective date of such acquisition, and provide a copy of such assumption agreement to the Chief Executive Officer within ten (10) days after the effective date of such acquisition. Section 6.2 Prohibited Mortgages. (a) Leasehold Estate. Other than pursuant to an Approved Leasehold Mortgage, Lessee may not mortgage, pledge or otherwise encumber all or any part of Lessee's interest in the Leasehold Estate (and no such mortgage, pledge or other encumbrance shall be valid or effective) without Lessor's prior written consent, which may be withheld in its sole and absolute discretion. (b) Major Subleasehold Estate. Other than pursuant to an Approved Major Subleasehold Mortgage, no Major Subtenant may mortgage, pledge or otherwise encumber all or any part of such Major Subtenant's interest in its Major Subleasehold Estate (and no such mortgage, pledge or SUbm;tted into the pubiid-T X217950 v3 -Final Version of Watson Island Ground Lease - Cityof Miami and Flagstone record in connec%Ms- item q3y ®n Prisclila A. Thompson 02-1304 - City clerk other encumbrance shall be valid or effective), without Lessor's prior written consent, which may be withheld in its sole and absolute discretion. Section 6.3 Permitted Mortgages. (a) Leasehold Estate. Lessee is freely permitted to grant any and all Approved Leasehold Mortgages. (b) Major Subleasehold Estates. Each Major Sublessee is freely permitted to grant any and all Approved Major Subleasehold Mortgages. (c) Mortgages Encumbering Space Leasehold Estates. Nothing contained herein shall be deemed to prevent: (i) any Space Tenant from granting any mortgage, deed of trust or other similar security instrument encumbering its right, title and interest in, to and under the applicable Space Lease; or (ii) any holder of any such mortgage, deed of trust or other instrument from foreclosing upon such instrument or accepting an assignment or transfer in lieu thereof and thereafter assigning or transferring the collateral under such instrument to another Person, all subject to and in accordance with the terms and conditions of the applicable Space Lease. (d) Amendments. Upon the request of any actual or prospective Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee or any Approved Mezzanine Financer, Lessor and Lessee shall enter into a modification or amendment of this Lease to incorporate such commercially reasonable modifications, additions or deletions to this Lease as such party may reasonably request so as to render this Lease and any applicable Major Sublease "financeable" based on criteria for "financeability" typically imposed in comparable transactions, provided that such modification or amendment does not: (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease and the Subordination, Non -Disturbance and Attornment Agreements described below or impose any additional material burdens on Lessor. Section 6.4 Notification of Lessor. Notwithstanding any actual or constructive notice that Lessor may have of an Approved Leasehold Mortgage or an Approved Major Subleasehold Mortgage, no #217950 v3 - Final Version of Watson Is Ground Lease - City of Miami and Flagstone Submitted Into the public record in connectio vvAh, item _f)gn._on o Priscilla A. TWnl son City .Clerk such Approved Leasehold Mortgagee, Approved Major Subleasehold Mortgagee or other Approved Lender shall have the rights or benefits described in this Article, nor shall the provisions of this Article be binding upon Lessor with respect to any such mortgage or any assignment thereof, unless or until such Approved Leasehold Mortgagee, Approved Major Subleasehold Mortgagee or other Approved Lender shall deliver to Lessor a copy of such applicable Approved Leasehold Mortgage or Subleasehold Mortgage and/or any other applicable security documents encumbering the collateral thereunder, together with an executed Subordination, Non -Disturbance and Attornment Agreement, substantially in form and substance as that attached hereto as Exhibit L for Approved Leasehold Mortgages and Exhibit M for Approved Major Subleasehold Mortgages; provided, however, that the Chief Executive Officer shall not unreasonably withhold his or her consent to any commercially reasonable modifications to such forms as may be reasonably requested by the applicable Leasehold Mortgagee or Major Subleasehold Mortgagee so as to render this Lease and any applicable Major Sublease "financeable" based on criteria for "financeability" typically imposed in comparable transactions; provided, that such modifications do not: 0 (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease and the Subordination, Non -Disturbance and Attornment Agreements described below. Nothing contained in any such mortgage or contained herein, whether express or implied, shall have the effect of subordinating any interest or estate of Lessor in and to the Property, to the lien of such mortgage. Section 6.5 Foreclosure. (i) Leasehold Estate. Subject to and in accordance with the provisions of the applicable Subordination, Non -Disturbance and Attornment Agreement, any Approved Foreclosure Transferee may become the legal owner of the Leasehold Estate through a Foreclosure Transfer. Thereafter, such Approved Foreclosure Transferee may freely assign or transfer the Leasehold Estate without Lessor's consent to any Approved Subsequent Foreclosure Purchaser. Any subsequent Submitted Into the public record i= n connection wi h #217950 v3 - Final Version of Watson Island Ground Lease - Ci of Miami and Fl stone' on /Y y' 0Y1 City I$ea �JG� A. Tho psora City Clerk 02--1304 assignment or transfer thereof by such Approved Subsequent Foreclosure Purchaser to any other Person must comply with the provisions of Article VIII hereof. (b) Major Subleasehold Estate. Subject to and in accordance with the provisions of the applicable Subordination, Non -Disturbance and Attornment Agreement, any Approved Foreclosure Transferee may become the legal owner of the applicable Major Subleasehold Estate through a Foreclosure Transfer. Thereafter, such Approved Foreclosure Transferee may freely assign or transfer such Major Subleasehold Estate without Lessor's consent to any Approved Subsequent Foreclosure Purchaser. Any subsequent assignment or transfer thereof by such Approved Subsequent Foreclosure Purchaser to any other Person must comply with the provisions of Article VIII hereof. Section 6.6 New Lease. (a) Leasehold Estate. (i) Obtaining New Lease. If this Lease shall (x) terminate for any reason other than an Event of Lessee's Default for the failure, beyond the applicable cure period, to pay Base Rent, Percentage Rent, Impositions or the cost of Insurance, as to which Event of Lessee's Default, the 0 Approved Mortgagee was provided notice and an opportunity to cure in accordance with this Agreement and any applicable SNDA and failed to so cure within the time provided for therein, or (y) be rejected or disaffirmed pursuant to bankruptcy law or other law affecting creditor's rights, any Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have the right, exercisable by written notice to Lessor within thirty (30) days after the effective date of such termination, to enter into a new lease of the Property with Lessor (the "New Lease"), provided that such Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have remedied all defaults on the part of Lessee involving the payment of money to Lessor, and shall continue to pay all Rent that would come due under this Lease but for such termination. The term of the New Lease shall begin on the date of the termination of this Lease and shall continue for the remainder of the term of the Lease Term, including any Extension Terms. Such New Lease shall otherwise contain the same terms and conditions as those set forth herein, except for requirements which are no longer applicable or have already been performed; provided, however, that: (i) Submitted Into the public #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record in connecti4.Wlitem � ,onPriscilla Ao Th City Clerk 2-1 'O such New Lease shall require the lessee thereunder promptly to commence, and expeditiously to continue, 0 to remedy all other defaults on the part of the Lessee hereunder to the extent susceptible of being remedied, and (ii) such New Lease shall permit such Approved Leasehold Mortgagee or Approved Foreclosure Transferee to assign the New Lease to an Approved Subsequent Foreclosure Purchaser without Lessee's consent. The Person obtaining such New Lease shall be subrogated to the rights of Lessor against Lessee as to any monetary defaults of Lessee which are cured by such Person as a condition to obtaining such New Lease, and any other defaults which are remedied by such Person as provided by clause (i) above (but not as to any other matters). It is the intention of the parties hereto that such New Lease shall have the same priority relative to other rights or interests to or in the Property as this Lease. The provisions of this Section shall survive the termination of this Lease and shall continue in full force and effect thereafter to the same extent as if this Section were a separate and independent contract among Lessor, Lessee and the Approved Leasehold Mortgagee. From the date on which any Approved Leasehold Mortgagee or any Approved Foreclosure Transferee shall serve upon Lessor the aforesaid notice of the exercise of its rights to a New Lease, such Approved Leasehold Mortgagee or Approved Foreclosure Transferee pp may use and enjoy the Property without hindrance by Lessor but subject to compliance with the terms of this Lease as aforesaid. (ii) Execution of Other Documents. Simultaneously with the making of such New Lease, the party obtaining such New Lease, Lessor, all Major Subtenants, all Approved Major Subleasehold Mortgagees, the holders of any and all Approved Time Share Licenses (through their duly appointed agent) and their respective lenders, and any Space Tenants (to the extent such Space Tenants are entitled to enter into Subordination, Non -Disturbance and Attornment Agreements pursuant to Section 33.5(d), and have done so) and their respective lenders shall execute, acknowledge and deliver such new instruments, including new mortgages and other security documents, new Major Subleases, new Approved Time Share Licenses, new Space Leases, and new Subordination, Non -Disturbance and Attornment Agreements, as the case may be, and shall make such payments and adjustments among themselves, as shall be necessary and proper for the purpose of restoring to each of such parties as nearly Susi mit!'O �, p µ.� the; Public 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record ;n ca°ynnectiC">l�, R�,jlt item �on _ 0- _A o Y Priscilla Ao Tho pson City Clerk 02-x.304 • • • as reasonably possible, the respective interest and status with respect to the Property which was possessed by the respective parties prior to the termination of this Lease (including, but not limited to, any rights and obligations under any applicable Subordination, Non -Disturbance and Attornment Agreements entered into pursuant to the provisions of this Lease). (iii) No Termination by Lessee of any Major Sublease or Space Lease. Between the date of termination of this Lease and the date of execution and delivery of the New Lease, if the Approved Leasehold Mortgagee or Approved Foreclosure Transferee shall have requested such New Lease as provided for in this Section 6.6, Lessee shall not cancel or terminate any Major Sublease or Space Lease or accept any cancellation, termination or surrender thereof (unless such termination shall be effective as a matter of law on the termination of this Lease) without the prior written consent of such Approved Leasehold Mortgagee or Approved Foreclosure Transferee. (iv) No Condition to Cure Uncurable Defaults. Nothing contained in this Lease shall require any Approved Leasehold Mortgagee or Approved Foreclosure Transferee as a condition to its exercise of its right to enter into a New Lease to cure any default of Lessee or any Major Subtenant not reasonably susceptible of being cured by such Approved Leasehold Mortgagee or Approved Foreclosure Transferee, in order to comply with the provisions of Section 6.6. (v) Subordination, Non -Disturbance and Attornment Agreement. The Subordination, Non -Disturbance and Attornment described in Exhibit L shall include provisions addressing other matters concerning any New Lease, among other things: (i) the disclaimer of any representation or warranty by Lessor as to title to, the condition of, or other matters with respect to the Property and/or the Leasehold Improvements, to the extent provided for herein; (ii) the responsibility of the applicable Approved Leasehold Mortgage to remove Lessee from possession with Lessor's cooperation; and (iii) procedures for obtaining a New Lease where more than one Approved Leasehold Mortgagee requests same. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connectio with item �on1., y y Priscilla A. Thompson City Clerk 2-1804 • Section 6.1 Major Subleasehold Estates. Lessee agrees (and Lessor acknowledges) that each Major Sublease shall contain provisions therein comparable to those set forth in Section 6.6 for the benefit of each Approved Major Subleasehold Mortgagee. Section 6.8 Liabilityf Approved Mortgagee. (a) Leasehold Estate. No Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall become liable for the performance or observance of any covenants or conditions to be performed or observed by Lessee, unless and until such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee acquires possession of the Leasehold Estate, becomes the owner of the Lessee's interest hereunder, or enters into a New Lease with Lessor pursuant to Section 6.7 above. Thereafter, such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall be liable for the performance and observance of those covenants and conditions only for so long as such Approved Leasehold Mortgagee (or any assignee, designee or nominee thereof) or IsApproved Foreclosure Transferee remains in possession, owns such interest or is lessee under such New Lease (and thereafter to the extent of any, proceeds from the transfer or conveyance of such interest, but only as to any such covenants and conditions accruing to the date of such transfer or conveyance). (b) Major Subleasehold Estate. No Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall become liable for the performance or observance of any covenants or conditions to be performed or observed by the applicable Major Subtenant, unless and until such Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee acquires possession of the applicable Major Subleasehold Estate, becomes the owner of the Major Subtenant's interest under the applicable Major Sublease, or enters into a new sublease pursuant to provisions in the applicable Major Sublease described in Section 6.7.above. Thereafter, such Approved Major Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee shall be liable for the performance and observance of those covenants and conditions only for so long as such Approved Major Submitted Into the publics 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record In connectiog WV h item _�3F- ®n �y Priscilla A. Th mpson City Clerk 02-1804 Subleasehold Mortgagee (or any assignee, designee or nominee thereof) or Approved Foreclosure Transferee owns such interest or is sublessee under such new sublease (and thereafter to the extent of any proceeds from the transfer or conveyance of such interest, but only as to any such covenants and conditions accruing to the date of such transfer or conveyance). Section 6.9 Assignment of Development Plans and Project Approvals. (a) Grant of Right to Use. Lessee hereby grants Lessor the right to use the Development Plans and the ability to grant to other professionals the right to use the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepared the Development Plans and to the rights of any Approved Mortgagees therein) and all Project Approvals. Lessor agrees not to enforce such use right until after the occurrence and during the continuance of an Event of Lessee's Default. Furthermore, such use right shall be subject, subordinate and inferior to any rights with respect to the Development Plans and the Project Approvals which are granted to any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee as security for any applicable loan. If required by any Approved Mortgagee, Lessor shall join in any pledge of such rights as security for any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage solely to subordinate Lessor's interest in the same to the interest of such Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage. (b) Ownership Upon Termination of Lease. In the event of termination of this Lease on account of an Event of Lessee's Default, Lessor shall be entitled to the full, complete and unconditional use and ownership of the Development Plans and the ability to grant to other professionals the right to use the Development Plans (subject to the rights of the architect(s) and engineer(s) who prepared the Development Plans), and full, complete and unconditional ownership of the Project Approvals, without payment of any consideration therefor by Lessor to Lessee, provided that these rights shall be subject, subordinate and inferior to the rights therein of any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgage (or any applicable Approved Foreclosure Transferee), to the Submitted Into the public record in connection ori 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone item V -h, OnY' Priscilla A. Tho psora City Clerk a - 04 extent that a New Lease is entered into pursuant to Section 6.6 or a new Major Sublease is entered into pursuant to the comparable provisions of any Major Sublease. (c) Comparable Assignment in Major Subleases. Lessee covenants that each Major Sublease shall include an assignment (which assignment shall be comparable to that set forth in subparagraph (b) above) of such Major Subtenant's rights in and to any portion of the Development Plans and the Project Approvals, as the same pertain to the Major Sublease, such that the rights granted by Lessee herein shall include Lessee's rights to use any such Development Plans and Project Approvals which were prepared in connection with such Major Subleasehold Estate. Lease. Section 6.10 Survival. The provisions of this Section 6.9 shall survive any termination of this Section 6.11 Mezzanine Financing. (a) Secured By Approved Mortgage. Any Mezzanine Financing may be secured in whole or in part by an Approved Mortgage. In such case, the applicable Mezzanine Financer shall be deemed to be an Approved Mortgagee and entitled to all the rights and benefits hereunder of an Approved Mortgagee. (b) Secured by a Pledge. Any Mezzanine Financing made by an Approved Mezzanine Financer may be secured in whole or in part by a pledge or hypothecation of, or any other security interest in, any membership interests, shares or other ownership and/or voting interests in or rights of Lessee or any applicable Major Subtenant. Mezzanine Financing made by an Approved Mezzanine Financer, and'any such pledge, hypothecation or other granting of any such security interest, may be made freely and without Lessor's consent; provided that if such Mezzanine Financing is secured by an Approved Mortgage, it shall be in compliance with the applicable provisions of this Article VI. Furthermore, subject to subparagraph (c) below, any Approved Mezzanine Financer or Approved Lender (or any assignee who meets the criteria for an Approved Mezzanine Financer or Approved Lender, and any nominee or designee of an Approved Mezzanine Financer or Approved Lender) may, at any time, without Lessor's consent: (i) realize upon any such pledge, hypothecation or security interest in 9217950 v3 - Final Version of ubmitted Into the public Watsonon Island Ground Lease -City of Miami and Flagstone record in connecti® W* h item (d3 a. on l> Iy i 02-1304 Priscilla A. Th® psun City Clerk 0 -0 accordance with the terms of any applicable security agreements or instruments (or accept an assignment, conveyance or transfer in lieu thereof) and become the owner and holder of the applicable membership interests, shares or other ownership and/or voting interests in or rights of Lessee or any applicable Major Subtenant (collectively, a "Realization Upon Mezzanine Collateral"); and (ii) thereafter sell, convey, assign or transfer same to any other Person(s), provided that: (A) such Person(s) or Investors (as defined in Section 8.1) therein satisfy the requirements of Section 8.14 and Section 8.15; and (B) such sale, conveyance, assignment or transfer does not violate the terms and conditions of Section 8.2. (c) Transfer of Control Upon Realization of Collateral In the case of any Realization Upon Mezzanine Collateral which results in a Transfer of Lessee Control or a Transfer of Major Subtenant Control, as applicable (as such terms are defined in Section 8.1): (i) such event shall deemed a Foreclosure Transfer (even if the applicable Approved Mezzanine Financing is not secured by an Approved Mortgage, or if the Approved Mezzanine Financer holds an Approved Mortgage but elects not to exercise its rights and remedies thereunder), and any Person which obtains Voting and Operational Control of Lessee or the applicable Major Subtenant, as applicable, shall be deemed a Foreclosure Transferee (provided that such Person satisfies the requirements of clauses (i), (ii) and (iii) in the definition of a Foreclosure Transferee), and such Person shall thereupon be entitled to all of the rights and benefits afforded hereunder to a Foreclosure Transferee, including; without limitation, the right to transfer its interest in Lessee or the applicable Major Subtenant to an Approved Subsequent Foreclosure Purchaser. (d) Absolute Grant of Equity As a Condition to Mezzanine Financing. In the event any Approved Mezzanine Financer requires, as a condition to extending any Mezzanine Financing, that Lessee or any applicable Major Subtenant, as applicable, grant to such Approved Mezzanine Financer an absolute ownership or equity interest, direct or indirect, in Lessee or any applicable Major Subtenant (i.e., where such grant does not serve as collateral or security for any Approved Mezzanine Financing), such grant may be made, provided that such grant of ownership does not violate the terms and conditions of Submitted Into the public record in connectio wi h item Jaw on Y y op, 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Priscilla A. Thompson City Clerk Article VIII (it being understood, however, that such Mezzanine Financer shall be deemed to be a Non - 9 Disclosed Investor, as defined in Section S. 1). Section 6.12 Purchase Money Financing. Notwithstanding anything to the contrary contained herein: (i) Lessee shall have the right to take back a purchase money mortgage in connection with any Leasehold Estate Transfer (as defined in Article VIII) and to exercise all of its rights and remedies thereunder, but subject to the superior rights of any Approved Mortgagee; and (ii) any Major Subtenant shall have the right to take back a purchase money mortgage in connection with any Major Subleasehold Estate Transfer (as defined in Article VIII) and to exercise all of its rights and remedies thereunder, but subject to the superior rights of any Approved Mortgagee. The indebtedness secured by any such purchase money mortgage encumbering the Leasehold Estate shall be included in any calculation of the Maximum Project Debt to Value Ratio. The indebtedness secured by any such purchase money mortgage encumbering any Major Subleasehold Estate shall be included in any calculation of the Maximum Project Component Debt to Value Ratio with respect to such Major Subleasehold Estate. No such purchase 40 money mortgage may be assigned by the holder thereof to another Person unless such other Person qualifies as an Approved Lender under the criteria set forth in the definition thereof. ARTICLE VII USE OF SUBJECT PROPERTY Section 7.1 Certain Conditions Of Leasing. Lessee shall be subject to and bound by the covenants and agreements set forth in this Article VII. Such covenants and agreements shall run with the Leasehold Estate and burden any interests subordinate thereto. Section 7.2 Major Subleases and Space Leases. (a) Comparable Covenants in Mayor Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in Section 7.3(a) and Section 7.4 through Section 7.11. Lessee shall use reasonable, good faith efforts to Submitted Into the public record 'n connection wi #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone item 73 w ®n /a- /y a.> Priscilla A. Thompson City Clerk 02-1304 enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing 10 more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. (b) Comparable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in Section 7.3(a) and Section 7.4 through Section 7.11; and (ii) use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements on any of its Space Tenants, or to prevent Lessee from requiring any Major Subtenant to impose such more stringent requirements. (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Section 7.3(a) and Section 7.4 through Section 7.11 on account of any breach thereof by any Space Tenant. 0 Section 7.3 Permitted Uses, Long -Term Changes. (a) Permitted Uses. The Property shall be used solely for the Permitted Uses and no other use whatsoever (subject, however, to the provisions of Section 7.12 below), unless the Chief Executive Officer, in his or her sole discretion, approves any additional or other uses and such uses are lawful and have received all necessary approvals from applicable Governmental_ Authorities. (b) Long -Term Changes in Permitted Uses. At any time after the tenth (10`h) anniversary of the Possession Date, Lessee may make a request in writing to the Chief Executive Officer to change any of the Permitted Uses (other than those which are ancillary to income -generating Permitted Uses, such as parking), including, but not limited to, the Permitted Uses with respect to each of the Major Project Components other than the Parking Garage, if such Permitted Use: (i) is unable to achieve a trailing Debt Service Coverage Ratio of 1:0 for a period of three (3) consecutive years with respect to all mortgages encumbering the applicable Major Subleasehold Estate or portion thereof; or (ii) otherwise has failed to achieve a return sufficient to support reasonable debt service. Provided that any such change in°ro #217950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone record if, item j(3� on 7 Priscilla a�- Priscilla A. Thompson City Clerk 02-304 the Permitted Uses: (A) receives all necessary approvals from applicable Governmental Authorities 0 (including the City in its municipal capacity); and (B) complies with Applicable Law (including, but not limited to, passage of a public referendum, if then required by Applicable Law), the Chief Executive Officer shall approve or disapprove such change in accordance with the Chief Executive Officer Approval Procedures; subject, however, to any appropriate adjustment in Base Rent and/or Percentage Rent on account of any such change in the Permitted Uses as the Parties shall mutually agree upon (with each Party acting reasonably and in good faith). For purposes of this provision, the reasonable discretion of the Chief Executive Officer shall include such policy considerations as are deemed appropriate by the Mayor and/or the City Commission at such time. (c) Changes As to Hotels Where There is Another Hotel on Watson Island. In addition, in the event that Lessor, at any time during the Lease Term, enters into a lease agreement or other agreement for the construction and/or operation of another hotel on Watson Island, or Lessor (in either its proprietary or municipal capacity) otherwise authorizes, permits or causes the construction and/or operation of any such hotel on Watson Island, Lessee may make a request in writing to the Chief Executive Officer to change any of the Permitted Uses with respect to either or both of the Hotels. Provided that any such change in the Permitted Uses: (A) receives all necessary approvals from applicable Governmental Authorities (including the City in its municipal capacity); and (B) complies with Applicable Law (including, but not limited to, passage of a public referendum, if then required by Applicable Law), the Chief Executive Officer shall approve or disapprove such change in accordance with the Chief Executive Officer Approval Procedures; subject, however, to any appropriate adjustment in Base Rent and/or Percentage Rent on account of any such change in the Permitted Uses as the Parties shall mutually agree upon (with each Party acting reasonably and in good faith). For purposes of this provision, the reasonable discretion of the Chief Executive Officer shall include.. such policy considerations as are deemed appropriate by the Mayor and/or the City Commission at such time. Submitted into the public record in connection with item �3 �,,- on iy i} as Priscilla A. Thompson 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone City Clerk 2-1304 Section 7.4 No Discrimination. Lessee shall not discriminate in violation of any Applicable Laws upon the basis of race, color, religion, sex, or national origin in the sale, lease or rental, or in the use or occupancy, of the Property or the Leasehold Improvements. Section 7.5 Use of the Property. Lessee shall not use or occupy the Property at any time or do anything on the Property, or permit anything to be done in, brought into or kept on the Property, which: (i) violates any insurance policies required to be maintained hereunder; (ii) causes or is likely to cause injury to the Property; or (iii) constitutes a common law or statutory nuisance, public or private. Section 7.6 Leasehold Improvements to be Open to Public. As a general matter, the Project 02-1304 is intended to be "open to the public" as, much as practical. Accordingly, during the Lease Term, the Project shall be open to the general public without discrimination, subject to reasonable operational rules, regulations and restrictions typically imposed by operators of mixed uses projects similar to the Project; provided, however, that: (i) the businesses operating on the Property may charge fees for goods, commodities or services (including, without limitation, Marina slips and guest rooms at the Hotels, whether or not subject to an Approved Time Share License program) as they may establish from time to basis upon time, so long as such services are made available to the general public on a nondiscriminatory the payment of such fees; (ii) Lessee may operate or allow the operation of membership clubs (unless they are specifically listed herein as Prohibited Uses) which may charge membership fees, so long as such clubs are made available to the general public on a nondiscriminatory basis upon the payment of such membership fees; and (iii) nothing contained herein shall be deemed to require public access to any vessels at the Marina except as specifically required by clauses (i) and (ii) above, or to any areas not typically made available to the public (e.g., service areas, storage areas, "back of the house" areas, etc.). Section 7.7 Safe . Lessee shall take commercially reasonable actions to ensure that the Property is a safe environment for the general public. Lessor, as owner of the Property, shall have no responsibility for, or liability whatsoever to Lessee, the Major Subtenants, the Space Tenants and any other Person having any interest in the Leasehold Estate in connection with provision of security services Submitted Into the pUblle to the Property. record in connectio wl h #217950 v3 Final Version of Watson Island Ground Lease - City of Miami and Flagstone item O a on lt z C y - Priscilla A. Thompson --. City Clerk 02-1304 Section 7.8 Continuous Operation. Subject to any interruptions or closures on account of anv Force Majeure Events, emergencies or other exigent circumstances or on account of any repairs or alterations required or permitted hereunder, Lessee shall at all times during the Lease Term: (i) operate the Property in such manner as will, in Lessee's good faith reasonable business judgment, be reasonably likely to maximize the Gross Revenues produced by the Project; and (ii) keep the Project open for business on a continual basis during the usual days and hours for such business as are customary for the applicable type of use (it being understood, however, that certain businesses and activities are seasonal in nature and therefore may be closed or operate for fewer days or hours during certain periods of the year). The foregoing provisions shall not be deemed to require Lessee to ensure that all of the available facilities at the Property are open or leased to third parties at all times, inasmuch as: (A) there will need to be occasional adjustments of usage of facilities; and (B) there will be some portion of space that will be remain vacant from time to time given then -existing market conditions and turnover of Space Tenants. Furthermore, Lessor acknowledges and agrees that it is likely that most (if not all) of the businesses operating on the Property will be operated by Persons other than Lessee. Section 7.9 Compliance with Laws. (a) Compliance. Lessee shall throughout the Lease Term, at Lessee's sole expense, promptly comply in all material respects with all Applicable Laws now in effect or that may hereafter be adopted by any Governmental Authority (including, without limitation, the Minority and Women Business Affairs and Procurement Program Ordinance of the City of Miami). Specifically, but without limitation, Lessee shall construct and maintain the Leasehold Improvements to accommodate the disabled and comply in all material respects with the applicable requirements of the Americans with Disabilities Act of 1990, as amended, as well as other Applicable Laws pertaining to handicapped access, including, without limitation, the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities. Submitted Into the public - record in connection wi$h item r 36, on /i o- d Priscilla A. Tho pson City Clerk #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone )02--1304 (b) Notice. Lessee agrees to give Lessor prompt notice of the receipt by Lessee of any written complaints related to violation of any Applicable Law and of the commencement of any proceedings or investigations which relate to compliance with any Applicable Law. (c) Ridit to Contest Compliance. Lessee shall have the right in good faith to contest by appropriate legal proceeding and without cost or expense to Lessor, the validity of any Applicable Law. If compliance with any Applicable Law may legally be held in abeyance (i) without the incidence of any lien, charge or liability of any kind against the title to the Property or the Leasehold Estate (unless Lessee transfers such lien to bond or delivers an appropriate indemnity to Lessor), and (ii) without subjecting Lessee or Lessor to any liability of whatsoever nature for failure so to comply, Lessee may postpone compliance until the final determination of any proceedings, provided that all proceedings shall be prosecuted with all due diligence and dispatch. Section 7.10 Compliance with Insurance Requirements. Lessee shall observe and comply in all material respects with the requirements of all policies of public liability, fire and all other policies of insurance in force with respect to the Leasehold Improvements. Section 7.11 Prohibited Uses. Notwithstanding anything contained herein to the contrary, Lessee hereby agrees that the Property shall not be used for any of the uses set forth on Exhibit N attached hereto (collectively, the "Prohibited Uses") without the Chief Executive Officer's express prior written consent, which may be withheld in his or her sole discretion. Section 7.12 Casino Gambline. In the event that casino gambling or other forms of gambling or games of chance which are presently illegal in the City of Miami shall in the future become legal for similar properties, and Lessee or any Major Subtenant desires to offer the same on any portion of the Project: (i) Lessee or such Major Subtenant (or the applicable casino or other operator) shall be entitled to make application for a license therefor in,the same manner as similarly situated parties in conjunction with properties that are not leased by the City; (ii) any such application by Lessee or such Major Subtenant (or the applicable casino operator or other operator) for any such license or approval required by the City (in its municipal capacity) shall by considered by the City on the same basis as the City shall Submitted Into the public 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record In connectio With item i on Priscilla Aa Thompson 02-1304 City Clerk consider comparable proposals for properties in which the City is not a ground lessor; (iii) in the City's role as ground lessor of the Project, the City shall not object to Hotel A and Hotel B, at Lessee's option, being treated as a single hotel (e.g., for requirements as to the minimum number of hotel rooms or keys), provided, however, that this clause (iii) shall not prevent the City from refraining from according such treatment to the two hotels in the City's role in licensing, approving or overseeing gaming activity; and (iv) in its role as Lessor hereunder, the City may condition any approval of such gaming activities on receiving, over and above the Base Rent and Percentage Rent payable under this Lease, the Casino Rent (as hereinafter defined). (a) Casino Rent. For purposes hereof, the term "Casino Rent" means the fair market rent attributable to the operation of casino gaming or other games of chance on the Property, taking into consideration the rent payable on account of comparable gaming activities at those properties within the United States which are most comparable to the Project, but with any appropriate adjustments for regional differences, as determined in accordance with the procedure set forth in subparagraph (b) 49 below. Casino Rent shall not be treated as or be in lieu of a tax or levy by a municipal body on gaming activity. (b) Procedure for Determining Casino Rent. The procedure for determining the Casino Rent shall be as follows: (i) Selection of Lessor's Expert and Lessee's Expert. Lessor shall select an expert who shall be paid by Lessor ("Lessor's Expert"), and Lessee shall select an expert who shall be paid by Lessee ("Lessee's Expert"). Each expert shall be reasonably experienced or have consultants who are reasonably experienced with appraisal considerations involving casino operations. (ii) Selection of Third Expert. The third expert (the "Third Expert") shall be jointly selected by Lessor's Expert and', Lessee's Expert. The cost of the Third Expert shall be evenly split between Lessee and Lessor. If Lessor's Expert and Lessee's Expert fail to agree on the Third Expert within thirty (30) days after their appointment, the Third Expert shall be appointed by the President of the American Institute of Real Estate Appraisers ("AIREA") on the application of either Lessee's Expert or Submitted into the public #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record in connectio Wi item V3e- on /'- Priscijq.:.T p on rk -.2--1.304 Lessor's Expert. Such application shall be made by Lessor's Expert or Lessee's Expert, as applicable, on _fifteen (15) days' prior written notice to the other. The Third Expert appointed by the President of the AIREA may or may not be a member of the AIREA, in the discretion of such President, but in any event shall, in the judgment of such President, have appropriate experience for such appointment and shall not have undue connections or influence with either Lessor or Lessee. (iii) Procedure if Either Party Fails to Select Expert. If either Lessor or Lessee shall fail to appoint an expert within forty-five (45) days after demand from the other to make the appointment, then the expert appointed by the party making the demand shall appoint the second expert, and the two experts so appointed shall appoint the Third Expert. If the fust two experts so appointed shall fail to agree on such third expert within thirty (30) days after their appointment, the Third Expert shall be appointed by the President of AIRWA in the same manner provided in clause (ii) above. (iv) Proposals. Within thirty (30) days after appointment of all three (3) experts, Lessee's Expert and Lessor's Expert shall each prepare and submit a proposal for Casino Rent, istogether with written evidence supporting such proposal, to the Third Expert: (v) Selection of One Proposal. The Third Expert shall have fifteen (15) days to discuss the respective proposals with -each submitting expert and an additional thirty (30) days thereafter to select between the two (2) proposals; it being understood that the Third Expert may only select one (1) expert's proposal or the other and may not select portions of both or attempt to combine proposals. The proposal for Casino Rent selected by the Third Expert shall be binding and conclusive on Lessor and Lessee. (vi) Extension of Time Frames. Notwithstanding anything contained herein to the contrary, either Lessor or Lessee shall be entitled to extend any of the timeframes set forth in subparagraphs (ii) through (v) above for up to an additional thirty (30) day period if deemed necessary or desirable by either Party. Submitted Into the public record in connection wit item 3` on Is is aY Priscilla A. Tho psora City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--x.304 Section 7.13 Si a e. (a) Lessee's Installation of Signage on Property. Lessee, at its sole cost and expense, shall be permitted to install signage within the Property (including, but not limited to, any signage required by any franchisors or 'licensors with respect to the Hotels), subject to: (i) the prior written approval of the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures as to design, location, size and materials of any exterior signage; and (ii) Lessee's obtaining all applicable permits from the applicable Governmental Authorities as may be required in connection therewith. (b) Lessee's Installation of Signage Outside Property. Any request to install signage outside of the Property, including, without limitation, any request to the State of Florida Department of Transportation ("FDOT") for signage in State rights-of-way, must be approved in advance in writing by the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures. Such signage shall, to the extent permissible by FDOT, be consistent as to design, location, size and materials with other signage approved by Lessor for Watson Island. (c) Participation in Cost of Watson Island Pathfinder Signage System. Lessee shall participate in and pay, no later than thirty (30) days after receipt of a written invoice(s) from Lessor therefor, its proportionate share of the reasonable cost of an island -wide pathfinder signage system to provide uniform and efficient direction to all destinations on Watson Island. (d) MUSP. The exact form of all signage shall be subject to and in compliance with the requirements of the Major Use Special Permit for the Project. Section 7.14 Cure of Defaults Under Approved Leasehold Mortgages and Approved Major Subleasehold Mortgages. (a) Approved Leasehold Mortgages. Upon receiving written notice from any Approved Leasehold Mortgagee of any material default under any its Approved Leasehold Mortgage, Lessee shall use diligent efforts to cure such default in the manner and to the extent required by such Approved Leasehold Mortgage. Submitted into the public' record in ccnnectic vii h item - on �- oa c #217950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone Priscilla �Ao Thmps®npity clerk 02-1304 C. • (b) Approved Magor Subleasehold Mortgage. Lessee shall require each Major Subtenant to require each of such Major Subtenant's Approved Major Subleasehold Mortgagees to send a copy to Lessee of any written notice of a material default under the applicable Approved Major Subleasehold Mortgage. Upon Lessee's receipt of any such written notice, Lessee shall use diligent efforts to cause such default to be cured in the manner and to the extent required by such Approved Major Subleasehold Mortgage; provided, however, that Lessee shall not be required to cure any such default which cannot reasonably be cured by Lessee or cannot be cured without having possession of the applicable Major Project Component. (c) No Third Party Beneficiaries. The Parties specifically acknowledge and agree that no Approved Mortgagees, Major Subtenants or other Persons shall be third -party beneficiaries of the provisions of this Section 7.15. Section 7.15 Enforceability. It is intended and agreed hereby that the restrictive covenants contained in this Article VII shall be binding upon the Parties and their successors in interest and assigns, as covenants running with the land and shall be for the benefit and in favor of, and enforceable by, either Lessor and/or Lessee; provided however, that such covenants shall be binding on Lessor and Lessee, and their respective successors in interest and assigns, only for such period as each shall have (i) fee title to the Property, as to the City, and (ii) the Leasehold Estate, as to Lessee. ARTICLE VIII RESTRICTIONS ON TRANSFERS AND APPROVAL OF INVESTORS Section 8.1 Definition of Terms For purposes of this Article VIII, the following terms shall have the meanings attributed to them in this Section: (a) As to Leasehold Estate. (i) "Leasehold Estate Transfer" means any direct or indirect, voluntary or involuntary, sale, transfer, or assignment of any right, title or interest in and to this Lease or the Leasehold Suhrnitiei d !H-,10 the Public Estate. record in con lIriciction ;vit item �!(O@� a. � 0 Priscilla—A. Thompson 9217950 v3 -Final Version of Watson Island Ground Lease -City of Miami and Flagstone City Clerk 02x-1304 9 i (ii) "Lessee Interest Assignment" means: (A) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of any legal or beneficial interest in, or any grant of a security interest with respect to, Lessee; (B) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of all or substantially all of the assets of Lessee; or (C) any merger or consolidation with or of, or recapitalization or other similar transaction with respect to, Lessee or any Person having any legal or beneficial interest in Lessee. (iii) "Lessee Transfer of Control" means any Lessee Interest Assignment which results in a change in Voting and Operational Control of Lessee. (b) As to Major Subleasehold Estates: (i) "Major Subleasehold Estate Transfer" means any direct or indirect, voluntary or involuntary, sale, transfer, or assignment of any right, title or interest in and to any Major Sublease or any Major Subleasehold Estate. (ii) "Major Subtenant Interest Assignment" means: (A) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of any legal or.beneficial interest in, or any grant of a security interest with respect to, any Major Subtenant; (B) any direct or indirect, voluntary or involuntary, sale, assignment or transfer of all or substantially all of the assets of such Major Subtenant; or (C) any merger or consolidation with or of, or recapitalization or other similar transaction with respect to, such Major Subtenant or any Person having any legal or beneficial interest in such Major Subtenant. (iii) "Major Subtenant Transfer of Control" means any Major Subtenant Interest Assignment which results in a change in Voting and Operational Control of the applicable Major Subtenant. (c) Other Terms. (i) "Bgyraktar Permitted Transfer Date" means the later to occur of: (i) five (5) years after the Possession Date; or (ii) three (3) years after the date on which the last of the Major Submitted Into the public Project Components shall have Opened for Business. record in connec$I �1l itern — 3�—on / /a% Priscilla A. TFOilnpgon ®4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone city Clerk 021304 • "Major Sublease Unrestricted Transfer Date" means the date on which: 0 (i) the Project shall have achieved a trailing Debt Service Coverage Ratio of 1.3 with respect to all applicable Approved Leasehold Mortgages; and (ii) the applicable Major Project Component shall have achieved a trailing Debt Service Coverage Ratio of 1.3 with respect to all applicable Approved Major Subleasehold Mortgages encumbering the Major Subleasehold Estate with respect to such Major Project Component. - - (iii) "Allocated Rent" means: (i) the total Base Rent payable by Lessee to Lessor hereunder during any applicable calendar year, multiplied by a fraction, the numerator of which is the total acreage of the Property subleased pursuant to any applicable Major Sublease, and the denominator of which is the total acreage of the Property; and (ii) the total Percentage Rent payable by Lessee to Lessor hereunder during any calendar year which is attributable to the Major Project Component operated pursuant to such Major Sublease. The foregoing definition of Allocated Rent shall not bind the Chief Executive Officer in the approval of any Major Sublease hereunder. is(iv) "Lessee's Net Worth" means the net worth of Lessee, taking into account the Major Sublease Rent Present Value and such other assets as Lessee may then have. (v) "Major Sublease Rent Present Value" means the present value (based on a commercially reasonable interest factor agreed upon by the Parties) of the estimated aggregate rental stream (including base rent, percentage rent and all other rents) required to be paid to Lessee under all of the Major Subleases during the then remaining balance of the respective terms. thereof. . (vi) "Ground Lease Rent Present Value" means the present value (based on a commercially reasonably interest factor agreed upon by the Parties) of the total estimated Base Rent and Percentage Rent payable from Lessee to Lessor during the then remaining balance of the Lease Term. (vii) "Sufficient Lessee Economic Interest" means that either of the following requirements is met: (A) the aggregate rental stream (including base rent, percentage rent and all other rents) required to be paid to Lessee under each Major Sublease during each calendar year of the term thereof exceeds, by Twenty Percent (20%) or more, the Allocated Rent U rt s ect lto to �iCM' a�ubllC #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record in con riecti th item y/ on <i- ta- O1 Priscjlla Am Thorson ---- City Clerk 02-1304 Sublease which is payable by Lessee to Lessor hereunder during such calendar year; or (B) Lessee's Net Worth exceeds, by Twenty Percent (20%) or more, the Ground Lease Rent Present Value. (viii) "Existing Investment Fund" means any existing, widely recognized investment vehicle (such as a widely recognized mutual fund, real estate investment trust, pension fund, i insurance company or other investment fund) which has or obtains any direct or indirect legal or beneficial interest in the Project, which investment vehicle: (i) also invests in investments other than the Project and/or other projects which are owned and/or operated by the Bayraktar Family; and (ii) was not formed for the specific purpose of investing in the Project. (ix) "Investors" means: (i) all Persons now or hereafter having an equity interest in the Project; (ii) any direct or indirect legal or beneficial owners of interests in all of the equity investors in the Project; and (iii) holders of any note, debenture, mortgage or other security instrument encumbering any Major Project Component(s) and/or any interest in Lessee, other than any Approved Mortgagee. (x) "Non -Disclosed Investors" means those Investors: (i) whose investments in the Project are made through an Existing Investment Fund; or (ii) who are or will become Investors on account of any transaction described in Section 8.8. Investors. (xi) "Disclosed Investors" means all Investors other than Non -Disclosed (xii) .. "Financial Advisor" means any financial advisor for the Project designated by Lessee. Such fmancial advisor initially shall be HSBC (U.S.) Securities Inc. Any replacement thereof shall be subject to the Chief Executive Officer's prior written approval in accordance with the Chief Executive Officer Approval Procedures, but the Chief Executive Officer shall approve any such financial advisor which is: (i) not a Disqualified Person; and (ii) is listed in Exhibit O or otherwise has a level of business experience and expertise comparable to that of HSBC (U.S.) Securities Inc. Submitted Into the public record in connection with item _t3G on it )0.X Priscilla A. Thompson #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone City Clerk 02-130-4 (xiii) "Investor Questionnaire" means a questionnaire prepared by the Financial Advisor as part of the initial screening process for Disclosed Investors, the form of which shall have been mutually agreed upon by the Financial Advisor, the Chief Executive Officer and Lessee. Section 8.2 Bavraktar Interests. (a) All Transfers by Bayraktar Prohibited PRIOR TO Bayraktar Permitted Transfer Date. Lessee recognizes and agrees that: (i) the experience of Lessee and Mehmet Bayraktar was given special consideration by Lessor in the selection process which resulted in the award of this Lease; (ii) the qualifications and identity of Lessee and Mehmet Bayraktar are of particular concern to the community and Lessor; and (iii) it is partially because of such qualifications and identity that Lessor is entering into this Lease. Accordingly, at all times prior to the Bayraktar Permitted Transfer Date: (A) the Bayraktar Family Equity Contribution shall be maintained; (B) Mehmet Bayraktar shall retain Voting and Operational Control of Lessee; (C) Mehmet Bayraktar or Lessee shall retain Voting and Operational Control of each Major Subtenant then in existence; and (D) Lessee shall own more than Fifty Percent (50%) of the ownership interests in each Major Subtenant then in existence. Furthermore, at all times prior to the Bayraktar Permitted Transfer Date, there shall be no Leasehold Estate Transfer, Lessee Transfer of Control or Major Subleasehold Estate Transfer. Any waiver of the foregoing requirement shall require the Chief Executive Officer's prior written consent, which may be granted or withheld in his or her sole and absolute discretion. (b) Transfers by Bayraktar Permitted AFTER Bayraktar Permitted Transfer Date. From and after the Bayraktar Permitted Transfer Date: (i) the Bayraktar Family may divest itself of any and all equity it has in the Project; and (ii) Mehmet Bayraktar may divest himself of Voting and Operational Control of Lessee and/or any Major Subtenant. No such actions shall require Lessor's prior written consent; provided, however, that any: (i) any such action shall be in compliance with the provisions of Section 8.15 and Section 8.15; and (ii) such action which results in a Leasehold Estate Transfer, a Lessee Transfer of Control, a Major Subleasehold Estate Transfer or a Major Subtenant Transfer of Control shall comply with the applicable provisions of this Article V1Bbmltt2d Into the publi(o --record in connectiov�€%h #217950 v3 - Final Version of Watson Island Ground Lease - City -of Miami and Flagstone stern 3 a' on i 1a 1 $I> -- Priscilla A. Thompson -� City Cleric 021304 Submitted Into the public record in connection with ® -item 43^.