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ISLAND GARDENS
Major Use Special Permit Presentation
June 24, 2004
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ISLAND GARDENS
MAJOR USE SPECIAL PERMIT PRESENTATION
Table of Contents
VOLUME 4
Agreement To Enter Into Ground Lease between City of
Miami and Flagstone Island Gardens, LLC,
dated January 22, 2003 1
Ground Lease Agreement between City of Miami and
Flagstone Island Gardens, LLC,
dated January 22, 2003 2
695240-1
AGREEMENT
TO ENTER INTO GROUND LEASE
BETWEEN
THE CITY OF MIAMI, FLORIDA
AND
FLAGSTONE ISLAND GARDENS LLC
DATED AS OF
GY&S/208223.16
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS; INCORPORATION OF RECITALS AND
EFFECTIVE DATE 1
ARTICLE 2. NATURE OF THIS AGREEMENT; GROUND LEASE ATTACHED. 2
2.1. Nature of this Agreement. 2
2.2. Ground Lease. 2
ARTICLE 3. 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
ARTICLE 5. 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
TABLE OF CONTENTS
Page
7.6. Marina Approvals. 22
ARTICLE 8. COORDINATION W1TH 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
ARTICLE 10. 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
AND RELEASE 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. 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
ii
GY&S/208223.16
TABLE OF CONTENTS
12..2f.
13.11. Brokers 36
13.12. No Partnership or Joint Venture 36
13.13. Counterparts. 36
iii
GY&S/208223.16
AGREEMENT TO ENTER INTO GROUND LEASE
The CITY OF MIAMI, FLORIDA, a municipal corporation of the State of Florida ("City"),
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
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
1
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. 2nd Avenue, 3'd Floor, Miami, FL 33130, Telephone:
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GY&S/208223.16
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 firms) or consultant(s) listed on Exhibit 3.3.1 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
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GY&S/208223.16
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. Flagstone's Acknowledgments and Deliveries.
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GY&S/208223.16
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").
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GYBS/208223.16
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, commerci: lty 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 "Oreanizationa: 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 Investors) 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 welt as the
operation thereof through Project Stabilization.
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GY&S/208223.16
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 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 Manna slips on traffic, if necessary; and (ii) expand the
boundaries of the Downtown DR! 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
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GY&S/208223.16
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.
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GY&S/208223.16
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
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GY&S/208223.16
not the obligation) to terminate this Agreement by written notice to Flagstone delivered on or before the
fifth (5th) day after the expiration of the MUSP/NOPC Application Deadline or the N1USP/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
shalt 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 4.3 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 (5th) 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
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GY&S/208223.16
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 Securitv" 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
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sole cost and expense, an additional Letter of Credit in the amount of Two Hundred Thousand and
No/I00 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 5.3 (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
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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 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:
1 (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
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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 anv 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 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
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anticipated costs of development and construction of the Project Components (the "Construction
Budoet").
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
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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. 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 shalt 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
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(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. Ripht 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 4.3 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
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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 partics 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
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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 4.25 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
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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,
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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 "Operating 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. 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
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capacity as the marina depicted in the Island Gardens Proposal (a '°Mena -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 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 ("DERM"), and respond to and accommodate, in
a commercially reasonable manner, any reasonable requests by such Governmental
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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 Permits) are issued by such
Governmental Authorities.
7.6.2. Notice and MeetinEs 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
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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 Manna 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
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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 8. 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
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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 tire 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 shalt 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-
Requirine 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;
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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 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
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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.
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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. Dischar;ine 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.
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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 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;
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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. Citv'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 Rpresentations. 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
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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. Citv'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.
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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 6.1.3).
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
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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-Partv 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. HeadinEs. 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
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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 FOLLOW]
35
GY&S/208223.16
ES WITNESS WHEREOF, City and 'Flagstone have caused this Agreement to be exccutcd as
required by law as of the date set forth beside the parties signatures below.
'4/4. Name: Priatills A. Thompson
Title: City Clerk
APPROVED AS
. By.
a a • ro Vila
City Attorney
THE CITY OF 1 t it, a municipal
corporation oft State Flom
By. ,
r]. Joe kraals -
Titl . .
Date: January 31, 2003
FLAGSTONE ISLAND GARDENS LLC, a
Delaware limited liability company
By: Flagstone Miami Holdings, LLC, a
Delaware limited liability company. as its sole
and managing member
By: Flagstone Property Group, LLC, a
Delaware limited liability company, as its role
and managing member
By:. +.
Name Mehmet
Title: Sole arid Managing Member
Dato:1AAci3
Sworn to end subscribed before me this r2.Z day of January. 2003, by Mebtnct Bayraictat, who ( ) is
personally known to me, or ( ) has produced ae identification.
My commission expires:
36
lie
Cain, :TSA Y
L!t tSii: Crw. i tN
NOTAr 1"Jrc L _• $:: G:: I'!')A
CO5.2G1.:.:l+::;:;„
14Y COMIMPON 0:"?. FEL 21:v+`.3'
GY&Sl206223.16
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
By: Flagstone Miami Holdings, LLC, a
Delaware limited liability company, as its sole
and managing member
By: Flagstone Property Group, LLC, a
Delaware limited liability company, as its sole
and managing member
By:
Name: Mehmet ktar
Title: Sole and Managing Member
Date: j J p.2l acur3- y
Sworn to and subscribed before me this - '• day of January, 2003, by Mehmet Bayraktar, who ( ) is
personally known to me, or ( ) has produced as identification.
•
My commission expires:
36
blic
GY&S/208223.16
Exhibit A
Legal Description of the Propertv
GYBS/208223.16
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 Tine 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
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.
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' 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 position 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 428.44
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 to 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.
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 "Agreement" 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 "Citv" 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.
l .16 "Disclosed Investors" means all Investors other than Non -Disclosed Investors.
GY&S208223.16
1.I7 "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 DR!" 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" 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.
GY&S/208223.16
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.
t.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
I.31 "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 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
GY&S208223.16
1.43 "Organizational Documents" shall have the meaning ascribed to such term in Section 4.1.4 of this
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
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.
GY&S/208223.16
Exhibit C
Form Ground Lease
GY&S/208223.16
i
i
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
TABLE OF CONTENTS
ARTICLE I INCORPORATION, EXHIBITS AND DEFINITIONS
Section 1.1 Incorporation by Reference
Section 1.2 Exhibits.
Section 1.3 Singular, Plural And Gender.
Section 1.4 Section References
Section 1.5 Defined Terms.
ARTICLE II DEMISE
Section 2.1
Section 2.2
Section 2.3
ARTICLE III TERM
Section 3.1
Section 3.2
Demise
Leasehold Improvements
Delivery of Title to Lessor..
Initial Term.
Extension Terms.
2
3
4
4
4
14
14
14
15
15
15
16
ARTICLE IV DELIVERY OF POSSESSION AND DEVELOPMENT AND OPERATION OF
THE PROJECT
Section 4.1 Delivery of Possession of Property.
Section 4.2 Memorandum.
Section 4.3 Development of the Project
Section 4.4 Operating Team.
ARTICLE V RENT AND SECURITY DEPOSIT
Section 5.1 Construction Rent.
Section 5.2 Base Rent.
Section 5.3 Percentage Rent.
Section 5.4 Security Deposit
Section 5.5 Place Of Payment
Section 5.6 Default Interest
Section 5.7 Late Charge
Section 5.8 Rent To Be Without Deduction
ARTICLE VI LEASEHOLD AND SUBLEASEHOLD MORTGAGES
Section 6.1 Definition of Terms
Section 6.2 Prohibited Mortgages.
Section 6.3 Permitted Mortgages.
action 6.4 Notification of Lessor.
Section 6.5 Foreclosure
Section 6.6 New Lease
Section 6.7 Major Subleasehold Estates.
Section 6.8 Liability of Approved Mortgagee.
Section 6.9 Assignment of Development Plans and Project Approvals.
Section 6.10 Survival.
Section 6.11 Mezzanine Financing.
Section 6.12 Purchase Money Financing.
ARTICLE VII USE OF SUBJECT PROPERTY
Section 7.1 Certain Conditions Of Leasing.
Section 7.2 Major Subleases and Space Leases
Section 7.3 Permitted Uses; Long -Term Changes.
Section 7.4 No Discrimination
Section 7.5 Use of the Property.
Section 7.6 Leasehold Improvements to be Open to Public.
