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Development and Gound Lease Agreement with Portman Miami Beach, LLC ? old- 2q I I APPENDIX 1 DEVELOPMENT AND GROUND LEASE AGREEMENT between PORTMAN MIAMI BEACH, LLC, a Delaware limited liability company and CITY OF MIAMI BEACH, a Florida municipal corporation September 2, 2015 TABLE OF CONTENTS ARTICLE I 2 VOTER REFERENDUM,EFFECTIVE DATE AND DEFINITIONS 2 SECTION 1.1. VOTER REFERENDUM REQUIREMENT 2 SECTION 1.2. EFFECTIVE DATE 2 SECTION 1.3. DEFINED TERMS 2 SECTION 1.4. EXHIBITS 18 SECTION 1.5. INTERPRETATION 18 ARTICLE II 18 THE HOTEL PROJECT IMPROVEMENTS 18 SECTION 2.1. DEVELOPMENT AND CONFORMITY OF PLANS 18 SECTION 2.2. APPROVED PLANS 18 SECTION 2.3. LESSEE'S HOTEL PROJECT OBLIGATIONS 19 SECTION 2.4. PAYMENT OF HOTEL PROJECT COSTS 20 SECTION 2.5. FINANCING MATTERS 20 SECTION 2.6. No CLAIM FOR VALUE OF LESSEE IMPROVEMENTS 21 SECTION 2.7. SCHEDULE OF PERFORMANCE 21 SECTION 2.8. CONSTRUCTION OBLIGATIONS 21 SECTION 2.9. PROGRESS OF CONSTRUCTION/CITY'S REPRESENTATIVE 23 SECTION 2.10. DELIVERY OF PLANS 24 SECTION 2.11. CONNECTION OF BUILDINGS TO UTILITIES 24 SECTION 2.12. PERMITS AND APPROVALS 25 SECTION 2.13. CITY AND LESSEE TO JOIN IN CERTAIN ACTIONS 25 SECTION 2.14. COMPLIANCE WITH LAWS 25 SECTION 2.15. ALTERATIONS AND RENOVATIONS 25 SECTION 2.16. ART IN PUBLIC PLACES 25 ARTICLE III 25 LAND USES AND DEVELOPMENT OBLIGATIONS 25 SECTION 3.1. COVENANT REGARDING LAND USES 25 SECTION 3.2. APPLICATIONS FOR DEVELOPMENT APPROVALS AND DEVELOPMENT PERMITS 26 SECTION 3.3. CONCURRENCY 26 SECTION 3.4. COMPLIANCE WITH LOCAL REGULATIONS REGARDING DEVELOPMENT PERMITS 26 SECTION 3.5. CONSISTENCY WITH THE CITY'S COMPREHENSIVE PLAN 26 SECTION 3.6. PRESENTLY PERMITTED DEVELOPMENT 26 SECTION 3.7. PUBLIC FACILITIES TO SERVE THE LEASED PROPERTY 26 SECTION 3.8. PUBLIC RESERVATIONS,DEDICATIONS 26 SECTION 3.9. REQUIRED DEVELOPMENT PERMITS 26 SECTION 3.10. RESPONSIBLE WAGES AND LOCAL EMPLOYMENT 27 SECTION 3.11. LAWS GOVERNING THIS LEASE 27 SECTION 3.12. DURATION OF DEVELOPMENT RIGHTS 27 SECTION 3.13. LESSEE'S RIGHT OF TERMINATION 27 ARTICLE IV 27 GENERAL TERMS OF LEASE 27 SECTION 4.1. LEASE OF LEASED PROPERTY TO 27 SECTION 4.2. RESTRICTIVE COVENANTS 31 SECTION 4.3. REPRESENTATIONS 33 SECTION 4.4. RENT AND OTHER PAYMENTS 34 SECTION 4.5. COVENANTS FOR PAYMENT OF PUBLIC CHARGES BY LESSEE 38 ARTICLE V 40 ASSIGNMENT 40 SECTION 5.1. PURPOSE OF RESTRICTIONS ON TRANSFER 40 SECTION 5.2. TRANSFERS 40 SECTION 5.3. PERMITTED TRANSFERS 40 SECTION 5.4. TRANSFER REQUIRING CITY'S APPROVAL 41 SECTION 5.5. EFFECTIVENESS OF TRANSFERS 42 SECTION 5.6. SUBLETTING 42 ARTICLE VI 43 MORTGAGE FINANCING; RIGHTS OF MORTGAGEE AND LESSEE 43 SECTION 6.1. CONDITIONS OF FINANCING AND LEASEHOLD MORTGAGE 43 SECTION 6.2. NO WAIVER OF LESSEE'S OBLIGATIONS OR CITY'S RIGHTS 48 ARTICLE VII 49 REMEDIES; EVENTS OF DEFAULT 49 SECTION 7.1. DEFAULT BY LESSEE 49 SECTION 7.2. REMEDIES FOR LESSEE'S DEFAULT 52 SECTION 7.3. DEFAULT BY THE CITY 54 SECTION 7.4. FORCE MAJEURE AND ECONOMIC FORCE MAJEURE 55 SECTION 7.5. REMEDIES CUMULATIVE;WAIVER 55 SECTION 7.6. RIGHT TO CURE 55 SECTION 7.7. ROOM BLOCK AGREEMENT 56 SECTION 7.8. DISPUTE RESOLUTION 56 SECTION 7.9. EXPEDITED ARBITRATION OF DEVELOPMENT DISPUTES. 56 SECTION 7.10. DISPUTES REGARDING DISAPPROVAL OF A PROPOSED BRAND OR PROPOSED TRANSFEREE 58 SECTION 7.11. PLANS AND DATA 60 ARTICLE VILL 60 PROTECTION AGAINST MECHANICS' LIENS 60 AND OTHER CLAIMS; INDEMNIFICATION 60 SECTION 8.1. LESSEE'S DUTY TO KEEP PROJECT FREE OF LIENS 60 SECTION 8.2. CONTESTING LIENS 61 SECTION 8.3. INDEMNIFICATION 61 SECTION 8.4. ENVIRONMENTAL MATTERS 62 SECTION 8.5. LIMITATION OF CITY'S LIABILITY 64 ARTICLE IX 65 INSURANCE AND RECONSTRUCTION 65 SECTION 9.1. GENERAL INSURANCE PROVISIONS 65 SECTION 9.2. EVIDENCE OF INSURANCE 65 SECTION 9.3. REQUIRED COVERAGES 66 SECTION 9.4. PREMIUMS AND RENEWALS 67 SECTION 9.5. ADEQUACY OF INSURANCE COVERAGE 67 SECTION 9.6. CITY MAY PROCURE INSURANCE IF LESSEE FAILS To Do So 67 SECTION 9.7. EFFECT OF Loss OR DAMAGE 67 SECTION 9.8. PROOF OF LOSS 68 SECTION 9.9. INSURANCE PROCEEDS 68 SECTION 9.10. RECONSTRUCTION 69 SECTION 9.11. WAIVER OF SUBROGATION 69 SECTION 9.12. INADEQUACY OF INSURANCE PROCEEDS 69 SECTION 9.13. No CITY OBLIGATION TO PROVIDE PROPERTY INSURANCE 70 SECTION 9.14. COMPLIANCE 70 SECTION 9.15. RIGHT TO EXAMINE 70 SECTION 9.16. PERSONAL PROPERTY 70 ARTICLE X 70 CONDEMNATION 70 SECTION 10.1. COMPLETE CONDEMNATION 70 SECTION 10.2. PARTIAL CONDEMNATION 71 SECTION 10.3. RESTORATION AFTER CONDEMNATION 71 SECTION 10.4. TEMPORARY TAKING 71 SECTION 10.5. DETERMINATIONS 72 SECTION 10.6. PAYMENT OF FEES AND COSTS 72 ARTICLE XI 72 QUIET ENJOYMENT AND OWNERSHIP OF IMPROVEMENTS 72 SECTION 11.1. QUIET ENJOYMENT 72 SECTION 11.2. WASTE 72 SECTION 11.3. MAINTENANCE AND OPERATION OF IMPROVEMENTS 72 SECTION 11.4. OWNERSHIP OF IMPROVEMENTS DURING LEASE 73 SECTION 11.5. SURRENDER OF LEASED PROPERTY 73 ARTICLE XII 73 MAINTENANCE AND REPAIRS 73 SECTION 12.1. STANDARDS GENERALLY 73 SECTION 12.2. UTILITIES 73 SECTION 12.3. CLEANING 73 SECTION 12.4. REMOVAL OF TRASH 74 SECTION 12.5. MAINTENANCE AND REPAIRS 74 SECTION 12.6. EXCAVATION OF LAND 74 SECTION 12.7. WATER AND SEWERAGE SYSTEM 74 SECTION 12.8. INDUSTRIAL WASTE FACILITIES 75 SECTION 12.9. INSPECTIONS 75 SECTION 12.10. FAILURE OF LESSEE TO MAINTAIN 75 ARTICLE XIII 75 MANAGEMENT OF HOTEL 75 SECTION 13.1. HOTEL STANDARDS 75 SECTION 13.2. COVENANT TO CONTINUOUSLY OPERATE HOTEL 76 SECTION 13.3. HOTEL NAME 77 ARTICLE XIV 77 MISCELLANEOUS PROVISIONS 77 SECTION 14.1. No PARTNERSHIP OR JOINT VENTURE 77 SECTION 14.2. RECORDING,DOCUMENTARY STAMPS 77 SECTION 14.3. FLORIDA AND LOCAL LAWS PREVAIL 77 SECTION 14.4. NO CONFLICTS OF INTEREST 78 SECTION 14.5. NOTICE 78 SECTION 14.6. ESTOPPEL CERTIFICATES 79 SECTION 14.7. PROVISIONS NOT MERGED WITH DEED 79 SECTION 14.8. TITLES OF ARTICLES AND SECTIONS 80 SECTION 14.9. COUNTERPARTS 80 SECTION 14.10. SUCCESSORS AND ASSIGNS;NO THIRD PARTY BENEFICIARIES 80 SECTION 14.11. ENTIRE AGREEMENT 80 SECTION 14.12. AMENDMENTS 80 SECTION 14.13. NON-SUBORDINATION OF CITY'S INTEREST 80 SECTION 14.14. CITY MANAGER'S DELEGATED AUTHORITY. 81 SECTION 14.15. HOLIDAYS 81 SECTION 14.16. NO BROKERS 81 SECTION 14.17. NO LIABILITY FOR APPROVALS AND INSPECTIONS 81 SECTION 14.18. RADON 81 SECTION 14.19. LESSEE ENTITY 81 SECTION 14.20. INFLATION ADJUSTMENTS 82 SECTION 14.21. STANDARD OF CONDUCT 82 SECTION 14.22. WAIVER OF CONSEQUENTIAL DAMAGES 82 SECTION 14.23. RESERVATION OF RIGHTS 82 List of Exhibits EXHIBIT "A" Acceptable Owner Definition 85 EXHIBIT "B" Hotel Standards 90 EXHIBIT "C" Budgeted Improvement Costs 91 EXHIBIT "D" Legal Description of Hotel Site 92 EXHIBIT "E" Approved Plans 95 EXHIBIT "F" Schedule of Performance 122 EXHIBIT "G" Form of Easements 124 EXHIBIT "H" Presently Permitted Development 135 EXHIBIT "I" Public Facilities 136 EXHIBIT "J" Public Reservations and Dedications 137 EXHIBIT "K" Required Development Permits and Variances 138 EXHIBIT "L" Room Block Agreement 139 EXHIBIT "M" Ownership Interests in Lessee 165 EXHIBIT "N" Uniform System Summary of Operating Statement 166 EXHIBIT "0" Transaction Rent 169 EXHIBIT "P" Location of Geothermal System 170 EXHIBIT "Q" RESERVED 181 EXHIBIT "R" Minimum Fixed Rent 182 EXHIBIT "S" Mandatory Hotel Project Design Elements 183 EXHIBIT "T" Lessee's LLC Documents 184 EXHIBIT "U" Fillmore Theater Parking 187 DEVELOPMENT AND GROUND LEASE AGREEMENT THIS DEVELOPMENT AND GROUND LEASE AGREEMENT ("Lease") is executed on the 2nd day of September, 2015, by and between the CITY OF MIAMI BEACH, FLORIDA, a municipal corporation (the "City") and PORTMAN MIAMI BEACH, LLC, a Delaware limited liability company (the "Lessee"). RECITALS: A. The City has a material interest in maximizing the performance of the Miami Beach Convention Center (as hereinafter defined in Section 1.3) and encouraging convention and tourism business in the City. To further those goals, the City desires to facilitate development of an adjacent full service convention center headquarter hotel on real property owned by the City and described more fully in Exhibit "D" hereto, to be connected to the Convention Center by an enclosed overhead pedestrian Skybridge (as hereinafter defined in Section 1.3). B. The City is a Florida municipal corporation with powers and authority conferred under the Florida Constitution, the Municipal Home Rule Powers Act set forth in Chapter 166 of the Florida Statutes, and the Miami Beach City Charter and Code of Ordinances (the "City Code"). The City has all governmental, corporate and proprietary powers to enable it to conduct municipal government, perform municipal and governmental functions, and render municipal services, including the authority to adopt, implement and enforce (together with any other required Governmental Approvals) comprehensive plans, zoning ordinances, redevelopment plans, and other police power and legislative measures necessary to assure the health, safety and general welfare of the City and its inhabitants. C. This Lease, among other things, is intended to and shall constitute a development agreement between the parties pursuant to Sections 163.3220-163.3243, Florida Statutes, the "Florida Local Government Development Agreement Act" and Section 118-4 of the City's Code. D. On or about January 29, 2015, the City issued Request for Proposal No. 2015- 103-ME, for the Development of a Convention Hotel Adjacent to the Miami Beach Convention Center ("RFP"). After a competitive RFP process, and the City having fully considered this Lease at two duly noticed public hearings in compliance with Section 163.3225 of the Act; having determined that the Hotel Project (as hereinafter defined in Section 1.3) and this Lease are in compliance with the City's Comprehensive Plan and Land Development Regulations (as each are hereinafter defined in Section 1.3) as of September 2, 2015; and having further determined that it is in the City's best interest to address the issues covered by this Lease in a comprehensive manner, in compliance with all applicable laws, ordinances, plans, rules and regulations of the City, the City has agreed to enter into this Lease with the Lessee, subject to the terms and conditions herein. E. On September 2, 2015, the City Commission, by Resolution No. 2015-29115, approved the execution of this Lease. 1 NOW THEREFORE, for and in consideration of the foregoing, and of the mutual covenants and agreements contained herein, the parties agree as follows: ARTICLE I VOTER REFERENDUM, EFFECTIVE DATE AND DEFINITIONS Section 1.1. Voter Referendum Requirement. The parties acknowledge and agree that, pursuant to Section 1.03(b)(3) of the City Code, this Lease and the obligations herein are subject to and contingent upon the approval of this Lease by vote of at least sixty percent (60%) of the voters voting thereon in a City-wide referendum ("Referendum"). In the event the Referendum is not successful, or if the ballot question is removed or election results are invalidated by a court of competent jurisdiction, this Lease shall be deemed null and void and the parties shall have no obligations or liabilities of any kind or nature whatsoever hereunder. Section 1.2. Effective Date. If the Referendum is successful and all requirements of the City Code and applicable law are satisfied, this Lease shall be effective upon the City Commission's adoption of a resolution accepting the certification of the official results of the March 15, 2016 election with respect to the Referendum ("Effective Date"). Section 1.3. Defined Terms. As used herein the term: "Acceptable Owner" has the meaning ascribed to it in Exhibit "A". "Additional Base Rent" shall have the meaning ascribed to it in Section 4.4(a). "Additional Rent" means any and all payments required of Lessee to the City by the terms of this Lease other than Base Rent. "Affiliate" means, regarding any Person: (a) any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person; (b) any officer, director, general partner, member, manager or trustee of such Person; or (c) any other Person who is an officer, director, general partner, member, manager or trustee of such Person described in clauses (a) or(b) of this sentence. When used in reference to Lessee, for so long as Portman Holdings, LLC (or any of its Affiliates) holds an interest, directly or indirectly, in Lessee, "Affiliate" shall include any Person Controlling, Controlled by, or under common Control with Portman Holdings, LLC. 2 "Approval, Approve or Approved" means the written approval or consent of a Party, which unless otherwise specified herein by reference to "sole discretion" or words of similar effect, shall be commercially reasonable and made in good faith and with due diligence. "Approved Brand" means (a) each of the following national hotel operators but only if its reputation for quality and quality of operation, at the time Lessee engages such operator, is generally known and recognized by the hotel industry as not having substantially declined, as of the time in question, in comparison to their reputation for quality and quality of operation as of the Effective Date: Marriott (i.e., the Marriott, Marriott Marquis or JW Marriott brands), Westin, Omni, Hyatt Regency, Sheraton, La Meridien, or Hilton, or (b) any other hotel operator Approved by City in its reasonable discretion. "Approved Operator" means (a) any Approved Brand or (b) any management company approved by the Approved Brand to serve as the Hotel Operator pursuant to a franchise agreement with the Approved Brand. "Approved Plans" means the renderings and diagrams attached hereto as Exhibit "E" depicting the Mandatory Hotel Project Design Elements (other than the Skybridge), which renderings and diagrams the City has Approved as of the Effective Date, as may be modified from time to time in accordance with the terms of this Lease. "Approved Skybridge and Off-Site Improvements Plans" means the renderings and diagrams depicting the Skybridge and Off-Site Improvements to be Approved by the City Manager prior to the Possession Date, which, following Approval by the City Manager, may be modified from time to time in the same manner as the Approved Plans in accordance with the terms of this Lease. The Skybridge will have finishes consistent with the finishes in the connecting point in the Convention Center. The repairs to the Fillmore Theater as part of the Off-Site Improvements will be done consistently with the quality of the Fillmore Theater prior to the work being done by Lessee in connection with the Hotel Project. "Arbitrator" shall have the meaning ascribed to it in Section 7.10(a). "Assignment of Contracts and Agreements" means an assignment from Lessee, as assignor, to the City, as assignee, assigning in favor of the City all of Lessee's right, title and interest in and to all contracts and agreements (other than the Hotel Project General Construction Contract and the Assignment of Plans and Approvals) executed in connection with the design, construction and equipping of the Hotel Project prior to the Completion of Construction, including such contracts and agreements with design professionals, on a non-recourse basis without any warranties or representations from Lessee, which assignment shall be in form and substance reasonably satisfactory to the City(together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of all such contracts and agreements, with the right to enforce all of the terms thereof, for the duration of the Term; provided, further that for so long as a First Leasehold Mortgage encumbers the Hotel Project, the City agrees to permit Lessee to make a pari passu assignment of such contracts and agreements to such First Leasehold 3 Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Assignment of Hotel Project General Construction Contract" means an assignment from Lessee, as assignor, to the City, as assignee, assigning in favor of the City all of Lessee's right, title and interest in and to the Hotel Project General Construction Contract, which assignment shall include a duly executed consent by the Hotel Project General Contractor and shall otherwise be in form and substance reasonably satisfactory to the City (together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of the Hotel Project General Construction Contract, with the right to enforce all of the terms thereof, for the duration of the Term; provided, further that for so long as a First Leasehold Mortgage encumbers the Hotel Project, the City agrees to permit Lessee to make a pari passu assignment of the Hotel Project General Construction Contract to such First Leasehold Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non- disturbance and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Assignment of Plans and Approvals" means an assignment from Lessee, as assignor, to the City, as assignee, assigning in favor of the City all of Lessee's right, title and interest in and to all Approved Plans, designs, Governmental Approvals and other work product produced by Lessee and any other Person for use in the development, construction and operation of the Work, which assignment shall include a duly executed consent by each Person other than the Lessee having an interest in such Approved Plans, designs, Governmental Approvals and other work product and shall otherwise be in form and substance reasonably satisfactory to the City (together with any necessary consents required in connection with such assignment), which assignment shall be an absolute assignment from Lessee to the City, provided that for so long as no Event of Default has occurred and is continuing hereunder, the City shall give Lessee a license of all such Approved Plans, designs, Governmental Approvals and other work product assigned to the City for the duration of the Term; provided, further that for so long as a First Leasehold Mortgage encumbers the Hotel Project, the City agrees to permit Lessee to make a pari passu assignment of such Approved Plans, designs, Governmental Approvals and other work product to such First Leasehold Mortgagee (which First Leasehold Mortgagee shall have priority with respect thereto pursuant to the non-disturbance and attornment agreement entered into pursuant to Section 6.1(b) hereof). "Audited Gross Operating Revenues Schedule" means a schedule prepared in accordance with GAAP and GAAS, and showing all Gross Operating Revenues for a Lease Year. Such Audited Gross Operating Revenues shall be based on Lessee's audited financial statements for such Lease Year. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as amended. 4 "Base Rent" shall have the meaning ascribed to it in Section 4.4(a). "Brand Approvals" means the written confirmation from the Initial Hotel Operator approving the design of the Hotel Project, and, prior to Opening, approving the FF&E to be installed in the Hotel Project. "Budgeted Improvement Costs" means the estimated Improvement Costs as of the date hereof, as set forth in Exhibit "C". "Business Day" means a day other than a Saturday, a Sunday or a day on which the offices of the City, or national banks in Miami-Dade County, Florida are closed for business. "Certificate of Occupancy" means a certificate of occupancy or certificate of completion, as applicable, for the buildings and structures on the Leased Property, and shall include any such certificate designated as "Temporary" in nature, provided it allows for occupancy of the Hotel by paying guests. "City" shall mean the City of Miami Beach, a Florida municipal corporation, having its principal offices at 1700 Convention Center Drive, Miami Beach, Florida 33139. In all respects hereunder, City's obligations and performance is pursuant to City's position as the owner of the Hotel Site acting in its proprietary capacity. In the event City exercises its regulatory authority as a governmental body, the exercise of such regulatory authority and the enforcement of any rules, regulations, laws and ordinances (including through the exercise of the City's building, fire, code enforcement, police department or otherwise) shall be deemed to have occurred pursuant to City's regulatory authority as a governmental body and shall not be attributable in any manner to City as a party to this Lease or in any way be deemed in conflict with, or a default under, the City's obligations hereunder. "City Code" has the meaning ascribed to it in the recitals hereto. "City Commission" shall mean the governing and legislative body of the City. "City Delays" shall mean the number of days in which the City performs any obligation under Section 2.13 hereof in excess of the number of days set forth for such performance therein. "City Manager" shall mean the Chief Administrative Officer of the City. The City Manager shall be construed to include any duly authorized representatives designated in writing with respect to any specific matter(s) concerning this Lease (exclusive of those authorizations reserved to the City Commission or regulatory or administrative bodies having jurisdiction over any matter(s) related to this Lease). "City's Representative" has the meaning ascribed to it in Section 2.9(b). "Commence Construction" or "Commencement of Construction" means, with respect to the Hotel Project, the commencement of bona-fide pouring of the concrete foundation for the Hotel Project, provided that the pour is completed in the ordinary course. "Commencement of Construction of the MBCC Project" means the commencement of construction of the MBCC Project, as evidenced by the execution of the guaranteed maximum 5 price amendment to the construction contract between the City and Clark Construction Group, LLC and the issuance by the City of a notice to proceed thereunder. "Complete Construction" or"Completion of Construction" means the date Lessee has completed the Hotel Project substantially in accordance with the requirements of the Approved Plans and all conditions of permits and regulatory agencies have been satisfied, all Governmental Authorities have issued a Certificate of Occupancy, the Hotel has been accepted by the Hotel Operator, and the Hotel Project is ready for occupancy, utilization and continuous commercial operation for the uses and purposes intended by this Lease, without material interference from incomplete or improperly completed Work, and substantially all of the FF&E required for the Opening Date has been purchased, delivered to and installed in the Hotel Project. "Comprehensive Plan" means the comprehensive plan which the City Commission has adopted and implemented for the redevelopment and continuing development of the City pursuant to Chapter 163 Part II, of the Florida Statutes. "Concurrency Requirements" shall have the meaning ascribed to it in Section 3.3. "Construction Lender" means the Institutional Lender selected by Lessee to provide the Construction Loan. "Construction Loan" means the loan or loans to be provided by the Construction Lender(s) to the Lessee for development and construction of the Hotel Project in an aggregate amount not more than 65% of the Budgeted Improvement Costs. "Construction Loan Commitment" means a financing commitment by the Construction Lender that has been executed and delivered by and between Lessee and the Construction Lender(s) that confirms availability of the Construction Loan to fund the construction of the Hotel Project in accordance with the requirements of this Lease. "Control," "Controlling" or "Controlled" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, by Governmental Requirements or otherwise, or the power to elect in excess of fifty percent (50%) of the directors, managers, general partners or other Persons exercising similar authority with respect to such Person (it being acknowledged that a Person shall not be deemed to lack Control of another Person even though certain decisions may be subject to "major decision" consent or approval rights of limited partners, shareholders or members, as applicable). "Convention Center" means the Miami Beach Convention Center located at 1901 Convention Center Drive, Miami Beach, Florida, 33139. "Corrective Action Work" has the meaning ascribed to it in Section 8.4(a)(vii). "CPA" means a national firm of certified public accountants Approved by the City Manager, used by Lessee for the purpose of certifying the annual reports, its financial condition or for any other purpose specified herein. "Credit Enhancement" means a credit enhancement with respect to, or guaranty of, the financing for the Hotel provided by a Hotel Operator, or an Affiliate thereof. 6 "Debt Service Coverage Ratio" means the ratio of: (i) Gross Operating Profit for the previous twelve (12) months; to (ii) the amount of Debt Service Payments actually required to be paid in such twelve (12) months. For example, if Gross Operating Revenues for a particular twelve (12) months equal $3,700,000, Project Expenses equal $1,000,000 and Debt Service Payments actually required to be paid equal $1,800,000, the Debt Service Coverage Ratio for that twelve (12) months would be 1.50. "Debt Service Payments" means all principal, interest and other sums and amounts paid or payable by Lessee for or during the applicable or pertinent period, in connection with any debt secured by a Leasehold Mortgage. "Default Rate" means an interest rate equal to five percent (5%) per annum above the highest annual prime rate (or base rate) published from time-to-time in The Wall Street Journal under the heading "Money Rates" or any successor heading as being the rate in effect for corporate loans at large U.S. money center commercial banks (whether or not such rate has actually been charged by any such bank) or if such rate is no longer published, then the highest annual rate charged from time-to-time at a large U.S. money center commercial bank, selected by the City, on short term, unsecured loans to its most creditworthy large corporate borrowers. "Deficiency" shall have the meaning ascribed to it in Section 7.2(b)(ii). "Development Arbitrator" shall have the meaning ascribed to it in Section 7.9(b). "Development Dispute" means any dispute between Lessee and City (acting in its proprietary capacity) arising prior to the Opening Date with respect to (i) whether a modification to the Hotel Project is a substantial deviation from the Approved Plans or a Prohibited Hotel Project Change requiring City's Approval pursuant to Section 2.2; (ii) any contention that City has unreasonably failed to Approve modifications to the Approved Plans in accordance with this Lease; (iii) any contention that City has unreasonably failed to Approve the proposed Approved Skybridge and Off-Site Improvements Plans or modifications thereto in accordance with this Lease; (iv) any contention that City has unreasonably failed to Approve a Hotel Project General Contractor in accordance with Section 2.8(b); (v) any disagreement as to permitted delays in the Schedule of Performance pursuant to Section 2.7, or (vi) any disagreement as to the cost or scheduling impact of a change in the location of the geothermal system as provided in Section 2.11(c). "Development Order" means any order granting, denying, or granting with conditions an application for a Development Permit. "Development Permit" shall have the meaning set forth in Section 163.3221(5), Florida Statutes (2014). "Economic Force Majeure" means economic or political conditions or events that materially impair access to debt or equity markets by developers for development of projects in the United States similar to the Hotel Project or allow a committed debt or equity participant to terminate its debt or equity commitment, such as a temporary or long term liquidity crisis or major recession. "Effective Date" has the meaning ascribed to in Section 1.2. "Environmental Condition" has the meaning ascribed to it in Section 8.4. "Environmental Claim" has the meaning ascribed to it in Section 8.4. 7 "Environmental Laws" has the meaning ascribed to it in Section 8.4. "Environmental Permit" has the meaning ascribed to it in Section 8.4. "Environmental Requirements" has the meaning ascribed to it in Section 8.4. "Equity Commitment" means the commitment of Lessee to contribute an amount in cash to pay Improvement Costs as may be necessary, at the time of determination, when combined with the Initial Hotel Operator Financial Commitment and the proceeds available under the Construction Loan and Mezzanine Loan, if any, to maintain the Hotel Project In Balance, a portion of which Equity Commitment shall be funded by the Portman Estimated Equity Contribution but in no event less than the Portman Minimum Equity Contribution. "Event of Default" has the meaning ascribed to it in Article VII. "FF&E" means the furniture, fixtures and equipment for the Hotel Project to be procured and maintained by the Lessee. "Fillmore Theater" means the performing arts center located at 1700 Washington Avenue, Miami Beach, Florida, adjacent to and east of the Hotel Project and also known as the "Fillmore Miami Beach at the Jackie Gleason Theater". "First Leasehold Mortgage" means a Leasehold Mortgage which is a first lien on Lessee's interest in this Lease and the leasehold interest created hereby. "First Leasehold Mortgagee" means the Institutional Lender that is a holder of a First Leasehold Mortgage, which shall be evidenced by, and the City shall be able to rely absolutely on, a title report current as of the time of any determination and prepared by a generally recognized title insurance company doing business in Miami-Dade County, Florida, or upon a certificate of Lessee, signed and verified by a Responsible Officer of Lessee. "First Rent Year" has the meaning ascribed to it in Section 4.4(a). "Force Majeure Event" means the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies, whether actual or threatened; orders of any civil or military authority; insurrections; riots; acts of terrorism; epidemics; landslides, earthquakes, lightning, fires, hurricanes, storms, floods, washouts and other natural disasters; inability to procure or a general shortage of labor, equipment, facilities, materials or supplies in the open market, or failure or unavailability of transportation generally; or other similar extraordinary causes beyond the commercially reasonable control of the Party claiming such inability. In no event shall "Force Majeure Event" include economic hardship or financial inability to perform specific to the Party nor shall it include Economic Force Majeure. "Foreign Instrumentality" means a foreign (non-U.S.) government or agency thereof or a Person Controlled thereby. "GAAP" means generally accepted accounting principles, as in effect from time to time, as promulgated by the Financial Accounting Standards Board, consistently applied or a system generally recognized in the United States as having replaced GAAP. 8 "GAAS" means generally accepted auditing standards, as in effect from time to time, as developed by the American Institute of Certified Public Accountants, consistently applied, or a system generally recognized in the United States as having replaced GAAS. "Gaming Establishment" means any establishment offering or otherwise engaged in gambling or wagering of nature or kind. 9 9 any "Governmental Approvals" means all permits, approvals, certificates of occupancy, notifications, certifications, registrations, authorizations and other rights and privileges that are required by any Governmental Authority. Notwithstanding anything to the contrary in this Lease, the Lessee retains its rights in accordance with applicable Governmental Requirements to challenge or appeal any denial of Governmental Approvals. "Governmental Authority" means any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency, or any instrumentality of any of them, with jurisdiction over the Leased Property, the Lessee Improvements, the Work or the Off-Site Improvements. "Governmental Requirements" means any law, enactment, statute, code, order, ordinance, rule, regulation, judgment, decree, writ, injunction, franchise, permit, certificate, license, or other similar requirement of any Governmental Authority, now existing or hereafter enacted, adopted, promulgated, entered, or issued, affecting the Leased Property or the construction and operation of the Lessee Improvements. Notwithstanding anything to the contrary in this Lease, the Lessee retains its right to challenge Governmental Requirements in accordance with all other applicable Governmental Requirements, including based on a constitutional objection that a Governmental Requirement violates Lessee's constitutional rights regarding contracts. "Gross Operating Profit" means the amount calculated by subtracting Project Expenses from Y 9 J Gross Operating Revenues. "Gross Operating Revenues" means all revenues and income of any nature derived directly or indirectly from the Hotel or from the use or operation of the Leased Property, including gross rooms sales, gross food and beverage sales (whether any food and beverage establishment is operated by Lessee or a Subtenant), catering receipts, telephone, facsimile and/or internet services, in-room video and parking and valet service receipts (whether the parking or valet services are operated by Lessee or a Subtenant), vending machines, gross receipts, rents or license fees from the operation by Lessee or any Affiliate of Lessee of newsstand, gift shop, or business center, or from any other sub-lessees, concessionaires, third-parties conducting operations on the Leased Property or other sources (except as provided in Section 5.6(c) hereof), the fair rental value of space within the Hotel Project occupied by Lessee or any entity affiliated with or employed by Lessee for purposes other than managing the Hotel Project (to the extent the occupants of such space are paying less than the fair market value of such space) and the proceeds of business interruption, other loss of income, use, occupancy or similar insurance, as determined in accordance with GAAP (to the extent not inconsistent with the Uniform Systems of Accounts), and the Uniform System of Accounts, and without any reduction or allowance for uncollectable charges or bad debts. Notwithstanding the foregoing, the following shall not constitute Gross Operating Revenues: (i) any gratuities or service charges added to a customer's bill and distributed as compensation to the Hotel's employees; (ii) any credits or refunds made to customers, guests or patrons; (iii) any sums and credits received for lost or damaged merchandise; (iv) any sales taxes, excise taxes, or other similar taxes or 9 charges collected by the Hotel and remitted to tax authorities; (v) any proceeds from the sale or other disposition of FF&E or capital equipment; (vi) any interest earned with respect to the deposit or investment of proceeds from operation of the Hotel; (vii) any fire and extended coverage insurance proceeds (except that proceeds of business interruption or other loss of income insurance shall be included in Gross Operating Revenues); (viii) any condemnation awards; and (ix) any proceeds of sale or financing or refinancing of the Hotel. "Hazardous Substance" has the meaning ascribed to it in Section 8.4. "Hotel" means the hotel complex to be developed and constructed on the Hotel Site substantially in accordance with the Approved Plans, which will contain approximately (but not more than) 800, separately keyed sleeping rooms capable of individual rental on a day-to-day overnight basis to hotel patrons and guests. For the purpose of determining the maximum number of separately keyed sleeping rooms contained within the Hotel at any time during the Term, each such room which is capable of being separately keyed will be deemed to be separately keyed, without regard to the actual use thereof. "Hotel Operator" means and includes any Approved Operator engaged by Lessee to be responsible for overseeing the day- to-day management of the Hotel Project (or, if at any time there is no such operator, Lessee as operator of the Hotel Project). "Hotel Project" means Lessee's leasehold created by this Lease and the development, design, construction and purchase of the Lessee Improvements and their subsequent use; the completion of the Work substantially in accordance with the Approved Plans, including (1) the Hotel and all associated infrastructure (including on-site parking and all supporting Hotel facilities and amenities), (2) the Skybridge and all associated infrastructure, (3) the installation of FF&E and other improvements and appurtenances of every kind and description (including all landscaping, planting and other improvements of any type) now located or hereafter erected, constructed or placed upon the Leased Property; and (4) any and all alterations, renewals and replacements thereof, additions thereto and substitutions therefor. "Hotel Project General Construction Contract" means the construction contract between Lessee and the Hotel Project General Contractor for the construction of the Hotel Project in accordance with the Approved Plans, within the contract time specified for completion of the Work, for a guaranteed maximum price that will not exceed the sum allocated for construction of the Work in the Budgeted Improvement Costs, and that includes provisions requiring a Performance Bond and Payment Bond and all other terms or conditions required under this Lease. "Hotel Project General Contractor" means the duly licensed general contractor(s) engaged by Lessee for the construction of the Hotel Project and completion of the Work. "Hotel Site" means the parcel of real property described in Exhibit "D". "Hotel Standards" means the standards set forth in Exhibit "B". "Improvement Costs" means the actual, verifiable costs and expenses paid to third parties, not Affiliates of Lessee (unless such costs paid to Affiliates of Lessee are at fair market value and with notice to the City), in the design, permitting, development, construction and equipping of the Hotel Project; 10 "In Balance" means, at any time in question, that the sum of (a) the then unfunded amount of the Construction Loan available to Lessee for payment of costs of labor and materials to achieve Completion of Construction of the Hotel Project, plus (b) the then unfunded amount of the Mezzanine Loan, if any, available to Lessee for the payment of costs of labor and materials to achieve Completion of Construction of the Hotel Project, plus (c) the then remaining balance to be funded under the Equity Commitment, plus (d) the then remaining balance to be funded under the Initial Hotel Operator Financial Commitment, if any, plus (e) any additional cash amounts deposited with the City by Lessee in order to fund the difference, if any, between the sum of(a), (b), (c) and (d) above and the then remaining Improvement Costs is adequate to pay all of the then remaining Improvements Costs that are reasonably likely to be incurred through Complete Construction of the Hotel Project. "Initial Hotel Operator" means the initial Hotel Operator engaged by Lessee. "Initial Hotel Operator Financial Commitment" means the commitment of the Initial Hotel Operator to fund, in the aggregate, cash, to be used to pay Budgeted Improvement Costs, in such amount as may be necessary when combined with the Equity Commitment and the proceeds available under the Construction Loan and Mezzanine Loan, if any, to maintain the Hotel Project In Balance. "Institutional Lender" means, subject to the City Manager's Approval within twenty (20) days from receipt by the City of commercially reasonable information properly identifying the proposed Institutional Lender, including its financial qualifications, any of the following entities that have a net worth in excess of Fifty Million Dollars ($50,000,000) (as adjusted by inflation over the Term pursuant to Section 14.20 hereof): (a) any federal or state chartered commercial bank or national bank or any of its subsidiaries; (b) any federal or state chartered savings and loan association, savings bank or trust company; (c) any pension, retirement or welfare trust or fund, whose loans on real estate are regulated by state or federal laws; (d) any public limited partnerships, public real estate investment trust or other public entity investing in commercial mortgage loans whose loans on real estate are regulated by state or federal laws; (e) any state licensed life insurance company in the business of making commercial mortgage loans or a subsidiary or affiliate of any such institution whose loans on real estate are regulated by state or federal laws; (f) any agent, designee, or nominee of an Institutional Lender that is an Affiliate (solely as described in clause (a) of the definition thereof) of any Institutional Lender or any other Person that is a subsidiary or an Affiliate (solely as described in clause (a) of the definition thereof) of an Institutional Lender; and (g) Any private debt fund having assets in excess of$2 billion. 11 In the event of a syndicated loan, if fifty-one percent (51%) or more of the syndicate of lenders are Institutional Lenders, then the syndicated loan shall be deemed to be made by an Institutional Lender. City Manager's failure to notify Lessee of any disapproval within such twenty (20) day period shall be deemed to constitute the City Manager's conclusive Approval of the proposed Institutional Lender. "Insurance Trustee" has the meaning ascribed to it in Section 9.9(a). "Land Development Regulations" shall have the meaning set forth in Section 163.3221(8), Florida Statutes and shall also include the definition of "land development regulations" in Section 114-1 of the City Code. "Lease" means this Development and Ground Lease Agreement, and all exhibits annexed hereto and made a part hereof, as the same may be modified or amended from time to time. "Leased Property" means the Hotel Site. "Leasehold Mortgage" means a mortgage, including an assignment of the rents, issues and profits from the Hotel Project or other security instrument in favor of a Leasehold Mortgagee, which constitutes a lien on Lessee's leasehold interest created by this Lease during the Term. "Leasehold Mortgagee" means an Institutional Lender that is the owner and holder of a Leasehold Mortgage. "Lease Year" means a year, other than the first and last year of the Term, consisting of twelve (12) consecutive calendar months. The first Lease Year during the term of this Lease shall commence on the Rent Commencement Date and end on December 31st of the year in which the Rent Commencement Date occurs. The second and following Lease Years shall commence on the 1st day of January each calendar year and end on December 31St of such year. "LEED Status" means a certification by the U.S. Green Building Counsel's ("USGBC") Leadership in Energy and Environmental Design ("LEED")that the Hotel Project has satisfied all of the requirements associated with the then current USGBC Silver LEED certification. "Lessee" means Portman Miami Beach, LLC, and the successors, assigns or transferees thereof expressly Approved or permitted by the terms and provisions of this Lease. An executed copy of Lessee's limited liability company documents is on file with the City as set forth on Exhibit "T". "Lessee Improvements" means any and all permanent buildings, structures and machinery, equipment and fixtures, which are existing and may from time to time and at any time during the Term be erected or located on the Leased Property, including the Hotel and associated infrastructure and the Skybridge and associated infrastructure. "Liquid Assets" means (a) cash on hand or on deposit in any federal or state chartered commercial bank or national bank or any of its subsidiaries, (b) readily marketable securities, (c) readily marketable commercial paper rated A-1 by Standard & Poor's Corporation (or a similar rating by any similar organization that rates commercial paper), (d) certificates of deposit issued by commercial banks operating in the United States with maturities of one year or less, (e) money market mutual funds, and (f)the uncommitted amount of any available line(s) of credit. 12 "Management Agreement" means the hotel operating or management agreement, as it may be extended, supplemented, amended or replaced from time to time, between Lessee and the Hotel Operator and which provides Lessee with the right to use the name or flag of the Hotel (if Lessee does not otherwise have such rights), and specifies the terms and conditions applicable to the day-to-day management of the Hotel, including the obligation of the Hotel Operator to comply with the Room Block Agreement. "Mandatory Hotel Proiect Design Elements" means the design features, components or other elements of the Hotel Project to be developed by the Lessee as further described on Exhibit «S„ "MBCC Project" means the Miami Beach Convention Center Renovation and Expansion Project, consisting of the renovation of the Convention Center, expansion of ballroom and auxiliary spaces, parking levels above portions of the Convention Center, exterior landscaping and a 6.5 acre public park, the renovation of Convention Center Drive, including relocation of utilities, and other improvements to the Convention Center and surrounding areas. "MBCC Standard of Operation" means the average standard of quality for the facilities and associated infrastructure consistent with the principal convention centers operated in Orlando, Atlanta, New Orleans, Dallas, Houston, Boston, Chicago, San Francisco, San Diego and Los Angeles, as of the Effective Date. "Mezzanine Lender" means (a) the Institutional Lender selected by Lessee to provide the Mezzanine Loan or (b) a Hotel Operator, or an Affiliate thereof, to the extent it is providing a Mezzanine Loan or Credit Enhancement and is receiving a pledge of the equity interests in Lessee. "Mezzanine Loan" means a loan to be made by the Mezzanine Lender to the Lessee to provide financing for the Hotel Project, subordinate to the First Leasehold Mortgagee, which may be secured by a lien on Lessee's equity interest. "Mezzanine Loan Commitment" means a mezzanine financing commitment by the Mezzanine Lender that has been executed and delivered by and between Lessee and the Mezzanine Lender that confirms the availability of the Mezzanine Loan. "Minimum Fixed Rent" has the meaning ascribed to it in Section 4.4(a)(i). "Off-Site Improvements" means any and all improvements not located on the Leased Property shown on the Approved Plans and in accordance with the Governmental Approvals, including demolition of any portion of the Fillmore Theater located on the Leased Property, enclosure of any remaining portion of the Fillmore Theater located outside the Leased Property, and paving and striping of up to twenty-five surface parking spaces for Fillmore Theater personnel as depicted in Exhibit "U". "Opening Date" means the date on which the Hotel first opens for business to the general public. "Original Lessee Investors" means the owners of Lessee on the date hereof, as identified on Exhibit "M". 