- on .. �- Priscilla A. Thompson Section 8.3 Leasehold and Major Subleasehold Estates. City Cleric (a) Leasehold Estate Transfer or Lessee Transfer of Control AFTER Bavraktar Permitted Transfer Date. From and after the Bayraktar Permitted Transfer Date, any Leasehold Estate Transfer or Lessee Transfer of Control shall be permitted, provided that: (i) Approval. The Chief Executive Officer shall have given, in accordance with the Transfer Review Procedures (as hereinafter defined), his or her prior written approval (which approval shall be in his or her sole discretion prior to the Bayraktar Permitted Transfer Date), of: (i) the new Lessee, in the case of a Leasehold Estate Transfer; or (ii) the Person obtaining or having Voting and Operational Control of Lessee, in the case of any Lessee Transfer of Control; (ii) Assumption. In the case of a Leasehold Estate Transfer, the new Lessee shall assume, by written instrument in recordable form and reasonably satisfactory to the City Attorney, all of the obligations of Lessee under this Lease; (iii) Voting and Operational Control. At least one Person shall have Voting and Operational Control of the new Lessee (in the case of a Leasehold Estate Transfer) or of Lessee (in the case of a Lessee Transfer of Control), and such Person shall have (or shall have retained an operator having) not less than ten (10) years of experience in owning or operating projects which are comparable to the Project; (iv) No Disqualified Person. The new Lessee (in the case of a Leasehold Estate Transfer) or the Person acquiring Voting and Operational Control of Lessee (in the case of a Lessee Transfer of Control) shall not be a Disqualified Person; and (v) Investors. The requirements of Section 8.14 and Section 8.15 shall be satisfied as to all Investors in the new Lessee (in the case of a Leasehold Estate Transfer) or all new Investors in Lessee (in the case of a Lessee Transfer of Control). (b) Magor Subleasehold Estate Transfer or Major Subtenant Transfer of Control AFTER Bayraktar Permitted Transfer Date and BEFORE the Major Sublease Unrestricted Transfer Date. During any period from and after the Bayraktar Permitted Transfer Date and before the Major Sublease #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ZouDmlttea into the pumic record in connection with ® • item on i4 v ->-- Priscilla A. Thompson City Clerk Unrestricted Transfer Date, any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control shall be permitted, provided that: (i) Approval. The Chief Executive Officer shall have given, in accordance with the Transfer Review Procedures, his or her prior written approval, in his or her sole discretion, of: (i) the new Major Subtenant, in the case of a Major Subleasehold Estate Transfer; or (ii) the Person obtaining or having Voting and Operational Control of the applicable Major Subtenant, in the case of any Major Subtenant Transfer of Control; Assumption. In the case of a Major Subleasehold Estate Transfer, the new Major Subtenant shall assume, by written instrument in recordable form and reasonably satisfactory to the City Attorney, all of the obligations of the applicable Major Subtenant under the applicable Major Sublease; (iii) Voting and Operational Control. At least one Person shall have Voting and Operational Control of the new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or of the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control), and shall have (or shall have retained an operator having) not less than ten (10) years of experience in owning or operating large scale projects which are comparable to the applicable Major Project Component; (iv) Sufficient Lessee Economic Interest. There exists a Sufficient Lessee Economic Interest with respect to such Major Sublease; (v) No Disqualified Person. The new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or the Person acquiring Voting and Operational Control of the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control) shall not be a Disqualified Person; and (vi) Investors. The requirements of Section 8.14 and Section 8.15 shall be satisfied as to all Investors in the new Major Subtenant (in the case of a Major Subleasehold Estate Transfer) or all new Investors in the applicable Major Subtenant (in the case of a Major Subtenant Transfer of Control). #217950 v3 - Final Version of Watson Island Ground Lease - Ci of Miami and Flagstone City a8 02-x304 dE7;.;1$116tvu 11Itw ton., ts.n...... record in connection with ® item q3u- on /.)6.. Priscilla A. Thompson CP Clerk c Maior Subleasehold Estate Transfer or Major Subtenant Transfer of bntro AFTER Bayraktar Permitted Transfer and also AFTER Major Sublease Unrestricted Transfer Date. From and after the Major Sublease Unrestricted Transfer Date, any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control shall be permitted, provided that the requirements set forth in clauses (i) through (vi) of subparagraph (b) above are satisfied (although the Chief Executive Officer's approval is required, it shall not be unreasonably withheld). Section 8.4 Chief Executive Officer Review and Approval Procedures. In the event of a proposed Leasehold Estate Transfer or Lessee Transfer of Control described in Section 83(a) or any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control described in Section 83(b) the following procedures (collectively, the "Transfer Review Procedures.') shall apply: (a) Notice to Chief Executive Officer. Not less than forty-five (45) days prior to any such proposed transaction, Lessee shall give or cause to be given to the Chief Executive Officer written notice of (and request from the Chief Executive Officer's written approval) of the applicable Person described in Section 83(a)(i) or Section 8.3 (b)(i), as applicable (the "Proposed Transferee") of which Lessee or its officers shall have knowledge, together with the following information. (i) the name and address of the Proposed Transferee; (ii) a description of the nature and character of the experience and business operations of the Proposed Transferee; (iii) disclosure of the ownership of such Proposed Transferee (with back up third -party written information, if possible); (iv) a proposed form of any assignment and assumption agreement, if required pursuant to Section:83(a)(ii) or Section 83(b)(ii); and (v) banking references and/or financial information with respect to the Proposed Transferee reasonably sufficient to enable the Chief Executive Officer to determine the financial responsibility of the Proposed Transferee. Such notice and information shall also be accompanied by an administrative fee of One Thousand Dollars ($1,000.00) paid to Lessor in order to reimburse Lessor for all of its internal costs and expenses, including, without limitation, .reasonable costs incurred in connection with the review of financial materials, meetings with representatives of the proposed transferee, and review and approval of the required assignment documents. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone p2-130.4 (b) Response by Chief Executive Officer. 01JUtllILWU MLU UIV F3UU11y record in connection with item W -U., t3ny DY Priscilla A. Thoson City Clerk Within thirty (30) days of the Chief • Executive Officer's receipt of the written notice and information described in subparagraph (a) above, the Chief Executive Officer shall give Lessee written notice either: (i) that the Chief Executive Officer has approved to the Proposed Transferee; or (ii) the Chief Executive Officer is refusing to approve the Proposed Transferee, in which case the Chief Executive Officer shall, as part of such written .notice, include a statement (with specificity and reasonable back up information for his or her conclusion and as to which of the five (5-) criteria described in clauses (i) through (v) of subparagraph (a) above are not satisfied and why) of the reasons for such refusal to approve the Proposed Transferee. If the Chief Executive Officer fails to timely give such written approval, he or she shall be deemed to have approved r the Proposed Transferee. The Chief Executive Officer's determination shall be made reasonably and in good faith solely on the basis of such five (5) criteria. Any such approval shall not waive any of Lessor's rights to approve any subsequent Proposed Transferee for which approval is required under this Article VIII. 0 (c) Payment of All Sums Then Due. All Rent, Impositions, insurance, permitting and other charges due and owing as of the date of the transaction and required to be paid by Lessee under this Lease shall have been paid by Lessee and all other covenants and agreements to be kept and performed by Lessee shall have been complied with as of the date of the transaction (but for purposes of satisfying the foregoing requirement, the Proposed Transferee may rely upon an estoppel certificate from Lessor given pursuant to Section 30.2). (d) Assumption of Obligations. If applicable pursuant to Section 8.3(a)(i) or Section 83(b)(0 -the Proposed Transferee shall, for itself and its successors and assigns, and especially for the benefit of Lessor, by written instrument in recordable form and reasonably satisfactory to the City Attorney, expressly assume all of the obligations of Lessee under this Lease, or all obligations of the Major Subtenant under any applicable Major Sublease, as applicable. The Proposed Transfer shall deliver to Lessor, or shall cause to be delivered to Lessor, within thirty (30) days after the effective date of the 4217950 v3 - Final Version of Watson Island Ground Lease - Ci of Miami and Flagstone City ags -i)-004 Submitted Into the public record in connection ith item 3ai- onorn ly �y oY oil transfer, true and correct copies of all of the instruments effectuating the transfer, rinc�uldt�ng an ity jhom erk �CI$j/ Clerk applicable instrument of assignment and assumption. Section 8.5 Release from Liability. Upon compliance with any applicable provisions of Section 8.3 and/or Section 8.4, the applicable transferor shall, in the case of a Leasehold Estate Transfer or a Major Subleasehold Estate Transfer, be released from all liability under this Lease or the applicable Major Sublease, as applicable, for actions or obligations arising or accruing subsequent to such transfer. Section 8.6 No Consent Required for Affiliate or Related Party Transfer. Notwithstanding anything to the contrary contained herein, any Lessee Interest Assignment or Major Subtenant Interest Assignment: (i) resulting from the death of any Person, provided that such Person's interest is transferred to the spouse, any sibling(s) and/or any lineal descendant(s) (collectively, "Permitted Relatives") of the deceased Person or to one or more trusts or legal entities for the benefit of any of the Permitted Relatives; (ii) made by any Person to one or more trusts or legal entities for the benefit of such Person's Permitted Relatives, provided that the transferring Person has control over the management and decision making of such trusts or legal entities; or (iii) made by any Person to Affiliate(s) of such Person, may be completed at any time without the Chief Executive Officer's consent, provided that: (a) Notice. Lessee or the applicable Major Subtenant shall give the Chief Executive Officer prior written notice thereof (or in the case of clause (i), prompt written notice thereof); (b) No Release. Any Person liable for the obligations of Lessee under this Lease or any Major Subtenant under any Major- Sublease (or in the case of clause (i), such Person's estate) shall not be released from such liability on account of any such Lessee Interest Assignment or Major Subtenant Interest Assignment; (c) No Change in Votingand nd Operational Control. Such Lessee Interest Assignment or Major Subtenant Interest Assignment shall not result in any change in the Person(s) having Voting and Operational Control of Lessee or the applicable Major Subtenant (except in the case of the death of any natural Person(s) who has Voting and Operational Control), although such Voting and Operational Control may be exercised through different or additional intermediary Person(s); 0 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x:304 ® &J"—. Flitted Into the public record in conrlW vl�ith itemor u> (d) No Disqualified Person. Any applicable transferee shall n r 4-a'111kS uaS®n Person; and City Clerk (e) Investors. The provisions of Section 8.14 and Section 8.15 below shall apply to any new Investors on account of any such Lessee Interest Assignment or Major Subtenant Interest Assignment. In connection with any such Lessee Interest Assignment or Major Subtenant Interest Assignment, nothing contained herein shall be deemed to prevent Lessee or any Major Subtenant from complying, if it so elects, with the applicable provisions of Section 8.4, in which case the transferor (provided that the Chief Executive Officer approves the Proposed Transfer pursuant to the Transfer Review Procedures) shall be released from liability as provided for by Section 8.5. Section 8.7 Mortgages, Leases and Subleases. The provisions of this Article VIII shall not apply to or prohibit: (i) any Approved Mortgages, Foreclosure Transfers (including any such Foreclosure Transfer described in Section 6.11(c) above), transfers to Approved Subsequent Purchasers (including any such transfer described in Section 6.11(c) above) or any other transactions governed by this Article VI; or (ii) any Major Subleases, Space Leases or other leasing or subleasing transactions governed by Article XXXIII (except that Section 8.14 and Section 8.15 shall be applicable to any Investors in any Major Subtenants). Section 8.8 Going Public. Notwithstanding anything to the contrary contained herein, no consent of the Chief Executive Officer shall be required for, and the provisions of this Article VIII shall not apply to: (i) the public offering of securities by any Person which is effected pursuant to a registration statement filed with the Securities & Exchange Commission under the Securities Act of 1933 or any successor act (or pursuant to any comparable or similar procedure used outside the United States); provided, however, that if such public offering with respect to Lessee or any Major Subtenant occurs prior to the Bayraktar Permitted Transfer Date, Mehmet Bayraktar must retain Voting and Operational Control of Lessee or such Major Subtenant, as applicable; and (ii) any subsequent transaction in which such securities are publicly traded. #217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone 02-x.304 • • • 1 Submitted Into the public record in connectio �^t,,th item ,3C, on IJ pY Priscilla A. Thompson Section 8.9 Other Transactions for Which No Consent Is Required. Except °for Qy Clerk procedures as to Investors set forth in Section 8.14 and Section 8.15, any Lessee Interest Transfer or Major Subtenant Interest Transfer or other transaction not constituting a Lessee Transfer of Control or a Major Subtenant Transfer of Control (including, but not necessarily limited to, any transfer or conveyance of any portion of the Leasehold Improvements which is subject to any Direct Space Lease) shall not require any consent by Lessor pursuant to this Article VIII. Section 8.14 Violation. Any Leasehold Estate Transfer, Lessee Transfer of Control, Subleasehold Estate Transfer or Major Subtenant Transfer of Control made in violation of the terms of this Article is strictly prohibited and shall be null and void and no force and effect and shall be deemed an Event of Lessee's Default hereunder. Section 8.11 Acceptance of Rent from Transferee. The acceptance by Lessor of the payment of Rent following any Leasehold Estate Transfer, Lessee Transfer of Control, Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control prohibited by this Article shall not be deemed to be a consent by Lessor to any of the foregoing for which such consent is required, nor shall the same be deemed to be a waiver of any right or remedy of Lessor hereunder. Section 8.12 Lessor's Participation In Proceeds. (a) Leasehold Estate Transfer or Lessee Transfer of Control. Upon the first time that there occurs either a Leasehold Estate Transfer or a Lessee Transfer of Control (whether occurring in a single transaction or in a series of transactions over a five (5) year period), Lessor shall be entitled to receive, within five (5) Business Days thereafter, a sum equal to One Tenth of One Percent (0.1%) of the total purchase price payable in consideration of such Leasehold Estate Transfer or Lessee Transfer of Control. No such sum shall be due and payable in connection with any subsequent Leasehold Estate Transfer or Lessee Transfer of Control. (b) Major Subleasehold Estate Transfer or Major- Subtenant Transfer of Control. With respect to each Major Project Component, upon the first time that there occurs either a Major Subleasehold Estate Transfer with respect to such Major Project Component or a Major Subtenant #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connectio witl iters Q3-- On !y c1 Priscilla A. 'rhom sc Transfer of Control (whether occurring in,a single transaction or in a series of transactions over a five (5) City Clel year period) with respect to the Major Subtenant for such Major Project Component, Lessor shall be entitled to receive, within five (5) Business Days thereafter, a sum equal to One Tenth of One Percent (0.1%) of the total purchase price payable in consideration of such Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control. No such sum shall be due and payable in connection with any subsequent Major Subleasehold Estate Transfer with respect to such Major Project Component or Major Subtenant Transfer of Control for such Major Project Component. (c) Excluded Transactions. Notwithstanding the provisions of subparagraphs (a) and (b) above, no such sum described therein shall be due and payable in connection with: (i) any of the transactions or events described in Section 8.6, Section 8.7 and/or Section 8.9; (ii) any public offering described in Section .8.8 where the securities being offered constitute debt and the proceeds from the sale of such securities are used to retire indebtedness secured by one or more Approved Mortgages; (iii) any other public offering described in Section 8.8 to the extent the proceeds from the sale of such securities are used for capital raises for the construction, operation or maintenance of the Project or other uses for the Project, as opposed to the "cash out" of any Investors; or (iv) any public trading of securities described in Section 8.860 other than an initial public offering. (d) No Double Counting: Notwithstanding the provisions of subparagraph (a) and (b) above: (i) the sums described in subparagraph (b) shall not be payable with respect to any Major Project Component if sum described in paragraph (a) has been previously paid with respect to the entire Project; and (ii) to the extent any sum described in subparagraph (b) has been paid as to any particular Major Project Component, such sum shall be deducted from any amount thereafter payable under subparagraph (a) with respect to the entire Project. Section 8.13 Organizational Documents of Lessee. As of the Possession Date, the documents listed in Exhibit P attached hereto constitute all of the organizational documents of Lessee, including, without limitation, any operating and/or voting agreements among the members thereof (collectively, the "Organizational Documents"), and Lessee hereby represents and warrants to Lessor that Lessee has #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.304 Submitted Into the publi record in connection %1t • • item 3w oni,y 33 Priscilla A. Thbdp s€ provided to Lessor true, correct and complete copies of all such Organizational Documents. Lessee shall City Cie promptly provide Lessor with written notice of any amendments, modifications, additions or terminations of the Organizational Documents, together with written copies thereof. Prior to the Bayraktar Permitted Transfer Date, the member(s) or other Investor(s) of Lessee shall not enter into any voting agreements, the effect of which would cause Mehmet Bayraktar to relinquish Voting and Operational Control of Lessee. Section 8.14 - Investors. (a) Non -Disclosed Investors. Lessee shall not be required to disclose or provide to the City the identity of or any documents or other -information (including, but not limited to, financial statements or other information) concerning Non -Disclosed Investors. (b) Disclosed Investors. (i) Information to be Provided to Chief Executive Officer. With respect to each initial Disclosed Investor and each proposed subsequent Disclosed Investor, Lessee shall deliver or cause to be delivered to the Chief Executive Officer the following information: (A) the name and address of the Investor; and (B) the Social Security Number or U.S. Federal Taxpayer Identification Number of the Investor, if one exists (or in the case of foreign investors who do not have a Social Security Number or U.S. Federal Taxpayer Identification Number, any similar identification number (if one exists) provided for in the country of their primary residence or domicile). Disclosed Investors shall not be required to provide any financial statements or information to Lessor. (ii) Investment Questionnaire. Lessee shall cause the Financial Advisor to require each Disclosed Investor to complete the Investment Questionnaire. Based on the responses to the questions in the Investor Questionnaire and such other due diligence the Financial Advisor may perform in the normal course of its fiduciary duties, the Financial Advisor shall determine, in its good faith, commercially reasonable judgment, whether or not such Disclosed Investor is a Disqualified Person. The Financial Advisor shall not propose to Lessee (and Lessee shall not allow) any Disclosed Investor which #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone JUUIIIIl1CU 11ItU LI IV PUUIIU record in connection with, ® item 3w on is L;l�o--,-- Priscilla A. Thompson the Financial Advisor has concluded is a Disqualified Person. The Parties acknowledge and agree that of ity Clerk • Disqualified Person shall hold a legal or beneficial interest in the Project. Section 8.15 Chief Executive Officer's Right to Object. Notwithstanding anything to the contrary contained in this Section, the Chief Executive Officer shall have the right to object to any Disclosed Investor (and therefore require that such Disclosed Investor not have any equity investment in the Project), if such Person is a Disqualified Person. Any such objection shall be made by a written notice given by the Chief Executive Officer to Lessee within twenty (20) days after Lessee (and, if applicable, the Financial Advisor) provides the information required by subparagraph (i) above. Such notice shall state the specific basis for the objection. Section 8.16 Transfers of the City's Interest. (i) Conveyance of Interest. During the Lease Term, Lessor may convey its fee and reversionary interest in the Property or its interest in this Lease to another Person or Persons, provided that: (i) Lessor gives Lessee prior written notice thereof; (ii) such other Person or Persons shall assume in writing all of Lessor's obligations hereunder; (iii) if more than one Person acquires any such interest, only one such Person shall be irrevocably designated in writing by all such Persons to take any actions which shall be binding of all such Persons as Lessor hereunder; and (iv) in the event such other Person is not a Governmental Authority, the provisions set forth in Exhibit shall no longer be applicable. (ii) Subject to this Lease. Any conveyance or transfer by Lessor of its fee or reversionary interest shall be made subject to the terms and conditions set forth in this Lease and the rights of Lessee and any Person claiming by, through or under Lessee; provided, however that, any approvals to be made by the "Chief Executive Officer" hereunder shall be made by the transferee of Lessor's interest hereunder in the same manner as described in Section 38.7. The Person to which Lessor assigns or conveys such fee or reversionary interest shall, for itself and its successors and assigns and especially for the benefit of Lessee, by written instrument in recordable form, expressly assume all of the 0 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-1304 :admitted Into the-publin- record in connect' ith 0 ® item 4/3 on !yoy- PriSGille A. Thompson obligations of Lessor under this Lease arising and accruing after the date of the transfer and agree to Gity Clerk 0 subject to all terms and conditions hereof to which Lessor is subject. (iii) Mortgage of Fee Interest. The lien, operation and effect of any mortgage encumbering Lessor's fee simple estate or other interest in the Property or any portion thereof shall, at all times and for purposes, be subject, subordinate and inferior to this Lease (including all of the terms, covenants, conditions and provisions hereof) and the Leasehold Estate and all rights of Lessee hereunder and any Major Subtenant, Space Tenant or other Person claiming by, through or under Lessee, including, without limitation, holders of Approved Time Share Licenses and their respective lenders. ARTICLE IX EASEMENTS AND LICENSES Section 9.1 Utility Easements. (a) In Favor of Lessor. Lessee agrees to grant to Lessor and/or any public utility company, pursuant to separate instruments, non-exclusive perpetual easements for the installation, 0 operation, maintenance, repair, replacement, relocation, and removal of utility lines and facilities (together with access incidental thereto) such as water lines, fire lines, gas mains, electrical power lines, telephone lines, storm and sanitary sewers and other utility lines and facilities (collectively, -Elifity Facilities"), and such other easements as Lessor and/or such public utility companies may reasonably require from time to time. All such easements shall be over, under and/or across: (i) those portions of the Property shown on the approved Construction Plans and Specifications; or (ii) such other locations on the Property as may be requested by Lessor or such public utility companies from time to time, so long as such locations are reasonably acceptable to Lessee, considering, among other things, whether such locations cause unreasonable interference with the construction, use and operation of the Project or undue expense to Lessee. The instruments granting such easements shall provide, among other things, that the grantee(s) thereunder shall not exercise their rights thereunder in such a manner as would cause unreasonable interference with the construction, use and operation of the Project or undue expense to ! #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connection with ® item_� _�_on i y r,� Priscilla A. Thompson Lessee. Any such easement instrument shall include appropriate indemnification from LessoQb Clerk insurance obligations on the part of Lessor with respect to any Persons entering onto the Property and/or the Leasehold Improvements pursuant to the easement rights granted therein. . (b) For the Benefit of Lessee. Subject to the rights of adjacent property owners (other than Lessor) and other lessees of property on Watson Island (and to the condition that the same shall not cause any undue expense or interference to such parties), Lessor agrees to grant unto any applicable provider of Utility Facilities servicing the Property and/or the Leasehold Improvements, and such provider's employees, contractors or agents and their respective successors and assigns, the non-exclusive right and easement to install, operate, maintain, repair, relocate, replace and remove Utility Facilities underground within all portions of Watson Island owned by Lessor, provided that such Utility Facilities are shown on the approved Construction Plans and Specifications, or are located at such other locations as may be requested by Lessee and approved by Lessor from time to time during the Lease Term. Section 9.2 Easements in Favor of Lessee. In order to facilitate the construction, use and operation of the Project consistent with the Watson Island RFP and the Island Gardens Proposal, Lessor agrees to consider in good faith granting to Lessee, any Major Subtenant, any Space Tenant and their respective employees, agents, contractors, invitees, licensees, guests, and customers, and their respective successors and assigns, such other easements and access rights as Lessee may reasonably require from time to time, all subject to and in accordance with such terms, covenants and conditions as may be reasonably imposed by Lessor and with Applicable Laws. Section 9.3 Access Easement in favor of the Public. Lessor shall execute and deliver and cause to be recorded in the Public Records of Miami -Dade County, Florida an instrument, in form and substance mutually satisfactory to Lessor and Lessee, pursuant to which Lessor shall grant an easement in favor of the public over, across and upon the waters (the "Adjacent Waters") above the submerged land adjacent to the Marina which is owned by the City (the "Adjacent Submerged Land"), for the purpose of affording to marine vessels using the Marina: (i) ingress and egress to and from the Marina; and (ii) the ability to turn around and otherwise maneuver in connection with entering and exiting and docking at the 0 #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 11 5uomlilea tray tilt; Fuen1v record in connection 4wthnitem ��on_/��oY PriscillaA. "Thor)I soil � City Cleric Marina, all so as to facilitate the proper use and operation of the Marina consistent with the Watson Island RFP and the Island Gardens Proposal. Section 9.4 Duration of Easements. Unless a shorter term is provided, each of the rights and easements granted or reserved in this Article shall be for the Lease Term. Section 9.5 Dredging to Facilitate Safe Passage of Vessels. Lessee shall obtain any permits from applicable Governmental Authorities which are required to complete such dredging of the Adjacent Submerged Land as may be required to facilitate the safe passage of marine vessels arriving at and departing from the Marina over, across and upon the Adjacent Waters. All such dredging shall be completed in accordance with such permits and Applicable Laws. Lessor shall reasonably cooperate with Lessee in conjunction with Lessee's obtaining all such permits, and shall not object to Lessee's completion of such dredging in accordance with such permits and Applicable Laws. Section 9.6 Confirmatory Instruments. Each Party covenants and agrees that from time to time at the request of the other Party, it shall execute and deliver such additional documents or instruments confirming the rights and easements granted and reserved in this Article, or more precisely showing their location, as such requesting Party shall reasonably deem to be necessary or desirable. ARTICLE X PAYMENT OF IMPOSITIONS Section 10.1 . Payment of Impositions. Lessee shall pay, or cause to be paid, all Impositions before they become delinquent (i.e., before any penalty, fine or interest is added to the amount due, but without any requirement that the amount due be paid by any date which will take advantage of any discounts available for early payment). If by law any Imposition is payable or may, at the option of the taxpayer, be paid in installments (whether or not interest shall accrue on the unpaid balance of the Imposition), Lessee may pay the same (and any accrued interest on the unpaid balance of the Imposition) in installments, but same shall in all events be paid before they become delinquent. Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included before the Possession 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02`130- Submitted Into the public record in connection with ® item _ y3g, on , i o >--- Priscilla Priscilla Ae Thompson Date and a part of which is included after the Possession Date shall be adjusted as between Lesso(°'& Clerk 0 Lessee as of the Possession Date, so that Lessee shall pay (before same becomes delinquent) that proportion of the Imposition attributable to that part of the fiscal period included in the Lease Term, and Lessor shall pay the remainder, if applicable. Any Imposition relating to a fiscal period of the taxing authority, a part of which is included within the Lease Term and a part of which is included in a period of time after Lease Term, shall be adjusted as between Lessor and Lessee as of the termination of the Lease Term, so that Lessee shall pay that proportion of the Imposition attributable to that part of the fiscal period included in the Lease Term, and Lessor shall pay the remainder, if applicable. Section 10.2 Taxes on Lessor: Any sales, excise, transaction, use or privilege tax now or hereafter imposed by any Governmental Authority upon Lessor or the Property on account of, attributed to, or measured by Rent or other charges payable by Lessee shall be paid by Lessee to Lessor as additional Rent, even though the taxing statute or ordinance may purport to impose such tax against Lessor. Nothing herein contained shall require Lessee to pay municipal, state or federal income taxes assessed against Lessor, or corporate excess profits or franchise taxes imposed upon Lessor unless the method of taxation prevailing at the commencement of the term hereof shall be altered so that such taxes shall be assessed in lieu of or as a substitute for the whole or any part of the Impositions, in which event, such income, profits or franchise taxes shall be included within the term "Impositions" for purposes hereof, and Lessee shall pay and discharge the same as herein provided. Section 10.3 Lessee's Right to 6ntest Impositions. Notwithstanding anything to the contrary contained herein, Lessee shall have and (retain the right to contest in good faith by legal proceedings, diligently pursued, any Imposition, or any valuation in connection therewith, provided that: (i) to the extent required by Applicable Laws, Lessee shall first make all contested payments under protest; (ii) Lessee shall pursue such action in accordance with Applicable Laws such that neither the Property nor the Leasehold Improvements nor any part thereof or interest therein would be in any danger of being sold, forfeited, lost or interfered with; and (iii) all expenses incurred in connection with such proceedings shall be paid by Lessee. Such legal proceedings shall include appropriate proceedings to review tax #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone assessments and appeals from orders in connection therewith and appeals from anv judgments, decrees or • orders. Section 10.4 Proof of Payment. Lessee shall furnish (or arrange for an outside service to furnish) to Lessor, within thirty (30) days after the date when any Imposition is paid by or on behalf of Lessee, official receipts of the appropriatetaxing authority, photocopies thereof or other proof of payment satisfactory to Lessor. Submitted into the public record in connection with ARTICLE XI item�-4--on /.,,A--)0 INSURANCE Priscilla A. Thompson - City Clerk Section 11.1 Insurance on the 'Leasehold Improvements. Beginning on the Possession Date and at all times during the Lease Term, Lessee shall, at Lessee's sole cost and expense but for the benefit of Lessor and Lessee as their interests may appear, maintain the following insurance: (a) Property Insurance. "All risk" property insurance with extended coverage against loss or damage by earthquake, mudslide, windstorm, flood with such endorsement for amended coverage, vandalism, malicious mischief, sprinkler leakage and special coverage, including flammable materials used for cooking. (i) Amounts. Such coverage shall be in the following amounts: (i) as to windstorm, $100,000,000; (ii) as to flood, $12,500,000; and (iii) as to all other perils, One Hundred Percent (100%) of the replacement cost of the Leasehold Improvements (exclusive of foundation and excavation costs), Lessee's alterations, improvements, fixtures, equipment, furniture, trade fixtures and floor coverings, including the expense of the removal of debris as a result of damage by an insured peril (collectively, the "Insured Property") on the Property. (ii) Deductibles. The maximum deductibles for such coverage shall be as follows: (i) as to flood and windstorm, Five Percent (5%) of the completed building value; and (ii) as to all other perils, One Percent (1'%) of the insured value. Is4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 ' Submitted Into the puu► ,- record in connectio vii t' item �on y y Y Priscilla A. Thom sG (iii) Loss Pa -ees and Insureds. Lessor, Lessee and any Approved Leaseh�Idy Clerk Mortgagee shall be named as loss payees. Lessee shall be the first named insured, and Lessor and any Approved Mortgagee shall be named as additional insureds. (iv) Special Considerations for Casualty and Windstorm Insurance Notwithstanding the foregoing, the Parties acknowledge and agree that coastal properties are often precluded from being insured by private insurers and that any casualty and windstorm insurance may have to be written through the Florida Joint Underwriters Association and/or other governmental or other insurance pool which may include certain prohibitions such as no replacement cost coverage. (v) Determination of Replacement Cost. Unless expressly waived in writing by the Chief Executive Officer, the replacement cost of the insured property shall be determined every seven (7) years during the Lease Term by an insurance appraiser selected and paid for by Lessee, provided that Lessee shall obtain Lessor's approval (which approval shall not be unreasonably withheld) of the appraiser before commencement of the appraisal. The appraiser selected by Lessee shall submit to Lessor and Lessee a written report of the appraised replacement cost. If Lessor or Lessee is not satisfied with such report, the dissatisfied party shall serve upon the other a notice of dissatisfaction within thirty (30) days after receipt of the report, and' the Parties shall in good faith attempt to resolve any disputes concerning the appraised replacement cost. During this period of the dispute, Lessee shall continue to maintain insurance in an amount equal to that maintained before the dispute arose. Promptly upon receipt of the appraiser's report and resolution of any such dispute, Lessee shall procure and deliver to Lessor written confirmation from the insurer(s) evidencing the increase in insurance which may be required to comply with the provisions above. (b) Business Interruption Insurance. Business interruption insurance with limits not less than an amount equal to: (i) the Base Rent for a twelve (12) month period; plus (ii) an amount equal to the average annual Percentage Rent payable during the three (3) year period immediately preceding the issuance or renewal of such insurance (or; in the case of each of the first (3) three years from and after the date on which Percentage Rent is first payable hereunder, the amount of annual Percentage Rent 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connection v�r'th item _ 3,L on �r z - Priscilla A. Thompson estimated by Lessee in good faith which will be payable during such year). Lessor, Lessee and City Cleric Approved Leasehold Mortgagee shall be named as loss payees. Lessee shall be the first named insured. (c) Boiler and Machinery Insurance. Boiler and machinery insurance covering repair and replacement of all boilers and machinery serving or benefiting the Leasehold Improvements. The policies of insurance shall be endorsed so as to provide use and occupancy coverage for the Leasehold Improvements in such amount as may be reasonably acceptable to Lessor. Lessor, Lessee and any Approved Leasehold Mortgagee shall be named as loss payees. Lessee shall be the first named . insured, and Lessor and any Approved Leasehold Mortgagee shall be named as additional insureds. Section 11.2 Other Insurance To Be Carried. Lessee shall also, at Lessee's sole cost and expense but for the mutual benefit of Lessor (with Lessor being named as an additional insured thereunder) and Lessee (with leasehold mortgage clauses for the benefit of any Approved Mortgagee, which clauses shall be consistent with the�terms of this Lease), maintain the following insurance: (a) CGL Insurance. Commercial General Liability insurance on a commercial general liability coverage form with "broad form" coverage, or its equivalent, including contractual liability, Products and completed operations, Personal injury, liquor legal liability, garage keepers liability (which coverage shall not be required until the Parking Garage is operating), and products and completed operations, personal injury, and premises coverage against sums adjudicated to be payable by the insured on account of bodily injury, death or property damage occurring in or about the Property (it being understood, however, that such coverage", does not extend to damage to property in the insured's care, custody and control). (i) Amounts.ii The limits of such coverage shall not be less than One Million Dollars ($1,000,000) per occurrence and! Two Million Dollars ($2,000,000) aggregate single limit for bodily injury and property damage. No, deductible in excess of $50,000 will be carried under this coverage without the Chief Executive Officer's prior written consent, which shall not be unreasonably withheld. 0 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted into the public ® record in connection v, 'th iteral �on oY Priscilla A. Thorn psc. � i (u) Umbrella Policy. Lessee shall further maintain an excess habf4y Clerk umbrella policy whose limits shall not be less than a combined single limit of Five Million Dollars ($5.000,000). (iii) Adjustments in Amounts. Such insured amounts as provided in clauses (i) and (ii) above shall be adjusted as of the fourth (4`h) anniversary of the January 1 following the Possession Date, and every three (3) years thereafter by any increase and/or decrease (which decrease shall not result in an amount less than- the amounts initially required as set forth above) in the Consumer Price Index (as defined in Section 5.2) from the Possession Date to the date on which the adjustment is to be made. (b) Builder's Risk. During periods of excavation and/or construction or during periods of alteration or during periods of restoration in the event of damage or destruction or condemnation or during periods of razing or demolition at, in or on the Property, the Leasehold 11 Improvements or any part of it, an all risk Builder's Risk policy (including extended coverage for fire, lightning, earth movement, flood, collapse, business interruption, hurricane, boiler and machinery) covering the interests of Lessor and Lessee. Such policy shall insure that portion of the Leasehold Improvements which is affected by such excavation and/or construction for not less than 100% replacement cost on a completed value basis (including foundations and pilings), and shall include coverage for the increased cost of construction due to the enforcement of any laws, as well as the contingent liability from the operation of buildings, and coverage for the demolition cost of undamaged portions of buildings. (j) E & O Coverage. In addition, Lessee shall cause all of the key or primary professionals retained by it in connection with any construction (e.g., architects and engineers) to procure errors and omission coverage reasonably satisfactory to Lessee for Lessee's and Lessor's benefit, in such amounts as are customarily carried by such professionals in Miami -Dade County, Florida. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone � k. � 00 4 I Submitted Into the public ® ® record in connection i h item 3w on /y Ji vY �royilha A. Thompson (ii) "Wrap -Up" Policy. Lessor acknowledges and afire s a e cover(!3e ly Clerk required by this subparagraph (b) and anyl'other coverages required hereunder may be obtained through a so-called "wrap-up" policy. (c) Pollution/Environmental Impairment Liability. Pollution/Environmental Impairment Liability Insurance coverage on a claims made basis with limits of One Million Dollars ($1,000,000) per occurrence (with the policy period extending at least six (6) years from and after the expiration of sooner termination of this Lease), providing coverage for the damage caused by spillage of any fuel, petroleum, products or any other "hazardous substances", "hazardous materials" or "toxic substances" (as defined in any and all state, local, or federal laws, rules, regulations and orders pertaining to environmental, public health or welfare matters), whether those substances are solid, liquid or gaseous. Such policy of insurance shall also provide coverage for the cost of cleanup of the affected area and for the removal, transportation and safe disposal of any contaminated area. Lessor and Lessee shall be named as loss payees. Lessee shall be. the first named insured, and Lessor and any Approved Leasehold 10 Mortgagee shall be named as additional insureds. (d) Worker's Compensation. Worker's compensation and occupational disease coverage in the amounts and types required by Chapter 440, F.S., or any successor thereto. Only Lessee shall be named as an insured. (e) Automobile Liability. Automobile liability insurance covering all owned, non - owned and hired vehicles used in conjunction with operations covered by this Lease. The policy or policies of insurance shall contain such' limits as may be reasonably requested by Lessor from time to time but not less than Five Hundred Thousand ($500,000). Such insured amount as provided above shall be increased as of the fourth (4`h) anniversary of the January 1 following the Possession Date, and every three years thereafter by any increase in the Consumer Price Index from the Possession Date to the date in which the adjustment is to be made. (f) Other Coverage. In the event that any other type of legislation may be enacted imposing special liability upon Lessor or Lessee by virtue of its use for any special purposes, before 9 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0.2-0.04 ODU1IHUft:U tnlu lne PUDIIC record in connection with item on y 4 3 ® Priscilla A. Thompson Lessee shall so use the Property and/or the Leasehold Improvements or any part of it for such pi'irsClerk Lessee shall provide insurance in form and substance, and with insurers and limits reasonably satisfactory d to Lessor and meeting commercial standards insuring the interests of Lessor and Lessee and naming Lessor as additional insured. Section 11.3 Policies Obtained by Independent Contractors. Lessee may cause its independent contractors to provide some or all of the insurance coverages required hereunder; To the extent that such independent contractors carry such coverages. Lessee shall not be required to carry such coverages, so long as the coverages obtained by Lessee and such independent contractors together satisfy the requirements of this Article XI. Lessor, Lessee and any Approved Mortgagees shall be named as additional insureds as to any such coverages obtained by Lessee's independent contractors. Section 11.4 Policies Obtained by Major Subtenants. Lessee may, at its option, include provisions in any Major Sublease requiring the applicable Major Subtenant to carry insurance coverages as to the applicable Major Project Component corresponding to those required to be obtained hereunder by Lessee. To the extent that Major Subtenants (or their Space Tenants) carry such coverages, Lessor shall not be nY required to ca such coverages as to such Major Project Component, so long as the coverages obtained by all of the Major Subtenants (or their Space Tenants) and Lessee together satisfy the requirements of this Article XI. Lessor, Lessee and any Approved Mortgagees shall be named as additional insureds as to any such coverages obtained by Major Subtenants or Space Tenants. Section 11.5 Delivery of Insurance Policies. All public liability and worker's compensation policies shall be retained by Lessee. Subject to the rights of any Approved Mortgagee, all other policies of insurance required to be furnished shall be held jointly by Lessor and Lessee. Insurance company certificates evidencing the existence of all of these policies of insurance shall be delivered to Lessor. (a) Required Policy Provisions. All policies of insurance required to be provided and obtained shall provide that they shall not be amended or canceled on less than thirty (30) days' prior written notice to Lessor and all insureds and beneficiaries of the policies; provided, however, that if thirty (30) days' notice is ever commercially unavailable, then the required number of days' notice shall be #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02.1304 • • reduced to such number as is commercially available. All such policies shall contain waiver of subrogation rights endorsements as required below. Lessor shall have no obligation to pay premiums or make contributions to the insuring company or any other Person or satisfy any deductible. (b) Delivery. On or, before the Possession Date and then not less than thirty (30) days prior to the expiration date of any policy required to be carried pursuant to this Article, Lessee shall deliver to Lessor and any Approved Leasehold Mortgagee the applicable respective policies and insurance company certificates evidencing all policies of insurance and renewals required to be furnished hereunder. Receipt of any documentation of insurance by Lessor or by any of its representatives which indicates less coverage than required does not constitute a waiver of Lessee's obligation to fulfill the insurance requirements herein. Section 11.6 Lessor's Right to Obtain. If Lessee fails to pay insurance premiums when due or to comply with other insurance requirements set forth in this Lease, Lessor shall have the right, at its u option, to order insurance policies and to °i advance such sums as are required to maintain or procure such I insurance, and to the extent of the money so advanced, Lessor shall be entitled to reimbursement by Lessee pursuant to Article XV hereof. Unless there would ensue a lapse of coverage, Lessor shall, before making any such advance, provide Lessee with ten (10) days' prior written notice and the opportunity to obtain the required policies. Section 11.7 Insurer To Be Approved: Premium Receipts. All policies of insurance of the I character described in Sections 11.1 and 11.2 shall be shall be effected under policies issued by insurers permitted to do business in the State of Florida and rated in Best's Insurance Guide, or any successor thereto (or, if there is none, an organization having a national reputation for rating insurance companies) as having a general policyholder rating of "A" and a financial rating of at least "VII". On written request by Lessor, Lessee shall provide photocopies of receipts showing the payment of premiums for all insurance policies required to be maintained by this Lease Section 11.8 Waiver of Subrogation. Submitted Into the public record in connectio with item �13a. on ��- is o >. Priscilla A. Thompson City Clerk 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1.304 0 1 0 (a) Mutual Waiver. Each Party waives all rights to recover against the other Pam for any damage arising from any cause covered by any insurance required to be carried by the waiving Party, or any insurance actually carried by the waiving Party; provided, however, that such waiver shall apply only to the extent the applicable insurers issue the appropriate waiver of subrogation rights endorsements described in subparagraph (b) below. (b) Endorsements. Each Party shall cause its insurer(s) to issue appropriate waiver of subrogation rights endorsements to all policies of insurance carried in connection with the Property. (c) Major Subtenants. Lessee shall require all Major Subtenants to execute and deliver to Lessor a waiver of claims similar to the waiver in this paragraph and to obtain such waiver of subrogation rights endorsements, and Lessor shall execute and deliver to each Major Subtenant such waiver of claims and obtain such waiver of subrogation endorsements. Submitted Into the public record in connection wit item �3a— on iy o'' ARTICLE XII Priscilla Aa Thompson City Clerk RECORDS AND AUDITING Section 12.1 Records of Sales. (a) Maintenance of Records. During the Lease Term, Lessee shall maintain and keep, or cause to be maintained and kept at the Property, a full, complete and accurate record and account of all Gross Revenues (on an accrual basis) arising or accruing by virtue of the operations conducted at or from the Property, for each day of the Lease Term, together with audited annual financial statements, federal and state (if applicable) income tax returns, Florida sales tax returns and other returns or evidence reasonably acceptable to Lessor of the payment of all other required Impositions, statements of revenues and fees charged, agreements entered into by Lessee with respect to the Project, bank statements and deposit slips, cash receipt journals, general ledgers and any other appropriate documentation as may be reasonably required by generally accepted,accounting practices for the applicable industry(ies). 217950 %3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 (b) Availability of Records for Inspection. At all times during the Lease Term, upon providing fourteen (14) days' -prior written notice to Lessee, all then existing records and accounts and all other supporting records which are located at the Property pursuant to Section 12.1 shall be available for inspection and audit by Lessor and its duly authorized agents or representatives during the hours of 8:00 a.m. to 5:00 p.m., Monday through Friday. All such records and accounts shall be in accordance with generally accepted accounting principles. (c) Accounting Control Equipment. Lessee must provide point of sale machines or such other cash registers or accounting control equipment deemed reasonably necessary for proper control of cash and payments, whether such transaction is a cash or credit transaction. (d) Required Period for Preserving Records. Lessee shall keep and preserve, or cause to be kept and preserved, such records for not less than sixty (60) months after the payment of the Percentage Rent due under the terms hereof to which such records relate. For the same period of time, Lessee shall also retain copies of all sales and tax returns covering its operations at the Property, and any other governmental tax or other returns which show Lessee's sales therein, and shall, upon demand, deliver photographic copies or computer disks thereof to Lessor at no cost to Lessor. (e) Cooperation. Lessee shall cooperate with Lessor's internal auditors (or such other auditors designated by Lessor) in order to facilitate Lessor's examination of records and accounts. Lessee shall allow Lessor or Lessor's auditors to inspect all or any part of the compilation procedures for the aforesaid monthly reports. Such inspection shall be reasonable and is at the sole discretion of Lessor. Section 12.2 Audit. (a) Audit by Lessee. Lessee shall deliver or cause to be delivered within one hundred (120) days after the end of each calendar year to Lessor's Office of Asset Management, currently located at 444 SW 2 Avenue, Suite 325, Miami, FL 33130, audited financial statements for such calendar year, prepared and certified by a nationally recognized auditor employed at Lessee's sole cost and expense (the "Auditor"). Such Auditor shall certify that: (i) it made a complete examination of the books, state sales tax returns, and federal income tax returns of Lessee, all Major Subtenants and all Direct Space Tenants Submitted Into the public #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone record in connection wi h item Yaw on 0A /, o s— Priscilla Ao Thompson 04 City Clerk 02-13 which are Affiliates of Lessee; and (ii) such statement is prepared in accordance with general)} accepted accounting principles and practices and represents the Gross Revenues of Lessee, the Major Subtenants and such Direct Space Tenants for the period indicated therein (on an accrual basis). Within menty (20) days after the delivery of such audited statements, Lessee shall pay to Lessor any unpaid balance of the Rent or underpayment of Percentage Rent, if any, and Lessor shall credit any overpayments, if any, towards the next payment of Rent due. (b) Lessor's Remedies for Failure to Deliver Audit. In the event Lessee fails to prepare or deliver the required Audited Financial,'Statement to Lessor within the time set forth in subparagraph (a) above, Lessor, upon thirty (30) days' written notice to Lessee, may elect to exercise either or both of the following remedies: (i) to treat any continuing omission as a default of this Lease, subject to applicable notice and cure periods specified in Seetion 25.1(1); and/or (ii) to cause an audit and/or accounting pursuant to the provisions of this Lease to be made by any auditor of Lessor's choosing at the sole cost and expense of Lessee. Such audit shall be binding on Lessee. Lessee shall pay the reasonable cost of such audit within thirty (30) days of receipt of an invoice for same. (c) Audit by Lessor. In 'addition to the audit rights specified in subparagraph (b) above, Lessor shall have the right, upon fifteen,' (1 5) days' prior written notice to Lessee, to cause a complete audit by a nationally recognized auditor to be made of the accounting records of Lessee, the Major Subtenants, and any Direct Space Tenants which are Affiliates of Lessee, in connection with the sales on, from or related to the Property for the period covered by any Percentage Rent statement furnished by Lessee to Lessor. Any such audit shall be made at Lessor's sole cost and expense and must be completed within sixty (60) months of Lessee's delivery of such applicable Percentage Rent statement to Lessor. If such audit shall disclose an underpayment of Rent, Lessee shall pay Lessor any unpaid balance within thirty (30) days of receipt of notice from, Lessor that such balance is due. If such audit shall disclose an overpayment, Lessor shall credit such overpayment towards the next payment of Rent due. (d) Continuing Right to Examine. The acceptance by Lessor of payments of Percentage Rent shall be without prejudice to Lessor',s right to conduct an examination of Lessee's books and records #Z 17950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connection i item 4L --on 444-11nl. Priscilla A. Thompson 02-1304 city Clerk Submitted Into ine puunu record in connection tl� item -1430- on '/ y o z. Priscilla A. Th mo, i of its Gross Revenues and inventories of merchandise on the Property in order to verify the amount (Q-itY clerk annual Gross Revenues made by Lessee in and from the Property. Neither the receipt by Lessor of any statement or any payment of Percentage Rent for anv period, nor the failure of Lessor to make an -y audit for any such period shall bind Lessor as to the correctness of any statement or payment, nor bar Lessor from collecting at any time thereafter the correct Percentage Rent due for such period. Notwithstanding the foregoing, Lessor shall not re-examine an accounting period which has previously been audited, unless it has reasonable cause to do so, and Lessor shall in no event go back further than sixty (60) months from Lessee's delivery of any applicable Percentage Rent statement. (e) Major Subleases and Space Leases. (i) Major Subleases and No -Direct Space Leases. In each Major Sublease, Lessee shall include comparable provisions which shall require that the applicable Major Subtenant comply with the provisions of this Article XXII or require, as to any portion of the applicable Major Project Component covered by Space Leases, that all of such Major Subtenant's Spaces Tenants comply with same. So long as Lessee is using good faith efforts to enforce such compliance by Major Subtenants, Lessee shall be relieved from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. (ii) Direct Space Leases. In each Direct Space Lease, Lessee shall include comparable provisions which shall require that the applicable Direct Space Tenant comply with the foregoing reporting and auditing procedures. So long as Lessee is using good faith efforts to enforce such compliance by such Direct Space Tenants, Lessee shall be relieved from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. (iii) Affiliates. Notwithstanding the foregoing, in the case of Major Subtenants or Direct Space Tenants which are Affiliates of Lessee, only actual compliance by such Major Subtenants or Direct Space Tenants shall relieve Lessee from any making or keeping any duplicative reports or otherwise complying with any duplicative procedures. »217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • • ARTICLE XIII REPRESENTATIONS AND COVENANTS Submitted Into the public (record in connectiol 4ihitem=on �'' � Priscilla Ao Tho son Priscilla City Clerk Section 13.1 Limited Representations by Lessor. Lessor makes the following representations. covenants and warranties, which shall survive the execution of this Lease and the taking of possession of the Property by Lessee: (a) Marketable Title. Lessor is indefeasibly seized of marketable, fee simple title to the Property, and is the sole owner of and has good right, title and authority to convey and transfer the Leasehold Estate to Lessee, free and clear of all liens and encumbrances other than the Permitted Title Exceptions and subject to the terms and conditions of the Partial Modification of Restrictions. From and after the Possession Date, Lessor shall take no action and shall record no documents in the Public Records which would materially impair Lessee's estate, rights or interest in and to the Leasehold Estate or otherwise be binding on Lessee or run with the Leasehold Estate, without the prior written consent of Lessee. (b) No Parties in Possession. No party except Lessee shall, on the Possession Date, be in or have any right to possession of the Property. (i) No Pending Litigation. There is no suit, action, claim, audit, arbitration, or legal, administrative, judicial or other proceeding (including, without limitation, any of the foregoing relating to violations of any Applicable Laws, litigation, investigation or proceeding pending, or, to the knowledge or belief of Lessor, threatened, which relates to, affects, or involves the Property, or which would impair or otherwise adversely affect Lessor's ability to perform its obligations under this Lease, any of which would have a material adverse effect on the Property or the Project, or which is or could become a lien upon the Property. (c) Compliance with Laws. The execution and delivery of this Lease has been duly authorized and is in accordance with and pursuant to all Applicable Laws (including, without limitation, those of Lessor) and the Constitution of the State of Florida. 7217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone C7 rI • Section 13.2 Authority. Each Party represents to the other that: Submitted Into the public record in connection with item.�w t?n /s /oY Priscilla A. Thompsol'I (i) such Pam has, and Qqy Clerk exercised, the applicable legal requirements necessary to adopt. execute and deliver this Lease and perform its obligations hereunder; and (ii) this Lease has been duly, executed and delivered by such Pam and constitutes a valid and binding obligation of such Party, enforceable in accordance with its terms, conditions and provisions. Section 13.3 Lessee's Representations and Covenants. (a) Funding of Project. To the best of Lessee's knowledge: (i) Lessee has access to sufficient funds to satisfy the Initial Equity Requirement (as defined in Section 6.1); (ii) as of the Possession Date, Lessee will have closed upon an Approved Construction Loan (as defined in Section �.][); and (iii) the total of such sums will be sufficient to carry out the development and construction of the Project and to operate the Project Components and comply with the terms and conditions of this Lease. (b) Due Diligence. Lessee has done such studies and has made such evaluations as it deems appropriate regarding the tourism and local markets in the area surrounding Watson Island and has deemed it desirable to invest in the Project, recognizing the risks inherent therein. (c) No Liability for Municipal Actions. Lessee acknowledges that Lessor shall not be liable under this Agreement for any actions taken by the City, acting in its municipal capacity, including, without limitation, any actions which may adversely impact tourism, crime, the local economy, the success of the Project, etc., and that in no event shall any actions taken by the City in its municipal capacity be the basis for any cause of action or defense of any obligation by Lessee hereunder. (d) No Other Business Activities. Lessee covenants that at all times during the Lease Term, Lessee shall not engage in any business activities unrelated to the development, construction, use and operation of the Project as contemplated by this Lease. Section 13.4 Disclaimer of Lessor's Representations. (a) "As Is" Condition. Lessee acknowledges that it has examined the Property, and hereby accepts the Property in its present ''AS -IS, WHERE -IS" condition and without any additional representations or warranties of any kind or nature by Lessor whatsoever, express or implied, as to the 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone `9 Submitted Into the public record in connection with item _ 3a' on Priscilla A. Thompson Property, the condition thereof, or the accuracy of any information furnished to Lessee with respeC,t ity Clark thereto. Lessee assumes the sole responsibility for the condition and demolition of the present improvements and other structures located on the Property in order that Lessee may construct, operate. maintain and manage the Leasehold Improvements upon the Property; and Lessor shall not be required at any time to make any repairs, replacements, changes (structural or otherwise), additions or alterations to the Property, the Leasehold Improvement's and/or any other property of any kind demised by this Lease. (b) No Other Representations. Lessee hereby expressly acknowledges and agrees that except as and to the extent expressly provided to the contrary in Section 13.1 and Section 13.2 or in the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003: (1) Lessor makes and has made no warranty or representation whatsoever as to the condition or suitability of any portion of the Property for Lessee's purposes; (ii) Lessor makes and has made no warranty, express or implied, with regard to the accuracy of any information furnished to Lessee, and Lessor shall not be bound by any statement of any broker, employee, agent or other representative of Lessor; (iii) Lessee has made a complete and thorough independent examination and inspection of all portions of the Property utilizing such experts and consultants as Lessee deemed appropriate and, on the basis of its inspection, Lessee is thoroughly familiar with all portions of the Property (including, without limitation, whether or not hazardous or toxic materials are or have heretofore been located on or under or generated from any portion of the Property), and all other matters relevant to Lessee; (iv) Lessee has determined that the condition of all portions of the Property is satisfactory to Lessee; and (v) Lessor makes and has made no warranty, express or implied, concerning any portion of the Property, its condition, the use to which it may be put, any environmental matters, or any other thing or matter directly or indirectly related thereto or hereto, including, without limitation, NO WARRANTY OF MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE, OR RELATING TO THE ABSENCE OF LATENT OR OTHER DEFECTS. Section 13.5 Survival. The provisions of this Article shall survive the expiration or sooner termination of this Lease. ?#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone o2.—.1304 Submitted Into the public • ® record in connection onnectio with item �3w on �y �y oY ARTICLE XIV Priscilla A. I hompson City Clerk REPAIRS, MAINTENANCE ALTERATIONS AND IMPROVEMENTS Section 14.1 Maintenance and Repair. (a) Maintenance. Throughout the Lease Term, Lessee shall, at Lessees sole cost and expense, maintain or cause to be maintained in a first-class, good, clean, safe and orderly condition and repair the Property and the Leasehold Improvements. Such maintenance shall include, without limitation, the docks, seawalls and submerged areas, subject to Lessee's obtaining such permits, approvals and authorizations from all applicable .Governmental Authorities are as necessary to perform such maintenance of such docks, seawalls and submerged areas. (b) Repairs. Throughout the Lease Term, Lessee shall, at Lessee's sole cost and I� expense, promptly make or cause to be made to the Leasehold Improvements all necessary repairs, renewals and replacements, interior and exterior, structural and nonstructural, whether made necessary or caused by fire or other casualty (but subject to the provisions of Article XVI), or by ordinary wear and tear. All repairs, renewals and replacements shall be of good quality sufficient for the proper maintenance and operation of the Leasehold Improvements and shall be constructed and installed in compliance with all Applicable Laws. (c) Removal of Dangerous Condition. Promptly after receiving written notice from Lessor or any other Person of any dangerous condition from time to time existing on the Property, Lessee shall, at Lessee's sole cost and expense, do or cause to be done all things necessary to remove such condition, including, but not limited to, taking appropriate measures to prevent or repair any erosion, collapse or other unstable condition on the Property. (d) Accumulation of Debris. Lessee shall not permit the accumulation of waste, dirt, rubbish, debris or refuse matter upon the Property or the Leasehold Improvements. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 Submitted Into the public ® ® record in connection with item y3e- on _ y i� o 2/ Priscilla A. Thol ipb,on (e) Insurance. Lessee shall not permit anything to be done upon the PropertQtglerk Leasehold Improvements which would invalidate or prevent the procurement of all insurance policies required pursuant to the provisions of Article XI. (f) No Lessor Repair or Maintenance Obligations. Nothing contained in the Lease shall impose on Lessor the obligation to make any repairs or expend any monies for the maintenance of the Property, or the renewal, replacement or repair of the Leasehold Improvements; provided, however that if Lessee fails to do any of the foregoing in accordance with the terms of this Lease, then Lessor, upon reasonable prior written notice to Lessee, may elect, in its sole discretion, to perform or cause the same to be performed on Lessee's behalf and all of the costs and expenses reasonably incurred in connection with the foregoing shall be deemed to be additional Rent due from Lessee to Lessor hereunder. Section 14.2 Alteration and Modification to Leasehold Improvements After Completion of Leasehold Improvements. 0 (a) Definition of Terms. For purposes of this Section 14.2, the following terms shall have the meanings attributed to them below: (i) "Exterior Alterations" means any alteration or addition to any Project Component (from that which was originally constructed pursuant to the Development Plans) which results in a material change to the original exterior elevation, design or overall appearance of such Project Component (including the basic landscaping scheme thereof) and is visible from the MacArthur Causeway; provided, however, that such term shall not include periodic maintenance activities such as replanting, repainting exteriors and replacing damaged, worn or obsolete fixtures. (ii) "Major Interior Alterations" means any alteration or addition to any Project Component (whether done as a single project or as a series of projects within a twelve (12) month period) whose cost exceeds ten percent ('10%) of the Fair Market Value (as defined in Section 6.1) of such Major Project Component immediately prior to the commencement of such alteration or addition. #017950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • Submitted Into the public •record in connection wr1h iteral _Y,;jA, on Priscilla A. T'hofnpson (b) Chief Executive Officer Approval. Lessee shall not make or permit any Ext0ity Clerk Alterations or Major Interior Alterations to be made unless and until detailed plans and specifications for same have been approved in writing by the Chief Executive Officer, in accordance with the Chief Executive Officer Approval Procedures. ARTICLE XV LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS; REIMBURSEMENT OF LESSOR FOR AMOUNTS SO EXPENDED Section 15.1 Performance of Lessee's Covenants to Pay Money. Lessee covenants that if it shall at any time default in the payment of any Impositions pursuant to the provisions of Article X, or shall fail to make any other payment to any third party required to be paid hereunder, and any such failure shall continue for thirty (30) days after written notice by Lessor to Lessee ("Notice of Non -Payment of Imposition"), then Lessor may, but shall not be obligated to, and without further notice to or demand upon Lessee and without waiving or releasing Lessee from any obligations of Lessee in this Lease contained, pay any such Imposition or make any other payment which Lessee has improperly failed to pay as set forth in the Notice of Non -Payment of Imposition. No such action shall be taken, however, if Lessee is duly contesting the payment of same as permitted by the provisions hereof, including, but not necessarily limited to, Section 7.1, Section 103 and Section 183. Section 15.2 Lessor's Right to' Cure Lessee's Default. Notwithstanding anything herein to the contrary, if there shall be any default by Lessee, beyond notice and any applicable cure period, under this Lease, any Approved Mortgage or any Major Sublease (including, but not limited to, any default involving Lessee's failure to keep the Leasehold Improvements in good condition and repair, to make any renewals or replacements or to remove any dangerous condition, all in accordance with any applicable requirements set forth in this Lease), then upon prior written notice to Lessee, Lessor may, but shall have no obligation to, cure any such default in addition to any and all of Lessor's other remedies hereunder. #217950 0 - Final Version of Watson Island Ground Lease - City of Nliami and Flagstone %2-1304 • Section l 5.3 Reimbursement of Lessor and Lessee. All sums advanced by Lessor pursuant to the provisions of Sections 15.1 and 15.2, and all necessary and incidental costs, expenses and reasonable attorneys' fees in connection with the performance of any acts, together with interest at the Default Rate from the date of the making of such advances to the date reimbursed to Lessor by or behalf of Lessee, shall be deemed additional Rent, and shall be promptly paid by Lessee, in the respective amounts so advanced, to Lessor. Such reimbursement shall be made on demand, or, at the option of Lessor, may be added to any Rent then due or becoming due under this Lease, and Lessee covenants to pay the sum or sums with interest as provided above. In the event of nonpayment of such reimbursement, Lessor shall have, in addition to any other right or remedy of Lessor, the same rights and remedies as in the case of default by Lessee in the payment of any installment of Rent (subject to applicable notice and cure periods _ 12 hereunder). SUbrrlitted Into the public record in connection w,th ARTICLE XVI item & a� ®n DY Priscilla A. Thompson DAMAGE OR DESTRUCTION - - City Clerk Section 16.1 Definitions of Terms. For the purposes of this Article XVI, the following words shall have the meanings attributed to them in this Section: thereof. (a) "Casual " means any casualty to the Leasehold Improvements or any portion (b) "Damage' means any damage to the Leasehold Improvements or any portion thereof on account of a Casualty. (c) "Net Insurance Proceeds" means the actual amount of insurance proceeds paid following a Casualty, less all costs and expenses, including reasonable attorneys' fees incurred by Lessee, any affected Major Subtenant and/or Lessor, with respect to the collection thereof. (d) "Restoration Work" means the repair, restoration or replacement of that portion of the Leasehold Improvements which has sustained Damage. 0 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone tiw n04 4 Submitted Into the public • record in connection w)lh item�3�. on , 62 Priscilla A. Tho. peon (e) "Insurance Trustee" 'means an insurance trustee mutually acceptable to Lescity Clerk Lessee, and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any Restoration Work. (f) "Insurance Escrow AF..reement" means any escrow agreement among an Insurance Trustee, Lessor, Lessee and any Approved Mortgagee having an interest in any Net Insurance Proceeds which are to be used for completing any„ Restoration Work, which escrow agreement provides for such Net Insurance Proceeds and any another funds deposited for the purpose of completing such Restoration Work to be deposited in escrow with such Insurance Trustee and to be disbursed to fund the completion of such Restoration Work, all under such terms, conditions and procedures as are set forth therein. (g) "New Loan" means any new Construction Loan obtained by Lessee or any affected Major Subtenant from an Approved Lender for the purpose of completing any Restoration Work. Section 16.2 Net Insurance Proceeds, Oblijzation to Fund Restoration Work. (a) Adjustment of Net Insurance Proceeds. Upon the occurrence of any Damage, Lessee shall promptly and diligently Pursue the adjustment of any applicable insurance and take reasonable measures to require any affected Major Subtenant to do the same, to the end that all applicable Net Insurance Proceeds shall be made available to complete the applicable Restoration Work. (b) Rights of Approved Mortgagees. If any Approved Leasehold Mortgagee or affected Approved Major Subleasehold Mortgagee shall have entered into a Subordination, Non - Disturbance and Attornment Agreement, or comparable agreement, with Lessor, providing for rights to receive and/or control the disbursement of such Net Insurance Proceeds, such rights shall control over the provisions of this Lease. In such event, to the extent that any such Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee agrees to permit such Net Insurance Proceeds to be used for such Restoration Work, all such sums shall be deposited with an Insurance Trustee pursuant to an Insurance Escrow Agreement. (c) Insurance Trustee. The Insurance Trustee may (but shall not be required to) be an Approved Mortgagee. Each Approved Leasehold Mortgagee may elect to be the Insurance Trustee in 0 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • • • 9 U the order of the priority of the applicable Approved Leasehold Mortgages Submitted Into the public record in connection Wth item mon y s o Priscilla A. Thompson If no such ApprovQity Clerk Leasehold Mortgagee elects to be the Insurance Trustee, then each affected Approved Major Subleasehold Mortgagee may elect to be the Insurance Trustee in the order of the priority of the applicable Approved Major Subleasehold, Mortgages. (d) New Loan. If any Approved Leasehold Mortgagee or Approved Major Subleasehold Mortgagee does not permit all or any portion of the Net Insurance Proceeds to be applied to the Restoration Work, Lessee or the affected Major Subtenant shall nonetheless be required to cause the Restoration Work to be performed and shall deposit funds adequate to fund the Restoration Work with an Insurance Trustee pursuant to an Insurance Escrow Agreement; provided, however, that Lessee or such Major Subtenant may elect to obtain a New Loan for such purposes, in which event Lessee or such Major Subtenant shall use prompt and diligent efforts to obtain such New Loan. (e) Other Shortfalls. To the extent that the Net Insurance Proceeds are inadequate in amount to fund the completion of such Restoration Work for reasons other than those described in subparagraph (d) above, Lessee or any affected Major Subtenant shall be required to fund such shortfall, including, without limitation, a shortfall related to a deductible in the applicable insurance policy. Such shortfall shall be deposited with an Insurance Trustee pursuant to the applicable Insurance Escrow Agreement within sixty (60) days of the date of adjustment of Net Insurance Proceeds, unless the parties thereto agree to any alternative mechanism for funding such shortfall. Section 16.3 Restoration Work. (a) Plans. Lessee shall diligently proceed to cause plans and specifications for the Restoration Work, together with a proposed construction schedule, to be prepared and submitted to the Chief Executive Officer. Such plans and specifications shall be designed to restore the Property to substantially the condition prior to such 'Damage, or as similar as is practicable and reasonable. Unless such plans and specifications are materially different from original Construction Plans and Specifications applicable to the portion of the Leasehold Improvements to be restored, the Chief Executive Officer shall have no approval rights with respect to such plans and specifications. If such plans and specifications are 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone materially different from such original Construction Plans and Specifications, then same shall be subject to the Chief Executive Officer's approval in accordance with the Chief Ex e�t c rl A rDva public Procedures. record in corr1nectfGrl item ons— (b) Completion of Restoration Work. Priscilla A. Th�s� CV Mork (i) After: (A) such submission and approval, if applicable, of such Plansan specifications; (B) the applicable Insurance Escrow Agreement has been entered and the applicable Net Insurance Proceeds and other funds deposited have been deposited with the applicable Insurance Trustee or otherwise made available for disbursement in accordance with such Insurance Escrow Agreement; and (C) any necessary permits have been obtained from applicable Governmental Authorities (which permits Lessee or any affected Major Subtenant shall use diligent efforts to obtain), Lessee or such affected Major Subtenant shall complete such Restoration, all subject to and in accordance with such requirements and conditions as applicable Approved Leasehold Mortgagees and Approved Major Subleasehold Mortgagees, if any, may impose in accordance with the applicable Approved Leasehold Mortgages and Approved Major Subleasehold Mortgages and the Insurance Escrow Agreement. 40 (ii) Lessee or the affected Major Subtenant shall commence the Restoration Work on such date (the "Restoration Commencement Date") as the Insurance Trustee or any Approved Lender making the New Loan, if applicable, first begins disbursing portions of such Net Insurance Proceeds or loan proceeds to Lessee for such purpose (it being understood that such disbursement may be conditioned upon such requirements as ;any such Approved Leasehold Mortgage or Approved Major Subleasehold Mortgagee may be entitled to impose). (iii) The Insurance Escrow Agreement shall provide, among other things, that the applicable Insurance Trustee shall, with notice thereof to all parties thereto, disburse the Net Insurance Proceeds and other available funds as the Restoration Work progresses upon certificates of the architect or engineer supervising the Restoration Work that the disbursements then requested, plus all previous disbursements, do not exceed the cost of the Restoration Work already completed and paid for, and that the balance in the escrow fund, plus any amounts to be contributed by Lessee, is sufficient to pay for the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connection W. h item N, on /j.. /.x o y Priscilla A. Thompson reasonably estimated cost of completing ;the Restoration Work; provided, however, that the foregoin9ity Clerk is"funds in balance" requirement may be !superseded by any similar requirement which any Approved Mortgagee is entitled to impose. (iv) Subject to Unavoidable Delays, Lessee shall, from and after the Restoration Commencement Date, diligently and in good faith prosecute such Restoration Work to completion. (v) Subject to the rights of any Approved Mortgagee, any Net Insurance Proceeds remaining after completion of and payment for such Restoration Work shall be disbursed to and be the sole property of Lessee. Section 16.4 Termination. Notwithstanding the provisions of Section 16.4, if any Damage occurs with ten (10) years of the end of the then applicable Lease Term and the budget for the Restoration 11 Work is, as to any particular Major Project Component, greater than Three Percent (3%) of the replacement cost for such Major Projects Component, Lessee may, by giving written notice thereof to Lessor with ninety (90) of the adjustment of any applicable insurance, terminate this Lease, effective as of the date of the Casualty; provided, however, that any such termination shall be subject to the prior written consent of any Approved Leasehold Mortgage. Upon any such termination of this Lease: (i) Lessee shall 11 remain obligated to pay to Lessor all Base Rent, Percentage Rent and other sums accruing under this Lease to (but not including) the date of the Casualty; (ii) the Parties shall be. relieved of all further obligations under this Lease, other than those obligations which expressly survive such termination; and (iii) any applicable Net Insurance Proceeds shall be applied as follows: (a) first, to pay any principal, interest and other sums owed to each and every Approved Leasehold Mortgagee; (b) second, to pay for 11 the cost for debris removal; and (c) thirds to pay any accrued and unpaid liabilities of Lessee under this Lease to the date of termination. The remaining balance of such Net Insurance Proceeds shall be allocated between Lessor and Lessee in accordance with their respective interests in the Project. 10 0217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-13,04 Su emitted Into the public ® record in connectionv1�'th item 3a, on u �- o Priscilla A. Thompson Section 16.5 No Other Right to Terminate. Except for Lessee's right to terminate this Leascity Clerk pursuant to Section 16.5 above, Lessee waives the provisions of any Applicable Law which may grant Lessee the right to terminate this Lease in the event of a Casualty. Section 16.6 Rights of Approved Leasehold Mortgagee. The provisions of this Article XVI shall be subject to the rights of any Approved Leasehold Mortgagee and to the provisions of any Approved Leasehold Mortgage, and in the event of any conflict between the provisions of this Article and the provisions of any Approved Leasehold Mortgage, the provisions of the Approved Leasehold Mortgage shall control. Section 16.7 Major Subleases. Lessee shall cause each Major Sublease to contain comparable casualty provisions as those set forth in this Article XVI with respect to each Major Project Component; provided, however, that each such Major Sublease may, but shall not be required to, have provisions comparable to Section 16.9 below. Lessor agrees that any such comparable provisions shall be binding upon Lessor. Section 16.8 Deferral of Base"Rent. (a) No Abatement of Base Rent or Percentage Rent. Lessee's obligations with respect to the payment of Base Rent and/or Percentage Rent shall in no event be abated on account of any Casualty, but Base Rent and Percentage Rent, as to any portion of the Leasehold Improvements which has sustained Damage, shall be deferred upon the terms and conditions set forth in subparagraph (b) below. (b) Deferral of Base Rent and Percentage Rent. If, during any period from and after the occurrence of a Casualty and until the applicable Restoration Work has been completed and the applicable portion of the Leasehold Improvements once again Opens for Business: (i) Lessor does not receive sufficient insurance proceeds under any business interruption insurance policy to cover the Base Rent and/or Percentage Rent payable during such period; and (ii) any failure by Lessor to receive such insurance proceeds is not due to Lessee's failure to maintain same in accordance with Section 11.1(b), Lessee shall be entitled, during the Deferral Period (as hereinafter defined) to defer the payment of Base Rent and Percentage Rent not covered by such business interruption insurance proceeds. In addition, 0 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone y A04 Submitted Into tale puDllc record in connectio wi 'l item mon Priscilla A. Thompson Lessee shall not be required to pay any Base Rent and/or Percentage Rent to the extent Lessor receiQty Clerk 0 business interruption insurance proceeds covering same. The term "Deferral Period" shall mean the period of time commencing when the Casualty occurs and ending on the date when the applicable Restoration Work has been completed and the applicable portion of the Leasehold Improvements once again Opens for Business, or on such earlier date as Lessee shall have received any written notice from any applicable insurance company in the form of a pleading or similar document whereby such insurance company specifically rejects Lessee's claim for such insurance. The amount of Base Rent and Percentage Rent so deferred during the Deferral Period is hereinafter collectively referred to as the "Deferred Amount". (c) Resumption of Payments. Once the Deferral Period ends, Lessee shall pay each month, together with the Base Rent and Percentage Rent then due and payable, an amount equal to fifty percent (50%) of a fraction, the numerator of which is the total Deferred Amount and the denominator of which is the number of months of the deferral. Such monthly installments of the Deferred Amount shall continue until the Deferred Amount is paid in full. ARTICLE XVII ARBITRATION Section 17.1 Binding Arbitration. Any controversy, dispute or breach arising out of or related to this Lease (including all monetary and non -monetary matters) shall be submitted to binding arbitration in accordance with the provisions of this Article XVII; provided, however, that: (i) no such controversy, dispute or breach with respect to the payment of Base Rent or Percentage Rent shall be submitted to binding arbitration; and (ii) any controversy, dispute or breach with respect to the obligations of Lessor or Lessee under Exhibit H shall be submitted to binding arbitration in li accordance with the provisions of Exhibit H. The matters to be submitted to binding arbitration r in accordance with this Article XVII shall include, without limitation: (i) whether Lessor or Lessee's actions hereunder are "reasonable" where this Lease requires such actions to be 0 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connection wi h item AA, on i y oy Priscilla A. �'ho on reasonable; and (ii) whether either Party has complied with any provisions hereof requiring that'City Clerk any approval by such Party "shall not be unreasonably withheld or delayed". Section 17.2 Procedures. Any binding arbitration pursuant to this Article XVII shall be governed by the following procedures: (a) Demand. Either Party (the "Demanding Party") may make written demand upon the other Party (the "Non -Demanding Party") to commence arbitration. Such demand shall include a statement of the question to be arbitrated. (b) Selection of Proposed Arbitrators. Upon any such demand being made by either Party, the Demanding Party shall, within five (5) Business Days thereafter, make a written request to the President of the Florida Chapter of the American Arbitration Association that he or she independently provide, within thirty (30) days after succi request is made, a list (the "List of Proposed Arbitrators") with the names and addresses of eleven (,11) proposed arbitrators (the "Proposed Arbitrators"). The Non -Demanding Party shall be copied on any such written request. (c) Qualifications. Every Proposed Arbitrator must be a member of the American Arbitration Association or any successor organization, and no Proposed Arbitrator shall: (i) be a person who is or has been an employee of either Lessor or Lessee during the five (5) year period immediately preceding his or her appointment; (ii) be neutral and independent of the Parties; (iii) be affiliated with either Parties' auditors; (iv) be affiliated with any contractor of Lessee; or (v) have a conflict of interest with either Party or any bias towards or against either Party. (d) Selection of Arbitrator. Within three (3) Business Days after its receipt of the List of Proposed Arbitrators, the Non -Demanding Party shall give written notice to the Demanding Party of three (3) Proposed Arbitrators that the Non -Demanding Party strikes from the List of Proposed Arbitrators. Within three (3) Business Days after its receipt of such written notice, the Demanding Party shall send written notice to the Demanding Party of three (3) additional Proposed Arbitrators that the Demanding Party strikes from the List of Proposed Arbitrators. Commencing with the Non -Demanding 0 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x.3®4 bUDMIXIeQ IIILV L6 U PULAiv record in connection w's .h item �on s- y�i- ® ® Priscilla A.T hon Party, each Parry shall thereafter have successive one (1) Business Day periods in which to strike one (I�ity Clerk isadditional Proposed Arbitrator from the List of Proposed Arbitrators, until there is only one (1) Proposed Arbitrator remaining on the List of Proposed Arbitrators. The remaining Proposed Arbitrator shall constitute the sole arbitrator hereunder (the "Arbitrator"). Neither Party shall be required to have or provide a reason for striking a particular Proposed Arbitrator. If either Party fails to strike a Proposed Arbitrator within the time specified above, then the other Party may exercise the unused strike or strikes prior to its next strike or strikes. (e) Code of Ethics. The Arbitrator selected hereunder shall agree to observe the Code of Ethics for Arbitrators in Commercial Disputes promulgated by the American Arbitration Association and the American Bar Association, or at any successor code. (f) Hearing. Within thirty (30) days following the selection of the Arbitrator, the Arbitrator shall commence a hearing in accordance with the following procedures: (i) All actions, hearings and decisions of the Arbitrator shall be conducted, based upon and made in accordance with the Commercial Arbitration Rules (or in the case of construction related issues, the Construction Industry Rules of the American Arbitration Association) of the American Arbitration Association or any successor organization, or any other rules then prevailing in substitution of such rules. (ii) The Parties shall be entitled to such pre -hearing discovery as they may agree upon, or as otherwise determined by the Arbitrator. (iii) Each Party shall make a good faith effort to cooperate with the other in all respects in connection with the exchange of documents relevant to the matter being arbitrated. (iv) To the extent that either Party would be required to make confidential information available to the other Party, an agreement or an order shall be entered in the proceeding protecting the confidentiality of and limiting access to such information before such Party is required to produce such information. Information produced by either Party shall be used exclusively in the arbitration or litigation that may arise, and shall not otherwise be disclosed. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • (v) A court reporter shall make a transcript of the hearing Submitted Into the public record in connection with item o Priscilla A. Thompsol City Clerl (vi) The hearing shall be held in the City of Miami at a place designated by the Arbitrator. (vii) The Parties and the Arbitrator shall use their best efforts to conclude the hearing within ten (10) days of its commencement. (viii) Each Party shall have the right to be represented by counsel, to call witnesses and to cross-examine witnesses on the question at issue, and to submit evidence. (ix) The Arbitrator shall have the right to question witnesses at the hearing, but not to call witnesses. (x) Each Party shall be entitled to one (1) continuance for up to a maximum fifteen (15) days as a matter of right. (xi) No additional request for continuance may be made in any manner to the Arbitrator unless there has been consent given in writing by the other Party. (xii) The Arbitrator shall not grant any continuance without a request from a Party in compliance with this subparagraph (e). (xiii) The Arbitrator may render a decision at the close of the hearing or may request briefs on any or all issues. Any and all such briefs, including reply briefs, shall be filed on the terms and on the schedule set by the Arbitrator, but in no event later than forty-five (45) days following the commencement of the hearing. (xiv) The Arbitrator shall render a determination within thirty (30) days from it the conclusion of the hearing, or in the event briefs are submitted, within thirty (30) days after receipt of such briefs. (xv) In determining any matter before it, the Arbitrator shall apply the terms and provisions of this Lease, and shall not have the power to vary, modify or reform any such terms and provisions in any respect. 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02 i304 Submitted Into the public • record in connection with item �3� on i y Priscilla A. Th mpson (xv1) The Arbitrator shall 'not be authorized to make an award of punitive orCity Clerk exemplary damages. (xvii) Each Party shall bear its own fees and costs and those of the Arbitrator. Arbitrator's decision. (xvirr) The Arbitrator shall provide a written explanation of the basis for the (xix) The Arbitrator's decision shall be final and binding on the Parties and may be enforced according to the laws of the State of Florida, and judgment upon the award rendered by the Arbitrator shall be entered in any court having jurisdiction thereof. Section 17.3 No Delay in Completion of Work. There shall be no interruption of Work pending the completion of any arbitration proceeding hereunder, unless the dispute or matter which is subject to arbitration involves the nature of the Work or whether the Work was required by the Construction and Development Rider (in which case Lessee may suspend the Work until the dispute is resolved, and same shall be deemed an Unavoidable Delay). Section 17.4 Right of Approved Mortgage .to Participate. Notwithstanding anything to the contrary contained herein, a copy of each notice given under this Article XVII shall be given to each and every Approved Leasehold Mortgagee and every Approved Major Subleasehold Mortgagee to the extent the matter being arbitrated involves the Major Project Component encumbered thereby, and each such Approved Mortgagee shall have the right, upon providing written notice to both Parties at any time prior to the commencement of the Arbitrator's hearing, to participate in the hearing and to have all rights afforded to each Party with respect thereto. In addition, to the extent that any applicable Approved Mortgage provides for consents rights on the part of any such Approved Mortgagee as to the selection of the Arbitrator, Lessee shall not exercise its rights to strike any Proposed Arbitrator from the List of Arbitrators without such Approved Mortgagee's consent in accordance with the provisions of such Approved Mortgage. 