$217950 v3 - Final Version of Wagon Island Ground Lease - City of Miami and Flagstone
17
17
17
17
18
19
19
19
21
22
24
25
25
25
26
26
33
34
34
35
36
38
39
40
41
41
43
43
43
43
44
45
45
45
Section 7.7 Safety. 46
Section 7.8 Continuous operation. ................................................................46
Section 7.9 Compliance with Laws 47
Section 7.10 Compliance with Insurance Requirements 47
Section 7.11 Prohibited Uses. 48
Section 7.12 Casino Gambling. 48
Section 7.13 Signage 50
Section 7.14 Cure of Defaults Under Approved Leasehold Mortgages and Approved
Major Subleasehold Mortgages. 51
Section 7.15 Enforceability 5I
ARTICLE VIII RESTRICTIONS ON TRANSFERS AND APPROVAL OF INVESTORS 52
Section 8.1 Definition of Terms 52
Section 8.2 Bayraktar Interests. 55
Section 8.3 Leasehold and Major Subleasehold Estates. 56
Section 8.4 Chief Executive Officer Review and Approval Procedures 58
Section 8.5 Release from Liability 60
Section 8.6 No Consent Required for Affiliate or Related Party Transfer. 60
Section 8.7 Mortgages, Leases and Subleases. 61
Section 8.8 Going Public. 62
Section 8.9 Other Transactions for Which No Consent Is Required. 62
Section 8.10 Violation. 62
Section 8.11 Acceptance of Rent from Transferee. 63
Section 8.12 Lessor's Participation In Proceeds. 63
Section 8.13 Organizational Documents of Lessee. 64
Section 8.14 Investors 64
Section 8.15 Chief Executive Officer's Right to Object 65
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. 68
Section 9.4 Duration of Easements. 68
Section 9.5 Dredging to Facilitate Safe Passage of Vessels. 68
Section 9.6 Confirmatory Instruments. 69
ARTICLE X PAYMENT OF IMPOSITIONS 69
Section 10.1 Payment of Impositions. 69
Section 10.2 Taxes on Lessor. 70
Section 10.3 Lessee's Right to Contest Impositions. 70
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. 76
Section 11.5 Delivery of Insurance Policies. 76
Section 11.6 Lessor's Right to Obtain. 77
Section 11.7 Insurer To Be Approved; Premium Receipts 77
Section 11.8 Waiver of Subrogation. 78
ARTICLE XII RECORDS AND AUDITING 78
Section 12.1 Records of Sales 78
Section 12.2 Audit. 79
ii
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
ARTICLE XIII REPRESENTATIONS AND COVENANTS 82
Section 13.1 Limited Representations by Lessor 82
Section 13.2 Authority. 83
Section 13.3 Lessee's Representations and Covenants 83
Section 13.4 Disclaimer of Lessor's Representations 84
Section 13.5 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. 86
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 87
Section 15.3 Reimbursement of Lessor and Lessee 88
ARTICLE XVI DAMAGE OR DESTRUCTION 88
Section 16.1 Definitions of Terms. 88
Section 16.2 Net Insurance Proceeds; Obligation to Fund Restoration Work. 89
Section 16.3 Restoration Work. 90
Section 16.4 Termination 92
Section 16.5 No Other Right to Terminate. 93
Section 16.6 Rights of Approved Leasehold Mortgagee.. 93
Section 16.7 Major Subleases. 93
Section 16.8 Deferral of Base Rent 93
ARTICLE XVII ARBITRATION 94
Section 17.1 Binding Arbitration. 94
Section 17.2 Procedures. 95
Section 17.3 No Delay in Completion of Work 98
Section 17.4 Right of Approved Mortgage to Participate 98
ARTICLE XVIII MECHANICS' LIENS 99
Section 18.1 Definition. 99
Section 18.2 No Consent by Lessor. 99
Section 18.3 Notice of No Liability of Lessor. 99
Section 18.4 Inclusion in Memorandum of Lease. 100
Section 18.5 Discharge of Mechanics' Liens 100
Section 18.6 Right to Contest. 100
Section 18.7 Releases 101
ARTICLE XIX COVENANT AGAINST WASTE; INSPECTION 101
Section 19.1 Waste 101
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. 106
Section 20.4 Indemnity. 106
Section 20.5 Notices. 107
Section 20.6 Lessor's Remedies. 107
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. 109
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
ARTICLE XXI PUBLIC UTILITY CHARGES 109
Section 21.1 Lessee to Provide and Pay for Utilities 109
Section 21.2 Compliance with Utility Services. 110
Section 21.3 Permits. 110
Section 21.4 No Obligation for Utilities not on Property. 110
Section 21.5 Notice and Disclaimer as to Utility Services and Other Services. 110
ARTICLE XXII INDEMNIFICATION AND RELEASE OF LESSOR 111
Section 22.1 General Indemnification of Lessor Without Limitation of Any Other
Indemnity Given Hereunder 11 1
Section 22.2 Defense. 112
Section 22.3 Lessor's Participation 112
Section 22.4 No Limitation 112
Section 22.5 Challenges to Lease. 112
Section 22.6 Survival. 113
ARTICLE XXIII LIEN FOR RENT AND OTHER CHARGES 113
Section 23.1 Lien for Rent. 113
Section 23.2 Other Liens 113
Section 23.3 Limitations. 113
ARTICLE XXIV CONDEMNATION 114
Section 24.1 Definition of Terms 114
Section 24.2 Entire Property Taken by Condemnation 116
Section 24.3 Part of Property Taken by Condemnation 116
Section 24.4 Takings for Temporary Period. 117
Section 24.5 Event of Lessee's Default. 118
Section 24.6 Rights of Approved Leasehold Mortgagee. 118
Section 24.7 Major Subleases. 1 19
ARTICLE XXV DEFAULT PROVISIONS 119
Section 25.1 Events of Default by Lessee 119
Section 25.2 Remedies in Event of Lessee's Default. 122
Section 25.3 Events of Default - Lessor. 124
Section 25.4 Mitigation 126
ARTICLE XXVI COVENANTS OF LESSOR AND LESSEE 126
Section 26.1 Partial Modification of Restrictions. 126
Section 26.2 Civic Arts Endowment Trust. 127
ARTICLE XXVII QUIET ENJOYMENT 128
Section 27.1 Quiet Enjoyment. i 2 3
ARTICLE XXVIII LESSEE NOT TO ENCUMBER LESSOR'S INTEREST 128
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 131
ARTICLE XXXI NO WAIVER 132
Section 31.1 Delays in Exercising Rights. 132
Section 31.2 Waivers to be in Writing. 132
Section 31.3 Receipt of Rent. 132
Section 31.4 Consents 133
ARTICLE XXXII SURRENDER AND HOLDING OVER 133
Section 32.1 Surrender at End of Term 133
Section 32.2 Rights Upon Holding Over. 134
iv
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
Section 32.3 . No Waiver 134
Section 32.4 Survival. 135
ARTICLE XXXII' MAJOR SUBLEASES, SPACE LEASES AND APPROVED TIME SHARE
LICENSES 135
Section 33.1 Leasing and Subleasing 135
Section 33.2 Non -Disturbance and Attomment. 135
Section 33.3 Major Subleases. 135
Section 33.4 No Cross -Defaults Among Major Subleases. 137
Section 33.5 Space Leases. 138
Section 33.6 Approved Time Share Licenses. 139
ARTICLE XXXIV MINORITY AND WOMEN PARTICIPATION AND EQUAL
EMPLOYMENT OPPORTUNITIES 140
Section 34.1 First Source Hiring Agreement. 140
Section 34.2 Minority and Women Participation and Equal Employment Opportunity. 140
Section 34.3 Skills, Training and Employment Center 141
Section 34.4 Tax Credits. 142
ARTICLE XXXV OPERATING AGREEMENTS FOR HOTELS AND MARINA 142
Section 35.1 Approval. 142
Section 35.2 Approved Operators 142
Section 35.3 Terms. 143
Section 35.4 Non -Disturbance and Attotnment Agreement. 143
ARTICLE XXXVI UNAVOIDABLE DELAY 143
Section 36.1 Unavoidable Delay(s). 143
Section 36.2 Manner of Notice of Unavoidable Delay(s) and Conditions With Respect
to Performance of Obligations. 143
ARTICLE XXXVII NOTICES 144
Section 37.1 Notices. 144
Section 37.2 Notice to Approved Mortgagees. 145
Section 37.3 Sufficiency of Service. 146
ARTICLE XXXVIII MISCELLANEOUS PROVISIONS 146
Section 38.1 Captions. 146
Section 38.2 Conditions and Covenants. 146
Section 38.3 Entire Agreement. 146
Section 38.4 Modification 146
Section 38.5 Time of Essence as to Covenants of Lease. 146
Section 38.6 Recording. 147
Section 38.7 Chief Executive Officer Approval Procedures. 147
Section 38.8 Governing Law. 149
Section 38.9 Jurisdiction and Venue 149 •
Section 38.10 Waiver of Jury Trial. 150
Section 38.11 Conflict of interest. 150
Section 38.12 Covenants to Run with the Leasehold Estate 150
Section 38.13 No Merger 151
Section 38.14 Brokerage. 151
Section 38.15 Counterparts 151
Section 38.16 No Third Party Beneficiaries. 151
Section 38.17 Attorney's Fees and Expenses. 152
Section 38.18 Invalidity of Provisions. 152
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#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 "City"), 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
Panel".
