HomeMy WebLinkAboutSubmittal-Commissioner Ken Russell-Referendum Question and Ground LeaseSubmitted into the publi�c
record f r it (s) `1�, 1
on 5� jb I n . City Clerk
"OFFICIAL BALLOT
SPECIAL MUNICIPAL ELECTION
TUESDAY, NOVEMBER 6, 2001
FOR APPROVAL OR DISAPPROVAL OF THE
FOLLOWING BALLOT QUESTION
'53
I
/(0
Ballot Question No. 2
authorizing 45-year
lease of City -owned
upland/submerged land
on Watson Island.
YES
(For the Measure)
NO
(Against the Measure)
"Shall the City lease City -owned
land consisting of 24.2 total
upland and submerged acres on
Watson Island to Flagstone
Properties, LLC, for development
of a mega yacht marina, fish
market, hotels with timeshare
units, a maritime museum, public
gardens, cultural facilities,
restaurants, retail and support
facilities, for 45 years with
two 15-year renewals, subject
to capital investment,
subject to a minimum annual
guaranteed rent of $2,000,000
and other conditions the City
may require?"
Section 7. Electors desiring to vote for the approval
of Ballot Question No. 2 described above, shall be instructed to
punch straight down with the stylus through the hole next to the
word "YES" within the ballot from containing the statement
relating to said Question. Electors desiring to vote against
the question in disapproval of said Question, shall be
instructed to punch straight down with the stylus through the
Page 7 of 901— 7
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Submitted into the public
recordfc�ter(s) Sp,'
on II ho I fl . City Clerk
AMENDED AND RESTATED
AGREEMENT TO ENTER INTO GROUND LEASE
DATED AS OF FEBRUARY 1, 2010
(AMENDING AND RESTATING AGREEMENT
TO ENTER INTO GROUND LEASE
BETWEEN
THE CITY OF MIAMI, FLORIDA
AND
FLAGSTONE ISLAND GARDENS, LLC
DATED AS OF JANUARY 1, 2003)
ARTICLE 1
ARTICLE 2
2.1
2.2
2.3
ARTICLE 3
3.1
3.2
3.3
3.4
3.5
ARTICLE 4
4.1
4.2
4.3
ARTICLE 5
5.1
5.2
5.3
5.4
ARTICLE 6
6.1
6.2
6.3
ARTICLE 7
7.1
7.2
,;tted into the public.
sClv'�� o ite (s) 5� i�_ _—
on :5 (1��� , City Clerk
DEFINITIONS; INCORPORATION OF RECITALS, EXHIBITS
AND ATTACHMENTS; AND Ell±CTIVE DATE 6
NATURE OF THIS AGREEMENT; GROUND LEASE
ATTACHED; NEW CONSTRUCTION SCHEDULE, OPTIONS TO
EXTEND, NEW PAYMENTS SCHEDULE, RELATED DEFAULTS
AND NOTES REGARDING CONDITIONS RELATED THERETO 6
Nature of this Agreement; Term 6
Ground Lease(s) 7
New Construction Schedule, New Payments Schedule, Options to Extend,
Related Defaults, and Notes Regarding Conditions Related Thereto 7
INSPECTION PERIOD 8
Termination of Access and Indemnification Agreement 8
Inspections 8
Environmental Inspections
Indemnification
Insurance
AGREEMENT CONDITIONS AND DELIVERIES
Flagstone's Acknowledgments and Deliveries
Other Conditions and Deliveries
Outside Date
SECURITY DEPOSITS
Security for the Easements
Security Deposit for the Construction Rent/Base Rent
Deposits; Letters of Credit
Security for Hold Harmless and Indemnification and Security Provisions
EXECUTION AND DELIVERY OF GROUND LEASE(S)
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10
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15
15
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Conditions Precedent to Execution and Delivery of Each of the Ground Leases 17
Special Additional Conditions Precedent with Respect to Component by
Component Development 23
Outside Dates 24
DEVELOPMENT OF PROJECT 24
Development Plans 24
Use and Ownership of Development Plans and Permits and Approvals in the
event of Termination 24
7.3 Platting and Other Development Matters 25
Submitted into the public
record foilite s)
on 0 City Clerk
7.4 License(s)/Easements for Pre -Development Work 25
7.5 Indemnification and Waiver 26
7.6 Issuance to Flagstone of Marine Operating Permit for Existing Marina 27
7.7 Marina Approvals 28
7.8 Water and Sewer Agreement 31
ARTICLE 8 COORDINATION WITH CITY; APPROVAL PROCEDURES 31
8.1 Coordination with City 31
8.2 City Manager Approval Procedures 32
8.3 City Manager Approvals; Disclaimer 33
ARTICLE 9 DISCHARGE OF LIENS, JUDGMENTS, AND GARNISHMENTS 34
9.1 No Liens Judgments and Garnishments 34
9.2 Discharging Liens Judgment and Garnishments 34
9.3 Hold Harmless and Indemnification Agreement 35
ARTICLE 10 CONDEMNATION 35
10.1 Material Taking 35
10.2 Less than a Material Taking 35
10.3 Award 36
ARTICLE 11 DEFAULT AND REMEDIES; TERMINATIONS 36
11.1 Events of Flagstone's Default 36
11.2 Remedies for Flagstone's Default 37
11.3 City's Default 37
11.4 Terminations 38
ARTICLE 12 REPRESENTATIONS BY FLAGSTONE AND CITY; DEFENSE
AND RELEASE 38
12.1 Flagstone's Representations 38
12.2 City's Representations 39
12.3 Disclaimer of Representations by Flagstone 39
ARTICLE 13 MISCELLANEOUS 40
13.1 Assignment 40
13.2 Notices 41
13.3 Applicable Law 41
13.4 Severability 41
13.5 Waiver/Deferral 41
Subrittckdinto the public
record f iten (s) �
on 3���j) f . City Clerk
13.6 No Third -Party Beneficiary 41
13.7 Enforcement Costs 41
13.8 Entire Agreement 42
13.9 Headings 42
13.10 References 42
13.11 Brokers 42
13.12 No Partnership or Joint Venture 42
13.13 Counterparts 43
13.14. Jurisdiction and Venue ... ... ... ...... 43
13.15 Waiver of Jury Trial...................................................................... 43
13.16 No Conflicts of Interest.. ... .43
Submitted into the public
record fol. ite (s) SV,
on 6I It/ Il . City Clerk
AMENDED AND RESTATED
AGREEMENT TO ENTER INTO GROUND LEASE
DATED AS OF FEBRUARY 1, 2010
OF
(AMENDING AND RESTATING AGREEMENT TO ENTER INTO GROUND LEASE
DATED AS OF JANUARY 1, 2003)
The CITY OF MIAMI, FLORIDA, a municipal corporation of the State of Florida
("C"), and FLAGSTONE ISLAND GARDENS, LLC, a Delaware limited liability company,
which is successor by merger to Flagstone Properties, LLC, a Florida limited liability company
("Flagstone"), hereby enter into this Amended and Restated Agreement to Enter Into Ground
Lease as of February 1, 2010 (the "Effective Date") of the Agreement to Enter Into Ground
Lease (the "Original Agreement to Enter"), dated as of January 1, 2003 (the "Original
Effective Date") as amended by the subsequent First Amendment, Second Amendment and
Third Amendment each as defined below (the Original Agreement to Enter, the First
Amendment, Second Amendment, Third Amendment and this Amended and Restated
Agreement to Enter Into Ground Lease and all of the exhibits, attachments, and riders to all of
the foregoing being collectively amended, restated and superseded by and referred to hereinafter
as 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 and with all addenda thereto, collectively, 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") for the development on the Property of a mega -yacht marina and related and other
upland facilities (the "Project"), and Flagstone was selected as the most qualified and responsive
and responsible bidder; and
WHEREAS, the City Commission pursuant to Resolution No. 01-972, adopted
September 17, 2001 and Resolution No. 01-1028, adopted September 25, 2001(both attached
hereto and made a part hereof as part of Composite Attachment 1), polled the electors of the
City of Miami regarding leasing the Property to Flagstone Island Gardens, LLC for the Project
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City Clerk
and on November 6, 2001, the Island Gardens Proposal was approved by voter referendum by
the electorate of the City of Miami (the "Referendum"), which Referendum granted Flagstone
the right to negotiate with City the terms and conditions by which Flagstone would develop and
ground lease the Property; and
WHEREAS, Flagstone Properties LLC subsequently merged with Flagstone Island
Gardens, LLC ("Flagstone") and pursuant to City Commission Resolution No. 02-1304 adopted
December 12, 2002, the City and Flagstone previously entered into the Original Agreement to
Enter for the development and ground lease of the Property, subject to the terms and conditions
contained therein and subsequently amended those terms and conditions (a) pursuant to City
Commission Resolution No. 04-0558, adopted September 9, 2004, authorizing the First
Amendment to Agreement to Enter Into Ground Lease and Amendment to Form of Ground
Lease, dated December 12, 2004 (the "First Amendment"), (b) pursuant to City Commission
Resolution No. 06-0674, adopted November 9, 2006, authorizing the Second Amendment to
Agreement to Enter Into Ground Lease, dated December 8, 2006 (the "Second Amendment"),
and (c) pursuant to City Commission Resolution No. 08-0350, adopted June 12, 2008 authorizing
the Third Amendment to Agreement to Enter Into Ground Lease, dated July 30, 2008 (the "Third
Amendment"); and
WHEREAS, Flagstone has requested in accordance with the Watson Island RFP and the
Island Gardens Proposal, among other things, for the development of the Property to occur at
Flagstone's option either on an entire Project basis or on a component by component basis, and
the City Commission has authorized pursuant to Resolution No. 10-0402, adopted September 23,
2010 (attached hereto and made a part hereof as part of Composite Attachment 1), certain terns
and conditions for, among other things, development of the Property on either an entire basis or
on a component basis and related ability for Flagstone to enter into either one ground lease or
multiple ground leases for different areas of the Property if and as may become necessary, all in
accordance with this Agreement; and
WHEREAS, the execution of this Agreement on behalf of Flagstone has been authorized
by Flagstone, which authorization is attached hereto and made a part hereof as Attachment 2,
and is consistent with Flagstone's governing documents; and
WHEREAS, this Agreement (a) now amends and restates the Original Agreement to
Enter, the First Amendment, the Second Amendment, the Third Amendment, and all exhibits,
attachments, and riders to the foregoing, (b) adds certain new terms and conditions, and
modifications agreed to by the City and Flagstone which are consistent with the RFP, the Island
Gardens Proposal, and the Referendum, and (c) is intended to fully and completely supersede,
replace, and restate the Original Agreement to Enter, the First Amendment, the Second
Amendment, the Third Amendment, and all exhibits, attachments, and riders to the foregoing
including, but not limited to the form of Amended and Restated Ground Lease(s) (hereinafter
the" Ground Lease(s)") as set forth below; and
NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by the parties, City and Flagstone agree as
follows:
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ARTICLE 1
DEFINITIONS; INCORPORATION OF RECITALS, EXHIBITS AND
ATTACHMENTS, AND EFFECTIVE DATE
The foregoing Recitals are true and correct and are incorporated herein by this reference.
All attachments and exhibits to this Agreement are incorporated herein and made a part hereof
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 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
February 1, 2010. 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(s)
attached hereto as Exhibit C.
ARTICLE 2
NATURE OF THIS AGREEMENT; GROUND LEASE ATTACHED; NEW
CONSTRUCTION SCHEDULE, OPTIONS TO EXTEND, NEW PAYMENTS
SCHEDULE, RELATED DEFAULTS, AND NOTES REGARDING CONDITIONS
RELATED THERETO
2.1 Nature of this Agreement; Term.
2.1.1 This Agreement constitutes an agreement to enter into one or more ground
lease(s) in order for Flagstone to have the option to accomplish the development of the Property
all at once or on a component by component basis 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.
2.1.2 Term. The term of this Agreement shall commence upon the Effective Date and,
unless sooner terminated by the terms hereof (except for any provisions hereof that expressly
survive such earlier termination), continue until (a) the execution of one Ground Lease if
Flagstone determines to develop the Project on the Property all at once, or (b) until the execution
of the last of all Ground Leases relating to Major Project Components if Flagstone determines to
develop the project on a component by component basis.
2.1.3 Before entering into any Ground Lease(s), whether all at once or on a component
by component basis, Flagstone must meet any and all conditions precedent, as stated in this
Agreement, for construction of the related Major Project Component(s). The last day which can
be the Lease Delivery Date for each Major Project Component shall be as follows: (a) for the
Marina Component, September 1, 2013, (b) for the Parking/Retail Components, September 1,
2016, (c) for any of the Hotel Components (if no option to extend the commencement of
construction is exercised), September 1, 2018, (d) for the Hotel Components (if the first five-year
option to extend the commencement of construction is exercised), September 1, 2023, and (e)
for the second Hotel Component (if the second five-year option to extend the commencement of
construction is exercised), September 1, 2028; Construction of any Major Project Component
must commence for that Component at the earlier of ninety (90) days after the applicable Lease
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Delivery Date and the construction commencement dates set forth for each Major Project
Component in Composite Attachment 3.
2.1.4 In no case shall this Agreement continue beyond August 31, 2018, unless
Flagstone has exercised one or both of its five-year options to extend the commencement of
construction of one or both of the Hotel Components as set forth in Composite Attachment 3
described in Section 2.3 below and in such event pursuant to Composite Attachment 3, (i)
should Flagstone exercise only the first 5-year option to extend, then the term of this Agreement
shall expire on August 31, 2023, and (ii) should Flagstone exercise both the first and the second
5-year options to extend, then the term of this Agreement shall expire on August 31, 2028.