13 "Outside Construction Commencement Date" means March 29, 2018, by which date Commencement of Construction must take place, as such date may be reasonably extended for (i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease, (ii) City Delays, and/or (iii) the number of days by which Commencement of Construction of the MBCC Project is delayed beyond January 1, 2016, if any. "Outside Construction Loan Closing Date" means March 29, 2018, as such date may be reasonably extended in accordance with this Lease for a period not exceeding twelve (12) months for (i) actual delays suffered by Lessee in achieving closing of the Construction Loan caused by a Force Majeure Event or Economic Force Majeure, (ii) City Delays, and/or (iii) the number of days by which Commencement of Construction of the MBCC Project is delayed beyond January 1, 2016, if any. "Outside Completion Date" means February 11, 2020, by which date Completion of Construction shall have occurred, as such date may be reasonably extended by (i) the number of days by which the Outside Construction Commencement Date was extended, and thereafter for (ii) a Force Majeure Event or Economic Force Majeure in accordance with this Lease, (iii) City Delays, and/or (iv) the number of days by which completion of construction of the MBCC Project is delayed beyond January 1, 2019, if any, but only if and to the extent such delays preclude the Convention Center from holding events that utilize the Convention Center's four main exhibition halls. "Outside Opening Date" means April 12, 2020, the date by which the Opening Date must have occurred, as such date may be reasonably extended by (i) the number of days by which the Outside Construction Commencement Date was extended, and thereafter for (ii) a Force Majeure Event or Economic Force Majeure in accordance with this Lease, (iii) City Delays, and/or (iv) the number of days by which the completion of construction of the MBCC Project is delayed beyond January 1, 2019, if any, but only if and to the extent such delays preclude the Convention Center from holding events that utilize the Convention Center's four main exhibition halls. "Outside Possession Date" means March 29, 2018, by which date the Possession Conditions must be satisfied, as such date may be reasonably extended for (i) a Force Majeure Event or Economic Force Majeure in accordance with this Lease, (ii) City Delays, and/or (iii) the number of days by which Commencement of Construction of the MBCC Project is delayed beyond January 1, 2016, if any. "Parties" means City and Lessee, and "Party" is a reference to either City or Lessee, as the context may indicate or require. "Performance Bond and Payment Bond" means a performance bond and a payment bond with regard to the Hotel Project General Construction Contract in the full amount of the guaranteed maximum price thereof, with a good and sufficient surety, in compliance with all applicable Governmental Requirements and in form and content Approved by the City Manager, or such other security as is reasonably acceptable to the City Manager, after consultation with the City Attorney. "Permitted Transfers" has the meaning ascribed to it in Section 5.3. "Person" means any corporation, unincorporated association or business, limited liability 14 company; business trust, real estate investment trust, common law trust, or other trust, general partnership, limited partnership, limited liability limited partnership, limited liability partnership, joint venture, or two or more persons having a joint or common economic interest, nominee, or other entity, or any individual (or estate of such individual); and shall include any Governmental Authority. "Portman" means Portman Holdings, LLC, a Georgia limited liability company. "Portman Estimated Equity Contribution" means an amount up to $17,000,000 but not less than the Portman Minimum Equity Contribution to be funded in cash by Portman or one of its Affiliates to pay Improvement Costs. "Portman Minimum Equity Contribution" means $10,000,000 to be funded in cash by Portman or one of its Affiliates to pay Improvement Costs. "Possession Conditions" has the meaning ascribed to it in Section 4.1(b). "Possession Date" has the meaning ascribed to it in Section 4.1(b). "Prohibited Hotel Project Changes" means (a) after the Effective Date and prior to the Possession Date, any changes to the Approved Plans that result in any of the following except to the extent previously Approved in a writing executed by the City Manager and expressly providing that the City Manager is thereby Approving a Prohibited Hotel Project Change (which Approval may be granted or withheld by City Manager in his sole and absolute discretion), or which are required because of Governmental Requirements: (i) a failure of the Hotel Project to contain any of the Mandatory Hotel Project Design Elements, or a material change to the design thereof; (ii) failure to obtain any Brand Approval; (iii) a material change in the massing of the development, including the orientation and general configuration of the tower structure or the size and configuration of the tower structure and podium design reflected in the Approved Plans, or (iv) any change that materially affects the façade of the Hotel Project Approved by the City, or otherwise materially affects the exterior appearance of the Hotel Project or materially impairs the ability of the Hotel Project to function as a convention center hotel, or (b) after the Possession Date and prior to the Opening Date, any changes to the Approved Plans or any actual construction that results in any of the following, except to the extent previously Approved in a writing executed by the City Manager and expressly providing that the City Manager is thereby Approving a Prohibited Hotel Project Change (which Approval may be granted or withheld by City Manager in his sole and absolute discretion), or which are required because of Governmental Requirements: (i) a failure of the Hotel Project to contain any of the Mandatory Hotel Project Design Elements, or a material change to the design thereof; (ii) failure to obtain any Brand Approval; (iii) a material change in the design or actual scope, appearance or quality of any of the Mandatory Hotel Project Design Elements; (iv) a material change in the massing of the development, including the orientation and general configuration of the tower structure or the size and configuration of the tower structure and podium design reflected in the Approved Plans, or(v) any change that materially affects the façade of the Hotel Project Approved by the City, or otherwise materially affects the exterior appearance of the Hotel Project or materially impairs the ability of the Hotel Project to function as a convention center hotel. 15 "Project Expenses" means: (a) commercially reasonable operating expenses of the Hotel Project incurred to Persons other than Affiliates of the Lessee (unless such expenses paid to Affiliates of Lessee are at a fair market rate and with notice to the City); (b) commercially reasonable wages and benefits paid and payable to the Hotel Operator's full time or part-time on-site or off-site management employees and full or part-time non-management employees; and (c) commercially reasonable management fees, at prevailing market rates. "Proposed Transferee" has the meaning ascribed to it in Section 7.10(b). "Public Charges" has the meaning ascribed to it in Section 4.5(a). "Reconstruction Work" has the meaning ascribed to it in Section 9.9(b). "Rent" means all payments required pursuant to Section 4.4 and any other payments characterized as rent hereunder, including Base Rent, Additional Rent and Transaction Rent. "Rent Commencement Date" has the meaning ascribed to it in Section 4.4(a). "Rent Year" has the meaning ascribed to it in Section 4.4(a). "Responsible Officer" means any executive officer or manager of Lessee responsible for the administration of the obligations of Lessee in respect of this Lease. "Room Block Agreement" means the room block agreement, in the form of Exhibit "L" attached hereto, to be executed by and between the City and the Lessee, and pursuant to which Lessee agrees to provide the services therein described to City in exchange for the agreements of City hereunder. "Schedule of Performance" has the meaning ascribed to it in Section 2.7. "Second Rent Year" has the meaning ascribed to it in Section 4.4(a). "Section," "Subsection," "Paragraph," "Subparagraph," "Clause," or "Subclause" followed by a number or letter means the section, subsection, paragraph, subparagraph, clause or subclause of this Lease so designated. "Single Purpose Entity" means: (a) an entity or organization that does not and cannot by virtue of its organizational documents: (i) engage in any business other than owning, developing, leasing and operating the Hotel Project; or (ii) acquire or own material assets other than the Hotel Project and incidental personal property; and that 16 • (b) does not hold itself out to the public as anything but a legal entity or organization separate from any other Person; and (c) conducts business solely in its name or under a duly registered fictitious name. "Skybridge" means the overhead, enclosed, climate-controlled pedestrian walkway to be constructed, operated and maintained by Lessee in accordance herewith connecting the Hotel Project to the Convention Center and included in the Hotel Site described on Exhibit"D". "Sublease" means any lease, sublease, license or other agreement by which Lessee demises, leases, or licenses the use and occupancy by another Person of one or more specific retail, parking/valet, spa or restaurant spaces, or other defined portion of the Hotel Project. "Subtenant" means any Person using and occupying or intending to use and occupy one or more specific spaces or other defined portion of the Hotel Project pursuant to a Sublease. "Target Dates" means the following dates that have been targeted by Lessee to achieve the following activities or events: (a) The "Target Possession Date": the date targeted for satisfaction of the Possession Conditions, which date is April 28, 2017. (b) The "Target Construction Loan Closing Date": the date targeted for Lessee's closing of the Construction Loan for the Hotel Project, which date is April 28, 2017. (c) The "Target Completion Date": the date targeted for completion of construction of the Hotel Project, which date is April 13, 2019. "Term" ha the meaning ascribed to it in Section 4.1(a). st g "Third Rent Year" has the meaning ascribed to it in Section 4.4(a). "Transaction Rent" shall have the meaning ascribed to it in Section 4.4(b). "Transfer" means any sale, assignment or conveyance or any other transaction or series of transactions in the nature of a sale, assignment or conveyance of: (a) the Hotel Project or any part thereof; (b) any legal or beneficial interest in the Hotel Project, or any part thereof; (c) any direct or indirect legal or beneficial interest in Lessee (including the syndication of tax benefits); or any series of such Transfers that have the cumulative effect of a sale, transfer or conveyance of any of the foregoing (a), (b), or(c). "Uniform System" means the Uniform System of Accounts for the Lodging Industry, 10th Revised Edition, as may be modified from time-to-time by the International Association of 17 Hospitality Accountants, consistently applied, or any successor thereto generally recognized by the Lodging Industry. "Work" means the design, permitting, development and construction of the Lessee Improvements in accordance with the Approved Plans, including all design, architectural, engineering and other professional services, demolition and construction services, supervision, administration and coordination services and the provision of all drawings, specifications, labor, materials, equipment, supplies, tools, machinery, utilities, fabrication, transportation, storage, insurance, bonds, permits and conditions thereof, zoning approvals, changes required to comply with building codes and Governmental Approvals, licenses, tests, inspections, surveys, studies, and other items, work and services that are necessary or appropriate for the demolition of existing structures and other preparatory or remediation work on the Hotel Site; utility relocations, installations, hook-ups or other infrastructure as may be required to make the Leased Property suitable for the use of the Hotel Project; total design, construction, installation, furnishing, equipping, and functioning of the Lessee Improvements, together with all additional, collateral and incidental items, work and services required for completion of the Lessee Improvements (including all such items, work and services as are necessary to provide fully functional and functioning Lessee Improvements). The Work also includes completion of all Off- Site Improvements. Section 1.4. Exhibits. If any exhibit to this Lease conflicts with the body of this Lease, the body of this Lease shall govern. Section 1.5. Interpretation. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as appropriate. The words "herein," "hereof," "hereunder," "hereinafter," and words of similar import refer to this Lease as a whole and not to any particular Article, Section or Subsection hereof. The terms "include" and "including" and words of similar import shall each be construed as if followed by the phrase "without limitation". This Lease will be interpreted without interpreting any provision in favor of or against either party by reason of the drafting of such provision. ARTICLE II THE HOTEL PROJECT IMPROVEMENTS Section 2.1. Development and Conformity of Plans. (a) Lessee shall be responsible for preparing all plans and specifications for constructing the Hotel Project. Such plans and specifications shall conform in all material respects to the Approved Plans; (b) Notwithstanding any other provision or term of this Lease or any Exhibit hereto, the Approved Plans and all work by Lessee regarding the Hotel Project shall conform to the City Code, the Florida Building Code and all other Governmental Requirements and, to the extent consistent with the above, the provisions of this Lease. Section 2.2. Approved Plans. The City shall have the right to Approve, in its sole discretion, (x) any substantial deviation of the Hotel Project from the Approved Plans and (y) any Prohibited Hotel Project Changes. Notwithstanding any Approval provided pursuant to this Section 2.2, Lessee shall be solely responsible for obtaining all required final, non-appealable Governmental Approvals as more fully set forth in Article IV of this Lease. Any Approval of the Approved Plans 18 or any component thereof by the City shall be for its own benefit in its proprietary capacity as the owner of the Leased Property and shall not be deemed to mean, and the City, in such proprietary capacity, makes no representation, that such Approved Plans comply with all applicable Governmental Approvals and Governmental Requirements. (a) Lessee shall submit to the City Manager, prior to Commencement of Construction, any proposed modifications to the Approved Plans for the City Manager's determination of whether such modifications include any substantial deviation of the Hotel Project from the Approved Plans or Prohibited Hotel Project Changes. Modifications to the Approved Plans shall be indicated by "ballooning," highlighting, blacklining or describing such modifications in writing in reasonable detail in an accompanying memorandum. The City shall not be responsible for, and shall not be deemed to have Approved, any modification to the Approved Plans that is not indicated as required by this Section. (b) Within twenty-one (21) days of receipt of any proposed modifications to the Approved Plans, the City Manager shall notify Lessee, in writing, that he approves such modifications, or the basis for any disapproval of any substantial deviation of the Hotel Project from the Approved Plans or Prohibited Hotel Project Change; provided, however, that the City shall not disapprove any material modification necessitated by Governmental Requirements. City's failure to notify Lessee of any disapproval within such twenty-one (21) day period shall be deemed to constitute the City's conclusive Approval of the proposed modifications to the Approved Plans. The Approved Plans, as amended by such Approved modifications, shall thereafter be the Approved Plans referred to herein. (c) If the City disapproves of any modification pursuant to this Section 2.2, then Lessee shall, at its election, either(x) submit City's disapproval to expedited arbitration pursuant to Section 7.9 of this Lease, or (y) within thirty (30) days after receiving the City's disapproval notice, submit revised proposed modifications to the Approved Plans for City's review and Approval as provided in this Section 2.2, provided that the time period for approval or disapproval shall be fifteen (15) days. (d) At any time during the design development phase of the Hotel Project, Lessee may (but shall not be required to) submit to the City Manager any proposed modifications to the Approved Plans for City's review and Approval pursuant to this Section 2.2, so as to mitigate or avoid any potential delays to the Schedule of Performance as a result of disputes regarding the final proposed Approved Plans. Section 2.3. Lessee's Hotel Project Obligations. Subject to the terms hereof, Lessee is obligated to and shall (i) design, permit, and construct, in a good and workmanlike manner, and at its sole cost and expense, the Hotel Project in all material respects in accordance with and subject to all of the terms and provisions of this Lease and to Complete Construction thereof by the Outside Completion Date, (ii) obtain a certificate of the LEED Status in accordance with Section 100-6 of the City Code and provide reasonable evidence of such certification to City within a reasonable period following the Opening Date, and (iii) operate, maintain, repair and replace, at its sole cost and expense, the Hotel Project in accordance with and subject to all of the terms and provisions of this Lease. 19 Section 2.4. Payment of Hotel Project Costs. (a) As between Lessee and the City, the Lessee shall bear and be solely responsible for all costs and expenses related to the design, permitting and construction of the Work, the Hotel Project and its subsequent use, including the following: (i) Lessee's land use approvals, development fees, and permit fees for the design, construction, and subsequent use of the Hotel Project; (ii) Lessee's design and construction of the Hotel Project; (iii) Lessee's financing, construction bonding and insurance, building permits, utility installations and/or hook-ups or other infrastructure, as may be required to make the Leased Property suitable for the use of the Hotel Project; (iv) Lessee's consultants, accountants, financing charges, legal fees, furnishings, equipment, and other personal property of the Lessee; and (v) all other Lessee direct or indirect costs associated with the approvals, design, construction, and financing of the Lessee Improvements, and their subsequent use. (b) Lessee acknowledges that the City shall have no maintenance responsibility for any of the Leased Property and Lessee Improvements, and utilities and infrastructure to be constructed by Lessee. (c) Lessee shall be exclusively responsible for all matters relating to underground utility lines and facilities, including locating, relocating and/or removal, as necessary. Under no circumstances shall City be responsible for paying the cost of, or otherwise reimbursing Lessee for, relocation, removal, or payment of charges to utility companies for, any utility lines or facilities lying on, under, or around the Leased Property. City shall provide reasonable cooperation and assistance to Lessee in the resolution of issues associated with existing underground utilities. Lessee shall not remove, disturb, or relocate any existing utilities on the Leased Property without the City Manager's prior written Approval. Section 2.5. Financing Matters. (a) Lessee shall pay for all Improvement Costs from funds required to be provided under the Equity Commitment, the Initial Hotel Operator Financial Commitment, the Construction Loan and the Mezzanine Loan, if any; provided that if the proceeds of the Construction Loan are not available or are inadequate for any reason, Lessee shall be responsible to provide funds from such other sources as Lessee may identify to pay all costs and expenses necessary to Complete Construction of the Hotel Project and cause the Opening Date to occur in accordance herewith. (b) Lessee shall be solely responsible for obtaining the Construction Loan and the Mezzanine Loan, if any, for all completion guaranties required in connection with the Construction Loan and the Mezzanine Loan, if any, and for providing all collateral and other security, and otherwise satisfying all conditions thereof and covenants, agreements and obligations of the borrower thereunder. In no event shall City have any responsibility, obligation or liability with respect to the Construction Loan or the Mezzanine Loan, if any, and Lessee shall reimburse City for all of City's third party costs and expenses (including attorneys' fees) 20 reasonably incurred in connection with any requirements or requests of the Construction Lender in connection with the Construction Loan or the Mezzanine Lender in connection with the Mezzanine Loan, if any. Section 2.6. No Claim for Value of Lessee Improvements. Lessee shall have no claim against the City for the value of the Lessee Improvements following any termination of this Lease, whether at the natural expiration of the Term or otherwise, except, with respect to any claims against the City acting in its governmental capacity, any claims related to a condemnation by the City. Section 2.7. Schedule of Performance. The schedule attached hereto as Exhibit "F" (the "Schedule of Performance") sets forth the dates and times of delivery of the Hotel Project, including the Target Dates, and other milestones for development and approval of the plans and specifications listed in Section 2.2, preparation and filing of applications for and obtaining all applicable Governmental Approvals for the Hotel Project and schedule for the completion of the Work. Lessee shall prosecute completion of the Work substantially in accordance with the Approved Plans (with only such changes hereto that do not constitute Prohibited Hotel Project Changes, except as otherwise permitted or Approved pursuant to this Lease), with all commercially reasonable diligence and in good-faith, in good and workmanlike manner, and in accordance with the Schedule of Performance, time being of the essence. The dates in Exhibit "F" shall not be extended except for (i) a Force Majeure Event, (ii) Economic Force Majeure, (iii) a City Delay, (vi) the number of days by which Commencement of Construction of the MBCC Project is delayed beyond January 1, 2016, if any; and (iv) the number of days by which the completion of construction of the MBCC Project is delayed beyond January 1, 2019, if any, but only if and to the extent such delays preclude the Convention Center from holding events that utilize the Convention Center's four main exhibition halls. If the Parties disagree with respect to any permitted delays in the Schedule of Performance, such disagreement shall be resolved in accordance with Section 7.9 hereof. (a) Lessee shall endeavor, through the use of diligent, good-faith efforts, to cause the prosecution of the Work in accordance with the Target Dates and other dates set forth in the Schedule of Performance, but failure to meet the Target Dates shall not be a default under this Lease. (b) As further delineated in the Schedule of Performance, Lessee shall Complete Construction by the Outside Completion Date. (c) The failure of Lessee (i) to satisfy all of the Possession Conditions by the Outside Possession Date, (ii) after Commencement of Construction has occurred, to Complete Construction by the Outside Completion Date or (ii) after Commencement of Construction has occurred, to achieve the Opening Date by the Outside Opening Date shall each be deemed an Event of Default under this Lease. Section 2.8. Construction Obligations. (a) Bonds. By no later than Commencement of Construction, Lessee shall provide a Performance Bond and Payment Bond, with all premiums paid and in favor of Lessee with an obligee rider in favor of the City and the First Leasehold Mortgagee. Lessee shall also provide City with a demolition bond or other form of financial instrument reasonably acceptable to City to assure the availability of funds for demolition or removal of any uncompleted facility in the event 21 Lessee, after receipt of a written demand from City, fails to demolish and remove the uncompleted facility following Lessee's failure to substantially complete such facility as required herein. (b) Approval of Hotel Project General Contractor. Lessee's selection of the Hotel Project General Contractor shall be subject to the advance Approval of the City Manager, after consultation with the City Attorney, as to the qualifications and responsibility of the proposed Hotel Project General Contractor to perform the contract, based on the contractor's licensure, bonding capacity, financial capacity, history of compliance with laws, and satisfactory past performance on similar projects. Provided that the Hotel Project General Contractor proposed by Lessee does not have a significant history of material non-compliance with the law, City agrees to Approve any Hotel Project General Contractor proposed by Lessee that satisfies each of the following: (i) Has a State of Florida Building and Business License; (ii) Has completed at least one project in the past three years under a construction contract that specified a guaranteed maximum price at or above $100,000,000; (iii) Has completed at least one high-rise hotel of at least eight (8) stories and four hundred (400) rooms in the last 5 years; and (iv) Has total bonding capacity in excess of$1 Billion with at least $250,000,000 available for a single project. (c) Construction Obligations. Prior to the Outside Completion Date, Lessee shall, or shall cause its Hotel Project General Contractor to: (i) Perform and complete the Work; (ii) Select the means and methods of construction. Only adequate and safe procedures, methods, structures and equipment shall be used; (iii) Furnish, erect, maintain and remove such construction plant and such temporary work as may be required; and be responsible for the safety, efficiency and adequacy of the plant, appliance and methods used and any damage which may result from failure, improper construction, maintenance or operation of such plant, appliances and methods; (iv) Provide all architectural and engineering services, scaffolding, hoists, or any temporary structures, light, heat, power, toilets and temporary connections, as well as all equipment, tools and materials and whatever else may be required for the proper performance of the Work; (v) Order and have delivered all materials required for the Work and shall be responsible for all materials so delivered to remain in good condition; (vi) Maintain the Hotel Project site in a clean and orderly manner at all times, and remove all paper, cartons and other debris from the Hotel Site; (vii) Erect, furnish and maintain a field office with a telephone at the Hotel Site during the period of construction in which a supervisor-level employee shall be on site during the performance of any Work in connection with the Hotel Project; and cause the Hotel Project 22 General Contractor to require in each subcontract having a price in excess of $5,000,000 (and to require each subcontractor to require in each sub-subcontract having a price in excess of $5,000,000) that such subcontractor (and sub-subcontractor) have on-site a supervisor-level employee at all times during the performance of any. Work under such subcontract (and sub- subcontract); (viii) Protect all Work prior to its completion and acceptance; (ix) Preserve all properties adjacent and leading to the Hotel Site and restore and repair any such properties damaged as a result of construction of the Hotel Project, whether such properties are publicly or privately owned; (x) Implement, and maintain in place at all times, a comprehensive hurricane and flood plan for the Hotel Site and the Work, and provide a copy of same to the City; (xi) Upon Completion of Construction, deliver to the City as built drawings and plans and specifications of the Hotel Project; and (xii) Upon Completion of Construction, deliver to the City, a copy of the final certificate of occupancy or certificate of completion, as applicable, for the Hotel Project. Notwithstanding any provision hereof to the contrary, at no time during construction of the Hotel Project may Lessee make any Prohibited Hotel Project Changes without the express, prior written Approval of City (which Approval may be granted or withheld by City in City's sole and absolute discretion). (d) Completion of Construction. Lessee shall carry on any construction, maintenance or repair activity with diligence and dispatch and shall use diligent, good-faith efforts to complete the same in accordance with the Schedule of Performance. Lessee shall not, except if an emergency exists (then only to the extent that the City can grant such an exception), carry on any construction, maintenance or repair activity in any easement area that unreasonably interferes with using and enjoying the property encumbered by such easement. (e) Skybridge and Off-Site Improvements. Lessee shall deliver the proposed Approved Skybridge and Off-Site Improvements Plans to the City for Approval as required to maintain the Schedule of Performance. The 25 surface parking spaces for Fillmore Theater personnel to be constructed by Lessee as part of the Off-Site Improvements will be constructed as depicted on Exhibit "U" hereto. Lessee shall have no obligations or liabilities with respect to the ownership or operation of such parking spaces after completion. Section 2.9. Progress of Construction/City's Representative. (a) Lessee shall keep the City apprised of Lessee's progress regarding the Work. Lessee shall deliver written reports of same not less than monthly; and (b) The City may, from time-to-time, designate one or more employees or agents to be the City's representative ("City's Representative"), who may, during normal business hours, in a commercially reasonable manner, visit, inspect and monitor the Hotel Project, the materials to be used thereon or therein, contracts, records, plans, specifications and shop drawings relating thereto, whether kept at Lessee's offices or at the Hotel Project construction site or 23 elsewhere, and the books, records, accounts and other financial and accounting records of Lessee wherever kept, as often as may be requested. Further, City's Representative shall be advised of, and entitled to attend, meetings among Lessee, Lessee's representative and the Hotel Project General Contractor or any subset of this group. Lessee will cooperate with the City to enable City's Representative to conduct such visits, inspections and appraisals. Lessee shall make available to City's Representative for inspection, with commercially reasonable notice, daily log sheets covering the period since the immediately preceding inspection showing the date, weather, subcontractors on the job, number of workers and status of construction. Section 2.10. Delivery of Plans. Promptly after completing the Work and Lessee's receipt of a Certificate of Occupancy, as applicable, for the Work, Lessee will deliver to the City a copy of the plans and specifications, including shop drawings, for the Lessee Improvements. Section 2.11. Connection of Buildings to Utilities. (a) Lessee, at its sole cost and expense for the Leased Property and in compliance with all Governmental Approvals and Governmental Requirements, shall install or cause to be installed all necessary connections between the Lessee Improvements, and the water, sanitary and storm drain mains and mechanical and electrical conduits whether or not owned by the City. (b) Lessee shall pay for the cost, for the Leased Property, if any, of locating, grounding and installing within the Leased Property, as applicable, new facilities for sewer, water, electrical, and other utilities as needed to service the Hotel Project, and, at its sole cost and expense for the Leased Property, will install or cause to be installed inside the property line of the Leased Property, all necessary utility lines, with adequate capacity and the sizing of utility lines for the Hotel Project, as contemplated on the Approved Plans. (c) Lessee shall perform, or cause to be performed, all Work on the Leased Property so as not to interfere with or adversely affect in a material way the City's geothermal system located adjacent to the Leased Property. In the event that Lessee, Hotel Project General Contractor or their respective agents, representatives, employees or invitees causes any damage to such system, Lessee shall promptly repair and restore same to its condition existing immediately prior to such damage, unless such damage results from the geothermal system being located other than as shown on the as-built plans provided by the City and set forth on Exhibit "P" hereto, or as shown in any updated information as to the location of the geothermal system that may be provided to Lessee by the City prior to Commencement of Construction of the Hotel Project or Off-Site Improvements. In the event City updates the information set forth in Exhibit "P" such that the location of the geothermal system is either on the Leased Property or so close to the Leased Property that it impacts the foundations for the Hotel Project and a significant re-design of the Hotel Project is required, the Lessee shall be entitled to an equitable adjustment for the design and construction-related costs solely and directly attributed to the differing location of the geothermal system, in the form of a credit against Base Rent otherwise due to the City, subject to mutual agreement of the Parties with respect thereto. The Schedule of Performance and all succeeding Outside Dates shall be adjusted to reflect the additional time required for such re-design work and the modification or obtaining of any permits required in connection therewith. This paragraph shall expressly survive termination of this Lease. 24 Section 2.12. Permits and Approvals. Lessee shall secure and pay for all Governmental Approvals for the Work, including any alterations and renovations made pursuant to Section 2.15, and shall pay any and all fees and charges due to and collected by the City or any other Governmental Authority connected with issuing such Governmental Approvals, if any. Section 2.13. City and Lessee to Join in Certain Actions. Within fifteen (15) days after receiving a written request from Lessee that is consistent with all Governmental Requirements and in accordance with this Lease, the City shall join Lessee when required by law in any and all applications for Governmental Approvals as may be commercially reasonably necessary for constructing of the Hotel Project. Lessee shall pay all fees and charges for all such applications. Failure of the City to perform as requested within such fifteen (15) day period shall be deemed a City Delay for the number of days of delay beyond such fifteen (15) day period. Section 2.14. Compliance with Laws. Lessee will comply with any Governmental Requirements in constructing and operating the Hotel Project. Section 2.15. Alterations and Renovations. After completing the Work, if Lessee wishes to make alterations or renovations thereof: (a) no renovation or alteration shall be made until Lessee obtains all required Governmental Approvals, at Lessee's sole cost and expense; (b) except for FF&E, any renovation or alteration of Lessee Improvements that involves a substantial deviation from the Approved Plans or otherwise substantially affects the overall character or appearance of the exterior of the Hotel Project, unless required by Governmental Requirements shall require the City's approval in its proprietary capacity in its sole discretion; and (c) all such alterations and renovations shall be performed by duly licensed and insured contractors in a good and workmanlike manner, and in any event, shall be consistent with the Hotel Standards. Section 2.16. Art in Public Places. Lessee shall comply with the City's Art In Public Places (AIPP) program requirements under Section 82-536 through 82-612 of the City Code, as applicable, and shall contribute to the City's Art in Public Places fund the total of 1.5% of the "construction cost" of the Hotel Project, as such term is defined in Section 82-537 of the City Code, no later than date of execution of the Hotel Project General Contract by Lessee and the Hotel Project General Contractor, as required by the City Code. ARTICLE III LAND USES AND DEVELOPMENT OBLIGATIONS Section 3.1. Covenant Regarding Land Uses. Lessee agrees and covenants to devote, during the Term of this Lease, the Hotel Project only to the uses specified in this Lease and to be bound by and comply in all material respects with all of the provisions and conditions of this Lease. In addition, and except as hereinafter set forth, Lessee shall not have the right to seek or obtain different uses or a change in such uses either by requesting a zoning change or by court or administrative action without first obtaining the City's Approval, which Approval may be granted or denied in the City's sole-discretion. 25 Section 3.2. Applications for Development Approvals and Development Permits. Promptly following the Effective Date of this Lease, the Lessee will initiate and diligently pursue all applications for Development Orders and Development Permits that may be required in connection with the Hotel Project. Lessee shall be solely responsible for obtaining all final, non- appealable Development Orders and Development Permits for the Hotel Project. No extension of any time period herein shall be deemed to be an extension of any time periods contained within the Development Permits or Development Orders. Section 3.3. Concurrency. Lessee shall be solely responsible for obtaining all land use permits, including all permits and approvals required pursuant to Section 163.3180, Florida Statutes, with respect to concurrency requirements for roads, sanitary sewer, solid waste, drainage, potable water, parks and recreation, and schools (the "Concurrency Requirements"). Prior to applying for its building permit for the Hotel Project, Lessee shall apply to the appropriate Governmental Authorities and obtain letters or other evidence that Lessee has obtained all applicable Concurrency Requirements, and shall diligently and in good faith obtain such letters or other evidence that the Hotel Project meets all applicable Concurrency Requirements and shall pay such impact fees as may then be due or applicable to meet Concurrency Requirements. Section 3.4. Compliance with Local Regulations Regarding Development Permits. This Lease is not and shall not be construed as a Development Permit, approval or authorization to commence any development, fill, or other land modification. The Lessee and the City agree that the failure of this Lease to address a particular permit, approval, procedure, condition, fee, term or restriction in effect on September 2, 2015 shall not relieve Lessee of the necessity of complying with the regulation governing said permitting requirements, conditions, fees, terms or restrictions, subject to the terms of this Lease. Section 3.5. Consistency with the City's Comprehensive Plan. The City has adopted and implemented the Comprehensive Plan. The City hereby finds and declares that the provisions of this Lease dealing with the Hotel Site and the Hotel Project are consistent with the City's Comprehensive Plan and Land Development Regulations (subject to all applicable requirements, permits and approvals). Section 3.6. Presently Permitted Development. The development that is presently permitted on the Leased Property, including population densities, and building intensities and height, which are subject to this Lease, are more specifically set forth in Exhibit "H" hereto. Section 3.7. Public Facilities to Serve the Leased Property. A description of the public facilities that will service the Hotel Project of the properties subject to this Lease, including who shall provide such facilities; the date any new facilities, if needed, will be constructed; and a schedule to assure public facilities are available concurrent with the impacts of the development is included as Exhibit"I" hereto. Section 3.8. Public Reservations, Dedications. A description of the reservations and/or dedications of land for public purposes that are proposed under the terms of this Lease is included as Exhibit"J" hereto. Section 3.9. Required Development Permits. Attached and made a part hereof as Exhibit "K" is a listing and description of certain local development permits approved or needed to be approved for the development of the Hotel Project, provided that City makes no representation or warranty that the information set forth on Exhibit "K" is correct or complete, Lessee releases 26 City from any liability with respect to such information and Lessee acknowledges and Lessee agrees that Lessee is solely responsible for confirming the correctness and completeness of such information and obtaining all applicable Governmental Approvals whether or not set forth on Exhibit "K". Section 3.10. Responsible Wages and Local Employment. The City and Lessee support and encourage the application of responsible wages and City of Miami Beach and Miami-Dade County workforce hiring with respect to the Hotel Project. Section 3.11. Laws Governing this Lease. For the entire Term of this Lease, the City hereby agrees that the City's Land Development Regulations governing the development of the Leased Property as they exist as of September 2, 2015 of this Lease shall govern the development of the Leased Property and the Hotel Project during the Term. Notwithstanding the foregoing, the City may apply subsequently adopted laws or policies to the Leased Property and the Hotel Project (particularly as they may relate to quality of life issues such as, but not limited to noise, litter, and hours of operation) as permitted or required by the Act, including, without limitation, Section 163.3233(2), Florida Statutes, as same may be amended from time to time; provided, however, that this provision shall not be deemed to apply to regulations governing height, floor area ratio (FAR), density, parking requirements or permitted uses. Section 3.12. Duration of Development Rights. Notwithstanding any provision to the contrary in this Lease, the development rights and responsibilities granted to Lessee hereunder shall run for an initial term of six (6) years from the Effective Date, and may be extended by mutual consent of the City and the Lessee subject to a public hearing(s) pursuant to Section 163.3225, Florida Statutes. Consent to any extension of the development rights granted herein is within the sole discretion of each Party. No notice of termination shall be required by either Party upon the expiration of the development rights granted pursuant to this Lease, provided, however, that the Parties' obligations for the failure to satisfy Possession Conditions shall be as provided for in Section 4.1(f)and any other applicable provisions of this Lease. Section 3.13. Lessee's Right of Termination. Notwithstanding anything to the contrary herein, Lessee shall have the right to terminate this Lease prior to the Possession Date due to (i) changes to the Approved Plans required by the City's Design Review Board or any other Governmental Authority. (including the City) that render the Hotel Project economically unfeasible in the reasonable business judgment of Lessee; (ii) the Hotel Project cannot meet the Concurrency Requirements, or the costs of concurrency mitigation are, in the reasonable business judgment of Lessee, economically unfeasible; or(c) Lessee, after its diligent good-faith efforts, has been unable to obtain a full building permit for the Hotel Project. In the event of termination pursuant to this Section 3.13, each Party shall bear its own costs and expenses incurred in connection with this Lease and, neither Party shall have any further liability to the other Party. ARTICLE IV GENERAL TERMS OF LEASE Section 4.1. Lease of Leased Property to Lessee. Subject to the conditions set forth in this Lease, including the occurrence of the Possession Date, the payment of all Rent and all other payments by Lessee provided herein, and the City's and Lessee's performance of their duties and obligations required by this Lease: 27 (a) Demise. The City, as of the Possession Date, demises and leases to Lessee, and Lessee takes and hires from the City, the Leased Property for a term of approximately ninety-nine (99) years ending on December 31st of the last Lease Year prior to the 99th anniversary of the Possession Date (the "Term"). Within thirty (30) days after the Possession Date, the City and Lessee, upon request of either Party, shall execute a commencement date agreement and/or one or more written memoranda in such form as will enable them to be recorded among the Public Records of Miami-Dade County, in each case, setting forth the beginning and termination dates of the Term, determined according to this Lease, and recording any such other documents as may be required under this Lease. (b) Possession Date; Conditions Precedent to Possession. The Parties recognize that as of the Effective Date there remain various items and matters to be satisfied, obtained and Approved in order that the Hotel Project may proceed as intended by the Parties. The date that the City delivers possession of the Leased Property to Lessee according to this Section 4.1(b), as designated by the City to Lessee in writing, is referred to herein as, the "Possession Date." The City shall not be obligated to deliver possession of the Leased Property and Lessee's rights as tenant hereunder shall not become effective until each of the events described in this Section 4.1(b) irrevocably shall have occurred, at which time, the City shall deliver possession of the Leased Property to Lessee, Lessee shall take possession thereof and the lease provisions of this