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 v3 - Final Version of Watson Island Ground I rase - City of Miami and Flagstone
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 8, 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 "Project
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:
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ARTICLE I
INCORPORATION, EXHIBITS 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
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 ] — 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
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Exhibit 0 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.
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(c) "Applicable 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.
(0 "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.
(h) "Base Rent" means the base rent to be paid by Lessee as set forth in Section 5.2.
(i)
City of Miami.
"Business Days" means Monday through Friday, excluding legal holidays in the
(j) "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
hereunder.
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(1) "Chief Executive Officer Apgroval Procedures" has the meaning ascribed to it in
Section 38.7.
(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 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.
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#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
(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 tiine 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.
"Event of Lessee's Default" has the meaning ascribed to it in Section 25.1.
"Extension Option" has the meaning ascribed to it in Section 3.2.
"Extension Term" has the meaning ascribed to it in Section 3.2.
"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.
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(aa) "Gross Revenues" has the meaning ascribed to it in Exhibit 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 or 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
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#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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.
(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
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#217950 v3 - Final Version of Watson Island Ground Lcasc - City of Miami and Flagstone
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.
(II) "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 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 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.
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#217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
(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) "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.
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#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
(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 5.3.
(bbb) "Permitted Title Exceptions" means those certain title matters set forth in
Exhibit I.
(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.
(ffi) "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.
(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,
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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).
(ijj) "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.
(11l) "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)
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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.
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Section 2.2 Leasehold Improvements So long as this Lease remains in force, the Leasehold
[mprovements 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).
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ARTICLE III
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 (30th)
anniversary of the Possession Date and ending on the forty-second (42nd) anniversary of the Possession
Date. The first (1) 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 (1g) 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
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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 (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 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.
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Section 4.3 Development of the Project. Lessee shall cause the Project Components to be
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
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
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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.
(0 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 (1u) 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 (1u) of the
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month, Lessee shall, on the Occupancy Date, pay to Lessor the pro rata portion of Base Rent due for any
partial month in which the Occupancy Date occurs.
(b) Amount Payable 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 S41,666.67 per month in advance on the first (1u) 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 Cap. 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.
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(f) Notice of CPI Adiustment. 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 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 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
"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 (1") day of each month,
commencing on the first (1 ") 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(a1 for the month which is two (2) months before the due date of such
installment (e.g., an installment due on July 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 Sate" 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).
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(ii) Percentage Rent. In addition to the Percentage Rent specified in Section
5.3(a) 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 (1") 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.
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(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
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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,
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and in the absence of such designation, at the office of the Finance Director of the City of Miami 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 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(cl 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.
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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 Morteaee" 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.
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(c) "Approved Maior 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 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:
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(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";
(vi) in the case of Mezzanine Financing, any Approved Mezzanine Financer;
(vii) any successor of any Person described in clauses (i) through (vi) above;
and
(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.
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(ix) "Financial Standards" means that, at the time any applicable loan is
made, the lender making such loan shall have assets in excess of S50,000,000,000 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.
(j) "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:
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• (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
Subleasehoid 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:
(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.
(I) "initial Equity Reauirement" 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 S 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
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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 shalt
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
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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(1/0).
(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
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(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 (l0) 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
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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
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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
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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 Attomment 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)
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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(4 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
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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 anv 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.
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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 Subleaseho(d 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
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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
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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 Maior 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.
Section 6.10 Survival. The provisions of this Section 6.9 shall survive any termination of this
Lease.
Section 6.1 1 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
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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
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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 ;u'iect 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(al and Section 7.4 through Section 7.11. Lessee shall use reasonable, good faith efforts to
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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 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.
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) Intentionally Deleted.
(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
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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.
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
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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 Safety. 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.
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
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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.
(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
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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
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 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
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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
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 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
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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 extendany 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.
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 shalt
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.
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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.
(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.
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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.
(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 Maior 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;
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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.
(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
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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 with respect to such Major
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.
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(xi) "Disclosed Investors" means all Investors other than Non -Disclosed
Investors.
(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 0 or otherwise
has a level of business experience and expertise comparable to that of HSBC (U.S.) Securities Inc.
(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 Bayraktar Prohibited PRIOR TO Bavraktar 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.
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(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 (it) 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.
Section 8.3 Leasehold and Major 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;
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. (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 Maior 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
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;
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•(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).
(c) Major Subleasehold Estate Transfer or Major Subtenant Transfer of Control
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 8.3(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)(il 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
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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 (51,000.00) 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.
(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 (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
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
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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)(i), 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
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 Liabilitv. Upon compliance with any applicable provisions of
Section 8.3 and/or Section 8.4the 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);
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(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);
(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).
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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.
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, arty 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.
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(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 occur -ring 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 (O, l%) 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 Maior 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
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 8.8(iil other than an initial public offering.
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(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
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 arty 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
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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
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
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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 mariner 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
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, holden 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 tines, gas mains, electrical power lines,
telephone lines, storm and sanitary sewers and other utility lines and facilities (collectively, "Utility
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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
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
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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 Submersed 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
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.
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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
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
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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
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
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coverage, vandalism, malicious mischief, sprinkler leakage and special coverage, including flammable
2
materials used for cooking.
(i) Amounts. Such coverage shall be in the following amounts: (i) as to
windstorm, S100,000,000; (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.
(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 Casualtv 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
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(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 intemtption insurance with limits not
Tess 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
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
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(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 S50,000 will be carried under this
coverage without the Chief Executive Officer's prior written consent, which shall not be unreasonably
withheld.
(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%
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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 & 0 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.
(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
(S1,000,000) 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.
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(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 (4m) 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.
(0 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
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 XL 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
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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
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 ail 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
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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.
(a) Mutual Waiver. Each Party waives all rights to recover against the other Party
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.
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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).
(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 Eauioment. 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
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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
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 25.1(iZ; 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
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and expense of Lesse4. 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
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) M jor 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
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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 Aftiliates 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.
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
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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.
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 Party
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
6_I); 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.
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(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
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
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or implied, with regarct 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.
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.
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(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 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.
(e) Insurance. Lessee shall not permit anything to be done upon the Property 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.
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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 (l2) 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.
(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 plats 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
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Imposition"), then Lt~ssor 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 10.3 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.
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 arty 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).
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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) "Casualty" means any casualty to the Leasehold Improvements or any portion
thereof.
(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, Tess 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.
(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.
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(a) Adiustment 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
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.
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(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
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
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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
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
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
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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.
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.
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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,
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
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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
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 "Demandine Party") may make written demand
upon the other Party (the "Non-Demandine 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")
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with the names and addresses of eleven (I l) proposed arbitrators (the "Proposed Arbitrators"). The
Non -Demanding Party shall be copied on any such written request.
(c) Oualifications. 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
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 (l) 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:
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. (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.
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.
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, (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.
(xvi) The Arbitrator shall not be authorized to make an award of punitive or
exemplary damages.
(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
Arbitrator's decision.
(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
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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.
ARTICLE XVIII
MECHANICS' LIENS
Section 18.1 Definition. For purposes of this Article XVIII, 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 1 8.2 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
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(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.
Section 18.5 Discharge of Mechanics' Liens. Lessee shall not cause, suffer or permit arty
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
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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 S25,000). 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
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.
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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 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
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 bf 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
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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,
Property or the Leasehold Improvements
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.
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
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however, shall have no affirmative obligation to bring the
into compliance and nothing herein shall be construed 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
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
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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 seq.); 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 seq.); 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 seq.); the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.); 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 seq.); 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.
(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 1 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 11 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.
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(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. Upon termination or expiration
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.
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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
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
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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 any time 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
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,
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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 Maior 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
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
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.