2.2 Ground Lease(s). Attached as Exhibit C is the Amended and Restated form of
Ground Lease(s) (as such may remain as one ground lease or may be divided into separate
ground leases, at Flagstone's option) which (i) the parties have fully negotiated and approved,
(ii) has been approved by the City Commission at a regularly scheduled meeting, (iii) has been
approved by Flagstone, and (iv) the parties intend to execute and deliver to each other, subject to
the satisfaction, waiver, or deferral of the conditions precedent set forth in ARTICLE 4 and
ARTICLE 6 of this Agreement in connection with development of the Property all at once or on
a component by component basis.
2.3 New Construction Schedule. New Payments Schedule, Options to Extend. Related
Defaults, and Notes Regarding Conditions Related Thereto.
2.3.1 Attached as Composite Attachment 3 are the New Construction Schedule,
Options to Extend, Defaults, and the New Payments Schedule and Notes Regarding Certain
Conditions Related Thereto which (i) the parties have fully negotiated and approved in order to
undertake the development of the Property on a component by component basis and to make
corresponding required payments to the City on a component by component basis, (ii) has been
approved by the City Commission at a regularly scheduled meeting, (iii) has been approved by
the authorized representatives of Flagstone as of February 1, 2010, and (iv) which the parties
intend to apply to both this Agreement and to each Ground Lease, including the form thereof
unless sooner terminated in accordance with the terms and conditions hereof (except for
provisions that expressly survive such termination).
2.3.2 Composite Attachment 3 Serves as Guideline for Business Terms: With
reference to Composite Attachment 3 attached and incorporated, the parties intend that as each of
the Amended and Restated Ground Lease(s) is prepared for execution, the parties' legal counsels
shall (i) utilize the form of Amended and Restated Ground Lease(s) attached hereto and
incorporated hereby as Exhibit C, (ii) consistent with the covenant of good faith and fair dealing
and consistent with the requirements of the RFP, the Island Gardens Proposal, and the City
Commission's authorizing Resolution No.10-0402, tailor such form of Amended and Restated
Ground Lease(s) so that it properly applies to the specific Major Project Component then being
ground leased, and (iii) incorporate the terms from Composite Attachment 3 as are relevant to
such Amended and Restated Ground Lease(s).
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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 was previously terminated in 2003 and is of no further force or
effect (except for any indemnification and confidentiality obligations which expressly survive
such termination).
3.2 Inspections.
3.2.1 Flagstone has performed, at Flagstone's sole cost and expense, all 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, or which are necessary for Flagstone's lenders, Flagstone has previously
provided for such Inspections conducted before the Effective Date of this Agreement and shall
provide, if any further Inspections (including any related access agreements for Inspections to be
conducted by Flagstone's lenders) need to be provided or conducted after the Effective Date of
this Agreement) at least three (3) business days prior written notice to the Director of Real Estate
and Public Facilities, City of Miami, at 444 S.W. 2nd Avenue, 3` 1 Floor, Miami, FL 33130,
Telephone: 305/416-1436, Facsimile: 305/416-2156 (or to such other City representative as
designated by City), which written notice provided or shall provide, as the case may be,
reasonable details regarding the type and scope of Inspection(s) performed or to be performed, as
the case may be, information for the related access agreement(s), and the scheduled date and
time of such Inspection and provided or shall provide, as the case may be, the City Manager 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.
3.2.2 Following any such Inspections, Flagstone restored or shall promptly restore, as
the case may be, 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 City Manager. The Inspections
conducted prior to the Effective Date of this Agreement were conducted and the future
Inspections conducted after the Effective Date of this Agreement shall be conducted in
accordance with all applicable laws utilizing licensed and insured professionals and Flagstone
did cause and shall cause, as the case may be, its inspectors to obtain, at Flagstone's sole cost
and expense, any and all licenses and permits required to conduct the Inspections, as applicable.
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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 were performed and shall be performed, as the
case may be, by those certain environmental firm(s) 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 City Manager, which
may be given or withheld in his or her sole and absolute discretion.
3.3.2 Flagstone did not, and shall not, perform any invasive environmental tests (such
as drilling or soil or groundwater testing) unless the City Manager 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 resuhs 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 assumes all risks associated with the Inspections done or
to be done in the future 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. attomey'.s feesand 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 relieve Flagstone from liability if Flagstone, its agents,
employees, contractors or other representatives cause(s) 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 provide an updated Certificate of Insurance prior to the
execution of this Agreement, to be attached hereto as part of Composite Exhibit 3.5 and shall in
the future, prior to entering the Property and performing any Inspections, provide to City
evidence of insurance by Flagstone and its contractors, as applicable, as specified in Composite
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,
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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.
4.1.1 Acceptance of Property. Flagstone acknowledges that it 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 subject to the Amended Partial
Modification of Restrictions as defined in Section 4.2.5 below and, and subject to any updates to
the Title Commitment (such updates to be paid by Flagstone), 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 or in this subsection.
4.1.2 Environmental Condition Acceptance Notice. Flagstone
acknowledges that on or before the expiration of the Inspection Period, Flagstone executed and
delivered to the City the "Environmental Condition Acceptance Notice", dated March 10, 2006,
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 (bb) 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").
4.1.3.1 As required by the RFP, the Island Gardens Proposal, and as set
forth in the form of Ground Lease(s) attached hereto as Exhibit C, Flagstone acknowledges and
agrees that Mehmet Bayraktar and/or the qualified members of the Bayraktar Family shall at all
times retain voting and beneficial control of Flagstone for the time periods required. The City
shall have the right, in its sole discretion, but not the obligation, upon the request of Flagstone, to
allow some other disqualified Disclosed Investor to have such voting control. 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
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the responses to the questions in the Investor Questionnaire and such other due diligence the
Financial Advisor may perform in the normal course of its fiduciary duties, the Financial
Advisor shall determine, in its good faith, commercially reasonable judgment, whether or not
such Disclosed Investor is a Disqualified Person. Financial Advisor shall not propose to the City
any Disclosed Investor which it has concluded is a Disqualified Person. Furthermore, the City
itself shall have the right to object to any Disclosed Investor if it determines in its good faith
commercially reasonable judgment that such Disclosed Investor is a Disqualified Person. The
parties acknowledge and agree that no Disqualified Person shall hold a legal or beneficial interest
in the Project.
4.1.4 Organizational Documents. As of the Effective Date, the documents
listed in Exhibit 4.1.4 attached hereto constitute all of the existing organizational documents of
Flagstone, including, without limitation, any operating and/or voting agreements among the
members thereof (collectively, the "Organizational Documents"), and Flagstone has provided
to the City Manager true, correct and complete copies of all such Organizational Documents.
Flagstone shall promptly provide City written notice of any amendments, modifications,
additions or terminations of the Organizational Documents, together with written copies thereof.
The member(s) or other Investor(s) of Flagstone shall not enter into any voting agreements the
effect of which would cause Mehmet Bayraktar and/or other qualified members of the Bayraktar
Family, to become contrary to the form of Ground Lease(s) (which was prepared in accordance
with requirements of the RFP and the Island Gardens Proposal), 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. The Original Agreement to Enter had
attached to it as Exhibit 4.1.5 a letter to the City from Flagstone's then Financial Advisor and
Holiday Fegnolio, which set forth in favor of the City that, based upon the Island Gardens
Proposal, the Original Agreement to Enter and the original form of Ground Lease attached
thereto as Exhibit C, such parties were highly confident that Flagstone would be able to raise its
Initial Equity Requirement, which together with the projected financing would be sufficient to
fully fund the development and construction of the Project Components as then contemplated as
well as the operation thereof through Project Stabilization as originally defined.
4.2 Other Conditions and Deliveries.
4.2.1 MUSP Approval. From and after the Effective Date and at no costs to
the City, Flagstone shall use good faith reasonable efforts to maintain in full force and effect the
approval of the Major Use Special Permit by the applicable governmental authority(ies) for the
Major Project Components. To date, Flagstone has obtained such Major Use Special Permit
approval as evidenced by Resolution No. 04-0462, adopted by the City Commission on July 8,
2004. Flagstone has subsequently requested and been granted modifications to said Major Use
Special Permit approval through "de minimus" non -substantial changes (such approval, as
modified from time to time, shall be referred to herein collectively as the "MUSP Approvar').
With reference to the existing MUSP Approval and any future modifications to the MUSP
Approval, the City shall reasonably and in good faith cooperate with such efforts, including,
without limitation, executing all applications jointly as owner, if necessary. Flagstone shall
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obtain written approval of the City Manager to any application for a modification for the Major
Use Special Permit 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 City Manager 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 any
other necessary modifications to the MUSP Approval or the MUSP Application, as applicable,
which result from any governmental or quasi -governmental process, provided that in no event
shall the City Manager 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. Prior to
the Possession Date for the first Ground Lease, Flagstone shall have submitted to and received
approval from the appropriate Governmental Authority for any MUSP Application, including but
not limited to any MUSP modification relating to the Major Project Component covered by such
Ground Lease.
4.2.2 NOPC Approval. Flagstone has obtained a determination dated June
21, 2004 from the State of Florida Department of Community Affairs ("DCA"), and shall use
good faith reasonable efforts to maintain in full force and effect such determination of the DCA,
that a "Notice of Proposed Change" ("NOPC") to the Downtown Development of Regional
Impact Increment II ("Downtown DRI"), which amends the Downtown DRI to: (i) add the
Marina as a new use thereunder, including the applicable simultaneous increase and decrease
from an existing land use category to account for any impacts of the Marina slips on traffic, if
necessary; and (ii) expand the boundaries of the Downtown DRI to include the Project (such
approval shall be referred to herein as the "NOPC Approvar'), would not result in a substantial
deviation under Chapter 380 of the Florida Statutes. The City has amended the Downtown DRI
in accordance with the NOPC to accommodate the Project. Flagstone has in the past obtained
and shall for any future submissions obtain written approval of the City Manager to any
application for a NOPC and for any continuation or modification requirements therefor
(collectively, "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 City Manager. Any
future changes to the NOPC Application or any other required approvals or continuations during
any future NOPC approval process, including, without limitation, any conditions that may be
imposed by DDA or DCA in connection therewith must be approved by the City Manager in
advance of the approval of the NOPC. The parties agree to use reasonable, good -faith efforts to
agree upon necessary modifications to the NOPC Application or any other required approvals or
continuations which result from any governmental or quasi -governmental process, provided that
in no event shall the City Manager 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 submitted the NOPC
Application to DCA for approval thereof in a timely manner and that for any future updates, if
and as applicable, Flagstone further agrees that it will make any required submissions in a timely
manner.
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4.2.3 MUSP/NOPC Application Date and Approval Date. The date of
the latter 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 latter 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. The parties acknowledge that
Flagstone and the City have previously executed four (4) counterpart originals of a "First Source
Hiring Agreement" (prepared by Flagstone) for the Project (which is referred to in Section 34.1
of the Ground Lease), which First Source Hiring Agreement (a) was in form and substance
reasonably acceptable to the parties and (b) shall continue to remain in full force and effect as
required by the RFP.
4.2.5 Partial Modification of Restrictions; Amended Partial Modification of
Restrictions.
(a) From and after the Original Effective Date, City used good faith
reasonable efforts(which shall in no event be deemed to have included any financial obligation
on the part of the City) and obtained 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 were not 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. Such Partial Modification of Restrictions was obtained by the City
March 2, 2005 and requires the State to approve the amended and restated form of Ground
Lease(s) attached to this Agreement.
(b) On March 25, 2010, the City -Commission pursuant to Resolution No. 10-
144 authorized the City to discuss the proposed amended and restated form of Ground Lease
with the Board of Trustees to determine whether any amendments would be necessary to the
Partial Modification of Restrictions. On August 16, 2011, the City obtained the required updated
approval (the Amended Partial Modification of Restrictions) from the Board of Trustees for the
form of Amended and Restated Ground Lease(s) attached hereto. On September 15, 2011
pursuant to Resolution No.11-0337, the City Commission authorized the City to enter into the
Amended and Restated Partial Modification of Restrictions with the Board of Trustees in
accordance with the Amended Partial Modification of Restrictions, Deed 19447-F. The
Amended Partial Modification, dated September 15, 2011 is attached hereto as Exhibit 4.2.5.
4.2.6 Removal of Existing Occupants. The parties acknowledge that the
existing occupants of the Property described on Exhibit 4.8 attached hereto (the "Existing
Occupants") have been removed from the Property. The City shall have no responsibility under
any agreements negotiated by Flagstone with 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) any such agreement between Flagstone and an
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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 entitlement
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.
4.2.8 Labor Peace Agreement. The parties acknowledge that this Agreement and
the Amended and Restated Ground Leases) are subject to the requirements of City Commission
Resolution No. 09-0263, adopted May 28, 2009 (attached hereto and made a part hereof as
Attachment 4).
4.3 Outside Dates. As set forth in Section 2.1.3, the parties agree and acknowledge
that certain outside dates (collectively, the "Outside Dates") are established for the
commencement of construction of each Major Project Component on Composite Attachment 3,
so that when 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 or other required time periods set forth in Composite Attachment 3
regarding the New Construction Schedule, the Options to Extend, the New Payment Schedule
and the Notes Regarding Conditions Related Thereto) the longest possible term for this
Agreement shall not continue beyondAugust 31, 2028 for both (i) the date for entering into the
last Ground Lease(s) for the final Major Project Component(s) (the "Final Possession Date")
and (ii) the start of construction for all of the Components (the "Final Construction
Commencement Date"). 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 August 31, 2028.