Lease shall become effective. Until that time, this Lease shall be construed to be in the nature of a development agreement, and not a lease. The conditions precedent to delivery of possession (collectively, the "Possession Conditions") are as follows: (i) There exists no uncured Event of Default; (ii) Lessee shall have entered into, and delivered to the City a duly executed copy of, the Hotel Project General Construction Contract (and all then existing change orders thereto), in form and substance and with a Hotel Project General Contractor Approved pursuant to Subsection 2.8(b) by the City Manager reflecting the guaranteed maximum price for completion of the Lessee Improvements; (iii) Lessee shall have delivered to City written evidence reasonably satisfactory to the City of the existence and availability of (A) Liquid Assets to fund the Equity Commitment, (B) Initial Hotel Operator Financial Commitment, (C) the Mezzanine Loan Commitment, if any, and (D) the Construction Loan Commitment, all of which together demonstrate that the Hotel Project is In Balance; (iv) Lessee shall have provided to City, and City Manager shall have Approved in its sole discretion, any changes to the Budgeted Improvement Costs, provided that City Manager shall not withhold its Approval so long as Lessee has obtained and delivered to the City written evidence of the existence and availability of (A) Liquid Assets to fund the Equity Commitment, (B) the Initial Hotel Operator Financial Commitment, (C) the Mezzanine Loan Commitment, if any, and (D)the Construction Loan Commitment that demonstrate that the Hotel Project is In Balance; (v) Lessee shall have reimbursed the City for the costs associated with the City's voter referendum in connection with this Lease, not to exceed Twenty Five Thousand Dollars ($25,000); 28 (vi) Lessee shall have obtained, and shall have delivered to City a copy of, all Governmental Approvals necessary for the Commencement of Construction and necessary for construction of all vertical elements of the Hotel Project; (vii) Lessee and the Initial Hotel Operator shall have delivered to the City an instrument or instruments reasonably acceptable to the City (A) certifying that Lessee and the Initial Hotel Operator have duly executed and entered into the Management Agreement and any related franchise, technical services and/or centralized services agreements, that the Management Agreement and any other such agreements are in full force and effect and there are no defaults (or any events that could ripen into defaults) and attaching a true and correct copy of the Management Agreement and any such other agreements thereto, (B) acknowledging that for so long as the Initial Hotel Operator is managing and operating the Hotel Project it shall observe and comply with the Room Block Agreement and (C) in the form of an agreement among Lessee, the Initial Hotel Operator and the City, to the effect that if this Lease is terminated as a result of any Event of Default, the Hotel Operator shall, at the City's option, continue to perform under the Management Agreement in accordance with the terms thereof so long as the Hotel Operator is being paid compensation thereafter accruing under the Management Agreement and the City shall perform, and the Hotel Operator shall accept the City's performance of, the duties and obligations under the Management Agreement to be performed by the Lessee, as "owner," thereunder, but only to the extent accruing from and after the date of termination of this Lease; provided, however, if the First Leasehold Mortgagee enters into a similar agreement with the Lessee and the Hotel Operator, the City agrees that the Hotel Operator shall continue to perform and such performance shall not be optional on the part of the City; (viii) Lessee shall have delivered to City, and City Manager shall have Approved, the Schedule of Performance for the Hotel Project (City agrees that it shall not withhold Approval thereof so long as the same reflects Completion of Construction by the Outside Completion Date and Lessee has provided reasonable evidence that such schedule is reasonable); (ix) Lessee shall have presented evidence reasonably acceptable to the City that all required insurance coverages are in place; (x) Lessee shall have delivered to the City Manager reasonable evidence that the Approved Plans have been approved by the First Leasehold Mortgagee and the Initial Hotel Operator; (xi) Lessee shall have delivered to the City, a duly executed Assignment of Plans and Approvals, a duly executed Assignment of Hotel Project General Construction Contract and a duly executed Assignment of Contracts and Agreements; (xii) Lessee shall have delivered to the City reasonable evidence that Lessee has invested the Portman Minimum Equity Contribution prior to the Possession Date, or if the Portman Minimum Equity Contribution has not been invested prior to the Possession Date, Lessee shall deposit the balance of the unfunded amount of the Portman Minimum Equity Contribution in escrow with an escrow agent reasonably satisfactory to the City to be drawn by Lessee on a monthly basis based upon presentation of invoices for Budgeted Improvement Costs; 29 (xiii) Lessee has provided to the City reasonable evidence that all conditions to funding the Construction Loan that can be satisfied as of such date have been satisfied and the Lessee has paid all commitment or loan fees due under the Construction Loan documents; and (xiv) the representations and warranties made by the Lessee in this Lease pursuant to Sections 4.3(a) and 5.2 remain true and correct in all material respects on and as of the Possession Date. (c) Pre-Possession Period. From and after the Effective Date, the Parties shall each use their respective diligent and commercially reasonable efforts to achieve the Possession Date timely. (d) Hotel Site Inspections. Commencing on the date hereof and thereafter until this Lease is terminated or the Possession Date occurs, the City shall permit Lessee commercially reasonably access to the Hotel Site to conduct at Lessee's sole cost and expense, physical inspections, tests and studies of the Hotel Site and to the extent necessary to carry out the provisions of this Lease; provided, however, that such access shall not materially interfere with any ongoing operations at the Convention Center or the Fillmore Theater or the City's construction activity relating to the MBCC Project. Lessee, at all times and at its sole cost and expense, shall maintain or shall cause its Hotel Project General Contractor or other contractors in privity with Lessee to maintain, comprehensive general liability insurance as required in Article IX. Lessee shall restore any damage to the Hotel Site caused by any such inspections, tests or studies; provided that in no event.shall Lessee be responsible for the discovery, exposure or release of hazardous substances or materials in, on or about the Hotel Site that are not introduced to the Hotel Site by Lessee, its agents, representatives, contractors, invitees or employees. (e) Indemnification. Whether or not the Possession Date occurs, Lessee shall indemnify, defend and hold City and its respective officers, employees, agents, representatives, consultants, counsel and contractors (of any tier) harmless from and against all claims, actions, suits, charges, complaints, orders, liability, damages, loss, costs and expenses (including any attorneys' fees and costs of litigation) related to, arising from or in connection with the acts or omissions of Lessee, its agents, representatives, contractors or employees, including injury or death to persons or damage to their property, while exercising Lessee's right to access the Hotel Site and performance of such inspections, tests or studies pursuant hereto, except to the extent resulting from the negligence or willful misconduct of City or its officers, employees, agents, representatives, consultants, counsel and contractors, and except as limited in paragraph (d) above. The indemnification obligations of Lessee set forth in this paragraph shall expressly survive the expiration or termination of this Lease and notwithstanding any provision of this Lease to the contrary, City shall have all rights and remedies available at law or in equity in the enforcement of such indemnification obligations of Lessee or arising from Lessee's failure to perform such indemnification obligations. (f) Failure to Satisfy Conditions. Notwithstanding anything contained in this Lease to the contrary, if: (i) any of the Possession Conditions have not occurred by the Outside Possession Date; (ii) Lessee does not close the Construction Loan by the Outside Construction Loan Closing Date; (iii) Lessee does not commence construction by the Outside Construction Commencement Date; (iv) Lessee does not Complete Construction by the Outside Completion Date; or (v) the Opening Date does not occur by the Outside Opening Date, then notwithstanding anything to the contrary set forth in Section 7.1 below, Lessee hereby waives any further right to cure, and the City shall be entitled to immediately revoke the licenses 30 granted to Lessee pursuant to the Assignment of Plans and Approvals, the Assignment of Hotel Project General Construction Contract and the Assignment of Contracts and Agreements and to immediately terminate this Lease upon written notice to the Lessee; provided that Lessee shall also have the right to immediately terminate this Lease upon written notice to the City on or before the Outside Possession Date if the event described in clause (i) of this Section 4.1(f) does not occur as described therein and in any such event, the Parties shall thereafter be released from all obligations set forth herein except any such obligations that expressly survive termination. (g) Easements. Lessee agrees that this Lease shall be subject to and contingent upon the execution of certain easements, including any applicable access easements. On the Possession Date, the easements in substantially the forms attached hereto as Exhibit "G" (the "Easements") shall be executed by all necessary parties. The Parties shall also prior to the Possession Date enter into any easements which may be required by Lessee to connect utilities to the Hotel Site as shown in the Approved Plans. The Parties shall thereafter cause the Easements to be promptly recorded among the public records of Miami-Dade County, Florida. The Easements shall be held in escrow by the City and released therefrom and recorded among the public records of Miami-Dade County, Florida prior to the Commencement of Construction. Section 4.2. Restrictive Covenants. (a) Permitted Use. Lessee shall operate the Hotel Project throughout the Term as a convention headquarter hotel for the accommodation of hotel guests, and for related banquet, meeting and similar purposes, with related retail shops, restaurants and such other amenities as are consistent with the Hotel Standards. (b) Use Restrictions. The Hotel Project shall not be used by Lessee, nor shall Lessee knowingly permit the use thereof by any other Person for the following: (i) any unlawful or illegal business, use or purpose; (ii) any business, use or purpose which is immoral, disreputable (including "adult entertainment establishments" and "adult" bookstores) or extra- hazardous; (iii) a nightclub where the sale of food is only incidental to the sale of alcoholic beverages and where the establishment is licensed and primarily operated from midnight to 5:00 a.m. as a "Dance hall" or "Entertainment Establishment" as defined by Section 114-1 of the City of Miami Beach Code (other than and specifically excluding the Hotel's lobby bars, rooftop bars or cocktail lounges, pool bars, restaurants, banquet functions or other similar food and beverage operations contemplated as part of the Approved Plans or the Mandatory Hotel Project Design Elements); (iv) any Gaming Establishment (whether or not such use is permitted by applicable law), or (v) any use that constitutes a public nuisance of any kind. Lessee shall have no right to convert the use of the Hotel Project or any portion thereof to any time sharing, time interval or cooperative form of ownership, or to subject the same to any condominium regime. (c) Nuisances Disallowed. Lessee shall not make any use of the Leased Property, nor shall it allow any of its sub-lessees or invitees to make use of the Leased Property, in a manner that creates or reasonably will lead to a public or private nuisance under state or local law. Upon notification by City that such a nuisance is then being allowed on the Leased Property, Lessee shall promptly take steps necessary to abate such nuisance to the City's reasonable satisfaction. City shall retain all of its contract rights to abate a nuisance under the terms of this Lease, as well as its regulatory rights to abate such nuisance in accordance with then-current law. 31 (d) No Discrimination. Lessee shall comply with, and shall cause others to comply with, Governmental Requirements prohibiting discrimination by reason of race, color, national origin, religion, sex, intersexuality, gender identity, sexual orientation, marital and familial status, and age or disability in the sale, lease, use or occupancy of the Hotel Project or any portion thereof. Lessee's compliance with the City's Human Rights Ordinance, codified in Chapter 62 of the City Code, as may be amended from time to time, shall be a material term of this Lease. Lessee shall cause for this provision to be incorporated in the Management Agreement with the Hotel Operator. (e) Lessee's Rights To Operate a Convention Hotel Not Exclusive. Except as specified herein, it is expressly understood and agreed that the rights granted under this Lease are non- exclusive and City reserves the right to grant similar privileges and similar leases to other lessees on other City-owned or leased property, and to take any and all actions (including the leasing of City property other than the Leased Property for any lawful purpose) that City is permitted to take under federal, state, and local law. Solely with respect to the development of other hotels on City-owned or City-leased property, the City agrees as follows: (i) Collins Site. With respect to the City-owned property bounded by the south right- of-way line of 22nd Street to the North, the north right-of-way line of 21" Street to the South, the east right-of-way line of Collins Avenue to the West and the Atlantic Ocean to the East (the "Collins Site"), the City may at any time permit a hotel with up to 400 separately keyed hotel sleeping rooms to open for business to the general public, provided any such hotel at the Collins Site (1) contains leasable ballroom and conference/meeting space not exceeding in the aggregate a maximum of thirty (30) square feet per separately keyed sleeping room, and (2) is required to include the minimum elements required to obtain a five-star rating from the Forbes Travel Guide and a five-diamond rating from the American Automobile Association ("AAA"), or, if either one of these rating systems is discontinued, such hotel is required to include the minimum elements required to obtain at least one of the two ratings specified in this Section 4.2(e)(i). (ii) 17th Street Garage Site. With respect to the City-owned property located at 640 17th Street, Miami Beach, Florida (the "17th Street Garage Site"), the City shall not permit a hotel to open for business to the general public for a period of four (4) years after the Opening Date. After the fourth anniversary of the Opening Date, the City may permit a hotel with up to 250 separately keyed hotel sleeping rooms to open for business to the general public at the 17th Street Garage Site. (iii) Other City-Owned or City-Leased Sites Between 5th Street and 41St Street. Except with respect to any hotel developed at the Collins Site or any hotel developed at the 17th Street Garage Site in accordance with the provisions set forth above in Sections 4.2(e)(i) and 4.2(e)(ii), respectively, the City shall not permit any other hotel to open for business to the general public on City-owned or City-leased property within the area bounded by the north right of way line of 5th Street and the south right of way line of 41' Street, with an extension of both streets in an easterly and westerly direction to the waterfront, for a period of eight (8) years after the Opening Date. (e) The foregoing restrictions in Sections 4.2(e)(i) through 4.2(e)(iii) shall expire at the end of the eighth anniversary of the Opening Date. (f) Room Block Agreement. Lessee shall operate, and cause the Hotel Operator to operate, the Leased Property in material compliance with the terms of the Room Block 32 Agreement throughout the Term. In addition, Lessee shall not receive any commission, rebate or other compensation from any hotel located in the City of Miami Beach with respect to any group room block or room bookings made by any such Miami Beach hotel. (g) No Ownership Interests in Gaming Establishments in Miami-Dade County. Lessee, and any Persons with an ownership interest in Lessee, shall not, directly or indirectly, own, operate or manage a Gaming Establishment in Miami-Dade County, Florida; provided, however, that the foregoing restriction shall not prevent Persons having an ownership interest in Lessee, from owning or Controlling in the aggregate five percent (5%) or less of the voting securities of any owner, operator or manager of a Gaming Establishment in Miami-Dade County, Florida. (h) Enforceability. The restrictive covenants contained in this Section 4.2 shall be binding upon the Parties and shall be for the benefit and in favor of, and enforceable by, the Parties, and their successors and assigns, as the case may be. It is further understood that such covenants shall not benefit or be enforceable by any other Person. Section 4.3. Representations. (a) Lessee's Representation. Lessee represents to the City that its principals and Affiliates are experienced in the development, construction, leasing and operation of hotel properties generally, and that Lessee has independently determined the merits and risks of electing to proceed with the development of the Hotel Project, and that Lessee is not and, will not be relying upon any information that may have been or hereafter be provided to Lessee with respect to or relating to the financial results derived from, financial merits of investing in, or other economic or other benefits that may be realized from the development, construction, leasing and operation of the Hotel Project or sale of Lessee's interests in this Lease. (b) No Representation or Warranties By City. Lessee acknowledges and agrees that it will be given the opportunity to perform all inspections and investigations concerning the Leased Property to its satisfaction prior to the Possession Date, and the City (i) except as specifically provided in this Lease, is not making and has not made any representations or warranties, express or implied, of any kind whatsoever with respect to the Leased Property, including any representation or warranty of any kind with respect to title, survey, physical condition, suitability or fitness for any particular purpose, the financial performance or financial prospects of the Hotel Project, its value, or any other economic benefit that can be realized or expected therefrom, the presence or absence of Hazardous Substances, the tenants and occupants thereof, the zoning or other Governmental Requirements applicable thereto, taxes, the use that may be made of the Leased Property, or any other matters with respect to this transaction or Lease); (ii) Lessee has relied on no such representations, statements or warranties, and (iii) City will in no event whatsoever be liable for any latent or patent defects in the Leased Property (including any subsurface conditions). (c) "AS IS" Condition of Leased Property. Lessee acknowledges it has relied solely on Lessee's own inspections, tests, evaluations and investigations of and related to this Lease and the Leased Property in its determination of whether to proceed with this Lease and the Hotel Project. As a material part of the consideration of this Lease, Lessee agrees to accept the Leased Property on the Possession Date in its "AS IS" and "WHERE IS" condition "WITH ALL FAULTS" and latent or patent defects, and without representations and warranties of any kind, express or implied, or arising by operation of law. 33 (d) The provisions of this Section 4.3 shall survive the termination of this Lease. Section 4.4. Rent and Other Payments. Lessee covenants and agrees to pay the City, from and after the date hereof and during the Term the following Rent, as applicable: (a) Base Rent. Commencing as of the later of (i) Opening Date and (ii) the completion of construction of the MBCC Project such that the Convention Center may hold events utilizing all 4 main exhibit halls (the later of such dates being the "Rent Commencement Date"), and except as set forth below, monthly rent in the amount of the greater of (x) two and one-half percent (2.5%) of the Gross Operating Revenues for such month or (y) one-twelfth (1/12th) of the Minimum Fixed Rent set forth in Section 4.4(a)(i) of this Lease ("Base Rent"); provided, however, that • for each month during the period commencing on the Rent Commencement Date and ending on December 31 of the year in which the first anniversary of the Rent Commencement Date occurs (the "First Rent Year"), Base Rent shall be the greater of (x) one-half percent (0.5%) of the Gross Operating Revenues for such month or (y) one-twelfth (1112th) of the Minimum Fixed Rent; • for each month during the period commencing on the first day after the end of the First Rent Year and ending on the day before the anniversary thereof (the "Second Rent Year"), Base Rent shall be the greater of (x) One percent (1.0%) of the Gross Operating Revenues for such month or (y) one-twelfth (1/12th) of the Minimum Fixed Rent; • for each month during the period commencing on the first day after the end of the Second Rent Year and ending on the day before the anniversary thereof (the "Third Rent Year"),'Base Rent shall be the greater of(x) one and one-half percent (1.5%) of the Gross Operating Revenues for such month or (y) one-twelfth (1/12th) of the Minimum Fixed Rent; and • for each month from and after the end of the Third Rent Year, the Base Rent shall be the greater of (x) two and one-half percent (2.5%) of the Gross Operating Revenues for such month or(y) one-twelfth (1/12th) of the Minimum Fixed Rent. • for each year from and after the end of the Third Rent Year (each such year being a "Rent Year"), Lessee shall also pay as Base Rent (x) an amount equal to one and one-half percent (1.5%) of the Gross Operating Revenue for such Rent Year if, and only if, the Gross Operating Revenue for such Rent Year exceeds one hundred and ten percent (110%) of (i) in the first year after the Third Rent Year, the projected Gross Operating Revenue for such Rent Year in the pro forma which is developed with the input of the Initial Hotel Operator and accepted by the Construction Lender in connection with the closing of the Construction Loan (the "Fourth Year Projected GOR"), and (ii) in each Rent Year thereafter, the Fourth Year Projected GOR adjusted annually for inflation pursuant to Section 14.20 hereof, with such increase measured from the first day of each Rent Year until the first day of each succeeding Rent Year, and (y) an amount equal to one percent (1%) of the Gross Operating Revenue for such Rent Year if, and only if, the Gross Operating Revenue for such Rent Year exceeds one hundred and twenty five percent(125%) of(i) in the first year after the Third Rent Year, the Fourth Year Projected GOR, and (ii) in each Rent Year 34 thereafter, the Fourth Year Projected GOR adjusted annually for inflation pursuant to Section 14.20 hereof, with such increase measured from the first day of each Rent Year until the first day of each succeeding Rent Year (the amount payable pursuant to (x) and (y) above being the "Additional Base Rent"). The Base Rent shall be due and payable on or before the twenty-fifth (25th) day of each month following the month for which the Base Rent is applicable; provided that the Additional Base Rent shall be due and payable on or before the twenty-fifth (25th) day after the end of each Rent Year. Prior to the closing of the Construction Loan, Lessee shall provide City with a copy of the pro forma accepted by the Construction Lender in connection with the closing of the Construction Loan. (i) Minimum Fixed Rent. "Minimum Fixed Rent" shall be an annual fixed rent payable in twelve (12) equal monthly installments, prorated as to any partial month, commencing on the Rent Commencement Date and continuing on the first day of each month thereafter. Attached as Exhibit "R" hereto is a schedule setting forth the Minimum Fixed Rent for the period commending on the Rent Commencement Date and ending on December 31 of the year in which the tenth (10th) anniversary of the Rent Commencement Date occurs; provided that the amount shown for the first year shall apply for the period commencing on the Rent Commencement Date and ending on December 31 of the year in which the first anniversary of the Rent Commencement Date occurs, prorated for any partial calendar years. Commencing on January 1st following the tenth anniversary of the Rent Commencement Date, and every ten (10) Lease Years thereafter (each, a "Minimum Fixed Rent Reset Date"), the Minimum Fixed Rent shall be adjusted to equal the greater of (x) the Minimum Fixed Rent payable for the period immediately preceding the Minimum Fixed Rent Reset Date, or (y) fifty-five percent (55%) of the average Base Rent payable for each twelve month period during the preceding ten (10) calendar year periods; provided that for the first Minimum Fixed Rent Reset Date item (y) shall be fifty-five percent (55%) of the average Base Rent for each twelve month period payable during the preceding five (5) calendar year period. (ii) Each Base Rent payment shall be accompanied with documentation sufficient for City to verify the accuracy of the Base Rent payment, and in a format and of a detail reasonably required by City. (iii) By May 1 of each year following the Rent Commencement Date, Lessee shall provide City with a certified report, prepared and attested to by an independent CPA, as to the correct Gross Operating Revenues for the previous calendar year. The report shall be prepared in accordance with the American Institute of Certified Public Accountants' requirements for special reports. All Base Rent payments and annual reports are subject to audit under Section 4.4(j). (iv) Lessee shall be responsible for any applicable sales tax payable in connection with the Rent. (b) Transaction Rent. Lessee covenants and agrees to pay the City as Additional Rent, within sixty (60) days after the closing of the first three Transfers effecting a sale of the entire Hotel Project or a Transfer of a Controlling interest in Lessee to an unaffiliated third party (other than a Transfer (i) pursuant to a foreclosure of a Leasehold Mortgage or a delivery by Lessee of a deed in lieu thereof or (ii) pursuant to a foreclosure of the pledge of ownership interests of Lessee granted pursuant to a Mezzanine Loan or Credit Enhancement or a delivery by Lessee of an assignment in lieu thereof), an amount equal to the lesser of (x) $2 million, or 35 (y) 0.25% of the gross sales price (less typical closing adjustments and credits) in connection with such Transfer (each "Transaction Rent"); provided that Transaction Rent shall be payable in connection with the first such Transfer (and such first Transfer shall be counted as the first Transfer) only if the gross sales price in connection with such Transfer exceeds $580 million (or a prorated portion thereof if such Transfer is of less than 100% of the ownership interests of Lessee). If the first such Transfer has a gross sales price equal to or less than $580 million, Transaction Rent shall apply to the next two (2) succeeding Transfers regardless of whether the gross sales price in connection therewith exceeds $580 million. (i) An example of calculating Transaction Rent pursuant to Section 4.4(b) is set forth on Exhibit "0". • (c) Non-subordination of Rent. The Rent payable to City hereunder shall never be subordinated, including to any sums due under the Construction Loan or any other financing by Lessee, and City shall at all times have a first priority right to payment of the Rent from Gross Operating Revenues. (d) Payment of Rent and Other Payments. All Rent and other payments hereunder required to be made to the City shall be paid to the City at the Office of the Director of Finance, Miami Beach City Hall, 1700 Convention Center Drive, 3rd Floor, Miami Beach, Florida 33139 and in such manner or at such other place as the City shall designate from time-to-time in a notice given pursuant to the provisions of Section 14.5. (e) Late Payment Charge. In the event the Lessee fails to make any payments, as required to be paid under the provisions of this Lease, within fifteen (15) days after same shall become due, interest at the Default Rate shall accrue against the delinquent payment(s) from the original due date until the City actually receives payment. The right of the City to require payment of such interest and the obligation of the Lessee to pay same shall be in addition to and not in lieu of the rights of the City to enforce other provisions herein, including termination of this Lease, and to pursue other remedies provided by law. All payments of money required to be paid to the City by Lessee under this Lease other than Base Rent, including interest, late fees, penalties and contributions, shall be treated as Additional Rent. (f) Dishonored Check or Draft. In the event that the Lessee delivers a dishonored check, draft or wire transfer to the City in payment of any obligation arising under this Lease, the Lessee shall incur and pay City an amount that is three (3)times the service fee incurred by City for such dishonored check or draft. Further, in such event, the City may require that future payments required pursuant to this Lease be made by cashier's check or other means acceptable to the City. (g) Holdover Rental. In the event that the Lessee remains in possession of the Leased Property beyond the Term or termination of this Lease, the Lessee shall be bound by all of the terms and conditions of this Lease to the same extent as if this Lease were in full force and effect during the time beyond the expiration date of this Lease. However, during any such possession of the Leased Property, as a holdover tenant after the City has demanded the return of the Leased Property, the Lessee shall be liable for double the Base Rent being paid at that time, or, if Section 83.06, Florida Statutes, as amended provides a greater amount, then whatever greater amount is specified in the Florida Statutes. 36 (h) No Abatement of Rent. Except as may be otherwise expressly provided herein, there will be no abatement, diminution or reduction of Rent payable by Lessee hereunder or of the other obligations of Lessee hereunder under any circumstances. (i) Lessee Improvements Not Deemed Rent. The Lessee Improvements will be made by Lessee in order to put the Leased Premises in a condition suitable for the operation of the Lessee's business. The cost or value of the Lessee Improvements is intended by the parties to inure solely to the benefit of the Lessee and no portion of such cost or value is intended to inure to the benefit of the City or constitute rent, license fee or other consideration for the right to occupy the Leased Property or the Lessee Improvements until the surrender of the Leased Property from Lessee to the City at the expiration or earlier termination of this Lease. (j) Records and Reporting. (I) For the purpose of permitting verification by the City of any amounts due to it, including an account of Gross Operating Revenues, Base Rent and Transaction Rent, Lessee shall keep and preserve for at least five (5) years in Miami-Dade County, Florida, at the address specified in Section 14.5, or at its home office, auditable original or duplicate books and records for the Hotel Project, which shall disclose all financial information regarding the Hotel Project, including information required to determine Base Rent and Transaction Rent. All such records shall be maintained in every material respect according to GAAP and, as applicable to the Hotel, the Uniform System. The City shall, on commercially reasonable notice, have the right during normal business hours at the expense of the City unless otherwise provided herein to inspect such books and records and make any examination or audit or copy thereof which the City may require at any time within one year after (a) submittal of the annual certification to City set forth in Subsection 4.4(j)(ii) with respect to the Gross Operating Revenues, and (b) a Transfer pursuant to which Transaction Rent is due in accordance herewith, with respect to the gross sales price of such Transfer, as applicable. Records copied by the City, if any, shall be subject to the requirements of the Florida Public Records Act set forth in Chapter 119 of the Florida Statutes ("Public Records Act"). To the fullest extent permitted by law, City shall protect from disclosure any records that are confidential and exempt from disclosure under Florida law, provided, however, that nothing herein shall preclude the City or its employees from complying with the disclosure requirements of the Public Records Act, and any such compliance shall not be deemed an event of default by the City under this Lease. City shall use its good-faith, diligent efforts to provide timely written notice to Lessee of any public records request seeking any records of the Lessee that may be within the City's custody, possession or control, to permit Lessee the opportunity to seek to protect such information from disclosure. If such audit shall disclose a liability for Rent in excess of the Rent theretofore paid by Lessee for the period in question, Lessee shall pay such excess amounts, together with interest at the Default Rate, as Additional Rent within thirty (30) days after receipt of written demand therefor, and if such audit shall disclose an overpayment of the Rent theretofore paid, the City shall return the excess to Lessee within thirty (30) days after receipt of written demand therefore. (ii) Lessee shall provide the City with an annual Audited Gross Operating Revenues Schedule for each Lease Year during the Term, certified by the Lessee's outside CPA, within one hundred twenty (120) days after the close of each Lease Year (including the Lease Year in which this Lease terminates or is terminated) specifying the Gross Operating Revenues, for each of the categories or items identified in the definition of Gross Operating Revenues category, Base Rent for the applicable Lease Year and Additional Base Rent, if any. 37 (iii) If Lessee shall fail to deliver the foregoing annual Audited Gross Operating Revenues Schedule to the City within said one hundred twenty (120) day period, the City shall have the right to either conduct an audit itself or to employ an independent certified public accountant to examine such books and records as may be necessary to certify the amount of Rents due with respect to such Lease Year and to obtain the information described above. Lessee shall pay to the City, within thirty (30) days after receipt of written demand thereof, as Additional Rent, the cost of any audit performed by or for the City pursuant to this item (iii). (iv) If the City disagrees with the annual Audited Gross Operating Revenues Schedule provided by Lessee, it may conduct its own audit within one year after receipt of same by City, which Lessee shall pay for if said audit demonstrates a deficiency of more than three percent (3%), in the amount of Base Rent due to the City. If in the course of any audit the City identifies a deficiency in excess of five percent (5%) in the amount of Base Rent (including any Additional Base Rent due to the City), the City shall have the right to audit Lessee's books and records for the three (3) prior calendar years. If the City identifies any deficiencies in excess of five percent (5%) in the amount of Base Rent (including any Additional Base Rent) due as a result of an audit of any of those three (3) prior calendar years, the City shall have the right to audit an additional two (2) prior calendar years. Any dispute between the two audits which cannot be resolved by the Parties shall be resolved in accordance with Section 7.8 of this Lease. The cost of any audit by the City which Lessee is required to pay the cost of pursuant to this Section shall be the cost charged to the City by its independent auditors, or if done by City personnel, the direct employee salary cost to the City for the time spent by said employees in performing such audit, but not in excess of what would have been charged to the City for the same service by the City's outside auditors. (v) Quarterly, commencing on the Possession Date and continuing until the Completion of Construction, and not less often than annually thereafter, Lessee shall deliver to the City a written report detailing the employment by Lessee of City of Miami Beach and Miami- Dade County residents in the construction, operation and maintenance of the Hotel Project. Section 4.5. Covenants for Payment of Public Charges by Lessee. (a) Payment of Public Charges. Payment of Public Charges includes: (I) Lessee, in addition to the Rent and all other payments due to City hereunder, covenants and agrees timely to pay and discharge, before any fine, penalty, interest or cost may be added, all real and personal property taxes, all ad valorem real property taxes, all taxes on Rents payable hereunder and under Subleases, tourist, room and restaurant taxes, restaurant taxes, and public assessments (including, without limitation, permit fees, impact fees and other public charges); and (ii) Special Assessments pursuant to Section 4.5(d), electric, water and sewer rents, rates and charges levied, assessed or imposed by any Governmental Authority against the Leased Property, including all Lessee Improvements thereon, in the same manner and to the same extent as if the same, together with all Lessee Improvements thereon were owned in fee simple by Lessee. (collectively, "Public Charges"); 38 (b) Lessee's obligation to pay and discharge Public Charges levied, assessed or imposed against or with respect to the Leased Property shall not commence until the Possession Date. All such charges shall be prorated if the Possession Date is not at the beginning of the calendar year. Lessee, upon written request, shall furnish or cause to be furnished to the City, official receipts of the appropriate taxing authority, or other proof satisfactory to the City evidencing the payment of any Public Charges. (c) Contesting Impositions. (i) Lessee shall have the right to contest the amount or validity, in whole or in part, of any Public Charges, for which Lessee is, or is claimed to be, liable, by appropriate proceedings diligently conducted but only after payment of such Public Charges, unless such payment would operate as a bar to such contest or materially interfere with the prosecution thereof, in which event, payment of such Public Charges may be postponed if, and only if, Lessee has deposited with City, in its capacity as landlord under this Lease, cash or other security Approved by the City Manager in the amount so contested and unpaid, together with interest and penalties in connection therewith and any other charges that may be assessed against or become a charge on the Leased Property or any part thereof in such proceedings. Upon the termination of any such proceedings, Lessee shall pay the amount of such Public Charges or part thereof, if any, as finally determined in such proceedings, together with any costs, fees, including counsel fees, interest, penalties and any other liability in connection therewith, and may use the cash or other security deposited with the City for such purpose. (ii) City shall not be required to join in any proceedings referred to in this Section 4.5(c) unless: (1) Governmental Requirements shall require that such proceedings be brought by or in the name of City; or (2) the proceeding involves the assessment or attempted assessment of a real estate or ad valorem tax on the Leased Property, in which event the City shall join in such proceedings or permit the same to be brought in the City's name. Notwithstanding the foregoing, City's joinder and cooperation shall be limited to actions necessary to enable Lessee to satisfy technical requirements of any action or proceeding and in no event shall City be required to join in such action or proceeding in any substantive capacity. (iii) Except for any counsel it retains separately, the City shall not be subjected to any liability to pay any fees, including counsel fees, costs and expenses regarding such proceedings. Lessee agrees to pay such fees, including commercially reasonable counsel fees, costs and expenses or, on demand, to make reimbursement to the City for such payment. The City will endeavor to use in house counsel whenever possible, in accordance with the City's customary practices. (d) Special Assessments. The City retains all its rights to impose nondiscriminatory special assessments or other public charges; provided, however, if at any time the City, in its municipal capacity, subjects non-governmental users to an exclusive franchise for trash removal or other public services, Lessee will be treated the same as similarly sized and situated properties (such as the Miami Beach Loews Hotel). 