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ARTICLE XXI
PUBLIC UTILITY CHARGES
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 seryice41, or substitutes to the Property and the Leasehold Improvements.
Lessor shall, at no cost to Lessor, cooperate with and assist Lessee in such endeavor.
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
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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
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
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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
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.
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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
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
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
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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
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.
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(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 attomey'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
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:
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(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 riot 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
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
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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.
(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 243, as applicable.
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(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 Tenn 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(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.
(b) " Assignment. 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 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.
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Section 24.7 Major 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) Voluntary 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
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
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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 Maior 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
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
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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 Subleasehotd 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;
(j) 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 (j) 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
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).
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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
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
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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).
(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
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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
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.
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(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
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.
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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) Le:,so,- 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
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
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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) Fundin . 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
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
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� e) nor !,a!! such funds in an:, c Pcr., ar.d c,ther
�...5 l,c s eunder.
AR1 1+ 1_E XXVII
QUIE1 "-- '+7rl."\1ENT
`:cc::on 27.1 Quiet Enjoyment.
L Ret,t and all Impositions and other c'
' a < _!:all lawfully and quietly hold, occ..i
cr molestation by Lessor (solely in :•:
Lcssc: ly in its prcprietary capacity).
ARTICLE XXVIII
F'SEE NOT TO EN(
L `
Lessee, upon
conditions of
!.< `case Term without
•sens c:a:mina under
1_"1ivTFREST
Lessee shall have no right or power tc. ..: ! .-. .1 c::he tale of Lessor in
tc :h.c Property, or the title of Lessor's rem. :. , c <c t:c?d 'rr p;rc‘ements.
fee <:. ple estate of Lessor in the Prop :< f Lessor F. :he Leasehold
' :;c\e:--,ents shall not be in any way subject', ;`.cr rse, whether claimed
;icn of law or by virtue or any express < , lher ins..,,ment made by
I_e see a::d any claim to the lien or otherwise : i . :! i_ 1 ;-..rrcveme nts arising
cm any act or omission of Lessee shall b ;. _. L..__ct'.. ..,:cres; in :4.e Leasehold
improvements.
AP CLE XXIX
LIMITA.1'- 111.APILITY
`7ec:ion 29.1 Limitation of Liabilitti : ' Lessee.
(a) C, Loral Limitation on '<r_:cod by and
! c;- «;, :1.c Parties, anything herein to
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Fags:one
;:.c1 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
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
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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
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
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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.
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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 shalt 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.
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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 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 XXXI I hereof; (iii) any service and
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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 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
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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 Attornment. 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
shalt 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);
(ii) Covenants. Include the covenants required by the applicable Sections of
this Lease;
(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);
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(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 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
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respect to the applicable Major Subleasehold Estate which are substantially similar to those contained in
Article VIII;
(xii) Notice of Default under Operating_ Aireements 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 shalt 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) 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
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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
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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 Attomment Agreements with the holders of Approved Time
Share Licenses and their respective lenders. Each such Subordination, Non -Disturbance and Attomment
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 Attomment
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.
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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.
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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 ail 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.
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ARTICLE XXXV
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 Operator(s)").
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 Agreement. 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(s1. 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,
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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
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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:
with a copy to:
Department of Economic Development, City of Miami
444 SW 2 Avenue
Miami, FL 33130
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):
if to Lessee, at:
with a copy to:
with a copy to:
Finance Director, City of Miami
444 SW 2 Avenue
Miami, FL 33130
Flagstone Island Gardens LLC
506 Celebration Avenue
Celebration, Florida 34747
Attn: Mehmet Bayraktar
Shutts & Bowen LLP
1500 Miami Center
201 South Biscayne Boulevard
Miami, Florida 33131
Attn: Kevin D. Cowan, Esq.,
and Terry B. Fein, Esq.
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn: Richard L. Chadakoff, Esq.
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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 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
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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 "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;
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(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
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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) Nothing 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.
147
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
Section 38.9 Jurisdiction and Venue. The parties acknowledge that a substantial portion of the
negotiations, anticipated performance and execution of this Lease occur -red 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 38.10 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
148
4217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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
149
#2 t 7950 v3 . Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 Attornev'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.
150
#217950 v3 - Final Version of Watson [stand Ground Lease - City of Miami and Flagstone
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:
Name:
CITY OF MIAMI, a municipal corporation
of the State of Florida
By:
Name: , Chief Executive Officer
ATTEST:
City Clerk
APPROVED AS TO INSURANCE APPROVED AS TO FORM AND CORRECTNESS:
REQUIREMENTS:
, Chief
Division of Risk Management City Attorney
Signed, sealed and delivered
in the presence of:
Name:
Name:
LESSEE:
FLAGSTONE ISLAND GARDENS LLC,
a Delaware limited liability company
By:
Name:
Title:
151
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT A
SKETCH OF WATSON ISLAND
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
0EC-O4-2O02 VEO 041:t0 Aft
GAM •+0
IAA to • OVID AT /i1/1M2 •:M:$ AY Worn trNrV TIN* • *V11:PARRRYSW14.OM :TTM! • C1110: • OUllAT1011 iAMMI.MM
P. 01
EXHIBIT B
UPLAND PARCEL
#217930 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
LEGAL DESCRIPTION OF UPLAND PARCEL
Commence at a point shown marked by an 5/8" diameter iron rod and Cap Stamped
7.D.O.T., shown as P.T. Sta.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 -. radius of 1432.69 feet and a central angle of 62 00' 00 seconds" ; thence South
59 ' 5 t' 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- I -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 raci;us 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
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 ' 0T 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.
EXHIBIT C
SUBMERGED PARCEL
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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' 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 position 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 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 ' 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.
EXHIBIT D
SURVEY
#217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
EXHIBIT E
DESCRIPTION OF PROJECT COMPONENTS AND AMENITIES
[. General Description.
(. 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. &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
12 i 7950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
adjustments thereto, shall be as set forth in the approved Construction Plans and
Specifications).
1I. 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
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
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
EXHIBIT E-1
DESCRIPTION OF PUBLIC ART
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
DEC-04-3C2 4;:D 09:43
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AWARDS
1997 rR Clew, FUN)Pota.3.:
UV! C•ge•r:TiaT higarerial FoteSszlos N.:as-TV
PUBLIC COMMISSIONS
Pafracc AnS allot
.LCa Art in AM;;
$E.I.t:LTED PUBLIC COLLECTIONS
Animar Art (" L R,4t
Barak r livemalasw,Mws
Dig&i..wilat :Amax of Lefft Ai/krit
Chem CAtauti lid -AM MeA?:# Ateu:".
EjA.rMrrn. .1.1.1mtan1 firnow4 Cm yin+, Aliar4.st4Wegx
AiglemOR +1" , Voe.k. NV
coit Sm4.ifor Gado. Wathift164 DC
Lars4 Prose ia Lean:641ra Kar.A; Gfrvart
A4 Aisamv. Mani
MARC!) gat. 41r .4.mrs Cothmponicao. Modro
mar. a Be fk.) Ae" Cara,* VerzYig
Matta f AK, Abed: Ws"' sf Pale. Praidmie
Maana• Chedroonscr Sil Th
Maloof tf AA; 1.-Ya• .144, L‘rie
.Vama Mciesx e A.4 Brat PaW Ber4 Pariala
PisilsaWir Aisueda al A,. 'W404/1141
Paseax Ar: M:issma, /Intim
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trtr Miaow. .eir.....riart 4.114 Nor YceA
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An iatcrnauocalli aciimcd artist_ her nook it in
ma x luthlic cekecanns including the Alctropcli-
tanMust; utuui An in New Ycrk,tbe Art lWinne
of Chicago, Virg nia lalcteut` cf Fine Arts, and
the )slstvntJ l)esiki MurzuCn-Sm chw:iaa I:iau-
tutij:t, New Voris_ Iitr s,-.dai red public :It oieees
indude Radiant Site, a 1156 Frnt k,ng eotr.-
posed of 11000 gold !Lune tilos at the Herald
Square Subway eoi plea is New York, Codex
Sacra nento at the Sm:rwnento Centai L'acur,
and Walk on the Batch, _:e xlebratet:22,000
SF 3kcr of L.:xico rs: A, MiF.mi Intern3;ional
Aizprwr. Oka Don= hac participated in a awn -ace
of die tinnbtaisho.i a b1ititzts, among them Formed
be Fire, (amemit Mtneum of Ar ]rttsttur2h: De-
sign Resource, Coopec.Jh Witt Museum, Ne..