ARTICLE 5
SECURITY DEPOSIT
5.1 Security for the Easements. The parties acknowledged that the City has previously
delivered to Flagstone certain easements or licenses referred to in Section 7.4 hereof as set forth
in Exhibit 7.4.1 (collectively, the "Easements"). Prior to the execution and delivery of this
Agreement by City to Flagstone, Flagstone shall either (a) deliver the amount of Thirty -Five
Thousand and No/100 Dollars ($35,000.00) (the "Easement Deposit") to Escrow Agent or (b)
provide to City, at Flagstone's sole cost and expense, a Letter of Credit in the amount of Thirty -
Five Thousand and No/I00 ($35,000.00) (the "Easement Security LOC"). Notwithstanding the
foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of Credit so
long as the easement deposit equals Thirty -Five Thousand and No/100 Dollars ($35,000.00) in
the aggregate. The Easement Deposit or the Easement Security LOC, as applicable, shall
hereinafter be referred to as the "Easement Security" and shall provide security for the faithful
performance by Flagstone of all of the provisions of the Easements to be performed or observed
by Flagstone.
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5.2 Security Deposit for the Construction Rent/Base Rent. Prior to execution of the
Agreement to Enter, Flagstone shall either (a) deliver the amount equal to one year's
Construction Rent/Base Rent as defined in Section 5.2 to the Escrow Agent, or (b) provide to
City, at Flagstone's sole cost and expense, a Letter of Credit in the amount equal to one year's
Construction Rent/Base Rent as defined herein. Notwithstanding the foregoing, Flagstone shall
be permitted to utilize any combination of cash or Letter of Credit so long as the Security
Deposit for the Pre -Paid Construction Rent/Base Rent equals the amounts defined in the
aggregate. The Security Deposit for the Construction Rent/Base Rent, shall herein after be
referred to as the "Security Rent Deposit" and shall provide security for the faithful
performance by Flagstone of all rent payment provisions of this Agreement to be performed or
observed by Flagstone. During the periods outlined below, Flagstone shall deliver the Security
Rent Deposits as defined below:
Commencing
Annual Amount Required for Rent
Security Deposit
October 1, 2010
$300,000
October 1, 2011
$500,000
October 1,2012
$750,000
October 1, 2013
$1,000,000
October 1, 2014
$1,000,000
October 1, 2015
$1,000,000
October 1, 2016
$1,500,000
October 1, 2017
$1,675,000
October 1, 2018
$2,000,000
Any LOC Deposit held by the Lessor or Cash Deposit held by Escrow Agent, as defined in this
Agreement as security under this Agreement to Enter into Ground Lease may be credited toward
the following year's Security Rent Deposit. The annual amount due on October 1, 2018 of
$2,000,000 shall remain in effect for the life of the Agreement to Enter and of the Ground
Lease(s), in accordance with the schedule listed in this Section 5.2. If an Event of Lessee's
Default for non-payment of rent 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 Rent 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
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Security Rent Deposit, Lessee shall, within thirty (30) days after written 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 Rent Security Deposit
by an equivalent amount.
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 as set forth in Exhibit 5.3 (the
"Escrow Agreement"), which Escrow Agreement shall be executed by City, Flagstone and
Escrow Agent simultaneously with the execution of the this Agreement in connection with the
Easements and shall continue for Additional Security to be deposited under the Escrow
Agreement upon the execution of the first Ground Lease and additional security deposits upon
the execution of any and all additional Ground Leases. 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 throughout the term of the related Ground Lease(s), unless the Easements
and the related Ground Lease(s) are otherwise terminated.
5.4 Security for Hold Harmless and Indemnification and Security Provisions under
Attachment 3. Flagstone shall also comply with the provisions of Section IX of Attachment 3
hereto, and Section 9.3 of this Agreement regarding Security Deposit(s) required regarding any
lawsuits, pending against the City relating to any Lien(s) on the subject Property.
ARTICLE 6
EXECUTION AND DELIVERY OF GROUND LEASE(S)
6.1 •Conditions Precedent to Execution and Delivery of Each of the Ground Leases.
Within fifteen (15) days after the satisfaction of all of the following conditions precedent
applicable to a Major Project Component (or the written waiver or deferral by the City Manager
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 each of
the Ground Leases for that Major Project Component (or one Ground Lease for all Major Project
Components, at Flagstone's election), in form and substance attached hereto as Exhibit C for
delivery to each party hereunder and in accordance with the Outside Dates for the respective
Lease Delivery Dates as set forth in Section 2.1.3 above. The parties acknowledge that the Major
Project Components of the Project may be developed and constructed by Flagstone on a Major
Project Component by Major Project Component basis (i.e. with the Marina Component alone
possibly being the first Major Project Component to be constructed). If Flagstone develops and
constructs on a component by component basis, then (a) all of the conditions set forth in this
Article 6 shall be satisfied on a component by component basis in full for the applicable Major
Project Component being developed or, as applicable, deferred by the City Manager on a
component by component basis, and (b) at the election of Flagstone or its lenders one Ground
Lease or separate Ground Leases shall be executed and delivered by the City and the form of
Ground Lease in Exhibit C shall be revised as necessary to apply only to the Major Project
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Component being developed, and (c) the provisions of this Agreement that have not been
satisfied with respect to all Major Project Component(s) shall continue to survive until such time
as satisfied in order for Flagstone to enter into one or more Ground Leases for the development
of such remaining Major Project Component(s). For any Major Project Component for which the
conditions precedent have been satisfied in order to enter into one or more Ground Leases, then
the provisions of this Amendment shall terminate (except for those provisions expressly
surviving) and the applicable Ground Lease shall control. Within a reasonable time after
Flagstone believes that it has satisfied each condition precedent of this Article 6, Flagstone shall
notify the City in writing and the City shall have thirty (30) calendar days to acknowledge in
writing whether the City agrees or disagrees that such condition precedent has been satisfied.
Flagstone agrees to use diligent good -faith efforts to cause the satisfaction of the conditions
precedent set forth in this Section 6.1 prior to the Lease Delivery Date for the applicable Major
Project Component either all at once or on a component by component basis, at Flagstone's
option regarding which development course to choose, and Flagstone shall promptly provide to
the City Manager, from time to time, such written documentation as may be reasonably
requested by the City Manager to evidence the same.
6.1.1 Construction Plans and Specifications. The City Manager shall have
received and approved in his or her good faith, reasonable discretion plans and specifications for
the development and construction of the applicable Major Project Component of the Project (the
"Construction Plans and Specifications") which shall be in sufficient detail in order for
Flagstone to obtain foundation permits, as applicable, for such Major Project Component(s)
being developed which Construction Plans and Specifications shall be in accordance with the
Project Approvals. Flagstone shall submit on a component by component basis, for each Major
Project Component, such Construction Plans and Specifications that shall contain sufficient
detail in order for the City Manager to determine, using the Schedule of Values, the proposed
Construction Budget and the GMP Contract(s) described in Section 6.1.6 hereof for each
component, that the Project can be completed (either all at once or on a component by
component basis, as applicable) 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, Mobil or similar (collectively, "AAA") hotel rating standards, within the
Construction Budget. Regarding the items to be included for the Marina Component, see Exhibit
E attached to the form of Ground Lease and Composite Attachment 3 attached hereto and made a
part hereof.
6.1.2 Closing of Construction Loa»t s): Other. For each Major Project
Component, flagstone shall have closed its Initial Construction Loan(s) with an Approved Initial
Construction Lender (as defined in the Ground Lease), which financing thereunder, together with
the amount of Initial Equity Requirement or more as Flagstone may determine to invest into the
same, applicable to the relevant Major Project Component(s), shall be sufficient to complete the
development and construction (either all at once or on a component by component basis at
Flagstone's option) of the applicable Major Project Component of the Project and to fund any
shortfalls in operations that may exist prior to Project Stabilization for such Major Project
Component. For each Major Project Component Flagstone shall provide the Chief Financial
Officer with a copy of the closed Initial Construction Loan documents as evidence of such
closing.
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6.1.3 Initial Equity Requirement. Flagstone shall have provided to the
City Manager written evidence satisfactory to the City Manager in his or her reasonable
judgment of the availability and/or the expenditure of the Initial Equity Requirement applicable
to the relevant Major Project Component(s) (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/or committed to be made by Flagstone or
its qualified Disclosed Investors and the loan proceeds to be funded in connection with the Initial
Construction Loan(s) for the relevant Major Project Component(s), is sufficient to complete the
development and construction) of the applicable Major Project Component and to fund any
shortfalls in operations that may exist prior to Project Stabilization for the relevant Major Project
Component(s). 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 execution date
of each Amended and Restated Ground Lease for the particular component being financed and
constructed at such time, 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. On either an all at once development basis or on a
component by component development basis, at Flagstone's option, Flagstone shall have (a)
obtained the prior written approval of the City Manager to the identities of all of the following
individuals and/or entities: (i) the lead architect which is coordinating preparation of the
conceptual and architectural plans for each of the applicable Major Project Components; (ii) the
lead landscape architect which is coordinating preparation of the landscape plans for each of the
applicable Major Project Components; and (iii) the construction manager(s) for the Project
and/or for each of the applicable Major Project Components, to the extent different (collectively,
the "Development Team") and (b) provided written evidence that binding agreements with each
of the members of the Development Team have been executed. Each member of the
Development Team shall be subject to the prior written approval of the City, which approval
shall not be unreasonably withheld and shall include, but not be limited to, the City's ability to
withhold its approval of any Disqualified Person. Flagstone shall be permitted to supplement the
Development Team with additional members without the prior consent of the City: provided,
however, any replacements of an approved member of the Development Team shall be subject to
the City's approval in accordance with the foregoing sentence. The City hereby approves the
Persons listed on Exhibit 6.1.4 attached hereto.
6.15 Operating Team. On either an all at once development basis or on a
component by component development basis, at Flagstone's option, Flagstone shall have (a)
obtained the prior written approval of the City Manager to the identities of the operator for each
of the Hotels (when the Hotel(s) Components are being developed and constructed) and the
Marina (when the Marina Component is being developed and constructed) within the Project (the
foregoing, together with Fairchild Tropical Garden and The Historical Museum of South Florida,
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shall be collectively referred to herein as the "Operating Team"), and (b) provided written
evidence that at the time of execution of the applicable Ground Lease(s) binding agreements
with each of the applicable 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,
Retail, and/or Parking Garage either directly or through an Affiliate thereof.
6.1.6 Construction Contracts. On either an all at once development basis
or on a component by component development basis, at Flagstone's option, Flagstone shall have
provided to and the City Manager shall have received and approved in his or her good faith,
reasonable discretion one (1) or more binding construction contract(s), whether guaranteed
maximum price, cost plus, construction manager at risk, or some other commercially reasonable
form (individually or collectively, the "GMP Contract") which individually or in the aggregate
provide for the development and construction of the applicable Major Project Component(s) in
accordance with the MUSP Approval (at a cost which shall not exceed the aggregate costs for
development and construction of the applicable Major Project Component(s) as set forth in the
Construction Budget), together with a "Schedule of Values" for the Project to be approved by the
City Manager in his or her good faith, reasonable discretion.
6.1.7 Construction Budget. On either an all at once basis or on a
component by component basis, at Flagstone's option, Flagstone shall have provided and the
City Manager shall have received and approved in his or her good faith, reasonable discretion the
budget setting forth in reasonable detail the anticipated costs of development and construction of
the applicable Major Project Component(s) (the "Construction Budget"). The Construction
Budget shall be submitted no later than 60 days prior to the Commission meeting date for
consideration of the respective Ground Lease(s).
6.1.8 Construction Schedule. Prior to the applicable Lease Delivery Date
for each Major Project Component, Flagstone shall provide to the City Manager evidence of all
necessary Project Approvals as described in Subsection 6.1.13 below, and the City Manager shall
receive and approve 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 City
Manager's approval; provided that Flagstone shall provide prompt advance written notice to the
City Manager of such acceleration.
6.1.9 Bonds/Letters of Credit. On either an all at once basis, or on a
component by component basis, depending upon Flagstone's option in determining whether to
enter into one or more Ground Leases, Flagstone shall deliver and the City Manager 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 bard construction costs of the applicable Major
Project Component(s), which shall name City as the owner or dual obligee, as appropriate. The
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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 City Manager,
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. On either an all at once basis or on a
component by component basis, depending upon Flagstone's option in determining whether to
enter into one or more Ground Leases for one or both of the Hotel Components, as applicable,
Flagstone shall have delivered and the City Manager 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 City Manager 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 attomment provision whereby the hotel
operator or franchisor agrees to attom to the City pursuant to a subordination, non -disturbance
and attornment agreement acceptable to the City Manager, 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 City Manager in his or her
reasonable discretion. Any such affiliated operator or franchisor shall execute a subordination
agreement reasonably acceptable to the City Manager.
6.1.11 Insurance. All insurance policies required to be maintained by
Flagstone under the Ground Lease(s) (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.
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(a) The Partial Modification of Restrictions, MUSP Approval, NOPC Approval
and foundation permits for each applicable Major Project Component(s) (the "Foundation
Permits") shall have been issued by the applicable Government Authorities for the development
and construction of the applicable Major Project Component(s) (collectively, the "Project,
Approvals"). The Project Approvals shall not be deemed to have been issued unless and until
any and all appeals periods as provided by law shall have, expired without an appeal, objection
or challenge having been filed, or, if filed, when such objection, challenge or appeal has been
dismissed or resolved finally and conclusively to the satisfaction of the City Manager in his or
her reasonable judgment.