39 (e) No Tax Abatements or Other Public Subsidies to Lessee. Lessee shall not receive any tax abatement, public subsidy or rebate with respect to any Public Charges (including, without limitation, City, Miami-Dade County, or State of Florida taxes of any kind), other than any tax benefits generally available or provided to other similarly situated or similarly sized hotels or businesses. ARTICLE V ASSIGNMENT Section 5.1. Purpose of Restrictions on Transfer. This Lease is granted to Lessee solely to develop the Hotel Project and its subsequent use according to the terms hereof, and not for speculation in landholding. Lessee recognizes that, in view of the importance of developing the Hotel Project to the general welfare of the City and the general community, the Lessee's qualifications and identity are of particular concern to the community and the City. Accordingly, Lessee acknowledges that it is because of such qualifications and identity that the City is entering into this Lease with Lessee, and, in so doing, the City is further willing to accept and rely on the Lessee's obligations for faithfully performing all its undertakings and covenants. Section 5.2. Transfers. Lessee represents and warrants that Lessee has not made, created or suffered any Transfers as of the date of this Lease and that the Persons that have an ownership interest in Lessee on the date of this Lease are listed, together with their percentage and character of ownership, on Exhibit "M". No Transfer may or shall be made, suffered or created by Lessee, its successors, assigns or transferees without complying with the terms of this Article V. Any Transfer that violates this Lease shall be null and void and of no force and effect. Section 5.3. Permitted Transfers. (a) Prior to the Opening Date, other than Permitted Transfers, no Transfer will be permitted without the written Approval of the City. (b) Each of the following Transfers, shall be permitted hereunder without the City's Approval ("Permitted Transfers"): (i) a Transfer prior to the Possession Date of a direct or indirect interest in Lessee to an equity investor funding the balance of the Equity Commitment in excess of the Portman Minimum Equity Contribution (together with any additional amounts funded by Portman or one of its Affiliates), provided that such transferee is an Acceptable Owner; (ii) a Transfer after the Opening Date of the entire Hotel Project or any direct or indirect interest in Lessee provided that (i) the transferee is an Acceptable Owner; (ii).the City is given written notice thereof together with true and correct copies of the proposed Transfer documents and other agreements between the parties and current certified financial statements (to the extent applicable) and other relevant information of the proposed transferee in accordance with the time frames set forth on Exhibit "A" attached hereto in order for City Manager to confirm that the transferee (or the Lessee) is an Acceptable Owner; (iii) no Event of Default has occurred and is continuing and (iv) all of the conditions precedent to the effectiveness of such Transfer as set forth in Section 5.5 hereof are satisfied; 40 (iii) Any Transfer, if in accordance with the terms and conditions of Article VI, by the First Leasehold Mortgagee, to an agent, designee or nominee of the First Leasehold Mortgagee that is wholly owned or Controlled by such First Leasehold Mortgagee; (iv) Any Transfer directly resulting from the foreclosure of a First Leasehold Mortgage or the granting of a deed in lieu of foreclosure of a First Leasehold Mortgage or any Transfer made to the purchaser at foreclosure of a First Leasehold Mortgage or to the grantee of a deed in lieu of foreclosure of a First Leasehold Mortgage (if such purchaser or grantee is a nominee in interest of the First Leasehold Mortgagee), and provided further that such Transfer, purchase or grant is in accordance with the terms and conditions of Article VI; (v) Any Transfer directly resulting from a conveyance to a First Leasehold Mortgagee of Lessee's interest provided it is in accordance with the terms and conditions of Article VI; (vi) Any Transfer directly resulting from the foreclosure by the Mezzanine Lender of a pledge of ownership interests of Lessee or any Transfer made to the purchaser at a foreclosure of such pledge of ownership interests of Lessee (if such purchaser is a nominee in interest of the Mezzanine Lender), or any assignment in lieu of such foreclosure, provided that such Transfer is in accordance with the terms and conditions of Article VI; (vii) Any Transfer, or series of Transfers, not permitted pursuant to Sections 5.3(b)(i) and 5.3(b)(ii) above of not more than an aggregate of ten percent (10%) of the direct or indirect ownership interests in Lessee, provided that at all times after such Transfer, Portman or an Affiliate thereof, an Acceptable Owner or other successor Person Approved by the City Manager has the power to direct the day-to-day management and policies of Lessee; provided, however, in the case of any Transfer hereunder, the proposed transferee shall not, directly or indirectly, own, operate or manage any Gaming Establishment in Miami-Dade County, Florida and any purported Transfer in violation hereof shall be null and void and of no force and effect; provided, however, that the foregoing restriction shall not apply to a proposed transferee if all Persons owning or Controlling such proposed transferee, own or control in the aggregate five percent (5%) or less of the voting securities of any owner, operator or manager of a Gaming Establishment in Miami-Dade County, Florida. Section 5.4. Transfer Requiring City's Approval. Regarding any Permitted Transfer pursuant to Section 5.3(b) or any other Transfer that is not a Permitted Transfer, Lessee shall give or cause to be given to the City written notice of a Transfer (in the case of a Permitted Transfer), or written notice requesting Approval of any other Transfer that is not a Permitted Transfer, and submitting all information reasonably necessary for the City Manager (or the City Commission, with respect to Transfers to certain Foreign Instrumentalities as specified herein) to evaluate the proposed transferees and the Transfer and to obtain the City's Approval of same, when required. If a Permitted Transfer, said information shall demonstrate that the transferee is an Acceptable Owner as set forth on Exhibit "A" attached hereto If not a Permitted Transfer, Lessee shall provide to the City the information described in Paragraph C of Exhibit "A" and the provisions described in Paragraph D of Exhibit "A" shall apply. The City's confirmation or Approval process shall proceed as set forth on Exhibit "A" attached hereto. Any Approval of a Transfer to a Foreign Instrumentality (other than to any of the member 41 countries of the European Union' or the Gulf Cooperation Council2, each as existing as of the Effective Date, Canada, Mexico, countries located in South America, Japan, South Korea, Singapore and Australia, or Persons Controlled by any of the foregoing countries) shall be subject to the prior written approval of the City Commission, which approval may be granted, conditioned or withheld by the City Commission in its sole discretion. Any Approval of a Transfer shall not waive any of the City's rights to Approve or disapprove of any subsequent Transfer. Lessee shall from time to time throughout the Term, as the City shall reasonably request, furnish the City with a complete statement, subscribed and sworn to by a Responsible Officer of Lessee, setting forth the full names and address of holders of the ownership interests in Lessee who hold, directly or indirectly, at least a ten percent (10%) interest in Lessee as well as to confirm the percentage ownership interest, if any, of such Responsible Officer. Section 5.5. Effectiveness of Transfers. No Transfer shall be effective unless and until all of the following conditions precedent are satisfied within thirty (30) days of such Transfer: (a) executed copies of the Transfer documents and other agreements between the parties to the Transfer are delivered to the City; and (b) where the Transfer is pursuant to Section 5.3(b)(ii), and if it is of the entire Hotel Project, the Person to which any such Transfer is made, by a commercially reasonable, written instrument and in form recordable among the public records, shall, for itself and its successors and assigns, and especially for the benefit of the City, expressly assume all of the obligations of Lessee under this Lease and agree to be liable and subject to all conditions and restrictions to which Lessee is subject. Section 5.6. Subletting. (a) Subject to the other terms and conditions of this Lease, Lessee shall have the right to enter into Subleases of portions of the Leased Property at any time and from time to time during the Term of this Lease with such Subtenants and upon such commercially reasonable terms and conditions as Lessee shall deem fit and proper, provided the Sublease is consistent with this Lease and consistent with the Hotel Standards. At the City's request, Lessee shall allow the City to review and inspect any and all Subleases for the Hotel Project. (b) Lessee covenants that it will perform and observe in all material respects all the terms, covenants, conditions and agreements required to be performed and observed by it under each Sublease. Lessee agrees that each Sublease shall: (i) require the Subtenant to maintain adequate books and records including reasonably detailed information on Gross Operating Revenues of the applicable subleased portion of the Leased Premises and to submit the same for inspection and audit by the City and require the Subtenant to comply with Governmental Requirements; 1 As of 7/17/2015, the member countries are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. 2 As of 07/17/2015, the member countries are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. 42 (ii) provide that, if this Lease terminates, the Subtenant shall, if required by the City, pay all rents and all other charges required by such Sublease directly to the City; and (iii) obligate the Subtenant not to violate any term, covenant or restriction applicable to Lessee that is contained in this Lease. In addition, Lessee shall in all events require and cause Subtenants to perform obligations imposed by the Lease and applicable to such Sublease (specifically including the obligations set forth in this Section 5.6). (c) Notwithstanding anything to the contrary contained herein, at all times the Base Rent payable to the City with respect to all portions of the Leased Property, whether or not subleased to a Subtenant, shall be based on the Gross Operating Revenues of the Leased Property, including any subleased portion of the Leased Property, and shall not be based on the Sublease rent paid by any Subtenant thereunder (and such Sublease rent shall not be included in calculating Gross Operating Revenues), except solely with respect to a portion of the Leased Property leased to a Subtenant for purposes of operating a gift shop; a car rental facility; FedEx, UPS or a similar delivery service; beachwear and equipment rental; and antennae; in which cases, such Sublease rent (but not Gross Operating Revenues of such Subleased portions of the Leased Property) shall be included in calculating Gross Operating Revenues. ARTICLE VI MORTGAGE FINANCING; RIGHTS OF MORTGAGEE AND LESSEE Section 6.1. Conditions of Financing and Leasehold Mortgage. (a) Lessee shall have the right to secure one or more financings or re-financings and, in conjunction with and to secure that financing or re-financing, may enter into a First Leasehold Mortgage in favor of a First Leasehold Mortgagee and/or a pledge of its ownership interests in favor of a Mezzanine Lender, provided that: (i) any such secured financing of the Hotel Project exclusively secures debt of the Lessee directly related to the Hotel Project; (ii) no First Leasehold Mortgage or other encumbrance executed by the Lessee in connection with such First Leasehold Mortgage or Mezzanine Loan or otherwise will extend to or be a lien or encumbrance upon City's interest in any part of the Leased Property or in any right appurtenant to that interest; (iii) the First Leasehold Mortgage and any other encumbrance executed by the Lessee in connection with such First Leasehold Mortgage or otherwise shall at all times, without the necessity for the execution of any further documents, be subject and subordinate to the interest of the City in the Leased Property; provided that the First Leasehold Mortgagee agrees from time to time upon request and without charge to execute, acknowledge and deliver any instruments reasonably requested by the City under this Lease to evidence the foregoing subordination; (iv) the rights of the City in the Leased Property and arising out of this Lease shall not be affected by the First Leasehold Mortgage, First Leasehold Mortgagee, Mezzanine Loan or Mezzanine Lender, nor shall the City be deprived in any other way of its rights in the Leased Property or under this Lease, except to the extent provided in this Article VI or in any 43 subordination or other written agreement between the City and such First Leasehold Mortgagee or Mezzanine Lender; (v) Lessee shall at all times remain liable hereunder for the payment of Rent and the performance of all covenants and conditions of this Lease as provided in this Lease; (vi) at the time of the closing of the financing or re-financing, Lessee certifies to the City that the Hotel Project, after taking into account all existing debt of the Lessee, is projected to have and be able to sustain a Debt Service Coverage Ratio of not less than 1.25 (based on the reasonably projected first stabilized year for any financing that closes prior to the end of the reasonably projected first stabilized year, and any twelve (12) consecutive months out of the previous eighteen (18) months of operations for subsequent financings); (vii) at the time of the closing of the financing or re-financing, the aggregate amount of the principal indebtedness secured by (a) mortgages encumbering Lessee's interest in the Leased Property and/or(b) pledges of ownership interests of Lessee, does not exceed an amount equal to seventy percent (70%) of the sum of (1) the then value of Lessee's interest in the Leased Property and any improvements previously constructed on the Leased Property, as reasonably determined by a third-party appraiser selected by the City and engaged at Lessee's sole expense, which appraiser must have at least ten (10) years of experience in appraising hotel properties of at least four hundred (400) rooms in the Miami Beach area, (2) the value of any improvements to be constructed on the Leased Property with the proceeds of such financing or re-financing, and (3) all costs incurred, and all reserves required, in connection with such financing or re-financing; (viii) the First Leasehold Mortgagee waives all right and option to retain and apply the proceeds of any insurance or the proceeds of any condemnation award toward payment of the sum secured by the First Leasehold Mortgage to the extent such proceeds are required for the demolition, repair or restoration of the Leased Property in accordance with the provisions of this Lease; and (ix) no purchaser at any foreclosure sale will acquire any right, title or interest in or to this Lease, unless such purchaser, in a written instrument reasonably satisfactory to the City, assumes and agrees to perform all of the terms, covenants and conditions of Lessee hereunder arising after the date of such Transfer(provided that City does not waive or relinquish its right, and shall have the right, to enforce its remedies with respect to any Event of Default existing as of the date of such Transfer), that no additional mortgage or assignment of this Lease or pledge of ownership interests of Lessee will be made except in accordance with the provisions contained in this Article VI, and that a duplicate original of such written instrument, duly executed and acknowledged by such purchaser and in recordable form, is delivered to the City immediately after the consummation of such sale, or, in any event, prior to taking possession of the Leased Property. (b) Prior to the date (i) a First Leasehold Mortgage is recorded or (ii) the Mezzanine Lender, if any, enters into a Mezzanine Loan or Credit Enhancement agreement with Lessee, the First Leasehold Mortgagee or Mezzanine Lender, as applicable, Lessee and the City (by and through the City Manager) shall enter into a non-disturbance and attornment agreement containing the provisions set forth in Section 6.1(d) below and such other terms and conditions as are reasonably acceptable to the First Leasehold Mortgagee or Mezzanine Lender, as applicable, and the City Manager, after consultation with the City's Chief Financial Officer and City Attorney. 44 (c) Lessee shall deliver to the City, promptly after execution by Lessee, (i) a true and verified recorded copy of any First Leasehold Mortgage and any amendment, modification or extension thereof, together with the name and address bf the First Leasehold Mortgagee and (ii) a true and correct copy of any Mezzanine Loan or Credit Enhancement agreement and any amendment, modification or extension thereof, together with the name and address of the Mezzanine Lender. (d) For so long as any First Leasehold Mortgage encumbers the Leased Property, or, as applicable, a Mezzanine Lender holds a pledge of Lessee's ownership interest, and provided the conditions of Section 6.1(a) through (c) above have been satisfied: (i) in any event where the City gives Lessee notice of an Event of Default, the City shall deliver a copy of such notice to the First Leasehold Mortgagee and Mezzanine Lender, at the name and address designated in writing by the First Leasehold Mortgagee and Mezzanine Lender to the City from time to time (the City shall be deemed to have fulfilled its notice obligation by providing the required notice to the address delivered to the City in accordance with Section 6.1(c) or such other address so designated by the First Leasehold Mortgagee or Mezzanine Lender to the City in writing and shall not be responsible for any liability in the event such address is not current); (ii) notwithstanding the time allowed for Lessee to cure an Event of Default, the First Leasehold Mortgagee and the Mezzanine Lender shall have the right, but not the obligation, up to fifteen (15) days following the City's notice thereof to cure a monetary default and thereafter keep all Rent and other amounts due hereunder current, and up to thirty (30) days following the City's notice thereof to cure a non-monetary Event of Default (except an Event of Default under Sections 7.1(c) or (d) hereof, for which the First Leasehold Mortgagee and Mezzanine Lender will not be given any additional time to remedy), but if such non- monetary Event of Default cannot be cured within such thirty (30) day period, then the First Leasehold Mortgagee and Mezzanine Lender shall have up to ninety(90)days to cure, provided that it has started to do so within the initial thirty (30) day period and thereafter continues to diligently pursue the cure. The City will accept performance by the First Leasehold Mortgagee and Mezzanine Lender of any covenant, condition or agreement on Lessee's part to be performed hereunder with the same force and effect as though performed by Lessee; and (iii) notwithstanding the provisions of Article VII hereof, no Event of Default by Lessee will be deemed to exist as to the First Leasehold Mortgagee as long as the First Leasehold Mortgagee, in good faith, either promptly (A) commences to cure such Event of Default and prosecute the same to completion in accordance with clause (ii) above, or (B) if the nature of any non-monetary Event of Default (except an Event of Default under Sections 7.1(c) or (d) hereof, for which the First Leasehold Mortgagee will not be given any additional time to remedy) is such that possession of the Hotel Project is reasonably necessary to cure the Event of Default or if the Event of Default is of the type that cannot commercially reasonably be cured by the First Leasehold Mortgagee (e.g., Lessee bankruptcy) (and which will be waived as to the First Leasehold Mortgagee if the First Leasehold Mortgagee cures all other Events of Default), files a complaint for foreclosure and thereafter prosecutes the foreclosure action in good faith and with diligence and continuity and obtains possession directly or through a receiver, and as promptly as practicable after obtaining such possession, commences promptly to cure such Event of Default and to prosecute the same to completion in good faith and with diligence and continuity; provided, however, that the First Leasehold Mortgagee has delivered to the City, in writing within twenty (20) days following receipt of City's notice of default, its agreement to take 45 the action described in clause (A) or (B) of this clause (iii), and that during the period in which such action is being taken (and any foreclosure proceedings are pending), all of the other obligations of Lessee under this Lease, to the extent they are susceptible of being performed by the First Leasehold Mortgagee (e.g., the payment of Rent), are being duly performed. However, at any time after the delivery of the aforementioned agreement, the First Leasehold Mortgagee may notify the City, in writing, that it has relinquished possession of the Leased Property, or that it will not institute foreclosure proceedings or, if such proceedings have been commenced, that it has discontinued them, and in such event, the First Leasehold Mortgagee will have no further liability under such agreement from and after the date which is 30 days after it delivers such notice to the City (except for any obligations accruing prior to 30 days after the date it delivers such notice), and, thereupon, subject to the rights of the Mezzanine Lender set forth in clause (iv) below, the City will have the unrestricted right to terminate this Lease and to take any other action it deems appropriate by reason of any Event of Default, and upon any such termination, the provisions of Section 6.1(h) hereof will apply. (iv) notwithstanding the provisions of Article VII hereof, no Event of Default by Lessee will be deemed to exist as to the Mezzanine Lender as long as the Mezzanine Lender, in good faith, either promptly (A) commences to cure such Event of Default and prosecute the same to completion in accordance with clause (ii) above, or (B) if the nature of any non- monetary Event of Default (except an Event of Default under Sections 7.1(c) or (d) hereof, for which the Mezzanine Lender will not be given any additional time to remedy) is such that possession of the Lessee's ownership interests is reasonably necessary to cure the Event of Default or if the Event of Default is of the type that cannot commercially reasonably be cured by the Mezzanine Lender (e.g., Lessee bankruptcy) (and which will be waived as to the Mezzanine Lender if the Mezzanine Lender cures all other Events of Default), has taken all reasonable steps necessary to foreclose the pledge of the Lessee's ownership interests, and prosecutes such action in good faith and with diligence and continuity and obtains possession of the Lessee's ownership interest, and as promptly as practicable after obtaining such possession, commences promptly to cure such Event of Default and to prosecute the same to completion in good faith and with diligence and continuity; provided, however, that the Mezzanine Lender has delivered to the City, in writing within twenty (20) days following receipt of City's notice of default, its agreement to take the action described in clause (A) or (B) of this clause (iv), and that during the period in which such action is being taken, all of the other obligations of Lessee under this Lease, to the extent they are susceptible of being performed by the Mezzanine Lender (e.g., the payment of Rent), are being duly performed. However, at any time after the delivery of the aforementioned agreement, the Mezzanine Lender may notify the City, in writing, that it has relinquished possession of the Lessee's ownership interests or that it will not seek to foreclose the pledge of Lessee's ownership interests or, if such foreclosure has commenced, that it has been discontinued, and in such event, the Mezzanine Lender will have no further liability under such agreement from and after the date which is 30 days after it delivers such notice to the City (except for any obligations accruing prior to 30 days after the date it delivers such .notice), and, thereupon, subject to the rights of the First Leasehold Mortgagee set forth in clause (iii) above, the City will have the unrestricted right to terminate this Lease and to take any other action it deems appropriate by reason of any Event of Default, and upon any such termination, the provisions of Section 6.1(h) hereof will apply. (e) From and after the date upon which the City receives the notice described in Section 6.1(c) hereof, the City will not (i) consent to a cancellation or surrender of this Lease (except upon the expiration of the Term), or any amendment or modification materially increasing the Lessee's obligations hereunder or(ii) terminate this Lease other than as provided in this Article VI (except upon the expiration of the Term) without the prior written consent of the 46 First Leasehold Mortgagee and Mezzanine Lender, which consent shall not be unreasonably delayed, conditioned or withheld. (f) Foreclosure of a First Leasehold Mortgage or any sale thereunder, whether by judicial proceedings or by any power of sale contained in the First Leasehold Mortgage or applicable law, or any conveyance of the Hotel Project from Lessee to the First Leasehold Mortgagee in lieu of the foreclosure or other appropriate proceedings in the nature thereof, or any foreclosure of a Mezzanine Loan, or conveyance of the Lessee's ownership interest in lieu thereof, shall not: (i) require the City's consent; or (ii) provided the First Leasehold Mortgagee or the Mezzanine Lender has complied with the provisions of this Article VI, constitute a breach of any provision of or a default under this Lease. (g) If the First Leasehold Mortgagee or any other foreclosure sale purchaser subsequently assigns or transfers its interest under this Lease after acquiring the same by foreclosure or by an acceptance of a deed in lieu of foreclosure or subsequently assigns or transfers its interest under any such new lease entered into pursuant to Section 6.1(h) below, and in connection with any such assignment or transfer, the First Leasehold Mortgagee or any other foreclosure sale purchaser takes back a First Leasehold Mortgage to secure a portion of the purchase price, the holder of such First Leasehold Mortgage shall be a First Leasehold Mortgagee entitled to receive the benefit of this Article VI and all other provisions of this Lease intended for the benefit of a First Leasehold Mortgagee. Similarly, if a Mezzanine Lender or a purchaser under a UCC sale obtains title to the ownership interests in Lessee and subsequently assigns or transfers its interests in such ownership interests, or subsequently assigns or transfers its interest under any new lease entered into pursuant to Section 6.1(h) below, and in connection with any such assignment or transfer, the Mezzanine Lender or any other UCC sale purchaser takes back a pledge of the Lessee's ownership interests to secure a portion of the purchase price, the holder of such pledge shall be a Mezzanine Lender entitled to receive the benefit of this Article VI and all other provisions of this Lease intended for the benefit of a Mezzanine Lender. (h) Should the Lessee or any First Leasehold Mortgagee or Mezzanine Lender not cure the alleged Event of Default as provided in this Section 6.1, the City has the right to terminate this Lease by reason of any uncured Event of Default as provided in this Lease. If this Lease is terminated by the City in accordance with the foregoing or is terminated as a result of the bankruptcy of the Lessee, the City shall give written notification of such termination to the First Leasehold Mortgagee and Mezzanine Lender, and the City shall, upon written request of the First Leasehold Mortgagee to the City received within thirty (30) days after such notice of termination, enter into a new lease of the Leased Property with such First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee, for the remainder of the Term with the same covenants, conditions and agreements (except for any requirements which have been fully satisfied by Lessee or City prior to termination or which pertain to the ownership of Lessee) as are contained herein. (I) The City's delivery of the Leased Property to the First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as applicable, as lessee, pursuant to a new lease shall be: 47 (I) made without representation or warranty of any kind or nature whatsoever either express or implied; (ii) First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee, shall take such Leased Property"as-is" in its then current condition; and (iii) upon execution and delivery of such new lease, First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as lessee, at its sole cost and expense shall be responsible for taking such action as shall be necessary to cancel and discharge this Lease and to remove Lessee named herein and any other occupant (other than as allowed by the First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as applicable, as lessee, or the City)from the Hotel Project. (j) The City's obligation to enter into such new lease of the Leased Property with the First Leasehold Mortgagee or Lessee (as owned by the Mezzanine Lender) shall be conditioned upon, on the date the new lease is executed: (i) the City receiving payment of all Rent due hereunder through the date of such new lease; (ii) all monetary defaults hereunder having been cured; (iii) all non-monetary defaults susceptible to cure having been remedied and cured (or First Leasehold Mortgagee or Lessee (as owned by Mezzanine Lender), as applicable, as lessee, having commenced such cure and continuing to diligently complete the cure in accordance with clauses (iii) or(iv) of paragraph (d) above, as applicable); and (iv) the City receiving payment of all expenses, including reasonable attorneys' fees and disbursements and court costs, incurred by the City in connection with such Event of Default, the termination of this Lease and the preparation of the new lease, together with interest thereon at the lesser of the Default Rate or the highest rate permitted by law, from the due date or the date expended by the City, as the case may be, to the date of actual payment from First Leasehold Mortgagee or Mezzanine Lender, as applicable. (k) With respect to the payment of Rent by the First Leasehold Mortgagee or Mezzanine Lender pursuant to this Article VI, if the Rent currently due cannot be determined by the First Leasehold Mortgagee or Mezzanine Lender, as applicable, without possession of the Hotel Project or ownership of the Lessee's equity interests, as applicable, then the First Leasehold Mortgagee or Mezzanine Lender may pay the amount of Base Rent which was paid for the immediately previous period, with the adjustment, upward or downward, to be made ninety (90) days after the First Leasehold Mortgagee obtains possession of the Hotel Project or the Mezzanine Lender obtains possession of Lessee's equity interests, as applicable. Section 6.2. No Waiver of Lessee's Obligations or City's Rights. Nothing contained herein or in any Leasehold Mortgage shall be deemed or construed to relieve Lessee from the full and faithful observance and performance of its covenants, conditions and agreements contained herein, or from any liability for the non-observance or non-performance thereof, or to require, allow or provide for the subordination to the lien of such Leasehold Mortgage or to any Leasehold Mortgagee of any estate, right, title or interest of the City in or to the Leased Property, buildings and structures or this Lease (including the right to Rent, Public Charges, and other monetary obligations of Lessee to the City under this Lease), nor shall the City be required 48 to join in such mortgage financing or be liable for same in any way. City's interest in the Leased Property and this Lease, as the same may be modified, amended or renewed, will not at any time be subject or subordinate to (a) any mortgage now or hereafter placed upon Lessee's interest in this Lease, or (b) any other liens or encumbrances hereafter affecting Lessee's interest in this Lease. ARTICLE VII REMEDIES; EVENTS OF DEFAULT Section 7.1. Default by Lessee. Each of the following occurrences shall constitute an "Event of Default" of Lessee that shall entitle City to terminate this Lease and seek any other remedies as set forth in Section 7.2: (a) if Lessee fails to pay any installment of Rent, including Base Rent, or any part thereof, when the same becomes due and payable for a period of three (3) Business Days after notice thereof from the City; provided, however, that the City shall not be obligated to provide written notice of such failure more than two (2) times in any consecutive twelve (12) month period, and the failure of Lessee to pay any third or subsequent installment of Rent when due in any consecutive twelve (12) month period shall constitute an Event of Default by Lessee hereunder without the requirement of notice or opportunity to cure; (b) if Lessee fails to make any payment of Additional Rent, Public Charges or any other payment required to be paid by Lessee hereunder for a period of 10 Business Days after notice thereof from City to Lessee; (c) if Lessee fails to satisfy all of the Possession Conditions by the Outside Possession Date; (d) if Lessee fails, after Commencement of Construction, to Complete Construction by the Outside Completion Date; (e) if Lessee fails, after Commencement of Construction, to cause the Opening Date to occur by the Outside Opening Date; (f) if Lessee conducts on the Leased Property any business, the performance of any service, or the sale or marketing of any product or service by Lessee which is prohibited by the terms of this Lease for a period of thirty (30) days after receipt of notice thereof from the City; (g) If Lessee knows or actively participates in the use of any portion of the Hotel Project as a Gaming Establishment (through venue rental, promotion or other similar activities) for a period of three (3) Business Days after written notice thereof from the City; provided, however, that the City shall not be obligated to provide written notice of such failure more than two (2) times in any consecutive twelve (12) month period, and the failure of Lessee to comply with the restrictions in Section 4.2(b) prohibiting use of the Leased Property as a Gaming Establishment after the second written notice in any consecutive twelve (12) month period shall constitute an Event of Default by Lessee hereunder without the requirement of any notice or opportunity to cure; 49 (h) If Lessee or any Person with an ownership interest in Lessee violates Section 4.2(g) (other than as provided in subsection (g) above) or the Acceptable Owner criteria • specified in subparagraphs A.1., A.3. and A.4 of Exhibit A of this Lease; provided, however, in the case of any such violation by any Person with an ownership interest in Lessee, Lessee shall have twelve months to cure such violation after Lessee first becomes aware of such violation (whether by notice from the City or otherwise); (i) if Lessee fails to maintain or provide evidence of all insurance in strict compliance with Article IX hereof and such failure continues for a period of ten (10) Business Days from the date of written notice thereof from City; (j) if Lessee fails to operate the Hotel in compliance in all material respects with the Hotel Standards, regardless of the Hotel's AAA rating, and such failure continues for a period of ninety (90) days from the date of written notice thereof from City or if the default is not capable of being cured within such ninety (90) day period, Lessee fails within such period to commence a cure and thereafter diligently and in good faith prosecute the same to completion within a reasonable time, subject to the rights of any First Leasehold Mortgagees and sub- lessees hereunder; (k) if there is a default by Lessee under the Management Agreement and as a result of such default the Management Agreement is terminated and a replacement Management Agreement is not entered into within ninety (90) days thereafter, provided that if Lessee shall have commenced and thereafter shall have continued diligently to replace the Management Agreement within such ninety (90) day period and the Hotel Project continues to operate in the ordinary course of business, then Lessee shall have an additional commercially reasonable period of time not to exceed one hundred eighty (180) days within which to enter into a replacement Management Agreement; (I) if prior to the Opening Date, any lawsuit is filed against the Lessee, which is not dismissed within sixty (60) days and the amount in controversy of which is not covered by insurance or bond and which, if adversely determined, would substantially impair the ability of Lessee to perform its obligation to open the Hotel by the Outside Opening Date, unless Lessee is contesting such lawsuit in good faith and through appropriate action. (m) if Lessee fails to observe or perform one or more of the other terms, conditions, covenants or agreements of this Lease not otherwise addressed in this Section 7.1 and such failure continues for a period of 45 days after written notice thereof by City to Lessee specifying such failure, unless such failure requires work to be performed, acts to be done, or conditions to be removed which cannot by their nature reasonably be performed, done or removed, as the case may be, within such 45 day period, in which case no Default will be deemed to exist as long as (i) Lessee commences curing the same within such 45 day period and diligently and continuously prosecutes the same to completion and (ii) after the Opening Date the Hotel Project continues to operate in the ordinary course of business, to the extent commercially reasonable taking into account the nature of the alleged failure to perform according to the covenant, condition or agreement in question; (n) if Lessee is generally not paying its debts as such debts become due or admits, in writing, that it is unable to pay its debts as such debts become due; (o) if Lessee makes an assignment for the benefit of creditors; 50 (p) if Lessee files a voluntary petition under the Bankruptcy Code or if such petition is filed against Lessee and an order for relief is entered, or if Lessee files any petition or answer seeking, consenting to or acquiescing in any reorganization, arrangement, composition; readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code or any other present or future applicable federal, state or other statute or law, or seeks or consent to or acquiesces in or suffers the appointment of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of Lessee, or of all or any substantial part of its properties or of the Leased Property or any interest of Lessee therein; (q) if within 90 days after the commencement of any proceeding against Lessee seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking any reorganization, arrangement, composition, readjustment . or adjustment, winding-up, liquidation, dissolution or similar relief under the Bankruptcy Code or any other present or future applicable federal, state or other statute or law of any jurisdiction, domestic or foreign, such proceeding has not been dismissed, or if, within 90 days after the appointment, without the consent or acquiescence of Lessee, of any trustee, receiver, custodian, assignee, sequestrator or liquidator of Lessee, or of all or any substantial part of its properties or of the Leased Property or any interest of Lessee therein, such appointment has not been vacated or stayed on appeal or otherwise, or if, within 30 days after the expiration of any such stay, such appointment has not been vacated; (r) if any case, proceeding or other action is commenced or instituted against Lessee seeking the issuance of a warrant of attachment, execution or similar process against all or any substantial part of its property, which case, proceeding or other action results in the entry of an order for any such relief which has not been vacated, discharged, stayed or bonded pending Lessee's appeal therefrom within 30 days from the entry thereof; (s) if Lessee fails, or fails to cause the Hotel Operator, to continuously operate the Leased Property in accordance with Section 13.2 hereof; (t) if Lessee, prior to the Opening Date, vacates or abandons the Leased Property or any portion thereof, or voluntarily abandons construction of any portion of the Hotel Project (other than in connection with a Force Majeure Event), which abandonment is not cured within a reasonable time, not less than thirty(30)days, following written notice from City; (u) if this Lease or the leasehold estate of Lessee hereunder is assigned, subleased, transferred, mortgaged, pledged or encumbered in any manner without compliance with the provisions of this Lease, or if Lessee attempts to consummate any Transfer (by entering into an agreement to sell or assign its interest in this Lease or the Hotel Project or to sublet any portion of the Leased Property which is not conditioned on satisfying the Transfer provisions of this Lease, or by agreeing to a Transfer without complying with the provisions governing same in this Lease), except as expressly permitted herein, and fails to correct such Transfer within thirty(30)days after receiving notice from City; (v) if a levy under execution or attachment is made against Lessee or its property and such execution or attachment has not been vacated or removed by court order, bonding or otherwise within a period of 30 days after such execution of attachment; and (w) if Lessee or Hotel Operator fails to comply with the Room Block Agreement in a manner that constitutes an Event of Default under such agreement. 51 Notwithstanding any provision to the contrary herein, the Parties' acts or omissions in connection with Section 3.10 shall not be deemed an Event of Default. Section 7.2. Remedies for Lessee's Default. (a) If an Event of Default occurs hereunder, the City may elect any one or more of the following remedies, without limitation: (i) terminate this Lease and commence an action for eviction immediately upon the occurrence of any Event of Default; (ii) immediately revoke the licenses granted to Lessee pursuant to the Assignment of Plans and Approvals and the Assignment of Hotel Project General Construction Contract; and (iii) with respect to any Event of Default under Section 7.1(f), the City shall be entitled, for each month so long as such Event of Default has not been cured, to Base Rent equal to three times the Base Rent being paid at the time of such Event of Default for each month until the earlier of(x) such Event of Default has been cured or(y) City has terminated this Lease pursuant to clause (i) above. The City's election of a remedy hereunder with respect to any one or more Events of Default shall not limit or otherwise affect the City's right to elect any of the remedies available to it hereunder with respect to that or any other Event of Default. (b) If this Lease is terminated as provided in Section 7.2(a)(i) hereof, Lessee will pay or cause to be paid to the City the unfunded portion, if any, of the Portman Minimum Equity Contribution, and will indemnify City against and compensate City from and for any and all reasonable third party costs incurred by City in enforcing its rights and remedies hereunder; provided that if Lessee has already invested the amount of the Portman Minimum Equity Contribution at the time of termination and has provided reasonable evidence of same to the City, no additional amounts will be due from Lessee; (c) If an Event of Default occurs, Lessee will nevertheless be obligated to continue to pay all Rent for so long as Lessee has possession of the Leased Property. (d) Upon the termination of this Lease, Lessee shall quit and peaceably surrender the Hotel Project (which includes the Leased Property and the Lessee Improvements), and all property in its possession to the City in accordance with Sections 7.9 and 11.5. (e) Upon the termination of this Lease, as provided in this Section 7.2, all rights and interest of Lessee in and to the Hotel Project (which includes the Leased Property and the Lessee Improvements), and every part thereof shall cease and terminate, and the City may, in addition to any other rights and remedies it may have, retain all sums paid to it by Lessee under this Lease. (f) If this Lease is terminated prior to the Outside Completion Date, to the extent not previously assigned to the City, City shall have the right to cause Lessee to assign to the City (or another Person as "Assignee") all of its rights under all contracts and agreements executed in connection with the Hotel Project, including the Management Agreement and all such 52 contracts and agreements with the design professionals; on a non-recourse basis, without any warranties or representations from Lessee, and to entitle City or Assignee to all of the rights and benefits of Lessee thereunder, and to provide that City or Assignee, upon the assignment of such contracts(s) and agreement(s) pursuant to this section, shall only be responsible for amounts due thereunder for work performed or services rendered with City's or Assignee's consent after such assignment; provided that the other party to any such contracts will continue to have the rights and remedies provided therein for any defaults occurring prior to the assignment to the City or its Assignee. (g) In the event the City elects to terminate this Lease after an Event of Default and such termination is stayed by order of any court having jurisdiction of any matter relating to this Lease, or by any federal or state statute, then following the expiration of any such stay, the City shall have the right, at its election, to terminate this Lease with five (5) days' written notice to Lessee, Lessee as debtor in possession or if a trustee has been appointed, to such trustee. (h) As an additional inducement to and material consideration for City agreeing to this Lease, Lessee agrees that in the event a Bankruptcy or Judicial Action (as defined herein) is commenced which subjects the City to any stay in the exercise of the City's rights and remedies under this Lease, including the automatic stay imposed by section 362 of the United States Bankruptcy Code (individually and collectively, "Stay"), then Lessee irrevocably consents and agrees to the Stay being lifted and released against City, and City shall thereafter be entitled to exercise all of its rights and remedies against the Lessee under this Lease. The Lessee acknowledges that it is knowingly, voluntarily, and intentionally waiving its rights to any Stay and agrees that the benefits provided to the Lessee under the terms of this Lease are valuable consideration for such waiver. As used in this Section, the term "Bankruptcy or Judicial Action" shall mean any voluntary or involuntary case filed by or against Lessee under the Bankruptcy Code, or any voluntary or involuntary petition in composition, readjustment, liquidation, or dissolution, or any state and federal bankruptcy law action filed by or against Lessee, any action where Lessee is adjudicated as bankrupt or insolvent, any action for dissolution of Lessee or any action in furtherance of any of the foregoing, or any other action, case, or proceeding that has the effect of staying (or in which a Stay is being obtained against) the enforcement by the City of its rights and remedies under this Lease. (i) Notwithstanding the foregoing, in the event that Lessee seeks to assume and assign this Lease pursuant to section 365 of the Bankruptcy Code it will be required to provide to the City adequate assurance of future performance which shall consist of evidence that such assignee satisfies the following criteria [to be updated once Exhibit A is final]: (i) neither such assignee nor any Persons with an ownership interest in such assignee shall, directly or indirectly, own, operate or manage a Gaming Establishment in Miami- Dade County, Florida; provided, however, that the foregoing restriction shall not prevent an assignee who otherwise satisfies the criteria set forth in this Section 7.2(i) from so qualifying if all Persons owning or Controlling such assignee own or control in the aggregate five percent (5%) or less of the voting securities of any owner, operator or manager of a Gaming Establishment in Miami-Dade County, Florida; (ii) such assignee, or the Affiliates of such assignee or Persons with an ownership interest in such assignee, must possess the qualifications, good reputation and financial resources necessary to perform the obligations of Lessee in accordance with this Lease, in a manner consistent with the Hotel Standards; "good reputation" means the absence of a reputation for dishonesty, criminal conduct, or association with criminal elements; it does 53 not mean "prestigious," nor does the determination of whether one has a good reputation involve consideration of personal taste or preference; (iii) such assignee shall have no outstanding material violations of any Governmental Requirement against such assignee, or any hotel or other property owned or managed by such assignee, or an Affiliate of such assignee, within Florida, which have remained uncured for more than ninety (90) days after such assignee has knowledge of such violation; (iv) such assignee is not a Foreign Instrumentality; (v) such assignee must not be owned, controlled or run by entities or individuals who have been convicted, or are presently under indictment, for felonies under the laws of any foreign or United States of America jurisdiction; provided that the foregoing shall not apply to individuals or entities owning less than a ten (10%) percent equity interest in such assignee, other than officers, directors, managers or others who have the power to direct and control the business and affairs of such assignee; (vi) such assignee must not (nor shall any of the individuals or entities who own at least a ten (10%) percent equity interest in such assignee or are officers, directors, managers or otherwise have the power to direct and control the business and affairs of such assignee) have filed or been discharged from bankruptcy, or have been the subject of an involuntary bankruptcy, reorganization or insolvency proceedings within the past five (5) years (bankruptcy filings by Affiliates shall not disqualify such assignee, unless such Affiliates are any of the individuals or entities described in the parenthetical immediately above); and (vii) such assignee must not in its charter or organizations documents (defined as the articles of incorporation and bylaws for any corporation, the partnership agreement and partnership certificate for any partnership, the trust agreement for any trust and the constitution of the relevant government for any governmental entity, but expressly excluding any statements, positions, actions or allegations not contained in such charter organizational documents) expressly advocate or have as its stated purpose: (a) the violent overthrow of or armed resistance against, the U.S. government; or(b) genocide or violence against any persons; or (c) discrimination, hatred or animosity toward persons based solely on their race, creed, color, sex or national origin. Section 7.3. Default by the City. An event of default by the City shall be deemed to have occurred under this Lease if the City fails to perform any obligation or fulfill any covenant or agreement of the City set forth in this Lease and such failure shall continue for thirty (30) days following the City's receipt of written notice of the non-performance; provided, however, the City shall not be in default of this Lease: (a) if the City provides Lessee with a written response within said thirty (30) day period indicating the status of the City's resolution of the breach and providing for a mutually agreeable schedule to correct same; or (b) with respect to any breach that is capable of being cured but that cannot reasonably be cured within said thirty (30) day period, if the City commences to cure such breach within such thirty (30) day period (or as soon thereafter as is reasonably possible) and diligently continues to cure the breach until completion, but no longer than a total of one hundred twenty(120) days. 54 Section 7.4. Force Majeure and Economic Force Majeure. (a) Neither the City nor Lessee, as the case may be, shall be considered in breach of or in default of any of its non-monetary obligations, including suspension of construction activities, hereunder by reason of unavoidable delay due to any Force Majeure Event; provided that the Party claiming such Force Majeure Event delivers written.notice to the other Party of such Force Majeure Event within twenty-one (21) days after first becoming aware of the occurrence thereof, which notice shall describe in reasonable detail the events giving rise to the Force Majeure Event; and such Party shall diligently attempt to remove, resolve or otherwise seek to mitigate such delay and keep the other Party advised with respect thereto. Time is of the essence with respect to this provision, and any failure by a Party to timely deliver such notice of a Force Majeure Event shall be deemed a waiver of such Party's right to delay performance as a result of such Force Majeure Event. (b) Economic Force Majeure. If, prior to Possession, Lessee is delayed, hindered or prevented from being able to obtain a Construction Loan Commitment or satisfy the Possession Conditions due to Economic Force Majeure, then the Outside Possession Date, Outside Construction Loan Closing Date, the Outside Opening Date and the Outside Completion Date shall each be extended for the period of such delay (but not to exceed eighteen (18) months); provided, that, with respect to any such delay by Economic Force Majeure, the Lessee shall give written notice of such occurrence to City within twenty-one (21) days after Lessee has knowledge of such occurrence, which notice shall describe in reasonable detail the events giving rise to the Economic Force Majeure and Lessee shall diligently attempt to remove, resolve, or otherwise seek to mitigate such delay, and keep City advised with respect thereto. Time is of the essence with respect to this provision, and any failure by Lessee to timely deliver such notice of Economic Force Majeure shall be deemed a waiver of Lessee's right to extend the Outside Possession Date, Outside Construction Loan Closing Date, the Outside Opening Date and Outside Completion Date, as applicable, as a result of such Economic Force Majeure. Section 7.5. Remedies Cumulative; Waiver. The rights and remedies of the parties to this Lease, whether provided by law or by this Lease, shall be cumulative and concurrent, and the exercise by either Party of any one or more of such remedies shall not preclude the exercise by it, at the same or different times, of any other such remedies for the same default or breach, or of any of its remedies for any other default or breach by the other Party. No waiver of any default or Event of Default hereunder shall extend to or affect any subsequent or other default or Event of Default then existing, or impair any rights, powers or remedies consequent thereon, and no delay or omission of any Party to exercise any right, power or remedy shall be construed to waive any such default or Event of Default or to constitute acquiescence thereof. Section 7.6. Right to Cure. If Lessee shall default in the performance of any term, covenant or condition to be performed on its part hereunder, the City may, in its sole discretion, after notice to Lessee and beyond applicable cure periods (or without such notice and cure in the event of an emergency), perform the same for the account and at the expense of Lessee. If, at any time and by reason of such default, the City is compelled to pay, or elects to pay, any sum of money or do any act which will require the payment of any sum of money, or is compelled to incur any expense in the enforcement of its rights hereunder or otherwise, such sum or sums shall be deemed Additional Rent hereunder and, together with interest thereon at the Default Rate, shall be repaid to the City by Lessee upon demand. 