Mai LrxlthethJ E‘1eg.ncc, Guggeniiei-n Museum,
NewYockRt:pert,Naomi tata:ettm ra' lane -ken,
Ri-t de jareisa Bali1; seal Aeekixetucc a ui !1i.,
Iatezraaioaa: Contemporary Are tai►, Yokohama.
Japan. A retrospective of Ma i liner s waek it be
iag ocganit:d by the: Bass lausciesiitt peach
and is scheduled to L-avri to rraiscums in th:. United
Sea cs Eutop , and Late America.
Her vwcck has been revieired be c New York
Time, Th.. Wall Smoot ) Dram!, The New Yxker,
the :Vishi=goof: Fcs. , Metropolis MaguiAe and
the Los Angeles Tunes. Oka Dove: is :he rrti,i-
nt or a number of ay.-adds and get^.tl: Thc i4Caa
Ccteitkt&x., The New York Some Co::ncd for the
Ares, and the Lydia Wmatnn alixn Prize at tad
Douai: Ir-etnate of the !era.
1(mien t•f Muni Bach, Oha Door: aired
her BS%Danger and ?LEA from Me Univenity of
Michigan. L- 1994 she was bcnored with. t:e Di:-
tingnir6ed AJaniewe Awned from thu Sd1001 ui
Ai... ATrott: of Tbc tniait-110 in artaa:
Beach, she alto serves or: gut Ad.:limy Council
o: ties Utm,cair! of Miehlgau'c'cLool of At-,
PAGE 1 t RCVO AT 11 %302 tA1:i2 MA (Eastern Stadia rmel t S R:FACSERYERh St OMS Uost CSC: t DRAIN taa412.12
DEc-04-20C2 WED 09:44
M&I14 J * f0412.a *A
r Ai; 7. 03
Vrrt Mar:iaas Cary; ertnds the bouialui-
trdaSiu nrat7: a.st;a:.teti with the rtcditun oc
pirxograr bF.. One of her most cokbnted wiaa i.
Attu Continuous. a erntn.1:.rt from she M2r.,i
Dada Ant is Pu_lic P:aecu ? raS_aat 1,4:urinenj'
au vita,/ a Nfiami Iatec:tu onal A:tpoa's Con -
came Tl (.sung an easstaag atrium ,?lair wall as a
bate for the work the miss ccntnr1 a mttal glum
r+�Ae:ts cpon the alga:. of navel and d.spiacn:nat
•rrl tiwi. +.Zpa:ficartce co on: legion. The 40 mil,
40' x 44r un_bhited phowp iph:e ntizra1 on ltltw
Kas complattd on )salary 1991
A rxip.:.,t 61 a Cutro F icz*a}t.p. a :•htioual
End.amw. for the Arts mud and a l aright-
Fiays Gear, h:t:mock has been cr+deh trhalvrM
in the United Cana sal abroad. Hoc wo.k ar
ineladai . nc permaae a t.iliec..imas of the
NQtami Arc Nose -Luc, dte Ccr a (+to ge Pompidou,
Pans, Museum of Modena in New Yak,
Inrcrnuinnal i .r+ttrr of Paoenhwapb' maw ark,
Vex Yawl; the 11L4Latutt of Contecpointy .5
Cticag.•, Center for G ra*: Photograph; -1 uaott,
:lrzona, ? userstrt of . (ace a +r.. San Fruscacn.
Ccrttro Culturit Acts Cnttrrr,lvxaneq 'Mexico C);
Lor Angolos Count! Muscu.n of ALI, 1,4 .:N •.gv1s,
Cai.fou
PACE 311 t RCYD AT 12%20021:17:02AM (Eastern Standard True] t S+AtFAXSERYERfiSr 0111t/703t CSV. DURATIONtoa 0:11-12
EXHIBIT F
CONCEPTUAL SITE PLAN
#2I7950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
ISLAND GARDENS
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id ./ r /er rI L.sYr.r 141 ma*
• wog *meta r dyke. Id.ad embl•r/•^'/
Mrir Y M.** a*•nova kola*
....• l•.•• r• r 1.&Or r well
a..rd, pku A.J d.. «.r a•J •.•. eel
• r1r, I•1• rr I ,Yea yka .wra
• r1. r, ✓ .I P.M. Ibyd A••••.•
r C........e, Tk• J w As**.1 *k.I
twee, e • rq•.l
T•..1..d/.r./ rmew* Jw
▪ Y* r mammy y r trek* M er'
.•4 I • r.• •4 err * bind Ew e
o•rJ4•e� r ,a'q*#yel *or
...I ewer• 1..0 b.a• .J oak rr
./ P.O../ Aqd M1rr. rJ Coro. Are
(fY Ir .{.•r Ike+• e*s r 1.e • Kq
yd.gW • A•e r *aka r/Mr a W•y
Ire/ *vs. • .•.Y ••• r .}I. • Ma*
..• r V..' 'maw r Jyy
A n✓'1I_*. r •q1 r 1.4•K
hear. 4• dY n. Y•i ...I .1 w hYd
Alm w /•ra Er.... !•rkr1 w,
../i.tp.I/ r • * •
.f •aanr•I awl Arai*wog •Yra ot
f it r er.r iair, el Mr) V*
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EXHIBITG
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.
0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 Toss
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 ',cast. Rents or other rentals payable by such Space
#217950 v3 • Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 53(bl 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
M217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
all facilities of the Marina (other than such receipts, revenues, income and proceeds attributable to the
operation by Space Tenants, if any, of the Manna of their respective businesses), subject to the applicable
Exclusions.
1. 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.
N2I7950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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)
procee s 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
GAAP.
0217950 v3 - Final Version of Watson Wand Ground [,ease - City of Miami and Flagstone
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
N217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
a.n�r•w�
attributable to the operation by Space Tenants, if any, of the Retail Space of their respective businesses,
subject, however, to the proviso in Paragraph [V.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 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.
0217950 v3 - Final Version of Watson Island Ground Lase - City of Miami and Flagstone
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.
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. Parki g 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
N217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
Parking Garage so subleased, to all such Parking Operational Revenues and Parking Lease Rents received
by the applicable Major 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 "Parkin 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.
ADZ 17950 v3 - Final Vcrsion of Watson Island Ground Lease - City of Miami and Flagstone
2. Such term shall exclude the following: (i) all taxes required by law 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 "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
GAAP.
0217950 v3 - Final Version of Watson Wand Ground Lease - City of Miami and Flagstone
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 Protect 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 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 uncollectibte 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
N217950 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
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 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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
N2 t 7930 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 maybe 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
M217950 v3 - Final Version of Watson Island Ground Lase - City of Miami and Flagstone
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
#2 t 7950 v3 - Final Version of Watson Island Ground Lase - City of Miami and Flagstone
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 tilt. existing Marina permits or such other permits and approvals from
Governmental Aafthorities 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).
(j) 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 bland Ground Lease - City of Miami and Flagstone
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.
0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT I
PERMITTED TITLE EXCEPTIONS
#217950 v3 - Final Version of Watson Island Ground Leasc - City of Miami and Flagstone
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]
N217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
i
EXHIBIT K
LIST OF PRE -APPROVED LENDERS
[Note: To be agreed upon by the Parties and attached prior to February 1, 20031
0217930 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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
EXHIBIT M
APPROVED SUBLEASEHOLD MORTGAGEE SNDA
(NOTE: TO BE AGREED UPON AND INSERTED PRIOR TO FEBRUARY 1, 2003]
0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT N
PROHIBITED USES
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
0217950 v3 - Final Version of Watson Island (around Lease - City of Miami and Flagstone
(f)
(g)
(h)
(i)
(i)
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;
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;
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;
Any operation primarily used as a warehouse operation and any assembling,
manufacturing, distilling, refining, smelting, agricultural, or mining operation;
Any dumping, disposing, incineration, or reduction of garbage (exclusive of
garbage compactors located near the rear of any building);
Any fire sale, bankruptcy sale (unless pursuant to a court order) or auction house
operation;
/217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
(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 Manna;
(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);
0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
(s)
(t)
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
Any use which would constitute a material breach of the covenants described in
Exhibit N-1.