0 9217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02x1304 ® Submitted Into the public record in connectio wi h item _ s w on ARTICLE XVIII Priscilla A. Thompson MECHANICS' LIENS City Clerk Section 18.1 Definition.. For purposes of this Article XVIIa, the term "Mechanic's Lien" means any mechanic's, laborer's, vendor's, materialman's, construction or other similar statutory lien, whether pursuant to Chapter 713, F.S., or otherwise. Section 18.2 No Consent by Lessor. Nothing in this Lease shall be construed as: (i) constituting the consent or request of Lessor, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of or to the Property or the Leasehold Improvements or any part thereof, or (ii) giving Lessee any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials, which, in the case of either clause (i) or clause (ii) above, would give rise to the filing of any Mechanic's Lien against Lessor's fee simple interest in the Property or any part thereof, the assets of Lessor, or Lessor's interest in any Rent. Section 18.3 Notice of No Liability of Lessor. Notice is hereby given, and Lessee shall cause all construction agreements, Major Subleases and Space Leases to provide, that to the extent enforceable under Florida law: (i) Lessor shall not be liable for any work performed or to be performed at or on the Property or the Leasehold Improvements or any part thereof for Lessee, any Major Subtenant or any Space Tenant, or for any materials furnished or to be furnished to the Property or the Leasehold Improvements or any part thereof for any of the foregoing; and (ii) no Mechanic's Lien for such work or materials shall attach to or affect Lessor's fee simple interest in the Property or any part thereof or any assets of Lessor or Lessor's interest in any Rent. Section 18.4 Inclusion in Memorandum of Lease. Any short form or memorandum of this Lease shall include the foregoing prohibition on Mechanic's Liens for the purposes of giving constructive notice under Section 713. 10, F.S., and a copy thereof shall be conspicuously posted on the Property. 0 #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-13OwA Submitted Into the public record in connection with Item X43 on /a- X Priscilla A. Thompson Section IM Discharge of Mechanics' Liens. Lessee shall not cause, suffer or permit anvCity Clerk • Mechanics' Liens to be filed against the fee simple title to the Property, or against the Leasehold Estate or the Leasehold Improvements by reason of any.,labor, services or materials supplied or claimed to have been supplied to Lessee, any Major Subtenant or any Space Tenant. If any such Mechanics' Lien is filed, Lessee shall cause it to be discharged of record by payment, deposit, bond (including any notice of bond in the case of any work which is covered by as payment and performance bond), order of a court of competent jurisdiction or otherwise, within ninety (90) days after the date Lessee has knowledge of its Filing. If Lessee shall fail to do so within such ninety (90) day period, and such failure shall continue for an additional thirty (30) days after written notice thereof by Lessor to Lessee, then in addition to any other right or remedy available to Lessor hereunder, Lessor may, but shall not be obligated to, discharge such Mechanics' Lien, either by paying the amount claimed to be due or by procuring the discharge of the lien by deposit in court or bonding. All such amounts paid by Lessor in connection therewith, including, without limitation, interest, costs and allowances, shall constitute additional Rent due and payable under this Lease and shall be repaid to Lessor by Lessee immediately upon rendition of an invoice or bill by Lessor. Section 18.6 Right to Contest. Notwithstanding the provisions of Section 18.2, Lessee shall not be required to pay or discharge any Mechanics' Lien so long as Lessee shall: (i) in good faith and with diligence proceed to contest such Mechanics' Lien by appropriate proceedings; (ii) give Lessor written notice of its intention to contest the validity of the lien; and (iii) upon written request of Lessor, furnish and keep in effect a surety bond of a responsible and substantial surety company reasonably acceptable to Lessor or other security reasonably satisfactory to Lessor in an amount sufficient to pay one hundred ten percent (110%) of the amount of the contested lien claim with all interest on it and costs and expenses, including reasonable attorneys' fees, to be incurred in connection with it (provided, however, that no such bond shall be required if the amount contested is less than $25,000). If, despite Lessee's efforts to contest such Mechanics' Lien, Lessor reasonably believes that a court judgment or order foreclosing such lien is about to be entered or granted and so notifies Lessee in writing, Lessee shall, within ten (10) days of #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-i30 ::wed Into the public • re,.-Jad in connectio with item �3g on > "J.- Priscilla A. Th o pson notice to such effect from Lessor (but not later than three (3) Business Days prior to the entry or granting City Clerk of judgment or order of foreclosure), cause such Mechanics' Lien to be discharged of record. If Lessee fails to do so within such period, Lessor may thereafter discharge the lien and look to the security furnished by Lessee for reimbursement of Lessor's cost in so doing. Nothing contained herein shall be deemed to prevent Lessee from contesting any action or proceeding on account of any Work for which a Mechanics' Lien was filed and thereafter bonded off or transferred to security other than the Property or the Leasehold Improvements pursuant to Applicable Laws. Section 18.7 Releases. To the extent permitted under Florida law, Lessee shall obtain releases or waivers of any contractor, subcontractors and any other Persons furnishing work and materials discharging all liens and claims for all Work and materials furnished and similar releases from the architect or other recipient in the case of payments out of the funds to the architect or other recipient. ARTICLE XIX COVENANT AGAINST WASTE: INSPECTION J Section 19.1 Waste. Except as otherwise permitted by this Lease, Lessee covenants not to allow any waste (as defined by any Applicable Law) with respect to the Property or the Leasehold Improvements or any part thereof. The provisions of this Section shall not apply to any demolition or disfigurement required in connection with repairs, renovations, upgrading or new construction, or to the deposit of clean fill at the Property or the removal of fill from the Property for such purposes. . Section 19.2 Inspection of Property. (a) Right of Inspection. Lessor, its agents, employees and authorized representatives may enter the Property at any time in response to an emergency, and at reasonable times upon reasonable prior written notice, as Lessor deems necessary to, incident to, or connected with the performance of Lessor's duties and obligations hereunder or in the exercise of its rights and functions, including, without limitation, to inspect the operation, sanitation, safety, maintenance and use of the same, or any portions of the same, and to assure itself that Lessee is in full compliance with its obligations under this Lease (but #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1,304 Submitted Into the public record in connect io ith item a on 4 iy o=- Priscilla A. Th Inpson Lessor shall not thereby assume any responsibility for the performance of any of Lessee's obligationCity Clerk Ishereunder, nor any liability arising from the improper performance thereof). In furtherance and not in limitation of the foregoing, Lessor and its agents, employees and authorized representatives shall have the right of access to the Property to conduct from time to time an ADA inspection or audit of the Property or the Leasehold Improvements, and Lessee agrees to cooperate in the conduct of such investigation or audit. (b) - Compliance. If any inspection or audit detects a violation of Lessee's obligation to comply and to keep the Property and/or the Leasehold Improvements in compliance with the requirements of the Lease, then Lessee shall bear the cost and take whatever action is reasonably necessary to comply, and bring the Property and/or the Leasehold Improvements into compliance, with this Lease and any reasonable fee or cost incurred by Lessor for such investigation or audit shall be borne by Lessee and shall be paid by Lessee as additional Rent under this Lease on demand by Lessor. (c) Action by Lessor. If Lessee fails to keep the Property or the Leasehold Improvements in compliance with the requirements of this Lease (including, without limitation, the requirement that the Property and the Leasehold Improvements be in compliance with the ADA) and an Event of Lessee's Default has occurred and is continuing on account thereof, then Lessor, upon reasonable prior written notice to Lessee, may take whatever action is reasonably necessary to bring the Property and/or the Leasehold Improvements into compliance, to the extent required by Applicable Laws. Lessee agrees to provide Lessor access to the Property and the Leasehold Improvements and pay, as additional Rent, all costs reasonably incurred by Lessor in bringing the Property and/or the Leasehold Improvements into compliance. Lessor, however, shall have no affirmative obligation to bring the Property or the Leasehold Improvements into compliance and nothing herein shall be construed as creating such an obligation on Lessor. (d) Minimizing Interference with Business Operations. Any inspection or audit described in this Section 19.2 shall be done in such a manner so as to reasonably minimize any interference with any business operations on the Property. 0 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-13 • • Ll Section 19.3 Major Subleases and Space Leases. Submitted Into the public • record in connection wi h item Ili3 on Priscilla A. son city Clerk (a) Comparable Covenants in Major Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in this Article XIX. Lessee shall use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. — (b) Comparable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in this Article XIX; and use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements of any of its Space Tenants, or to prevent Lessee from requiring any Major Subtenant to impose such more stringent requirements. (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Article XIX on account of any breach thereof by any Major Subtenant or Space Tenant. ARTICLE XX ENVIRONMENTAL LIABILITY Section 20.1 Definition of Terms. For purposes of this Article XX. the following terms shall have the meanings attributed to them in this Section: (a) "Hazardous Materials" means (i) petroleum and its constituents; (ii) radon gas, asbestos in any form which is or could become friable, urea formaldehyde, foam insulation, transformers or other shipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess 9217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 of federal, state or local safety guidelines, whichever are more stringent; (iii) any substance, gas, material 0 or chemical which is or may hereafter be defined as or included in the definition of "hazardous substances", "hazardous materials", "hazardous wastes", "pollutants or contaminants", "solid wastes" or words of similar import under any Environmental Law; and (iv) any other chemical, material, gas or substance, the exposure to or release of which is regulated by any Governmental Authority. (b) "Environmental Laws" means all applicable requirements relating to the protection of human health or the Environment, including, without limitation, requirements relating to reporting, licensing, permitting, investigation and remediation of any Release or Threat of Release of Hazardous Materials, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials or pertaining to the protection of the health and safety of employees or the public, as such requirements are contained in all applicable federal, state and local environmental, public health, and safety laws, regulations, orders, permits, licenses, approvals, ordinances and directives, now or hereafter in effect, including, but not limited to, all applicable requirements of the Clean Air Act (42 U.S.C. §7401 et seg.); the Clean Water Act; the Resource Conservation, and Recovery Act, as amended by the hazardous and Solid Waste Amendments of 1984 (42 U.S.C. §6901 et seg.); the Safe Drinking Water Act; the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §9061 et seg.); the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seg.); the Occupational Health and Safety Act; the Toxic Substances Control Act; the Federal Water Pollution Prevention and Removal Act, as amended (33 U.S.C. § 1251 et seg.); the Florida Pollutant Discharge Prevention and Removal Act (Florida Statutes, Chapter 376); the Water Resources Restoration and Preservation Act; the Florida Air and Water Pollution Control Act; the Florida Safe Drinking Water Act; Florida Environmental Reorganization Act of 1975 (Florida Statutes, Chapter 403). (c) "Environment' means soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata and ambient air. Submitted Into the public record in connection mit item V-44— on Priscilla A. T peon 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone City Clerk 02-1304 C • • • • (d) "Costs" means all costs incurred in connection with correcting any violations of any Environmental Laws and/or the Clean Up of Existing Contamination, including the Original Phase I and If Assessments, if applicable. (e) "Existing Contamination" means any Hazardous Materials revealed by the Original Phase I and II Assessments, if applicable. (f) "Original Phase I and II Assessments" means the environmental investigation and testing on the Property undertaken by Lessee, as may be applicable, pursuant to the Access and Indemnification Agreement between the Parties, and the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003. (g) "Release" means any releasing, seeping, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping into the Environment. (h) "Threat of Release" means a substantial likelihood (as determined by an environmental consultant selected by Lessee and reasonably acceptable to Lessor) of a Release which requires action to prevent or mitigate damage to the Environment which may result from such Release. (i) "Clean Up" means any remediation and/or disposal of Hazardous Materials at or from the Property which is ordered by any federal, state, or local environmental regulatory agency, if necessary, to avoid injury to persons or property in connection with the Existing Contamination, if any. Section 20.2 Environmental Obligations of Lessee. Lessee hereby covenants and agrees that during the Lease Term it shall not: (a) cause or permit any Hazardous Materials to be generated, produced, brought, used, stored, treated, discharged, released, spilled or disposed of upon, in, under or about the Property or Watson Island by Lessee or any of Lessee's Affiliates, or by any Major Subtenants or Space Tenants, or by any subsidiaries, assignees or invitees thereof, or by any of the employees, agents, contractors or subcontractors of any of the foregoing (all the foregoing collectively, "Related Parties"), which is, in any case, in violation of the Environmental Laws, or (b) otherwise cause or permit the violation of any Environmental Law_ in connection with the Property #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Upon termination or expiration Submitted Into the public record in connection wi .h item Sac. on i� Priscilla A. Thompson City Clerk 02-1304 Submitted into the public record in connection ith 0 0 item34 on Priscilla A. Thompson of the Lease, Lessee shall, at its sole cost and expense, cause all Hazardous Materials, including their City Clerk storage devices, placed in or about the Property by Lessee or its Related Parties, or at their direction to be removed from the Property and transported for use, storage or disposal in accordance and compliance with all applicable Environmental Laws. Section 20.3 Lessee's Liability for Contamination During Lease Term. Lessee shall undertake at Lessee's sole cost and expense, any necessary action, including any remediation and/or disposal reasonably required, as determined by Lessee in good faith, as a result of a Release of a Hazardous Material occurring on or from the Property in connection with any activity or acts of Lessee or any of its Related Parties, during the Lease Term. Section 20.4 Indemnity. Lessee shall defend, indemnify, and hold harmless Lessor and its agents, officials, and employees, to the fullest extent permitted by law, from and against all expenses of remediation, disposal or other similar type of clean up or action necessary for compliance with the Environmental Laws, and any and all claims, causes of action, or demands, in law or in equity, including, but not limited to, all lien claims, administrative claims, claims for injunctive relief, claims of property damage, natural resources damages, environmental response and clean up costs, fines, penalties, and expenses (including, without limitation, counsel fees, consultant fees and expert fees, costs and expenses incurred in investigation and defending against the assertion of such liabilities), which may be sustained, suffered or incurred by Lessee, its agents, officials or employees in connection with failure by Lessee or its Related Parties to fully comply with the provisions of this Article. The Parties acknowledge and agree that the indemnification provided above in this Section is conditioned upon the failure of Lessee to fully comply with the provisions of this Article and that such indemnification does not cover any Costs of clean-up required by the presence of any Hazardous Materials on the Property or other portions of Watson Island resulting solely from the acts or negligence of any third party or parties other than Lessee or Lessee's Related Parties. Section 20.5 Notices. If Lessee or Lessor receives any written notice of a Release, Threat of Release or environmental condition at the Property or a written notice with regard to air emissions, water 0 #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connection with item on Priscilla A. Thompson discharges, noise emissions, recycling, or any violation of any Environmental Law (any such notdt�`Clerk "Environmental Complaint") independently or by notice from any Governmental Authority, or with respect to any litigation regarding environmental conditions at or about the Property, then such Party shall give prompt written notice of the same to the other Party detailing all relevant facts and circumstances. Section 20.6 Lessor's Remedies. Promptly after becoming aware of any violation of any Environmental Law at the Property, Lessee shall commence to remediate in accordance with its obligations hereunder and thereafter diligently pursue the completion thereof in a reasonable time (and in any event in accordance with Environmental Laws). If Lessee fails to do so, Lessor may give written notice of such failure to Lessee, and if such failure continues for five (S) days after Lessee receives such notice, Lessor shall have the right, but not the obligation, to enter onto the Property and to take such action as it reasonably deems necessary or advisable to cleanup, remove, resolve or minimize the impact of or otherwise deal with any Hazardous Materials, Release, Threat of Release or Environmental Complaint upon its obtaining knowledge of such matters independently or by receipt of any notice from any Person or Governmental Authority, and all of the reasonable costs and expenses of Lessor in 0 connection therewith shall be deemed to be additional Rent due from lessee to Lessor hereunder. Section 20.7 Phase I Environmental Assessment at End of Lease Term. (a) End -Term Audit. At anytime within the twelve (12) months before the expiration or earlier termination of the Lease Term, upon written request by Lessor, Lessee, at Lessee's sole cost and expense, shall cause a Phase I environmental audit (the "End -Term Audit") of the Property and the Leasehold Improvements to be completed by a professional environmental consultant approved by the Chief Executive Officer. If practicable, such consultant shall be the same firm which completed the Original Phase I and 11 Audits or its successor. If the End -Term Audit indicates the presence of Hazardous Materials which were either (i) not present as indicated in either the Original Phase I and II Assessments or (ii) if present as indicated in either or both of such Original Phase I and II Assessments, were previously subject to and satisfied by all Clean -Up requirements, it shall first be determined whether the presence of such contamination is due to the acts or negligence of Lessee, Lessor, or a third party. If it 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public ' record in connection wi -h item 3c- on _ is ��- Prisci% A. Theo psora is determined that the presence of such contamination is due to the acts, omissions or neg igencVCleric Lessee and/or its Related Parties, Lessee shall pay or cause to be paid all reasonable Costs associated with the required remediation and clean-up. (b) Cooperation. In the event that it is determined that neither Lessor, nor Lessee and/or its Related Parties, is responsible for the presence of such contamination, but that the presence of such new Hazardous Materials was caused by the acts or negligence of a third party, Lessor and Lessee shall reasonably cooperate with each other in all matters relating to the identification and clean-up responsibilities of such third party contaminator and its Clean -Up responsibilities; provided, however, that such obligation to cooperate shall not be deemed to impose on either Party the obligation to expend any funds. Section 20.8 Major Subleases and Space Leases. (a) Comparable Covenants in Major Subleases and Direct Space Leases. Lessee shall require that each Major Sublease and Direct Space Lease include covenants on the part of the applicable Major Subtenant and Direct Space Tenant which are comparable to those covenants set forth in this Article XX. Lessee shall use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent Lessee from imposing more stringent requirements on any such Major Subtenant and/or Direct Space Tenant. (b) Comparable Covenants in Other Space Leases. Each Major Sublease shall provide for each Major Subtenant to: (i) include in each of its Space Leases covenants on the part of the applicable Space Tenant which are comparable to covenants on the part of the applicable Space Tenant as those covenants set forth in this Article XX; and use reasonable, good faith efforts to enforce such covenants. Nothing contained herein shall be deemed to prevent any Major Subtenant from imposing more stringent requirements of any of its Space Tenants, or to prevent Lessee from requiring any Major i Subtenant to impose such more stringent requirements. 0 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone is • • • (c) Compliance. So long as Lessee complies with the provisions of subparagraphs (a) and (b) above, Lessee shall not be deemed to have breached any of the covenants set forth in this Article XX on account of any breach thereof by any Space Tenant. Section 20.9 Survival of Lessee's Obligations. The respective rights and obligations of Lessor and Lessee under this Article XX shall survive the expiration or termination of this Lease. ARTICLE XXI PUBLIC UTILITY CHARGES Submitted into the public record in connection ith item 3A, on is i 6 -2 - Priscilla A. Thompson city Clerk Section 21.1 Lessee to Provide and Pay for Utilities. Lessee shall pay, or cause to be paid, all proper charges, including connection and tapping fees, for the use of gas, electricity, light, heat, water, sewer, storm sewer, power, fire lines, television, cable, telephone, protective services and other communication services, and for all other public or private utility services, which shall be used, rendered or supplied upon or in connection with the Property and the Leasehold Improvements or any part thereof, at any time during the Lease Term (or its proportionate share of any such charges for any such services supplied both to the Property and the Leasehold Improvements and to other properties and/or improvements). Section 21.2 Compliance with Utility Services. Lessee shall, at its sole cost and expense, comply with all contracts relating to any utility services and do all other things required for the maintenance and continuance of all utility services as are necessary for the proper maintenance and operation of the Property and the Leasehold Improvements. Section 21.3 Permits. Lessee shall, at its sole cost and expense, procure any and all necessary permits, licenses or other authorizations required for the lawful and proper installation and maintenance upon the Property of wires, pipes, conduits, tubes and other equipment and appliances for use in supplying any such utility services or substitutes to the Property and the Leasehold Improvements. Lessor shall, at no cost to Lessor, cooperate with and assist Lessee in such endeavor. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1204 • • • • Section 21.4 No Obligation for Utilities not on Property. Submitted Into the public record ip connection Vitl Item On/x /y oy Priscilla An Thompse In no event shall Lessee be City Clel responsible for the installation, upgrading or alteration of any utility lines or facilities located or to be located on any portions of Watson Island other than the Property. Section 21.5 Notice and Disclaimer as to Utility Services and Other Services. Lessor (in its proprietary capacity only) shall not be required to supply any services or utilities whatsoever to the Property or the Leasehold Improvements. However, Lessor and its successors, assignees or franchisees may enter into contracts for the provision of services to Watson Island, including, but not necessarily limited to, water supply, sewer, gas, electric current, cable, television or telephone services. Neither Lessor nor any operator or concessionaire, as provider of such service (a "Service Provider"), guarantees or warrants, expressly or impliedly, the merchantability or fitness for use, or the quality of any such services. Lessee acknowledges that neither Lessor nor any Service Provider nor any successor, assignee or franchisee thereof shall be responsible or liable for losses, injuries or deaths resulting from such services or the failure or interruption of such services, except to the extent any of the foregoing is caused by or arises out of the gross negligence of Lessor or any of its agents, servants and employees. Notwithstanding anything contained herein to the contrary, the failure of such services at any time or from time to time shall in no event be deemed to be a defense to an Event of Lessee's Default hereunder unless the same is deemed to be in connection with a Force Majeure Event hereunder. ARTICLE XXII INDEMNIFICATION AND RELEASE OF LESSOR Section 22.1 General Indemnification of Lessor Without Limitation of Any Other Indemnity Given Hereunder. ' Lessee shall indemnify, defend and save harmless Lessor and Lessor's successors, permitted assigns, officials, employees and agents (the "Lessor Indemnified Parties") from and against any and all claims, actions, proceedings, damages, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys' fees and costs) by or on behalf of any Person, arising out of, resulting from, or in any way connected to: (i) any development, construction or other work in or about #2 [ 7950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-304 • the Property and/or the Leasehold Improvements; Submitted Into the public record in connection w' h item ,3� on �i i� s 2. Priscilla A. Thompson (ii) a hazardous condition of or present on`�Irt Clerk Leasehold Improvements and/or Property; (iii) any breach or default on the part of Lessee in the performance of any of Lessee's obligations pursuant to the terms of this Lease; (iv) any act or negligence of Lessee or any of its officers, employees, agents, servants, representatives, contractors, invitees, or licensees; or (v) any accident, injury, or damage caused to any Person occurring during the Lease Term in or on the Property; provided, however, that Lessor shall not be indemnified, defended or held harmless from any of the foregoing to the extent caused by Lessor's intentional acts or gross or wanton negligence upon the Property (collectively, the "Indemnified Matters"). Section 22.2 Defense. In case any action or proceeding is brought against Lessor by reason of any of the Indemnified Matters, Lessee, upon sixty (60) days' written notice from Lessor, shall, at its expense, resist or defend the action or proceeding by counsel reasonably satisfactory to Lessor. Section 22.3 Lessor's Participation. If Lessee is required to defend any action or proceeding pursuant to this Article XXII to which action or proceeding Lessor is made a party, Lessor shall also be entitled to appear, defend, or otherwise take part in the matter involved, at its election, and at the sole expense of Lessor by counsel located within Miami -Dade County, Florida of its own choosing, provided that: (i) such action by Lessor shall not limit or make void any liability of any insurer of Lessor or Lessee with respect to the claim or matter in question; and (ii) Lessor shall not, without Lessee's prior written consent, settle any such action or proceeding or interfere with Lessee's defense or prosecution of such action or proceeding. Section 22.4 No Limitation. The foregoing agreements of indemnity are in addition to and not by way of limitation of any other covenants in this Lease to indemnify Lessor. Section 22.5 Challenges to Lease. Lessee acknowledges and agrees that the Watson Island RFP, the Island Gardens Proposal, Agreement to Enter Into Ground Lease between the Parties having an effective date of January 1, 2003, and this Ground Lease may be challenged by private third parties for various reasons. Lessee further acknowledges and agrees that: (i) Lessor shall have no liability whatsoever to Lessee or any Investors (as defined in Article VIII) in Lessee and/or the Project in 0. #217950 0 - Final Version of Watson Island Ground Lease . City of Miami and Flagstone C� connection with any such challenge, and Lessee hereby forever waives and releases Lessor from any such liability, now or hereafter arising; and (ii) Lessee shall, at its expense, undertake the defense of (but not indemnify Lessor against) any action brought against Lessor seeking to set aside or invalidate this Lease on the theory that this Lease constitutes a material deviation from the Watson Island RFP and/or the Island Gardens Proposal. Lessor may participate in any such defense, but neither Party shall settle or compromise any such action without the prior written consent of the other Party. Section 22.6 Survival. The provisions of this Article XXII shall survive the expiration or sooner termination of this Lease. ARTICLE XXIII LIEN FOR RENT AND OTHER CHARGES Submitted Into the public record in connection with item 1134- on i Priscilla A. Th &rnpson City Clerk Section 23.1 Lien for Rent. Subject to the limitations set forth in Section 23.3, the whole amount of the Rent, and each and every installment, and the amount of all taxes, assessments, water rates, insurance premiums and other charges and Impositions paid by Lessor under the provisions of this Lease, and all costs and reasonable attorneys' fees which may be incurred by Lessor in enforcing the provisions of this Lease or in carrying out any of the provisions of this Lease, shall be and are deemed to constitute a valid lien upon the Leasehold Improvements and the Leasehold Estate, which lien may be enforced by all remedies available at law and in equity. Section 23.2 Other Liens. Subject to the limitations set forth in Section 23.3, Lessor shall be entitled to have and enforce any and all common law, statutory or other liens for non-payment of Rent or other sums due hereunder. To the extent that any such liens would not otherwise be subject to the limitations set forth in Section 23.3, Lessor hereby irrevocably waives same. Section 23.3 Limitations. All'of the liens described in this Article XXXIIII shall be subject to the following limitations: (i) each such lien shall, for all purposes and in all respects, be subject and subordinate to the lien, operation, effect, terms and provisions of any Approved Mortgage and to the rights of any Approved Mortgagee, and no such lien may be enforced against any portion of the 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • Ll Submitted into the public • ® record in connection with item ,* it #,on i4c - Priscllla A. Thompson Leasehold Improvements or the Leasehold Estate at any time such portion is encumbered by aCyity Clerk Approved Mortgage without the applicable Approved Mortgagee's prior written consent in its sole discretion; (ii) no such lien shall attach to or be enforceable against any portion of the Project subject to any Approved Time Share Licenses; (iii) no such lien shall attach to or be enforceable against any Personal Property which is owned by an equipment lessor or other third party lessor of Personal Property and leased to Lessee, any Major Subtenant and Space Tenant or any other Person; (iii) each such lien shall, for all purposes and in all respects, be subject and subordinate to the lien and security interest of any third party providing financing secured by Personal Property owned by Lessee, any Major Subtenant or any Direct Space Tenant which is an Affiliate of Lessee, and without the prior written consent of such third party in its sole discretion, no such lien may be enforced against any such Personal Property unless and until such lien and security interest is fully released; and (iv) no such lien shall attach to or be enforceable against any other Personal Property, including any Personal Property owned by any other Space Tenant. Upon the request of any such third party lessor of Personal Property or third party providing financing secured by Personal Property, Lessor shall execute any documentation reasonably required by such third party consistent with the foregoing limitations (it being understood that nothing contained herein shall be deemed to prohibit or impair any such leasing or financing with respect to Personal Property. ARTICLE XXIV CONDEMNATION Section 24.1 Definition of Terms. For purposes of this Article, the following words shall have the meanings attributed to them in this Section: (a) "Condemnation", means the acquisition by a governmental or quasi -governmental agency with the power of eminent domain, by the exercise of that power, of title to all or part of the Property and/or Leasehold Improvements, or other conveyance of the Property in lieu of eminent domain. "Condemnation" shall also include any case of inverse condemnation as may be determined by a court of 0 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record In connection vviill stern on Priscilla A. Thompson City Clerk U-13®4 competent jurisdiction. A Condemnation shall not be deemed a Leasehold Estate Transfer or Major 0 Subleasehold Estate Transfer (as defined in Section 8.1). (b) "Total Taking" means the Condemnation of the entirety of the Property. The term "Total Taking" shall also include the Condemnation of a portion of the Property and Leasehold Improvements that renders restoration of the remaining Property for continued use economically unfeasible in the sole and reasonable opinion of Lessee. (c) "Partial Taking" means the Condemnation of a portion of the Property and/or the Leasehold Improvements where it is economically feasible in the sole and reasonable opinion of Lessee to effect restoration of the balance of the Property for continued use. (d) "Temporary Taking" means a Total Taking or Partial Taking for a period of time less than the remainder of the Lease Term as of the Date of Taking. (e) "Date of Taking" means the date upon which title to any of the Property and/or Leasehold Improvements transfers to the governmental or quasi -governmental agency which is Condemning the Property. i(f) "Condemnation Award" means the actual amount paid for the Property and/or the Leasehold Improvements, or portion thereof, which is taken by Condemnation, including, but not limited to, the decline in value of any Property and/or Leasehold Improvements not taken, if any. In the event of Condemnation by the United States Government, or other Governmental Authority where reasonable attorney's fees and costs are not paid in addition to the Condemnation Award, Condemnation Award shall mean such actual amount paid, less all reasonable attorney's fees and costs incurred in connection with securing such award. (g) "Fee Value" means the present value of the Base Rent and Percentage Rent payable pursuant to this Lease for the remaining balance of the Lease Term, and the fair market value of Lessor's reversionary interest in the Property and the Leasehold Improvements, both as of the Date of Taking. The Parties stipulate and agree that for purposes of the foregoing, the Percentage Rent payable pursuant to this Lease for the remaining balance of the Lease Term shall be deemed to be an amount 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the PLiblic record in conn ctior item ,3a. orl i�JA, Priscilla A. TlI M so# 1 02-1304 City Clerk C • • equal to the average annual Percentage Rent payable during the three (3) year period immediately preceding the Date of Taking, multiplied by the number of years (including any portion thereof) left for the remaining balance of the Lease Term. (h) "Leasehold Value" means the fee simple fair market value of the Property and Leasehold Improvements as of the Date of Taking, less the Fee Value. Section 24.2 Entire Property Taken by Condemnation. In the event of a Total Taking: (a) Termination. This Lease shall be deemed terminated as of the Date of Taking; (b) Remaining Obligations. Lessee shall remain obligated to pay to Lessor all Base Rent, Percentage Rent and other sums accruing under this Lease to (but not including) the Date of Taking, and the Parties shall be relieved of all further obligations under this Lease, other than those obligations which expressly survive such termination); and (c) Apportionment of Condemnation Award. Unless otherwise agreed to in writing by Lessor and Lessee (with the prior written consent of any Approved Leasehold Mortgagee), the Condemnation Award shall be apportioned by a court of competent jurisdiction based on Lessor's and Lessee's property rights as set forth herein. Specifically, (i) Lessor shall be entitled to receive the Fee Value (which sum shall be paid directly to Lessor and shall not be required to be held in escrow); and (ii) Lessee shall be entitled to the remainder of any Condemnation Award not payable to Lessor, including, but not necessarily limited to, the Leasehold Value; provided, however, that to the extent that any Approved Leasehold Mortgagee has any rights under any Subordination, Non - Disturbance and Attornment Agreement described herein and/or control the disbursement of such sums, such rights shall control over any provisions of this Lease. Section 24.3 Part of Property Taken by Condemnation. In the event of a Partial Taking: (a) Continuation of Lease; Reduction of Base Rent. This Lease shall remain in full force and effect as to all of the Property not taken by Condemnation, except that the Base Rent, after the Date of Taking, shall be reduced on an equitable basis for the remainder of the Lease Term (it being 9217950 v3 - Final Version of Watson island Ground Lease - City of !Miami and Flagstone Submitted into the public record in connectio k !iJ h item Oe.11, .� oj— Priscilla A. Thompson City Clerk 0 -x304 Submitted Into the pubiio ® record an conn nci ® s .bay item —- Priscilla A. -Th mpson understood that after the Date of Taking, Percentage Rent shall continue to be payable subject to and in City Clea; accordance with the terms and conditions of this Lease for that portion of the Property not included in the Condemnation); and (b) Apportionment of Condemnation Award. Unless otherwise agreed to in writing by Lessor and Lessee (with the prior written consent of any Approved Leasehold Mortgagee), the Condemnation Award shall be apportioned by a court of competent jurisdiction based on Lessor's and Lessee's property rights as set forth herein. Specifically, (i) Lessee shall receive and be obligated to apply the amount necessary to restore the balance of the Project to as new a condition as existed immediately prior to the Taking; and (ii) the balance of the Condemnation Award shall be divided among Lessor and Lessee based upon their proportionate shares and remaining interests in this Lease, the Leasehold Improvements taken, the fee interest, the remainder interest, and the diminution in value of the Project; provided, however, that to the extent that any Approved Leasehold Mortgagee has any rights under any applicable Subordination, Non -Disturbance and Attornment Agreement described herein to receive and/or control the disbursement of such sums, such rights shall control over any provisions of this Lease. Section 24.4 Takings for Temporary Period. Where the Condemnation is for a temporary period of time, the provisions of this Section shall apply: (a) No Termination; Force Majeure. In the event of a Temporary Taking, this Lease shall not terminate and Lessee shall continue to perform and observe all of its obligations (including, but not limited to, payment of Base Rent and Percentage Rent as provided throughout this Lease without adjustment) as though the Temporary Taking had not occurred and Lessee shall be entitled to the entirety of the Condemnation Award for the Temporary Taking; provided, however, that to the extent Lessee may be prevented from performing its obligations (excluding payment of Base Rent and Percentage Rent as provided throughout this Lease without adjustment) by the terms of the Condemnation or by the conditions resulting from the Condemnation, including Lessee's use of all or any part of the Property, same shall be deemed to constitute an Event of Force Majeure. 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02.1304 Submitted Into the puUllc record in connection ith item s � on �i J 6�/ Priscilla A. Thompson (b) Temporary Taking For Same Period As Lease Term. In the event of a`TUal city Clerk Taking or Partial Taking for a period of time which extends for exactly the remainder of the Lease Term as of the Date of Taking, Lessor and Lessee shall each receive that portion of the award as though the Condemnation had not been for a limited period of time, all subject to and in accordance with the provisions of Section 24.2 or Section 24.3, as applicable. (c) Temporary Taking For Period Beyond Lease Tenn—In the event of a Total Taking or Partial Taking for a period of time which extends beyond the remainder of the Lease Term as of the Date of Taking, Lessee shall be entitled to that portion of the Condemnation Award equal to what Lessee would have received had the Condemnation not been for a limited period of time, all subject to and in accordance with -the provisions of Section 24.2 or Section 24.3, as applicable; provided, however, that Lessee shall not be entitled to any monies awardable for any time period after the Lease Term would otherwise have ended. Section 24.5 Event of Lessee's Default. Notwithstanding any provisions contained herein to the contrary, in the Event of Lessee's Default described in Section 25.1(x), Section 25.1(b) or Section 25.1(c) (subject to an Approved Mortgagee's exercise of any applicable cure rights therefor) prior to or at the time of a final judgment or other determination as to the amount of the Condemnation Award, or payment of the Condemnation Award, Lessor shall be entitled to receive such portion of the Condemnation Award as is necessary to cure such Event of Lessee's Default, in addition to such other portion of the Condemnation Award to which Lessor is otherwise entitled under this Article XXIV. Section 24.6 Rights of Approved Leasehold Mortgagee. (a) Consent and Participation Rights, Lessor and Lessee shall not settle or compromise the amount or division of any Condemnation Award in any Condemnation proceeding without any Approved Leasehold Mortgagee's prior written consent. Any such Approved Leasehold Mortgagee shall be entitled to appear in any such Condemnation proceeding and make claim for the share of any award to which Lessee is entitled by the terms of this Article. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 021304 (b) Assignment. Lessee may assign to any Approved Leasehold Mortgagee any and 0 all rights of Lessee with respect to Condemnation Awards and proceedings. (c) Provisions of Approved Leasehold Mortgage. The provisions of this Article XXIV shall be subject to the rights of any Approved Leasehold Mortgagee pursuant to an Subordination, Non -Disturbance and Attornment Agreement described herein. Section 24.7 Maeor Subleases. Lessee shall cause each Major Sublease to contain comparable condemnation provisions as those set forth in this Article with respect to each Major Project Component. ARTICLE XXV Submitted Into the public record in connectio with DEFAULT PROVISIONS item 3W on t,,- 1.10 Priscilla p Priscilla A. Thompson Section 25.1 Events of Default by Lessee. Each of following events is defined as -an Q JfZlerk of Lessee's Default": (a) Base Rent. If Lessee shall fail to pay any installment of Base Rent when and as due and payable, and such failure shall continue for a period of fifteen (15) days after written notice from Lessor to Lessee; (b) Percentage Rent. If Lessee shall fail to pay any installment of Percentage Rent when and as due and payable, and such failure shall continue for a period of thirty (30) days after written notice from Lessor to Lessee; (c) Other Sums of Money. If Lessee shall fail to pay any other sums of money due hereunder when and as due and payable, and such failure shall continue for a period of forty five (45) days after written notice from Lessor to Lessee; (d) Volun Bankruptcy_ If, at any time during the Lease Term, Lessee shall file: (i) a consent to or petition for the appointment of a receiver, trustee or liquidator of itself or all its assets; (ii) a voluntary petition in bankruptcy or a pleading, memorandum, affidavit or other paper in any court of record admitting in writing its inability to pay its debts as they come due; (iii) a general assignment for 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public record in connectio vu th item `�3� on • Y the benefit of creditors; or (iv) an answer admitting the material allegations of, or itpVjStjH&AWJ*ompson defaulting in answering, a petition filed against it in any bankruptcy proceeding; City Clea (e) Involuntary Bankruptcy. If, at any time during the Lease Term, there shall be filed against Lessee or any of its constituent entities, in any court of competent jurisdiction pursuant to any statute of the United States or of any State, a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a portion of Lessee's or any of Lessee's constituent entities' property, including, without limitation, the -Leasehold Estate or the Leasehold Improvements, and any such proceeding against Lessee or any of its constituent entities shall not be dismissed within ninety (90) days following the commencement thereof (which period may be extended up to an additional sixty (60) days) so long as Lessee is diligently pursuing such dismissal; (f) Seizure. If the Leasehold Estate or the Leasehold Improvements shall be seized under any levy, execution, attachment or other process of court where the same shall not be vacated or stayed on appeal or otherwise within sixty (60) days thereafter, or if the Leasehold Estate or the Leasehold Improvements are sold by judicial sale and such sale is not vacated, set aside or stayed on appeal or otherwise within any, period for vacating, setting aside, staying or appealing same, if any such period is applicable; (g) Certain Defaults Under Major Subleases. If. (i) any Major Subtenant defaults in the performance of or otherwise breaches any covenant under its Major Sublease which is specifically required by the provisions of this Lease to be included in such Major Sublease (including, but not limited to, those covenants described in Article VII hereof), or which is otherwise a material provision of such Major Sublease; (ii) such Major Subtenant fails to cure such default within the applicable notice and cure period for same under such Major Sublease; and (iii) Lessee fails to cause such default to be cured within forty five (45) days after the expiration of such notice and/or cure period, or if such default is not reasonably capable of being cured within such forty five (45) day period, Lessee shall have failed to commence to cure such default within such forty five (45) day period or thereafter failed to continue diligently prosecuting all action reasonably necessary to cure the default (it being understood that if 0 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--13-4 �d into the public • rec;:oj- in connection ,with item _ on !4Ly o2%- Firisc'lla A. Thompson legally authorized possession of the applicable Major Project Component is require n or er to cure Cleric default, such forty five (45)day cure period shall not be deemed to have commenced until Lessee is able, through diligent efforts, to obtain such possession); (h) Certain Defaults Under Operating Agreements. If. (i) Lessee or any Major Subtenant defaults under any applicable Operating Agreement for the operation and management of the applicable Major Project Component; (ii) such Operating Agreement is properly terminated by any such operator or manager on account of such default; and (iii) an Operating Agreement with a replacement operator approved by the Chief Executive Officer pursuant to the Chief Executive Officer Approval Procedures is not executed and delivered within ninety (90) days after Lessee or any Approved Mortgagee is able to take possession of such Major Project Component; (i) Unpermitted Transfer. If any Leasehold Estate Transfer or Lessee Transfer of Control shall be made in violation of the provisions of Article VIII, or if Lessee consents in writing to any Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control as to which any approval or consent of the Chief Executive Officer is required under the provisions of Article VIII, without Lessee's having first obtained such approval or consent of the Chief Executive Officer, and any such transaction is not unwound or nullified within thirty (30) days after its occurrence; 0) Insurance. If any insurance required to be maintained by Lessee hereunder lapses or is cancelled, and the same is not replaced within five (5) Business Days after Lessee receives written notice thereof from Lessor; provided, however, that no such Event of Lessee's shall give right to any right on the part of Lessor to terminate this Lease or Lessee's possession of the Property; or (k) Other Defaults. If Lessee shall fail to perform any of the other covenants, conditions and agreements of this Lease on the part of Lessee to be performed (other than those described in subparagraphs (a) through 0) above), and such failure shall continue for a period of sixty (60) days after written notice from Lessor to Lessee (stating with particularity the respects in which Lessor contends that Lessee has failed to perform any such covenants, conditions and agreements), or if such default is not reasonably capable of being cured within such sixty (60) day period, Lessee shall have failed to 0 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public ® record in connectio ith itempp 3�- on �d i,. o commenced to cure such default within such sixty (60) day period and thereafter to POMIlgil�isn l om son ity Clerk prosecuting all action reasonably necessary to cure the default (it being understood that if legally authorized possession of any applicable Major Project Component is required in order to cure such default, such sixty (60) day cure period shall not be deemed to have commenced until Lessee is able, through diligent efforts, to obtain such possession). Section 25.2 Remedies in Event of Lessee's Default. Lessor may treat any one or more of the Event(s) of Lessee's Default as a breach of this Lease, and thereupon at its option, by serving written notice on Lessee and any and all Approved Mortgagees of the Event of Lessee's Default, Lessor shall have, in addition to every other right or remedy existing at law or equity (to the extent consistent with any limitations on remedies specified herein), any one or more of the following remedies: (a) Completion of Work. During the development or construction of the Leasehold Improvements, Lessor shall have the right, but not the obligation, to carry out or complete the Work on behalf of Lessee without terminating this Lease, utilizing the proceeds of any applicable payment and performance bonds for the benefit of Lessor. In connection with the foregoing, Lessee hereby grants to Lessor an exclusive license to occupy the Premises in order to perform the Work. Notwithstanding the foregoing, all rights of Lessor under this subparagraph (a) shall be subject and subordinate in all respects to the rights of any Approved Mortgagee with respect to completing the Work and the proceeds of any payment and performance bonds. (b) Termination of Right to Possession,• Termination of Lease. After use of appropriate summary process or other legal process, Lessor may either: (a) terminate this Lease; or (ii) terminate Lessee's right to possession of the Property (without terminating this Lease) and re-enter the Property or the Leasehold Improvements and without further demand or notice, remove all persons and all or any property therefrom, by summary eviction proceedings or by any suitable action or proceeding at law, without being liable to indictment, prosecution or damages therefor, and repossess and enjoy the Property and the Leasehold Improvements. If Lessor elects to terminate the right of possession (without terminating this Lease), thereafter, Lessor may make such alterations and repairs as may be necessary in #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public ill record in ®� t�� item _— Priscilia A. Thompson order to relet the Property or the Leasehold Improvements and relet the Property or the Leasehady Clerk 0 Improvements. Lessor shall not be liable in any way whatsoever for failure to relet the Property or the Leasehold Improvements or, in the event that the Property or the Leasehold Improvements or any part or parts thereof are relet, for failure to collect the rent thereof under such reletting. Lessee, for Lessee and Lessee's successors and assigns, hereby irrevocably constitutes and appoints Lessor as Lessee's and their agent to collect the Rents due and to become due under all Major Subleases or Space Leases or any parts thereof. Notwithstanding any such reletting without termination, Lessor may at any time thereafter elect to terminate this Lease for such previous breach. (i) Lessee's Right to Cure. Notwithstanding the foregoing, Lessee shall have the right to cure any Event of Lessee's Default at any time prior to the issuance of a final order or judgment granting Lessor possession of the Property (subject to any pending appeal brought within the applicable appeals period), so long as Lessee also pays to Lessor any applicable interest due on previously unpaid sums at the Default Rate for the period from the due date thereof until the date paid in full, and all reasonable court costs and attorneys' fees. 0 (ii) No Acceleration of Rent. The Parties specifically acknowledge and agree that Lessor shall not be entitled to accelerate any Rent due hereunder on account of an Event of Lessee's Default. (c) Demand On Major Subtenants. Subject to the rights of any Approved Leasehold Mortgage or Approved Major Subleasehold Mortgagee, Lessor may demand that each Major Subtenant and each Direct Space Tenant pay the applicable rent due under such Major Sublease or Direct Space Lease directly to Lessor, and to exercise any and all of Lessee's rights and remedies thereunder if such Major Subtenant or Direct Space Tenant, as applicable, fails to pay rent directly to Lessor or otherwise comply with the terms of such Major Sublease or Direct Space Lease. Each Major Sublease and Direct Space Lease shall include a provision whereby the applicable Major Subtenant or Direct Space Tenant acknowledges and agrees that Lessor has the rights described in this subparagraph (d). 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connection Zvi h iternon �. /m o'' (d) Injunctive Relief. Lessor may seek injunctive relief agai (,ll�acr� peon City Clerk restraining, any affirmative violation of any of Lessee's covenants hereunder. (e) Damages. Lessor shall have the right to seek recovery from Lessee of all actual damages to Lessor proximately caused by any Event of Lessee's Default for which Lessor has terminated Lessee's right to possession of the Property and the Leasehold Improvements or terminated this Lease in accordance with the provisions of this Article XXV. In no event shall Lessor be entitled to recover consequential or punitive damages from Lessee. — (f) Other Remedies. No remedy conferred upon or reserved to Lessor shall be considered exclusive of any other remedy, but shall be cumulative and in addition to every other remedy given under this Lease or existing at law or in equity or by statute, and every power and remedy given by this Lease to Lessor may be exercised from to time and as often as occasion may arise, or as may be deemed expedient by Lessor; provided, however, all such remedies shall be consistent with the limitations of Lessor's rights with respect to termination of this Lease and any other limitations set forth in this Article 25. (g) SNDA's. Lessor acknowledges and agrees that certain rights and remedies of Lessor specified herein will, in certain respects, be limited by the provisions of any applicable Subordination, Non -Disturbance and Attornment Agreements entered into by Lessor with respect to the Project as contemplated herein, including any such agreements with Approved Leasehold Mortgagees, Approved Subleasehold Mortgages, Major Subtenants, Space Tenants and holders of Approved Time Share Licenses. Section 25.3 Events of Default — Lessor. (a) Events of Lessor's Default. An "Event of Lessor's Default" shall be deemed to have occurred upon the failure of Lessor to perform any of the covenants, conditions and agreements of this Lease which are to be performed by Lessor and the continuance of such failure for a period of thirty (30) days after notice thereof in writing from Lessee to Lessor (which notice shall specify the respects in which Lessee contends that Lessor has failed to perform any of such covenants, conditions and 4217950 Q - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02-130-4 Submitted Into the public record in/ connectio With ® Item `1.3� on />�- �rls�illa A. Thompson agreements), provided, however, that if such default is one which cannot be cured within thirty 30) days, City (;lark no such Event of Lessor's Default shall be deemed to have occurred if Lessor shall have commenced such cure within such thirty (30) day period and thereafter shall have continued diligently to prosecute all actions necessary to cure such default. (b) Lessee's Remedies in Event of Lessor's Default. If an Event of Lessor's Default shall occur, Lessee may treat same as a breach of this Lease, and thereupon at its option, by serving written notice on Lessor, Lessee shall have, in addition to every other right or remedy existing at law or equity, one or more of the following remedies: (i) Termination. The right and option to terminate this Lease and all of its obligations hereunder upon prior written notice to Lessor (except those which specifically survive termination of this Lease); (ii) Injunctive or Other Relief. The right to specific performance, injunction or other similar relief available to it under applicable law against Lessor (including any or all of the members of its governing body, and its officers, agents or representatives); and (iii) Damages. The right to obtain actual damages resulting from such default, but only to the extent that any such damages are not first or cannot be redressed through the relief described in clause (ii) above. Notwithstanding the foregoing, in no event shall any member of such governing body or any of its officers, agents or representatives be personally liable for any of the City's obligations to Lessee hereunder. In no event shall Lessee be entitled to recover consequential or punitive damages from Lessor. (iv) Setoff. Notwithstanding anything to the contrary contained herein, Lessee shall be entitled to set off against next accruing Rent payments the amount of any such damages awarded to Lessee payable by Lessor pursuant to any judgment or order by a court of competent jurisdiction, which judgment or order is no longer appealable. (v) Waiver of Sovereign Immunity. To the maximum extent permitted by Applicable Laws, Lessor hereby waives the right to raise any defense to Lessee's seeking or obtaining 42 17950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone • • is such damages, or otherwise to claim that Lessee is not entitled to seek or obtain such damages, based on the principle of sovereign immunity or any similar principle or requirement of Applicable Law. Section 25.4 Mitigation. Lessor and Lessee hereby expressly acknowledge and agree that each shall have an affirmative obligation to reasonably mitigate respective damages as a consequence of a default by the other. Section 26.1 (a) ARTICLE XXVI COVENANTS OF LESSOR AND LESSEE Partial Modification of Restrictions. Submitted Into the public record in connection with item _ �� on -/* , - Priscilla A. -Tho pson City Clerk Lessor's Compliance. Lessor shall comply with' all the terms and conditions of the Partial Modification of Restrictions. (b) Proof of Payments. Upon written request of Lessee from time to time, Lessor shall provide Lessee and any Approved Mortgagee with adequate proof that any payments required to be made by Lessor thereunder are being made in a timely manner. (c) Right to Make Payments. Lessor shall use reasonable good faith efforts to obtain from the Trustees (or other applicable Governmental Authority) written confirmation that the Trustees (or such other applicable Governmental Authority) shall provide to Lessee written notice of any failure by Lessor to make any payments when due as required pursuant to such Partial Modification of Restrictions and a reasonable period of time within which to afford Lessee the opportunity to cure such default; provided that if the Trustees do not agree to the same: (i) Lessor shall not be deemed to be in default under this Lease in connection therewith; and (ii) Lessor shall use reasonable good faith efforts to provide copies to Lessee of any such written notices it receives from the Trustees. If Lessor fails to make any such payments when due, then Lessee or any Approved Mortgagee may make the payment, in which case Lessee may set off the amount of such payment against the next accruing Rent payments due. If Lessor anticipates not making the payment to the Trustees when due, Lessor shall notify Lessee and any Approved Mortgagee thirty (30) days prior to the applicable due date (it being understood that Lessor's #217950 v3 - Final Version of Watson Island Ground Lease - City of Nliarni and Flagstone Submitted into the pu ® ® record in connect'on 36t - item r oip ea failure to make any such payment shall be deemed a default by Lessor hereunder, subject to the alp[icab�eia A. lil Or City C cure period). If Lessee or any Approved Mortgagee makes the payment to the Trustees, then, at Lessee's option or any Approved Mortgagee's option and upon providing advance written notice to Lessor, Lessee or any Approved Mortgagee may continue to make the annual payments to the Trustees, in which case Lessee may deduct the amount of the payments made to the Trustees from the next accruing Rent payments upon submitting proof of such payment to the reasonable satisfaction of Lessor. Section 26.2 Civic Arts Endowment Trust. (a) Creation. Lessee shall create a "Civic Arts Endowment Trust" for the Project (the "Trust"). Creation of the Trust, and conditions or restrictions applicable to the Trust shall be set forth in and governed by a separate written agreement in form and substance reasonably acceptable to Lessor and Lessee. Such agreement shall be entered into prior to the Possession Date. (b) Control. Lessee shall retain control of the Trust, but the Trust's managing board shall include, but not necessarily be limited to, a member from each of the City, Fairchild Tropical Garden and The Historical Museum of South Florida. (c) Funding. Lessee shall fund the Trust in accordance with the provisions of Exhibit R. (d) Investment of Funds. Funds contributed to the Trust shall be invested in such manner as is directed by the managing board of the Trust. (e) Use of Income. The income earned from the investment of the funds in the Trust (but not the corpus of the Trust) shall be used for operations, maintenance and repair of all civic spaces within the Project, which shall deemed to include all areas of the Project open to the public other than the Parking Garage, the Retail Space, rooms within the Hotels, and other areas of the Project which are subject to membership or user fees, such as spa and fitness facilities. Such income shall be used, among other things, to maintain the gardens and reflecting pools and the sculptures and other physical objects of art located within the public spaces within the Project in good condition and repair, which art shall be more specifically described on Exhibit E-1 attached hereto (the "Public Art"), and for "public -art" related purposes within the Project, such as visual or performance related art and/or art related festivals or 0 9217950 v3 - Final Version of Watson Island Ground Lease - City of N/liami and Flagstone 02-1304 • • 0 • • functions. Notwithstanding anything contained herein to the contrary, in no event shall any funds from the Trust be used for the maintenance of areas of the, Project which do not constitute civic spaces (as described above) nor shall such funds in any way reduce or be credited against the Rent and other obligations hereunder. Section 27.1 ARTICLE XXVII QUIET ENJOYMENT Submitted Into the public - record in connectiowith item tion / ?1, 13, Priscilla A. Thompson City Clerk Quiet Enjoyment. Lessor represents, warrants and covenants that Lessee, upon paying the Rent and all Impositions and other charges, and performing all the covenants and conditions of this Lease, shall lawfully and quietly hold, occupy and enjoy the Property during the Lease Term without hindrance or molestation by Lessor (solely in its proprietary capacity) or any Persons claiming under Lessor (solely in its proprietary capacity). ARTICLE XXVIII LESSEE NOT TO ENCUMBER LESSOR'S INTEREST Lessee shall have no right or power to, and shall not in any way encumber the title of Lessor in and to the Property, or the title of Lessor's remainder or residual interest in the Leasehold Improvements. The fee simple estate of Lessor in the Property and the residual interest of Lessor in the Leasehold Improvements shall not be in any way subject to any claim by way of lien or otherwise, whether claimed by operation of law or by virtue or any express or implied lease or contract or other instrument made by Lessee and any claim to the lien or otherwise upon the Property or in the Leasehold Improvements arising from any act or omission of Lessee shall accrue only against Lessee's interest in the Leasehold Improvements. ARTICLE XXIX LIMITATION OF LIABILITY Section 29.1 Limitation of Liability of Lessee. 421'950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone M�W • • • (a) General Limitation on Liability. Submitted Into the public ® record in connection vJti-:, item on y L o It is expressly understood and PgrWgi i AdThompSon City Clerk between the Parties, anything herein to the contrary notwithstanding, that each and all of the representations, covenants, undertakings and agreements herein made on the part of Lessee are made and intended not as personal representations, covenants, undertakings and agreements by the members, officers, agents and investors of Lessee or any officers, agents, shareholders, directors, members, partners, investors or any other Person of any of Lessee's constituent entities or for the purpose or with the intention of binding any of the foregoing personally; but are made and intended for the purpose of binding Lessee and the Leasehold Estate only. (b) Limited Carve -out. Notwithstanding the foregoing, in the event of (i) an actual and intentional fraud committed by any of Lessee's members or officers in any written document prepared by Lessee and submitted to Lessor; or (ii) any misappropriation of Net Insurance Proceeds or Condemnation Awards by Lessee (should same be paid directly to Lessee), any such members or officers committing the fraud or causing such misappropriation shall have personal liability to the extent of any actual damages sustained to Lessor proximately caused by such fraud or misappropriation, and the property and assets of such member or officer committing the fraud or causing the misappropriation shall be subject to levy of execution or enforcement procedure for the satisfaction of Lessor's remedies hereunder, but only to the extent that Lessor is unable to look to the Leasehold Improvements for recovery of such damages. The provisions of this subparagraph (b) shall not apply to any Approved Foreclosure Transferee or any Approved Subsequent Foreclosure Purchaser. Section 29.2 Limitation of Liability of Lessor. It is expressly understood and agreed by and between the Parties, anything herein to the contrary notwithstanding, that each and all of the representations, covenants, undertakings and agreements herein made on the part of Lessor while in form purporting to be the representations, covenants, undertakings and agreements of Lessor are nevertheless, each and every one of them, made and intended not as personal representations, covenants, undertakings and agreements by Lessor, or any commission member, employee, official, representative, attorney or agent of Lessor or for the purpose or with the intention of binding any of the foregoing personally; but are 4217930 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone o2-1304 Submitted Into the public record in connection I.S-n �' o y' - item _ A pD Tho Pace' made and intended for the purpose of binding the Lessor's fee simple interest in ttter�opelrtty onlyCity Clerk NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, NEITHER LESSOR NOR ANY COMMISSION MEMBER, EMPLOYEE, OFFICIAL, REPRESENTATIVE, ATTORNEY OR AGENT OF LESSOR, SHALL BE PERSONALLY LIABLE, DIRECTLY OR INDIRECTLY, UNDER OR IN CONNECTION WITH THIS LEASE, OR ANY DOCUMENT, INSTRUMENT OR CERTIFICATE SECURING OR OTHERWISE EXECUTED IN CONNECTION WITH THIS LEASE, OR ANY AMENDMENTS OR MODIFICATIONS TO ANY OF THE FOREGOING MADE AT ANY TIME OR TIMES, HERETOFORE OR HEREAFTER, OR IN RESPECT OF ANY MATTER, CONDITION, INJURY OR LOSS RELATED TO THIS LEASE OR THE PROPERTY AND ONLY LESSOR'S INTEREST IN THE PROPERTY (OR PROCEEDS THEREOF) SHALL BE AVAILABLE TO SATISFY ANY CLAIMS AGAINST LESSOR; AND LESSEE AND EACH OF ITS SUCCESSORS AND ASSIGNEES WANES AND DOES HEREBY WAIVE ANY SUCH PERSONAL LIABILITY. As used in this Lease, the term "Lessor" means only the current owner or owners of the fee title to the Property. Each lessor is obligated to perform the obligations of Lessor under this Lease only during the time such lessor owns such interest or title. Any lessor who transfers its title or interest is relieved of all liability with respect to the obligations of Lessor under this Lease to be performed on or after the date of transfer. However, each lessor shall deliver to its transferee all funds previously paid by Lessee if such funds have not yet been applied under the terms of this Lease. ARTICLE XXX ESTOPPEL CERTIFICATES Section 30.1 Estoppel Certificates from Lessee. Lessee shall, at any time and from time to time, so long as this Lease shall remain in effect, upon not less than fifteen (15) and not more than (30) days' prior written request by Lessor, execute, acknowledge and deliver to Lessor, or any other Person specified by Lessor, a written statement (which may be relied on by such Person) (a) certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full 0 4217950 v3 - Final Version of Watson Island Ground Lease - City of (Miami and Flagstone Submitted Into the public ® record in connectio vv th item �on Priscilla A. Thompson force and effect as modified, stating the modifications and if so requested, that the annexed copy of LAY Clerk Lease is a true, correct and complete copy of the Lease) and (ii) the date to which the Rent and other charges have been paid, if any, and (b) stating (i) whether Lessee has given Lessor written notice of any default, or any event that, with the giving of notice or the passage of time, or both, would constitute a default, by Lessor in the performance of any covenant, agreement, obligation or condition contained in this Lease, and (ii) whether, to the actual knowledge of Lessee (but without independent inquiry), Lessor is in default in the performance of any covenant, agreement, obligation or condition contained in this Lease, and, if so, specifying in detail each such default. Section 30.2 Certificates from Lessor. Lessor shall, at any time and from time to time, so long as this Lease shall remain in effect, upon not less than fifteen (15) and not more than thirty (30) days' prior written request by Lessee, execute, acknowledge and deliver to Lessee, and/or any other Person(s) specified by Lessee (including, but not limited to, any Approved Mortgagee and any proposed transferee of the Leasehold Estate or any Major Subleasehold Estate), a written statement addressed to Lessee and such other Person(s) (which may be relied on by such Person(s)) (a) certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full force and effect as modified, stating the modifications and if so requested, that the annexed copy of the Lease is a true, correct and complete copy of the Lease) and (ii) the date to which the Rent and other charges have been paid in advance, if any, and (b) stating (i) whether an Event of Lessee's Default has occurred or whether Lessor has given Lessee notice of any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Lessee's Default, and (ii) whether, to the actual knowledge of Lessor (but without independent inquiry), Lessee is in default in the performance of any covenant, agreement, obligation or condition contained in this Lease, and, if so, specifying in detail each such default or Event of Lessee's Default. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 00-1304 ® Submitted Into the public record in connection with ARTICLE XXXIStem 93-4-- on . OS" NO WAIVER Priscilla A. Thompson City Clerk Section 31.1 Delays in Exercising Rights. No delay or omission of Lessor or Lessee to exercise any right or power arising from any default shall impair any right or power, nor shall it be construed to be a waiver of any default or any acquiescence in it. Section 31.2 Waivers to be in Writing. No waiver of any breach or violation of any of the covenants or conditions contained in this Lease shall be implied but must be evidenced by a written instrument signed by the waiving Party, and no waiver of any breach of any of the covenants or conditions of this Lease shall be construed to be a waiver of any other breach or to be a waiver of, acquiescence in, or consent to any further or succeeding breach of the same or similar covenant or condition. No failure on the part of Lessor to enforce any covenant or provision contained in this Lease, and no waiver of any right under this Lease by Lessor, shall discharge or invalidate such covenant or provision or affect the right of Lessor to enforce same in the event of a subsequent breach or default, except to the extent Lessor has specifically waived same in writing. Receipt of Rent. The receipt of Rent by Lessor, with knowledge of any breach of this Lease by Lessee or of any default on the part of Lessee in the observance or performance of any of the conditions, agreements or covenants of this Lease, shall not be deemed to be a waiver of any provision of this Lease. The receipt by Lessor of any Rent or any other sum of money or any other consideration paid by Lessee after the termination of this Lease or the entry of a judgment granting possession of the Property to Lessor, shall not reinstate or continue the Lease Term unless so agreed to in writing and signed by the Chief Executive Officer and Lessee. Section 31.4 Consents. Consent of Lessor to any act or matter must be in writing and shall apply only with respect to the particular act or matter to which the consent is given and shall not relieve Lessee from the obligation, wherever required under this Lease, to obtain the consent of Lessor to any other act or matter. 0 x217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �'i'- S104 • is • :7 ARTICLE XXXII SURRENDER AND HOLDING OVER Section 32.1 Surrend,�r at End of Term. Submitted Into the public record in connectio Ait d item w 3on � La oe Priscilla A. ThompJol City CleO (a) Delivery of Property. Upon the expiration or sooner termination of this Lease, Lessee shall peaceably and quietly leave, surrender and deliver to Lessor, in their "as is" condition, the entire Property in accordance with Section 2.2, together with the following items: (i) the Leasehold Improvements; (ii) all alterations, changes, additions and other improvements made upon the Property; and (iii) any and all Personal Property owned by Lessee or any Major Subtenant or Affiliate of either, but only to the extent such Personal Property has been permanently affixed to the Property or the Leasehold Improvements for use in connection with the operation and/or maintenance of the Property and the Leasehold Improvements. In addition, Lessor shall have the right to assume, as of the expiration or sooner termination of this Lease, all remaining lessee obligations under any leases of Personal Property where Lessee or any Major Subtenant or any Affiliate of either is the lessee of the Personal Property, but subject to any consent rights of the applicable Personal Property lessor. Such assumption shall be made pursuant to written assumption agreement(s) in form and substance mutually acceptable to Lessor and Lessee or the applicable Major Subtenant or Affiliate, which assumption agreement(s) shall include, among other things, an appropriate indemnity from Lessor for the period from and after the date of assumption. (b) Delivery of Other Items. At the time of the surrender, Lessee shall also deliver to Lessor all of the following to the extent within Lessee's possession or immediate control (i.e., in the possession of a manager for Lessee or similar Person having a contractual duty to supply such documents to Lessee), all without representation, warranty or recourse: (i) Lessee's original executed counterparts, if available (and if not, then true and correct copies), of all Major Subleases and Space Leases then in effect pursuant to Article XXXIII hereof; (ii) any and all security deposits and rent advances under all Major Subleases and Direct Space Leases then in effect pursuant to Article XXXIII hereof; (iii) any service and 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 021°`i9V Submi eca dtin connection Zo item mon lm Priscilla A. Thompson City Clerk maintenance contracts then affecting the Property or the Leasehold Improvements; (iv) recent ismaintenance records for the Property and the Leasehold Improvements; (v) all currently effective original licenses and permits then pertaining to the Property or the Leasehold Improvements; (vi) permanent or temporary Certificates of Occupancy then in effect for the Property or the Leasehold Improvements; (vii) all warranties and guarantees then in effect that Lessee shall have received in connection with any work or services performed or building equipment installed on the Property or in the Leasehold Improvements, together with a duly executed quit -claim assignment thereof to Lessor in a recordable form approved by the City Attorney; and (viii) all financial reports specifically required by this Lease which are less than sixty (60) months old and which were not previously furnished to Lessor. Section 32.2 Rights Upon Holding Over. At the expiration of the Lease Term, or any earlier termination of this Lease, Lessee shall yield up immediate possession of the Property and the Leasehold Improvements to Lessor but in the event that Lessee fails to do so, Lessee shall pay to Lessor for the whole time such possession is withheld beyond the date of expiration or termination of this Lease a sum per day equal to Two Hundred (200) percent times 1/365th of the aggregate of the Rent paid or payable to isLessor for the immediately preceding calendar year as set forth in Article V. Section 32.3 No Waiver. The provisions of this Article shall not be held to be a waiver by Lessor of any right of entry or reentry as set forth in this Lease, nor shall the receipt of a sum, or any other act in apparent affirmance of the tenancy, operate as a waiver of the right to terminate this Lease for any breach of Lessee under this Lease (subject to any applicable notice and/or cure periods). Section 32.4 Survival. The provisions of this Article shall survive the expiration or earlier termination of this Lease. ARTICLE XXXIII MAJOR SUBLEASES, SPACE LEASES AND APPROVED TIME SHARE LICENSES Section 33.1 Leasing and Subleasing. Except as provided by this Article XXXIII, Lessee shall not sublease or license or grant any other use or occupancy rights with respect to the Property, the 4217950 Q - Final Version of Watson Island Ground Lease - City of :Miami and Flagstone Submitted Into the public record in connection wil:1', item A6�&_on I.Ax i a - Leasehold Improvements or the Leasehold Estate without the Chief Executive Officer'ppt l i& Thom SOI City Clea consent, which may be granted or withheld in the Chief Executive Officer's sole discretion. Section 33.2 Non -Disturbance and Attomment. On Lessee's request, Lessor shall enter into Subordination, Non -Disturbance and Attornment Agreements with each Major Subtenant substantially in form and substance attached hereto as Exhibit S; provided, however, that the Chief Executive Officer shall not unreasonably withhold his or her consent to any commercially reasonable modifications to such form as may be requested by the applicable Major Subtenant, any Approved Major Subleasehold Mortgagee or any Approved Mezzanine Financer providing Approved Mezzanine Financing to such Major Subtenant. Section 33.3 Major Subleases. Subject to the provisions of this Article XXXIII and Article VIII. Lessee shall have the right at any time during the Lease Term to enter into a Major Sublease for each of the five (5) Major Project Components with a Major Subtenant, provided that: (i) the provisions of Article VIII are satisfied as to each such Major Subtenant; and (ii) each such Major Sublease shall meet the requirements set forth in subparagraph (a) below. (a) Requirements for Major Subleases. Lessee shall provide to Lessor copies of all Major Subleases and amendments thereto. Each Major Sublease (as well as a material modification or amendment thereof) shall be subject to the Chief Executive Officer's prior written approval in accordance with the Chief Executive Officer Approval Procedures. Each Major Sublease shall: (i) Term. Be for a term equal to or less than the presently existing Lease Term (i.e., which shall include any properly exercised Extension Options and shall not include any unexercised Extension Options but may have corresponding Extension Options); this Lease; (ii) Covenants. Include the covenants required,by the applicable Sections of (iii) Subordination. Provide that such Major Sublease shall be subject and subordinate to the terms of this Lease (but subject to the provisions of any applicable Subordination, Non - Disturbance and Attomment Agreement); 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • r� Submitted Into the public record in connection ith item 64, on i o Priscilla A. Thompson (iv) Bank and Records. Provide that the applicable Major Subtenant shall City Cleric maintain full and accurate books of account and records of such Major Subtenant's business, operation or enterprise, in accordance with the requirements under Article ?CII, and that Lessor shall have the same rights, including, without limitation, the audit rights, set forth therein with respect to such Major Subleases; (v) Mortgagee Cure Rights. Include provisions permitting any Approved Leasehold Mortgagee to cure defaults by Lessee thereunder, and any applicable Approved Major Subleasehold Mortgagee to cure defaults by such Major Subtenant thereunder; (vi) Lessor Cure Rights. Include provisions permitting Lessor to cure defaults by Lessee thereunder; (vii) No Action Causing Default under Lease. Provide that such Major Subtenant shall not take any action or fail to act which would result in an Event of Lessee's Default hereunder; (viii) Compliance With Laws and Insurance. Provide that such Major Subtenant shall comply in all material respects with all Applicable Laws as to the applicable Major Project Component, and any and all requirements of public liability, fire and other policies of insurance which may be applicable to its operations, activities, rights and obligations under such Major Sublease; (ix) Maintenance of Insurance. Provide that such Major Subtenant shall maintain the insurance coverages set forth in Article XI with respect to the applicable Major Project Component governed by the Major Sublease; (x) Casualty and Condemnation. Include casualty and condemnation provisions with respect to the applicable Major Project Component which are substantially similar to those contained in this Lease; (xi) Use Restrictions. Include restrictions on Major Subtenant Transfers of Control with respect to the applicable Major Subtenant and Major Subleasehold Estate Transfers with X217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--.1304 .,.)rnitted Into the, public record in connection with item on r} i} rlscilla A. Thompson respect to the applicable Major Subleasehold Estate which are substantially similar to t�ose contained iCity Clerk Article VIII; (xii) Notice of Default under Operating Agreements and Mortgages. Require the Lessee and the applicable Major Subtenant to provide Lessor with notice of default or any allegation of default by such Major Subtenant and/or any counterparty under any Operating Agreement(s) or Approved Major Subleasehold Mortgage(s) or of any expressed intention of either party to any such agreement to terminate same; (xiii) Advance Rent. Provide that in no event shall Lessee be permitted to accept more than two (2) months rent in advance of the then current month under any Major Sublease. and (xiv) Rentals. Provide for such rentals as are necessary to maintain a Sufficient Lessee Economic Interest (as defined in Section 8.1). Section 33.4 No Cross -Defaults Among Major Subleases. No default or Event of Lessee's Default under any Major Sublease shall constitute or give rise to a default under any other Major 0 Sublease. Section 33.5 Space Leases. (a) Approval of Certain Space Leases. Any single Space Lease for more than 50,000 net rentable square feet shall require the prior written consent of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures. (b) Right to Enter into Space Leases. Lessee and/or any Major Subtenant shall have the right to enter into any other Space Leases with respect to each of the Major Project Components or any other Project Components without Lessor's consent, provided that all such Space Leases shall: (i) be for a Permitted Use and not for any Prohibited Use; (ii) be entered into in a non-discriminatory fashion; (iii) be negotiated at arm's length; (iv) have adequate security deposits in the good faith judgment of Lessee or 'the applicable Major Subtenant; (v) be on lease forms previously supplied to Lessor or on another form typically required by any national tenant (but in each case with such modifications as shall 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ;;,;, omitted Into the pub'.i record in connection 0 item J4, on /t /1 Priscilla A. Thompsoin have been negotiated with the applicable Space Tenant); (vi) be within the tenant improvement guidelines City Clerk prepared by Lessee reasonably and in good faith and submitted by Lessee to Lessor from time to time (or as to Space Leases with national tenants, as required by such national tenants); (vii) be with the rental rate guidelines prepared by Lessee reasonably and in good faith and submitted by Lessee to Lessor from time to time (it being understood that such guidelines shall generally provide for market rents to be charged, unless specified circumstances or conditions are applicable to particular Space Leases as agreed upon by Lessor and Lessee reasonably and in good faith); (viii) result in a complementary tenant mix, including a variety of restaurants with varied price points; and (ix) result in first-class operations befitting the Project. (c) Assignment of Rents. As security for the prompt payment of Rent hereunder, Lessee hereby: (i) assigns to Lessor all of its right, title and interest in and to any and all existing and future Major Subleases and Space Leases and all rents due and to become due thereunder; and (ii) grants to Lessor the right to collect such rents and apply same to the Rent due hereunder; provided, however, that Lessee shall be entitled to collect and receive such rents in accordance with the terms of such Major Sublease and Space Leases unless and until an Event of Lessee's Default has occurred and is continuing. Lessor's rights under this subparagraph (c) shall be (and are hereby made) subject, subordinate and inferior in all respects and for all purposes to any right, title and interest of each and every Approved Mortgagee in and to all such Major Subleases and Space Leases and all such rents due and to become due thereunder. Upon the written request of any such Approved Mortgagee, Lessor shall execute such instruments as such Approved Mortgagee may request for the purpose of confirming the foregoing subordination. (d) Non -Disturbance. Upon Lessor's request, Lessee shall enter into a Subordination, Non -Disturbance and Attornment Agreement with any Space Tenant which meets one or more of the following criteria: (i) such Space Tenant will occupy more than 50,000 net rentable square feet; (ii) such Space Tenant will have a Space Lease having a term exceeding five (5) years; or (iii) such Space Tenant is a national tenant which requires non -disturbance protection. The form of such Subordination, Non -Disturbance and Attornment Agreement shall be comparable to the form for Major 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone V02-13,04 Submitted Into the public record in connect 10n 'v itl� item �w on �y my Priscilla A. -Thompson Subtenants set forth in Exhibit S., provided, however, that the Chief Executive Officer shall not City Clerk unreasonably withhold his or her consent to any commercially reasonable modifications to such form as may be requested by the applicable Space Tenant (with due consideration to the particular requirements of any national tenant). Section 33.6 Approved Time Share Licenses. (a) Acknowledgment. The Parties acknowledge and agree that Lessee or the applicable Major Subtenant is entitled to create and sell Approved Time Share Licenses at the Marina and/or within the Hotels (subject to the limitation of the number of keys allocated therefor as described in the definitions of Hotel A and Hotel B and in Exhibit E). (b) SNDA's. In order to assure the marketability and continued existence of all such Approved Time Share Licenses at all times during the Lease Term, Lessor agrees that Lessor, Lessee and any applicable Approved Mortgagees shall, upon Lessee's request from time to time, enter into one or more Subordination, Non -Disturbance and Attornment Agreements with the holders of Approved Time Share Licenses and their respective lenders. Each such Subordination, Non -Disturbance and Attornment Agreement shall: (i) be in form and substance reasonably satisfactory to all of the parties thereto; (ii) be binding upon and inure to the benefit of each holder of such Approved Time Share Licenses; (iii) provide, among other things, that for the entire duration of the Lease Term, the possessory and other rights of each such holder of an Approved Time Share License shall not be disturbed.or impaired on account of any termination of this Lease or any termination of any applicable Major Sublease prior to the stated expiration date of the Lease Term. (c) Lessor Protections. Subject to the provisions of clause (iii) of subparagraph (b) above, the Parties acknowledge and agree that the Subordination, Non -Disturbance and Attornment Agreements described in subparagraph (b) above shall in no event: (i) affect the business and financial terms of this Lease; (ii) constitute a material deviation from the Watson Island RFP and the Island Gardens Proposal; or (iii) significantly impair the protections afforded to Lessor pursuant to this Lease. #217950 v3 - Final Version of Watson Island Ground Lease -_Cit} of Miami and Flagstone 02-1304 • • • ARTICLE XXXIV 0 NIINORITV AND WOMEN PARTICIPATION AND EQUAL EMPLOYMENT OPPORTUNITIES Submitted Into.I record in connection viii h item y3 �. on �' , o Priscilla A. Thompson City Clerk Section 34.1 First Source Hiring Agreement. Simultaneously with the execution hereof by Lessee, Lessee shall enter into a First Source Hiring Agreement with the City, in form and substance substantially as set forth in Exhibit T. Section 34.2 Minority and Women Participation and Equal Employment Opportunity. During the Lease Term, Lessee agrees that it will: (a) take reasonable affirmative action in the recruitment and recruitment advertising to attract and retain qualified minority and female contractors and subcontractors; (b) provide a reasonable opportunity in the recruitment, recruitment advertising and hiring for contractors and subcontractors residing. within the City of Miami; (c) take reasonable affirmative action to retain employees regardless of race, color, place or birth, religion, national origin, sex, age, marital status, veteran and disability status; (d) maintain equitable principles in the recruitment, recruitment advertising, hiring, upgrading, transfer, layoff, termination, compensation and all other terms, conditions and privileges of employment; (e) monitor and review personnel practices to guarantee that equal opportunities are being provided to all employees, regardless of race, color, place of birth, religion, national origin, sex, age, marital status, veteran and disability status; (f) post in conspicuous places, available to employees and applicants for employment, notices in a form to be provided by Lessor setting forth provisions of this non-discrimination clause; (g) in all solicitations or advertisements for employees placed by or on behalf of Lessee, state that all qualified applicants will receive consideration for employment without regard to race, creed, color or national origin; and (h) send to each labor union or representative of workers with which the construction contractor or other operator within the Project has a collective bargaining agreement or other contract or understanding a notice in a form to be provided by Lessor, advising the union or representative of Lessee's commitments and posting copies of the notice conspicuous places available to employees and applicants for employment. X217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-2-1104, bi;cmii ec Into ine ADO. D11C record in connectioh item �/3�- on 4j.744.%- Priscilla A. Thompson City Clerk Section 34.3 Skills, Training and Employment Center. Lessee shall establish and maintain a "Skills Training Center" during the construction of the Project and a "Career Training Center" at all times during the Term to provide for training of the construction and operations personnel associated with the Project at the Property or other location(s) within the City. The Skills Training Center shall be run by a construction management team to be assembled by Lessee and shall provide for the advancement of skills for the construction personnel at the Project, which shall include, without limitation, a curriculum of safety, fundamental skills for untrained workers, advance skills for trained workers, additional skills for . certificates in alternate trades and management of construction operations. Such Skills Training Center shall provide opportunities for the chronically unemployed within Miami -Dade County, with priority (as a general proposition) being given to residents of the City. The Career Training Center will provide accredited course for all employees of the Project (which shall -be offered at no -cost to participants), including, without limitation, hospitality training, retail training, catering and dining training, marina operations training, public space management, customer service training, multiple language skills, historical ambassador training, botanical training, educational teaching for cultural facilities and emergency services training (for immediate care prior to arrival of professional emergency services). Section 34.4 Tax Credits. To the extent available, Lessor agrees to cooperate with Lessee, at no cost or expense to Lessor, in connection with Lessee's efforts to obtain any tax credit under Applicable Laws associated with employment, such as. the State of Florida "Enterprise Zone" program and/or the Miami -Dade County "Empowerment Zone" program. In no event shall the foregoing agreement to cooperate be deemed to apply to any municipal programs offered or operated by the City, but nothing contained herein shall be deemed to prevent Lessee from submitting any applications to the City with respect to any such municipal programs for which Lessee may be eligible. ;;2179i0 v3 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone ® Submitted Into the public ." J U record in connectio with item on ARTICLE XXXV Priscilla A. Thompson rr w City Clerk OPERATING AGREEMENTS FOR HOTELS AND MARINA Section 35.1 Approval. During the Lease Term, any operating and management agreement entered into by Lessee or any Major Subtenant for the operation and management of the Hotels and Marina (collectively, the "Operating Agreements"), and any material amendments or modifications thereto, shall be subject to the prior written approval of Lessor in accordance with the Chief Executive Officer Approval Procedures (it being understood that the Chief Executive Officer shall not object to any terms and conditions which are customary in the industry and/or are typically required by any nationally or internationally recognized operator or manager, provided that such terms and conditions do not violate any City policies, legal or otherwise). Section 35.2 Approved Operators. Any such Operating Agreement shall only be with a member of the Operating Team approved in accordance with the provisions of Section 4.4 (the "Approved Operators)"). ' Section 35.3 Terms. Each such Operating Agreements shall: (i) be subject and subordinate to l the terms of this Lease; and (ii) be for a term which is equal to or less than the presently existing Lease Term (i.e., which shall include any properly exercised Extension Options and shall not include any unexercised Extension Options but may have corresponding Extension Options). Section 35.4 Non -Disturbance and Attornment Ag Bement. Upon request, Lessor and the Approved Operator(s) shall enter into a Non -Disturbance and Attomment Agreement in form and substance to be mutually acceptable to the parties thereto. ARTICLE XXXVI UNAVOIDABLE DELAY Section 36.1 Unavoidable Delay(s). For the purpose of any of the provisions of this Lease (except the payment of Rent), neither Lessor nor Lessee, as the case may be, nor any successor in interest, r "-Z 17950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02. 1304 Submitted Into the public record in connectio vt th n y l��o y for next Business Day delivery, fee prepaid. (iii) on the date of an facsimile tra�t is �' �-t-�t efp' P P y 0r]Sc.i aim i fibrnpson 5:00 p.m., Miami time, otherwise on the next Business Day), with transmission verified and a hard cx4y Clerk of the transmission promptly sent by U.S. Priority Mail; or (iv) three (3) Business Days after deposit with the United States Postal Service as registered or certified mail, postage prepaid, and in each case addressed as follows (or to such other addresses as either party may subsequently designate in writing to the other): If to Lessor, at: Chief Executive Officer (City Manager), City of Miami, Florida 3500 Pan American Drive Miami, FL 33133 with a copy to: Department of Economic Development, City of Miami 444 SW 2 Avenue Miami, FL 33130 with a copy to: City Attorney, City of Miami 444 S W' 2 Avenue Miami, FL 33130 All Rent payments shall be made to (unless otherwise designated in writing by Lessor): Finance Director, City of Miami 444 SW 2 Avenue Miami, FL 33130 if to Lessee, at: Flagstone Island Gardens LLC 506 Celebration Avenue Celebration, Florida 34747 Attn: Mehmet Bayraktar with a copy to: Shutts & Bowen LLP 1500 Miami Center 201 South Biscayne Boulevard Miami, Florida 33131 Attn: Kevin D. Cowan, Esq., and Terry B. Fein, Esq. with a copy to: Latham & Watkins 885 Third Avenue New York, New York 10022 Attn: Richard L. Chadakoff, Esq. 