55 Section 7.7. Room Block Agreement. No termination or expiration of this Lease shall affect or impair the Room Block Agreement; which shall continue to encumber the Hotel with respect to any subsequent lessees. Section 7.8. Dispute Resolution. (a) City and Lessee agree that any dispute, claim or controversy between them relating to or arising under this Lease ("Dispute") will first be submitted, by written notice, to a designated representative of both City and Lessee who will meet at City's place of business or other mutually agreeable location, or by teleconference, and confer in an effort to resolve such dispute. Any decision of the representatives will be final and binding on the parties. In the event the representatives are unable to resolve any dispute within ten (10) days after submission to them, either Party may refer the dispute to mediation. The exclusive venue for any Dispute not resolved by mediation shall be any state or federal court of competent jurisdiction sitting in or for Miami-Dade County, Florida, except for (i) Development Disputes, which shall be resolved in accordance with Section 7.9, or (ii) Disputes relating to City's disapproval of a proposed brand as an Approved Brand or a Proposed Transferee as an Acceptable Owner, which shall be resolved in accordance with Section 7.10. (b) TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE CITY AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE PARTIES ENTERING INTO THIS LEASE. Section 7.9. Expedited Arbitration of Development Disputes. (a) If Lessee or City asserts that a Development Dispute has arisen, such asserting Party shall give prompt written notice thereof to the other Party, and such Development Dispute shall be submitted to binding arbitration by the Development Arbitrator in accordance with this Section 7.9. (b) The Parties shall cooperate to select an independent, neutral, professional arbitrator experienced in the resolution of construction claims and associated subject matter having at least ten (10) years of hotel development or construction experience in the Miami- Dade County area to serve as the arbitrator (the "Development Arbitrator"). If the Parties cannot agree on a single Development Arbitrator, then each Party shall select an arbitrator with such hotel development or construction experience, who shall jointly select a third arbitrator with such hotel development or construction experience and the three arbitrators shall collectively constitute the Development Arbitrator. (c) The Development Arbitrator shall, no later than five (5) Business Days after being selected, hold a preliminary, informal meeting with City and Lessee in an attempt to mediate such Development Dispute. If such Development Dispute is not resolved at such meeting, the Development Arbitrator shall at such meeting establish a date (the "Hearing Date"), not earlier than five (5) Business Days after such meeting nor later than twenty (20) days after such meeting for a hearing (a "Hearing") to be held in accordance with this Lease to 56 resolve such Development Dispute. (d) Lessee and City each shall have the right to make one (1) written submission to the Development Arbitrator prior to the Hearing. Such submission shall be received by the Development Arbitrator and the other Party not later than two (2) Business Days prior to the Hearing Date. The Parties agree that no discovery (as the term is commonly construed in litigation proceedings) will be permitted and agree that neither Party nor the Development Arbitrator shall have discovery rights in connection with a Development Dispute. (e) The Hearing shall be conducted by the Development Arbitrator. It is the intention of the Parties that the Hearing on a Development Dispute shall be conducted in an informal and expeditious manner. No transcript or recording shall be made. Each Party shall have the opportunity to make a brief statement and to present documentary and other support for its position, which may include the testimony of not more than four(4) individuals, two (2) of whom may be outside experts. There shall be no presumption in favor of either Party's position. Any procedural matter not covered herein shall be governed by procedures mutually agreed upon by the Parties, or if they are unable to agree, in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association (as amended hereby). (f) The Hearing shall be held in a location selected by the Development Arbitrator in Miami-Dade County, Florida. Provided that the Development Arbitrator is accompanied by representatives of both Lessee and City, the Development Arbitrator may, at its option, visit the Hotel Site to make an independent review in connection with any Development Dispute. (g) The Development Arbitrator, in rendering its decision with regard to any Development Dispute, shall take into account and at a minimum consider the following factors, which shall be used to guide its decision: (i) City does not have any Approval rights with respect to the matter of interior design and decor of the Hotel Project except to the extent the same is reflected in the Approved Plans or Mandatory Hotel Project Design Elements; (ii) the Hotel Project shall be designed and constructed to meet or exceed the Hotel Standards; (iii) the mutual goal of Lessee and City is that costs in excess of the Budgeted Improvement Costs should be avoided or minimized unless proposed by Lessee and for which Lessee has agreed to provide adequate funds; (iv) the mutual goal of Lessee and City is that the construction of the Hotel Project be completed by the Outside Completion Date; (v) the Hotel Project must comply with all Governmental Requirements; and (vi) the magnitude of the modification to the Approved Plans. (h) Pending resolution of the Development Dispute, Lessee may not implement the matter which is the subject of such Development Dispute. 57 (I) The Development Arbitrator shall render a decision, in writing, as to any Development Dispute not later than two (2) Business Days following the conclusion of the Hearing regarding such Development Dispute and shall provide a brief written basis for its decision not later than five (5) Business Days thereafter. Such decision of the Development Arbitrator shall be rendered by (a) the decision of the single Development Arbitrator, (b) the decision of two of the arbitrators comprising the Development Arbitrator, if two are able to agree, (c) the decision of the third arbitrator appointed by each of the Parties' arbitrators, if no two of the three arbitrators are able to agree within such period, or(d) agreement between the Parties prior to and independently of the decision of the Development Arbitrator. As to each Development Dispute, the Development Arbitrator's decision shall be limited to resolution of the Development Dispute in question, and the Development Arbitrator shall have no right whatsoever to impose or grant to either Party any remedy other than a decision as to: (i) whether a modification to the Hotel Project is a substantial deviation from the Approved Plans or a Prohibited Hotel Project Change requiring City's Approval pursuant to Section 2.2; (ii) any contention that City has unreasonably failed to Approve modifications to the Approved Plans in accordance with this Lease; (iii) any contention that City has unreasonably failed to Approve the proposed Approved Skybridge and Off-Site Improvements Plans or modifications thereto in accordance with this Lease; (iv) any contention that City has unreasonably failed to Approve a Hotel Project General Contractor in accordance with Section 2.8(b); (v) any disagreement as to permitted delays in the Schedule of Performance pursuant to Section 2.7, or (vi) any disagreement as to the cost or scheduling impact of a change in the location of the geothermal system as provided in Section 2.11(c). (j) The decision of the Development Arbitrator shall be final and binding on the Parties for all purposes and may be entered in any court of competent jurisdiction. (k) If any matter submitted to the Development Arbitrator hereunder is settled by agreement between the Parties prior to, or independently of, the final determination of the Development Arbitrator, any and all expenses of such binding determination (including fees of the Development Arbitrator) will be shared equally by the Parties; and the expense of such binding determination resolved by final determination of the Development Arbitrator (including fees of the Development Arbitrator) will be borne by the Party against whom such determination has been concluded. Section 7.10. Disputes Regarding Disapproval of a Proposed Brand or Proposed Transferee. (a) If (i) Lessee and City disagree as to whether a proposed Approved Brand satisfies the definition of an Approved Brand pursuant to clause (a) of the definition thereof or (ii) Lessee believes that the City is acting unreasonably in disapproving a proposed brand as an Approved Brand, then in either case, the Lessee may refer the matter to mediation in accordance with Section 7.8(a) above, and if the matter is not resolved by mediation, then Lessee, as its sole remedy, may submit such matter to a panel of experts for a binding determination in accordance with this Section 7.10 (an "Arbitrator"). (b) If the City Manager determines that a proposed transferee of the Hotel Project (or any part thereof), any legal or beneficial interest in the Hotel Project (or any part thereof) or 58 any direct or indirect legal or beneficial interest in Lessee (each, a "Proposed Transferee") does not satisfy the definition of an Acceptable Owner and the Acceptable Owner Criteria pursuant to Exhibit A attached hereto, and Lessee disagrees, and if the matter is not resolved by the designated representatives of the City and Lessee as provided in Section 7.8(a) above, then solely with respect to any such determination made by the City Manager, Lessee, as its sole remedy, may submit such matter to an Arbitrator in accordance with this Section 7.10. For the avoidance of doubt, in the event the City Manager exercises his or her right to seek the City Commission's direction or Approval of a Proposed Transferee, the Lessee shall not have the right to submit the City Commission's determination or disapproval of a Proposed Transferee to arbitration pursuant to this Section 7.10, but the City Commission shall be subject to the same time period and standards of judgment as would apply to the City Manager as provided in Exhibit A. (c) If Lessee elects to proceed with an Arbitrator in accordance with this Section 7.10, the determination of whether a proposed brand should be an Approved Brand or a Proposed Transferee is an Acceptable Owner, will be made by (a) an expert selected jointly by the City and Lessee, or (b) if the City and Lessee fail to agree upon a single expert, by an expert selected by the City, an expert selected by Lessee and a third expert appointed by the experts selected by the Parties. Any Arbitrator or expert panelist hereunder will each have at least ten (10) years of professional experience in the hotel industry with hotels meeting the Hotel Standards. The Parties agree that no discovery (as the term is commonly construed in litigation proceedings) will be permitted and agree that neither Party nor the Arbitrator shall have discovery rights in connection with a Dispute hereunder. The proceeding before the Arbitrator shall be conducted in an informal and expeditious manner. No transcript or recording shall be made. Each Party shall have the opportunity to make a brief statement and to present documentary and other support for its position, which may include the testimony of not more than four (4) individuals, two (2) of whom may be outside experts. There shall be no presumption in favor of either Party's position. Any procedural matter not covered herein shall be governed by procedures mutually agreed upon by the Parties, or if they are unable to agree, in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association (as amended hereby). (d) The matter submitted to the Arbitrator will be conclusively determined within thirty (30) days of the appointment of the last Arbitrator by (a) the decision of the single expert, (b) the decision of any two of the three experts, if two are able to agree, (c) the decision of the third expert, if no two of the three experts are able to agree within such period, or(d) agreement between the Parties prior to and independently of the decision of the Arbitrator. (e) With respect to (i) whether a proposed Approved Brand satisfies the definition of an Approved Brand pursuant to clause (a) of the definition thereof, the Arbitrator will determine that such proposed Approved Brand either satisfies such definition or fails to satisfy such definition or (ii) whether the City has acted reasonably in disapproving a proposed Approved Brand pursuant to Section 13.3, the Arbitrator will determine either that the City acted reasonably in disapproving the proposed Approved Brand or that the City acted unreasonably in disapproving the proposed Approved Brand, and the Arbitrator will have no authority to compromise or otherwise modify the issue that is the subject of the determination or(iii) whether a Proposed Transferee satisfies the definition of an Acceptable Owner and the Acceptable Owner Criteria pursuant to Exhibit A, the Arbitrator will determine that such Proposed 59 Transferee either satisfies such definition and criteria or fails to satisfy such definition and criteria. If any matter submitted to the Arbitrator hereunder is settled by agreement between the Parties prior to, and independently of, the final determination of the Arbitrator, any and all expenses of such binding determination (including fees of the Arbitrator) will be shared equally by the Parties; and the expense of such binding determination resolved by final determination of the Arbitrator (including fees of the Arbitrator) will be borne by the Party against whom such determination has been concluded. Section 7.11. Plans and Data. In the event of a termination of this Lease, Lessee shall deliver to City, copies of any and all Subleases and service and maintenance agreements then affecting the Leased Property, all maintenance records, all warranties or guaranties then in effect which Lessee received in connection with any work or services performed or FF&E installed on the Leased Property, the plans and specifications, surveys, studies, reports, cost estimates, designs, Governmental Approvals, keys, combinations to locks, access codes, records, correspondence and any and all other records, files, documents and other items and materials of every kind and nature whatsoever relating to the development, operation, maintenance or ownership of the Hotel Project, all of which shall be delivered by Lessee to the City within thirty (30) days after such termination. Such materials will be provided to City without any representation or warranty of any kind, express or implied (including regarding the truth, accuracy or completeness thereof and fitness for a particular purpose). The obligations of Lessee under this Section 7.11 survive the termination of this Lease. ARTICLE VIII PROTECTION AGAINST MECHANICS' LIENS AND OTHER CLAIMS; INDEMNIFICATION Section 8.1. Lessee's Duty to Keep Project Free of Liens. (a) Pursuant to Section 713.10, Florida Statutes, any and all liens or lien rights shall extend to, and only to, the right, title and interest of Lessee in the Hotel Project and shall not encumber or affect the City's fee simple title to the Leased Property. (b) The right, title and interest of the City in the Leased Property shall not be subject to liens or claims of liens for improvements made by Lessee. Nothing contained in this Lease shall be deemed or construed to constitute the consent or request of the City, express or by implication or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement of, alteration to, or repair of the Hotel Project, or any part thereof, nor as giving Lessee, any Leasehold Mortgagee, Subtenant, lessee, or sub-lessee any right, power or authority to contract for, or permit the rendering of, any services or the furnishing of materials that would give rise to the filing of any lien, mortgage or other encumbrance against City's interest in the Leased Property, or any part thereof, or against assets of the City, or City's interest in any Rent and other monetary obligations of Lessee as defined in this Lease. (c) Notice is hereby given, and Lessee shall cause all construction agreements entered into between Lessee and the Hotel Project General Contractor or other contractor in privity with Lessee or subcontractor in privity with the Hotel Project General Contractor or any other subcontractor to provide that: 60 (I) City shall not be liable for any work performed or to be performed at the Hotel Project or any part thereof for or on behalf of the Lessee, any Leasehold Mortgagee, Subtenant, lessee, or sub-lessee or for any materials furnished or to be furnished to the Hotel Project, or any part thereof, for any of the foregoing; and (ii) no mechanic's, laborer's, vendor's, materialman's or other similar statutory lien for such work or materials shall be attached to or affect City's interest in the Leased Property, or any part thereof, or any assets of the City, or the City's interest in any Rent or other monetary obligations of Lessee arising under this Lease. (d) Lessee acknowledges and agrees that the City shall be entitled to record in the public records of Miami-Dade County, Florida a notice of no lien in accordance with Chapter 713.10, Florida Statutes, and that if requested by the City, Lessee will execute and deliver a countersignature to such notice within ten (10) days of the City's request. Section 8.2. Contesting Liens. If Lessee desires to contest any such lien as described in Section 8.1, it shall notify the City of its intention to do so within thirty(30) days after Lessee has notice of the filing of such lien. In such case, Lessee, at Lessee's sole cost and expense, shall furnish a cash deposit or surety bond in an amount sufficient to pay such lien and any cost (including interest and penalties), liability or damage arising out of such contest. The lien, if Lessee timely provides the bond described above, shall not be an Event of Default hereunder until thirty (30) days after the final determination of the validity thereof provided that, within that time, Lessee shall satisfy and discharge such lien to the extent held valid; provided, however, that the satisfaction and discharge of any such lien shall not, in any case, be delayed until execution is had on any judgment rendered thereon, or else such delay shall be considered to be a monetary Event of Default hereunder. In the event of any such contest, Lessee shall protect and indemnify the City against all loss, expense and damage resulting therefrom as provided in Section 8.3. Section 8.3. Indemnification. (a) Lessee acknowledges and agrees that this Lease is not an agreement between City and any architect, engineer, general contractor, subcontractor, sub-subcontractor, or materialman or any combination thereof for the construction, alteration, repair, or demolition of a building, structure, appurtenance, or appliance on the Leased Property, and therefore that the limitations on indemnity provisions in Section 725.06, Florida Statutes, as such statute may be amended from time to time, do not apply to this Lease. Accordingly, to the fullest extent permitted by law, the Lessee shall defend, indemnify and hold harmless the City and its officers, employees, agents and instrumentalities from any and all liability, losses or damages, including reasonable attorneys' fees and costs of defense, which the City or its officers, employees, agents or instrumentalities may incur as a result of claims, demands, suits, causes of actions or proceedings of any kind or nature first arising following the Effective Date, and arising out of, relating to or resulting from any of the following occurrences or events, whether by the Lessee or its employees, agents, partners, principals, sub-lessees, or contractors: (i) any default, breach or violation or non-performance of this Lease or any provision thereof; (ii) the use and operation of the Hotel Project or any part thereof which is not in compliance with the terms of this Lease, (iii) the negligent acts or omissions of Lessee or its employees, agents, partners, principals, sub-lessees, or contractors; (iv) any challenge to the validity of any Transfer by a third party through legal proceedings or otherwise based on the action or inaction of Lessee or its employees, agents, partners, principals, sub-lessees or contractors, except to the extent any 61 liability, losses or damages are caused by the gross negligence or willful misconduct of the City or its officers, employees, agents, or contractors. (b) Lessee shall investigate and defend all claims, suits, or actions of any kind or nature in the name of the City which are covered by this indemnity obligation, where applicable, including appellate proceedings, and shall pay reasonable costs, judgments, and reasonable attorney's fees which may issue thereon. (c) Lessee expressly understands and agrees that any insurance protection required by this Lease or otherwise provided by Lessee shall in no way limit the responsibility to indemnify, keep and save harmless and defend the City or its officers, employees, agents and instrumentalities as herein provided. The City shall give to the Lessee reasonable notice of any such claims or actions. The provisions of this section shall survive the expiration or early termination of this Lease. (d) Lessee covenants and agrees that any contracts entered into by Lessee and the Hotel Project General Contractor or other contractors in privity with Lessee for the Work shall include the indemnities required by this Section 8.3 from the Hotel Project General Contractor or other contractors in privity with Lessee in favor of Lessee and the City. Section 8.4. Environmental Matters. (a) Defined Terms. (i) "Environmental Condition" means any set of physical circumstances in, on, under, or affecting the Hotel Project that may constitute a threat to or endangerment of health, or the environment, including: (1) The presence of any Hazardous Substance in violation of Environmental Laws which were introduced to the Hotel Site after the Possession Date or by Lessee prior to the Possession Date; (2) any underground storage tanks, as defined in Subtitle I of the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. 6991 et. seq., or the regulations thereunder, for the storage of hazardous wastes, oil, petroleum products, or their byproducts; (3) The presence of any PCB, asbestos or any other substances specifically regulated under the Toxic Substances Control Act, 15 U.S.C. 2601 or regulations issued thereunder, in violation of Environmental Laws which were introduced to the Hotel Site after the Possession Date or by Lessee prior to the Possession Date; and any open dump or system of refuse disposal for public use without a permit, as prohibited by 42 U.S.C. 6945 and/or Florida law equivalent, or the regulations issued thereunder. (ii) "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et. seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et. seq.; the Toxic Substances Control Act, 15 U.S.C. 2601 et. seq.; the Clean Water Act, 33 U.S.C. 1251 et seq.; the Clean Air Act, 42 U.S.C. 7401 et. seq.; the Oil Pollution Act, 33 U.S.C. 2701 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et. seq.; the Refuse Act of 1989, 33 U.S.C. 407; as such laws have been amended or supplemented from time-to-time, and the regulations promulgated thereunder; and any equivalent state or local laws. 62 (iii) "Hazardous Substance" means any substances or materials presently or hereinafter identified to be toxic or hazardous according to any of the Environmental Laws, including any asbestos, PCB, radioactive substances, petroleum based products, and includes hazardous wastes, hazardous substances, extremely hazardous substances, hazardous materials, toxic substances, toxic chemicals, oil, petroleum products and their by-products, and pollutants or contaminants as those terms are defined in the Environmental Laws. (iv) "Environmental Permit" means any Governmental Approval required under any Environmental Law in connection with the ownership, use or operation of the Hotel Project for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances, or the sale, transfer or conveyance of the Hotel Project, and all supporting documentation thereof. (v) "Environmental Claim" means any notice of violation, claim, demand, abatement or order or direction (conditional or otherwise) by any Governmental Authority or any person for personal injury (including sickness, disease, or death), property damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties, or restrictions, resulting from or based upon: (1) the existence or release, or continuation of any existence of a release of, or exposure to, any Hazardous Substance in, into or onto the environment (including the air, ground, water or any surface) at, in, or from the Leased Property in violation of Environmental Laws; (2) the transportation, storage, treatment or disposal of any Hazardous Substance in connection with the activities on the Leased Property in violation of Environmental Laws; or (3) the violation, or alleged violation, of any Environmental Laws on the Leased Property; but excluding any of the foregoing to the extent arising from the negligent or intentional actions of the City and its agents. (vi) "Corrective Action Work" means any and all activities of removal, response, investigation, testing, analysis, remediation taken to: (1) prevent, abate or correct an existing or threatened Environmental Condition at, about, or affecting the Leased Property; or (2) comply with all applicable Environmental Laws. (b) Environmental Indemnification. (i) Lessee covenants and agrees, at its sole cost and expense, to defend (with counsel selected by Lessee, after consulting with the City), indemnify and hold harmless the City, its successors, and assigns from and against, and shall reimburse the City, its successors and assigns, for any and all Environmental Claims, whether meritorious or not, brought against the City by any Governmental Authority; 63 (ii) the foregoing indemnity includes indemnification against all costs of removal, response, investigation, or remediation of any kind, and disposal of such Hazardous Substances as necessary to comply with Environmental Laws, all costs associated with any Corrective Action Work, all costs associated with claims for damages to persons, property, or natural resources, and the City's commercially reasonable attorneys' fees and consultants' fees, court costs and expenses incurred in connection therewith; (iii) this indemnification is in addition to all other rights of the City under this Lease; and (iv) payments by Lessee under this Section shall not reduce Lessee's obligations and liabilities under any other provision of this Lease. Notwithstanding anything to the contrary contained in this Lease, neither the Lessee nor Hotel Project General Contractor, or other contractor in privity with Lessee, has a duty to indemnify the City in connection with any Environmental Claims to the extent caused by the negligent or intentional conduct of the City or its agents, employees or contractors, which negligent or intentional conduct occurs following the date the Lessee completed its environmental testing. Section 8.5. Limitation of City's Liability. (a) Any tort liability to which the City is exposed under this Lease shall be limited to the extent permitted by applicable law and subject to the provisions and monetary limitations of Section 768.28, Florida Statutes, as may be amended, which statutory limitations shall be applied as if the parties had not entered into this Lease, and City expressly does not waive any of its rights and immunities thereunder. (b) City will not in any event whatsoever be liable for any injury or damage to Lessee (unless caused by the gross negligence of City, its agents, contractors or employees) or to any other Person happening on, in or about the Leased Property and its appurtenances, nor for any injury or damage to the Leased Property or to any property belonging to Lessee (unless caused by the gross negligence of City, its agents, contractors or employees) or to any other Person which may be caused by any fire or breakage, or by the use, misuse or abuse of any of the Lessee Improvements (including any of the common areas within the buildings, equipment, elevators, hatches, openings, installations, stairways, hallways or other common facilities or the improvements to the land described in this Lease), or which may arise from any other cause whatsoever. (c) City will not be liable to Lessee or to any other Person for any failure of telephone, computer system, cable TV, water supply, sewage disposal, gas or electric current, nor for any injury or damage to any property of Lessee or to any Person or to the Leased Property caused by or resulting from gasoline, oil, steam, gas, electricity, or hurricane, tornado, flood, wind or similar storms or disturbances, or water, rain or snow which may leak or flow from the street, sewer, gas mains or subsurface area or from any part of the Leased Property, or leakage of gasoline or oil from pipes, appliances, sewer or plumbing works therein, or from any other place, nor for interference with light or other incorporeal hereditaments by any Person (unless caused by the gross negligence of City, its agents, contractors or employees). 64 ARTICLE IX INSURANCE AND RECONSTRUCTION Section 9.1. General Insurance Provisions. Prior to any activity on the Leased Property, and at all times during the Term, Lessee at its sole cost and expense shall procure the insurance specified below. In addition, Lessee shall ensure its Hotel Project General Contractor and tenants maintain the insurance coverages set forth below. All policies must be executable in the State of Florida. All insurers must maintain an AM Best rating of A- or better. The terms and conditions of all policies may not be less restrictive than those contained in the most recent edition of the policy forms issued by the Insurance Services Office (ISO) or the National Council on Compensation Insurance (NCCJ). If ISO or NCCI issues new policy forms during the policy term of the required insurance, complying with the new policy forms will be deferred until the expiration date of the subject policy. Said insurance policies shall be primary over any and all insurance available to the City whether purchased or not and shall be non-contributory. The Lessee, its Hotel Project General Contractor or tenants shall be solely responsible for all deductibles contained in their respective policies. All policies procured pursuant to this Article IX shall be subject to maximum deductibles reasonably acceptable to the City. The City of Miami Beach will be included as an "additional insured" on the commercial general liability, automobile liability, property insurance, and pollution liability policies. The City will also be named as an insured as its interests may appear with respect to the builder's risk policy. Section 9.2. Evidence of Insurance. Prior to Lessee taking possession of the Leased Property, and annually thereafter, Lessee shall deliver satisfactory evidence of the required insurance to the City. Satisfactory evidence shall be: (a) a certificate of insurance for all required coverage; and (b) a copy of the actual insurance policy for builder's risk coverage. The City, at is sole option, may request a certified copy of any or all insurance policies required by this Lease, or the applicable portions thereof if insurance is provided through a master insurance program. All insurance policies must specify they are not subject to cancellation or non-renewal without a minimum of 30 days notification by the insurer to the City, the City's Risk Management Division and the First Leasehold Mortgagee, with a minimum of 10 days notification by the insurer to the City, the City's Risk Management Division and the First Leasehold Mortgagee prior to cancellation or non-renewal for non-payment of premium. The Lessee will deliver to the City, at least 30 days prior to the date of expiration of any insurance policy, a renewal policy replacing any policies expiring during the Term of this Lease, or a certificate thereof, together with evidence that the full premiums have been paid. Premiums on policies will not be financed in any manner whereby any Leasehold Mortgagee, on default or otherwise, will have the right or privilege of surrendering or cancelling the policies; provided, however, that premiums may be paid in annual installments. All certificates of insurance shall (i) be in a form acceptable to the City, (ii) name the types of policies provided, (iii) refer specifically to this Lease; (iv) evidence the waiver of subrogation in favor of the City as required by Section 9.11 below; and (v) evidence that coverage shall be primary and noncontributory, and that each policy includes a Cross Liability or Severability of Interests provision, with no requirement of premium payment by the City. Lessee shall deliver, together with each certificate of insurance, a letter from the agent or broker placing such insurance, certifying to the City that the coverage provided meets the coverage required under this Lease. The official title of the certificate holder is "City of Miami Beach, Florida." Additional insured certificates for the City shall read "City of Miami Beach, Florida", and shall be addressed to 1700 Convention Center Drive, Miami Beach, FL, 33139, Attn: Risk Management, 3rd Floor. 65 Section 9.3. Required Coverages. In addition to such insurance as may be required by law, the Lessee shall procure and maintain, or cause others to procure and maintain, without lapse or material change, for so long as it occupies the Leased Property, the following insurance, which may be provided through master blanket insurance policies: (a) Commercial General Liability Insurance on a comprehensive basis, including contractual liability, to cover the Leased Property and Lessee's operations and indemnity obligations, in an amount not less than $5,000,000 combined single limit per occurrence for bodily injury and property damage. Such insurance may be provided through a combination of primary and excess/umbrella liability policies. (b) Automobile Liability Insurance covering all owned, non-owned and hired vehicles used by the Lessee in connection with its operations under this Lease in an amount not less than $1,000,000 combined single limit per occurrence for bodily injury and property damage. Coverage must be afforded on a form no more restrictive than the latest edition of the Business Automobile Liability policy, without restrictive endorsements, as filed by the Insurance Services Office (ISO). (c) Pollution Liability Insurance in an amount not less than $10,000,000 per claim, covering third party claims, remediation expenses, and legal defense expenses arising from on- site and off-site loss, or expense or claim related to the release of Hazardous Materials at the Leased Property. Such policy shall include an annual policy aggregate in the amount of $20,000,000. (d) Builders Risk Insurance during the course of construction, issued in the name of the Lessee, the Hotel Project General Contractor and the City as their interests may appear, in amount(s) not less than 100% of the insurable value of the Hotel Project completed structure(s), covering perils on an "All Risk" basis, including flood, earthquake, and windstorm. In an amount not less than $10,000,000. Policy(s) must clearly indicate that underground structures (if applicable) and materials being installed are covered. Any deductibles are the sole responsibility of the Lessee. (e) Commercial Property Insurance in an amount of 100% of the insurable value of all Lessee Improvements under an "all risk" form, including damage by water, flood, subsistence, tornado, hurricane and earthquake in an amount not less than $10,000,000. (f) Business Interruption Insurance coverage utilizing a gross earnings value form with limits equal to twelve (12) months of Lessee's projected Gross Operating Revenues associated with the Leased Property. The City and Lessee shall jointly review Lessee's projected Gross Operating Revenues periodically and the limits of this policy shall be adjusted based on this review. (g) Workers' Compensation and Employers Liability Insurance with limits sufficient to respond to Florida Statute §440. In addition, the Lessee shall obtain Employers' Liability Insurance with limits of not less than: (i) $500,000 Bodily Injury by Accident, (ii) $500,000 Bodily Injury by Disease and (iii) $500,000 Bodily Injury by Disease, each employee. (h) Professional Liability. Lessee shall cause any architects or engineers to maintain architects and engineers errors and omissions liability insurance specific to the activities or scope of work such consultants will perform. If coverage is provided on a "claims made" basis, the policy shall provide for the reporting of claims for a period of five (5) years 66 following the completion of all construction activities. The minimum limits acceptable shall be $1,000,000 per occurrence and $3,000,000 in the annual aggregate. (i) Terrorism Insurance. So long as the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA") or a similar or subsequent statute is in effect, terrorism insurance for "certified" and "non-certified" acts (as such terms are used in TRIPRA or a similar or subsequent statute) in an amount equal to the full replacement cost of the Leased Property plus 12 months of business interruption coverage. If TRIPRA or a similar or subsequent statute is not in effect, then the "all risk" property insurance required pursuant to Section 9.3(e) of this Lease shall not exclude coverage for acts of terror or similar acts of sabotage unless terrorism insurance is not commercially available, in which case, Lessee shall obtain stand-alone coverage in commercially reasonable amounts (for purposes of this clause (i), commercially reasonable amounts shall mean amounts that would be (A) obtained by property owners or lessees of properties located in markets similar to that of the Hotel Project and similar in size and type to the Hotel Project and (B) required by prudent Institutional Lenders or landlords in such similar markets with similar properties). Section 9.4. Premiums and renewals. Lessee shall pay as the same become due all premiums for the insurance required by this Article IX, shall renew or replace each such policy and deliver to the City evidence of the payment of the full premium thereof prior to the expiration date of such policy, and shall promptly deliver to the City all original Certificates of Insurance and copies of all such renewal or replacement policies. Section 9.5. Adequacy Of Insurance Coverage. (a) The adequacy of the insurance coverage required by this Article IX may be reviewed periodically by the City in its sole discretion. The City reserves the right, but not the obligation, to review and reasonably revise the insurance requirements every three (3) years, (including but not limited to deductibles, limits, coverages and endorsements) provided such revisions are commercially reasonable, customary and commonly available regarding properties similar in type, size, use and location to the Leased Property and Lessee Improvements and further provided that such coverage is available at commercially reasonable rates (including fiduciary liability and directors and officers liability insurance); (b) Lessee agrees that City may, if it so elects, at City's expense, have the Lessee Improvements appraised for purposes of obtaining the proper amount of insurance hereunder. Any review by the City shall not constitute an approval or acceptance of the amount of insurance coverage. Section 9.6. City May Procure Insurance if Lessee Fails To Do So. If Lessee refuses, neglects or fails to secure and maintain in full force and effect any or all of the insurance required pursuant to this Lease within thirty (30) days after written notice from the City, the City, at its option, may procure or renew such insurance. In that event, all commercially reasonable amounts of money paid therefor by the City shall be treated as Additional Rent payable by Lessee to the City together with interest thereon at the Default Rate from the date the same were paid by the City to the date of payment thereof by Lessee. Such amounts, together with all interest accrued thereon, shall be paid by Lessee to the City within ten (10) days of written notice thereof. Section 9.7. Effect of Loss or Damage. Any loss or damage by fire or other casualty of or to any of the Lessee Improvements on the Leased Property at any time shall not operate to 67 terminate this Lease or to relieve or discharge Lessee from the payment of Rent, or from the payment of any money to be treated as Additional Rent in respect thereto, pursuant to this Lease, as the same may become due and payable, as provided in this Lease, or from the performance and fulfillment of any of Lessee's obligations pursuant to this Lease. No acceptance or approval of any insurance agreement or agreements by the City shall relieve or release or be construed to relieve or release Lessee from any liability, duty or obligation assumed by, or imposed upon it by the provisions of this Lease. Section 9.8. Proof of Loss. Whenever any Lessee Improvements, or any part thereof, constructed on the Leased Property (including any personal property furnished or installed in the premises) shall have been damaged or destroyed, Lessee shall promptly make proof of loss in accordance with the terms of the insurance policies and shall proceed promptly to collect or cause to be collected all valid claims which may have arisen against insurers or others based upon any such damage or destruction. Section 9.9. Insurance Proceeds. (a) Authorized Payment. All sums payable for loss and damage arising out of the casualties covered by the property insurance policies shall be payable: (I) directly to Lessee, if the total recovery is equal to or less than $10,000,000 (as adjusted for inflation over the Term pursuant to Section 14.20 hereof), except that if an Event of Default has occurred and is continuing hereunder, such proceeds, shall be paid over to the Insurance Trustee and disbursed in accordance with Section 9.9(a)(ii). After the completion of all Reconstruction Work in accordance herewith, any remaining proceeds shall be paid over to Lessee subject to its obligations to the First Leasehold Mortgagee; and (ii) to a commercial bank or trust company designated by Lessee and Approved by the City Manager (the "Insurance Trustee"), if the total -recovery is in excess of $10,000,000 (as adjusted for inflation over the Term pursuant to Section 14.20 hereof) or is less than $10,000,000 but an Event of Default has occurred and is continuing hereunder, to be held by the Insurance Trustee pending establishment of reconstruction, repair or replacement costs and shall be disbursed to Lessee pursuant to the provisions of subparagraph (b) of this Section 9.9. (b) Disposition of Insurance Proceeds for Reconstruction. (i) All insurance proceeds shall be applied for the reconstruction, repair or replacement of Lessee Improvements and the FF&E and other personal property of Lessee located on the Leased Property, so that Lessee Improvements, FF&E and such other personal property shall be restored to a condition comparable to the condition prior to the loss or damage but in all cases consistent with the Hotel Standards (hereinafter referred to as "Reconstruction Work"); (ii) From the insurance proceeds received by the Insurance Trustee, there shall be disbursed to Lessee such amounts as are required for the Reconstruction Work. Lessee shall submit invoices or proof of payment to the Insurance Trustee for payment or reimbursement according to an agreed schedule of values approved in advance by the City Manager and Lessee; and 68 (iii) After the completion of the Reconstruction Work, any unused insurance proceeds shall be paid to Lessee. Section 9.10. Reconstruction. (a) In the event of any loss or damage by fire or other casualty of or to any of the Lessee Improvements, FF&E and other personal property of Lessee located on the Leased Property having a value in excess of$2,500,000, Lessee shall give the City notice thereof within five (5) Business Days, and Lessee, at its sole cost and expense, whether or not such loss or damage has been insured and whether or not such loss or damage is to property having a value in excess of $2,500,000, covenants and agrees to commence the Reconstruction Work as soon as practicable, but in any event within three (3) months after the insurance proceeds in respect of the destroyed or damaged improvements or personal property have been received, and to fully complete such Reconstruction Work as expeditiously as reasonably possible consistent with the nature and extent of the damage. Lessee shall comply in all respects with the provisions of Section 2.15 with respect to any Reconstruction Work. (b) In the event that Lessee fails to perform the Reconstruction Work in accordance herewith and within a reasonable time after such loss or damage, the City shall have the right to terminate this Lease after thirty (30) days' notice if within such thirty (30) day period such Reconstruction Work is not complete or Lessee has not provided reasonable assurance that it is proceeding in good faith and using commercially reasonable efforts to complete such Reconstruction Work, in which case, upon the City's request, the Lessee shall surrender and return the Leased Property to the City in the same condition existing on the Possession Date, including demolition of all Lessee Improvements and repair and restoration of any property, including the Convention Center, affected by the demolition of the Lessee Improvements, and free and clear of all debts, mortgages, encumbrances and liens. (c) Notwithstanding the foregoing, if, during the last ten (10) years of the Term, the Lessee Improvements are totally destroyed or so damaged as to render them unusable, then (i) Lessee or the City may terminate this Lease by delivery of written notice of such termination to the other Party not later than sixty (60) days after the occurrence of such casualty, whereupon this Lease will terminate as of the date of such casualty. Upon such termination, the insurance proceeds shall be payable as follows: (i) first, to demolish the Lessee Improvements and clear the site of all Lessee Improvements and debris to the City's reasonable satisfaction, (ii) second to reimburse Lessee for the fair market value of the Lessee Improvements as of the date prior to such loss or destruction and (iii) third, the balance, if any, to the City. If neither the Lessee nor the City timely elect to terminate this Lease in accordance with this Section 9.10(c), Lessee shall restore the Lessee Improvements in accordance with Section 9.10(a) hereof. Section 9.11. Waiver of Subrogation. Where permitted by law, each Party hereby waives all rights of recovery by subrogation or otherwise (including, without limitation, claims related to deductible or self-insured retention clauses, inadequacy of limits of any insurance policy, insolvency of any insurer, limitations or exclusions of coverage), against the other Party, and its respective officers, agents, or employees. Section 9.12. Inadequacy of Insurance Proceeds. Lessee's liability hereunder to timely commence and complete restoration of the damaged or destroyed Lessee Improvements shall be absolute, irrespective of whether the insurance proceeds received, if any, are adequate to pay for said restoration. 