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT N-1
COVENANTS AS TO PORT OF MIAMI
[Note: To be agreed upon by the Parties and attached prior to February 1, 2003]
1217950 v3 - Final Version of Watson Wand Ground Lease - City of Miami and Flagstone
EXHIBIT 0
LIST OF PRE -APPROVED FINANCIAL ADVISORS
[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
EXHIBIT P
ORGANIZATIONAL DOCUMENTS
JADDITIONAL DOCUMENTS TO BE SUPPLIED{
N217950 v3 - Final Version of Watson Wand Ground Lease - City of lvWmi and Flagstone
EXHIBIT Q
PROVISIONS NOT APPLICABLE TO PRIVATE LESSOR
jTO BE SUPPLIED]
/217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT R
CIVIC ARTS ENDOWMENT TRUST
Trust.
(a) Term. The term of the Trust shall coincide with the Lease Term (including any
applicable Extension Terms); provided, however, that the Trust shall terminate upon any sooner
termination of the Lease or Lessee's right to possession of the Property and the Leasehold
Improvements, for any reason whatsoever (collectively, a "Lease Termination").
(b) Corpus and Trust Income. The amount which is funded into the Trust pursuant
to Paragraph 2 below (the "Corpus"), and the income earned thereon (the "Trust Income") shall
be held and disbursed in the manner provided below.
(c) Operating Expenses. Annual operating expenses of the Trust shall be paid out of
the Trust Income and not the Corpus.
2. Funding.
(a) Initial Term. During each year of the initial Lease Term, Lessee shall fund the
Trust (or cause the Trust to be funded) in amounts equal to the following percentages of the net
operating income for the Project during each such year as reflected in the operating statements of
Lessee and each applicable Major Subtenant ("NOI"): (i) Seven Tenths Percent (.7%) during
each of the first fifteen (15) years of the Lease Term; (ii) Six Tenths Percent (.6%) during each of
the second fifteen (15) years of the Lease Term; and (iii) Five Tenths Percent (.5%) during each.
of the third fifteen (15) years of the Lease Term.
(b) First Extension Term. If Lessee duly exercises the first (Is') Extension Option
pursuant to Section 3.2 of the Lease, then during each year of the first (1m) Extension Term,
Lessee shall fund the Trust (or cause the Trust to be funded) in an amount equal to Five Tenths
Percent (.5%) of NOI for such year.
#217950 v3 - Final Version of Watson Wand Ground Lease - City of Miami and Flagstone
(c) Second Extension Term. If Lessee duly exercises the second (2nd) Extension
Option pursuant to Section 3.2 of the Lease, then during each year of the second (2nd) Extension
Term, Lessee shall fund the Trust (or cause the Trust to be funded) in an amount equal to Five
Tenths Percent (.5%) of NOI for such year.
3. Return of Funds.
(a) End of Initial Lease Term. If Lessee does not duly exercise the first (I")
Extension Option, then, at the end of the initial Lease Term (or any sooner Lease Termination),
the Trust shall be terminated, and the entire Corpus shall be returned to and become the sole
property of Lessee but all other funds then in the Trust shall be retained by and become the sole
property of Lessor. If Lessee does duly exercise the first (1s`) Extension Option, then at the end
of the initial Lease Term, an amount equal to Seventy Percent (70%) of the Corpus of the Trust
shall be returned to and become the sole property of Lessee. The remaining balance shall
continue in the Trust, and Lessee shall continue to have the funding obligations described in
Paragraph 2(b) above.
(b) End of First Extension Term. If Lessee does not duly exercise the second (2nd)
Extension Option, then, at the end of the first (I') Extension Term (or any sooner Lease
Termination), the Trust shall be terminated, and the entire Corpus shalt be returned to and
become the sole property of Lessee but all other funds then in the Trust shall be retained by and
become the sole property of Lessor. If Lessee does duly exercise the second (2nd) Extension
Option, then at the end of the first (1u) Extension Term, the then existing Corpus and all other
funds then in the Trust shall continue in the Trust, and Lessee shall continue to have the funding
obligations described in Paragraph 2(c) above.
(c) End of Second Extension Term. If Lessee duly exercises the second (2nd)
Extension Option, then at the end of the second (2"d) Extension Term (or any sooner Lease
Termination), the Trust shall be terminated, and the entire Corpus shall be returned to and
#2 17950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
become the sole property of Lessee but all other funds then in the Trust shall be retained by and
become the sole property of Lessor.
#217950 v3 - Final Version of Watson (stand Ground Lease - City of Miami and Flagstone
EXHIBIT S
MAJOR SUBLEASE SNDA
[NOTE: TO BE AGREED UPON AND INSERTED PRIORTO FEBRUARY 1, 20031
N217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
EXHIBIT T
FORM OF FIRST SOURCE HIRING AGREEMENT
[Note: To be agreed upon by the Parties and attached prior to July 1, 2003]
11217950 v3 - Final Version of Watson Wand Ground Lease - City of Miami and Flagstone
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 Manner"). 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
11217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
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 (1") 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
1217950 v3 - 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.
N217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
(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 Landscapint? 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
0217950 v3 - Final Version of Watson [stand Ground Lease - City 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
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 Zink 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
0217950 v3 - Final Version of Wdtson Island Ground Lease - City of Miami and Flagstone
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 Damafe 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
N2 1 7950 v3 - Final Version of Watson Island Ground Lease - City of Miami aad Flagstone
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 Toss 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
0217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
1
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 v3 - Final Version of Watson island Ground Lease - City of Miami and Flagstone
RIDER EXHIBIT 1
SKETCH OF ENTRANCE ROAD
#217950 v3 - Final Version of Watson Island Ground Lease - City of Miami and Flagstone
Exhibit 33.1
Approved Environmental Consultants
1. PBS &.J (Post Buckley) - Contact: William. Pitcher
2. Langan - Contact: Christina Gonzalez
3. K & B Kaderabek & Barreiro Consultants, Inc. -Contact: Thomas Kaderabek
GY&S/208223.16
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 (51,000,000) 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 (SI,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 (S500,000). 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 "7".
GY&S/208223.16
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 1 1 :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 I, 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 9 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 I3 of Schedule B-
Section I, 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
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE A
Office File Number
(REV. 12/10/02
1. Policy or Policies to be issued:
LEASEHOLD OWNER'S POLICY 1992
with Florida Modifications
Proposed Insured:
Effective Date
June 9. 2002
at 1 1 :00 PM
Commitment Number
16657.0004
To be determined
Flagstone Island Gardens LLC, a Delaware limited liability company
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)
3. 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.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-
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.
ARA 499 se
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE A
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° 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
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) 87060-21 17,
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 tine; 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 550.2
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° 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° 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° 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.
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.
449se
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE B - Section 1
Commitment Number
The following are requirements to be complied with:
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 Island Gardens LLC, a Delaware limited liability
company
NOTE: The Company must be provided with a copy of the proposed Lease
Agreement and Memorandum thereof and reserves the right to add
requirements and/or exceptions.
2 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 and payable.
4 Proof of payment of real property taxes for the year 2001 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 INTENTIONALLY DELETED.
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, and release of the
right of entry with respect to the oil. gas and mineral reservations set forth
in the deed.
10 INTENTIONALLY DELETED.
11 Resolution from the City of Miami authorizing the lease 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.
AIM 4199 SS
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE B - Section 1
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 from City of Miami that the Lease recorded in Deed Book 2779,
Page 390 has expired and is no longer in effect.
14 LLC requirement for Flagstone Island Gardens LLC, a Delaware limited
liability company along with authorization to transact business in Florida.
15 Termination of that Dedication filed March 20, 1980 in Official Records
Book 10695, Page 264 of the Public Records of Miami - Dade County,
Florida.
16 Release or termination of Deed Restrictions, conditionally waiving deed
restrictions at Deed Book 3130, Page 257, filed March 20, 1980 in Official
Records Book 10695, Page 270.
17
Proof that the Lease for the use of the "Asphalt Helicopter Landing Pad"
has been terminated and that no party has the right to use said landing
pad.
Note: Landing Pad depicted on survey.
NOTE: All of the recording information contained herein refers to the Public
Records of Miami -Dade County, Florida, unless otherwise indicated.
End of Schedule B - Section 1
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE B - Section 2
Commitment Number
300204602
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.
1 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.
2 Stan aid Exceptions:
a. Rights or claims of parties in possession not shown by the Public
Records.
b. INTENTIONALLY DELETED
c. INTENTIONALLY DELETED .
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 Bulkhead line as shown on the plat recorded in Plat Book 74, Page 4.
6 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 govemment arising by reasons of the United States government
control over navigable waters in the interest of navigation and commerce.
7 Oil, gas and mineral reservations as set forth in that Deed from The
Trustees of the Internal Improvement Fund to the City of Miami, filed April
1 1, 1949 in Deed Book 3130, page 257 and under Clerk's File No. Y-29610.