(b) Flagstone shall (i) obtain and provide to the City Manager the Florida
Department of Transportation Approvals ("FDOT Approvals") and City Approvals for site utility
work for each of the Major Project Components on a component by component basis as
necessary and as approved by the City and as required by the Master Declaration as a condition
precedent to executing the first Ground Lease (the utility lines needed for both Hotel
Components shall be provided at the same time as the construction of the utility lines for the
Parking/Retail Components) to begin site utility work for the applicable Major Project
Component(s), and in accordance with Composite Attachment 3 hereto, (ii) apply to the City for
Foundation Permits and commence site utility relocation work by such time period as necessary
to begin such site utility work for the applicable Major Project Components, (iii) obtain and
provide any other necessary governmental approvals for commencement of construction for the
applicable Major Project Component(s), and (iv) continue to use good faith efforts to keep active
and in full force and effect such FDOT Approvals, City Approvals, Foundation Permits, other
necessary governmental approvals, the Miami -Dade County Class I Permit for Marina which has
been previously obtained, all in order for the City Manager to review and consider the
construction schedule(s) as set forth in Subsection 6.1.8 above. Should any of the FDOT
Approvals, the City Approvals, the Foundation Permits, the Miami- Dade County Class I Permit
for the Marina, or any other governmental approvals temporarily lapse, (i) such lapse shall not be
a reason to extend the Outside Dates for construction commencement of any Major Project
Component, and (ii) such temporary lapse shall not constitute an Event of Flagstone's Default as
long as Flagstone continues to use good faith efforts to reinstate any such lapsed FDOT
Approval(s), City Approval(s), Class I Permit, the Foundation Permits, or any other
governmental approval, as applicable.
6.1.14 Establishment of Skills Training and Employment Center Program.
City Manager 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 (which is referred to in Section 26.2 of the Ground Lease), which shall be
in form and substance reasonably acceptable to the parties.
6.1.16.. Composite Attachment 3. The parties agree that all of the conditions
precedent set forth in Composite Attachment 3 for the New Construction Schedule, Options to
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Extend, New Payments Schedule, Related Defaults, and Notes Regarding Conditions Related
Thereto shall be a part of this Article 6. The parties agree that Composite Attachment 3 provides
the option for Flagstone to develop the Property on a component by component basis so that the
conditions precedent in Composite Attachment 3 may occur on a component by component
basis.
6.2 Special Additional Conditions Precedent with Respect to Component by Component
Development. With reference to component by component development, the City
Manager shall have received (a) subject to the terms and conditions of Composite Attachment 3
regarding time periods for cross -defaults, a form of subordination, non -disturbance and
attornment agreement for such Major Project Component ground lessee, similar to the form
attached to the Amended and Restated Ground Lease as Exhibit "C", where the City agrees not
to disturb such Major Project Component ground lessee notwithstanding a default hereunder, if
applicable for that time period set forth in Composite Attachment 3 or under another Major
Project Component ground lease; and (b) the City Manager shall have received a Master.
Declaration, subject to City Commission approvals as required, which, among other things (i)
provides for the necessary rights of ingress, egress, and access so that each Major Project
Component (whether developed or not) can be financed, developed and operated independently
in the future, (ii) addresses the design, construction and provision of utility lines needed for all
Components in connection with Flagstone's construction of each Major Project Component
(whether developed or not) on a component by component basis or all at once, as necessary and
as approved by the City, and (iii) establishes a Master Association and transfers responsibilities
for all common infrastructure utilities and community property so that the entire Project can be
financed and developed either all at once or in phases.
6.2.1 Right of Termination.
Termination. Flagstone agrees to use diligent good -faith efforts to cause the
satisfaction of the conditions precedent set forth in ARTICLE 6 above and Flagstone shall
promptly provide to the City Manager, from time to time, such written documentation as may be
reasonably requested by the City Manager to evidence the same. In the event the conditions
precedent set forth in ARTICLE 6 above are not satisfied (and the City Manager has not waived
the same in writing in his or her sole and absolute discretion) on or before the applicable outside
dates as described in Section 2.1.3, 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.
6.3 Outside Date(s). As set forth in Section 2.1.3, the parties agree and
acknowledge that certain outside dates (collectively, the "Outside Dates") are established for
each Major Project Component on Composite Attachment 3, so that when adding up all of the
time periods for satisfaction of the conditions precedent set forth in this ARTICLE 6 plus all the
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applicable extensions therefor (including, without limitation, any extensions or other required
time periods set forth in Composite Attachment 3 regarding the New Construction Schedule, the
Options to Extend, the New Payment Schedule and the Notes Regarding Conditions Related
Thereto) the longest possible term for this Agreement shall not continue beyond August 31, 2028
for both (i) the date for entering into the last Ground Lease(s) for the final Major Project
Component(s) (the "Final Possession Date") and (ii) the start of construction for all of the
Components (the "Final Construction Commencement Date"). 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 6.1 above are not satisfied on or
before August 31, 2028.
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 applicable
Major Project Components, including, without limitation: (i) the Construction Plans and
Specifications, (ii) all application materials necessary in connection with any MUSP Application,
(iii) all application materials necessary in connection with any 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 materially 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_and any other persons and entities with 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 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. Attached as
Exhibit 7.2 is a list of the Permits and Approvals held by Flagstone as of the Effective Date,
which Permits and Approvals Flagstone shall use good faith reasonable efforts to maintain in full
force and effect.
7.3 Platting and Other Development Matters. The Plat of Watson Island Southwest
was approved by both the City and Miami -Dade County and recorded on February 7, 2007, in
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Plat Book 166 at Page 11 of the Public Records of Miami -Dade County, Florida (the "Plat").
The Plat includes the Property. City shall have the right from time to time to enter into
development related agreements which may impact or otherwise encumber the 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, provided that such agreements do not
materially and adversely affect, in Flagstone's reasonable opinion, the use of the Property as
contemplated by the Development Plans. Should Flagstone request additional changes that would
require a "Re -Plat", then the City will continue to cooperate with Flagstone to complete such
replatting processes in an expeditious manner and Flagstone shall be solely responsible for all
costs and expenses related to such Re -Plat (which shall in no event be deemed to include any
financial obligation on the part of the City).
7.4 License(s)/Easements for Pre -Development Work.
7.4.1 License(s)/Easements. Subject to (i) obtaining the City
Commission's prior written approval (which shall include, without limitation, approval as to the
type and extent of work to be performed), and (ii) compliance with the Board of Trustees Deed
(as the same may be modified in connection with Section 4.2.5 hereof) and Applicable Laws
(including, without limitation, obtaining the appropriate permits necessary from the applicable
Governmental Authority(ies)), City shall grant to Flagstone. for use by its agents, employees and
contractors, a license or easement to perform certain pre -approved dredging work on the
Submerged Parcel and/or a license or easement to perform certain pre -approved utility relocation
and/or other pre -development work on the Uplands Parcel (whether a license or an easement,
individually and/or collectively referred to herein as the "License" or "Easement", as
applicable), 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. Any Easement shall be nonexclusive and for a temporary or
permanent term as necessary for development of the Project, with security deposit requirements,
payment and performance bond requirements, and insurance requirements, all as approved by
the City Conunission. During the term of any License and any Easement, 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 or
Easements, Flagstone agrees that, Flagstone has no right, title, interest or claim in, or to the use
oC 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 or any Easement 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. Attached as Exhibit 7.4.1 is a list of the Licenses/Easements in effect as of
the Effective Date.
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7.4.2 No Consideration Except for Required Easement Security Deposit.
The parties hereby acknowledge and agree that, during the term of the License or Easements, as
applicable, except for the required Easement Security Deposit, 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 or
Easement(s).
7.5 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) or the Easement(s), Flagstone does hereby release, waive, discharge,
covenant not to sue, acquit, satisfy and forever discharge City and its officers, 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, attomeys 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) or the Easement(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. Subject to the provisions and limitations of
Florida Statutes Section 768.28, this subsection does not apply to the extent of the gross
negligence or willful misconduct of the City or of any representative, agent, or independent
contractor of the City.
7.6 Issuance to Flagstone of Marine Operating Permit for ExistinaMarina. The
City has transferred Marine Operating Permit No. MOP-000306 for the existing marina on
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Watson Island (the "Operating Permit"), from the City to Flagstone. The Operating Permit
remains in full force and effect in Flagstone's name through September 30, 2012. The City shall
continue to cooperate (which shall not include any obligation for the City 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 the Miami -Dade County Department of
Environmental Resources Management's ("DERM") approval, City shall, provided said repairs
and renovations are approved by the City Manager, 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 I ease Delivery Date shall belong to the City.
Flagstone shall use continuing good faith efforts to maintain the Operating Permit in full force
and effect throughout the term of this Agreement as it relates to the Marina Component and
throughout the term of the applicable Ground Lease for the Marina Component; any failure to
use continuing good faith efforts to maintain the Operating Permit in full force and effect shall
constitute an Event of Flagstone's default related to the Marina Component of the Project. In the
event that this Agreement is terminated for any reason related to the Marina Component other
than the execution and delivery of the Ground Lease for the Marina Component, 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. The City shall have the right (but not the
obligation), given or withheld in City's sole and absolute discretion, upon written request by
Flagstone, prior to the execution of the Ground Lease for the Marina Component by Flagstone
and the City, to issue Flagstone a License (in accordance with all provisions of Section 7.4.1 and
in accordance with all City requirements for insurance, bonding, fmancial security, public safety
and security for operators of City -owned facilities) to operate the existing marina and some
temporary related facilities on terms mutually agreeable between the City and Flagstone. Should
any of the approvals for the Marina Operating Permit temporarily lapse, (i) such lapse shall not
be a reason to extend the Outside Dates for construction commencement of the Marina
Component, and (ii) such temporary lapse shall not constitute an Event of Flagstone's Default as
long as Flagstone continues to use good faith efforts to reinstate any such lapsed Marina
Operating Permit.
7.7 Marina Approvals. Flagstone has obtained its required Marina Approvals from the
County and Flagstone shall use its "best efforts" (as such term is defined below) to maintain in
full force and effect throughout the term of this Agreement related to the Marina Component and
throughout the term of the Ground Lease for the Marina Component 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"). If deemed necessary or
desirable by the City Manager, any applications for renewals 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 maintain in full force and effect all of the Mega -Yacht Marina Permits
as a condition precedent to executing the Ground Lease for the Marina Component, then the term
"Marina" as used in the Ground 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 Ground Lease for the Marina Component.
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7.7.1 Best Efforts. For purposes hereof, the term "best efforts" shall mean that
Flagstone shall take all of the following actions:
7.7.1.1 Flagstone has made and shall continue to make good faith
efforts, including expending commercially reasonable amounts of funds, and use all due
diligence (including retaining consultants, professionals and experts and taking their advice) in
pursuing and in continuing to maintain in full force and effect throughout the term of this
Agreement relating to the Marina Component and throughout the term of the Ground Lease
related to the Marina Component, all necessary Mega -Yacht Marina Permits (and specifically in
taking all of the actions described in subsections 7.7.1.2 through 7.7.1.5 below).
7.7.1.2 Flagstone has diligently developed and shall continue to 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 its good faith efforts in pursuing and in maintaining in full force
and effect the Mega -Yacht Marina Permits (collectively, the "Mega -Yacht Marina Plans").
Should any of the Mega -Yacht Marina Permit for the Marina temporarily lapse, (i) such lapse
shall not be a reason to extend the Outside Dates for construction commencement of the Marina
Component, and (ii) such temporary lapse shall not constitute an Event of Flagstone's Default as
long as Flagstone continues to use good faith efforts to reinstate any such lapsed Mega -Yacht
Marina Permit,as applicable.
7.7.1.3 Flagstone submitted the Mega -Yacht Marina Plans to the
City Manager for his or her approval in accordance with the City Manager Approval Procedures
and obtained such approval.
7.7.1.4 After approval of the Mega -Yacht Marina Plans by the City
Manager, with whatever modifications as were agreed upon at that time, all subject to and in
accordance with the City Manager Approval Procedures, Flagstone submitted the Mega -Yacht
Marina Plans to all necessary Governmental Authorities and obtained 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"), after
responding to and accommodating, in a commercially reasonable manner, any reasonable
requests by such Governmental Authorities for modifications to the Mega -Yacht Marina Plans.
Flagstone informed the City Manager in writing of such modifications at that time. For any
future modifications, the City Manager 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 7.7.1.4. The City Manager 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 City Manager. 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
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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.
7.7.1.5 After Flagstone obtained consensus among the staff of the
applicable Governmental Authorities for the Mega -Yacht Marina Plans, Flagstone (a) submitted
the Mega -Yacht Marina Plans (as same may have been 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 fmal approval for
the construction and operation of the Mega -Yacht Marina substantially in accordance with such
Mega -Yacht Marina Plans, and had its representatives attend the hearing before the Board
concerning same and persuaded the Board to approve same: and (b) submitted 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 thereafter continued to follow up with such application(s)
including, but not limited to, appearing before the SFWMD Governing Board, until such Mega -
Yacht Marina Permit(s) were issued by such Governmental Authorities.
7.7.2 Notice and Meetings with City. Flagstone has in the past provided and from
the Effective Date of this Agreement shall continue to 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 any written correspondence
between Flagstone and such Governmental Authorities in connection with the "best efforts" steps
described in Section 7.7.1 above for any future matters regarding the Mega -Yacht Marina.
7.7.2.1 Flagstone has in the past held and from the Effective Date of this
Agreement hereby agrees to continue to have monthly meetings with City's designated
representatives to discuss the status of Flagstone's "best efforts" regarding the Mega -Yacht
Marina, 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 continuing obligations
regarding any future Governmental Approvals in Section 7.7.1 above and the status thereof. I£
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 7.7.1 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.
7.7.2.2. Notwithstanding the foregoing, Flagstone shall not be required to accept
any unreasonable conditions for continued approval(s) or renewal(s) 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
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covenants, conditions and/or restrictions with respect to the development and operation of the
proposed Mega -Yacht Marina Component.