69 Section 9.13. No City Obligation to Provide Property Insurance. Lessee acknowledges and agrees that City shall have no obligation to provide any property insurance on any Lessee Improvements or property of Lessee located on the Leased Property. If City does provide any property insurance coverage, Lessee acknowledges that such insurance shall be for the sole benefit of the City and Lessee shall have no right or claim to any such proceeds. Section 9.14. Compliance. Lessee's compliance with the requirements of this Article IX shall not relieve the Lessee of its liability, or be construed to relieve or limit, Lessee of any responsibility, liability, or obligation imposed under any other portion of this Lease, or by law, including, without limitation, any indemnification obligations which Lessee owes to City. Section 9.15. Right to Examine. The City reserves the right, upon reasonable notice, to examine the original or true copies of policies of insurance (including binders, amendments, exclusions, riders and applications), or applicable portions of any master insurance policy, to determine the true extent of coverage. The Lessee agrees to permit such inspection and make available such policies or portions thereof at the offices of the City. Section 9.16. Personal Property. Any personal property of the Lessee or of others placed in the Leased Property shall be at the sole risk of the Lessee or the owners thereof, and the City shall not be liable for any loss or damage thereto for any cause except as a result of the gross negligence or willful misconduct of the City or its employees, agents or contractors. ARTICLE X CONDEMNATION Section 10.1. Complete Condemnation. (a) If the entire Hotel Project shall be taken or condemned for any public or quasi- public use or purpose, by right of eminent domain or by purchase in lieu thereof(in each case, a "Taking"), or if such Taking shall be for a portion of the Hotel Project such that the portion remaining is not sufficient and suitable, on a commercially reasonable basis, for the operation of the Hotel, then this Lease shall cease and terminate as of the date on which the condemning authority takes possession; and (b) If this Lease is so terminated, the entire award for the Hotel Project or the portion thereof so taken shall be apportioned among the City and the Lessee as of the day immediately prior to the vesting of title in the condemning authority, as follows: (i) First, but only if the City is not the authority condemning the Hotel Project, the City shall receive the then fair market value of the Leased Property so taken or condemned considered as vacant, unimproved, and unencumbered, together with the value of the City's remainder interest in the Lessee Improvements which have been taken; (ii) Second, Lessee shall be entitled to the then fair market value of its interest under this Lease and in the Lessee Improvements, less the discounted value of such Lessee Improvements as allocated to the City, together with any and all business damages 70 suffered by Lessee (subject, however, to the rights of the First Leasehold Mortgagee thereto); and (iii) the City and Lessee shall each receive one-half(1/2) of any remaining balance of the award, except that the Lessee shall receive the entire remaining balance of the award if the City is the authority condemning the Hotel Project. Section 10.2. Partial Condemnation. (a) If there is a Taking of a portion of the Hotel Project, and the remaining portion can, on a commercially reasonable basis be adapted and used to operate the Hotel in the same manner it was previously operated, then this Lease shall continue in full force and effect; and (b) In such event, the award shall be apportioned as follows: (i) First, to the Lessee to the extent required, pursuant to the terms of this Lease, for the restoration of the Hotel Project; (ii) Second, but only if the City is not the authority condemning the Hotel Project, to the City the portion of the award allocated to the fair market value of the Leased Property which is so taken, considered as vacant and unimproved; (iii) Third, to the Lessee the amount by which the value of Lessee's interest in the Lessee Improvements and the Leased Property were diminished by the taking or condemnation; and (iv) the City and Lessee shall each receive one-half (1/2) of any remaining balance of the award, except that the Lessee shall receive the entire remaining balance of the award if the City is the authority condemning the Hotel Project. Section 10.3. Restoration After Condemnation. If this Lease does not terminate due to a Taking, then: (a) Lessee shall, with commercially reasonable diligence and good-faith, restore the remaining portion of the Hotel Project in accordance with the provisions of Sections 9.10(a) hereof; (b) the entire proceeds of the award shall be deposited and treated in the same manner as insurance proceeds are to be treated under Article IX until the restoration has been completed and Lessee and the City have received their respective shares thereof pursuant to this Article X; and (c) if the award is insufficient to pay for the restoration, Lessee shall be responsible for the remaining cost and expense. Section 10.4. Temporary Taking. If there is a Taking of the temporary use (but not title) of the Hotel Project, or any part thereof, this Lease shall, but only to the extent it is commercially reasonable, remain in full force and effect and there shall be no abatement of any amount or sum payable by or other obligation of Lessee hereunder. Lessee shall receive the entire award 71 for any such temporary Taking to the extent it applies to the period prior to the end of the Term and the City shall receive the balance of the award. Section 10.5. Determinations. If Landlord and the Lessee cannot agree in respect of any matters to be determined under this Article, a determination shall be requested of the court having jurisdiction over the Taking. For purposes of this Article, any personal property taken or condemned shall be deemed to be a part of the Lessee Improvements, and the provisions hereof shall be applicable thereto. Section 10.6. Payment of Fees and Costs. All fees and costs incurred in connection with any condemnation proceeding described in Article X shall be paid in accordance with the law governing same, as determined by the court, if appropriate. ARTICLE XI QUIET ENJOYMENT AND OWNERSHIP OF IMPROVEMENTS Section 11.1. Quiet Enjoyment. (a) The City represents and warrants that Lessee, upon paying the Rent, Additional Rent and other monetary obligations pursuant to this Lease and observing and keeping the covenants and agreements of this Lease on its part to be kept and performed, shall lawfully and quietly hold, occupy and enjoy the Leased Property during the Term without hindrance or molestation by the City, acting in its proprietary capacity, or by any Person claiming under the City, acting in its proprietary capacity. The City shall, at its own cost and expense, through the City Attorney's office or other counsel selected by the City in its sole discretion, defend any suits or actions which may be brought challenging Lessee's right to lawfully and quietly hold, occupy and enjoy the.Leased Property in accordance with the preceding sentence. Lessee shall have the right to retain its own counsel in connection with such proceedings, at Lessee's sole cost and expense. (b) However, if the City is acting in its governmental capacity, any liability under this Section shall only be to the extent permitted by applicable law and subject to the provisions and monetary limitations of Section 768.28, Florida Statutes, as may be amended, which statutory limitations shall be applied as if the parties had not entered into this Lease. Section 11.2. Waste. Lessee shall not knowingly permit, commit or suffer waste or material impairment of the Hotel Project, or any part thereof; provided, however, demolition of existing improvements on the Leased Property existing on the date hereof or redevelopment or reconstruction of the Hotel Project as permitted under this Lease shall not constitute waste. Section 11.3. Maintenance and Operation of Improvements. Without limiting the provisions of Article XII, Lessee shall at all times keep the Hotel Project in good and safe condition and repair in accordance with the Hotel Standards, commercially reasonable wear and tear excepted. Regarding the occupancy, maintenance and operation of the Hotel Project, the Lessee shall comply with all applicable Governmental Requirements. 72 Section 11.4. Ownership of Improvements During Lease. (a) Prior to the expiration or termination of this Lease, title to the Lessee Improvements shall not vest in the City by reason of its ownership of fee simple title to the Leased Property, but title to the Lessee Improvements shall remain in Lessee. (b) If this Lease shall terminate, based on a mutual agreement between the parties or an final order from a court with jurisdiction from which the time for appeal has expired, prior to the expiration of the Term and if, at that time, the First Leasehold Mortgagee shall exercise its option to obtain a new lease for the remainder of the Term pursuant to Article VI, then title to the Lessee Improvements shall automatically pass to, vest in and belong to such First Leasehold Mortgagee or any designee or nominee of such First Leasehold Mortgagee permitted hereunder, until the expiration or sooner termination of the term of such new lease. (c) The City and Lessee covenant that, to confirm the automatic vesting of title as provided in this paragraph, each will execute and deliver such further assurances and instruments of assignment and conveyance as may be commercially reasonably required by the other for that purpose. Section 11.5. Surrender of Leased Property. (a) Upon the expiration of the Term or earlier termination of this Lease (subject only to the rights of any First Leasehold Mortgagee), title to Lessee Improvements, free and clear of all debts, mortgages, encumbrances, and liens (which for this purpose shall include all personal property or equipment furnished or installed on the Hotel Project and owned or leased by Lessee), shall automatically pass to, vest in and belong to the City or its successor in ownership and it shall be lawful for the City or its successor in ownership to re-enter and repossess the Leased Property and Lessee Improvements thereon without process of law; and (b) The City and Lessee covenant that, to confirm the automatic vesting of title as provided in this Section, each will execute and deliver such further assurances and instruments of assignment and conveyance as may be reasonably required by the other for that purpose. ARTICLE XII MAINTENANCE AND REPAIRS Section 12.1. Standards Generally. The City and Lessee agree that the manner in which the Hotel Project is developed, operated and maintained is important to the City by reason of its interest in having a convention hotel facility for use by its residents and visitors to the City. Therefore, Lessee hereby agrees to develop, operate and maintain the Hotel Project and the Lessee Improvements thereon (including all FF&E) consistent with the Hotel Standards and in good order and repair, and will replace the same when necessary with items of similar utility and value in order to maintain such condition throughout the Term. Section 12.2. Utilities. City will not be required to furnish any services, utilities or facilities whatsoever to the Leased Property pursuant to this Lease. Any services provided to the Leased Property shall be pursuant to the terms of a separate agreement. Section 12.3. Cleaning. Lessee shall, at its sole cost and expense, perform or cause to be performed, services which will at all times keep the Leased Property and the Lessee 73 Improvements thereon, whether partially or fully constructed, in a clean, neat, orderly, sanitary and presentable condition. Section 12.4. Removal of Trash. Lessee shall, at its sole cost and expense, store, dispose of, and remove or cause to be removed from the Leased Property all trash and refuse which might accumulate and arise from its use of the Leased Property. Section 12.5. Maintenance and Repairs. (a) Lessee shall be exclusively responsible for maintenance and repair of the Leased Property and the Lessee Improvements, (except for the Off-Site Improvements or to the extent infrastructure maintenance has been transferred by Lessee to a utility company by means of a written contract), to the extent and at the times that are consistent with standard industry practice for each applicable Lessee Improvement. Maintenance and repairs by Lessee, including landscape maintenance, shall be in quality and class equal to or better than the original Work to preserve the Leased Property and Hotel Project in good condition and working order. (b) In no event shall City be responsible or liable for any maintenance or repair of any Lessee Improvement, fixture, equipment, structure, facility, alteration, or addition thereto on the Leased Property. (c) Lessee shall be responsible for complying at its cost with any Governmental Requirements, including construction re-certification of any Lessee Improvement on the Leased Property (other than the Off-Site Improvements), including the "40-year recertification" requirement under the current building code. (d) Maintenance and repair of the Hotel Project must be at a level that is in compliance with the Hotel Standards and that will cause the Hotel Project to be in a usable condition at the expiration or termination of this Lease, and with Lessee having expended sufficient funds during the last ten (10) years of this Lease that will cause each Lessee Improvement to be useful and functional and code compliant. During the Term of this Lease, Lessee shall (1) adequately and reasonably fund maintenance reserve accounts for each Lessee Improvement on the Leased Property in amounts that are consistent with standard industry practice applicable to each particular Lessee Improvement, (2) periodically expend funds from such accounts for maintenance purposes in an amount and at a time or times that are customary and ordinary for a sound maintenance program for the Leased Property and consistent with commercial development practices prevailing in South Florida and (3) comply at all times with the terms set forth in the Management Agreement from time to time regarding accrual, maintenance and expenditure of reserves, including FF&E reserves. Section 12.6. Excavation of Land. Except in connection with the construction of the Hotel Project, or redevelopment or reconstruction of the Hotel Project as permitted under this Lease, no excavation of any of the land shall be made, no soil or earth shall be removed from the Leased Property, and no well of any nature shall be dug, constructed or drilled on the Leased Property except as may be required for environmental monitoring purposes, without the prior written Approval by City Manager. Section 12.7. Water and Sewerage System. The Lessee shall operate and maintain, at its sole cost and expense, all the components of the water, sanitary sewerage and storm drainage facilities constructed by Lessee as part of the Hotel Project within the boundaries of the Leased 74 Property. Once constructed, Lessee shall not make any alterations or modifications to these facilities without the advance written Approval of the City Manager, which approval shall not be unreasonably withheld. Such consent shall be granted if any such alterations or modifications are required to comply with Governmental Requirements. Section 12.8. Industrial Waste Facilities. The Lessee shall be fully responsible for all industrial wastes on the Leased Property caused or produced by Lessee, its Subtenants or third-parties operating on the Leased Property and the proper disposal thereof, in accordance with applicable Governmental Requirements. Section 12.9. Inspections. City and/or its designated representatives shall have the right, during normal working hours, after prior reasonable notice to inspect the Leased Property and the Lessee Improvements to identify those items of maintenance, repair, replacement, modification and refurbishment reasonably required of Lessee to keep the Leased Property and the Lessee Improvements in good order and condition. If Lessee has failed to fulfill its maintenance and repair obligations under this Lease, City shall provide written notice and the Lessee shall perform all corrective work identified in such notice within thirty (30) days of receipt of the notice from City; provided, however that if such corrective work cannot be reasonably accomplished within a thirty (30) day period, then the Lessee shall commence the corrective work within that thirty (30) day period and diligently prosecute same to completion. Trash and debris maintenance shall be corrected within two (2) Business Days following receipt of written notice from City. Failure of City to inspect as aforementioned shall not impose any liability on the City. Nothing in this contractual provision relating to City's inspections shall preclude City from making inspections of the Leased Property in accordance with City's regulatory authority. Section 12.10. Failure of Lessee to Maintain. If Lessee has failed to properly clean, remove trash and debris, maintain, repair, replace and refurbish the Leased Property as required by this Article XII, the City shall provide to the Lessee a written list of deficiencies, reflecting the amount of time to be reasonably allowed for the Lessee to correct same. If the Lessee fails to correct or commence to correct such deficiencies within the time allowed and has not registered an objection as to its obligation to do so, the City, at its option, may elect to correct any or all of such deficiencies, in which case, the City shall give Lessee fifteen (15) days further written notice of its intention to do so, and if the Lessee has not corrected or commenced to correct the same within such additional fifteen (15) day period, the City may enter upon the Leased Property and perform all work, which, in the reasonable judgment of the City, is necessary and the City shall add the cost of such work, plus twenty-five percent (25%) for administrative costs, to the Rent due hereunder on the first day of the month following the date of such work, and such cost shall be and constitute a part of the Rent. If Lessee has not corrected or commenced to correct such deficiencies within such additional fifteen (15) day period, the Lessee shall not undertake performance of such repairs or cleanup without specific prior written authorization from the City. ARTICLE XIII MANAGEMENT OF HOTEL Section 13.1. Hotel Standards. (a) Lessee covenants and agrees that it will utilize the Hotel Standards, as delineated in Exhibit "B", to maintain and operate the Hotel, and operate or cause for the Hotel 75 to be operated in compliance with this Lease, Management Agreement and Governmental Requirements; (b) Any commercial operations on the Hotel Project, whether conducted by Lessee, an Affiliate of Lessee or any concessionaire, involving any unreasonably noisy, dangerous or obnoxious activities or the leasing or rental of unreasonably noisy, dangerous or obnoxious equipment, shall require the prior written approval of the City and City may withhold such approval or require the termination of any such commercial operations then in existence on the Hotel Project in its commercially reasonable judgment; and (c) Lessee shall use commercially reasonable efforts to ensure that any concession, commercial activity, or other Hotel activity shall be generally consistent with the Hotel Standards. (d) Notwithstanding anything to the contrary contained herein, in the event that the Convention Center is not operated and maintained in accordance with the MBCC Standard of Operation for a period of more than two (2) years after written notice thereof from Lessee to City and City does not commence improvements to restore the Convention Center to the MBCC Standard of Operation within two (2) years after written notice thereof from Lessee, then Lessee, as its sole remedy, shall not be required to operate and maintain the Hotel in accordance with the Hotel Standards but instead shall be required to operate the Hotel (or cause for the Hotel to be operated) so that it meets a sufficient number of the standards then required to be able to obtain a three-diamond rating from the American Automobile Association; provided that, if at any time during the Term during which the Convention Center is not operated in accordance with the MBCC Standard of Operation, such rating system is discontinued or the standard for such rating system is materially changed, the Parties shall mutually and reasonably agree to substitute an alternate rating system that is most nearly equivalent to the discontinued or changed rating system. At such time as the MBCC Standard of Operation is restored, Lessee shall be required to operate the Hotel in accordance with the Hotel Standards. Section 13.2. Covenant to Continuously Operate Hotel. (a) Subject to the need to make repairs and perform maintenance and any Force Majeure Event in accordance herewith, after the Opening Date, Lessee shall diligently and continuously operate (or cause to be operated) the Hotel for 365 days each year consistent with the Hotel Standards; (b) Subject to the need to make repairs and perform maintenance and subject to any Force Majeure Events in accordance herewith, after the Opening Date, for each day the Hotel is not operated continuously, the City, in addition to any other remedies available to it under this Lease, shall be entitled to receive a rental which shall be no less per day than the average of the Base Rent payable during the preceding three (3)full Lease Years; and (c) Notwithstanding the foregoing, Lessee shall have the right from time-to-time to close the Hotel or parts thereof for such commercially reasonable periods of time to make repairs, alterations, remodeling or for any reconstruction after casualty or condemnation or any Force Majeure Event; provided that the Lessee is using commercially reasonable diligent efforts to repair and restore the Hotel or, as applicable, to mitigate the impact of such Force Majeure Events on its operations. 76 Section 13.3. Hotel Name. Lessee may enter into new Management Agreements or change the name of "flag" of the Hotel so long as such brand or flag is an Approved Brand. In determining whether or not to give any Approval of a brand that is not an Approved Brand, the City may consider, by way of example and not of limitation, the public image of the proposed name or flag, its AAA or other quality classification and whether such image is commensurate with the public image the City desires to project. Provided that no Event of Default is then continuing, Lessee's request for approval shall be deemed approved if (i) the first correspondence from Lessee to City requesting such approval or consent is in an envelope marked "PRIORITY" and contains a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "FIRST NOTICE: THIS IS A REQUEST FOR CONSENT UNDER SECTION 13.3 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED SEPTEMBER 2, 2015, AND FAILURE TO RESPOND TO THIS REQUEST WITHIN TWENTY (20) DAYS MAY RESULT IN THE REQUEST BEING DEEMED GRANTED", and is accompanied by the information and documents required above, and any other information reasonably requested by City in writing prior to the expiration of such twenty (20) day period in order to adequately review the same has been delivered; and (ii) if City fails to respond or to deny such request for approval in writing within the first fifteen (15) days of such twenty (20) day period, a second notice requesting approval is delivered to City from Lessee in an envelope marked "PRIORITY" containing a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "SECOND AND FINAL NOTICE: THIS IS A REQUEST FOR CONSENT UNDER SECTION 13.3 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED SEPTEMBER 2, 2015. IF YOU FAIL TO PROVIDE A SUBSTANTIVE RESPONSE (E.G., APPROVAL, DENIAL OR REQUEST FOR CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5) DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN" and City fails to provide a substantive response to such request for approval within such final five (5) day period. ARTICLE XIV MISCELLANEOUS PROVISIONS Section 14.1. No Partnership or Joint Venture. It is mutually understood and agreed that nothing contained in this Lease is intended or shall be construed in any manner or under any circumstances whatsoever as creating or establishing the relationship of co-partners, or creating or establishing the relationship of a joint venture between the City and Lessee, or as constituting Lessee as the agent or representative of the City for any purpose or in any manner whatsoever. Section 14.2. Recording, Documentary Stamps. A memorandum of this Lease, in form mutually satisfactory to the parties, may be recorded by either Party among the Public Records of Miami-Dade County, Florida and the cost of any such recordation, the cost of any documentary stamps which legally must be attached to any or all of said documents shall be paid in full by Lessee. The Parties shall cooperate in structuring the transactions contemplated hereby in such a manner as to reduce such costs, provided such structure shall not have any adverse consequence for the City. Section 14.3. Florida and Local Laws Prevail. This Lease shall be governed by the laws of the State of Florida. This Lease is subject to and shall comply with the City Code as the same is in existence as of the execution of this Lease and the ordinances of the City of Miami Beach. Any conflicts between this Lease and the City Code shall be resolved in favor of the latter. If any term, covenant, or condition of this Lease or the application thereof to any Person or 77 circumstances shall to any extent, be illegal, invalid, or unenforceable because of present or future laws or any rule or regulation of any governmental body or entity or becomes unenforceable because of judicial construction, the remaining terms, covenants and conditions of this Lease, or application of such term, covenant or condition to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant, or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law. Any dispute arising out of or relating to this Lease that specifically provides for arbitration (and only such provisions) shall be subject to arbitration as provided herein. In any such arbitration or in any legal action brought by either Party because of a breach of this Lease or to enforce any provision of this Lease, the prevailing Party shall be entitled to reasonable attorneys' fees and paralegals' fees and costs, including those incurred in subsequent actions to enforce or vacate an arbitration award and those incurred on appeal. Section 14.4. No Conflicts of Interest/City Representatives not Individually Liable. No member, official, representative, or employee of the City shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official, representative or employee participate in any decision relating to this Lease which affects his or her personal interest or the interest of any corporation, partnership or association in which he or she is, directly or indirectly, interested. No member, official, elected representative or employee of the City shall be personally liable to Lessee or any successor in interest in the event of any default or breach by the City or for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. Section 14.5. Notice. A notice or communication, under this Lease by the City, on the one hand, to Lessee, or, on the other, by Lessee to the City shall be sufficiently given or delivered if in writing and dispatched by hand delivery, or by nationally recognized overnight courier providing receipts, or by registered or certified mail, postage prepaid, return receipt requested to: (a) Lessee. In the case of a notice or communication to Lessee if addressed as follows: To: Portman Miami Beach, LLC, c/o Portman Holdings, LLC 303 Peachtree Center Ave, Suite 575 Atlanta, GA 30303 Attn: John C. Portman, Ill With copies to: General Counsel, Portman Miami Beach, LLC (same address above) (b) City. In the case of a notice or communication to the City, if addressed as follows: To: City Manager City of Miami Beach, Florida 1700 Convention Center Drive, 4th Floor Miami Beach, Florida 33139 With Copies To: City Attorney City of Miami Beach, Florida 1700 Convention Center Drive, 4th Floor Miami Beach, Florida 33139 78 or if such notice is addressed in such other way in respect to any of the foregoing Parties as that Party may, from time-to-time, designate in writing, dispatched as provided in this Section 14.5. Section 14.6. Estoppel Certificates. The City and Lessee shall, within thirty (30) days after written request by the other, execute, acknowledge and deliver to the Party which has requested the same or to any actual or prospective First Leasehold Mortgagee, Mezzanine Lender, or purchaser of the Hotel or any equity interest in Lessee, a certificate stating that: (a) this Lease is in full force and effect and has not been modified, supplemented or amended in any way, or, if there have been modifications, this Lease is in full force and effect as modified, identifying such modification agreement, and if this Lease is not in force and effect, the certificate shall so state; (b) this Lease as modified represents the entire agreement between the Parties as to this subject matter, or, if it does not, the certificate shall so state; (c) the dates on which the Term of this Lease commenced and will terminate; (d) to the knowledge of the certifying Party all conditions under this Lease to be performed up to that date by the City or Lessee, as the case may be, have been performed or satisfied and, as of the date of such certificate, there are no existing defaults, defenses or offsets which the City or Lessee, as the case may be, has against the enforcement of this Lease by the other Party, or, if such conditions have not been satisfied or if there are any defaults, defenses or offsets, the certificate shall so state; and (e) the Rent due and payable for the year in which such certificate is delivered has been paid in full, or, if it has not been paid, the certificate shall so state. The Party to whom any such certificate shall be issued may rely on the matters therein set forth; however, in delivering such certificate neither Lessee nor the City (nor any individual signing such certificate on such Party's behalf) shall be liable for the accuracy of the statements made therein, but rather shall be estopped from denying the veracity or accuracy of the same. Any certificate required to be made by the City or Lessee pursuant to this paragraph shall be deemed to have been made by the City or Lessee (as the case may be) and not by the person signing same. Section 14.7. Provisions not Merged with Deed. Unless otherwise expressed in the instrument of conveyance or transfer; none of the provisions of this Lease are intended to or shall be merged by reason of any deed: (a) transferring the Hotel Project or any part thereof from Lessee (or its successors or assigns) to the City(or its successors or assigns); or (b) transferring title to the Leased Property or any part thereof from the City to Lessee, its successors or assigns. Any such deed shall not be deemed to affect or impair the provisions and covenants of this Lease. Notwithstanding anything to the contrary contained herein, so long as there is a First Leasehold Mortgagee, the City and Lessee agree that the City shall not transfer any fee interest in the Leased Property to Lessee without such First Leasehold Mortgagee's prior written consent. 79 Section 14.8. Titles of Articles and Sections. Any titles of the several parts, Articles and , Sections of this Lease are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 14.9. Counterparts. This Lease may be executed in counterparts, each of which shall be deemed an original. Any such counterparts shall constitute one and the same instrument. This Lease shall become effective only upon execution and delivery of this Lease by the Parties hereto. Section 14.10. Successors and Assigns; No Third Party Beneficiaries. Except to the extent limited elsewhere in this Lease, all of the covenants conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of the City and Lessee. Lessee and the City acknowledge and agree that except for a First Leasehold Mortgagee or a Mezzanine Lender, if any, each of which shall have the rights set forth in Article VI hereof, no third party shall have any rights or claims arising hereunder, nor is it intended that any third party shall be a third party beneficiary of any provisions hereof. Section 14.11. Entire Agreement. This Lease and its Exhibits constitute the sole and only agreement of the Parties hereto with respect to the subject matter hereof and correctly set forth the rights, duties, and obligations of each to the other as of its date. Any prior agreements, promises, negotiations, or representations not expressly set forth in this Lease are of no force or effect and are merged into this Lease. Section 14.12. Amendments. No amendments to this Lease shall be binding on either Party unless in writing and signed by both Parties. Solely to the limited extent as may be necessary to reasonably facilitate lender financing for the Hotel Project, the City Manager shall have the delegated authority (but not the obligation), after consultation with the City's Chief Financial Officer and City Attorney, to negotiate and execute modifications to Article 9, Article 10, Sections 6.1(a)(vi) through 6.1(a)(ix), and Sections 6.1(b) through 6.1(k) of this Lease; and to negotiate and execute the easements contemplated pursuant to Section 4.1(g) of this Lease. All other amendments must be approved by majority vote of the City Commission, subject to the requirements of the City Charter and applicable law, except that the provisions of Sections 4.2(b), 4.2(g), 4.5(a) through (e), and Section A.1 of Exhibit "A" hereto may not be modified except by a 6/7th vote of the City Commission and approval of such modifications by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(b)(3) of the City Charter, and the Base Rent and Minimum Fixed Rent set forth in Section 4.4(a) may not be modified except by approval of such modification by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(b)(3) of the City Charter. The City shall not be obligated to expend any money or undertake any obligation connected with any such amendment proposed by Lessee, or otherwise connected with any action requested by or for the benefit of Lessee under this Lease, and shall be reimbursed by Lessee for all out of pocket expenses (including third party consultants and attorneys) incurred by the City. Prior to the City taking action regarding any such request, Lessee shall deposit with the City the estimated amount of such costs, as reasonably determined by the City. Section 14.13. Non-Subordination of City's Interest. The. City's fee interest in and ownership of the Leased Property and the City's rights and interest in this Lease (including the rights to Rent, Public Charges and other monetary obligations of Lessee to the City under this 80 Lease) shall not be subject or subordinate to or encumbered by any financing for the Hotel Project or lien or encumbrances affecting Lessee's interest in this Lease or Lessee Improvements or by any acts or omissions of Lessee or any Subtenant hereunder. In this regard, the Rent, Additional Rent, Public Charges and other monetary obligations of Lessee to the City under this Lease then payable at any point in time during the Term shall be paid by Lessee to the City and shall be superior in right to all claims or rights hereunder or described above in this Section, including all Hotel Project operating expenses, the payment of debt service, and any distributions of profits to Lessee or any of its Affiliates or owners. Section 14.14. City Manager's Delegated Authority. Notwithstanding any provision to the contrary in this Lease, nothing herein shall preclude the City Manager from seeking direction from or electing to have the City Commission determine any matter arising out of or related to this Lease, including, without limitation, any Approval contemplated under this Lease (within the timeframe specified therefor as if the Approval was being determined by the City Manager), any proposed amendment or modification to this Lease or any separate agreement relating to the Hotel Project or otherwise referenced in this Lease. Section 14.15. Holidays. It is hereby agreed that whenever a notice or performance under the terms of this Lease is to be made or given on a Saturday or Sunday or on a legal holiday recognized by the City, it shall be postponed to the next following Business Day, not a Saturday, Sunday or legal holiday. Section 14.16. No Brokers. Lessee shall be responsible for, and shall hold the City harmless with respect to, the payment of any commission claimed by or owed to any real estate broker or other Person retained by Lessee and which is entitled to a commission as a result of the execution and delivery of this Lease. The City similarly shall be responsible for, and shall hold Lessee harmless with respect to, the payment of any commission claimed by or owed to any real estate broker or other Person retained by the City and which is entitled to a commission as a result of the execution and delivery of this Lease. Section 14.17. No Liability for Approvals and Inspections. Except as may be otherwise expressly provided herein, no approval to be made by the City in its capacity as landlord under this Lease or any inspection of the Work or the Hotel Project by the City under this Lease, shall render the City liable for its failure to discover any defects or nonconformance with any Governmental Requirement. Section 14.18. Radon. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from the county public health unit for Miami-Dade County. Section 14.19. Lessee Entity. On the date of execution hereof, Lessee is a limited liability company. In the event that at any time during the Term of this Lease and any extensions and renewals thereof, Lessee is a corporation or an entity other than a limited liability company, then any references herein to member, membership interest, manager and the like which are applicable to a limited liability company shall mean and be changed to the equivalent designation of such term which is appropriate to the nature of the new Lessee entity. 81 Section 14.20. Inflation Adjustments. All adjustments for inflation required under this Lease shall be calculated utilizing the United States Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers; U.S. City average (1982-84=100). If the United States Department of Labor should no longer compile and publish this index, the most similar index compiled and published by said Department or any other branch or department of the federal government shall be used for the purpose of computing the inflation adjustments provided for in this Lease. If no such index is compiled or published by any branch or department of the federal government, the statistics reflecting cost of living increases as compiled by any institution or organization or individual designated by the City and generally recognized as an authority by financial or insurance institutions shall be used as a basis for such adjustments. Section 14.21. Standard of Conduct. The implied covenant of good faith and fair dealing under Florida law is expressly adopted. Section 14.22. Waiver of Consequential Damages. Notwithstanding anything contained in this Lease to the contrary, in no event shall either Party be liable to the other for any consequential, exemplary or punitive damages. Section 14.23. Reservation of Rights. This Lease shall not affect any rights that may have accrued to any Party to this Lease under applicable laws and each Party hereto reserves any and all of such rights. [signature pages to follow] 82 IN WITNESS WHEREOF, Lessee has caused this Lease to be signed in its name by its President, and the City of Miami Beach has caused this Lease to be signed in its name by the Mayor, and duly attested to by the City Clerk, and approved as to form and sufficiency by the City Attorney, on the day and year first above written. WITNESSED BY: CITY OF MIAMI BEACH, FLORI►-A Print Name: Krxec.,e l fc►2 ■/ i " By: // Pr'• la -. � bs �s�ie Philip Le Mayor ATTEST Approved for form and legal sufficiency By: J , By: *fir- City Attorney City Clerk STATE OF FLORIDA ) COUNTY OF MIAMI-DADE ) The foregoing instrument was acknowledged before me this 2. day of 5s l he r- , 2015, by 72 G •i'e L.c o'n'e , as A 6 Of , of -� VYltCln4 l eccC.k Who is personally known to me or who produced i as iden ication. N. ary Public Commission Number: Commission Expires: ......... IJUA CARDILLO fiFir MY COMMISSION#FF 155322 • a EXPIRES:August 27,2018 •,,pF Bonded Thru Notary Public Underwriters 83 ' / . / Ai , / A/ d. LESS /, if/-, y iv �," k,..,, ..'