Note: The right of entry has been released pursuant to (to be filled in j.
8 Agreement for Water Facilities filed March 13, 1998, in Official Records
Book 18016, Page 2892.
NOTE: On loan policies, junior and subordinate matters. if any, will not be reflected in Schedule 8.
Baez ws se
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE B - Section 2
9 Agreement for Sanitary Sewage Facilities filed April 14, 1998, in Official
Records Book 18058, Page 112.
10 Resolution No. 98-23, filed January 19, 1999 in Official Records Book
18699, Page 1236.
11 INTENTIONALLY DELETED.
12 INTENTIONALLY DELETED.
13 INTENTIONALLY DELETED.
14 Easement 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.
15 INTENTIONALLY DELETED.
16 INTENTIONALLY DELETED.
17 INTENTIONALLY DELETED.
18 INTENTIONALLY DELETED.
19 INTENTIONALLY DELETED.
20 Terms and conditions of that Lease executed by and between the City of
Miami and Flagstone Island Gardens LLC, a Delaware limited liability
company, dated _ and filed _ in Official Records Book , Page _.
21 INTENTIONALLY DELETED.
22 Perpetual Easement in favor of the Florida Department of Transportation
filed March 13, 1998 in Official Records Book 18018, Page 1 181 .
23 The survey drawn by Weidener Surveying and Mapping PA under Project
# 1712, dated July 11, 2002 discloses encroachment of curbing onto that
FDOT Easement in Official Records Book 18018, page 1 181 at the
Northern portion of the property along with any easements arising from
those sanitary sewer manholes, sanitary sewer line, overhead utilities,
water fines and light poles running throughout the upland paved.
Informational Note:
Terms of Biscayne Bay Management Plan filed May 29, 1981 in Official
Records Book 11114, page 822 and under Clerk's File No. 81 R-143810.
Note: Standard Exception 2(f) of Schedule B - Section 2 is hereby deleted.
Note: The following endorsements will be issued with the final policies:
LOAN:
NOTE: On loan policies, junior and subordinate matters, d any, will not be reflected in Schedule 6.
.r9a sa
300204602
A.L.T.A. COMMITMENT
CHICAGO TITLE INSURANCE COMPANY
SCHEDULE B - Section 2
Navigational Servitude
ALTA 13.1
OWNER:
ALTA 13
Navigational Servitude
End of Schedule B - Section 2
NOTE: On loan policies. junior and subordinate matters. if any. will not be reflected In Schedule B.
CHICAGO TITLE INSURANCE COMPANY
REPORT TO AGENTS ON STATUS OF TITLE
NUMBER: 300204602
TO: Michelle Vazquez-Pineda
Shutts Er Bowen, LLP
1 500 Miami Center
201 S Biscayne Blvd
Miami, Florida 33131
(REV. 12/10/02)
This report on the status of title is being furnished at your request to assist in the
preparation of a CHICAGO TITLE INSURANCE COMPANY (the Company) title insurance
commitment and policy to be issued by your office. Only the results of an examination
of the record title are reflected herein.
After you have reviewed this report, you must still -
(a) Add requirements to Schedule "B" you find necessary from your analysis of the
present transaction,
surveys, prior title evidence and exceptions to Schedule B reflecting matters you
may have actual
knowledge of which are not already shown in Schedule "B".
(b) Review the transaction in accordance with criteria discussed in the Standard
Underwriting Risk section of the Underwriting Guide_
(c) If the amount of the policy(ies) to be issued exceed your agency limits, obtain
written authorization to issue the commitment from the Company. This report is
NOT authorization to issue the commitment.
This report has been furnished to you in a format that will allow for part of it to be used
as the inserts for the title insurance commitment to be issued. You will need to
complete Schedule A as well as add any additional requirements you deem necessary as
a result of the above. You must keep a copy of the entire report in your file.
This report consists of the following:
This leader sheet
Schedule A
Schedule B - Section 1
Schedule B - Section 2
NOTE: Personal property tax information has NOT been searched.
THIS REPORT IS PROVIDED FOR THE SOLE PURPOSE OF THE ISSUANCE OF A
CHICAGO TITLE INSURANCE COMPANY COMMITMENT AND POLICY BY THE
ADDRESSEE AS AUTHORIZED BY THE COMPANY. THE COMPANY DISCLAIMS
LIABILITY TO THE ADDRESSEE OR ANY THIRD PARTY IN THE EVENT THIS
INFORMATION IS USED FOR A PURPOSE OTHER THAN AS STATED.
STATUS 6199 S8
{
CHICAGO TITLE INSURANCE COMPANY
CHICAGO TITLE INSURANCE COMPANY
REPORT TO AGENTS ON STATUS OF TITLE
Date: September 12. 2002 Albert V. Roth, Esq_
Exhibit 4.1.2
Environmental Condition Acceptance Notice
GY&S/208223.16
ENVIRONMENTAL CONDITION ACCEPTANCE NOTICE
Reference to made to that certain Agreement to Enter into Ground Lease between
The City of Miami, Florida ("City"), and Flagstone Island Gardens LLC, a Delaware
limited liability company ("Flagstone"), having an effective date of January 1, 2003 (the
"Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have
the respective meanings given to them in the Agreement.
Pursuant to Section 4.1.2 of the Agreement, Flagstone hereby gives notice to City
as follows:
(i) Flagstone has inspected the environmental condition of the Property prior
to the expiration of the Inspection Period pursuant to Section 4.1.1 of the
Agreement; and
(ii) The environmental condition of the Property is satisfactory to Flagstone.
FLAGSTONE ISLAND GARDENS LLC,
a Delaware limited liability company
By:
Name:
Title:
565033v1
Exhibit 4.13
Investor List
1. Flagstone Island Gardens LLC
2. Mehmet Bayraktar
GY&S/208223.16
Exhibit 4.1.4
List of Organizational Documents
GY8 S/208223.16
LIST OF ORGANIZATIONAL DOCUMENTS
1. Certificate of Formation of Flagstone Island Gardens, LLC dated December 4,
2002, filed on December 9, 2002 with the Secretary of State, State of Delaware.
2. Certificate of Merger of Flagstone Properties, LLC (a Florida limited liability
company) and Flagstone Island Gardens, LLC (a Delaware limited liability
company) dated December, 2002, whereby Flagstone Island Gardens, LLC is
designated as the "Surviving LLC", together with: (i) Articles of Merger dated
December, 2002; (ii) Plan of Merger dated December, 2002; (iii) Consent of Sole
Member of Flagstone Properties, LLC dated December, 2002; and (iv) Consent of
Sole Member of Flagstone Island Gardens, LLC dated December, 2002.
3. Operating Agreement dated December 2002.
NOTE: Articles of Organization for Flagstone Properties, LLC were filed on May 24,
2002 with the Secretary of State, State of Florida.
565095v1
MIADOCS 560024vl
Exhibit 4.1.5
Expressions of Interest
GY&S/208223.16
HSBC �;
December 3, 2002
Mr. Mehmet Bayraktar
Chairman of the Board
Flagstone Properties LLC
201 South Biscayne Boulevard
Suite 2828
Miami, FL 33131
Dear Mehznet,
HSBC Securities (USA) Inc. has been serving for the past twelve months as Financial
Advisor to Flagstone Properties in connection with its Island Garden project at Watson
Island. Together with our sub -advisor partner, Holliday Fenoglio Fowler, LP, we have
been actively engaged in all aspects of the project including Flagstone's discussions with
the City, the company's outside development team and your specialists for this marina,
hotel and retail project. Based on the agreements with the City about to be signed, the
project's business plan and our market evaluation, we are confident that the Project's debt
and equity requirements can be raised within the established timeline (assuming
reasonably normal market conditions).
It's been a pleasure working with you and the Flagstone team on this landmark project.
Respect?lly,
Charles H. Columbus
HSBC Securities (USA) lac.