7.7.3 Notice of Failure to Maintain Mega -Yacht Marina Permits. In the
event Flagstone is unable, after using such best efforts, to maintain in full force and effect all of
the Mega -Yacht Marina Permits then Flagstone shall provide written notice thereof to City. If
City agrees that Flagstone has used such best efforts and the Mega -Yacht Marina Permits cannot
be maintained, then, the term "Marina" as used herein and in the Ground Lease related to the
Marina Component 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 maintain in full force and effect, and Flagstone shall develop
and/or operate such Marina subject to and in accordance with the terms and conditions of the
Ground Lease related to the Marina Component. If City does not agree that Flagstone has used
such best efforts to maintain in full force and effect the Mega -Yacht Marina Permits, then no
later than thirty (30) days after City's receipt of written notice from Flagstone, City shall provide
written notice to Flagstone that City is submitting the matter to arbitration in accordance with
Section 7.7.4 below; provided, however that City shall not be entitled to submit the matter to
arbitration to the extent Section 7.7.2.2 provides otherwise.
7.7.4 Arbitration. If at any time (including, without limitation, at the time
Flagstone provides written notice to City that Flagstone is unable to maintain in full force and
effect the Mega -Yacht Marina Permits) City believes in its good -faith reasonable judgment that
Flagstone has not or is not using "best efforts" to maintain in full force and effect 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 7.7.1 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.
7.8 Water and Sewer Agreement. The parties acknowledge that on April 27, 2007,
Miami -Dade County, the City and Flagstone entered into an Agreement for Water and Sanitary
Sewage Facilities for the Project, which was subsequently amended (the "WASA
Agreement").The WASA Agreement expired in September, 2009. The City agrees that with the
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approval of this Agreement, the City hereby authorizes the City Manager to approve and execute,
after consultation with the City Attorney, a new Agreement for Water and Sanitary Sewage
Facilities for the Project so long as such agreement is in substantially the same form as the
original WASA Agreement.
ARTICLE 8
COORDINATION WITH CITY; APPROVAL PROCEDURES
8.1 Coordination with City.
8.1.1 Ombudsman. City has appointed Public Facilities Real Estate
Manager, Aldo Bustamante, as the City's internal representative who is experienced and
qualified to (i) report directly to the City Manager, (ii) have authority to coordinate, expedite and
respond for the City on behalf of the City Manager 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
processes with respect to Construction Plans and Specifications, for at Flagstone's option, either
development all at once or development on a component by component basis, (ii) after the Lease
Delivery Date(s), for, at Flagstone's option, either development all at once or development on a
component by component basis, expedite and help deliver construction inspection approvals
(including building and fire department approvals), (iii) after the Lease Delivery Date(s), for at
Flagstone's option either development all at once or development on a component by component
basis, monitor and inspect the development and construction process on City's behalf, and (iv)
otherwise represent and assist the City in coordinating the City's roles and responses and
approvals.
8.1.2 City Consultant. In -addition to the Ombudsman, City, at the request
of Flagstone, shall retain on its behalf but at the sole cost and expense of Flagstone (which costs
shall be mutually acceptable to.the parties), an outside, qualified construction, development and
fire and building consultant(s) who shall be mutually agreeable to City and Flagstone
(individually or collectively, the "Consultant") to coordinate and assist in the development
processes, at Flagstone's option either for development all at once or development on a
component by component basis, and advise Ombudsman and City Manager. 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 City Manager 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
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Agreement. Ombudsman and Consultant shall provide copies to Flagstone of all reports and
records concerning construction inspections. All matters shall be undertaken by the parties with a
covenant of good faith and fair dealing by Flagstone and the City in reasonably complying with
their respective obligations hereunder.
8.2 City Manager Approval Procedures. Any matter requiring City Manager approval
under this Agreement or in connection with the Project (any such matter, an "Approval -
Requiring Matter") shall be subject to the procedures set forth in this Section 8.2. The
following shall apply with respect to all approvals requested by Flagstone from the City
Manager:
8.2.1 Except for those instances expressly set forth herein where approval may be
withheld by the City Manager his or her "sole discretion" or "sole and absolute discretion", any
other approvals to be given by the City Manager hereunder shall not be unreasonably withheld;
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 City Manager 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
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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
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 City Manager Approvals; Disclaimer. Notwithstanding anything to the contrary
contained in this Agreement, Flagstone acknowledges that any approvals by the City Manager 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 City Manager 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 City
Manager 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
mariner. 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. This
Section shall not limit the City's obligations under this Agreement in the City's proprietary
capacity nor limit the City's rights and responsibilities in its governmental capacities.
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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 Discharging Liens.
9.2.1 With respect to the liens listed on Exhibit 9.2.1 attached hereto as of the Effective
Date of this Agreement (collectively, the "Existing Liens"), Flagstone shall either discharge all
existing and alleged liens, judgments and garnishments as required by Attachment 3, Section IX
and Section 2(c) of the Amended and Partial Modification or deliver to the Miami -Dade County
Clerk of Courts Registry, to be held in an escrow account as follows: (a) under Section 2(c)
under the Amended Partial Modification an amount not less than one hundred twenty five
percent (125%) of all judgments not previously discharged on or before January 17, 2012; and
(b) under Section IX of Attachment 3, an amount not less than the total remaining outstanding
balance of all liens, garnishments and judgments not previously discharged within one hundred
and twenty (120) days from September 15, 2011, as set forth in Composite Attachment 3. If
Flagstone elects to discharge all existing and alleged liens, judgments and garnishments prior to
the execution of this Agreement, Flagstone shall provide satisfactory evidence of such discharges
to the City prior to this Agreement being executed. The escrow amount shall remain until the
first Ground Lease is executed. Such escrow deposit amount shall be incremented as and if
necessary to cover any alleged additional liens, claims of liens, judgments, and garnishments.
9.2.2 After the Effective Date of this Agreement (except as provided in 9.2.1 above for
Existing Liens) and during the term thereafter of this Agreement, if any Lien shall at any time be
filed against the Property, or any part thereof within forty-five (45) days after notice of filing
thereof; Flagstone shall cause the same to be discharged, removed, 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 withinsuch 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 in fu1L City
shall notify Flagstone in writing of the dates and amounts of any such payments and related
interest rates thereon, and Flagstone shall- reimburse City within seven (7) calendar days
following receipt of such notification.
9.3 Hold Harmless. Indemnification and Security Agreement. As required by City
Commission Resolution No. 10-0144 adopted March 25, 2010, Flagstone has provided the Hold
Harmless, Indemnification and Security Agreement attached hereto and incorporated hereby as
Exhibit 9.3. Any default by Flagstone under the Hold Harmless, Indemnification and Security
Agreement shall be an Event of Flagstone's Default under this Agreement and an Event of
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Lessee's Default under the related Ground Lease(s).
ARTICLE 10
CONDEMNATION
10.1 Material Taking. If at any time prior to the Lease Delivery Date(s) 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 Date for
the applicable Major Project Component a portion of the Property for such Major Project
Component 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.
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(s). 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; TERMINATIONS
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 (unless another time period is provided in the Agreement) 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
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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;
11.1.4 If Flagstone shall be dissolved without City having permitted a successor
to the rights of Flagstone under this Agreement; or
11.15 Any express, material representation made hereunder shall prove
to have been incorrect in any material respect when made.
11.1.6. Any failure of Flagstone to make any payment required by Composite
Attachment 3 hereto which failure is not cured within ten (10) days of the payment due date.
11.1.7. Any failure of Flagstone to make any payment or any deposit required by
the Escrow Agreement in Article V hereof or by the Hold Harmless and Indemnification
Agreement attached hereto as Exhibit 9.3 which failure is not cured within the cure period set
forth in such Escrow Agreement or such Hold Harmless and Indemnification Agreement as
applicable.
11.1.8. Any failure of Flagstone to make the security deposit(s) required by
Article 5 hereof; which failure is not cured within ten (10) days of the required security deposit
date.
11.1.9. Any Composite Attachment 3 deadline providing for a termination if such
deadline is not achieved is not to be considered a default hereunder; provided however, that
where failure to perform under Composite Attachment 3 by a certain deadline does not have a
termination right, then such type of failure to perform by a certain deadline is a default hereunder
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 Article 5
Security Deposits, and the Hold Harmless and Indemnification Agreement Security Deposit(s) to
City as liquidated damages as and for its sole remedy hereunder; it being agreed that the Article
5 Security Deposits and the Hold Harmless and Indemnification Agreement Security Deposits
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 or
pursue the remedy of specific performance for any such Event of Flagstone's Default.
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
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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
Article 5 Security Deposits to Flagstone as liquidated damages as and for its sole remedy
hereunder, it being agreed that the Article 5 Security Deposits represent a reasonable endeavor
by the parties to ascertain that said sums would be the minimal damages suffered by Flagstone
upon the occurrence of a default by the City; or (ii) pursue the remedy of specific performance.
Flagstone waives all other remedies it may have against City at law or in equity. Notwithstanding
any default by the City, Flagstone acknowledges that it is not entitled to any security deposit
funds under the Hold Harmless and Indemnification Agreement (as the City has had to become
involved in lawsuits and use City time, personnel and resources due to the Existing Liens against
Flagstone which were wrongly attached to the City's Property).
11.4 Terminations.
11.4.1 Terminations by Either Party:
(a) If all of the conditions precedent set forth in Section 4.2 above are not satisfied
on or before August 31, 2028, and so long as the terminating party is not in default (which
default has not been cured in accordance with any applicable notice and cure periods provided in
this ARTICLE 11), either party shall have the absolute 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
Delivery Date has passed, 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.
(b) If all of the conditions precedent set forth in Section 6.1 above are not satisfied
on or before August 31, 2028, and so long as the terminating party is not in default (which
default has not been cured in accordance with any applicable notice and cure periods provided in
this ARTICLE 11), either party shall have the absolute 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
Delivery Date has passed, 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.
(c) Composite Attachment 3 attached hereto and incorporated hereby also
provides for certain rights of termination of the parties in certain events as set forth therein.
ARTICLE 12
REPRESENTATIONS BY FLAGSTONE AND CITY: DEFENSE AND RELEASE
12.1 Flaestone's Representations. Flagstone hereby represents and warrants to City
that:
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12.1.1 Existence and Capacity. Flagstone is a duly organized and validly
existing limited liability company in good standing under the laws of the State of Delaware, and
is in good standing and authorized to transact business as a foreign entity under the laws of the
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. At such time as
Flagstone enters in to the related Ground Lease(s) for each of the applicable Major Project
Component(s), Flagstone shall represent and warrant to the City that, to the best of Flagstone's
knowledge: (i) Flagstone has access to sufficient funds to satisfy the Initial Equity Requirement
regarding such Major Project Component; (ii) as of the Lease Delivery Date, Flagstone will have
closed upon an Initial Construction Loan for the applicable Major Project Component(s); and
(iii) the total of such sums will be sufficient to carry out the development and construction of the
applicable Major Project Component(s) and to operate the applicable Major Project
Component(s) and comply with the terms and conditions of this Agreement and the related
Ground Lease(s). 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 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. Flagstone shall provide to the City
at least thirty (30) days in advance of the proposed Lease Delivery Date for each Major Project
Component such pro forma, budget, financial, and other commercially reasonable written
information necessary for the City's review and to determine the pro rata amount of the Initial
Equity Requirement for that Major Project Component and to determine that such Initial Equity
Requirement has in fact been met for the particular Major Project Component. 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.
12.1.4 Insurance. Flagstone currently holds the insurance types, amounts and
coverages required by the City's Risk Management Department as evidenced by its certificates
attached hereto as Exhibit 12.1.4. naming the City as an additional insured, and Flagstone will
maintain such insurance types, amounts and coverages in full force and effect throughout the
term of this Agreement. All information set forth in such Exhibit 12.1.4 is true and correct to the
best of Flagstone's knowledge.
12.2 City's Representations. City hereby represents and warrants to Flagstone that the
Property is free of any encumbrance or restriction other than those disclosed in Exhibit 12.2
attached hereto, as the same may be updated at Flagstone's request and Flagstone's expense (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
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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.
12.3.6 Defense and Release. The parties believe that this Agreement and
the form of Ground Lease(s) 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(s) 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
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foregoing be deemed to prohibit Flagstone from obtaining equity investments therein, subject to
the provisions of Section 6.1.3); provided, however, and subject to the change of control and
transfer, only to the extent that such transfer does not decrease the Lessee's Voting and
Operational Control less than Fifty Percent (50%) of the ownership interest as further defined
under the provisions of the applicable Ground Lease(s) (which were prepared in accordance with
the requirements of the RFP and the Island Gardens Proposal), Flagstone shall be permitted to
make assignments, enter into subleases for each Major Project Component, obtain equity
investments in the Project, and effect other transfers to the extent not in conflict with the
requirements of, and the resulting change of control, permitted transfers, and other applicable
provisions of the form of Ground Lease(s) .
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 Agreement or application of such terms, covenants or conditions to Persons or
circumstances other than those as to which it is heldinvalid 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/Deferral. No waiver or deferral 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. Any waiver or
deferral hereunder must be waived or deferred in writing by the waiving or deferring party.
13.6 No Third -Party Beneficiary. Nothing contained in this Agreement shall be
construed so as to confer upon any other party the rights of a third party beneficiary.
13.7 Enforcement Costs. If any civil action, arbitration or other legal proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys' fees, court costs and
all expenses (including, without limitation, all such fees, costs and expenses incident to
arbitration, appellate, bankruptcy and post -judgment proceedings), incurred in that civil action,
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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 and the Ground Lease(s) (to the extent in effect)
represent the entire agreement between the parties hereto and supersede 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 and the Ground Lease(s) (to the extent in effect) shall be of any
force or effect. No modification or amendment of this Agreement shall be binding upon the
parties unless such modification or amendment is in writing and is signed by the party to be
bound thereby.