�Lfgl 1 //, Tint Name: = _,�,,,,, John . Ports an, III itite.--Q—/rA — •Print Name: lvpo,,k Kam,,,r, STATE OF FLORIDA ) COUNTY OF MIAMI-DADE ) The fore oin instr a was acknowledged before me this O � day of ck , 2015, b `John (2, Kean . - , asQfesi3.e. of fo g , 6�c�j LL C Y Who is personally known to me or who produced as identification. / )714,1,-)„...,e6„) Notary P blic •mmi ion Number: •m• ission Expires: STATE OF FLORIDA [............., ���,,. YAWLS(MORALES • COUNTY OF MIAMI-DADE ) .-�,�;-.: Notary P uWk•ta�bt4.o1 i s My Comm.Expiraa Mar 16.2017 e�= Commission N EE 87542® .`\°P• gonde"Through National Notary Assn. 84 EXHIBIT "A" ACCEPTABLE OWNER DEFINITION A. "Acceptable Owner" means any individual, corporation or other entity which has, at a minimum, the following qualifications: 1. Neither the proposed transferee nor any Persons with an ownership interest in the proposed transferee shall, directly or indirectly, own, operate or manage a Gaming Establishment in Miami-Dade County, Florida; provided, however, that the foregoing restriction shall not prevent a proposed transferee who otherwise qualifies as an Acceptable Owner from so qualifying if all Persons owning or Controlling such proposed transferee, own or control in the aggregate five percent (5%) or less of the voting securities of any owner, operator or manager of a Gaming Establishment in Miami-Dade County, Florida. 2. The proposed transferee is not a Foreign Instrumentality other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, Canada, Mexico, countries located in South America, Japan, South Korea, Singapore and Australia, or a Person Controlled by any of the foregoing countries. 3. The proposed transferee must not be owned, or Controlled by entities or individuals who have been convicted, or are presently under indictment, for felonies under the laws of any foreign or United States of America jurisdiction. But the foregoing shall not apply to individuals or entities owning less than a ten percent (10%) equity interest in the proposed transferee, other than officers, directors, managers or others who have the power to direct and control the business and affairs of the proposed transferee. 4. The proposed transferee must not in its charter or organizational documents (defined as the articles of incorporation and bylaws for any corporation, the partnership agreement and partnership certificate for any partnership, the articles of organization and limited liability company operating agreement for any limited liability company, the trust agreement for any trust and the constitution of the relevant government for any governmental entity, but expressly excluding any statements, positions, actions or allegations not contained in such charter organizational documents) expressly advocate or have as its stated purpose: (a) the violent overthrow of or armed resistance against, the U.S. government; or (b) genocide or violence against any persons; or (c) discrimination, hatred or animosity toward persons based solely on their race, creed, color, sex or national origin. 5. A proposed transferee of the entire Hotel Project or of a direct or indirect Controlling ownership interest in Lessee (each, a "Proposed Major Transferee"), or an Affiliate of such Proposed Major Transferee Controlling such Proposed Major Transferee or Person with an ownership interest in such Proposed Major Transferee Controlling such Proposed Major Transferee, must be a Person that generally invests in commercial real estate projects and has sufficient financial resources, including access to debt financing, as may be necessary to conclude the proposed acquisition and to perform the obligations of Lessee in accordance with this Lease (or if a transfer of a direct or indirect Controlling ownership in Lessee, that Lessee has such financial resources), in a manner consistent with the Hotel Standards. 6. A Proposed Major Transferee shall have no outstanding material violations of any applicable law against such Proposed Major Transferee, or any hotel or other property owned or managed by such Proposed Major Transferee, within Florida, which have remained uncured for more than ninety (90) days after such Proposed Major Transferee has 85 knowledge of such violation unless such violation is being contested in good faith so long as the Proposed Major Transferee is able to continue operating such hotel or other property while such matter is being contested. A material violation of applicable law means that the Proposed Major Transferee would be subject to any of the following if found guilty of such violation, or if such violation remains uncured after any applicable period for curing such violation in the statutory or regulatory scheme describing such violation: (i) prohibition from continuing to operate such hotel or other property for any period of time, (ii) loss of such hotel or other property, or (iii) a penalty in excess of$3 million (adjusted annually for inflation pursuant to Section 14.20 hereof). 7. A Proposed Major Transferee must not (nor any of the individuals or entities who own at least a ten percent (10%) equity interest in such Proposed Major Transferee or are officers, directors, managers or otherwise have the power to direct and control the business and affairs of such Proposed Major Transferee) have filed or been discharged from bankruptcy, or have been the subject of an involuntary bankruptcy, reorganization or insolvency proceedings within the past five (5) years (bankruptcy filings by Affiliates shall not disqualify a Proposed Major Transferee, unless such Affiliates are any of the individuals or entities described in the parenthetical immediately above). B. "Acceptable Owner Criteria": The foregoing seven (7) categories of requirements set forth in paragraph A above are collectively defined as the "Acceptable Owner Criteria." C. Evaluation of the Acceptable Owner Criteria: Solely for the purpose of evaluating whether the proposed transferee has met the seven (7) criteria set forth above, the proposed transferee shall provide the following information to the Lessee and certify that the information provided by the proposed transferee is true and correct and that the proposed transferee meets or exceeds the Acceptable Owner Criteria: 1. solely with respect to a Proposed Major Transferee, information sufficient for the City or any outside vendor engaged by the City to perform a due diligence investigation pursuant to paragraph D below, including copies of any applicable operating licenses; 2. solely with respect to a Proposed Major Transferee, certified financial statements reflecting such Proposed Major Transferee's financial ability to meet the obligations and requirements of Lessee under this Lease; 3. solely with respect to a Proposed Major Transferee, a list of four (4) persons or firms with whom the principals of such Proposed Major Transferee have conducted business transactions during the past three (3) years. At least two (2) of those references must have knowledge of such Proposed Major Transferee's debt payment history; 4. solely with respect to a Proposed Major Transferee, identification of the hotels owned or managed by such Proposed Major Transferee or its Affiliates or principals; 5. solely with respect to a Proposed Major Transferee, the resume of such Proposed Major Transferee, senior executives, and other key employees thereof, including identification of and duration, of hotel ownership experience; 86 6. solely with respect to a Proposed Major Transferee, a list of all bankruptcies filed by such Proposed Major Transferee or to which such Proposed Major Transferee was a party-bankrupt, if any; 7. a list of all pending litigation, liens or claims in which the proposed transferee is currently involved which are not covered by insurance and which, if adversely determined would exceed the amount of $250,000 (as adjusted for inflation over the Term pursuant to Section 14.20 hereof); and 8. such other evidence as is commercially reasonably necessary to establish that the new entity proposed to be the Acceptable Owner meets the Acceptable Owner Criteria. D. With respect to any proposed Transfer to a Proposed Major Transferee, City may, at its sole discretion, engage an outside vendor to perform a due diligence investigation at the Lessee's or such Proposed Major Transferee's sole expense, which may include a search of civil; criminal, or bankruptcy proceedings in federal and state jurisdictions; regulatory filings; tax filings; lien, judgment and Uniform Commercial Code searches; business registrations, and the like. City shall be entitled to engage an independent accounting firm, the reasonable costs of which shall be borne by Lessee or such Proposed Major Transferee, to review the information upon which the Proposed Major Transferee's certifications were based, for the purpose of determining whether the certifications and/or information provided to the City is accurate and complete. Lessee shall, or shall cause such Proposed Major Transferee to, reimburse City, upon demand, for any reasonable costs incurred by City in connection with such Transfer or proposed Transfer to a Proposed Major Transferee, including the reasonable out-of-pocket costs of making inquiries and investigations into the conformance with the Acceptable Owner Criteria of such Proposed.Major Transferee and the reasonable legal costs incurred, if any, in connection therewith. E. Confirmation/Approval Process for Proposed Transferees: Regarding the City's confirmation that a proposed transferee is an Acceptable Owner, or the City's approval of a Transfer that is not a Permitted Transfer, the parties hereby agree that: 1. The City Manager shall rely solely on the proposed transferee's certification that the proposed transferee meets the Acceptable Owner Criteria (if a Permitted Transfer), along with the information provided by the proposed transferee and with respect to any Proposed Major Transferee, the results of any due diligence investigation performed by the City. 2. The City Manager shall not unreasonably withhold the City's confirmation if the proposed transferee complies with the Acceptable Owner Criteria. 3. The City Manager shall not unreasonably withhold the City's Approval of a Transfer that is not a Permitted Transfer, except that with respect to a Transfer to a Foreign Instrumentality (other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, Canada, Mexico, countries located in South America, Japan, South Korea, Singapore and Australia or Persons Controlled by any of the foregoing countries), such Transfer shall be subject to the prior written approval of the City 87 Commission, which may be granted, conditioned or withheld by the City Commission in its sole discretion; and 4. If a proposed Transfer requires the City's confirmation or Approval, Lessee shall deliver written notice to the City, which shall include (i) the name and address of the proposed transferee; (ii) the name and address of the proposed transferor; (iii) information describing the nature of the transaction; (iv) the percentage interest being conveyed; and (iv) the materials described in paragraph C above. 5. The City Manager shall have up to forty-five (45) days after the delivery of such written notice and the information required under paragraph C above, to determine whether, on a commercially reasonable basis, the proposed transferee meets the Acceptable Owner Criteria if a Permitted Transfer, or to Approve in accordance herewith a Transfer if not a Permitted Transfer. 6. Provided that no Event of Default is then continuing, Lessee's request for confirmation or Approval shall be deemed confirmed or Approved if (i) the first correspondence from Lessee to the City requesting such confirmation or Approval is in an envelope marked "PRIORITY" and contains a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "FIRST NOTICE: THIS IS A REQUEST FOR CONFIRMATION OR APPROVAL UNDER SECTION 5.4 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED SEPTEMBER 2, 2015, AND FAILURE TO RESPOND TO THIS REQUEST WITHIN FORTY-FIVE (45) DAYS MAY RESULT IN THE REQUEST BEING DEEMED GRANTED", and is accompanied by the information and documents required above, and any other information reasonably requested by City in writing prior to the expiration of such forty-five (45) day period in order to adequately review the same has been delivered; and (ii) if City fails to respond or to deny such request for confirmation or Approval in writing within the first thirty (30) days of such forty-five (45) day period, a second notice requesting confirmation or Approval is delivered to City from Lessee in an envelope marked "PRIORITY" containing a bold-faced, conspicuous (in a font size that is not less than fourteen (14)) legend at the top of the first page thereof stating that "SECOND AND FINAL NOTICE: THIS IS A REQUEST FOR CONFIRMATION OR APPROVAL UNDER SECTION 5.4 OF THE DEVELOPMENT AND GROUND LEASE AGREEMENT, DATED SEPTEMBER 2, 2015. IF YOU FAIL TO PROVIDE A SUBSTANTIVE RESPONSE (E.G., CONFIRMATION, APPROVAL, DENIAL OR REQUEST FOR CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR CONFIRMATION OR APPROVAL IN WRITING WITHIN FIFTEEN (15) DAYS, YOUR CONFIRMATION OR APPROVAL SHALL BE DEEMED GIVEN" and City fails to provide a substantive response to such request for confirmation or Approval within such final fifteen (15) day period. Any Transfer shall be subject to the deemed Approval provisions set forth,above in this subparagraph E.6, provided, however, that the City Commission shall have sixty (60) days after receipt of written notice from Lessee of any proposed Transfer to a Foreign Instrumentality (other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, Canada, Mexico, countries located in South America, Japan, South Korea, Singapore and Australia or Persons Controlled by any of the foregoing countries), to approve or disapprove of such proposed Transfer, and if the City has not notified Lessee, in writing, of the City Commission's approval of such Transfer within such sixty(60) day period, then such Transfer shall be deemed approved. 7. If the City notifies Lessee, in writing, within such forty-five (45)-day period, that the information submitted is, on a commercially reasonable basis, incomplete or insufficient (and specifies in what ways it is incomplete or insufficient), then Lessee shall supplement such 88 information, on a commercially reasonable basis, and the City Manager (or City Commission, with respect to Transfers to Foreign Instrumentalities requiring City Commission approval) shall have twenty (20) days after such supplemental information is provided to make its determination whether the proposed transferee meets the Acceptable Owner Criteria or to Approve a Transfer that is not a Permitted Transfer. 8. If the City Manager does not confirm that the proposed transferee does not meet the Acceptable Owner Criteria or disapproves a Transfer that is not a Permitted Transfer, the City Manager shall provide to Lessee specific written, commercially reasonable reasons for such action. The failure to object to the proposed transferee or Transfer within either of the two time periods set forth above shall be deemed to be the confirmation by the City of the proposed transferee as an Acceptable Owner or Approval of the proposed Transfer, except with respect to a proposed Transfer to a Foreign Instrumentality (other than a member country of the European Union or the Gulf Cooperation Council, each as existing on the Effective Date, Canada, Mexico, countries located in South America, Japan, South Korea, Singapore and Australia or Persons Controlled by any of the foregoing countries), which the City Commission must expressly approve in writing, as provided above, in order for such Transfer to be effective. 9. Any entity approved as an Acceptable Owner must meet the Acceptable Owner Criteria set forth in subparagraphs A.1., A.3. and A.4. above throughout its service as an Acceptable Owner hereunder, subject to notice and cure rights as provided in the Lease. 10. No confirmation by the City of a proposed transferee as an Acceptable Owner or its meeting of the Acceptable Owner Criteria shall have the effect of waiving or estopping the City from later claiming that said Acceptable Owner is no longer operating or maintaining the Hotel Project according to the terms of this Lease. F. Interpretation: 1. All acts and omissions as well as rights and duties shall be done in a commercially reasonable manner, unless the standard of"sole discretion" is used. 2. The implied covenant of good faith and fair dealing under Florida law is expressly adopted. 89 EXHIBIT "B" HOTEL.STANDARDS DEFINITION The Lessee shall operate the Hotel, or cause for the Hotel to be operated, so that (with the requirements in paragraphs A, B and C being the "Hotel Standards"): A. it meets a sufficient number of the standards then required to be able to obtain a four-diamond rating from the American Automobile Association ("AAA"); or B. if at any time during the Term of this Lease either such rating system is discontinued or the standards for such rating system is materially changed, the Parties shall mutually and reasonably agree to substitute an alternate rating system that is most nearly equivalent to the discontinued or changed rating system. C. Notwithstanding the foregoing, Lessee shall be deemed to have satisfied the Hotel Standards as long as it is operating the Hotel Project (or causing the Hotel Project to be operated) in a manner substantially similar to the operation of the following convention center hotels as of the Effective Date: Hilton Americas-Houston, Hilton Orlando, Marriott Marquis Washington DC, San Francisco Marriott Marquis, Hyatt Regency Orlando, Hyatt Regency Denver at the Colorado Convention Center, The Westin Charlotte, and the Sheraton Chicago Hotel and Towers and the Loews Miami Beach or any convention center hotel of a similar size and purpose as the Hotel operated by an Approved Brand. The Lessee does not have to actually obtain the AAA four-diamond or equivalent rating. But, it must be able to meet the standards for obtaining it. If the Lessee elects, in its sole discretion, not to obtain that rating, the City shall have the right once every thirty-six (36) months to require the Lessee to retain a hotel consultant proficient in the AAA Diamond ratings and with at least ten (10) years' experience in the hotel industry to produce a report within sixty (60) days of the City's request that states the Hotel does or does not meet the Hotel Standards. The City has the right to accept or reject the report. If it rejects the report, the City shall Y 9 P reject P rejects its own hotel consultant proficient in the AAA Diamond ratings who shall also have at least ten (10) years' experience in the hotel industry. That consultant shall produce a report at any time explaining in commercially reasonable detail why the report by the Lessee's hotel consultant is or is not correct. After the City's hotel consultant's report is delivered to the Lessee, the City and Lessee shall not take any formal action for thirty (30) days. They may elect to discuss or mediate the matter during that period of thirty(30) days. At the end of that period of time, if the City does not agree that the Hotel is being operated in accordance with the Hotel Standards, then the matter may be resolved in accordance with Section 7.8, using a mediator with substantial experience in the hotel industry. In the event of a determination that the Hotel Standards are not being met, Lessee shall have six (6) months within which to take the necessary action to cause the Hotel to be operated in accordance with the Hotel Standards. 90 EXHIBIT "C" BUDGETED IMPROVEMENT COSTS Hotel Project Costs Soft Costs Design Architect $ 13,551,938 Landscape Architect $ Included Above Other Architectural $ Included Above Traffic Engineer $ Included Above Civil Engineer $ Included Above Misc. Consultants $ 1,033,500 Legal and Administrative $ 1,000,000 Real Estate Taxes $ 4,193,084 Developers Fee $ 22,424,772 Building Permits $ 11,120,197 Insurance - Builders Risk $ 3,545,741 Pre- Opening Expense $ 6,680,000 Working capital $ 800,000 Sewer/Water Hook Up $ 85,000 Art in Public Places - $ 3,643,386 Other $ 1,282,702 Soft Cost Contingency $ 20,272,520 Total Soft Cost $ 89,632,940 Financing Loan/Equity fees $ 11,344,436 Construction Period Interest $ 9,256,783 Operating Interest Reserve $ 11,503,442 $ 32,104,661 Construction Costs Construction Cost Hotel $ 235,880,136 Skybridge $ 1,800,000 Construction Contingency $ Included Above Payment & Performance Bonds $ 2,084,913 FF&E $ 24,683,024 OS&E $ 19,264,725 Total Construction Cost $ 283,712,798 Total Project Costs $ 405,450,398 91 EXHIBIT "D" LEGAL DESCRIPTION OF HOTEL SITE (see next two (2) pages) 92 : s 10 W A P. a €" .1 i ce-- — — aaai iQHf1S ION t. 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II 3 1= !!111111 ♦iii1N_E_!!=_ 111_ 1 !itI3 i-!�_ !iileiE11 --F._ X111 �- !!s !! 1_111 - -11E1111 1!!!0=!!!1 o g 11111 II !!!- I 111=_!!!!!!!!!!!!!!!1 =v.? !!1 11 111- 1!!!1!!!1!i!l111111- z 1111. 1i. 111:i11111111111111illiii W !!1 Ellin: ♦liiiii111111H111111 N I, 111111111 111111111111111111111 111 II 1111111111!!!iiniiil11111 ra,'.1 1 �1 1!!!!!!liIiii iiiiiii!!i!!_,I II 1111111111111i!!!'i/iilil= al 1 III..II IIIIIIIHHHHIIIIIIIIII N e 1 HIll! t.',5' 123 EXHIBIT "G" FORM OF EASEMENTS GRANT OF EASEMENT AND AGREEMENT THIS GRANT OF EASEMENT AND AGREEMENT (this "Easement") is made this day of , 20_, by the CITY OF MIAMI BEACH, a Florida municipal corporation (the "City"), having its principal place of business at 1700 Convention Center Drive, Miami Beach, Florida 33139 in favor of Portman Miami Beach, LLC, a Delaware limited liability company ("Lessee"), having its principal place of business at WHEREAS, the City owns that certain property situated, lying and being in Miami- Dade County, Florida, as more particularly described in Exhibit "A" attached hereto (the "Property"); WHEREAS, the City and the Lessee entered into that certain Development and Ground Lease Agreement dated as of , 20_, a memorandum of which is recorded in Official Records Book , at Page of the Public Records of Miami-Dade County (the "Development and Ground Lease Agreement"), which constitutes a development agreement pursuant to the Florida Local Government Development Act, Section 163.3220, et. seq., Florida Statutes (the "Act") and which contemplates the development and ground lease of the portion of the Property depicted in Exhibit "B" (the "Leased Property") for an 800-room full- service convention hotel and related facilities, to be connected to the Miami Beach Convention Center located at 1901 Convention Center Drive, Miami Beach, Florida ("Convention Center") by an enclosed overhead pedestrian skybridge (the "Hotel Project"); WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive access easement for the purpose of ingress and egress through, over, on, upon and across the right-of-way which is more particularly described in Exhibit "C" attached hereto ("Easement Parcel 1") for the purpose of permitting Lessee to access the Leased Property including, without limitation, its parking, loading docks and/or service areas, and reserving unto City and its contractors, agents, employees, invitees and licensees (collectively, the "City Parties") the right to ingress and egress through, over, on, upon and across the Easement Parcel 1 for all purposes, including but not limited to providing pedestrian and vehicular access to the Convention Center and The Fillmore Theater located at 1700 Washington Avenue, Miami Beach, Florida ("Fillmore Theater"), and their respective loading docks and service areas; WHEREAS, pursuant to the Development and Ground Lease Agreement, the City has agreed to grant to the Lessee a non-exclusive access easement over the area more fully described in Exhibit "D" hereto ("Easement Parcel 2"), for the purpose of permitting Lessee to construct the Skybridge and the Off-Site Improvements, as those terms are more particularly described in the Development and Ground Lease Agreement, and to maintain the Skybridge in accordance with the Development and Ground Lease Agreement; and WHEREAS, collectively, Easement Parcel 1 and Easement Parcel 2 shall be referred to herein as the "Easement Parcels"; 124 WHEREAS, granting the foregoing easements is a condition of the effectiveness of the Development and Ground Lease Agreement and the issuance of development permits and approvals in order to develop the Hotel Project; NOW THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the City and Lessee agree as follows: 1. The City hereby grants to the Lessee a non-exclusive access easement through, over, on, upon and across Easement Parcel 1 for the purpose of ingress and egress to and from the Leased Property and its parking, loading docks and/or service areas, for so long as Lessee uses the Leased Property in accordance with the terms of the Development and Ground Lease Agreement. The City hereby expressly reserves for itself, the other City Parties and their respective successors and/or assigns, the unrestricted right to use Easement Parcel 1 for purposes of providing pedestrian and vehicular access to the Convention Center and the Fillmore Theater, and their respective loading docks and service areas and for any and all other purposes that do not unreasonably interfere with the Lessee's use of Easement Parcel 1 for the rights granted herein, including but not limited to granting other easements or licenses at the same location. The City shall be responsible for the maintenance and operation of Easement Parcel 1 at the City's sole cost and expense. 2. The City hereby grants Lessee a non-exclusive access easement over, on, under, upon, and across Easement Parcel 2 to perform all acts necessary to ensure fulfillment of all requirements of [insert permit or order no.] with respect to the construction of the Skybridge and/or Off-Site Improvements referenced in the Development and Ground Lease Agreement and as reasonably necessary to maintain the Skybridge in accordance with Lessee's obligations under the Development and Ground Lease Agreement. The City hereby expressly reserves for itself, the other City Parties and their respective successors and/or assigns, the unrestricted right to use the Easement Parcel 2 for any and all other purposes that do not unreasonably interfere with the Lessee's use of Easement Parcel 2 for the rights granted herein, including but not limited to granting other easements or licenses at the same location. 3. The Easement Parcels are subject to all liens, encumbrances, covenants, conditions, restrictions, reservations, contracts, leases and licenses, easements, and rights of way pertaining to the Property, whether or not of record, as identified on Exhibit "E" hereto (the "Encumbrances"). The use of the word "grant" shall not imply any warranty on the part of the City with respect to the Easement Parcels. 4. The Lessee shall maintain insurance on the Easement Parcels at all times as required by the Development and Ground Lease Agreement. Such insurance policy shall name the City as an additional insured and loss payee (with respect to property coverage) thereunder; shall be written by insurance companies licensed to do business in Florida and with an AM Best rating of A- or better; and must specify it is not subject to cancellation or non- renewal without a minimum of 30 days notification by the insurer to the City with a copy to the attention of Risk Manager, 1700 Convention Center Drive, Miami Beach, Florida 33139 ("Risk Manager"), with a minimum of 10 days notification by the insurer to the City and the City's Risk Manager prior to cancellation or non-renewal for non-payment of premium. The Lessee shall provide the City with a certificate of insurance evidencing said coverages. 125 5.. City covenants, warrants and represents that it is the fee simple owner of the Leased Property and Easement Parcels, and has the right, title, and capacity to grant the easements granted herein, subject only to the Encumbrances. 6. Lessee shall not materially interfere with the use by and operation and activities of City Parties on the Easement Parcels, and Lessee shall use such routes and follow such procedures on the Easement Parcels as result in the least damage and inconvenience to City and its invitees, agents, employees, guests, lessees and/or licensees. 7. Lessee shall be responsible for any damage to the Property or any property of third parties resulting from the exercise or use of the Easement Parcels by the Lessee or its contractors, agents, officers, members, employees, invitees or licensees (collectively, the "Lessee Parties"), including but not limited to soil erosion, subsidence or damage resulting therefrom. Lessee shall promptly repair and restore to its original condition any of the Property that may be altered, damaged or destroyed in connection with the exercise or use of the Easement Parcels by the Lessee Parties. This Easement is made on the express condition that City is to be free from all liability by reason of injury or death to persons or injury to property from whatever cause arising out of any of the Lessee Parties' exercise or use of the Easement Parcels, including any liability for injury or death to the person or property of any of the Lessee Parties or to any property under the control or custody of any of the Lessee Parties. Lessee hereby covenants and agrees to defend and indemnify the City Parties and save them harmless from any and all liability, loss, costs, or obligations on account of, or arising out of, any such injury or losses caused or claimed to be caused by the exercise or use of the Easement Parcels by the Lessee Parties, however occurring, except to the extent caused solely by the willful or grossly negligent acts or omissions of City or the City Parties. 8. This Easement shall inure to the benefit of and be binding upon the heirs, legal representatives, successors and assigns of the City and Lessee, as applicable. 9. Lessee alone shall pay any and all taxes, charges or use fee(s) levied by any governmental agency against Lessee's interest in the Easement Parcels. Lessee shall not cause liens of any kind to be placed against the Easement Parcels or any of the Property except in connection with a Leasehold Mortgage. 10. Any notices required or permitted to be given under this Easement shall be in writing and shall be deemed to have been given if delivered by hand, sent by recognized overnight courier (such as Federal Express) or mailed by certified or registered mail, return receipt requested, in a postage prepaid envelope, and addressed as follows: If to the City at: City of Miami Beach, City Hall 1700 Convention Center Drive Miami Beach, Florida 3313 Attn: City Manager, City Attorney With a copy to: If to Lessee at: 126 c/o Attn: With a copy to: Notices personally delivered or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given five (5) days after deposit in the U.S. mails. The terms of this Section shall survive the termination of this Easement. 11. Construction. a. This Easement shall be construed and governed in accordance with the laws of the State of Florida. All of the parties to this Easement have participated fully in the negotiation and preparation hereof; and, accordingly, this Easement shall not be more strictly construed against any one of the parties hereto. b. In construing this Easement, the use of any gender shall include every other and all genders, and captions and section and paragraph headings shall be disregarded. c. All of the exhibits attached to this Easement are incorporated in, and made a part of, this Easement. d. The recitals to this Easement set forth above are true and correct and are incorporated herein by this reference. e. The dominant estate is intended to be appurtenant to the Development and Ground Lease Agreement and is co-terminus with the Lessee's rights thereunder. 12. Severability. In the event any term or provision of this Easement be determined by appropriate judicial authority to be illegal or otherwise invalid, such provision shall be given its nearest legal meaning or construed as deleted as such authority determines, and the remainder of this Easement shall be construed to be in full force and effect. 13. Time of Essence. Time shall be of the essence for each and every provision hereof. 14. Entire Agreement. This Easement, together with the documents referenced herein, constitute the entire agreement and understanding among the parties with respect to the subject matter hereof, and there are no other agreements, representations or warranties other than as set forth herein. This Easement may not be changed, altered or modified except by an instrument in writing signed by the party against whom enforcement of such change would be sought. 127 IN WITNESS WHEREOF, the undersigned has caused this Easement to be executed by execution of this instrument as of this day of , 201_. (Signature pages to follow) 128 Witnesses: CITY OF MIAMI BEACH, FLORIDA, a municipal corporation Sign Name: By: Mayor Print Name: Sign Name: Print Name: ATTEST: City Clerk STATE OF FLORIDA ) ) SS: COUNTY OF DADE ) The foregoing instrument was acknowledged before me this day of , 20_ by , as of . He is personally known to me or has produced as identification and who did (did not)take an oath. NOTARY PUBLIC Typed or Printed Name of Notary My Commission Expires: Serial No., if any: 129 ACKNOWLEDGED AND ACCEPTED this day of , 20_ by : Witnesses: LESSEE Sign Name: Print Name: By: Print name: Sign Name: Print Name: STATE OF FLORIDA ) SS: COUNTY OF DADE ) The foregoing instrument was acknowledged before me this day of , 20_ by , as of He is personally known to me or has produced as identification and who did (did not) take an oath. NOTARY PUBLIC Typed or Printed Name of Notary My Commission Expires: Serial No., if any: 130 Exhibit "A" [MBCC Parcel - Folio No. 02-3227-000-0090] 131 Exhibit "B" Hotel Site Legal Description [See Exhibit D to Development and Ground Lease Agreement] 132 Exhibit "C" Easement Parcel 1 (Right-of-way) [exact description to be finalized as part of the development process pursuant to the Lease] 133 Exhibit "D" Easement Parcel 2 for Construction of Skybridge and Off-site Improvements and Maintenance of Skybridge [exact description to be finalized as part of the development process pursuant to the Lease] 134 • EXHIBIT "H" PRESENTLY PERMITTED DEVELOPMENT (a) Permitted Development and Uses. The Leased Property is in the CCC Civic and Convention Center District, a zoning district created to accommodate the facilities necessary to support the Convention Center. The main permitted uses in the CCC Civic and Convention Center District are parking lots, garages, performing arts and cultural facilities; hotel; merchandise mart; commercial or office development; landscape open space; parks. Property located in the CCC Civic and Convention Center District may be used for the purposes permitted and regulated in these land use designations and zoning districts, as further limited by the City's Land Development Regulations, provided, however, that the Leased Property may only be used in accordance with the terms and conditions of this Lease. (b) Density, Building Heights, Setbacks and Intensities. The maximum density, heights, setbacks and intensities for any development on the Leased Property shall be regulated by the City's Land Development Regulations, Comprehensive Plan and any Governmental Requirements. The development regulations in the CCC Civic and Convention Center District are as follows: (1) maximum floor area ratio of 2.75. There are no lot area, lot width, population densities or unit size requirements for the CCC Civic and Convention Center District. Building height and story requirements are as follows: (1) Maximum building height for hotels: 300 feet; for all other uses: 100 feet. (2) Maximum number of stories for hotels: 30; for all other uses: 11 stories. The development regulations (setbacks, floor area ratio, signs, parking, etc.) shall be the average of the requirements contained in the surrounding zoning districts as determined by the City's Planning and Zoning Director. THIS EXHIBIT DESCRIBES THE PRESENTLY PERMITTED DEVELOPMENT FOR PURPOSES OF THE ACT ONLY. THE PROJECT SHALL CONFORM TO THE DESCRIPTION, TERMS AND CONDITIONS SET FORTH IN THIS LEASE. 135 EXHIBIT "I" PUBLIC FACILITIES The proposed development will be serviced by those roadway transportation facilities currently in existence as provided by state, county, and local roadways. The proposed development will also be serviced by public transportation facilities currently in existence, as provided by Miami-Dade County, the City of Miami Beach, and such other governmental entities as may presently operate public transportation services within the City of Miami Beach. Sanitary sewer, solid waste, drainage, and potable water services for the proposed development shall be those services currently in existence and owned or operated by Miami- Dade County, the Miami-Dade County Water and Sewer Department, and the City of Miami Beach. The proposed development shall be serviced by those existing educational facilities owned or operated by the Miami-Dade Public Schools District, if applicable. The proposed development shall be serviced by those existing parks and recreational facilities owned or operated by the United States Government within Miami- Dade County, by the State of Florida, ' by Miami-Dade County, and by the City of Miami Beach. The proposed development shall be serviced by those existing health systems and facilities operated by the United States Government within Miami-Dade County, by the State of Florida, by Miami-Dade County, and by the City of Miami Beach. The proposed development will also be serviced by any and all public facilities, as such are defined in Section 163.3221(12) of the Act, that are described in the Comprehensive Plan, specifically including those facilities described in the Infrastructure Element and the Capital Improvements Element therein, a copy of which is available for public inspection in the offices of the City Clerk of the City of Miami Beach. 136 EXHIBIT "J" PUBLIC RESERVATIONS AND DEDICATIONS None, except for any easements or reservations contemplated under Section 4.1(g). 137 EXHIBIT "K" REQUIRED DEVELOPMENT PERMITS AND VARIANCES The following constitutes a generalized list of local permits anticipated as necessary to be approved by the terms of this Lease: 1. Design Review Board, Planning Board, and/or Board of Adjustment approvals, pursuant to Chapter 118 of the City of Miami Beach Code. 2. Utility Permits 3. Demolition Permits 4. Building Permits 5. Environmental Permits 6. Hazardous Materials Removal Permit, if removal of hazardous materials is found necessary. 7. Public Works Permit, Paving and Drainage 8. Public Works Permit, Water and Sewer 9. Public Works Revocable Permits 10. Certificates of Use and/or Occupancy 11. Any variances or waivers that may be required pursuant to Chapters 114 through 142 of the City of Miami Beach Code 12. All other local governmental approvals as may be applicable to the subject property from time to time pursuant to the terms of this Development Agreement, including but not limited to restrictive covenants in lieu of unity of title 138 EXHIBIT "L" ROOM BLOCK AGREEMENT by and between CITY OF MIAMI BEACH, FLORIDA and PORTMAN MIAMI BEACH, LLC 139 TABLE OF CONTENTS ARTICLE I DEFINED TERMS 1 1.01 "18-MONTH ROOM BLOCK REQUEST" 1 1.02 "ACTIVE NEGOTIATIONS" 1 1.03 "AGREEMENT" 2 1.04 "AMENDED OFFER" 2 1.05 "AVAILABLE GUEST ROOMS" 2 1.06 "BLOCK NOTICE" 2 1.07 "BLOCK RELEASE REQUEST NOTICE" 2 1.08 "BUSINESS DAY" 2 1.09 "CITY" 2 1.10 "CITY MANAGER" 2 1.11 "CITY-WIDE EVENT" 2 1.12 "CONVENTION CENTER" 2 1.13 "CURE PERIOD" 3 1.14 "DEVELOPMENT AND GROUND LEASE AGREEMENT" 3 1.15 "EFFECTIVE DATE" 3 1.16 "EVENT BLOCK MINIMUM RATE" 3 1.17 "EVENT OF DEFAULT" 3 1.18 "EVENT NIGHT" 3 1.19 "EVENT ROOM BLOCK" 3 1.20 "FORCE MAJEURE" 3 1.21 "GMCVB" 3 1.22 "HOTEL" 3 1.23 "HOTEL SITE" 3 1.24 "INITIAL OFFER" 4 1.25 "MANAGED HOTELS" 4 1.26 "MANAGEMENT AGREEMENT" 4 1.27 "MAXIMUM EVENT NIGHT CEILING" 4 1.28 "MAXIMUM EVENT ROOM BLOCK" 4 1.29 "MIDWEEK" 4 1.30 "NOTICE" 4 1.31 "OFFER EXPIRATION DATE" 4 1.32 "OPENING" 4 1.33 "OPERATOR" 4 1.34 "LESSEE" 4 1.35 "POTENTIAL CONVENTION CENTER CUSTOMER" 4 1.36 "PUBLIC RECORDS ACT" 4 1.37 "RATE QUOTE" 4 1.38 "INTENTIONALLY OMITTED". 4 1.39 "ROOM BLOCK CONTRACT" 4 1.40 "ROOM BLOCK REQUEST NOTICE" 4 1.41 "SALES REPRESENTATIVE" 5 1.42 "SPECIAL EVENT BLOCK MINIMUM RATE" 5 1.43 "STANDARD OF OPERATION" 5 1.44 "STANDARD OF OPERATION FAILURE NOTICE" 5 1.45 "SUSPENSION PERIOD" 5 1.46 "TERM" 5 1.47 "WEEKEND" 5 ARTICLE II TERM OF THIS LEASE 5 2.01 COMMENCEMENT OF THE TERM 5 2.02 EXPIRATION OF TERM;SUSPENSION PERIOD 5 140 ARTICLE III ROOM BLOCK COMMITMENT;RELEASE OF BLOCK 6 3.01 ROOM BLOCK 6 3.02 RELEASE OF BLOCK 11 ARTICLE IV ROOM BLOCK PRICING 13 4.01 EVENT BLOCK MINIMUM RATES;SPECIAL EVENT BLOCK MINIMUM RATES 13 4.02 GENERAL MATTERS REGARDING RATES 15 4.03 CONFIDENTIALITY 15 ARTICLE V STANDARDS OF HOTEL OPERATION 15 5.01 STANDARDS 15 ARTICLE VI 16 STANDARDS OF CENTER OPERATION 16 ARTICLE VII NO LIABILITY FOR PROPOSED CONVENTION CENTER CUSTOMER;LESSEE RESPONSIBILITY TO CAUSE OPERATOR TO PERFORM; INDEMNITY 16 7.01 No LIABILITY TO CITY 16 ARTICLE VIII EVENTS OF DEFAULT 17 8.01 DEFAULT 17 8.03 LESSEE'S RESERVATION OF RIGHTS 18 ARTICLE IX ADDITIONAL PROVISIONS 18 9.02 MISCELLANEOUS 18 9.03 ESTOPPEL CERTIFICATE 18 9.04 NOTICES 18 141 ROOM BLOCK AGREEMENT THIS ROOM BLOCK AGREEMENT ("Agreement") made and entered into as of the day of , 201_(the "Effective Date") by and between City of Miami Beach, Florida ("City"), a Florida municipal corporation, and Portman Miami Beach, LLC ("Lessee"), a Delaware limited liability company, recites and provides as follows. RECITALS The City has a material interest in maximizing the quality and performance of convention business attracted to the Convention Center, as hereinafter defined in Section 1.12, and encouraging convention and tourism business in the City. In furtherance of those goals, and to facilitate the development of a full service convention center hotel connected to the Convention Center, the City has entered into the Development and Ground Lease Agreement ("Lease"), as hereinafter defined in Section 1.14, with Lessee, under which the parties have agreed, among other things, to enter into a room block agreement pursuant to which specific percentages of the Hotel's guest rooms will be reserved for specific periods of time for attendees, participants and planners of conventions and trade shows at the Convention Center. City and Lessee agree that the room block agreement described in the Lease (and, accordingly, this Agreement) constitutes a contract for the provision of services by Lessee to and for the benefit of City, which services are being provided in exchange for the covenants and agreements of City set forth in the Lease. City and Lessee intend that this Agreement satisfy such room block agreement requirement in the Lease. Lessee has or will execute and enter into a Management Agreement (as hereinafter defined) with the Initial Hotel Operator pursuant to which, among other things, Lessee shall require, and the Initial Hotel Operator must agree, to perform the obligations assigned to Lessee and/or Operator herein during the term of such Management Agreement and to otherwise operate the Hotel in a manner which complies with this Agreement. In consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and confessed by the parties hereto, City and Lessee hereby covenant and agree with each other as follows: ARTICLE I DEFINED TERMS In this Agreement, these terms shall have the following meanings: 1.01 "18-Month Room Block Request" is defined in Section 3.01(c). 1.02 "Active Negotiations" means (x) for purposes of Section 3.01(b), that Lessee or Operator, on the one hand, and a bona fide potential Hotel guest, on the other hand, have exchanged written correspondence between them that reflects an indication of mutual interest for consummating a transaction whereby such Hotel contracts to block or books guest rooms at the Hotel, and neither Lessee or Operator, on the one hand, nor such bona fide potential Hotel guest on the other hand, has indicated that it no longer has any interest in pursuing such negotiations and (y) for purposes of Section 3.02(b), that the GMCVB or the City or its representatives, on the one hand, and a Potential Convention Center Customer, on the other hand, have exchanged written correspondence between them that reflects an indication of 142 mutual interest for consummating a City-Wide Event and neither the GMCVB or the City, on the one hand, nor such Potential Convention Center Customer, on the other hand, has indicated that it no longer has any interest in pursuing such negotiations. 1.03 "Agreement" is defined in this Agreement's preamble. 1.04 "Amended Offer" is defined in Section 3.01(d). 1.05 "Available Guest Rooms" means, as of any date in question, all of the Hotel's guest rooms (including suites), excluding any guest rooms that are reasonably projected to be unavailable on the dates in question due to scheduled renovations, repairs (including, without limitation, repairs due to events of casualty that have occurred), or maintenance, and excluding any of the Hotel's guest rooms that have been condemned in a taking and as to which physical possession is projected to have been taken by the condemnor prior to the date in question. 1.06 "Block Notice" is defined in Section 3.01(d). 1.07 "Block Release Request Notice" is defined in Section 3.02(d). 