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public • record in connection w�ifh �, item 3on ii -Y Each party from time to time may change its address or add addresses for purposes or reccia eiv h y Clerk k qty Clerk 40 declarations or notices by giving notice of the changed address, to become effective ten (10) days following the giving of such notice. Section 37.2 Notice to Approved Mortgagees. All notices, demands or requests which may be required to be given by Lessor or Lessee to any Approved Mortgagee shall be sent in writing, in the manner or manners set forth in Section 37.1 for the giving of notices, addressed to the Approved Mortgagee at such place as the Approved Mortgagee may from time to time designate in a written notice to Lessor and Lessee. Copies of all notices shall simultaneously be sent to the other of Lessor or Lessee, as the case may be. Section 37.3 Sufficiency of Service. Service of any demand or notice as in this Article provided shall be sufficient for all purposes. ARTICLE XXXVIII MISCELLANEOUS PROVISIONS Section 38.1 Captions. The captions of this Lease are for convenience and reference only and in no way define, limit or describe the scope or intent of this Lease, nor in any way affect this Lease. Section 38.2 Conditions and Covenants. All the provisions of this Lease shall be deemed and construed to be conditions as well as covenants, as though the words specifically expressing or importing covenants and conditions were used in each separate provision. Section 38.3 Entire Agreement. This Lease (together with all of the Exhibits and other attachments (if any) hereto and any future easement agreements or other documents contemplated hereby, collectively contains the entire agreement between the Parties concerning the Property. This Lease shall supersede and control over any and all prior agreements and negotiations between the Parties, whether oral or in writing (which are hereby expressly merged into this Lease). To the extent of any conflict between this Lease and the Watson Island RFP and/or the Island Gardens Proposal, this Lease shall 0 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-1304 Submitted Into the public • record in connection wits item _ � on ij oA Priscilla A. Yhompsc control. This Lease shall supersede and control over any and all prior agreements and negotiations City Clel between the Parties, whether oral or In writing (which are hereby expressly merged into this Lease). Section 38.4 Modification. None of the covenants, terms or conditions of this Lease to be kept and performed by either party to this Lease shall in any manner be waived, modified, changed or abandoned except by a written instrument duly signed, acknowledged and delivered by both Lessor and Lessee. Section 38.5 Time of Essence as to Covenants of Lease. Subject to any extensions expressly provided with respect thereto, time is of the essence as to the performance of each and every of the provisions of this Lease by Lessee and Lessor. Section 38.6 Recording. The Parties shall, at the request of either Party, execute a short -form lease or memorandum of lease and have it properly acknowledged for the purpose of recording in the Public Records of Miami -Dade County, Florida. Such short -form lease or memorandum of lease shall include those provisions hereof as may be reasonably requested by either of the Parties, provided that the financial terms of this Lease shall not be contained therein if Lessee so requests. Lessee shall bear the cost of any such recordation thereof. Section 38.7 Chief Executive Officer Approval Procedures. Except for those circumstances in this Lease which expressly provide to the contrary or specifically call for an approval to be given or withheld in the "sole discretion' or "sole and absolute discretion' of the Chief Executive Officer, the following provisions shall apply to any matter for which approval is required hereunder to be obtained from the Chief Executive Officer (individually and collectively, an "Approval -Requiring Matter"), and shall be deemed to be the "Chief Executive Officer Approval Procedures": (a) Standard of Approval. Approval shall not be unreasonably withheld, delayed or conditioned and shall be considered by the Chief Executive Officer in good faith; (b) Disqualified Persons. Where approval of a particular Person is required, the Chief Executive Officer may withhold such approval if such Person is a Disqualified Person; ,217950 v3 - Final Version of Watson Island Ground Lease - City of :Miami and Flagstone 02-1304 0 (c) Response Time. Response by the Chief Executive Officer shall be given within fourteen (14) days of submission to the Chief Executive Officer of all information which is fundamentally required in order to make a decision; provided, however, in the case of any request for approval of the Construction Plans and Specifications: (i) response as to any initial Construction Plans and Specifications shall be given within twenty five (25) days of submission; (ii) response to any changes, modifications, additions or supplements thereto and any additional details with respect thereto which are required to be approved shall be given within ten (10) days of submission of same, and shall be limited to a review of only such changes, modifications, additions, supplements or additional detail, and the Chief Executive Officer shall not raise any objections to any matters or items previously approved in accordance with this Section 38.7 (except to the extent that the Chief Executive Officer learns that any such matter or item was approved contrary to the requirements of Applicable Laws or the Major Special Use Permit for the Project). (d) Request for Approval. Any submission for approval shall be accompanied by a written request for approval which shall include a legend at the top of the first page in a typeface larger than that used elsewhere in the request for approval indicating that Lessor is to provide comments within fourteen (14) days (or other applicable period) pursuant to this Section, together with a copy of such submission to the City's Ombudsman and the City's Consultant (as such terms are defined in the Development and Construction Rider); and (e) Reasons for Denial, If Applicable. In the case of the denial of any request, such denial shall be made with reasonably specific written comments as to why and as to what altematives might be acceptable (with the understanding that denial may be based on any reasonable grounds). (f) Chief Executive Officer Approvals; Disclaimer. (i) Notwithstanding anything to the contrary contained in this Lease, Lessee acknowledges that any approvals by the Chief Executive Officer of any Approval -Requiring Matter shall in no event be deemed to be a guarantee of the approval of such Approval -Requiring Matter by the City Commission or any other Governmental Authority. Any approval by the Chief Executive Officer of an ,1217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connectiPmpsoon ih item 1-/34- on I.L.Priscilla A. ih City Clerk 02 4304 Submitted Into the public record in connection with item 3�- on o f - Approval-Requiring Matter shall be made solely in the City's capacity as the owner o�tCt�l A.a po p5On City Clerk not in any governmental capacity, and Lessee shall remain responsible for obtaining whatever permits, licenses and approvals may be necessary to improve the Property in accordance with any such Approval - Requiring Matter, as well as all Applicable Laws. (ii) In addition, approval by the Chief Executive Officer of any Approval - Requiring Matter shall not constitute a warranty or representation by City that the Project Components meet all building codes or other Applicable Laws, or that such plans, will, if followed, result in properly designed or constructed Project Components, or that any Project Component built in accordance therewith will be built in good or workmanlike manner. (iii) Notwithstanding anything to the contrary contained in this Lease, the Parties recognize and agree that certain provisions of this Lease may require the City and/or its boards, departments or agencies, acting in their governmental capacity, to consider certain changes in applicable City codes, ordinances, plans, regulations or policies, as well as to consider other governmental actions. All such considerations and actions shall be undertaken in accordance with established requirements of state statute and City ordinances, in the exercise of the City's jurisdiction under the police power. (iv) Northing in this Lease is intended to limit or restrict the powers and responsibilities of the City in acting on applications for MUSP Approval and applications for other Project Approvals by virtue of the fact that the City may have consented to such applications as a property owner hereunder. The Parties further recognize and agree that these proceedings shall be conducted openly, fully, freely and fairly in full accordance with law and with both procedural and substantive due process to be accorded the applicant and any member of the public. Nothing contained in this Lease shall entitle Lessee to compel the City to take any such actions, save and except the consents to the filing of such applications for MUSP Approvals, land use approvals or the required approvals, as more fully set forth herein, and to timely process such applications.. Section 38.8 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of Florida, without application of its conflicts of law principles. #217950 v3 . Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-x,304 • Section 38.9 Jurisdiction and Venue. The parties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Lease occurred in Miami -Dade County, Florida. Except in connection with matters to be resolved in accordance with Article XVII hereof, the Parties agree that any disputes, civil action or legal proceeding arising out of or relating to this Lease shall be brought in the courts of record of the State of Florida in Miami -Dade County, Florida or the United States District Court, Southern District of Florida, Miami -Dade County Division. Each Party consents to the jurisdiction of such courts in any such civil action or legal proceeding and waives any objection to the laying of venue of any such civil action or legal proceeding in such court. Service of any court paper may be effected on such party by mail, as provided in this Lease, or in such other manner as may be provided under applicable laws, rules of procedure or local rules. Section 3 8. 10 Waiver of Jury Trial. The Parties hereby knowingly, irrevocably, voluntarily and intentionally waive any right either may have to a trial by jury in respect of any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Lease or any amendment or modification of this Lease, or any other agreement executed by and between the parties in connection with this Lease, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any Party hereto. This waiver of jury trial provision is a material inducement for Lessor and Lessee to enter into the subject transaction. Section 3 8. 11 Conflict of Interest. Lessee agrees to comply with the conflict of interest provisions of the Miami City Code, Miami -Dade County Code and the State of Florida. No member, official, or employee of Lessor shall have any personal interest, direct or indirect, in this Lease, nor shall any member, official, or employee participate in any decision relating to this Lease which affects his or her personal interests or the interests of any other Person in which he or she is, directly or indirectly, interested. No member, official, or employee of Lessor shall be personally liable to Lessee, its successors and assigns, or anyone claiming by, through or under Lessee or any successor in interest to the Property, in the event of any default or breach by Lessor or for any amount which may become due to Lessee, its Submitted Into the public record in connection wi h 4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone item on /} /� o y Priscilla A. Tho pson City Clerk Submitted Into the public record in connection with item 3e- on1• � v�- successors and assigns, or any successor in interest to the Property, or on any obligationR 1Id eAmsi-AIL" on of this Lease. City Clerk Section 38.12 Covenants to Run with the Leasehold Estate. All covenants, agreements conditions and undertakings in this Lease shall extend and inure to the benefit of and be binding upon the successors and assigns of each of the Parties and be construed as covenants running with the Leasehold Estate and the Leasehold Improvements. Subject to all provisions respecting the rights of assignment or subleasing, this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties. Wherever in this Lease reference is made to any of the Parties, it shall (unless expressly provided to the contrary in such reference) be held to include and apply to, wherever applicable, also the successors and assigns of each Party. Section 38.13 No Merger. Without the express written consent of all Approved Leasehold Mortgages and Subleasehold Mortgagees, there shall be no merger of this Lease or any interest therein or of the Leasehold Estate, with the fee estate in the Property or any portion thereof by reason of the fact that this Lease or such interest therein or the Leasehold Estate may ever be held directly or indirectly by or for the account of any Person who shall also hold the fee estate in the Property or any portion thereof or any interest of Lessor under this Lease. Section 38.14 Brokerage. Each Party represents and warrants to the other that it has not dealt with any broker or finder in connection with the transactions contemplated and each Party agrees to indemnify, defend and hold the other harmless of and from any and all manner of claims, including, but not limited to, reasonable attorneys' fees and expenses, incurred by the other Party and arising out of any claim by any broker or finder if it is ultimately determined that the indemnifying Party has breached the foregoing representation and warranty. Section 38.15 Counterparts. This Lease may be executed in any number of counterparts, each of which shall constitute an original of this Lease, and all of which shall constitute but one Lease. Section 38.16 No Third Party Beneficiaries. Nothing in this Lease shall confer upon any . person, other than the Parties hereto and their respective successors and permitted assigns, any rights or 217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 remedies under or by reason of this Lease; provided, however, that each Approved Mortgagee, Approved Foreclosure Transferee and Approved Subsequent Foreclosure Purchaser shall be a third party beneficiary hereunder to the extent such Persons are granted rights hereunder. Section 38.17 Attorney's Fees and Expenses. In the event of any litigation between the parties, all expenses, including reasonable attorneys' fees and court costs at both the trial and appellate levels, incurred by the prevailing party, shall be paid by the non -prevailing party. The term "attorneys' fees", as used in this Lease, shall be deemed to include, without limitation, any paraprofessional fees, investigative fees, administrative costs and other charges billed by the attorney to the prevailing party (including any fees and costs associated with collecting such amounts). The provisions of this Section 38.17 shall survive the expiration or any sooner termination of this Lease. Section 38.18 Invalidity of Provisions. If any provision of this Lease or the application of it to any Person or circumstances shall to any extent be finally determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease, and the application of such provision to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 0 ?217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into tg,1e public record in ccnrlectic with item Yaw ®11 .* -t oav Priscilla A. Thompson City Clerk 02-1304 • 0 0 IN WITNESS WHEREOF, Lessor has caused this Lease to be executed in its name and on its behalf by the Chief Executive Officer of the City of Miami, Florida and the City Clerk of the City of Miami, Florida, and Lessee has executed this Lease, as of the date and year first above written. Signed, sealed and delivered LESSOR: in the presence of: CITY OF MIAMI, a municipal corporation of the State of Florida Name: Name:_ ATTEST: City Clerk APPROVED AS TO INSURANCE REQUIREMENTS: , Chief Division of Risk Management Signed, sealed and delivered in the presence of: Name: Name: By: Chief Executive Officer APPROVED AS TO FORM AND CORRECTNESS: City Attorney LESSEE: FLAGSTONE ISLAND GARDENS LLC, a Delaware limited liability company By: _ Name: Title: is0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Subrn*jt.tE.A Into the public record in oonnectio vui:h item,5& on A'' Priscilla A. Thompson City Clerk 02-1304 Submitted Into the public EXHIBIT A record in connection w' h SKETCH OF WATSON ISLAND item ja- on /� y oY Priscilla A. Tho pson City Clerk 0 4217950 0 - Final Version of Watson Island Ground Lease - Citr of Miami and Flagstone 026-304 D DEC -04-2002 WED 09:10 AM FAX NO. P. Ol , 3w u N ` H pry J I d' N �I SIM T/ai.Or7�ll� � H I I G �/ I } I 111\ G C PAGE 111' HCVD AT 12W2002 0:20:20 AM PE..twn lt-drd Timet' OVN:/AX0ERVOtl11.ON0:"07 • C00):' DUIUTION OM- 000-M y�y Into qq 9�, +� q p p+ record in connection vui h item 3� o Il , ��-- priscil A. `Thompson City Clerk 02-x.304 • ® ® Submitted Into the public record in connectionpih EXHIBIT B item y3do:., on Da- Priscilla A. T hompkn UPLAND PARCEL City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 2 -m42 04 • Submitted into the pub?i record in connection w"t". item 3a.- on Priscilla A. Thompsc City Gler LEGAL DESCRIPTION OF UPLAND PARCEL Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62' 00'00 seconds" ; thence South 59 ' 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17 ' 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North 17' 12' 21" West continuing along said bulkhead line a distance of 924.70 feet to the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 89' 10' 55" East, a distance of 73.08 feet; thence North 86 ' 44' 00" East, a distance of 67.09 feet to non - tangent curve concave to the Northeast whose radial line bears North 39' 29' 18" East having a radius of 160.00 feet and central angle of 22 ' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72 ' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46' 17' 39" thence along said curve an are length of 484.79 feet to a point of tangency; thence South 26 122' 36" East continuing along the southwesterly right of way line of State Road A 1-A, a distance of 196.59 feet; thence South 54 ' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54' 03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. o2—iM • • L rotted into record i� l , or"i Iy%/j_6Y EXHIBIT C n cov)M item Prischo+'�c1 ailla A• City Clerk SUBMERGED PARCEL '217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-i304 4 • • ® Submitted Into the public record in connectio ) ith item � 3&on oY Priscilla A. Th meson City Clerk LEGAL DESCRIPTION OF SUBMERGED PARCEL Commence at a point marked by an 5/8" diameter iron rod and Cap Stamped F.D.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A 1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, at Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706- 112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62 3 00' 00"; thence South 59 3 51' 26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17 3 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 49 3 32' 57" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and position by coordinates North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 3 03'50" West, along the limits of said turning basin a distance of 428.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03 3 27' 54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10,716.59 feet, a radial line to said point bears South 01 3 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02 3 04' 17" to a point of tangency; thence South 89 3 10' 55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point of intersection with an existing bulkhead line; thence South 17 3 12' 21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. '02-1304 ® Submitted Into the public' record in connection with Items on j-� ® EXHIBIT D Priscilla A. Tho pson City Clerk SURVEY • #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone n • • ® Submitted Into the public record in connection wi h item q j on�� y o EXHIBIT E Priscilla A. T4hop on . City Clerk DESCRIPTION OF PROJECT COMPONENTS AND AMENITIES I. General Description. 1. The Major Project Components, consisting of the Marina, Hotel A, Hotel B, the Retail Space and the Parking Garage. 2. A fish market (the "Fish Market"). 3. A Maritime Gallery containing a minimum of 4,000 square feet. 4. Areas of public access and assembly, as more particularly described in the Island Gardens Proposal, which shall include, without limitation, the following: a. a roof garden to contain not less than Five Percent (5%) less than the proposed amount of square feet as described in the Island Gardens Proposal with swimming pools, cabanas, and garden room for special occasion rental, which shall supply the hospitality amenities for the Hotel guests and be available to the public on a fee basis; b. salt water gardens; and C. a 100' setback to include a grand promenade along the sea wall (the "100' Setback") For purposes of hereof. 5. Public Art as more particularly described in Exhibit E-1 attached hereto. 6. A boat basin for model boats adjacent to the entry boulevard for the Project. 7. Adequate facilities for passenger pick-up and drop-off by water taxi service and/or ferry service. 8. Any and all other infrastructure, landscaping and improvements which are more particularly described in.the Island Gardens Proposal (it being understood, however, that the details concerning such infrastructure, landscaping and improvements, including any #217950 0 - Final Version of Watson Island Ground Lease - City of N/Iiami and Flagstone o2-1304 • • 9 • Submitted Into tylepubl€c. record in connection wit adjustments thereto, shall be as set forth in the approved Consltrtaou dt-!�—aW 1 Y Priscilla A. Thal pS®n Specifications). City Clerk II. Number of Hotel Keys. 1. The total number of keys of allocated to Approved Time Share Licenses for the two Hotels in the aggregate may, at Lessee's option, be increased by up to five percent (5%) above the. maximum aggregate amount of 100 keys as set forth in the definitions of Hotel A and Hotel B (i.e., from 100 keys to 105 keys). 2. The total number of keys (other than those allocated to Approved Time Share Licenses) in each Hotel may, at Lessee's option, be increased or decreased by up to five percent (5%) above the respective maximums set forth in the respective definitions of Hotel A and Hotel B (i.e., 200 keys in the case of Hotel A and 300 keys in the case of Hotel B); provided, however, that if the application of such Five Percent (5%) maximum would result in less than a full floor of keys in either Hotel, then such Five Percent (5%) maximum may be exceeded by such additional amount as will result in a full floor of keys in each Hotel. 3. The foregoing increases or decreases may be made without Lessor's consent, but subject to the Chief Executive Officer's review and approval of the applicable Construction Plans and Specifications as provided for by the provisions of the Lease. 4. As an example of how the foregoing variances would be applied, assume that: (i) Hotel A and Hotel B will each have 18 keys per floor; (ii) Hotel B will have 60 keys allocated to Time Share Licenses; and (iii) Lessee desires to have the maximum number of keys it can have in each Hotel. A. Applying the Five Percent (5%) maximum with respect to the number of keys in Hotel B (other than those allocated to Approved Time Share Licenses), Lessee may have up to 315 keys (other than those allocated to Approved Time Share Licenses), plus the 70 keys allocated to Approved Time Share Licenses. The total number of keys in Hotel B would be 385 keys. However, with 18 keys per floor, 385 keys would result in having less than a full floor of keys. Since it would require 396 keys to reach a full floor of keys (i.e., 21 floors of 18 keys #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0. t Sl lbrni tea I":`, ; . record 6n connecbu., iteln _4 �tin . I 0>1 each), Lessee may have a maximum of 396 keys in Hotel B, of which 70 keys are lallo�cate�'hO111��0I ® City Clerl Approved Time Share Licenses. B. Based on the same assumptions, Hotel A may have a maximum of 35 keys allocated to Approved Time Share Licenses (for a total of 105 in the aggregate for both Hotels). Applying the Five Percent (5%) maximum with respect to the number of keys in Hotel A (other than those allocated to Approved Time Share Licenses), Lessee may have up to 210 keys (other than those allocated to Approved Time Share Licenses), plus the 35 keys allocated to Approved Time Share Licenses. The total number of keys in Hotel B would be 245 keys. However, with 18 keys per floor, 245 keys would result in having less than a full floor of keys. Since it would require 252 keys to reach a full floor of keys (i.e., 14 floors of 18 keys each), Lessee may have a maximum of 252 keys in Hotel A, of which 35 are allocated Approved Time Share Licenses. Il. Marina. The Marina may include, among other things: (i) fractional ownership provided isthat the same can be structured as an Approved Time Share License; and (ii) slips, dockage or other accommodations for (in addition to other marine vessels) water taxis, as well as amphibious aircraft, seaplanes and other air-sea amphibious craft (so long as such amphibious aircraft, seaplanes and other air- sea amphibious craft are not brought or allowed upon the Upland Parcel). in. 100' Setback. Lessee may construct and operate within the 100' Setback such facilities and improvements as are approved to be within the 100' Setback pursuant to the Major Use Special Permit for the Project and any and all other applicable Project Approvals (including any such Project Approvals required by the City in its municipal capacity). Such facilities and improvements may be constructed and operated within the 100' Setback without the prior written consent of Lessor (in its capacity as lessor under this Lease) or the Chief Executive Officer, subject only to the Chief Executive Officer's approval of specific Construction Plans and Specifications for same in accordance with the Chief Executive Officer Approval Procedures. The Parties acknowledge and agree that in no event shall the foregoing waiver of Lessor's right, in its capacity as lessor under this Lease, to object or consent to the construction and operation of such facilities and improvements within the 100' Setback be deemed to #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 9 ® be a vvaiver of any and all rights of Lessor (or any of its applicable planning boards or agencies) to object to same in its municipal or regulatory capacity. IV. Measurement of Retail Space. The 221,000 square feet of Retail Space shall be calculated based on "Usable Area' within each store under the Standard Method for Measuring Floor Area in Office Buildings (American National Standard) approved on June 7, 1996 by American National Standards Institute, Inc. and the Building Owners and Managers Association International (ANSUBOMA Z65.1-1996); it being understood and agreed, however, that in addition to such 221,000 square feet: (i) there may be common area factor which shall mean any area outside of a store or restaurant of up to Twenty Five Percent (25%) of such 221,000 square feet; and (ii) such Twenty Five Percent (25%) common area factor shall not be permitted to include common areas not directly related to the Retail Space (i.e., it shall exclude general Project common areas). Submitted Into the public record in connectic with item � art /i Ib 0' Z Priscilla A. `Thompson ® City Clerk • #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 0 Submitted Into the public EXHIBIT E-1 record in conneet '0 item on DESCRIPTION OF PUBLIC ART Priscilla A.T City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 0 E is DEC-04-2OC2 GILD 00:43 -A AST "Diff FAX K0.01 Submitted into the public record in connection with itern �on /,x- 1AbL1--- /J- /" 4honO on Priscilla A. Tho nPs city Clerk AWARDS 1.9)7 C.,ar A. Fwrdcd�� lippe Cwgv-.Z;,wv Mriffarid FvAndado,- fearbp PUBLIC COMMISSIONS PeJfoew..,g Aril' Xfy'vwi-D&k Arr ;I: SP-LeC—MD PVBUC COLLECTIONS Ar6osas --l"I f -'a -r L11Wo Z.,* �—Xjhvi �� -Ids capt"Off9w. Me.%iis Cip, iyme�-A 1-6&241.Wxr?u.,n, Haruad 1..Trmprnt,y fevw e , I rx , N. e w I 'a, k. :10'. Y 9,vdS,*Pxff Cgrde.-, im!fYwaawlt K=,, Aa,;;,Yr, Genran lf,=.? Are MXiewr. Alia ,,vfARrr) /Tfjap, dfA,es Mwl--) at B4M Aft , C�Waa, Lex: ua'a AIX -4.5v e An, Protdifue Msu4ga,4' Mxidm 011' M4? -<M70. I Aa, MAW Fw,* pwt, Rlonda of A:izom PAGE 1n'RCVI)ATiM2D529:47-02 AJAjEasMStandard Tir*j' SVR-FAXSERVE%,j5, %S,77031 CSIV.1 DURATION (mm.4,1'02-12 02i -i3, 04 0 • DEC -04-20C'? �J-D 09:43 A u M wNp FAX l,0. Submitted Into the public record In conner t:ou, wlthi itelll®rl Priscilla A. Thompson City Clerk gm i-atcmadons&y ac:lairmd asdst, her work is in majl-)r phlic c^Lccdnns including the fActropcli- tan Mu6cu.11t a i` ?lrt in New perk, the Art l nstiture of (;hicagc 'Viroa NILSeut: C l:inr Arts, ark -1 Ihr Xla6i rrJ Design 144ureurri•Srnith3o:.ia.-I I!iou- tuu.:,, Ncw Y-)sk. i%r acd,^arced ptt bhc est pieces indude Radaanr .Site, a 150 .pint lnng w-1 com- posed of 11;000 f013 ius*mac riles n( the Hcral4 Squarc Subway Complex is New Yxlc, Co& -x Sacramento at the Swrvmenc7 T'enual library: and A W�4k on the Beach, :'.r :xlcbraied ?2,0W Sl" lacr of cunco-ars.. A, MiEmi rtltemational irp,irr. Ma Loner has participated in a numbcc of c&stingt i-11ecl cxlibWuns, among thern Formed by Fire, t_amegie Muse= of Ar:, Pittsbuq b: D& - sign Resource, Cooper -Hewitt Muscwm' Nc-" Yolk, _culustru Elegance, Gu coheir Muscu:i, New-York;Repert,Natoodit$ieurt,a"Fine Rin de J=ax Brazil; and 3rrhixctucc and Al Itiirrradona; Cc=cmporary A.rt,ar, Yokobarra, japan, k retrospective of Mo l)nr-:es's •z-nrk is bo ing orgmized by thQ Ba:z .M aseu:ts i%% Mismi BeaCh and is scheduled to <<n -d to museums in thz [mired Smtvs. 1=utop aild Lars— America. Het uotk has bcw rettiewea bs "c New York Timet: The Vv'�l Street I-:�v.rnzl.The N uw Yorkcr, the Wxahixg&*n Fts. , titctxupalis AN1agpzine and the Los _Angeles Titres. Oka Donet is cie c"ec i -.vi.. Jnr or a number OF awncds and gzarm; The !<icaz ]?ccailxtic3r; The New York State Council for, the lists, and the Lydia kVui,rnn \•fall,•o Pxize at me i etroi: I=ttnto of 0-e Arcs. A natio.. of btiarni Bomb, 01ta Doacr rtcired her i'S'MEN/Dusign and Mfroin rhe 'Universityof Michigan.1 1994 she was hcrlored will, t -.e Dim- trncrn,,i>hed AI•smnus Award team th,: Schao! if A'rrustee of l-bc Wolfsonian-1-1U in iifsaaL' &:srh, ahc also serves or. thr Advisor! Council o= rhe Uni-%a='r, of-Mirlvgaii 0L: -":U01 UL Af-. PACE 213 = RCVO AT 240021:47:02 9;47,02 AJA IEaibm Stanndard Tinwj I SVR:FA3ERVEM 5 x ONIS:7703' CSID, z DURATION (MM4.1:02-12 -04 02 `y` 3 n u • • DEC-04-2OC2 W7 -D 00:44 A M41A ,9wky Ma -emus FA}' f`0. Submitted Into �� �i°h record inconi r► ty ��y F—�'' son Priscilla item P+o Th®�� City Clerk Vsrs -\AaW ineZ Cams ci_ands the b0UL1JL i:!% tr ;li: rre17.• assr,*u.ced with the mcdium o: Ph.rc0grsnc7. One of her most celcbgwed w-a_{s; +4 .VON Coniinwas, a crmr-)' froar. t6c i4L2x.-i n2de .fit L-) Pu.:l;c PLIC" �cC�_uu yrar]uucn:[,: au Vtvw at f3afIIi Intc mat'.onal °.:rpocft f.on- ecut,e Tt Gsing an e.ztiag atr;urn r]as.; N.• zz a btse fpr rhe +.vCr{t, the at:ut crP2tP..d a .n1i=] eli c rF.lrcts LprrL tha Ldea:: of ceascl sr,d d.sp1fteei:ic:1L nzui ih^;a s' rfkwirt: rw Ou::Vm The 48 CF.fle1, 40' x 40' sanfbla_ted phocogmpltx MLnL on Ql,,s wis ccanpleted on)airaa-y-199;. A r� iF;c�t a: a Ciux> Fc!]rju:yh.p, a. �lstiot�al Lnd�Lsmen: for the Arts n uwd and ai a1f right Hays Uran!, hur armnck has been widely exh!brrtri in the L:rutcd SratF4 -And sbeoaa. f4er wood: r9 includ,.d wa :nc o- rhe Mami ASL Mmicuv., the Germ Utorge Purrpidou, 1'afLs, kluseun� o: l Wrfu Am Nt w Yock, 1fLu:rrsatifrnsl C'PnrPr (.-.f P.cv)_- phi; New "'c fk, '�c-.r York, the Nx,burr. of Conrcfryox, ay A C:);c adv, Cenctr ion Cix-;6,L, , Phomgraphf, 'I u --soil, :1r.�ana, "luscum of %(ace -r. Ar-, &= Fmnoaco. Ccntro Cultural Afte "Ve='co Gr., Lo. it-ngolOc COu-3 ry Nfu2cLL-n OF Ar L, 1,-;; :Argcl25, CSIXOM; l PAGE WI RCVD AT 12'412002 9,47,02 AIA (Eastm Standard Tirml I SVR:FAXSERVEt i5 t DNIS:77Q3k C£ID, k DURATION (mm4J:02•12 304 • • 0 • EXHIBIT F CONCEPTUAL SITE PLAN #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connecticr3 i t hn item 3� on ty /s #-x- Priscilla - - Priscilla A. ThW mps®n City Clerk 02-x.304 • El • Submitted Into the publ record in connectio tall,,t e item ®n ! ' r `, Priscilla A. Th+o alrz W pea S�EB� ��w e;�:�'P$ �ag� a ���.•g �,b @�r6°.p �.�ja U��Ad1�a��p�`e8agaS '-_� �V ���eiSCa y?EiE°� GSF`F r,^�■s'a r.�a<�e�ai,� t���6 a'' a� .gT�Vi 9. � s9-gi E¢�Sl'�ae� cy �'�48 �.a_a ��3 ' �� g��� a�,e a�• a a oig�E�65y� zea a 6��q�3 02-1304 0 0 0 46 to. lilm- a M L/') z LU 0 C-1/ < C) PZ Z J ls' 1 o] j 1 JR J- -.2111 j IN Ail 02-1304 Submitted Into the publi6- connection wi h record in connection wi h item 3w on ti. -,16, &.1 - Tho on Priscilla A. Tho p on City Clerk Lim tj a M L/') z LU 0 C-1/ < C) PZ Z J ls' 1 o] j 1 JR J- -.2111 j IN Ail 02-1304 0 Submitted Into the public ® record in connection z i; itemQn 1s 1 aY Priscilla A. Thompson City Clerk 3414i jT1Ri{�a�ic`1�. z 0 w ?, II lilti �_5 I z " A]��r S�Sg9 �9sa'i�gq �SE.�o6Zht` �pba�:ra2'sZ11 §e`'�:s€d 4, �6�•` sF ✓i eEl so�_•re- $ �:Oe sa'ei�i F�Sei s 02-1304 0 • • C] rt42 �°xAa s S�55�9zs3� .ps `aeff• j js � � �1t� �e3gggp 6� S�T�i"ae • Submitted Into the public record in connection with item x-34 on �y iy a� Priscilla A. Th4om son City Clerk • • C .year • Submitted Into the public record in connection wi h item 3� on /.x.,4D _: �' Priscilla A. Tho pson City Clerk 11�C pe y y 0 1$� �T:i i �d $9 a� B.ti Ila � p < p e ] 5 7 u3 -M I 1111 �ji ��Ctutu?Eac°,€'Aa_e ev,u ?$e$$ 02-1304 0 • {�gji s Atti A6 E�5���W AY��� C • 0 Submitted Into the public record in connection with item _t ,3w ®i11, y �' � Am � r a E.f+�'" O P on Clerk li 3 •��'�,._~''.9�5 � � E ,� `� aA� <� =v" a $� � � �,�� •h �5iare�eEa 7ja��� �b3 A.aa,g 02-1304 • v tuba fitted Into the public ®record t� cr�nnecfiic�r�[v�Fz `, f Priscilla A. Thompscb City Cledl Dt, t1j! it till] V y.` vl H84 �il- mill fill a j spa 96 C I At 02-130 5 t iii' 1 t' 1 t ` �ttt�rtt ttC.}(Er=1 ��y`;i }�lY,� � y+ F I F t �� I l �+ 1�1 it (r� ! ^� f t• 1 i R � '' wy � 1 r IN 1 1 rte t LIP: S.t t � , .. h 11 � 11 ' , �• 'i Gr � � khl F - � 6YI`��� t ��,1` r�h�:f �1+�51 �i♦a it t�-.,;.� ' .,f. -� ,i��• Jalp 17 �, !�} . F } [ f• � � -: 111,., _ , { E � ...' • /'1 � �'[ ... w ey $Ayt� viv 4 1 • { 1 �" ' �� rFJ s ,L:r Swt ,.� t 1�.: 4 t(• Vit• � � ' t'k ''.. 1. � - s+` pt if'rl;a' lir \ ` 7p�il;tilll i l [ 4 G ltl�} .. _ ...__. l •. n GG t �r .I `F'f 1 24Jt.{ 1•� �•l' I' c . t i ART ( 6 r _... .E,.,Irr �,YI �� 4((tr��.�iA 1 (t kit ,ill "I". ll 'tilt L )( �' �� f t�t� tit M r i1 � R� - .'.� - 1 j�'■■■�j(1I � 1 • '.. 1 1 ♦ }, t � �t(i .� s ;'tS � .: 1'...il!k tar 1. �. .,•Ikl • • • ® Submitted Into the public record in con necuo item y3a- or s oJ-- Priscilla A.1 bcrnpson City Clerk ,41jr ,. 11 r Z 0 z AMR .1gy 1 1 rE <g3 s 3•s'y ,t Ryak�.�a+�y�'. �S,a�s•ar�a5� �g`s a"C3��a`e ,"�Eagg� �++ i `33�v8t`i e'xi.3i��~�s�e�8~spp~aiv 02-1304 C I V I C A K T 1 S L A N D G A K D E N S Dedicated to ROUNQABOUT C4tjffiWaVM Rf N EPIGRAMS Of C�Pt00mL f Jthe jeTI f "[OST AT ffA' r�,ra,,tr restoring the � { �pyyu�nrr��j jyrjh (/(j.7& Aprrahtp of the �/}•ERARY FIORiDA: 1�1entAg i1X t Gfl UYStrAl pOH( b} (i,L as leneMels to au AiW I�GAfY OR/AL• S ane a maft storytelling 100' prmmnade of Maritime History of nsourtrs of the Crescent Deicing enter the Me a }'achy bean -wrenching Quality of the inlenrdirn of ON palms it a fountain the Tits, the iteraturt of the rquira, Terrace, a olkaion of Marina harbor sill v perunres at Island 'icast anhitedure and pt1iO1 m baidevord and south Maki the Scut4u a panels mill Flagstone Propenes, trcarumd objerit haw one of two Garden; the At cities, Island 'hr'r'ad °wane, a 'Homy J` of 1& hind hind an air of 1,111 maks selections of scantad and embedded jigureheads atop each Sea: Legacy Memorial be symboric fonArain aaw to at Warr authrntraty to the these writings to extract in the bottom of the mart. Puha Tuttle -will Fountain will Gardens will &signed to okbratt dx Hiel mash lbe fereomt histmiwl story of quotations about the pool will capture the top the southern mast dedicated to rho re mho sponsor an art of sail sit atop a to the Fish Market Miami} 500year experituce of being pmt kgary of herrlaoms, =thin her hand an haw last their ices extensive msau ng gimM mount Tirlic This figural legacy. Dotumtmtng the of the seat, oceans, biggge, and pnreless outirntched orange against the aas of the program of dvie to that dm teak Steck fountain has 12-ftgurrt ittv"on of int part of mea, lakes, and arteefwj lost at sea. blossom and Henry Ctirrbbean and Miami. and public ort to can 4 into rbc retkng Ahs represent the the Caribbean from a ererglader. These Installed by Michele Flagler atop the This fouwaan the vers as the rads meth &mint) of rate; itrugging frontito iterarrrpts will be Oka Doner ry cer northern tomer with a armmemoraur allof ehronide the brreZrs and to the artd4 faith-, ono of the world}groal caned in stone and this detritus of our roil of plansfar her those lost at sea whether authenticity and fountain into the professions, purpose, antra of ommera, statiered throughout he bier willproade a railroad inblng down thry be fishermen, experience Of prerailiing wrnds. and (aper of drahing mdurtrx agriculture, entire demlopment giant mosaic of the to :Miami. These figurer railarr, pauertgert, living in Miami. Rigging, saihr, deck tvid with the maritime and tourism, these stone Intended to remind things which represent mall be pan of an cmmrgrana, or These sculptures, fm' -Y— cat 1,A *Y of Miamii sailpturr panels ail/ guests of the &rernty of six character of our oieral civic arts explorers. Following the friezes, dencadw from the relafionthrL to the sea chmiuck the ewlwron writing inspired by this iter. Alirrors, combs, s ulpturr program that deepy Couching mosaics, actual hardwarr used 500 years of history of Maamc as 'Captial plan, the soumi will silirrwure, china, wrll commemorate all installation of the fountains, murals, on daslie roringyacih, reor&d through the of the Caribbean". include Indian buckles, toot, hinges, who hate personified the Holocaust ,Memorial in engravings, and The xak of dx in&iadualr who hair Located on the bulk- insrriptsons, poems, nor- formes, doir, Aafches, Tech history of Miami. Ali— Beach, ibis epigrams will fountain is 36 fent in contributed to what beady abmu the slops els, mutes lyrics, and clocks, umbrellas, toys. Created by some of jouniain and become a describe the rich diameter and the dn-14 makes Miami nowt she in the Retail Asrnue, screenn wing sores. All trophies, res will all be Miami i most secular arsion of this history Of of & tailpture is 24 is ladadr thestpanels will be lgi- are loped to ontry a strews across the pool promeatier morin. memor a/and in Ammor: bk to all as a mnemes- depth of feting about bottom amidst a onlemporary see ptorc, bats a similar majesty /iliam.1 met -feel Hgbttl tai7 user 50 out fiie,e. Ont panel fife in Miamr, and smaered dated of there figurer will become to the l'ittnam War Mine legacy and feet abose the drnk for tach about how those who seashells. As eons of not only Island Memo ial in establisb once generation of people hate mated and iwd oasreAeions of our Gardens but of the traihr goon, DC. again that the city from the aboriginal here o,try their ter; there cart sprit of .Miami herself. is the greatest inhabitants to the experiences so the rest of aluminum arafacts Ail/ warn of art. immigrants who haw the world tri a story of those made AGami or of the reaching for the s most diene tukural promised land only to - Eric R Ifuhne centers in /be world fall short of their &Itinair... 211D into ibe but u/ South Flordran -,wrdent These room, will aha become a tertimomal to the dmrrriy of ru/tures l- r - who naw mak' up Miami; ctr�enry. And it Carrier the idea of atic an into do laadicape part of Island Garden.,. M.IKOY �. P"P—d by hLgnwrr Pguar 291.r. _m0e. 0 • 0 6J ce Q CL Q A �?1� C CD 1-14- -0 C)&_ C ter a i6. G—A u GARDENS: W9orkm. Por -1,j JA d Gmderr .dr .. a dMa..=mu: meth the i atrchsld ALa+,k Oko Dater Tiwpical C ardent, �tarA - Flagstone Prnperue, M—, L veil crwse the hw (i) „rh I . ContimntalGar&u tieaddT,.pialGmd— Room, at 1,15nd ,,,,d&„,.moad Garden t 1 hese v,A,— it miniature gardens mill 1-c K K -h' d-ftrrw..as. reprssnri the colkcuon Spd. C.,&4a O.+s1nt of plant, unique to Th— each continent than by people bat tleft to.ome a..nSPak,rSd"n—d to Ntmmi.. 1 /scan. Bh.r+.,w. w ESL -4 avn 4 shirk h.0 rua.r f.,&r ..rgr,.ud Astan, $uuth me ,r,.u.nrr, ad.rq+e+u American. 1.aropmn. and omnia —11 ,9 d o, hate selection r of the wen y- "wit .wuew, In unique floral type, that ! c, 6.hp-'r rte c+e^` hatefauncl their Arty rr,m&aao.,/1,w-me.n the. r, w a into ibe but u/ South Flordran -,wrdent These room, will aha become a tertimomal to the dmrrriy of ru/tures l- r - who naw mak' up Miami; ctr�enry. And it Carrier the idea of atic an into do laadicape part of Island Garden.,. M.IKOY �. P"P—d by hLgnwrr Pguar 291.r. _m0e. 0 • 0 6J ce Q CL Q A �?1� C CD 1-14- -0 C)&_ Submitted Int® the public' record in connection with EYHIBITG @$e0I33 s�p on ® priseilla A. Thompson City Clerk GROSS REVENUES Gross Revenues, whether in cash or on credit, shall be accounted for on an accrual basis. As used in this Lease, the term "Gross Revenues" shall have the respective meanings ascribed to it in this Exhibit G with respect to the applicable Project Components described below, subject in each case to: (i) the specific exclusions listed below with respect to each Project Component; and (ii) the General Exclusions listed below (collectively, the "Exclusions"). I. Hotels. A. With respect to the Hotels, the term `Gross Revenues" shall mean all Hotel Operational Revenues and all Hotel Space Lease Rents, as hereinafter defined. If a Hotel is not subleased pursuant to ® a Major Sublease, then the term "Gross Revenues" shall refer, as to such Hotel or portion thereof, to all such Hotel Operational Revenues and Hotel Space Lease Rents received by Lessee. If a Hotel or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer. as to such Hotel or portion thereof, to all such Hotel Operational Revenues and Hotel Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to such Hotel is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Hotel Operational Revenues of such Space Tenant. B. The term "Hotel Operational Revenues" shall mean all receipts, revenues, income, and , proceeds of sale of every kind or nature derived directly or indirectly from the operation of the Hotels (including all departments and parts thereof), and all services provided at or from the Hotel and all facilities of the Hotel (other than such receipts, revenues, income and proceeds attributable to the operation by Space Tenants of the Hotels of their respective businesses), subject to the applicable ® Exclusions. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone .02-1304 0 C 1. Such term shall include, but not necessarily be Submitted Into the public record in conne- ,t O `th iter"' --on Priscilla A. Thos" E 1 ley Gity limited to, those Hotel Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) rentals of Hotel guest rooms (including any Approved Time Share Licenses being operated as guest rooms); (ii) "profits" attributable to the operation of Approved Time Share Licenses as Hotel guest rooms in addition to the rental amounts described in clause (i) above (i.e., any assessments, service charges or other charges, fees or income collected from the owners of Approved Time Share Licenses, which exceed the total of. (A) common expenses or other expenses attributable to the operation of such Approved Time Share Licenses (similar to condominium assessments); and (B) other expenses attributable to the operation of any such Approved Time Share Licenses as Hotel guest rooms pursuant to the Uniform System, as hereinafter defined); (iii) food and beverage sales or operations; bar and lounge sales or operations; rentals of meeting room facilities; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Hotel guests and patrons; (iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Hotel Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Hotel other than with respect to the Space Leases at the Hotel, to the extent such amount is properly included in gross revenues pursuant to the Uniform System. 2. Such term shall exclude the following: (i) all taxes required by law to be collected from guests or patrons of the Hotels or with respect to goods or services sold at or from the Hotel, such as sales taxes or "bed" taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges. and gratuities collected for payment to employees of the Hotels (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or FF&E and of other items not in the ordinary course of the applicable Hotel's business; (iv) #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone r� +G"` • • • Submitted Into the public record in tonne f,io � th lierrn 3w on _Cyo�- Priscilla A. -�i:ors���on City Clerk proceeds of loans; (v) proceeds of insurance, other than from any .'business interruption", "business income", "use and occupancy' or other loss of income insurance; (vi) credit card commissions; (vii) travel agency commissions; (viii) interest received or accrued with respect to the funds in any FF&E.reserve or the other operating accounts of the Hotels; and (ix) the other general exclusions described below. C. The term "Hotel Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Hotels under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. 1. Such term shall include, but not necessarily be limited to: (i) "base rents" and "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy' or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in gross revenues pursuant to the Uniform System. 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iv) any taxes required by law to be collected from Space Tenants at the Hotels on account of any Hotel Space Lease Rents or other rentals payable by such Space #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connectio ith •item on /y /i , Priscilla A. Thompson City Clerk ® Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. E. For purposes of the Gross Revenues definition for Hotels, the term "Uniform System" refers to the latest edition (currently the Ninth Revised Edition) of the Uniform System of Accounts for the Lodging Industry as adopted by the American Hotel and Lodging Association, from time to time. II. Approved Time Share Licenses. With respect to Approved Time Share Licenses, the term "Gross Revenues" shall mean all proceeds with respect to each First Sale (as defined in Section 5.3(b) above), after deducting therefrom: (i) repayment of the allocated capital cost (including the required return); and (ii) marketing program costs. III. Marina. ® A. With respect to the Marina, the term "Gross Revenues" shall mean all Marina Operational Revenues and all Marina Space Lease Rents (if any), as hereinafter defined. If the Marina or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Marina not so subleased, to all such Marina Operational Revenues and Marina Space Lease Rents received by Lessee. If the Marina or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Marina so subleased, to all such Marina Operational Revenues and Marina Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to the Marina is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Marina Operational Revenues of such Space Tenant. B. The term "Marina Operational Revenues" shall mean all receipts, revenues, income, ® and proceeds of sale of every kind or nature derived directly or indirectly from the operation of the Marina (including all departments and parts thereof), and all services provided at or from the Marina and #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone {� Submitted Into the public ® record in ccnnectrcl� IN, tb items 3a. Pn iy aOr Priscilla A. Tl-Iciripson ® all facilities of the Marina (other than such receipts, revenues, income and proceeds attributable 'to Pity Clerk operation by Space Tenants, if any, of the Marina of their respective businesses), subject to the applicable Exclusions. Such term shall include, but not necessarily be limited to, those Marina Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) rentals and revenues of all kinds payable by non-commercial guests, licensees and/or occupants of boat slips, storage or other space at the Marina (including any Approved Time Share Licenses at the Marina being operated as "guest" facilities); (ii) `'profits" attributable to the operation of Approved Time Share Licenses as "guest" facilities in addition to the rental amounts described in clause (i) above (i.e., any assessments, service charges or other charges, fees or income collected from the owners of Approved Time Share Licenses, which exceed the total of. (A) common expenses or other expenses attributable to the operation of such Approved Time Share Licenses (similar to condominium assessments); and (B) other expenses attributable to the operation of any such Approved Time Share Licenses as "guest" facilities pursuant to the generally accepted accounting principles applied on a consistent basis ("GAAP"); (iii) gasoline sales; food and beverage sales or operations; facilities or property rentals; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Marina guests and patrons; (iv) revenues from any Gambling Boats (as defined in Exhibit N) operated directly by Lessee; (v) proceeds from any "business interruption", "business income", "use and occupancy" or other, a Major Subtenant or a Direct Space Tenant which is an Affiliate of Lessee loss of income insurance with respect to Marina Operational Revenues, to the extent not paid over to Lessor; and (iv) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Marina other than with respect to the Space Leases at the Marina, to the ® extent such amount is properly included in as an income item under GAAP. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 is • 2. Such term shall exclude the following: Submitted Into the public ® record in connectica W'th item `73 on Priscilla Ao 'Thol npson (i) all taxes required by law tChy Clerk collected from guests or patrons of the Marina or with respect to goods or services sold at or from the Marina, such as sales taxes or "bed" taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Marina (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of -the Marina's business; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption", "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; (vii) travel agency commissions; (viii) interest received or accrued with respect to the funds in any reserve or operating accounts of the Marina; and (ix) the other general exclusions described below. C. The term "Marina Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Marina under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. For purposes hereof, such Space Leases shall include Space Leases for any portion of the Marina on the Upland and any Space Leases for commercial operations on the Submerged Land, including, but not necessarily limited to, Space Leases for Gambling Boats. 1. Such term shall include, but not necessarily be limited to: (i) "base rents" and "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in income pursuant to is GAAP. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone €�= 304 9 • 0 • 2. Such term shall exclude the following Submitted Into the public •record in connectgt W th iter �(� On i Priscilla A. Thompson Cy Clerk (i) any amounts received by the landlor under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iii) any taxes required by law to be collected from Space -Tenants at the Marina on account of any Marina Space Lease Rents or other rentals payable by such Space Tenants; (iv) any credit card commissions payable on account of any payment of rents made by credit card; and (v) to the extent applicable, the other exclusions described below. IV. Retail Space. A. With respect to the Retail Space, the term "Gross Revenues" shall mean all Retail Operational Revenues (if any) and all Retail Space Lease Rents, as hereinafter defined. If the Retail Space or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Retail Space not so subleased, to all such Retail Operational Revenues and Retail Space Lease Rents received by Lessee. If the Retail Space or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Retail Space so subleased, to all such Retail Operational Revenues and Retail Space Lease Rents received by the applicable Major Subtenant; provided, however, that if any Space Tenant with respect to the Retail Space is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Retail Operational Revenues of such Space Tenant. B. The term "Retail Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale, if any, of every kind or nature derived directly or indirectly from the operation of the Retail Space (including all departments and parts thereof), and all services provided at or from the Retail Space and all facilities of the Retail Space (other than such receipts, revenues, income and proceeds #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone -304 Submitted Into the public • record in connec$lon w'th 434-1 on /r1ls1aY Priscilla A. 1 pomp son attributable to the operation by Space Tenants, if any, of the Retail Space of their respective busings (;lerk subject, however, to the proviso in Paragraph IV.A above as to Space Tenants which are Affiliates of the Major Subtenant for the Retail Space), subject to the applicable Exclusions. Such term shall include, but not necessarily be limited to, those Retail Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) food and beverage sales or operations; facilities or property rentals; income from vending machines; income from parking; wholesale and retail sales of merchandise; and service charges to Retail Space patrons; (iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Retail Space Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Retail Space other than with respect to the Space ® Leases within the Retail Space, to the extent such amount is properly included in as an income item under GAAP. 2. Such term shall exclude the following: (i) all taxes required by law to be collected from patrons of the Retail Space or with respect to goods or services sold at or from the Retail Space, such as sales taxes (but only to the extent such taxes are actually remitted to duly - constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Retail Space (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of the business of operating the Retail Space; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption', "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; and (vii) the other general exclusions described below. ® C. The term "Retail Space Lease Rents" shall mean all rents actually paid by Space Tenants of the Retail Space to the landlord under their respective Space Leases. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone t� V • Is Submitted Into the public • record in connection � ith item Oct.- on t,-./,� Priscilla A. Th meson Such term shall include, but not necessarily be limited to: (i) "base rents" and City Clerk "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent such amount is properly included in income pursuant to GAAP. 2. Such term shall exclude the following: (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as "additional rent"; (iv) any taxes required by law to be collected from Space Tenants within the Retail Space on account of any Retail Space Lease Rents or other rentals payable by such Space Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. V. Parking Garage. A. With respect to the Parking Garage, the term "Gross Revenues" shall mean all Parking Operational Revenues and all Parking Lease Rents, as hereinafter defined. If the Parking Garage or any portion thereof is not subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the Parking Garage not so subleased, to all such Parking Operational Revenues and Parking Lease Rents received by Lessee. If the Parking Garage or any portion thereof is subleased pursuant to a Major Sublease, then the term "Gross Revenues" shall refer, as to any portion of the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into it it; pu6j'i6.; r recoMLc,07'on ection with item / Priscilla A. Thompson City Clerk Parking Garage so subleased, to all such Parking Operational Revenues and Parking Lease Rents received by the applicable Ylajor Subtenant; provided, however, that if any Space Tenant with respect to the Parking Garage is an Affiliate of Lessee or such Major Subtenant, then, as to the area covered by the Space Lease for such Space Tenant, the term "Gross Revenues" shall refers to the Parking Operational Revenues of such Space Tenant. B. The term "Parking Operational Revenues" shall mean all receipts, revenues, income, and proceeds of sale, if any, of every kind or nature derived directly or indirectly from the operation of the Parking Garage, and all services provided at or from the Retail Space and all facilities of the Parking Garage (other than such receipts, revenues, income and proceeds attributable to the operation by Space Tenants, if any, within the Parking Garage of their respective businesses), subject to the applicable Exclusions. 1. Such term shall include, but not necessarily be limited to, those Parking Operational Revenues received by Lessee or the applicable Major Subtenant, as applicable, from the following (subject, in each case, to the applicable Exclusions): (i) parking charges or fees and service charges payable by patrons and users of parking spaces and other facilities within the Parking Garage, pursuant to any subleases, licenses or other arrangements for the use of same, regardless of the duration of the term of such sublease, license or other arrangement (collectively, "Parking Licenses"), excluding, however, of any portion there of such charges or fees or other sums collected by or paid over to any third -party manager or operator of the Parking Garage or any portion thereof; facilities or property rentals; income from vending machines; income from parking -;,(iv) proceeds from any "business interruption", "business income", "use and occupancy" or other loss of income insurance with respect to Parking Garage Operational Revenues, to the extent not paid over to Lessor; and (v) any amount recovered in any legal action or proceeding or settlement thereof which arose out of the operation of the Parking Garage other than with respect to the Space Leases within the Parking Garage, tothe extent such amount is properly included in as an income item under GAAP. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Ll 0 Submitted Into the public ® record '4n connection Ci h 9teCC9 �13c- on 4 n- oy Priscilla A. `fhorrlpson 2. Such term shall exclude the following: (i) all taxes required by law to Pty Clerk collected from patrons or users of the Parking Garage or with respect to goods or services sold at or from the Retail Space, such as sales taxes (but only to the extent such taxes are actually remitted to duly -constituted taxing authorities having jurisdiction); (ii) tips, service charges and gratuities collected for payment to employees of the Parking Garage (but only to the extent such amounts are actually paid to employees); (iii) proceeds from the sale or other disposition of capital assets or other items not in the ordinary course of the business of operating the Parking Garage; (iv) proceeds of loans; (v) proceeds of insurance, other than from any "business interruption", "business income", "use and occupancy" or other loss of income insurance; (vi) credit card commissions; and (vii) the other general exclusions described below. C. The term "Parking Lease Rents" shall mean all rents actually paid by Space Tenants of the Parking Garage under their respective Space Leases to Lessee or the applicable Major Subtenant, as applicable. For purposes hereof, the term "Space Lease" includes, but is not necessarily limited to, any sublease or other arrangement pursuant to which all or a portion of the Parking Garage is leased by Lessee or the applicable Major Subtenant to another Person which operates parking facilities within the Parking Garage. For purposes hereof, the term "Space Lease" does not include any Parking License. 1. Such term shall include, but not necessarily be limited to: (i) "base rents" and "percentage rents" payable under such Space Leases; provided, however, that there shall be deducted from each rental payment an amount equal to the cost of any tenant improvements paid for by the landlord amortized over the then applicable term of the applicable Space Lease; (ii) proceeds from any -"business interruption', "business income", "use and occupancy" or other loss of income insurance with respect to such Space Leases, to the extent not paid over to Lessor; and (iii) any amount recovered in any legal action or proceeding or settlement thereof in connection with such Space Leases, to the extent _such amount is properly included in income pursuant to 0 GAAP. #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 -20 a • C 2. Such term shall exclude the following record in connection with item _ 43,4- on Priscilla A. Thompson City Clerk (i) any amounts received by the landlord under any applicable Space Lease as payment for real estate and personal property taxes and assessments, common area and maintenance charges and insurance premiums, if same are separately stated in such Space Lease (but only to the extent of the actual costs thereof paid by the landlord thereunder); (ii) any reimbursements due to the landlord under any applicable Space Lease for costs incurred or sums advanced by such landlord, whether or not same are designated as `'additional rent"; (iv) any taxes required by law to be collected from Space Tenants within the Parking Garage on account of any Parking Lease Rents or other rentals payable by such Space Tenants; (v) any credit card commissions payable on account of any payment of rents made by credit card; and (vi) to the extent applicable, the other exclusions described below. VI. Other Project Components. To.the extent that there is any Project Component not included in the foregoing categories, the calculation of Gross Revenues shall be treated in the same manner as the category which is closest in character to the particular Project Component and with such modifications as are appropriate, all as mutually agreed upon by Lessor and Lessee reasonably and in good faith. VII. General Exclusions. A. The term "Gross Revenues" shall in no event include any of the following items: (i) exchanges of merchandise between different locations of Lessee or a controlled party or Major Subtenants where such exchanges are made solely for the operation of such Person's business and not for the purpose of consummating a sale which has been made at, in, or on the Property; (ii) returns to shippers and manufacturers for credit; (iii) sale of trade fixtures or operating equipment after use thereof in the conduct of Lessee's or any other Person's business on the Property; (iv) all sums and credits received in settlement of claims for loss or damage to merchandise and all credit company charges; (v) sales made from the Property of goods or items which are to be shipped directly to the purchaser from another location that are wholesale, or not retail; (vi) proceeds from any financing, sale or assignment of the Leasehold Estate, any #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public record in connection lithitem V3x- onY Priscilla A. Thompson ® Major Subleasehold Estate, or any portion thereof or interest therein, or any other similar transaction, (Qjj y Clerk collection of insurance proceeds; (viii) collection of Condemnation Awards; (ix) monies that are collected for event that are done for charities wherein the amounts collected are paid to the charitable sponsor or not-for-profit organizations; and (x) any rebates, tax credits (including, but not limited to, those described in Section 34.4) or other credits, direct payments or other incentives of any kind given by any Governmental Authority or otherwise authorized by Applicable Laws, including, but not limited to, any of the foregoing authorized pursuant to the State of Florida Qualified Target Industry Tax Refund program B. Gross Revenues shall be reduced by the following items: (i) amounts of any refunds or allowances made on merchandise claimed to be defective or unsatisfactory, or discounts to customers, provided that such amounts had been previously included as part of Gross Revenues (but if such refunds, allowances or discounts are in the form of credits to customers, such credits shall be included in Gross ® Revenues when issued); (ii) uncollected or uncollectible credit accounts (those accounts which are more than ninety (90) days delinquent), provided that such amounts are included in Gross Revenues upon payment, if made; and (iii) all reasonable costs of collection associated with collecting Gross Revenues. VII. Rentals. As used in this Exhibit G, the term "rents" shall be deemed to include any lump -sum payments or series of payments (regardless of whether the same is classified as rent or otherwise) made in consideration of the opportunity to lease or enter into a concession or similar arrangement. IX. No Double Counting. Lessee may from time to time establish facilities or perform services on the Property (e.g., master laundry facilities) for which Major Subtenants, Space Tenants and/or customers, guests, invitees and other users (collectively, "Users") are charged. Such services and facilities are hereinafter collectively referred to as "Direct Lessee Services". The charges by Lessee for such Direct Lessee Services are hereinafter referred to as "Direct Lessee Charges". The Parties • acknowledge and agree that Major Subtenants, Space Tenants or other Persons may pass on the cost of Direct Lessee Charges to other Persons, including other Space Tenants and Users, for services and #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 ® facilities which are the same or substantially the same as the Direct Lessee Services (collectively, "User • �i Services"), either with or without a surcharge or other additional charges. The amounts charged for such User Services are hereinafter collectively referred to as "User Charges". In such cases, User Charges shall (to the extent they are covered by the definition of Gross Revenues above) be included in the calculation of Percentage Rent, and the corresponding Direct Lessee Charges shall be excluded from the calculation of Percentage Rent. Submitted Into the public record i,, conn , UOR 1A h item _ .3�on Priscilla A. Thompson City Clerk 4217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • SUbmitted Ileac the lcUblic record in connection q:qi h D on _t_>re% oY EXHIBIT H item �w ® Pri cili A. I her pson City Clerk DEFINITION OF MARINA; MARINA APPROVAL PROCEDURES (a) Lessee shall use its "best efforts" (as such term is defined below) to obtain all permits and approvals from Governmental Authorities (collectively, the "Mega -Yacht Marina Permits") which are required to construct and operate a marina substantially similar in size and capacity as the marina depicted in the Island Gardens Proposal (a "Mega -Yacht Marina"). (b) In the event Lessee is able to obtain all of the Mega -Yacht Marina Permits, then the term "Marina" as used in this Lease shall mean and refer to such Mega -Yacht Marina, and Lessee shall develop and operate such Mega -Yacht Marina subject to and in accordance with the terms and conditions of this Lease. (c) For purposes hereof, the term "best efforts" shall mean that Lessee shall take all of the • following actions: (i) Lessee shall act in good faith, expend commercially reasonable amounts of funds, and use all due diligence (including retaining consultants, professionals and experts and taking their advice) in pursuing all necessary Mega -Yacht Marina Permits (and specifically in taking all of the actions described in clauses (ii) through (v) below). (ii) Lessee shall diligently develop such detailed plans and specifications, drawings, schematics, sketches and other documentation with respect to a Mega -Yacht Marina (as defined above) as may be necessary or appropriate in connection with pursuing the Mega -Yacht Marina Permits (collectively, the "Mega -Yacht Marina Plans"). (iii) Lessee shall submit the Mega -Yacht Marina Plans to the Chief Executive Officer for his or her approval in accordance with the Chief Executive Officer Approval Procedures. (iv) After approval of the Mega -Yacht Marina Plans by the Chief Executive Officer, with whatever modifications are agreed upon, all subject to and in accordance with the Chief Executive Officer Approval Procedures, Lessee shall submit the Mega -Yacht Marina Plans to all #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 10. 304 Submitted Into the public record in confection with item _�Aon �....1��„_ Priscilla A. Thompson Governmental Authorities necessary to obtain the Mega -Yacht Permits (it being understood thGity Clerk the applicable Governmental Authorities include, but are not necessarily limited to, the State of Florida Department of Environmental Protection, the Army Corps of Engineers (the "Corps"), the South Florida Water Management District ("SFWMD") and the Miami -Dade County Department of Environmental Resources . Management (DERM)), and respond to and accommodate, in a commercially reasonable manner, any reasonable requests by such Governmental Authorities for modifications to the Mega -Yacht Marina Plans. The Chief Executive Officer shall be informed, in writing, of such modifications by Lessee. The Chief Executive Officer shall have ten (10) Business Days from the date of receipt of such notice to review the modifications and advise Lessee in writing that the modifications are disapproved. If notice of disapproval is not delivered within the ten (10) Business Day period, Lessee shall give a written reminder notice to the Chief Executive Officer. If notice of disapproval is not delivered within five (5) Business Days after such reminder notice is given, the modifications shall be deemed approved. The notice to review and the reminder notice shall each contain legends at the top of the first page, in a typeface larger than that used elsewhere in the request, identifying the applicable required response time. (v) If Lessee is able to obtain consensus among the staff of the applicable Governmental Authorities for the Mega -Yacht Marina Plans, 'Lessee shall (a) submit the Mega - Yacht Marina Plans (as same may be modified as described above) and an application for a Class I Permit for the Mega -Yacht Marina (the "Class I Permit Application") to the Miami -Dade County Board of County Commissioners (the `Board") for final approval for the construction and operation of the Mega -Yacht Marina substantially in accordance with such Mega -Yacht Marina Plans, and have its representatives attend the hearing before the Board concerning same and attempt to persuade the Board to approve same; and (b) submit to the other applicable ® Governmental Authorities, including the SFWMD and the Corps, the Mega Yacht Marina Plans and the appropriate application(s) required for the issuance of the applicable Mega -Yacht Marina #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 2, Submitted Into the public record ir1 connectiorl With iter __7 3a- pn iy . pri;ellla A. o son city clerk ® Permits and Lessee shall thereafter follow up with such application(s) including, but not limited to, appearing before the SFWMD Governing Board, until such Mega -Yacht Marina Permit(s) are issued by such Governmental Authorities. (d) Lessee shall not be required to use such best efforts for more than twenty four (24) months after the Possession Date or such lesser period as to takes to complete the steps described in subparagraph (c) above. (e) Lessee shall provide Lessor with at least seven (7) days prior written notice of any meeting with the staff of applicable Governmental Authorities. Lessor shall have the right to have a representative present (by telephone or in person) at each such meeting. In addition, Lessee shall provide Lessor with copies of any written correspondences between Lessee and such Governmental Authorities in connection with the `'best efforts" steps described in subparagraph (c) above. (f) Lessee hereby agrees to have monthly meetings with Lessor's designated representatives to discuss the status of Lessee's "best efforts", and to keep Lessor regularly apprised through written updates as to what "best efforts" have been and are being taken by Lessee in order to satisfy its obligations in subparagraph (c) above and the status thereof. If, after any such monthly meeting or after Lessor receives any such written update, Lessor believes, reasonably and in good faith, that Lessee is not using its best efforts as described in subparagraph (c) above, Lessor shall, within seven (7) Business Days after any such meeting or receiving any such written update, give written notice to Lessee stating with particularity Lessor's belief and the specific basis for such belief. If Lessor fails to give such written notice within such seven (7) Business Day period, the actions by Lessee which are described in such meeting or written update shall be deemed to constitute best efforts as described in subparagraph (c) above up to the last step taken by Lessee as described in such meeting or written update, and Lessor shall not be entitled to submit to arbitration the question of whether such actions by Lessee constitute best efforts. (g) Notwithstanding the foregoing, Lessee shall not be required to accept any unreasonable ® conditions for approval which would compromise the feasibility of the proposed Mega -Yacht Marina or place unreasonable financial or economic burdens on Lessee (either in terms of increased costs or reduced 4217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone �j • Submitted Into the public record in connectic?l� d�eith item on6A- Priscilla A. Ton income) or unreasonable covenants, conditions and/or restrictions with respect to the development and pity Clerk operation of the proposed Mega -Yacht Marina. (h) In the event Lessee is unable, after using such best efforts, to obtain all of the Mega - Yacht Marina Permits, then Lessee shall provide written notice thereof to Lessor. If Lessor agrees, reasonably and in good faith, that Lessee has used such best efforts and that the MegaYacht Marina Permits cannot be obtained, then term "Marina" as used herein shall mean such marina as Lessee is able to construct and operate based on the existing Marina permits or such other permits and approvals from Governmental Authorities Lessee is able to obtain. If Lessor does not agree that Lessee has used such best efforts to obtain the Mega -Yacht Marina Permits, and Lessee disputes same, then no later than thirty (30) days after Lessor's receipt of written notice from Lessee, Lessor shall provide written notice to Lessee that Lessor is submitting the matter to arbitration in accordance with subparagraph (i) below; provided, however, that. Lessor shall not be entitled to submit the matter to arbitration to the extent subparagraph (f) provides otherwise. (i) If at any time (including, without limitation, at the time Lessee provides written notice to Lessor that Lessee is unable to obtain the Megayacht Marina Permits) Lessor believes, reasonably and in good faith, that Lessee has not or is not using "best efforts" to obtain the Mega -Yacht Marina Permits, then Lessor shall refer such dispute to binding arbitration in accordance with Article VII. In determining whether Lessee has used its best efforts as described in subparagraph (c) above, the Arbitrator may consider whether Lessee should pursue any administrative appeals. In no event shall Lessee be required to pursue litigation (although it may, at its option, elect to do so). 0) Nothing contained herein shall be deemed from preventing Lessee, if Lessee is unable to obtain the Mega -Yacht Marina Permits after using its best efforts as described herein, from later pursuing the Mega -Yacht Marina Permits, and if Lessee is thereafter able to obtain the Mega -Yacht Marina Permits and elects to develop and operate the Mega Yacht Marina, then the term "Marina" as used herein shall, from and after the date Lessee obtains the last of the Mega -Yacht Marina Permits, mean and refer to the #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02.130°4 • • Mega -Yacht Marina, and Lessee shall develop and operate such Mega -Yacht Marina subject and in accordance with the terms and conditions of this Lease. Submitted Into the public record in cennectie �vv�tl� item en (y (y o Priscilla A. Thompson City Cleric #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • is EXHIBIT I PERMITTED TITLE EXCEPTIONS Submitted Into the public record in com n�-"ctio-1 WR. item A— mon o �- Prisc.illa A. 'I horn-pson City Clerk #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • J • • Submitted Into the public record in connection4_1 th item �`t3r.-� oto I _/Priscllla Ao Tholmpon EXHIBIT J City Clerk LIST OF PRE -APPROVED HOTEL FRANCHISORS • Hilton group, including, but not limited to, Conrad Hotels • Starwood group, including, but not limited to, W Hotels, St. Regis Hotels, Starwood Luxury Collection • Rosewood Hotels • Hyatt group, including, but not limited to, Park Hyatt • Raffles Group, including, but not limited to, Raffles Hotels*(to be verified by the Chief Executive Officer) • Marriott group, including, but not limited to, Bulgari Hotels • The Peninsula Group*(to be verified by the Chief Executive Officer) • Le Meridien Group*(to be verified by the Chief Executive Officer) • Dorchester Group Hotels *(to be verified by the Chief Executive Officer) • Four Seasons Group, including, but not limited to, The Regent hotels • The Rocco Forte group, including, but not limited to, RF Hotels *(to be verified by the Chief Executive Officer) • Kempinski Hotels & Resorts*(to be verified by the Chief Executive Officer) • Orient Express Hotels *(to be verified by the Chief Executive Officer) • Oberoi Hotels & Resorts *(to be verified by the Chief Executive Officer ) • Six Continents Hotels • Mandarin Oriental *Notwithstanding anything contained to the contrary herein, the Chief Executive Officer has the right to remove those operators and/or franchisors indicated above with an asterisk ("*") next to their name by providing written notice to Lessee thereof if the Chief Executive Officer determines in his or her reasonable discretion by no later than January 15, 2003 that the same are not appropriate for inclusion in the "Pre -Approved List of Operators and/or Franchisors" hereunder. NOTE: ADDITIONAL ENTITIES TO BE AGREED UPON AND ADDED TO THE FOREGOING LIST PRIOR TO FEBRUARY 1, 20031 #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 0 EXHIBIT K is LIST OF PRE -APPROVED LENDERS [dote: To be agreed upon by the Parties and attached prior to February 1, 2003] Submitted l,nto the public record in conne.cbo with item �YX _fin l3 P � Priscilla A. Tbc�i ion City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 0 EXHIBIT L C7 • APPROVED LEASEHOLD MORTGAGEE SNDA [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 20031 Subrnitted I.t6 tie public record in connecs fyh avithy itern1______,l riAm ` horsipson city Clerk #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone, "` • • C7 r� L EXHIBIT M APPROVED SUBLEASEHOLD MORTGAGEE SNDA [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBUARY 1, 2003] Uu mitted into the public record in connection math item C On /y Priscilla A. Thompson City Clerk #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02=130 • • • • EXHIBIT N PROHIBITED USES Submitted Into the public record in coI'mm` ectith1 item qLo!�_ on Priscilla A. ih rTmpson City Clerk Without limiting the generality of the foregoing, the following uses of the Property shall not be permitted: (a) (b) (c) (d) (e) any unlawful or illegal business, including, without limitation, casino gambling, or games of chance or reward, unless otherwise approved by Lessor in accordance with Section 7.3 of the Lease; provided, however, that the foregoing shall not be deemed to prevent the use of the Marina as a departure and arrival point for vessels which have casino gambling or other games of chance on board (collectively, "Gambling Boats"), so long as such vessels operate in accordance with all Applicable Laws. the rental and/or operation of jet skis and/or any similar motorized personal watercraft, except for the noncommercial use by owners, users and staff of Mega - Yachts using the Marina and their families and guests; any adult entertainment and/or adult service establishments as defined in Article 25 of Ordinance 11000, as amended, of the Zoning Ordinance of the City of Miami or any peep show store, head shop store, topless or strip club or adult book store (which shall mean a store which sells or offers for sale sexually explicit printed materials, audio or videotapes or films or sexual devices) or any other similar store or club or any establishment selling, exhibiting or distributing pornographic materials; hauling and/or dry land storage of vessels; any residential uses, including, without limitation, time share and interval ownership other than Approved Time Share Licenses; provided, however, that #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 is • • Submitted Into the public record in connection with item q3a, on 1 �y Priscilla A. Thompson City Clerk the foregoing shall not be deemed to prohibit the Hotels from having the associated facilities and amenities described in the definitions of Hotel A and Hotel B; (f) private clubs (including, without limitation, private yacht clubs, other than any private clubs which are aboard vessels at the Marina or which otherwise do not operate on the Upland Parcel), except for ancillary uses such as staff lounges on the Upland Parcel; provided, however, that the foregoing shall not be deemed to prohibit: (i) the charging of fees or any other activities permitted by Section 7.6 of the Lease; or (ii) an "executive floor" club or similar arrangement offered or operated at either or both of the Hotels; (g) Any use which emits an unreasonable degree of obnoxious odor, noise, or sound which can be heard or smelled outside of any building within the Project; provided, however, that, the foregoing shall not be deemed to prevent (i) the provision of outdoor music at the Hotels and Retail Space (and the restaurants and banquet spaces located therein) to the extent permitted under all Applicable Laws; or (ii) the use of any Major Project Component for an "outdoor special event" such as a festival or art fair, which may include outdoor music in connection therewith; (h) Any operation primarily used as a warehouse operation and any assembling, manufacturing, distilling, refining, smelting, agricultural, or mining operation; (i) Any dumping, disposing, incineration, or reduction of garbage (exclusive of garbage compactors located near the rear of any building); 0) Any fire sale, bankruptcy sale (unless pursuant to a court order) or auction house operation; #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public irecord in connection w'th item y3w on _Ja- �> oy Priscilla A. Thompson Citi clerk (k) Any central laundry, dry cleaning plant, or Laundromat; provided, however, that this prohibition shall not be applicable to any such on-site service in connection with the operations of the Hotels or Marina; (1) Any automobile, truck, trailer or recreational vehicle sales, leasing or repair facilities; provided, however, that the foregoing shall not be deemed to prevent: (i) sales, leasing or charters of or repair services for yachts or other marina vessels; or (ii) the interval rental of automobiles on a daily or weekly basis; (m) Any veterinary hospital or animal raising facilities or pet supply shops; (n) Any mortuary or funeral home; (o) Any health club or spa fitness center or workout facility or massage parlor other than such facilities which are made available to guests of the Hotels (whether or not such facilities are located inside or outside the Hotels, and whether or not • such facilities are also made available to persons who are not guests of the Hotels); (p) Any training or educational facility, including, but not limited to, beauty schools; barber colleges, reading rooms, places of instruction or other operations catering primarily to students or trainees rather than to customers; provided however, this prohibition shall not be applicable to on-site employee training by an occupant incidental to the conduct of its business within the Premises or to any retail store that offers training or instruction as an ancillary service to its retail operations; (q) Any store engaged in the sale of fireworks or drug paraphernalia; (r) Any car wash other than a car wash service operated by the parking valet for Hotel or Marina guests and their families, guests, staff and employees; provided, however, that the foregoing shall not be deemed to prohibit the washing of marina vessels); #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 • (s) Any liquor store or grocery store except in connection with a gourmet shop or sundry store or provisioning store serving guests and patrons of the Hotels and • the Marina; or (t) Any use which would constitute a material breach of the covenants described in Exhibit N-1. Submitted Into the public record in connection %lith stern 3a- on /y Irl o?/ Priscilla A. Thompson City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 0 EXHIBIT N-1 • • COVENANTS AS TO PORT OF MIAMI [Note: To be agreed upon by the Parties and attached prior to February 1, 2003] the public Submitted int® t n �, ith rece'rd . Conn �n �i y a Y item �honl'P n prise+l4e �it, aeric #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • • ® Submitted Into the public record in connectio w'th item Aon EXHIBIT O Priscilla A. Thompson City Clerk LIST OF PRE -APPROVED FINANCIAL ADVISORS [Note: To be agreed upon by the Parties and attached prior to February 1, 2003] #217950 0 o Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0 EXHIBIT P • �J ORGANIZATIONAL DOCUMENTS [ADDITIONAL DOCUMENTS TO BE SUPPLIED] Submitted Into the public record in connection with item X13, on --I:-Ji oY Priscilla A. Thompson City Clerk #217950 0 a Final Version of Watson Island Ground Lease - City of Miami and Flagstone 0-1304 • ® Submitted Into the public record in connection with item q3� _on /y l�loy Priscilla A. Thompson EXHIBIT Q City Clerk PROVISIONS NOT APPLICABLE TO PRIVATE LESSOR [TO BE SUPPLIED] #217950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02-1304 • • EXHIBIT R CIVIC ARTS ENDOWMENT TRUST Submitted Into the public record in e®nl�eetiell V) th item q a on ryf iy�o Priscilla Am Thompson Cite Clerk Lessee shall fund the Trust each calendar year based on the following percentages of Lessee's net operating income for the Project during each such calendar year as reflected in the operating statements of Lessor and each applicable Major Subtenant: [AMOUNT AND DURATION OF FUNDING AND TIMING OF DISTRIBUTION OF CORPUS TO BE MUTUALLY AGREED UPON BY THE PARTIES CONSISTENT WITH ISLAND GARDENS PROPOSAL PRIOR TO DECEMBER 12, 2002 COMMISSION MEETING]. It is understood and agreed that if there is a negative net operating income for any such calendar year, Lessee shall not be required to make any such contribution to the Trust for such calendar year). #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 • C7 • ® Submitted'Into thep ublic- record in connection vv,,th EXHIBIT S item --ALOn t., e. --- Priscilla A. Thompson MAJOR SUBLEASE SNDA city Clerk [NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 2003] #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 ® EXHIBIT T • v FORM OF FIRST SOURCE HIRING AGREEMENT [Note: To be agreed upon by the Parties and attached prior to July 1, 2003] Submitted Into the public - record in connection with item 3& on i� ,y 9'riscilla A. Thompson City Clerk #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone a2-1304 • • 9 DEVELOPMENT AND CONSTRUCTION RIDER Submitted Into the public record in connection with 1telTZ N,.3G— ori I Priscilla A. Thompson City Cleric This Development and Construction Rider (this "Rider'') between The City of Miami, a municipal corporation of the State of Florida ("Lessor" or ''City"), and Flagstone Island Gardens LLC, a Delaware limited liability company (successor by merger to Flagstone Properties, LLC, a Florida limited liability company) ("Lessee") is intended to be incorporated in and be a part of the Ground Lease ("Lease") to which it is attached. In the event of any inconsistencies between the terms and provisions of this Rider and the terms and provisions of the Lease and/or any other exhibits or riders thereto, then the terms of this Rider shall prevail. All capitalized terms used but not defined herein shall have the meanings assigned to the same in the Lease. 1.1 Construction of Project Components. (a) Lessee shall cause the Project Components to be constructed on the Property, pursuant to and substantially in accordance with all of the terms and conditions of the Construction Plans and Specifications (which shall be subject to the review and approval of the Chief Executive Officer in accordance with the Chief Executive Officer Approval Procedures) and all Applicable Laws, including, without limitation, the Project Approvals (as amended from time to time). All of the Project Components shall be constructed, maintained and operated in accordance with all Applicable Laws, including, without limitation, Environmental Laws. (b) The City has approved [TO BE SUPPLIED] as the Construction Manager for the Project ("Construction Manager'). Lessee may replace such Construction Manager but: (i) such replacement shall have qualifications, experience and reputation which are comparable to or better than the respective individual(s) or entity(ies) being replaced; and (ii) the Chief Executive Officer shall have provided his or her prior written approval thereto. Any such approval shall: (i) be given or withheld reasonably and in good faith, (ii) be delivered within fourteen (14) days after Lessee makes a written request for approval (with a legend thereon advising City of required turnaround time) together with information as to #217950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone -12 �1a04 Submitted Into the public ® ® record in conneCtion Will I iters 3a- on !yf oy Priscilla A. Tho rr. son Cit� Clerk, ® qualifications, background, experience and reputation of such proposed replacement; and (iii) be deeme to have been given if Lessor does not respond within the stated time. If the Chief Executive Officer disapproves such replacement pursuant to the foregoing procedures, the Chief Executive Officer shall provide a written statement setting forth with particularity all reasons for disapproval. The Construction Manager may subcontract with individual contractors, subcontractors and/or vendors as it deems reasonably necessary or beneficial in connection with different components and subcomponents. 1.2 Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, construction shall commence not more than ninety (90) days after both (i) the Lease Delivery Date has occurred and (ii) Lessee has received foundation building permits for at least two (2) Major Project Components (the "Promised Commencement Date"). Furthermore, from and after the Promised Commencement Date, Lessee shall use reasonable, good faith, • diligent efforts to obtain all other permits, including, but not limited to, all other foundation permits as soon as reasonably practical after receipt of the first two (2) foundation permits. (b) Once started, construction shall be diligently and continuously pursued by Lessee until completion, subject to Unavoidable Delays. Lessee agrees that construction of all of the Project Components shall be substantially completed in a good and workmanlike manner and in accordance with good construction practices no later than thirty-six (36) months after the earlier to occur of: (i) the date construction commenced on the first (Is`) Major Project Component; or (ii) the Promised Commencement Date, subject to Unavoidable Delays (the "Promised Completion Date"). For purposes of this Agreement, each Major Project Component shall be considered substantially completed on the date that all of the following conditions are satisfied: (i) the Major Project Component is sufficiently complete so that the Lessee or the Major Subtenant therefor can legally occupy and utilize such Major Project Component for its intended use; (ii) all applicable governmental agencies having jurisdiction over the Work have issued a final Certificate of Occupancy (with no unreasonable conditions), with respect thereto, including landscaping and common areas; and (iii) completion of the Work has been approved by #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone € 2- 1304 C • the Ombudsman or the Consultant (as hereinafter defined), which approval shall be given or withheld in Submitted Into the publicgood faith and shall not be unreasonably withheld, delayed or conditioned. record in connecti��l3 �� if 1.3 Ombudsman and Consultant. item `3A, on ,ci Priscilla A. Thompson City Clerk (a) Lessor shall appoint an internal representative who is experienced and qualified to (i) report directly to the Chief Executive Officer, and (ii) have authority to coordinate, expedite and respond for the City on behalf of the Chief Executive Officer through the final permitting process (the "Ombudsman"). Among other things, the Ombudsman shall (i) lead and set schedules for the internal City review process with respect to Construction Plans and Specifications, (ii) expedite and help deliver construction inspection approvals (including building and fire department approvals), (iii) monitor and inspect the development and construction process on Lessor's behalf, and (iv) otherwise represent and assist the City in coordinating the City's roles and responses and approvals. ® (b) In addition to the Ombudsman, Lessor shall, at Lessee's request, retain on Lessor's behalf outside, qualified construction development and fire and building consultant(s) to coordinate and assist in the development process and advise the Ombudsman and the Chief Executive Officer in connection therewith (collectively, the "Consultant"). The person(s) selected as the Consultant shall be mutually acceptable to Lessor and Lessee. The fees and costs charged by the Consultant (the amount of which shall be mutually acceptable to the Parties) shall be paid for by Lessee, and Lessor shall have no responsibility or liability for same; provided, however, that the arrangements for payment if the fees and costs and the amounts thereof shall be subject to Lessee's prior written approval before the Consultant begins any work. Responsibilities of the Consultant shall include reviewing plans and development issues, permitting and inspection issues during the construction and development process and making recommendations directly to the Chief Executive Officer and the Ombudsman. Lessee shall provide on-site desk, telephone and storage space to the Consultant. The Consultant shall • not serve any role in connection with the City's capacity as a governmental body. #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone " i p '30' '304 Submitted Into the public ®record in connection with item 1-I3�, on n- &. o> Priscilla Am Tho psora City Clerk (c) Lessee shall cooperate fully with the Ombudsman and the Consultant, and shall promptly forward to same complete copies of draw requests and other reports and information customarily provided to an institutional mortgage lender, and such other information and materials as may be reasonably requested by the Ombudsman, the Consultant or Lessor. Lessee agrees to provide the Ombudsman and the Consultant with access to all portions of the Property, including, without limitation, access to inspect the Project Components, including, without limitation, review of the preparation work and work in progress. No such inspection by the Ombudsman and the Consultant shall impose upon Lessor responsibility or liability for any failure by Lessee to observe any requirements or safety practices in connection with such construction work, or constitute an acceptance of any work which does not comply with the provisions of this Rider. The Ombudsman- and the Consultant shall provide copies to Lessee of all reports and records concerning construction inspections. 1.4 Landscaping and Roadways. (a) Lessee shall be required to install landscaping on the Property and roadways, if any, as set forth in the Construction Plans and Specifications. The landscaping and roadways shall be completed by Lessee with respect to those portions of the Property surrounding Project Components to be constructed by no later than the issuance of a final Certificate of Occupancy for such Project Components. The roadways, if any, shall be completed by the time the first Hotel Opens for Business. (b) Coordination of Horizontal Control. Final horizontal control elevation ("Horizontal Control") shall mean the lowest occupiable elevation of any Project Component, including loading dock. Lessor acknowledges and agrees that Horizontal Control shall be reasonably acceptable to Lessee, based on (i) reasonable and competitively priced insurance availability, (ii) regulatory agencies' approvals, (iii) financing entities' approvals, (iv) feasibility of accommodating direct connections to basement back of house of each individual component, or in the case of the Marina, a direct access to the lower of the proposed two level marina pier, and (v) feasibility of accommodating reasonable and #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone Submitted Into the public ,otrd in connection with 13i 3p, on iy iy o v Priscilla A. Thompson City Clerk ® customary east -west directional pedestrian slopes at ground floors and entry and exit roadways. without the need of stairs or handicapped ramps, in order to accommodate sheet drainage flow. Subject to applicable permitting requirements, Lessee shall provide transition features such as drainage culverts, pumps, and/or utility modifications, if required, at north -south transitions to roadways on the perimeter of the Property. Such features may be located within the roadways or on adjacent City owned property. 1.5 Pre -Construction Maintenance. At all times prior to construction of any Project Components, the Property on which such Project Components are located shall be maintained in a reasonably neat manner (taking into account the work being performed). 1.6 Maintenance of Construction Site. Lessee shall maintain its construction site in a safe condition and a reasonably orderly manner and shall remove all major debris on a regular basis (including debris that has accumulated on adjacent lands, parcels or streets if created by Lessee; it being understood that in no event shall the same be deemed to be permission to store debris on any such adjacent lands, parcels or streets) and store all equipment in a neat manner when not in use. 1.7 Construction Traffic; Coordination. (a) Lessee shall keep driving lanes or extension roads and pedestrian access walkways located on or near the Property free from storage of equipment, building materials and dirt. Lessee may relocate roads and walkways and barriers located with the Property to other reasonable locations within three (3) days advance notice to the Ombudsman and the Consultant Inspector. (b) If so requested by Lessee, Lessor may, in its discretion and for a fee to be determined by Lessor, provide Lessee with a nonexclusive, temporary license to .use other property within Watson Island, if available (i.e., such property is not being leased by any party or otherwise being used by Lessor) for Lessee's construction -related storage or parking. Parking of vehicles for workers within the ® Project shall be in accordance with Applicable Laws, and if such parking will be on roadways, it must be #217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone " °4 Submitted Into the public • record in connection with Item q3G-- on !y I /W. ay Priscilla Aa Thompson City Clerk ® done in such a manner as will not interfere with the safety and passage of others. The surface of the public streets must be kept reasonably clean of mud and dust brought on to the streets during construction. During the construction of the Project Components, Lessee shall take reasonable and customary action to coordinate traffic to and from the Property, materials delivery, scheduling and temporary access, storage and utilities. 1.8 Avoidance of Nuisance. To the extent practical in connection with a Project of this size and scope, Lessee shall take such precautions as may be reasonably necessary to minimize the impact of noise, dust, truck traffic, nuisances and other consequences of construction activities. Lessor may, at Lessee's sole cost and expense, install a barrier or fence around attractive nuisances if Lessee fails to do so within ten (10) days after Lessor's demand therefor. Such construction fence may be relocated by Lessee from time to time, at Lessee's expense. Initially, such construction fence will (i) extend north from the wall of Children's Museum along the FDOT right-of-way to the Intracoastal, and (ii) be an eight ® (8) feet high chain link fence, in order to minimize resistance and avoid the necessity of removal during hurricane warnings; provided that such fence shall have a decorative cover which shall shield the construction site from view from the MacArthur Causeway. Such cover must be detached during a hurricane warning. 