13.9 Headings. The titles of the several clauses and parts of this Agreement are inserted
for convenience of reference only and shall be disregarded when construing or interpreting any
of its provisions.
13.10 References. Except as otherwise specifically indicated, all references to Article,
Section and Subsection numbers refer to Articles, Sections and Subsections of this Agreement
and all references to Exhibits refer to the Exhibits attached hereto, and all references to
Attachments refer to Attachments attached hereto, which exhibits and attachments are
incorporated herein by this reference. The words "herein", "hereof', "hereunder", "hereinafter"
and words of similar import refer to this 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 have the same effect as original signatures.
40
Submitted into the public
record for itch1 (s) 5P,
�
on lja 111 . City Clerk
13.14 Venue and Jurisdiction. The parties acknowledge that a substantial portion of the
negotiations, anticipated performance, and execution of this Agreement occurred in Miami -Dade
County, Florida. Except for matters to be resolved in accordance with specific Arbitration
provisions described herein, the parties agree that any disputes, civil actions, or legal proceedings
arising out of or relating to this Agreement shall be brought in the courts of record of the State of
Florida in Miami -Dade County, Florida, or in 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 actions or legal proceedings and waives any objections to the laying of venue of
any such civil action or legal proceeding in such court(s). Service of any court paper may be
effected on such party by mail, as provided in the Notice provisions of this Agreement, or in
such other manner as may be provided under applicable laws, rules of procedure, or local rules.
13.15 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
Agreement or any amendment or modification of this Agreement, or any other agreement
executed by and between the parties in connection with this Agreement, 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 the parties to enter into this
Agreement.
13.16 No Conflicts of Interest. Flagstone agrees to comply with the applicable conflict of
interest provisions of the Code of the City of Miami, the Miami -Dade County Code, and the laws
of the State of Florida as such are amended from time to time. No member, official, or employee
of the City shall have any personal interest, direct or indirect, in this Agreement or the Ground
Lease(s), nor shall any member, official, or employee participate in any decision relating to this
Agreement which affects his or her personal interests or the interests of any other Person (as
defined in the form of Ground Lease(s)) in which he or she is, directly or indirectly, interested.
No member, official, or employee of the City shall be personally liable to Flagstone, its
successors or assigns, or anyone claiming by, through, or under Flagstone or any successor in
interest to the Property, in the event of any default or breach by the City or for any amount which
may become due to Flagstone, its successors, and assigns, or any successor in interest to the
Property, or on any obligation under the terms of this Agreement or under the Ground Lease(s).
[SIGNATURES FOLLOW]
(Remainder of Page Intentionally Left Blank)
4l
Submitted into the public D
record foil- iterp(s) SP'
on 5I-im ii'1
City Clerk
IN WITNESS WHEREOF, City and Flagstone have caused this Agreement to be executed as
required by law as of the date set forth beside the parties signatures below.
THE CITY OF MIAMI, a municipal corporation
Attest: of the State of Florida
By: By:
Name: Priscilla A. Thompson Name: Johnny Martinez, P.E.
Title: City Clerk Title: City Manager
Date: Date:
APPROVED AS TO FORM AND APPROVED AS TO INSURANCE
CORRECTNESS: REQUIREMENTS:
By: By:
Name: Julie O. Bru Name: Calvin Ellis
Title: City Attorney Title: Director of Risk Management
Sworn to and subscribed before me this day of , 2011, by
who () is personally known to me, or () has produced as identification.
My commission expires:
Notary Public
42
Submitted into the public (\
record fp-� i�te (s) 43i,
on 5 I _. City Clerk
FLAGSTONE ISLAND GARDENS LLC, a
Delaware limited liability company
ATTEST: By: FLAGSTONE DEVELOPMENT
CORPORATION, a Delaware corporation, its
By: _ Managing Partner
Name:
Title: By:
Date: Name: Mehmet Bayraktar
Its: President
Date:
Sworn to and subscribed before me this day of . 2011, by , who ( )
is personally known to me, or ( ) has produced as identification.
My commission expires:
43
Notary Public
Submitted into the public
record for ite (s) SV1
on
5 ���11 City Clerk
Composite Attachment 3
Exhibit A to City Commission Resolution No. 10-0402. adopted September 23.2010
Construction Schedule. Options to Extend. Payments Schedule. Related Defaults and Notes
EXHIBIT A
This Exhibit A is an attachment to City Commission Resolution No. 10-0402, adopted
September 23„ 2010, contains material business terms, and becomes Composite
Attachment 3 to the Amended and Restated Agreement to Enter Into Ground Lease
(hereinafter, the "Agreement to Enter")•and to the form of Amended and Restated Ground
Lease(s) (hereinafter the "Ground Lease(s)"). All terms used herein but not defined herein
shall have the definitions given to them in the Agreement to Enter or in the form of Ground
Lease(s).
A. GENERAL CONSTRUCTION SCHEDULE FOR ALL MAJOR PROJECT
COMPONENTS.
Flagstone/Ground Lessee shall have the time periods set forth below to commence and
complete construction of the various Major Project Components, as such Major Project
Components are approved in accordance with the Major Use Special Permit and as such are
defined in the form of Ground Lease(s). Throughout this Exhibit A, (a) "Commence(s)
Construction" or "Start(s) Construction" shall mean that all material plans and permits are
approved and issued and the actual act of physical construction has begun; and (b) "Completion
Date" shall mean the date upon which the earlier of the temporary certificate of occupancy
("TCO") or a certificate of occupancy ("CO"), has been issued for the completion of
construction.
Until 9/1/2013 36 months from 9/1/2010 to Start Construction of the Marina Component.
(a) As described in Section VI(c) below, Marina Component
construction may be started earlier and separately from the
Parking/Retail Components once applicable conditions precedent
for Marina Component have been met.
Until 2/28/2015 54 months from 9/1/2010 to the Completion Date of the Marina
Component.
(a) If Marina Component Starts Construction earlier than 9/1/2013, then
Flagstone shall have 18 months from such earlier start date to the
Completion Date of the Marina Component.
Until 9/1/2016 72 months from 9/1/2010 to Start Construction of both the Retail/Parking
Components
153
Submitted into the public
record f r itet t(s)
�
on 5� "j City Clerk
Until 8/31/2019 108 months from 9/1/2010 to the Completion Date of Retail/Parking
Components.
(a) Parking spaces for Hotels may be completed separately with
construction of Hotels Components.
ro)
Flagstone agrees to design, construct and provide utility lines
needed for each of the Major Project Components on a component
by component basis as necessary and as approved by the City and
as required by the Master Declaration as a condition precedent to
executing the first Ground Lease. Flagstone shall design, construct
and provide utility lines needed for both Hotel Components in
connection with the construction of utility lines for the
Parking/Retail Components.
Until 9/1/2018 96 months from 9/1/2010 to Start Construction of both Hotels
Components, if the two (2) 5-year Options to extend described below are
not exercised, therefore until 8/31/2020 (being twenty-four (24) months)
to the Completion Date. Flagstone cannot exercise the second Option if no
hotel construction has commenced by 8/31 /2023.
Until 9/1/2023 .156 months from 9/1/2010 to Start Construction of a Hotel Component, if
only the first 5-year Option to extend is exercised. Accordingly, the first
Option period ends on 8/31/2023.
(a) During the first Option period, a Hotel Component must be completed within twenty-four
(24) months after Construction Commencement, therefore until 8/31/2025 to the
Completion Date of at least one Hotel Component. Accordingly, both the Rent(s)
payments schedule and the Option payments schedule in this Exhibit A would apply
throughout the entire period of construction, even if the Completion Date of such
construction period runs beyond the Option period.
(b)
The first 5-year Option period runs from 9/01/2018 through 8/31/2023. The first Option
period payment is $250,000 per annum ($125,000 per Hotel Component per annum) with
monthly payments beginning 9/01/2018 for the first Option period ending 8/331/2023.
(c) All Option payments are to be paid monthly in advance beginning on the first day of the
month. The first Option is exercised by Flagstone's giving not less than thirty (30) days
advance written notice prior to 8/31/2018 to the City for the first Option period to begin.
Until 9/1/2028 216 months from 9/1/2010 to Start Construction of the second Hotel
Component if Flagstone exercises the second 5-year Option to extend;
accordingly, the second Option period ends on 8/31/2028:
(a) The second 5-year Option period runs from 9/01/2023 through
8/31/2028. The second 5-year Option period payment is $315,000
154
Submitted into the public
record fofite (s) Q,
on 5l 1 City Clerk
per annum ($157,500 per Hotel Component per annum) with
monthly payments beginning 9/01/2023 for the second Option
period ending 8/31/2028, but second 5-year Option is not available
unless the first Hotel Component Starts Construction before the
end of the first 5-year Option period on 8/31/2023.
(b) All Option payments are to be paid monthly in advance beginning
on the first day of the month. The second Option is exercised by
Flagstone's giving not less than thirty (30) days advance written
notice prior to 8/31/2023 to the City for the second Option period
to begin.
(c) During the second Option period, the second Hotel Component
must be completed within twenty-four (24) months after Flagstone
Commences Construction, therefore until 8/31/2030 to reach the
Completion Date of the second Hotel Component that commenced
construction during the second Option period. Accordingly, both
the Rent(s) payments schedule and the Section IV Option
payments schedule in this Exhibit A would apply throughout the
entire period of construction, even if such construction period runs
beyond the Option period.
H. GENERAL RENT(S) PAYMENT SCHEDULE FOR ALL MAJOR PROJECT
COMPONENTS.
During the periods outlined below, Flagstone/Ground Lessee shall pay to the City the
amounts outlined below.
Beginning
Annual
Amount
C F = z x4 J�'f ti,
.k Y.;. h s
2/1/2010
through
9/30/2010
$200,000
Consideration for Extension Period. This amount
shall not be applied as a credit.
10/1/2010
$300,000
$300,000 is a Pre -Payment of Construction
Rent/Base Rent to City
10/1 /20l l
$500,000
$500,000 is a Pre -payment of Construction
Rent/Base Rent to City
10/1/2012
$750,000
$750,000 is a Pre -payment of Construction
Rent/Base Rent to City
10/1/2013
$1,000,000
$1,000,000 Construction Rent, subject to II(h)
below
10/1/2014
$1,000,000
$1,000,000 Construction Rent, subject to II(h)
below
10/1/2015
$1,000,000
$1,000,000 Construction Rent, subject to II(h)
below
10/1/2016
$1,140,000*
$1,500,000 Construction Rent is the amount
155
Submitted into the public O
record f r itet (s) Stf '
on 3130 (I1 . City Clerk
} y
;13 Row,YI
� v
.:� It1 N
�1 In
Annual 4
c r r Fes*
b 4 ..
:mount ft;'f
, , le Y:x ...�'n'i y�M 'MY .-J"t-S`'Jt
? 1 '�' { - �.e},_••��Sv obi
z ,, r x, �'i F�, .y j� .i r '�,,• F+ :;t �s`---
., , rr di ,,t,: t ' 'tk�'�,-
F ' ' �"( 'b wdL.SL. A f J1r 4
Ax.� �kR, li i• �1c
actually received by City since $360,000 was pre-
paid for this year per above schedule and Section
II below, unless there is no credit pursuant to
Section VI(a) below.
10/1/2017
$1,315,000*
$1,675,000 Construction Rent is the amount
actually received by City since $360,000 was pre-
paid pursuant to the above schedule and Sections
II below, unless there is no credit pursuant to
Section VI(a) below.
10/1/2018
and annually
thereafter
$1,640,000*
$2,000,000 Base Rent is the amount actually
received by City since $360,000 was pre -paid
pursuant to the above schedule and Section II
below, unless there is no credit pursuant to
Section VI(a) below. Base Rent continues until
termination of Ground Lease(s). Additionally,
Percentage Rent payments begin as described in
(d) below.
10/1/2019
$1,640,000*
$2,000,000 Base Rent is the amount actually
received by City since $360,000 was pre -paid
pursuant to the above schedule and Section II
below, unless there is no credit pursuant to
Section VI(a) below. Additionally, Percentage
Rent payments continue as described in (d) below.
10/1/2020
$1,890,000*
$2,000,000 Base Rent is the amount actually
received by City since $110,000 was pre -paid
pursuant to the above schedule and Section II
below, unless there is no credit pursuant to
Section VI(a) below. Additionally, Percentage
Rent payments continue as described in (d) below
until the termination of Ground Lease(s).
*Notwithstanding the Annual Amounts set forth above and pursuant to Section II(g)
below, credits of the Pre -Payment of Construction/Base Rent cannot be given until
the Marina Component Starts Construction prior to 9/1/2013 and both of the
Parking/Retail Components Start Construction prior to 9/1/2016 pursuant to the
above General Construction Schedule for All Major Project Components. As stated
in Section II(g) below, when all (i) of the Marina Component Starts Construction
prior to 9/1/2013 and (ii) the Retail/Parking Components Start Construction prior
to 9/1/2016, then credit of the Pre -Paid Construction/Base Rent begins the month
following the date upon which all of those three (3) specific Components have
started construction.
156
Submitted into the public
record fo itei (s)
onCity Clerk
As set forth in the State Waiver (as defined in Section VII below) at certain times
Flagstone and at certain times the City is obligated to pay an annual fee to the
State of Florida.