452 Fifth Avcauc, New York, NY 10018
Telephone (212) 525-5000
ZO/ZO'd ZV:9t Z0. V Sat
V68S--SZ8—ZIZ:x2d 'DPII (eSfl)'oaS 08SH
Exhibit 4.2.2
Binding Letter from DCA
GY&S/208223.16
4-a/A3
"
STATE OF FLORIDA
DEPARTMENT OF COMMUNITY AFFAIRS
"Dedicated to making Florida a better place to call home"
JEB BUSH
Governor
November 15 , 2002
Judith A. Burke, Esquire
Shuns and Bowen, LLP
1500 Miami Center
201 South Biscayne Boulevard
Miami, FL 33131
STEVEN M. SEIBERT
Secretary
a
(v
-a
0
301J:10 S)J3OVNTW A110
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
1. 1'he 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 S HU M A RD OAK BOULEVARD • TALLAHAS S EE, FLORIDA 32399-2 100
Phone: 850.488.8466/Suncom 278.846S FAX: 850.921.0781/Suncom 291.0781
Internet address: http :/www.dca.state.fl.us
CRITICAL STATE CONCERN FIELD OFFICE
2796 Overseas Higlwvay. Sine 212
Marathon. FL 3: `g3-2227
(305)269-2402
COMMUNITY PLANNING EMERGENCY MANAGEMENT
2555 Snumard Oak Boulevard 2555 Sihumara Oak 6oulnrard
Tatiana:se, FL 32399-2103 Taaanaasee:FL 32399-2100
(650)466d35e " ma) 413 9969
HOUSING i COMMUNITY DEVELOPMENT
2555 Shumara Oak Boulevard
Taeanassee. FL 32399-2100
te50) 466.7956
3
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 1 1, 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 Miarni ("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 req+fired 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.
2
10. In 1990, Miami -Dade County instituted a Marine
program. Every year since the inception of the program,
forty-three (43) commercial vessels.
11. The submerged land is unplatted. No subdivision
between August 1, 1967 and July 1, 1973_
Facilities Operating Permit ("MOP")
the Marina had received an MOP for
plats were approved for development
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.
Demolition of the existing Marina and subsequent construction of the Project on the subject site
will retain vesting from DRI review.
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. R. •pnari As ant General Counsel, at (850) 488-0410.
Since
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 ,receipt . which is hereby
ackn
Paula P. Ford
Agency Clerk
4
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 itmust 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 t1-1
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
Exhibit 4.2.6
Existinz Occupants
l . John J. Waterman ('Blue Sea II" - 2 vessels) - slips 36 & 37
2. Laiaro Sanchez (Casablanca Seafood - 5 vessels) - slips 23, 25, 26, 27 & 28 — "Fish Market"
3. IneIda 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
Exhibit 53
Escrow Agreement
i
GY&S/208223.16
Exhibit 6.1.4
Pre -Approved Candidates for Development Team
• Eric Kuhne & Associates
• Spillis Candella
GY&S/208223.16
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
Exhibit 5.5.1
Existing Marina Permit
GY&S/208223.16
MIAMI-DADE COUNTY, FLORIDA
MIAM3
PRISM 1 NO; MOP-000306-20Q2/2003 (B) -OBN
WAr3OX IsLAsn XA DU
1220 101C ARTHUR CSNY
1[SamT, 7L 33132-
PESHITTYZt
Mr. Stephen E Bogner
CITY Or )41).l I I[IAXARI A AT BAYSIDE
401 BISCAYNE BLVD
NIANI, 7L 33132-
ENVIRONMENTAL RESOURCES MANAGEMENT
NATURAL RESOURCES DIVISION
' 33 S.W. 2nd AVENUE
MLAMI, FLORIDA 33130-1540
(305) 372-6864
FAX (3051.372-6630
MARINE FACILITIES
ANNUAL OPERATING PERMIT
C)
DESCRIPTION Or FACILITY/BQ3IPFTRT
This document. issued under tbe'provisions of Chapter 24, Miami-)ade County Code (Ordinance Number
89-104), shall be valid from 01-OCT-2002 through 30-SEP-2003. The above named pernittee. is hereby
authorized to operate the a urine facility at the above location which consists of the following:
Commercial Facility.
Commercial vessel. operations with morethan 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
his 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:earine facility shall be. enforced..
3. All. fixed or floating non -water dependent structures in, on, over,
previously approved by a Class I permit. are prohibited.
or upon tidal waters, unless
4. All permanent sewage pumpout systems and -portable pumpout systems required at this facility
pursuant to DERN, 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 1 or 2 flow -through marine sanitatioa.devices. All vessel occupants shall use shoreside
facilities unless the vessel is equipped with a Coast Chard 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 -Dada County
Department of Envirn.+ -"te1 Resource• 2feaaS�Yit
John m. x milli7'4
P-E., D
ctOr
Page 1 of 2
prohibited.
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, boons. and
sweeps and shill 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 vesselbeing 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 passible 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.
czNERAL co]nrrioas
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 ah.11 immediately notify and
provide the department with the following information: (a) a description of and cause of
non-compliance; arid (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.
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 righti 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.
Page 2 of 2
Exhibit 12.2
Permitted Title Exceptions
1
GY&S/208223.16
PERMITTED EXCEPTIONS
Bulkhead line as shown on the plat recorded in Plat Book 74, Page 4.
2. Oil, gas and mineral reservations as 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 under Clerk's File No. Y-29610. Note: The right of entry has been
released pursuant to [TO BE FILLED IN).
3. Agreement for Water Facilities recorded March 13, 1998, in Official Records Book
18016, Page 2892.
4. Agreement for Sanitary Sewage Facilities recorded April 14, 1998, in Official
Records Book 18058, Page 112.
5. Resolution No. 98-23, recorded January 19, 1999, in Official Records Book 18699,
Page 1236.
6. Easement in favor of the United States of America set forth in that Grant of Easement
for Miami Harbor Tuming Basin, recorded April 22, 1963, in Official Records Book
3622, Page 751.
7. Perpetual Easement in favor of Florida Department of Transportation recorded March
13, 1998 in Official Records Book 18018, Page 1181.
NOTE: All recording references are as to the Public Records of Miami -Dade County,
Florida.
562E72-1
CLOSING DOCUMENTS CHECKLIST
BORROWER: FRIEDKIN-MEDLEY, LLC
GUARANTORS: MONTE FRIEDKIN, BENADA ALUMINUM OF FLORIDA
INC., BENADA ALUMINUM OF MINNESOTA, INC. and
CLASSIC OPTICAL LABORATORIES, INC.
LENDER: POINTE BANK
LOAN AMOUNT: $1,500,000.00 (not to exceed 70% of appraised value)
TRANSACTION: Mortgage Loan (5 year term)
PROPERTY: 8800 NW 79 Avenue, Miami, FL
CLOSING DATE: , 2004
I. DOCUMENTS TO BE FURNISHED BY BORROWER PRIOR TO CLOSING
X
X
X
X
X
X
X
1. Organizational Documents of Borrower
a. Articles of Organization
b. Operating Agreement
c. Florida Good Standing Certificate
2. Organizational Documents of Benada Aluminum of Florida Inc.
a. Articles of Incorporation
b. Florida Good Standing Certificate
3. Organizational Documents of Benada Aluminum of Minnesota Inc.
a. Articles of Incorporation
b. Good Standing Certificate
4. Organizational Documents of Classic Optical Laboratories Inc.
a. Articles of Incorporation
b. Good Standing Certificate
5. Organizational Documents of Benada Aluminum of Minnesota, Inc.
a. Articles of Incorporation
b. Good Standing Certificate
6. Copy of Existing Title Insurance Policy
7. Current As Built Survey, certified to Lender
MIADOCS 687685 1
3. Estoppel (Pay -Off) Letter re: Existing Mortgage Balance
Proof of Payment of 2003 real estate taxes on mortgaged property
10. Zoning Certification Letter
11. Flood Hazard Determination Letter
12. Certificates of hazard, windstorm, business interruption and liability
insurance
13. Certificate of flood insurance, if applicable
14. Copies of all leases
15. UCC-11 Search (Florida) as to Borrower
MIADOCS 687685 I
-2-
Prepared Executed
1. Appraisal
1I. LOAN DOCUMENTATION:
1. Commitment Letter
2. Promissory Note
3. Mortgage and Security Agreement
4. Collateral Assignment of Rents and Leases
5. Guaranty Agreements (4)
6. Subordination of Lease (Benada Aluminum of Florida Inc.)
7. Title Insurance Policy and Form 9 endorsement
8. UCC-1 Financing Statements
9. Owner's No -Lien Affidavit
10. Borrower's and Guarantors' Counsel Opinion Letter
11. Insurance Anti -Coercion Affidavit
12. Borrower Resolution (Partnership Affidavit)
13. Resolutions of Corporate Guarantors
14. Insurance Anti -Coercion Statement
15. Environmental Compliance and Indemnification Agreement
16. Loan Closing Statement
III. DOCUMENTS TO BE OBTAINED BY LENDER:
2. Environmental Audit
MIADOCS 687685 I
-3-