1.9 Other Construction. The Project is the largest and most complex to be done on Watson Island. As such, Lessee expects Lessor, to the extent it has the legal right to do so, to assist in causing other developments and construction on Watson Island to be accommodating when necessary for Lessee's development and construction. Lessee acknowledges, recognizes and agrees, however, that: (a) the development and construction of other projects on Watson Island may occur simultaneously with the development and construction of the Project, and the development and construction of the Project will not materially interfere with other projects on Watson Island; (b) the cooperation and coordination among Lessee, Lessor and the developers of other projects on Watson Island shall be necessary with respect to 0 . site access, temporary and permanent utility delivery and other construction -related activities; (c) Lessee #217950 0 - Final Version of Watson Island Ground Lease - Cit} of Miami and Flagstone 02-1304 0 C7 40 Submitted Into the public ® ® record in connection with item 43�__on Priscilla A. Thompson Cita Cleric shall comply with all schedules and procedures established by Lessee and Lessor with respect to t e foregoing; and (d) occasional delays with respect to site access, temporary and permanent utility delivery and other services may occur from time to time during the development and construction of the various projects on Watson Island (although same may constitute Unavoidable Delays subject to and in accordance with the terms and conditions of the Lease). Lessee shall be responsible for compliance with all of the foregoing requirements and for ensuring that all of its contractors, subcontractors, agents, employees and workers comply with the same. 1.10 Payment and Performance Bond. If Lessee fails to commence and/or complete construction timely and perform all other construction obligations in accordancewith the terms of this Rider, Lessor may (in its good faith, reasonable judgment and not thereby waiving any other remedies hereunder) subject to the rights of all Approved Mortgagees, elect to make effective all or any portion of the Payment and Performance Bond (as defined in the Agreement to Enter into Ground Lease between the Parties having an effective date of January 1, 2003) as satisfaction of Lessee's failure to perform its obligations hereunder. Upon completion of Construction of the Major Project Components substantially in accordance with the Construction Plans and Specifications, and performance by Lessee of all other construction obligations hereunder, the Payment and Performance Bond (or such remaining lesser portion thereof) shall be returned to Lessee. Use of the Payment and Performance Bond by Lessor shall be in addition to all other remedies of Lessor hereunder, which remedies are cumulative and non-exclusive. 1.11 Damage to Other Improvements; Interference. Construction and other activities conducted by Lessee shall not result in any damage to any improvements constructed by Lessor or other private developers on Watson Island, and shall not unreasonably interfere with adjacent parties' rights of access to and from their developments. Lessee shall indemnify, defend and hold harmless Lessor, other private developers on Watson Island and all Lessor Indemnified Parties from and against any and all claims, damages, expenses (including reasonable attorney's fees and court costs) and liabilities of any #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone ' ' =-'1=30 Submitted Into the public ® record in connection ithn iters �3�on �y Priscilla A. Thompson City Clerk nature whatsoever asserted against, or incurred by the same, in connection with any damage to improvements constructed by Lessor or other private developers on Watson Island. 1.12 Underground Utilities. Lessee shall cause, at its sole cost and expense, the utility lines on the south side of Watson Island pertaining to the Property to be installed underground (whether or not such utility lines are located within or outside of the Property boundaries) up to FDOT right-of-way and to the north wall of the Children's Museum (this line continuing west to point of intersection with the Visitors Center). In the event that the Lessor relocates any existing above -ground utility lines on the south side of Watson Island pertaining to the Property underground prior to the execution of the Lease and same are pre -approved in writing by Lessee (including, but not limited to, all necessary drawings, budgets, schedules, etc.), then upon terms to be agreed upon prior to such relocation, Lessee shall reimburse the Lessor for the costs incurred by Lessor in connection with such underground relocation. Lessor shall cooperate with Lessee to the extent Lessee can obtain or deliver the aforesaid facilities at a 0 cost saving to Lessee and with no adverse effect to Lessor. 1.13 Liability. Lessor shall not be responsible or liable in damages (whether direct, indirect, consequential or otherwise) to any Person arising out of or in connection with any defects in the Construction Plans and Specifications or any revisions thereto approved in accordance with the Chief Executive Officer Approval Procedures, any loss or any damage to any Person arising out of the approval or disapproval of the Construction Plans and Specifications, any loss or damage arising from non- compliance of the Construction Plans and Specifications with any Applicable Laws, or any defects in construction of the Project Components on the Property by Lessee. The Chief Executive Officer's approval of the Construction Plans and Specifications shall not be considered to be permission to encroach on any other parcel or to interfere with another property owner's or occupant's right to use and enjoy other parcels not within the Property. Unless caused by Lessor's own gross negligence or willful ismisconduct, Lessor shall not be responsible for any injury or damage to any property or to any Person happening on, in or about the Property, nor for any injury or damage to the Property or the Project #217950 Q - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02-1304 Submitted Into the public • record in connection w'th item `l3 A- on Priscilla A. 1 hompson City Clerk ® Components, and Lessor shall not in any event be responsible for damages to vehicles and their contents, belonging to Lessee or any other Person or for damages suffered by merchandise, furniture, improvements or other things of value found on or in the vicinity of the Property. 1.14 Entrance Road. Lessee agrees to design, construct and maintain, at Lessee's sole cost and expense, an entrance road for the Project across a portion of Watson Island. The configuration of such entrance road shall be substantially as shown in Rider Exhibit 1. Prior to commencing the construction of such entrance road, Lessee shall prepare Construction Plans and Specifications for such entrance road, which Construction Plans and Specifications shall be subject to Lessor's prior written approval in accordance with the terms hereof. Lessor shall grant to Lessee such temporary easement over (or otherwise permit Lessee to have access to) such areas of Watson Island as are reasonably required by Lessee to complete the construction of such entrance road. Upon the completion of such construction, Lessor shall, in accordance with Applicable Laws, elect either: (i) to cause such entrance road to be dedicated (by deed of conveyance) to the perpetual use of the public; or (ii) to grant to Lessee, all Major Subtenants, all Spaces, all holders of Approved Time Share Licenses and other occupants and users of the Property and/or the Leasehold Improvements, and all of their guests, invitees, employees, agents, contractors (and other Persons typically granted such rights), as appropriate, together with the successors and assigns of all such Persons, an easement over, across and upon such entrance road for ingress and egress to and from the Property and the Leasehold Improvements, and an easement over, across and upon such entrance road and areas adjacent thereto for the maintenance and repair of such entrance road from time to time. 1.15 Joinders. Provided that Lessor does not incur any liability or expense of account thereof, Lessor agrees to give its reasonable cooperation to Lessee with respect to (and if necessary or appropriate, join in and consent to) any applications for Project Approvals orother licenses, authorizations or permits 0 from any Governmental Authorities requested by Lessee from time to time. #217950 0 - Final Version of Watson Island Ground Lease - Cite of Miami and Flagstone, 8 �` • • Submitted Int® the public h. RIDER EXHIBIT 1 record in connection wifl item q3e- on �y iy1 os/ Priscilla A. -`icnipson SKETCH OF ENTRANCE ROAD City Clark #217950 0 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone 02--1304 • Exhibit 3.3.1 Approved Environmental Consultants PBS & J (Post Buckley) - Contact: William Pitcher Langan - Contact: Christina Gonzalez Submitted Into the pubiir- record in conn ect syn i�jA y item 0 Priscli9a A. `�hc�nIis9on city Clerk K & B Kaderabek & Barreiro Consultants, Inc. -Contact: Thomas Kaderabek 02-1304 GY&S/208223.16 ® 0submitted Into the public record in connection W1 h q3,, on 0- ty ay ® Exhibit 3.5 Item -- Priscilla A. Thompson. . City Clerk Insurance 1. Commercial General Liability insurance on a commercial general liability coverage form with "broad form" coverage, or its equivalent, including contractual liability, products and completed operations, personal injury, and premises coverage against those sums that the insured becomes legally obligated to pay as damages in connection with any and all claims, demands or actions, bodily injury, death or property damage occurring in the Property, the limits of which shall not be less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. 2. Pollution/Environmental Impairment Liability insurance coverage to be provided by Flagstone's contractors performing the Inspections on a claims basis (provided that such policy period must be for a minimum of six (6) years from and after the date of the Inspections) with limits of One Million Dollars ($1,000,000) per occurrence, providing coverage for the damage caused by spillage of any fuel, petroleum, products or any other "hazardous substances", "hazardous materials" or "toxic substances" (as defined in any and all state, local, or federal laws, rules, regulations and orders pertaining to environmental, public health or welfare matters), whether those substances are solid, liquid or gaseous. Said policy of insurance shall also provide coverage for the cost of cleanup of the affected area and for the removal, transportation and safe disposal of any contaminated area. 3. Automobile Liability insurance covering all owned, non -owned, and hired vehicles used in conjunction with Inspections of the Property. The policy or policies of insurance shall contain such limits as may be reasonably requested by the City from time to time but not less than Five Hundred Thousand Dollars ($500,000). Worker's Compensation insurance in the amounts and types required by Chapter 440, Florida Statues. Only Flagstone need be named as insured. 4. The limits set forth in paragraphs (1), (2) and (3) above shall be issued by an Insurance Company maintaining an "A" rating and Financial Strength of "T'. 02-1304 GY&S/208223.16 ® Into the ublic Submitted � rec-ord as a connection w1th Exhibit 4.1.1 item g- on !''[WAY • Priscilla A. �l her"`a SV—1 Title Matters — City Cleric For purposes hereof, all references to "Schedules" shall refer to those certain Schedules attached to that certain Chicago Title Insurance Company ("Title Insurer") A.L.T.A. Commitment for Leasehold Owner's Policy with an Effective.Date of June 9, 2002 at 11:00 PM (a copy of which is attached hereto). 1. For purposes of deleting Items 3, 4 and 5 of Schedule B -Section 1 and Item 2.e of Schedule B -Section 2 (as well modifying Item 2.g of Schedule B -Section 2), City shall provide Title Insurer confirmation that there are no outstanding taxes and/or municipal liens (i.e., proof of payment or exemption from taxation). 2. For purposes of deleting Item 7 of Schedule B -Section 1 and Items 1, 2.a, 2.d and 4 of Schedule B -Section 2, City shall provide Title Insurer a No Lien, Possession and Gap Affidavit executed on behalf of the City (stating, among other things, that there are no parties in possession or having a right to possession of any portion of the Property), in form and content reasonably satisfactory to Title Insurer. 3. Item of Schedule B -Section 1 and Item 8 of Schedule B -Section 2 refer to the 1949 deed from the Board of Trustees of the Internal Improvement Fund (the "Trustees"). City shall use reasonable, good -faith efforts to obtain from the Trustees: (i) a release of the right of entry with respect to the oil, gas and mineral reservations contained in this deed (provided that the same not be deemed to require City to incur any monetary obligation other than normal and customary application fees which ® may be charged in connection therewith); and (ii) a termination and/or release of Items 17 and 18 of Schedule B -Section 2, in form and content reasonably satisfactory to Title Insurer to delete the same. 4. City shall provide to Title Insurer the resolution and letter described in Item 11 of Schedule B -Section 1, in form and content reasonably satisfactory to Title Insurer so as to delete this item. 5. City shall provide to Title Insurer the affidavit described in Item 13 of Schedule B - Section 1, in form and content reasonably satisfactory to Title Insurer so as to delete this item. 6. As to Items 9 and 10 of Schedule B -Section 2, City shall use reasonable, good -faith efforts to obtain from the Miami -Dade Water and Sewer Authority Department ("WASA"), written confirmation that the water and sewer facilities described in these documents have been properly completed, conveyed and/or dedicated and accepted by WASA, etc. (if such is the case at the time of execution as of the Lease Delivery Date), and that the City has otherwise fully complied with the terms and conditions of these documents. GY&S/208223.16 9 0 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE A Office File Number Effective Date Commitment Number June 9, 2002 atl 1:00 PM Policy or Policies to be issued: LEASEHOLD OWNER'S POLICY 1992 with Florida Modifications Proposed Insured: Flagstone Properties, LLC, a Florida limited liability company To be determined Submitted into the; public record i.rl Connection With iters 3_ of3 Jy I y p y Priscilla An Thcrnl3s'on city Clerk The estate or interest in the land described or referred to in this Commitment and covered herein is Fee Simple, and title thereto is at the effective date hereof vested in: The City of Miami, a municipal corporation (Fee Titleholder) 0 The Land is described as follows: PARCEL 1: AKA EXHIBIT A-1 Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped F.O.O.T., shown as P.T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8706, designated as part of State Road A-1 -A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 8200.00; thence South 59' 51' 26" West departing radially from said centerline a distance of 987.36 feet to a Projected Bulkhead line; thence North 17 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence North _' 12' 21" West continuing along said bulkhead line a distance of 824.70 feet to the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 69 ' 10' 55" East, a distance of 73.08 feet; thence North 86' 44' 00" East, a distance of 67.09 feet to non -tangent curve concave to the Northeast whose radial line bears North 39' 29' 18" East having a radius of 160.00 feet and central angle of 22 ' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46' 17' 39" East along said curve an arc length of 484.79 feet to a point of tangency; thence South 26' 22' 36" East continuing along the southwesterly right of way line of State Road A -1-A, a distance of 196.59 feet; thence South 54' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35' 54' 03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. PARCEL 2 AKA EXHIBIT A-2 Note: This Commitment consists of insert pages labeled in Schedule A, Schedule B -Section 1, and Schedule B -Section 2. This Commitment is of no 2 force and effect unless all schedules are included, along with any Rider pages 300 4 incorporated by reference in the insert pages. ARA 4;99 SB • 0 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE A Commence at a point marked by an 5/8" diameter iron rod and Cap Stamped F.O.O.T., shown as P. T. Sta. 25+50 on the "Official Map of Location and Survey of a portion of Section 8708, designated as part of State Road A -1-A in Dade County, Florida", prepared by the State Road Department of the State of Florida, as recorded in Map Book 56, Page 71 of the Public Records of Dade County, Florida. Said point being the point of tangency of the original center line of the Douglas MacArthur Causeway running Easterly and South Easterly from the Westerly limits (West Bridge) of Watson Island as shown on Sheet 3 of the State Road Department Right -of -Way Map, Section No. (8706-112) 87060-2117, revised March 25, 1959, said most Northerly curve having a radius of 1432.69 feet and a central angle of 62 3 00' 00"; thence South 59 51' 26" West departing radially from said centerline, a distance of 987.36 feet to a projected bulkhead line; thence North 17 ' 12' 21" West along said bulkhead line, a distance of 238.86 feet to the point and place of beginning; thence South 49 ' 32' 57" West departing said bulkhead line a distance of 550.92 feet to a point of intersection of lines of turning basin limit as established by U.S. Army Corps of engineers and by coordinates North 527,878.62 feet, East 926,135.22 feet (based on North American Datum 1983-NAC83); thence North 31 ' 03' 50" West, along the limits of said turning basin a distance of 438.44 feet to a point of intersection with the East right of way line of the intracoastal waterway; thence North 03' 27' 54" West along said East right of way line a distance of 874.43 feet to a point of intersection with the Southerly right of way line of said Douglas MacArthur Causeway, said point of intersection being a point on a curve concave Southerly and having a radius of 10.716.59 feet, a radial line of said point bears South 01 ' 15' 15" East; thence run Easterly for 387.46 feet along the arc of said curve and along said Southerly right of way line, through a central angle of 02' 04' 17" to a point of tangency; thence South 89' 10'55" East continuing Easterly along the said Southerly right of way line, a distance of 31.87 feet more or less to a point of intersection with an existing bulkhead line; thence South 17' 12' 21" East along said bulkhead line a distance of 924.70 feet to the point of beginning. the Southerly right of way line of State Road A -1-A Douglas MacArthur Causeway; thence along said Southerly right of way line the following courses and distances; South 69' 10' 55" East, a distance of 73.08 feet; thence North 86' 44'00" East, a distance of 67.09 feet to non -tangent curve concave to the Northeast whose radial line bears North 39' 29' 18" East ®having a radius of 160.00 feet and central angle of 22 ' 09' 33"; thence along said curve an arc length of 61.88 feet; thence South 72 ' 40' 15" East continuing along said Southerly right of way line a distance of 276.49 feet; to a curve concave to the Southwest having a radius of 600.00 feet and central angel of 46' 17' 39" East along said curve an arc length of 484.79 feet to a point of tangency; thence South 26' 22' 36" East continuing along the southwesterly right of way line of State Road A -1-A, a distance of 196.59 feet; thence South 54' 07' 39" West Departing Said right of way line, a distance of 532.16 feet; thence North 35 ' 54'03" West, a distance of 132.74 feet; thence South 54' 07' 39" West, a distance of 150.14 feet to the point of beginning. Submitted into the public record is a connection lth it'7r ®n o - Priscilla o 1� Priscilla A. Th ,mpson City Clerk Note: This Commitment consists of insert pages labeled in Schedule A, Schedule B -Section 1, and Schedule B -Section 2. This Commitment is of no force and effect unless all schedules are included, along with any Rider pages incorporated by reference in the insert pages. 02-1304 ARA 4199 S8 300204602 A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 1 Submitted Intothe public record in corincectlol" °4th Commitment Number herr on ly lye Priscilla A. Thompson I. The following are requirements to be complied with: City Clerk 1 Instrument(s) necessary to create the estate or interest to be insured must be properly executed, delivered and duly filed for record. a)Recordation of Lease or Memorandum thereof by and between the City of Miami and Flagstone Properties, LLC. NOTE: The Company must be provided with a copy of the proposed Lease Agreement and Memorandum thereof and issue the right to add requirements and/or exemption. 2 I Payment of the full consideration to, or for the account of, the grantors or mortgagors. 3 ' Payment of all taxes, charges, assessments, levied and assessed against subject premises, which are due I' and payable. 4 Proof of payment of real property taxes for the year 2000 and all years prior thereto. 5 Proof of payment of any and all municipal liens which may be due and payable, and liens for water, sewer and gas service. 6 Upon receipt of a survey certified in accordance with Chapter 627.7842 Florida Statutes, the survey is exception and unrecorded easement exception shall be deleted. The Policies issued hereunder will be subject to a Special Exception for matters disclosed by said survey. The surveyor must certify on the survey the legal description shown on Schedule A closes. 7 I' Upon receipt of a Non -Lien and Possession Affidavit pursuant to Chapter 627.7842 Florida Statutes all exception as to mechanic's liens and persons in possession shall be deleted. The Policies issued hereunder will be subject to a Special Exception for the rights of parties disclosed by said affidavit. 8 Proof of proper incorporation and continued good standing of the Proposed Insured and a resolution authorizing the execution of the lease or memorandum of lease required at Item No. 1(a) above. 9 I Waiver of deed restrictions set forth in that deed from The Trustees of the Internal Improvement Fund I' ("TIIF") Deed No. 190447, filed April 11, 1949 in Deed Book 3130, page 257, Clerk's File No. Y- 29610. 10 I Surveyor's Certificate indicating that the lands described on Schedule A, Item No. 3 lie entirely within the boundaries of the lands described in that Deed filed at Deed Book 3130, Page 257. 11 Resolution from the City of Miami authorizing the lesse and a letter from the City of Miami attorney confirming compliance with the City of Miami charter and all other applicable laws regarding the alienation of city property. 12 The amount of requested insurance must be fumished and this Commitment is subject to such further requirements and/or exceptions as may then be deemed necessary. 13 Affidavit that the Lease recorded in Official Records Book 1110, Page 49, in Deed Book 2779, Page 39J has expired and is no longer in effect. �� =� 14 LLC requirement for Flagstone Properties, LLC, a Florida limited liability company. ,U2 AR81 4/99 SB 300204602 A.L.T.A. COMMITMENT . CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 1 Submitted Into the public End of Schedule B - Section I record 1P connection wit iters q_on !'�l,y o z 9 riscilla A. -(hcalY pson City Clerk 0 1y3�OL ARB1 4/99 SB A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 2 Commitment Number 300204602 Submitted Into the public record in connectioV/-pos,-,on ith item 3av on LPrlscilla Ae Tho City Clerk II. Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the Public Records or attaching subsequent to the effective date hereof but prior to the date the proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment. Standard Exceptions: a.Rights or claims of parties in possession not shown by the Public Records. b. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the premises. c.Easements, or claims of easements, not shown by the Public Records. d.Any lien, or right to a lien, for service, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the Public Records. e.Taxes or special assessments which are not shown as existing liens by the Public Records. f.Any claim that any portion of said lands are sovereign lands of the State of Florida, including submerged, filled or artificially exposed lands and lands accreted to such lands. g.Taxes and assessments for the year 2001 and subsequent years. 3 Standard exceptions (b) and (c) may be removed from the policy when a satisfactory survey and surveyor's report and inspection of the premises is made. 4 Standard exceptions (a) and (d) may be removed upon receipt of a satisfactory affidavit -indemnity from the party shown in title and in possession stating who is in possession of the lands and whether there are improvements being made at date of commitment or contemplated to commence prior to the date of closing which will not have been paid for in full prior to the closing. 5 All matters as shown on the plat recorded in Plat Book 74, Page 4. 6 Terms of Biscayne Bay Management Plan filed May 29, 1981 in Official Records Book 11114, Page 822 and under Clerk's File No. 81R-143810. 7 The property herein described being artificially filled land in what was formerly navigable water is subject to any and all rights of the United States government arising by reasons of the United States government control over navigable waters in the interest of navigation and commerce. 8 Oil, gas and mineral reservations and deed restrictions set forth in that Deed from The Trustees of the Internal Improvement Fund to the City of Miami, filed April 11, 1949 in Deed Book 3130, page 257 and under Clerk's File No. Y-29610. Agreement for Water Facilities filed March 13, 1998, in Official Records Book 18016, Page 2892. 10 Agreement for Sanitary Sewage Facilities filed April 14, 1998, in Official Records Book 18058, Page • 112. 11 Resolution No. 98-23, filed Januay 19, 1999, in Official Records Book 18699, Page 1236. 12 Restrictions, easements and other matters set forth on the plat of Location and Survey of a portion of NOTE: On loan policies, junior and subordinate matters, if any, will not be reflected in Schedule B. y� h 2 ARB2 4/99 SB V-- 1304 • C • A.L.T.A. COMMITMENT CHICAGO TITLE INSURANCE COMPANY SCHEDULE B - Section 2 300204602 Section 8706 designated as part of State Road A -1-A, as recorded in Plat Book 56, Page 71 and in Plat Book 67, Page 137 of the Public Records of Miami - Dade County, Florida. 13 Restrictions, easements and other matters set forth on the Plat of Right of Way Map, as recorded in Plat Book 68, Page 44, as recorded in Public Records of Miami - Dade County, Florida. 14 Easement in favor of the United States of America, set forth in that Perpetual Easement (Turning Basin) filed April 4, 1963 in Official Records Book 3618, Page 757 of the Public Records of Miami - Dade County, Florida. 15 Easements in favor of the United States of America set forth in that Grant of Easement for Miami Harbor Turning Basin, filed April 22, 1963, in Official Records Book 3622, Page 751 and grant of Easement For Main Skip Channel Miami Harbor, filed April 22, 1963 in Official Records Book 3622, Page 755 both of the Public Records of Broward County, Florida. 16 Grant of Easement filed in Deed Book 2185, Page 478 of the Public Records of Miami - Dade County, Florida. 17 Dedication filed March 20, 1980 in Official Records Book 10695, Page 264 of the Public Records of Miami - Dade County, Florida. 18 Waiver of Deed Restrictions, conditionally waiving deed restrictions at Deed Book 3130, Page 257, filed March 20, 1980 in Official Records Book 10695, Page 270. 19 Resolution 80-525, filed July 22, 1980 in Official Records Book 10816, Page 1001. 20 Perpetual right of way easement in favor of the United States of America, filed August 5, 1963 in Official Records Book 3768, Page 155, under Clerk's File No. 63R-127109. 21 Lease executed by and between the City of Miami and Flagstone Properties, LLC, dated _ and filed in Official Records Book , Page _. End of Schedule B - Section 2 Submitted Into the public record in connecti� w,ith iter 3w �n �yWj, � Priscilla A. 'Tl- ompson City Clerk NOTE: On loan policies, junior and subordinate matters, if any, will not be reflected in Schedule B. AR82 499 SB Submitted Into the public record in connection with Exhibit 4.1.2 Item o n �3 0� %�t y Priscilla A. C`ty �son !e k Environmental Condition Acceptance Notice 02-304 GY&S/208223.16 • n 1. Flagstone Island Gardens LLC 2. Mehmet Bayraktar 0 • • Exhibit 4.1.3 Submitted Into the public Investor List record in connection with item 3u- on Q Priscilla A. 'Thompson City Clerk 02-1304 GY&S/208223.16 9 0 • Exhibit 4.1.4 Submitted Into the public List of Organizational D . ocuments record 'I connection with Item Priscilla A. Thompson City Clerk 0 0 02-1304 GY&S/208223.16 9 • • Exhibit 4.1.5 Submitted Into the publi Expressions of Interestc record in connection ith item on i ° r Priscilla A.Thompson City Clerk 02.-004 GY&S/208223.16 • • Submitted Into the public record in connectiorl With Exhibit 4.2.2 item on —h/cin oY Binding Letter from DCA Priscilla A. `I`ho-npsan City Clerk 02-1304 GY&S/208223.16 Submitted Into the public y . record in connection with b item 3w on�- �� Priscilla A. Thompson STATE OF FLORIDA City Clerk DEPARTMENT OF COMMUNITY AFFAIRS "Dedicated to making Florida a better place to call home" JEB BUSH Governor November 15 , 2002 Judith A. Burke, Esquire Shutts and Bowen, LLP 1500 Miami Center 201 South Biscayne Boulevard Miami, FL 33131 STEVEN M. SEIBERT Secretary C:) N --i m 0 -o r -n .. T O 'T1 "o n M RE: Binding Letter of Vested Rights and Interpretation of Development of Regional Impact ® ("DRI") Status File No. BLIVR 11003-001 FINAL ORDER NO: DCA02-BL-288 Dear Ms. Burke: We have evaluated your Application for a Binding Letter of Vested Rights, dated September 25, 2002 ("Application"), and received on September 27, 2002. Based on the information contained in the application and supporting documentation, we enter the following Findings of Facts, Conclusions of Law, and Order. Per your request, the Binding Letter includes a determination as to the Watson Island Marina ("Marina") site's vested rights. FINDINGS OF FACT Preliminary Findings 4 1. The applicant is Plagstone Properties, LLC, ("Applicant"), which is represented in its application by Judith A. Burke as its authorized representative. The application describes the project as redevelopment of a forty-two (42) wet slip marina providing mooring for watercraft, encompassing 13.4 acres of submerged land, which is owned by the City of Miami. 2555 SHUMARD OAK BOULEVARD • TALLAHASSEE, FLORIDA 32399-2 100 Phone: 850.488.8466/Suncom 278.8463 FAX: 850.921.0781/Suncom 291.0781 Internet address: httc _:/ww.dca.stateJI.us CRITICAL STATE CONCERN FIELD OFFICE COMMUNITY PLANNING EMERGENCY MANAGEMENT HOUSING & COMMUNITY DEVELOPMENT 2796 Overseas Highway, Suite 212 2555 Shumard Oak Boulevard 2555 Shumard Oak Boulevard 2555 Shumard Oak Boulevard Marathon, FL 3.3';0-2227 Tallahassee. Fl. 32399-2100 Tallahassee, FL 32399-2100 Tallahassee. FL 32399.2100 (305)289-2402 (850)488-2356 (850)413-9%9 (850)488-7956 02.1304 Submitted Into the public record in connection wi h item Ji±: C ii /y)oY Priscilla A. Thompson City Clerk • 2. All communications made by the applicant, all material submitted by the applicant in the Application, and all other relevant written materials are incorporated herein by reference. 3. On October 11, 2002, a notice of the applicant's request for Binding Letter was published in the Florida Administrative Weekly. In addition, the South Florida Regional Planning Council, the City of Miami, and Miami -Dade County were notified of the application's receipt. 4. The project site is located wholly in the City of Miami (`'City"), Miami -Dade County, in Section 31,Township 53, Range 42. 5. The project site consists of 13.4 acres of submerged land. As represented in the Application, the existing improvements will lie wholly within the 13.4 area. 6. A brief summary of the development on the project site is as follows: The site is comprised of a forty-two (42) wet slip marina, which provides mooring for various watercraft used for sport, pleasure, and/or commercial fishing. The Marina was constructed prior to July 1, 1973. It was constructed in 1956 and has been in continuous operation since that date. The Marina includes a double row of mooring pilings, but does not include any docks or finger piers. The Applicant would like to develop a mega -yacht marina ("Project"), a forty-two (42) wet slip marina in the same footprint. Vested Rights 7. For Purposes of identifying the types of uses, which were permitted, the applicant submitted documentation beginning in 1956. There were no City government approvals pertinent to the scope of review as to vested rights as they relate to marinas. The statement was made, however, that the Marina was "completed in accordance with all applicable federal, state, and local statutes, rules regulation's and ordinances in effect as of 1956." In 1967, the City adopted an ordinance that required a permit for any waterfront improvements. As the Marina was constructed prior to 1967, a building permit was not required. Aerial photographs from 1966 along with relevant documentation indicate that the Marina was developed, and had remained in the same condition since prior to July 1, 1973. 8. In 1975, the State of Florida required Dredge and Fill Permits for coastal construction. The Marina was constructed prior to 1975 and thus did not require such a permit. 9. In 1980, the Miami -Dade County adopted an ordinance requiring a Class I Coastal Construction Permit for construction or renovations over any tidal waters, submerged bay bottomland, or wetlands in the County. The Marina did not require such a permit since it was constructed prior to 1980. 02.1304 2 U Submitted into the puDI►c record in connection wi h item ��on �y �.� PriSGiila A. Thor son City Clerk 10. In 1990, Miami -Dade County instituted a Marine Facilities Operating Permit ("MOP") program. Every year since the inception of the program, the Marina had received an MOP for forty-three (43) commercial vessels. 11. The submerged land is unplatted. No subdivision plats were approved for development between August 1, 1967 and July 1, 1973. 12. There are currently no pending development permits or other authorizations for the Project. 13. There are no development permits or authorizations that have been requested by the Project. 14. There are no development permits or authorizations that have been denied for the Project. 15. There has been no conveyance or agreement to convey property to the state or local government as prerequisite for approval of a zoning change. 16. The Marina has not been registered with the Division of Florida Land Sales and Condominiums. 17. As proposed in the Application, all of the Project will lie within the footprint of the existing Marina. 18. The Project is classified as a marina for purposes of DRI guidelines and standards. 19. The Project has not received any prior binding letters of interpretation from the Department. CONCLUSIONS 'OF LAW Pursuant to Section 380.06(4)(f), Florida Statutes, a development with vested rights may demolish and reconstruct within the same approximate footprint of its vested development without divesting this vested rights if the change in the size of the development does not exceed the substantial deviation criteria set forth in Section 380.06(19)(b), Florida Statutes. Under Section 380.06(4)(f), F.S., the existing Marina on the subject site is vested. 4 Demolition of the existing Marina and subsequent construction of the Project on the subject site will retain vesting from DRI review. 3 Submitted Into the public ® record in connection ith iters mon J} y I ORDER Priscilla A. Thompson City Clerk It is hereby ordered that the subject site has vested rights with respect to the forty-two (42) slips for the mega -yacht marina project. The proposed Project, as described in the September 25, 2002, application for binding letter, is deemed to be entitled to vested rights with respect for DRI review. The development evaluated in this binding letter shall be considered cumulatively with any future development in terms of the guidelines and standards contained in Chapter 28-24, F.A.C., and Section 380.0651, F.S., and its associated regional impacts. Should any of the above representations made in the application be substantially changed, further review of the project may be required. This letter shall expire and become void as of November 15, 2005, unless the proposed development has been substantially commenced by this date. This date may be extended by mutual agreement of the Department, local government of jurisdiction, and the developer. This determination does not obviate the need to comply with all other applicable state or local government permitting procedures. Any questions regarding this determination may be directed to Colin M. RAopnarir A!�5jdant General Counsel, at (850) 488-0410. X. "Sones" Timmerman, Director Division of Community Planning cc: David Dahlstrom, South Florida Regional Planning Council Carlos Gimenez, City Manager, City of Miami Ruth Ellis Myers, Miami -Dade County FILING AND ACKNOWLEDGEMENT FILED, on this date, with the designated Agency Cle , receiptwh'ch is hereby ackno I Paula P. Ford ate / Agency Cleric 02-130.4 4 Submitted Into the public ® record in connectio with '3G item -� Girt !.a- � a. Priscilla A. T hompso—n ® NOTICE OF RIGHTS Cit; Clerk The applicant has the opportunity for a formal administrative proceeding regarding this binding letter pursuant to Sections 120.569 & 120.569 & 120.57(1), F.S. If you dispute any issue of material fact stated in the binding letter, then you may file a petition requesting a formal administrative hearing before the an administrative law judge of the Division of Administrative Hearings pursuant to Sections 120.569 & 120.57(1), F.S. and Chapter 28-106, Parts I and.II, F.A.C. At a formal administrative hearing, you may be represented by counsel or other qualified representative, and you will have the opportunity to present evidence and argument on all the issues involved, to conduct cross examination and submit rebuttal evidence, to submit proposed findings of fact and orders, and to file exceptions to any recommended order. • If you desire a formal administrative hearing, you must file with the agency clerk of the Department of Community Affairs a written pleading entitled `petition for administrative proceedings' within 30 days of receipt of this notice. A petition is filed when it is received by the Agency Clerk in the Department's Office of General Counsel, 2555 Shumard Oak Boulevard, Tallahassee, Florida 32399-2100. The petition must meet the filing requirements in Rule 28-106.104(2), F.A.C. and must be submitted in accordance with Rule 28-106.201(2), F.A.C. The petition must include the signature of someone authorized to act on your behalf. A petition must specifically request an administrative proceeding, it must admit or deny each material fact contained in the binding letter, and it -must state any defenses upon which you rely. You waive the right to an administrative proceeding if you don not file a petition with the agency clerk within the time frames described above. You may also decide that no formal administrative proceeding is required for this binding Letter. If you do not requesta. formal administrative proceeding, this binding letter constitutes final agency action and is subject to judicial review of the binding letter pursuant o Section 120.68, F.S., and Florida Rules of Appellate Procedure 9.03(b)(1)(c) and 9.110. To initiate an appeal of this binding letter, a notice of appeal must be filed with the Department's Agency Clerk, 2555 Shumard Oak Boulevard, Tallahassee, Florida 32399-2100, and with the appropriate district court of appeal within 30 days of the day this binding letter is filed with the agency clerk. The notice of appeal filed with the district court of appeal must be accompanied by the filing fee specified in Section 35.22(3),F.S., and must be substantially in the form prescribed by Florida Rule of Appellate Procedure 9.900(a). You waive your right to judicial review if the notice of appeal is not timely filed with tli� agency clerk and the appropriate district court of appeal. Mediation under Section 120.573, F.S., is available with respect to the issues resolved by this binding letter. A request for mediation must include the information required by Rule 28- 106.402, F.A.C. Choosing mediation does not affect the right to an administrative hearing. 5 02-1304 ® • Submitted into the public connect \�'L record�con �'' �� Exhibit 4.2.6 it�m�fi 5����� A. ThoF6i' orn ® City Clerk Existine Occupants John J. Waterman ('Blue Sea II" - 2 vessels) - slips 36 & 37 Lazaro Sanchez (Casablanca Seafood - 5 vessels) - slips 23, 25, 26, 27 & 28 —"Fish Market" Inelda deArmas (De Armas Seafood - 3 vessels) - slips 32, 33, 34 — "Fish Market" 4. Bruce Purdy (Blackbeard Charters - 3 vessels) - slips 38, 40, and 42 • 02-1,304. GY&S/208223.16 Submitted Into the public record .n connection with Item 43w ®n • Exhibit 5.3 PriscIII B k`"c")'mpson Escrow Agreement City Clerk 020'rl�ltl� GY&S/208223.16 Submitted Into the public d in connect,�011 W,' recotu �ris&illa A. mpson Clerk Exhibit 6.1.4 City ® Pre-Approved Candidates for Development Team • Eric Kuhne & Associates • Spillis Candella • 02-1304 GY&S/208223.16 Submitted into the public record irj connection with item _9�� on Exhibit 6.1.5 Priscilla A. _rhorripson City Clerk Pre -Approved Hotel Operators and/or Franchisors • Hilton group, including but not limited to Conrad Hotels • Starwood group, including but not limited to W Hotels, St. Regis Hotels, Starwood Luxury Collection • Rosewood Hotels • Hyatt group, including but not limited to Park Hyatt • Raffles Group, including but not limited to Raffles Hotels* (to be verified by the Chief Executive Officer) • Marriott group, including but not limited to Bulgari Hotels • The Peninsula Group* (to be verified by the Chief Executive Officer) • Le Meridien Group* (to be verified by the Chief Executive Officer) • Dorchester Group Hotels* (to be verified by the Chief Executive Officer) • Four Seasons Group, including but not limited to The Regent Hotels • The Rocco Forte group, including but not limited to RF Hotels* (to be verified by the Chief ® Executive Officer) • Kempinski Hotels & Resorts* (to be verified by the Chief Executive Officer) • Orient Express Hotels* (to be verified by the Chief Executive Officer) • Oberoi Hotels & Resorts* (to be verified by the Chief Executive Officer) • Six Continents Hotels • Mandarin Oriental *Notwithstanding anything contained to the contrary herein, the Chief Executive Officer has the right to remove those operators and/or franchisors indicated above with an asterisk ("*") next to their name by providing written notice to Flagstone thereof if the Chief Executive Officer determines in his or her reasonable discretion by January 15, 2003 that the same are not appropriate for inclusion in the "Pre -Approved List of Operators and/or Franchisors" hereunder. GY&S/208223.16 • 0 Exhibit 5.5.1 Existing Marina Permit • C 11 Submitted Int® the public record in _cc_— nnectic th item_�Y3t oY priscila A. Thompson City Cleric 02-1304 GY&S/208223.16 NiIANit-DADS COUNTY, FAIDA M 1 AM I-DAD� NNW wMCM PERMIT NO: MOP -000306-2002/2003 (B) -GEN ENVIRONMENTAL RESOURCES MANAGEMENT WATSON ISLAND MARINA NATURAL RESOURCES DIVISION 1220 MAC ARTHUR CSWY 33 S.W. 2nd AVENUE MIAMI, PL 13132- MIAMI, FLORIDA 33130-1540 (305) 372-5864 FAX (305) 372-6630 PERMITTEE': Mr. Stephen A Bogner CITY OF MIAMI MIAMARIXA AT BAYSIDE Submitted Into,!he rpubI)C 401 BISCAYNE BLVD t�' ` r.. " MIAMI. FL 33132- record in COnn yt`O%-'?dfc! th item _0r` l is o�' MARINE FACILITIES Prise{Ilr� i�.. b®pSOn ANI- UAL OPERATING PEM -11A _ .City Cterk DESCRIPTION OF FACILITY/EQUIPMENT This document, issued under the provisions of Chapter 24, Miami -Dade County Code (Ordinance Number 89-104), shall be valid from 01 -OCT -2002 through 30 -SEP -2003. The above named permittee, is hereby authorized to operate the marine facility at the above location which consists of. the following: Commercial Facility. Commercial vessel operations with more than one boat located in any recreational or commercial marina in Dade County will require individual permits. Total.wet slips: 43 Total dry slips: 0 Total commercial vessels: 40.. Total recreational vessels: 3 Number of liveaboards: 0 Days of week in operation: 5 This facility is subject to conditions listed below and in the following pages (if any) of this permit. SPECIFIC CONDITIONS 1. This facility must be operated in accordance with the "Best Management Practices" attached hereto and incorporated herein by reference as part of this permit. 2. All applicable conditions from previously executed local, state, and federal permits issued for the above -referenced marine facility shall be enforced. 3. All fixed or floating non -water dependent structures in, on, over, or upon tidal waters, unless previously approved by.a Class Y permit, are prohibited. 4. All permanent sewage pumpout systems and portable pumpout systems required at this facility pursuant to DERM, state, or federal permits shall be maintained on site and in fully operable condition at all times in order to convey sewage to the sanitary sewer system. Designated slips for pumpout stations shall be.kept open at all times except while a vessel is discharging sewage to the pumpout system. There shall be no overboard discharge of sewage to tidal waters from vessels at this facility. This prohibition also includes discharges from approved Coast Guard .Type,I or 2 flow-through marine sanitation. devices. All vessel occupants shall .use shoreside facilities unless the vessel is equipped with a Coast Guard approved holding tank system or is directly connected to the facility's sewage pumpout system. S. The facility owner/operator is required to maintain a submerged land lease from the state of Florida if any vessels or'structures are located over state-owned submerged lands. Use of state-owned submerged lands without a lease or other form of consent from the State of Florida is Miami -Dade County ® Department of Environmental RGAOUreee Management dj:x� k�� 1,12, - - John W. Rea ow, P.B., D ctor Page 1 of 2 02-1304 i • prohibited. , 'w 6. Unless otherwise approved by DERM, fueling of vessels at this facility shall be prohibited. Facilities approved for fueling operations shall maintain on-site spill prevention, containment, and recovery equipment and materials including, but not limited to, absorbent pads, booms, and sweepo and shali.maintain staff trained in the deployment and operation of said equipment at all times. -'Fueling at approved facilities shall be conducted only at the designated fueling location in order to contain.any spills that may occur. A floating containment boom large enough to enclose the area of the.vessei being fueled, but with a minimum length of fifty (50) feet, shall be available at all times during fueling operations. Said equipment shall be deployed and operated in the most effective manner possible when spills occur. 7. The maximum number of vessels that may be stored, docked or moored at this facility may not exceed the number of slips as referenced above in this Operating Permit. This condition shall not apply to appurtenant vessels such as dinghies and tenders that are associated, by ownership, design and common usage, with a primary vessel docked, moored or stored at the facility, and therefore, are affixed to/carried by and stored on the primary vessel. GENERAL CONDITIONS S. The applicant, by acceptance of this document, agrees to operate and maintain the subject operation so as to comply with the requirements and standards of Chapter 24 of the Code of Miami -Dade County. 9. If for any reason, the applicant does not comply with or will be unable to comply with any condition or limitation specified on this document the applicant shall immediately notify and provide the department with the following information: (a) a description of and cause of non-compliance; and (b) the period of non-compliance including exact dates and times; or, if not corrected, the anticipated time the non-compliance is expected to continue, and steps taken to reduce, eliminate, and prevent recurrence of the non-compliance. Theapplicant shall be responsible for any and all damages which may result and may be subject to enforcement action by the department for penalties or revocation of this document. lo. As provided in Section 24-30 of the Code of Miami -Dade County, the prior written approval of the Department of Environmental Resources Management shall be obtained for any alteration to this facility. 11. The issuance of this document does not convey any vested rights or any exclusive privileges. Nor does it authorize any injury to public or private property or any invasion of personal rights, nor any infringement of federal, state or local laws or regulations. Nor does it relieve the applicant from liability for harm or injury to human health or welfare or property. 12. This document is required to be posted in a conspicuous location at the facility site during the entire period of operation. 13. This document is not transferable. Upon sale or legal transfer of the property or facility covered by this document, the applicant shall notify the department within thirty(30) days. The new owner must apply for a permit within thirty (30) days. The applicant shall be liable for any non-compliance of the source until the transferree applies for and receives a transfer of this document. 14. The applicant, by acceptance of this document, specifically agrees to allow access to the named source at reasonable times by department personnel presenting credentials for the purposes of inspection and testing to determine compliance with this document, and department rules. 15-. This document does not indicate a waiver of or approval of any other department permit that may . be required for.other aspects of this facility. 16. This document does not constitute an approval by DERM or certification that the applicant is in compliance with applicable laws, ordinances, rules or regulations. The applicant acknowledges that separate enforcement actions may be initiated by DERM and that this document does not constitute compliance with orders issued in conjunction with enforcement. actions for correction of violations. 17. Failure to comply with any condition of this document, or the standards as set forth in Chapter 24, Code of Miami -Dade County may subject the applicant to the penalty provisions of said Chapter including civil penalties up to $25,000 per day per offense and/or criminal penalties of $500 per day and/or sixty (60) days in jail. Submitted Into the public record 0 connection with itemi ,, oYon 43&,, P'ici la A. Thompson ® City Clerk page 2 of 2 - -- 02-1204 • • ® Submitted Into the public record in connection with item �3w on Exhibit 12.2 12.2 Priscilla A. Thompson Permitted Title Exceptions City Clerk GY&S/208223.16 02-1304