During the thirty-six (36) months after 9/01/2010 to 8/31/2013, Flagstone has a
10-day grace period beyond the first of each month to make each "Pre -Paid
Construction Rent" payment, and agrees to not require any notice from the City in
the event of non-payment of any "Pre -Paid Construction Rent" payment. In the
event that Flagstone defaults for non-payment, Flagstone also agrees to waive its
defenses as to non-payment against the City, immediately vacate and turn over to
the City for the City's possession all of Flagstone's rights, and interests in the
Property and the easement areas, remove from such easement areas and from the
Property all of its property of whatever kind as requested in writing by the City
Manager, and immediately (i) return or sign over, as applicable, to the City all of
Flagstone's rights, directly or indirectly, in the permits, plans, specifications, and
all related governmental approvals, documents, instruments, and agreements as
necessary related to the Property, and (ii) deliver to the City all of such permits,
plans, specifications, and all related governmental approvals, documents,
instruments, and agreements which are in Flagstone's possession or in Flagstone's
control.
(c) All payments to the City (for various Rents and for Option payments) are to be
paid monthly in advance beginning on the first day of the month, except for the
lump sum payment Flagstone shall pay to the City upon the date of City
Commission Approval of the Agreement to Enter and the Ground Lease, for the
Consideration of Extension Period amount from February 1, 2010 through
September 30, 2010.
(d) Additionally, if the Agreement to Enter is not signed in the same month of City
Commission Approval, then Flagstone shall alsopay a lump sum payment amount
of $25,000 per month for each month from October 1, 2010 until the Agreement
to Enter is executed.
(e) Additional provisions regarding Percentage Rent payments are included in the
form of each Amended and Restated Ground Lease(s). As stated therein,
Percentage Rent on the Gross Revenues of each Component begins on the third
anniversary after each Major Project Component is Open for Business. "Open for
Business" means the earlier of the date that the applicable Major Project
Component receives either its TCO or CO. Base Rent may begin sooner than
02/01/2018 (i.e., if both Hotels are Open for Business prior to that time as set
forth in the Amended and Restated Hotel Ground Lease).
(f)
As stated in the applicable Amended and Restated Ground Leases, once Base
Rent begins, it continues each year for the remaining term of the applicable
Ground Lease(s). On the first anniversary of the commencement of the Base Rent
for each Major Project Component, the Base Rent thereafter becomes subject to
an annual Consumer Price Index ("CPI") adjustment as set forth in the Ground
157
(g)
(h)
(i)
Submitted into the public
record for itern(s) 5
on I J�_�� City Clerk
Lease(s). Percentage Rent on the Gross Revenues of each Major Project
Component begins on the third anniversary after each Major Project Component
is Open for Business.
If the Marina Component Starts Construction prior to 9/1/2013 and the
Retail/Parking Component(s) both Start Construction prior to 9/1/2016, then on
the first day of the month following the date when the Marina Component and
the Retail/Parking Component(s) (all 3 such Components) have started
construction, the Construction Rent payment (subject to credits described in (g)
below) becomes at least $1,000,000 per year, as opposed to the lesser Prepaid
Construction/Base Rent payment amounts shown on the above Section II General
Rents Payment Schedule for All Major Project Components.
If the Marina Component Starts Construction prior to 9/1/2013 and the
Retail/Parking Component(s) (all 3 such Components) Start Construction by
9/1/2016, then as shown on the above Section II General Rent(s) Payment
Schedule for All Major Project Components, Flagstone is entitled to a credit back
of Pre -Paid Construction Rent/Base Rent each year beginning in the month
following the date upon which construction has started on all 3 such Components
in the amount of $30,000 per month for fifty-one (51) months and of $20,000 for
the 52nd month until Flagstone has received a total aggregate credit of $1,550,000.
This monthly credit is a return of Pre -Paid Construction/Base Rent paid by
Flagstone between 9/1/2010 and 8/31/2013. If Flagstone Starts Construction of
all three (3) of the Marina Component and the Retail/Parking Components prior to
9/1/2013, then the total credit back amount is reduced by 1/36th for each month
prior to 2/1/2013 that all such Components have commenced. Conversely, if
Flagstone does not Commence Construction of all three (3) of the Marina
Component and the Retail/Parking Components by 8/31/2016, then no credit of
Prepaid Construction Rent is allowed and the City keeps all of the Prepaid
Construction Rent amount received.
If no construction begins by 9/1/2013 on any Major Project Component, then the
City keeps all Prepaid Construction/Base Rent, Flagstone agrees to not require
any notice from the City to terminate for failure to begin construction, and
Flagstone also agrees to waive its defenses against the City, immediately vacate
and turn over to the City for the City's possession all of Flagstone's rights and
interests in the Property and the easement areas, remove from such easement
areas and from the Property all of its property of whatever kind as requested in
writing by the City Manager, and immediately (i) return or sign over, as
applicable, to the City all of Flagstone's rights, directly or indirectly, in the
permits, plans, specifications, and all related governmental approvals, documents,
instruments, and agreements as necessary related to the Property, and (ii) deliver
to the City all of such permits, plans, specifications, and all related governmental
approvals, documents, instruments, and agreements which are in Flagstone's
possession or in Flagstone's control.
III. OPTION PAYMENT SCHEDULE (FIRST OPTION).
158
Submitted into the public
record f r ite(s) SY. 1
on City Clerk
Flagstone has two (2) 5-year Options ("Option(s)") to extend the date to Commence
Construction of the Hotels Components, and Flagstone has the choice to build either one Hotel
Component or two Hotel Components; that choice triggers Option payments for one Hotel
Component or two Hotels Components accordingly.
If Flagstone exercises the first Hotel Option period for only one Hotel Component,
Flagstone must also pay to the City the following additional Option payment amounts.
4
Beginning
Annual Option
,s . , *
payment (for ,
One.Hotel),
, z,t
Annual Base
r ^ ,,
= Rent ,,
L } , x . w �� ,�: ,
L„Annual Amounts y
; 57 „ z
,,: ,€ „2 to the Cih' y ,,
9/1/2018
$125,000
$2,000,000
$2,125,000 (Base Rent plus
Option payment)
9/1/2019
$125,000
$2,000,000
$2,125,000 (Base Rent plus
Option payment)
9/1/2020
$125,000
$2,000,000
$2,125,000 (Base Rent plus
Option payment)
9/1/2021
$125,000
$2,000,000
$2,125,000 (Base Rent plus
Option payment)
9/1/2022
$125,000
$2,000,000
$2,125,000 (Base Rent plus
Option payment)
If Flagstone exercises the first Hotel Option period for two (2) Hotel(s) Components,
Flagstone must also pay to the City the following additional Option payment amounts.
+.' ^ •
r
Begmnung 0
rt < < r
, . ��....
Annual Option
r .
r Payments (for
na
.,�2: Hotel) _.
t
J '
Annual Base,
;, t = i
= Rent
. }5:�..y. x.,... .�
3 ri t x r-s
..-, �Y4i ! 'r71{'�4„-a +`r,J6a '� ,.,v ,
FAnnual Amounts
, ,� . � x K ;� , ,
,.� Ito the City�� �� ��;
��_. �,� �.�.,���s�..�-���;��. � '
9/1/2018
$250,000
$2,000,000
$2,250,000 (Base Rent plus
Option payments)
9/1/2019
$250,000
$2,000,000
$2,250,000 (Base Rent plus
Option payments)
9/1/2020
$250,000
$2,000,000
$2,250,000 (Base Rent plus
Option payments)
9/1/2021
$250,000
$2,000,000
$2,250,000 (Base Rent plus
Option payments)
9/1/2022
$250 000
$2,000,000
$2,250,000 (Base Rent plus
Option payments)
(a) As set forth in the the State Waiver (as defined in Section VII below) at certain
times Flagstone and at certain times the City is obligated to pay an annual fee to
the State of Florida.
159
Submitted into the publi
record foritet (s)
on
1 J 9 . City Clerk
(b) Flagstone can exercise the Option for only one Hotel Component or for both
Hotel Components, or stop Option payments at any time by giving written notice
to the City at least thirty (30) days before the date that the next Option payment is
due, but if Flagstone elects not to exercise the Option for one or both Hotel
Component(s), or fails to make any Option payment(s), then Flagstone must turn
over to the City immediately any applicable Hotel Ground Lease(s), Flagstone
also agrees to waive its defenses as to failure to pay the required Option
payments, immediately vacate and turn over to the City for the City's possession
all of Flagstone's rights and interests in the Hotel Component(s), any Hotel
Ground Lease, and the applicable easement areas, remove from such easement
areas all of its property of whatever kind as requested in writing by the City
Manager, and immediately (i) return or sign over, as applicable, to the City all of
Flagstone's rights, directly or indirectly, in the permits, plans, specifications, and
all related governmental approvals, documents, instruments, and agreements as
necessary related to the applicable Hotel Component(s), and (ii) deliver to the
City all of such permits, plans, specifications, and all related governmental
approvals, documents, instruments, and agreements relating to the applicable
Hotel Component(s) which are in Flagstone's possession or in Flagstone's
control, and City has the rights to seek a new developer for the applicable Hotel
Component(s).
(c) For Any Hotel(s) Component(s) that Start(s) Construction during the first Option
period and continue construction into the second Option period, the Option
payments shall increase on 9/01/2023 to the second Option period Option
payment amount(s) set forth below in Section IV, and shall continue at such
second Option payment amount(s) until the Completion Date. Such Option
payments for the Hotel(s) Component(s) are in addition to the required
Construction Rent, Base Rent, Percentage Rent, CPI Adjustments, Marina Rent,
and any other Rents for the Hotels and any other Major Project Components.
W. OPTION PAYMENTS SCHEDULE (SECOND OPTION).
If Flagstone exercises its second Hotel Option period for one Hotel Component only,
Flagstone must pay to the City the following additional amounts:
Beginning
Annual Option
payment (For
One Aotel
Annual Base
. Rent
'a .:
, 'Annual' Amounts
1
to the C1ty
9/1/2023
$157,500
$2,000,000
$ 2,157,500
9/1/2024
$157,500
$2,000,000
$ 2,157,500
9/1/2025
$157,500
$2,000,000
$ 2,157,500
9/1/2026
$157,500
$2,000,000
$ 2,157,500
9/1/2027
$157,500
$2,000,000
$ 2,157,500
160
Submitted into the publin
record f rite n(s) On 5_ r
City Clerk
If Flagstone exercises its second Hotel Option period for two Hotel Components,
Flagstone must pay to the City the following additional amounts:
Beginning
.,
Annual Option
payments (For
nd -.
: =2 ,Hotel)
t ti
. Annual Base
-Rent , F,
°., ._, ,�
f\
^,
'_• h
s, , 'Yf s 4i," ,�, �•
AnnualFAmountsi±w~y`,.
•z , : s = _ _.
� °s..to the City _ vi
,ri; _.-: ,_: � :a
9/1/2023
$315,000
$2,000,000
$ 2,315,000
9/1/2024
$315,000
$2,000,000
$ 2,315,000
9/1/2025
$315,000
$2,000,000
$ 2,315,000
9/1/2026
$315,000
$2,000,000
$ 2,315.000
9/1/2027
$315,000
$2,000,000
$ 2,315,000
(a) As set forth in the the State Waiver (as defined in Section VII below) at certain
times Flagstone and at certain times the City is obligated to pay an annual fee to
the State of Florida.
(b) Because Flagstone has twenty-four (24) months to complete construction of any
Hotel(s) Component, Flagstone shall continue to make Option payments to the
City beyond 8/31/2028 until such time that the final Hotel(s) Component(s)
construction has reached the final Completion Date. Flagstone can stop Option
payments at any time by giving written notice to the City at least thirty (30) days
before the date that the next Option payment is due, but if Flagstone elects not to
or fails to make any Option payment(s), then Flagstone must tum over to the City
immediately the Hotel Ground Lease(s) for the Hotel which is not to be
constructed, Flagstone also agrees to waive its defenses as to failure to pay the
required Option payments, immediately vacate and turn over to the City for the
City's possession all of Flagstone's rights and interests in the Hotel
Component(s), any Hotel Ground Lease, and the applicable easement areas,
remove from such easement areas all of its property of whatever kind as requested
in writing by the City Manager, and immediately (i) retum or sign over, as
applicable, to the City all of Flagstone's rights, directly or indirectly, in the
permits, plans, specifications, and all related governmental approvals, documents,
instruments, and agreements as necessary related to the applicable Hotel, and (ii)
deliver to the City all of such permits, plans, specifications, and all related
governmental approvals, documents, instruments, and agreements relating to the
applicable Hotel Component(s) which are in Flagstone's possession or in
Flagstone's control, and City has the rights to seek a new developer for the
applicable Hotel Component(s).
(c) If Flagstone does not Start Construction of the second Hotel Component by
9/1/2028, then both the City and Flagstone have their separate rights to terminate
the Agreement to Enter and Flagstone must immediately vacate and turn over to
the City for the City's possession all of Flagstone's rights and interests in the
Property related to the second Hotel Component and the easement areas, remove
from such easement areas and from the Property related to the second Hotel
Component all of its property of whatever kind as requested in writing by the City
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Manager, and (i) return or sign over, as applicable, to the City all of Flagstone's
rights, directly or indirectly, in the permits, plans, specifications, and all related
governmental approvals, documents, instruments, and agreements as necessary
related to the applicable Hotel, and (ii) deliver to the City all of such permits,
plans, specifications, and all related governmental approvals, documents,
instruments, and agreements relating to the applicable Hotel Component(s) which
are in Flagstone's possession or in Flagstone's control, and City has the rights to
seek a new developer for the applicable Hotel Component(s).
(d) Flagstone has a 10-day grace period beyond the first of each month to make each
Option payment, and agrees to not require any notice from the City in the event of
non-payment of any Option payment. In the event that Flagstone defaults for non-
payment, Flagstone also agrees to waive its defenses as to non-payment against
the City, immediately vacate and turn over to the City for the City's possession all
of Flagstone's rights and interests in the Second Hotel Component and the
easement areas, remove from such easement areas and from the Second Hotel
Component all of its property of whatever kind as requested in writing by the City
Manager, and immediately (i) return or sign over, as applicable, to the City all of
Flagstone's rights, directly or indirectly, in the permits, plans, specifications, and
all related governmental approvals, documents, instruments, and agreements as
necessary related to the Second Hotel Component, and (ii) deliver to the City all
of such permits, plans, specifications, and all related governmental approvals,
documents, instruments, and agreements which are in Flagstone's possession or in
Flagstone's control.
V. ADDITIONAL AGREEMENTS CONCERNING HOTEL COMPONENTS.
(a)
No Hotel Component can Start Construction until both the Marina Component
and the Parking/Retail Components Start Construction.
(b) Once a Hotel Component reaches its Completion Date, the Option payments for
that Hotel Component stop. For the portion of any construction period that
extends into the Option period, all applicable Option payment(s) (and all ongoing
Construction Rent payments) shall continue until the Completion Date. (Pursuant
to the applicable Ground Lease(s), the `Percentage Rent Payment Beginning
Anniversary Date" starts running for any Hotel on the date when it is Open for
Business and Percentage Rent payments begin on the third anniversary of the
Percentage Rent Payment Beginning Anniversary Date in order to give that Hotel
a Stabilization Period).
(c) The second Option period cannot be exercised unless one Hotel Component has
started construction before the end of the first Option period. If one Hotel
Component does not Start Construction before the end of the first Option period,
then the Option period terminates and no second Option exists. If the second
Hotel Starts Construction before the end of the first Option period and continues
construction into the second Option period, then the Option payments applicable
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to the second Option period shall be due upon commencement of the second
Option period until the second Hotel Component reaches its Completion Date.
(d) Upon entering into the Ground Lease for any Hotel Component(s) and prior to
Starting Construction for any such Hotel Component(s), Flagstone shall provide a
Construction Bond to the City for the full amount of the construction cost of any
such Hotel Component(s).
VI. ADDITIONAL AGREEMENTS CONCERNING FLAGSTONE FORFEITURE /
CITY TERMINATION RIGHTS.
(a)
(b)
If the Marina Component does not Start Construction by 9/01/2013 or both the
Parking/Retail Components do not Start Construction by 9/01/2016, then
Flagstone's rights to build any Components expires and ceases, the Agreement to
Enter is terminated, City retains all Prepaid Construction/Base Rent (as
consideration for the extension of time until 9/1/2013 for the Marina Component
and as consideration for the extension of time until 9/1/2016 for both the
Parking/Retail Components) and Flagstone must turn over to the City
immediately the applicable Ground Lease(s), Flagstone also agrees to waive its
defenses as to failure to begin construction against the City, immediately vacate
and turn over to the City for the City's possession all of Flagstone's rights and
interests in the Property and the easement areas, remove from such easement
areas and from the Property all of its property of whatever kind as requested in
writing by the City Manager, and immediately (i) return or sign over, as
applicable, to the City all of Flagstone's rights, directly or indirectly, in the
permits, plans, specifications, and all related governmental approvals, documents,
instruments, and agreements as necessary related to the Property, and (ii) deliver
to the City all of such permits, plans, specifications, and all related governmental
approvals, documents, instruments, and agreements which are in Flagstone's
possession or in Flagstone's control.
If any Hotel Component does not Start Construction according to the applicable
deadline under the construction schedule and the Option schedule(s) (as
applicable), then Flagstone's rights to build the applicable Hotel Component
expires (but Flagstone's obligations under the payment schedule for the Marina
Component, the Parking/Retail Component, and any Hotel Component that is/are
complying continues to the end of the applicable Ground Lease(s)). Any time
Flagstone loses the right to construct a Hotel(s) Component, then Flagstone must
turn over to the City immediately the applicable Ground Lease(s), Flagstone also
agrees to waive its defenses as to failure to begin construction against the City,
immediately vacate and turn over to the City for the City's possession .all of
Flagstone's rights and interests in the applicable Hotel Component, any Hotel
Ground Lease, and the related easement areas, remove from such easement areas
and from the Property all of its property of whatever kind as requested in writing
by the City Manager, and immediately (i) return or sign over, as applicable, to the
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City all of Flagstone's rights, directly or indirectly, in the permits, plans,
specifications, and all related governmental approvals, documents, instruments,
and agreements as necessary related to the applicable Hotel Component, and (ii)
deliver to the City all of such permits, plans, specifications, and all related
governmental approvals, documents, instruments, and agreements which are in
Flagstone's possession or in Flagstone's control.
(c) Subject to Section VII(a), Flagstone may separately ground lease and separately
construct the Marina Component prior to 9/1/2013 if the conditions precedent for
the Marina Component are met
(d) If construction is continuing during the Option period(s), then Flagstone shall pay
• both, Construction Rent or Base Rent in accordance with the General Rent
Schedule in Section II above, and the applicable Option payments related to its
choice to construct either one or two Hotel Components.
VII. CROSS DEFAULTS; SEPARATE DEFAULTS.
(a) During the period prior to the earlier of 96 months from 9/01/2010 (being
8/31/2018) or the date upon which the first Hotel is Open for Business, Ground
Leases for the separate Major Project Components shall be cross -defaulted for
any Base Rent payment defaults, Prepaid Construction/Base Rent payment
defaults, and any Construction Rent payment defaults.
(b) After the earlier of 96 months from 9/01/2010 (being 8/31/2018) or the date upon
which the first Hotel is Open for Business, (i) the Base Rent, Percentage Rent,
and all other payments to the City each year thereafter shall be apportioned to
each separate Major Project Component Ground Lease for direct payments to the
City by each separate Ground Lease lessee in an amount reflecting each separate
Major Project Component's respective percentage share of the total Project
Development Costs to that point in time, and (ii) the Ground Leases for the
separate Major Project Components shall not be cross -defaulted for any defaults,
including but not limited to any defaults in payments of Base Rent, Prepaid
Construction Rent/Base Rent, Construction Rent, Percentage Rent, or any other
Rent, with each separate lessee being solely responsible for any payment
default(s) to the City.
(a) Notwithstanding anything to the contrary in this Exhibit A, if the Retail/Parking
Components do not Commence Construction by the 72nd month from 9/01/2010
(being 8/31/2016), then (i) there will be no crediting of Prepaid Construction/Base
Rent, the City shall keep all Prepaid Construction/Base Rent received, (ii) the City
can terminate the Agreement to Enter, all Ground Lease(s), and (iii) the City can
take back the Marina Component, the Retail/Parking Components, any Hotel
Components and the balance of the Project and the Property.,
VIII. STATE WAIVER.
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Upon approval of this Exhibit A by City Commission Resolution, the City will have
forty-five (45) days to perform due diligence on the State Partial Waiver of Deed Restriction (the
"State Waiver"). If the State conditions approval in any manner unacceptable to the City, and
the City advises Flagstone that it intends to terminate due to such unacceptable conditions, then
the City must send notice of such State action to Flagstone within such forty-five (45) days.
Upon receipt of such notice, Flagstone will have thirty (30) days to resolve the dispute
satisfactorily. If the dispute concerning such unacceptable conditions is not resolved, then the
City, may cancel the current Agreement to Enter Into Ground Lease without executing a new
Amended and Restated Agreement to Enter Into Ground Lease. The parties intend to execute the
Agreement to Enter at such time as the State Waiver is executed and delivered and recorded.
IX. INDEMNIFICATION/HOLD HARMLESS FOR CITY: DISCHARGE OF
EXISTING LIENS, JUDGMENTS, AND GARNISHMENTS.
The City Commission in connection with Resolution No. 10-0144 of March 25, 2010
directed, and Flagstone agreed (a) that Flagstone will enter into a Hold Harmless,
Indemnification, and Security Agreement (the "Hold Harmless, Indemnification, and Security
Agreement") within thirty (30) days of the City's determination in Section X below to proceed
under the new State Waiver, protecting the City against any and all lawsuits and related costs, (b)
that Flagstone shall assist the City in defending against any and all lawsuits involving liens,
judgments, garnishments and any other matters against Flagstone related to the Property and the
easement areas, (c) to the extent any lawsuit is pending against the City relating to any lien(s) on
the subject Property, that Flagstone shall provide to the City not less than $200,000 in security
in such form(s) as satisfactory to the City Manager at such time as the parties enter into the Hold
Harmless, Indemnification and Security Agreement, and (d) Flagstone shall provide to the City
Manager audited financial statements as soon as the same are completed, and any other
information needed in connection with the Hold Harmless, Indemnification and Security
Agreement. Additionally, Flagstone shall have up to one hundred and twenty (120) days from the
date of City Commission approval of the Amended and Restated Agreement to Enter Into
Ground Lease (the "City Commission Approval Date") to clear and discharge as many liens,
garnishments, and judgments as possible, prior to making a deposit with the Miami -Dade County
Clerk of Courts Registry for all remaining outstanding liens, garnishments, and judgments at the
end of that one hundred and twenty (120) day period. Upon the one hundred and twenty first
(121 s) day after the City Commission Approval Date, Flagstone shall deliver to the Miami -Dade
Country Clerk of Courts Registry to be held in an escrow account, an amount not less than the
total remaining outstanding balance of all liens, garnishments, and judgments not previously
discharged during the one hundred and twenty (120) day period from the City Commission
Approval Date (and update such deposit amount as and if necessary from time to time and at the
time of execution of the Amended and Restated Agreement to Enter into Ground Lease, (and
update such deposit amount as and if necessary at time of execution of the Amended and
Restated Ground Lease). If Flagstone does not provide the foregoing, then the City shall
terminate the existing Agreement to Enter with Flagstone, terminate all easements with
Flagstone, and the City shall not enter into the contemplated new Amended and Restated
Agreement to Enter Into Ground Lease and the Amended and Restated Ground Lease, as
applicable at such time.
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X. SECURITY DEPOSITS.
City Clerk
The Amended and Restated Agreement to Enter Into Ground Lease and the form of Ground
Lease(s) provide for security deposits in connection with the easement areas, the Pre -paid
Construction Rent/Base Rent, and the Ground Lease(s).
(a) Security for the Easements. Prior to the execution and delivery of the new
Amended and Restated Agreement to Enter by City to Flagstone, Flagstone shall either
(a) deliver the amount of Thirty -Five Thousand and No/100 Dollars ($35,000.00) (the
"Easement Deposit") to Escrow Agent or (b) provide to City, at Flagstone's sole cost
and expense, a Letter of Credit in the amount of Thirty -Five Thousand and No/I00
($35,000.00) (the "Easement Security LOC"). Notwithstanding the foregoing, Flagstone
shall be permitted to utilize any combination of cash or Letter of Credit so long as the
easement deposit equals Thirty -Five Thousand and No/100 Dollars ($35,000.00) in the
aggregate. The Easement Deposit or the Easement Security LOC, as applicable, shall
hereinafter be referred to as the "Easement Security" and shall provide security for the
faithful performance by Flagstone of all of the provisions of the Easements to be
performed or observed by Flagstone.
(b) Security Deposit for the Construction Rent/Base Rent: Prior to execution of
the new and Amended and Restated Agreement to Enter, Flagstone shall either (a) deliver
the amount equal to one year's Construction Rent/Base Rent to the Escrow Agent, or (b)
provide to City, at Flagstone's sole cost and expense, a Letter of Credit in the amount
equal to one year's Construction Rent/Base Rent as defined herein. Notwithstanding the
foregoing, Flagstone shall be permitted to utilize any combination of cash or Letter of
Credit so long as the Security Deposit for the Pre -Paid Construction Rent/Base Rent
equals the amounts defined in the aggregate. The Security Deposit for the Construction
Rent/Base Rent, shall herein after be referred to as the "Security Rent Deposit" and shall
provide security for the faithful performance by Flagstone of all rent payment provisions
of this Agreement to be performed or observed by Flagstone. During the periods outlined
below, Flagstone shall deliver the Security Rent Deposits as defined below:
Commencing
Annual Amount Required for Rent
Security Deposit
October 1, 2010
$300,000
Octoberl„ 2011
$500,000
October 1, 2012
$750,000
October 1, 2013
$1,000,000
October 1, 2014
$1,000,000
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Octoberl, 2015
$1,000,000
October 1, 2016
$1,500,000
October 1, 2017
$1,675,000
Octoberl, 2018
$2,000,000
Any LOC Deposit held by the Lessor or Cash Deposit held by Escrow Agent, as defined in the
Agreement to Enter between the Parties (having an effective date of February 1, 2010) as
security under such Agreement to Enter into Ground Lease to begin being deposited as of
October 1, 2010 may be credited toward the following year's Security Rent Deposit. The annual
amount due on September 1, 2018 of $2,000,000 shall remain in effect for the life of the
Agreement to Enter and of the Ground Lease(s), in accordance with the schedule listed in this
section and in Section 5.2 of the Agreement to Enter. If an Event of Lessee's Default for non-
payment of rent 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 Rent 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 Rent Deposit, Lessee
shall, within thirty (30) days after written 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 Rent Security Deposit by an equivalent
amount.
XI. LABOR PEACE AGREEMENTS.
The parties acknowledge that the City Commission by Resolution No. 10-0144, adopted on
March 25, 2010, has directed that the Project is subject to the provisions of earlier City
Commission Resolution No. 09-0263, adopted May 28, 2009, regarding the establishment of
labor peace agreements prior to and during the operation of hospitality operations on the
Property.
XII. COVENANT OF GOOD FAITH AND FAIR DEALING.
All matters in this Exhibit A contain a covenant of good faith and fair dealing by Flagstone and
the City in reasonably complying with their respective obligations.
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