1.08 "Business Day" means a day other than a Saturday, a Sunday or a day on which national banks in Miami-Dade County, Florida are closed for business. If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is not a Business Day, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first Business Day following such non- Business Day. Unless otherwise specified herein, all references herein to a "day" or"days" shall refer to calendar days and not Business Days. 1.09 "City" means the City of Miami Beach, Florida, a municipal corporation of the State of Florida. 1.10 "City Manager" means the Chief Administrative Officer of the City. The City Manager shall be construed to include any duly authorized representatives designated in writing with respect to any specific matter(s) concerning the Room Block Agreement (exclusive of those authorizations reserved to the City Commission or regulatory or administrative bodies having jurisdiction over any matter(s) related to the Lease). 1.11 "City-Wide Event" means a convention, trade show or other event requiring a three (3) night stay, during which a Potential Convention Center Customer (i) needs to use a minimum of 115,000 gross square feet of exhibit or meeting space in the Convention Center and (ii) in connection with such event, requests 1,500 or more guest rooms be made available in hotels in the City (including the Hotel) and surrounding metropolitan areas, in the aggregate, for one or more days while the event is held at the Convention Center (and, potentially, the day preceding the commencement of such event and the day following the conclusion of such event). A City-Wide Event shall also include the annual Orange Bowl football game hosted by the Orange Bowl Committee, and any Super Bowl football game that may take place in Miami- Dade County or Broward County (without regard to whether either event utilizes the Convention Center in any way). 1.12 "Convention Center" means the Miami Beach Convention Center located at 1900 Convention Center Drive, Miami Beach, Florida. 143 1.13 "Cure Period" is defined in Section 2.02(b). 1.14 "Development and Ground Lease Agreement" or "Lease" means that certain Development and Ground Lease Agreement between Lessee and City dated , 2015, as may be amended from time to time in accordance with its terms. 1.15 "Effective Date" is defined in this Agreement's preamble. 1.16 "Event Block Minimum Rate" means the lowest rate City may require the Lessee and Operator to quote or charge a Potential Convention Center Customer for a room during a City-Wide Event, as described and determined in accordance with Section 4.01. 1.17 "Event of Default" is defined in Section 8.01. 1.18 "Event Night" means any night during a City-Wide Event (including the day preceding the commencement of and the day following the conclusion of such event, as contemplated in the definition thereof) for which (i) City has exercised its rights under Section 3.01(a) by giving a Room Block Request Notice to the Operator and (ii) in response to such Room Block Request Notice, 250 or more rooms have been booked, blocked or reserved by the Operator either (i) pursuant to a contract with the Potential Convention Center Customer or (ii) pursuant to Initial Offers or Amended Offers that have been accepted or are still outstanding (and, if such contracts are terminated or any of such offers are subsequently terminated or rejected, then any of the blocked rooms that were subject thereto shall no longer be considered blocked for purposes of this definition). If rooms are blocked under this Agreement for multiple City-Wide Events on the same night, that night will be considered to be a single Event Night for purposes of the Maximum Event Night Ceiling but in no event shall any night during a City-Wide Event be considered an Event Night for purposes of the Maximum Event Night Ceiling if City has not given a Room Block Request Notice for that night to the Operator. 1.19 "Event Room Block" means a block of guest rooms (including suites) at the Hotel, , offered to or reserved for the attendees of a City-Wide Event in response to a Room Block Request Notice. 1.20 "Force Majeure" means and includes causes without fault and beyond the control of a party, whether or not foreseeable, including, without limitation, fire, explosion, accident, flood, windstorm, earthquake, or other disaster or calamity, disruption of utility service; restrictive new governmental laws or regulations; acts of war (whether declared or undeclared), invasion, blockade, or sabotage; terrorism or threat thereof; riot, civil disturbance, insurrection or acts of public enemies; and strike, lockout or other labor action and inability to procure materials; provided that neither a material disruption of or material adverse change in financial, banking or capital market conditions or a material adverse change in the business, financial condition, operations, assets, liabilities or prospects of either party shall excuse any failure or delay in performance under this Agreement. 1.21 "GMCVB" means the Greater Miami Convention & Visitors Bureau. 1.22 "Hotel" means the hotel to be constructed by Lessee on the Hotel Site pursuant to the Lease, together with all supporting hotel facilities and amenities. 1.23 "Hotel Site" means the parcel of real property described on Exhibit A attached hereto and made part hereof. 144 1.24 "Initial Offer" is defined in Section 3.01(b). 1.25 "Managed Hotels" means full-service, convention center hotels within the United States of America operated as first-class hotels containing no less than 800 rentable guest rooms operated under the Operator's brand name and managed by the Operator or any entity controlled by, under common control with or that controls Operator, specifically excluding franchised hotels. 1.26 "Management Agreement" means the hotel operating or management agreement between Lessee and the Operator that exists from time to time, as it may be amended or replaced from time to time. 1.27 "Maximum Event Night Ceiling" means the maximum number of Event Nights in any calendar month during which Lessee or Operator shall be obligated to provide Event Room Blocks pursuant to this Agreement. The Maximum Event Night Ceiling is fourteen (14) Event Nights per calendar month. 1.28 "Maximum Event Room Block" means eighty percent (80%) of all of the Hotel's • Available Guest Rooms. 1.29 "Midweek" means Sunday through Thursday, inclusive. 1.30 "Notice" or "notice" means each and every communication, request, reply, or advice required or permitted to be given, made or accepted by any party to this Agreement to any other party to this Agreement, each of which shall be given in writing, and deemed received by the intended recipient, in accordance with Section 9.04. 1.31 "Offer Expiration Date" is defined in Section 3.01(e). 1.32 "Opening" means the opening of the Hotel to the public for business. 1.33 "Operator" means the entity responsible for overseeing the day to day management of the Hotel. The initial Operator (sometimes herein called the "Initial Hotel Operator") of the Hotel is , a corporation. 1.34 "Lessee" means the entity defined as "Lessee" in this Agreement's preamble and each subsequent Lessee of all or any part of the Hotel Site. An entity shall be deemed to be the "Lessee" hereunder only during the term of its leasehold of the Hotel Site. 1.35 "Potential Convention Center Customer" means a person, entity, group or association (or any combination thereof)that is planning a City-Wide Event. 1.36 "Public Records Act" is defined in Section 4.04. 1.37 "Rate Quote" is defined in Section 3.01(b). 1.38 Intentionally Omitted. 1.39 "Room Block Contract" is defined in Section 3.01(f). 1.40 "Room Block Request Notice" is defined in Section 3.01(a). 145 1.41 "Sales Representative" is defined in Section 3.01(a). 1.42 "Special Event Block Minimum Rate" means, for up to six (6) City-Wide Events per year as determined by City at its sole discretion, the lowest rate City may require the Lessee and Operator to quote or charge a Potential Convention Center Customer for a room for such City-Wide Events, as described and determined in accordance with Section 4.01. 1.43 "Standard of Operation" is defined in Section 6.01. 1.44 "Standard of Operation Failure Notice" is defined in Section 2.02(a)(ii). 1.45 "Suspension Period" is defined in Section 2.02(a). 1.46 "Term" is defined in Section 2.01. 1.47 "Weekend" means Friday and Saturday. ARTICLE II TERM OF THIS AGREEMENT 2.01 Commencement of the Term. The term of this Agreement (the "Term") shall commence on the Effective Date. 2.02 Expiration of Term; Suspension Period. (a) The Term shall continue until the earlier to occur of: (i) the date upon which the Convention Center is no longer designated by the City as the City's principal convention center; (ii) the date upon which the Convention Center is no longer operated and maintained substantially consistent with the Standard of Operation; provided, that, no expiration of the Term pursuant to this Section 2.02(a)(ii) shall be deemed to have occurred unless and until (1) Lessee has provided to City written notice (the "Standard of Operation Failure Notice") of any alleged failure by City to operate and maintain the Convention Center in a manner substantially consistent with the Standard of Operation, which notice (to be effective as such) must state with reasonable specificity the reasons why Lessee believes that the Convention Center is no longer being operated or maintained substantially consistent with the Standard of Operation (e.g., if Lessee believes the Convention Center is not being maintained in substantial accordance with the Standard of Operation, Lessee's notice shall describe the deficiencies in maintenance with reasonable specificity), and (2) City has failed to remedy such failure within two hundred seventy (270) days following receipt of such Standard of Operation Failure Notice (such 270-day cure period to be extended for delays resulting from Force Majeure and, if the nature of the failure is such that the same cannot reasonably be expected to be cured within said 270-day period, such 270-day period shall be extended such period of time as is reasonably necessary to effect such cure so long as City commences the cure promptly and uses commercially reasonable, diligent efforts to complete such cure as soon as reasonably practicable; the 270-day cure period, as the same may be extended as provided for in this clause, is herein called the "Cure Period"). Notwithstanding the foregoing, City shall have the right to contest Lessee's determination that the Convention Center is not being operated or maintained substantially in accordance with the Standard of Operation by giving Lessee notice 146 of such contest within thirty (30) days following receipt of the Standard of Operation Failure Notice. If City elects to contest Lessee's determination, then the commencement of the Cure Period shall be delayed until the date of determination by a court of competent jurisdiction that the Convention Center was not being operated and maintained substantially consistent with the Standard of Operation; or (ii) the termination of this Agreement pursuant to Section 8.01 of the Lease. ARTICLE III ROOM BLOCK COMMITMENT; RELEASE OF BLOCK 3.01 Room Block. During the Term, City may from time to time require the Operator to offer an Event Room Block to Potential Convention Center Customers in connection with a City-Wide Event in accordance with, and subject to the limitations set forth in, this Agreement. Notwithstanding anything herein to the contrary, City shall not have the right to require the Operator to offer an Event Room Block to Potential Convention Center Customers if (a) the number of Event Nights requested in the Room Block Request Notice for such Event Room Block would cause the Maximum Event Night Ceiling to be exceeded, or (b) the total number of rooms requested to be blocked in such Room Block Request Notice on any Event Night exceeds the number of rooms Operator is required to offer to block pursuant to Section 3.01(b)(i). Subject to the limitations set forth in the preceding sentence and elsewhere in this Article III, the right to require that the Operator so offer the Event Room Block will be exercised in accordance with the following procedures: (a) A management, sales or booking representative of City or, if authorized by City, the GMCVB (the "Sales Representative"), will notify the Operator that a Potential Convention Center Customer is seeking offers from local hotels to accommodate, among other needs, the guest room needs of the Potential Convention Center Customer for a City-Wide Event (the "Room Block Request Notice"). The Room Block Request Notice will (i) identify the Potential Convention Center Hotel Customer, (ii) if the same is generally available to City, set forth a documented history of the group's room block events for the most recent three year period including a comparison of the number of rooms blocked and the actual number of rooms actually used, (iii) specify each specific date for which the Potential Convention Center Customer will require blocks of guest rooms (including those dates commonly known as "move in" and "move out" dates), and (iv) specify the number of guest rooms in the Hotel the Potential Convention Center Customer is seeking to block on each of the specific dates. Notwithstanding the provisions of Section 9.04 or the definition of "Notice" set forth above, the Room Block Request Notice will be communicated to the Operator in the same manner as such notifications are customarily communicated by the Sales Representative to other hotels in the City. However, a copy of all Notices required or permitted to be provided by the Sales Representative or City under this Article III shall be delivered to Lessee, and such notices to Operator shall not be effective unless and until a copy of such notices are delivered to Lessee. (b) Unless such deadline is extended in writing by the Sales Representative, within five (5) Business Days after Operator's receipt of a Room Block Request Notice for a City-Wide Event that is no sooner than thirty (30) months from the date of such notice (or, if applicable by the operation of Section 3.01(c) below, eighteen (18) months from receipt of such notice), the Operator will deliver to the Potential Convention Center Hotel Customer(with a copy 147 to the Sales Representative and City) an initial written offer in response to the Room Block Request Notice (the "Initial Offer"). In the Initial Offer the Operator will (i) offer to the Potential Convention Center Customer to block, on each specific date that the Potential Convention Center Customer requires a block of guest rooms as specified in the Room Block Request Notice, the lesser of(A)the actual number of the guest rooms in the Room Block Request Notice for each specific date, or (B) the Maximum Event Room Block after deducting from the Maximum Event Room Block the following: 1. any previously offered room blocks under this Agreement for other City-Wide Events covering such dates, which offers have either been accepted or are still outstanding; 2. any guest rooms released by City pursuant to Section 3.01(i) or Section 3.02 and that have actually been booked by Operator or are the subject of Active Negotiations. If such guest rooms are the subject of Active Negotiations, then at the request of City Lessee and Operator shall (x) attempt to cause such proposed Hotel guest with whom such Active Negotiations are being held to select other dates for the use thereof that would permit Operator to accommodate the room block set forth in the Room Block Request Notice or (y) require that Operator accelerate negotiations with such potential Hotel guest by requiring such potential Hotel guest to execute a contract to block or book such rooms that are the subject of such Active Negotiations within the fifteen (15) Business Days following City's request to Operator under this clause (y), failing which, for purposes hereof, such rooms shall no longer be considered under Active Negotiations; and 3. in the case where the Maximum Event Night Ceiling for such month to which such block relates had previously been reached but, due to subsequent cancelations of bookings there remain, as of the date of request for the Initial Offer, available Event Nights for such month, then less the number of rooms booked, blocked or reserved by Operator (i.e., rooms that were booked or reserved, or were offered by Operator to be booked, blocked or reserved under offers that have either been accepted or are still outstanding) following the date such Maximum Event Ceiling Night had been reached and prior to such cancelations3, and (ii) quote a specific room rate for a standard single and double room and suites (the "Rate Quote"). In making the Rate Quote, the Operator will take into account seasonality (i.e., using group event guest room rates received in a calendar month as the basis for quotes for the same month in subsequent calendar years), Midweek versus Weekend rates, and special events that occur regularly during the applicable period); provided, that, the Rate Quote shall not take into account non-recurring special events that occur in a particular month 3 The following is an example of the intended operation of this clause (3). Assume that on January 1, 2020, the Maximum Event Night Ceiling was achieved for the month of January 2024. Then assume that, in accordance with its right to do so pursuant to Section 3.01(1), during the month of January 2020 the Operator books 200 room nights for the month of January 2024. Then assume that a block for 400 rooms booked for January 2024 and that comprised part of the Maximum Event Night Ceiling was canceled on February 1, 2020. Then assume that a Room Block Request is delivered on March 1, 2020 for a block in January 2024. The 200 rooms booked by Operator in January 2020 would be deducted from the calculation of the Maximum Event Room Block under clause (3). 148 which inflate group event room rates (such as Super Bowls, NCAA Men's or Women's basketball tournaments, Major League Baseball playoffs and similar sporting or entertainment events). In addition, rates for groups whose stay consists of both Midweek and Weekend days shall be determined in accordance with Operator's booking policies described in Section 3.01(f). The amount of the Rate Quote in the Initial Offer will be at the sole, but good faith, discretion of the Operator. (c) Notwithstanding anything to the contrary set forth in Section 3.01(b) or any other provision of this Agreement to the contrary: (i) the Operator shall offer the Maximum Event Room Block to a Potential Convention Center Customer for a City-Wide Event that will commence between eighteen (18) and thirty (30) months from the date of such notice (a "18-Month Room Block Request"), and Operator shall be obligated to issue an Initial Offer (and otherwise perform its obligations hereunder) for such a City-Wide Event only if the number of rooms requested in such 18-Month Room Block Request are available as of the date of receipt of such Room Block Request Notice (i.e., rooms that (x) have not been booked, blocked, or reserved, y) are not the subject of active negotiations regarding same and (z) have not been previously offered by Operator to be booked, blocked or reserved under offers that have either been accepted or are still outstanding) on the Event Nights for which rooms are requested in such Room Block Request Notice; provided, however, that (ii) the Operator shall designate one consecutive four (4) day period each calendar month to be able to offer a Maximum Event Room Block to a Potential Convention Center Customer for City-Wide Events commencing between eighteen (18) and thirty (30) months of a potential Event Room Block. Operator shall determine the consecutive four (4) day periods for each respective month during the applicable period and shall notify City of the schedule on a monthly basis. (d) The Rate Quote included by Operator in the Initial Offer shall be determined in Operator's sole, but good faith, discretion, and in determining such rate, Operator shall be entitled to take into account, among other considerations, the level of food and beverage services that the Operator anticipates the Potential Convention Center Customer will purchase in the Hotel. After reviewing the Initial Offer, the Sales Representative may consult with the Operator regarding the Rate Quote contained in the Initial Offer. If prior to acceptance of the Initial Offer(or any amendment thereto voluntarily offered by the Operator to the Potential Convention Center Customer), City reasonably and in good faith believes that it might be in City's or the City's best interest to compel the Lessee to offer the Potential Convention Center Customer an alternative rate structure, City may, after consultation with the Operator and within thirty (30) days following receipt of the Initial Offer, elect to require (which election shall be communicated by Notice from City to the Operator) the Operator to offer to the Potential Convention Center Customer a rate lower than the rate in the Initial Offer, but in no event lower than the Event Block Minimum Rate or, for up to six (6) City-Wide Events annually as determined at the City's sole discretion, the Special Event Block Minimum Rate, as applicable (such written election being the "Block Notice"). Upon receipt of the Block Notice, Operator shall, within two (2) Business Days thereafter, amend the Initial Offer by substituting the rate specified by City, which shall be no lower than the Event Block Minimum Rate, as the Rate Quote (the "Amended Offer"). (e) Subject to the remaining provisions of this Section 3.01(e), the Initial Offer or the Amended Offer (if applicable) shall remain open for acceptance by the Potential 149 Convention Customer until the sixtieth (60th) day following the date of the Initial Offer or Amended Offer, as the case may be; provided, that in the case of an Initial Offer or Amended Offer given in response to a 18-Month Room Block Request, then Operator may at any time provide the Potential Convention Center Customer with written notice (the "Acceleration Notice") that such Initial Offer or Amended Offer will expire on the fifteenth (15th) Business Day following the date of such Acceleration Notice unless the Potential Convention Center Customer executes and returns the Room Block Contract to the Operator. If such customer fails to execute and return the Room Block Contract within such fifteen (15)-Business Day period, the offer shall expire, and the Operator shall have no further obligation to City or the Potential Convention Center Customer in regard to such City-Wide Event under the Initial Offer or the Amended Offer, as the case may be. The date of expiration of the Initial Offer or Amended Offer, as the case may be, determined pursuant to this Section 3.01(e) is herein referred to as the "Offer Expiration Date". (f) If either the Initial Offer or the Amended Offer is accepted by the Potential Convention Center Customer prior to the Offer Expiration Date, Operator shall endeavor to negotiate a binding contract with the Potential Convention Center Customer applying Operator's customary booking policies to the Event Room Block (the "Room Block Contract"), including policies relating to contracts, advance deposits and cancellation, provided that these policies shall adhere in all material respects to the general customs employed by the Operator at its Managed Hotels, if any. Lessee will use its good faith efforts to cause Operator to consider changes to Operator's customary booking policies to the extent necessary to accommodate any prevalent and material local booking customs or practices. If a Potential Convention Center Customer has not for any reason (other than Operator's breach of its obligations set forth in the preceding sentence) signed a contract with the Operator with respect to such Initial Offer or Amended Offer, as the case may be, on or before the Offer Expiration Date, then such offer will expire, whereupon the Lessee shall have no further obligation to City or the Potential Convention Center Customer in regard to such City-Wide Event under the Initial Offer or the Amended Offer, as the case may be. However, if such offer expires at a time when there are more than thirty(30) months (or, by the operation of Section 3.01(c), eighteen (18) months) prior to the first Event Night of the Potential Convention Center Customer's City-Wide Event, nothing in this Agreement shall prohibit City from issuing a new Room Block Request Notice for such City-Wide Event in accordance with, and subject to the provisions of, this Section 3.01. (g) If a Potential Convention Center Customer signs a Room Block Contract with the Operator but later provides written notice to the Operator that it is terminating such contract, the Operator, after Notice to City from the Lessee or Operator, will have no further obligation to City in regard to the Event Nights covered by the Room Block Request Notice (which shall be deemed released from the obligations hereunder), but only if such written termination notice is given by the Potential Convention Center Customer on a date less than thirty (30) months before the first Event Night. If such notice of termination is given on a date more than thirty (30) months before the first Event Night, then, unless rooms are blocked under this Agreement for such Event Nights for another City-Wide Event, the Event Nights covered by the Room Block Request Notice for such City-Wide Event will not be included in calculating the Maximum Event Night Ceiling, and City may again deliver a Room Block Request Notice in accordance with, and subject to the limitations set forth in, this Section 3.01; provided, however, Operator will have no obligation to cancel any bookings to accommodate such subsequent request (for example, as provided in Section 3.01(1), once the Maximum Event Night Ceiling has been reached the Operator is free to book rooms hereunder for such month and Operator shall not be obligated to cancel any rooms reservations for such month to accommodate a replacement block). City recognizes that the Lessee or Operator may be entitled to collect 150 cancellation fees from such Potential Convention Center Customer and City hereby consents thereto and agrees that City shall have no right or claim to all or any portion of such fees except as provided in the Lease. Similarly, the Lessee recognizes that City may be entitled to collect cancellation fees from such Potential Convention Center Customer pursuant to the contract between City and the Potential Convention Center Customer, if any, and the Lessee hereby consents thereto and agrees that Lessee shall have no right or claim to all or any portion of such fees. (h) If a Potential Convention Center Customer signs a Room Block Contract with the Operator, then Operator will reserve rooms included in an Event Room Block for such customer for purchase by the persons attending the applicable event until the later of (x) the date required under the Room Block Contract executed with such Potential Convention Center Customer and (y) the sixtieth (60th) day preceding the first scheduled day of the applicable event, after which time any unbooked rooms shall be released from such Event Room Block and may be rented for the dates covered by such Event Room Block at any rate to any person Operator selects without restrictions imposed by this Agreement. If within ninety (90) days prior to the applicable event, the number of rooms actually booked is less than the number of rooms blocked, then Operator may request City to release some or all unbooked rooms and City agrees not to unreasonably withhold such consent. Furthermore, if the group history of the Potential Convention Center Customer (whether in respect of events at the Convention Center or elsewhere) reflects a pattern whereby the block of rooms reserved by such customer is greater than the actual number of rooms used, then the Operator, with the consent of City (which consent shall not unreasonably be withheld), shall have the right to block only such number of rooms which Operator, in the exercise of its professional judgment and based on such history of the customer, believes will be adequate to accommodate the number of rooms which will be actually used by such customer; provided, that such decision of the Operator shall not release or relieve Operator from providing other lodging (in accordance with industry standard for handling overbookings) if the number of rooms so blocked by Operator actually is not adequate to satisfy the actual use of rooms by the Potential Convention Center Customer (up to the amount of rooms included in the Event Room Block pursuant to the contract between Operator and such customer). (i) Operator shall have the unrestricted right to commit up to twenty (20%) of the Available Guest Rooms on any given date (and any other rooms that are not subject to being blocked by City pursuant to this Agreement) to the Hotel's commercial or group guests. In addition, Operator shall have the unrestricted right to commit any and all rooms not subject to a room block commitment pursuant to this Agreement for any date that is less than thirty (30) months in advance; provided, however, if a 18-Month Room Block Request is delivered to Operator, Operator shall issue an Initial Offer with respect to such request only to the extent required pursuant to Sections 3.01(c)(i) and 3.01(c)(ii). (j) If Operator has a potential booking that would not be permitted under the terms of this Agreement, Operator may by notice to City (with a copy to Lessee) request that it be entitled to make such booking. City shall have five (5) Business Days in which to respond to such request by notice to the Operator; provided, that a failure to respond shall be deemed a rejection of such request (but such deemed rejection shall not prevent Operator from making multiple requests for such release). (k) For the avoidance of doubt, the Operator shall have the right to freely book all rooms within the Hotel on any day which the Convention Center cannot accommodate a City-Wide Event because less than one hundred fifteen thousand (115,000) square feet of 151 meeting or exhibit space is available on such day for use by a Potential Convention Center Customer (such determination to be made as of the time Operator makes or extends an offer to make such booking). (I) Once the Maximum Event Night Ceiling is reached for a month, the Operator shall have the right to freely book the available rooms at the Hotel for that month, regardless of when the booking is made (e.g., it may be more than thirty (30) months in advance). (m) Notwithstanding the foregoing, if a Potential Convention Center Customer has (i) a documented history of causing material property damage or unusually heavy wear and tear in connection with group events or (ii) poor credit or a questionable payment history, then Operator shall have the right, at its option, to include in its Initial Offer to such Potential Convention Center Customer security, damage or other deposit requirements that, in Hotel Lessee's judgment exercised in good faith, would compensate Operator and Lessee for the damage, wear and tear or failure to pay (and, notwithstanding anything in Section 3.01(d) to the contrary, but subject to resolution of any dispute described below, City shall not have the right to require Operator to deliver an Amended Offer to such Potential Convention Center Customer that does not include such security, damage or other deposit requirements); provided that (1) Operator shall provide City notice that such Potential Convention Center Customer has a documented history of causing material property damage, unusually heavy wear and tear, poor credit or questionable payment history, as applicable, and also provide notice of its intention to include such (and provide a statement of the amount of the proposed) security, damage or other deposit requirements prior to issuance of such Initial Offer and (2) in such notice Operator shall set forth in reasonable detail the basis for the Operator's conclusions. City shall have the right to reasonably challenge Lessee's conclusion that such Potential Convention Center Customer is a customer described in clauses (i) or (ii) of the first sentence of this paragraph but, for the avoidance of doubt, Operator shall be entitled to deliver an Initial Offer with such additional security, damage or other deposit requirements prior to receipt of notice of any such challenge, and if the parties subsequently agree that such additional requirements are unnecessary, City shall be entitled, if such Initial Offer remains outstanding, to require Operator to issue an amended Initial Offer omitting such requirements. City shall, to the fullest extent permitted by law, keep such conclusions confidential in accordance with Section 4.04. In the event of any such challenge by City, the parties agree to meet and confer and attempt in good faith to reach agreement as to the additional deposit requirements will be placed on any offer given to such customer. 3.02 Release of Block (a) If the Operator desires to commit a block of more than twenty percent (20%) of the Available Guest Rooms to non-Potential Convention Center Customer business for a date more than thirty (30) months in the future, the Operator can request by Notice to City (a "Block Release Request Notice") that City release that block from this Agreement. Each Block Release Request Notice shall specify the dates as to which such request applies and the number of event night rooms to which such request applies. Within five (5) Business Days after receipt of such request, City shall deliver written notice to Operator either (i) approving such release of such requested block for such specific dates and rooms or (ii) disapproving such release. City shall be entitled to make such determination in its sole discretion, subject to Section 3.02(b) below; provided, that if the Block Release Request Notice describes a group that is proposing to contract for regularly recurring events (including on a rotating basis with other municipalities) at the Hotel and/or the Convention Center, City shall consider such request 152 for the release in light of the possible repeat nature of the proposed business. If City fails to either approve or disapprove such request in writing within such five (5) Business Day period, then.such request shall, except as set forth in the last two (2) sentences of Section 3.02(b), be deemed denied (but such deemed denial shall not prevent Operator from making multiple requests for such release). (b) Notwithstanding the foregoing provisions of this paragraph, City shall release the block requested in a Block Release Request Notice unless any of the following are true: (i) A Room Block Request Notice satisfying the requirements set forth herein has been delivered that covers any of the dates reflected in the Block Release Request Notice, unless any Initial Offer or Amended Offer delivered by Operator in response thereto has expired without the execution by the Potential Convention Center Customer of a Room Block Contract with Operator or, if such a contract was executed, the same has been terminated by the customer; (ii) The GMCVB or the City is in Active Negotiations with a Potential Convention Center Customer for a City-Wide Event that includes any of the dates covered by the Block Release Request Notice; or (iii) The dates covered by the Block Release Request Notice have historically been booked in hotels in the City for a City-Wide Event and City reasonably concludes that the release of the block in the Hotel will jeopardize booking of such City-Wide Event. (iv) City will provide Operator a list of known release dates on a periodic basis (not less than semi-annual) identifying all future dates the Convention Center cannot be utilized for City-wide Events due to maintenance, move in/out periods, or any other reason ("Known Release Dates"). If the City subsequently eliminates such dates from a subsequent list of Known Release Dates, such date(s) shall be subject to all applicable provisions of this Agreement, unless rooms have been booked, blocked or reserved by the Operator pursuant to a contract with a hotel customer or group (and, if such contracts are terminated, then any of the blocked rooms that were subject thereto shall no longer be considered blocked for purposes herein). Notwithstanding anything in Section 3.02(a)to the contrary, if City fails to either approve or disapprove a request Block Release Request Notice within the five (5) Business Day period described in Section 3.02(a), and Operator reasonably believes such release is required pursuant to this Section 3.02(b), then Operator shall have the right to send a second written notice to City(which second notice shall conspicuously include the following, in capital and bold print letters: "SECOND NOTICE FOR RELEASE OF BLOCK UNDER SECTION 3.02(b) OF ROOM BLOCK AGREEMENT; FAILURE TO RESPOND WITHIN FIVE BUSINESS DAYS SHALL BE DEEMED APPROVAL OF THE REQUESTED RELEASE") requesting that it be entitled to make such booking, setting forth in reasonable detail the reason such release complies with Section 3.02(b). If City fails to deliver to Operator written notice disapproving such request within five (5) Business Days of receipt of such second notice, then City shall be deemed to have approved such request. (c) Operator shall, upon request by City following any release made pursuant to this Section 3.02, use its good faith efforts to accommodate any Event Room Block 153 subsequently requested covering any of the dates for which a release has been provided by City under this Section 3.02. ARTICLE IV ROOM BLOCK PRICING 4.01 Event Block Minimum Rates; Special Event Block Minimum Rates. (a) The Event Block Minimum Rates and Special Event Block Minimum Rates shall be as follows: (i) The Event Block Minimum Rate shall be an amount equal to 105% of the average group rate for the applicable period reflected in the Lessee's Initial Projected Event Block Rate Schedule or Lessee's Subsequent Projected Event Block Rate Schedule (each as defined below), as applicable. (ii) The Special Event Block Minimum Rate shall be an amount equal to 100% of the average group rate for the applicable period reflected in the Lessee's Initial Projected Event Block Rate Schedule or Lessee's Subsequent Projected Event Block Rate Schedule (each as defined below), as applicable. (b) Concurrent with the execution hereof, Lessee has provided to City a schedule of the projected Event Block Minimum Rate and Special Event Block Minimum Rate for the first five (5) calendar years after the Opening (the "Lessee's Initial Projected Event Block Rate Schedule"). The Lessee's Initial Projected Event Block Rate Schedule shall include a schedule for both Event Block Minimum Rates and Special Event Block Minimum Rates, and will include varying rates for room type and for periods within each applicable calendar year to account for seasonality and day of the week (e.g., Midweek, Weekend). The rates for each such year included in Lessee's Initial Projected Event Block Rate Schedule shall represent Lessee's good faith forecast of the rates that will be included in the pro forma budget for the operation of the Hotel for such year and are the projections and forecasts being used by Lessee in making its decisions, and planning for, bookings in the operation of the Hotel and the conduct of Lessee's business generally. (c) By no later than January 1 of each year commencing after the date hereof, Lessee shall provide City a schedule of the projected Event Block Minimum Rate and Special Event Block Minimum Rate for the ensuing five (5) calendar year period (each such schedule, an "Lessee's Subsequent Projected Event Block Rate Schedule"). The rates (x) for the first twelve (12) months covered by the Lessee's Subsequent Projected Event Block Rate Schedule shall be those set forth in the pro forma operating budget for the Hotel for such 12- month period that has been approved by Lessee and Operator, and (y) for each other year covered thereby shall represent Lessee's and Operator's then-current good faith forecast of the rates that Lessee and Operator project will be included in the actual pro forma budget adopted for the operation of the Hotel for such years and are the forecasts and projections being used by Lessee in making its decisions, and planning for, bookings in the operation of the Hotel and the conduct of Lessee's business generally. For each year, subsequent to January 1, Lessee may deliver one (1) updated Lessee's Subsequent Projected Event Block Rate Schedule, which will replace the Lessee's Subsequent Projected Event Block Rate Schedule previously delivered for such year. 154 (d) Each of the Lessee's Initial Projected Event Block Rate Schedule and each Lessee's Subsequent Projected Rate Schedule shall, when delivered to City, be accompanied by (i) reasonable evidence that the same has been approved by both Lessee and Operator, and (ii) a certification from Lessee to City indicating that the Event Block Minimum Rate and Special Event Block Minimum Rate for each year set forth therein represents (x) for the first twelve (12) months covered thereby those set forth in the Lessee's pro forma operating budget for such 12-month period that has been approved by Lessee and Operator, and (y) for each other year covered thereby, Lessee's and Operator's good faith forecast of the rates that Lessee and Operator project will be included in the actual pro forma budget adopted for the operation of the Hotel for such year and are the forecasts and projections actually being used by Lessee in making its decisions, and planning for, bookings in the operation of the Hotel and the conduct of Lessee's business generally. (e) The rates reflected in the Lessee's Initial Projected Event Block Rate Schedule and each of the Lessee's Subsequent Projected Event Block Rate Schedules, as increased up to one hundred and five percent (105%) of such rates, shall be the "Event Block Minimum Rate" for each of the five (5) years covered by, as applicable, the Lessee's Initial Projected Event Block Rate Schedule or the then current Lessee's Subsequent Projected Event Block Rate Schedule. The rates reflected in the Lessee's Initial Projected Event Block Rate Schedule and each of the Lessee's Subsequent Projected Event Block Rate Schedules, at one hundred percent (100%) of such rates, shall be the "Special Event Block Minimum Rate" for each of the five (5) years covered by, as applicable, the Lessee's Initial Projected Event Block Rate Schedule or the then current Lessee's Subsequent Projected Event Block Rate Schedule. (i) The parties recognize that the Event Block Minimum Rate and Special Event Block Minimum Rate may change each year (but only once per year and then only with the issuance of the Lessee's Subsequent Projected Event Block Rate Schedule), it being understood that each Lessee's Subsequent Projected Event Block Rate Schedule (and the rates reflected therein) shall supersede all previously issued Lessee's Subsequent Projected Event Block Rate Schedules even though the same relate to the same years (the following is an example of the "rolling" nature of the determination of the Event Block Minimum Rate: assume that the Lessee issues, on December 1, 2020, an Lessee's Subsequent Projected Event Block • Rate Schedule. That schedule will cover the period commencing January 1, 2021 and ending December 31, 2025 [the "2021 Schedule"]. Then assume that on December 1, 2021, Lessee issues a Lessee's Subsequent Projected Event Block Rate Schedule. That schedule will cover the period commencing January 1, 2022 and ending on December 31, 2026 [the "2022 Schedule"]. The 2022 Schedule will, as to any Block Notice issued on or after January 1, 2022, supersede the 2021 Schedule and all prior schedules covering the years 2022, 2023, 2024 and 2025 and shall govern the determination of the Event Block Rate with respect to such Block Notice). (ii) If a Block Notice is issued for a City-Wide Event where the first Event Night will occur on a date in a calendar year that is not covered by the then current Lessee's Subsequent Projected Event Block Rate Schedule (i.e., the date of such first Event Night is beyond the five (5) year period covered by the then current Lessee's Subsequent Projected Event Block Rate Schedule), the Event Block Rate reflected in the then current Lessee's Subsequent Projected Event Block Rate Schedule shall be used but shall be adjusted by an usual and customary industry inflation factor as reasonably agreed upon by Lessee, Operator and City. 155 4.02 General Matters Regarding Rates. All rates described are for single rooms. Double occupancy rooms may be quoted at a rate not greater than twenty percent (20%) above the single room rates. Triple and quad occupancy rooms may be quoted at rates with an increase of not greater than thirty percent (30%) above the single room rates. Suites may be quoted with an increase above standard room rates consistent with market practice, as reasonably determined by the Operator. 4.03 Confidentiality. Subject to its obligations under the Florida Public Records Act (the "Public Records Act") in force in the State of Florida from time to time, City will not disclose any Initial Offer or Amended Offer, any information provided by Operator under Section 3.01(m) or any information obtained pursuant to Section 4.01 to any person or entity other than (i) its employees, accountants, counsel and other consultants who have a need to know such information, (ii) the Lessee and its officers, directors, employees, accountants, counsel and other consultants, (iii) the Lessee's existing and proposed lenders, (iv) Operator and its officers, directors, employees, accountants, counsel and other consultants, (v) prospective purchasers of the Hotel or (vi) in connection with any legal proceeding (or alternative dispute resolution procedure) between City and Lessee and/or Operator, provided that City shall use reasonable efforts to obtain confidential treatment of same. Neither Lessee nor Operator will disclose any information provided by City to Lessee or Operator hereunder to any person or entity other than (1) their respective affiliates, and the employees, accountants, counsel and other consultants of Lessee, Operator and their respective affiliates who have a need to know such information and their respective partners, members, shareholders, and other holders of direct or indirect beneficial interests in Lessee or Operator, (2) the Lessee's existing and proposed lenders and investors and any proposed replacement Operator, (3) prospective purchasers of the Hotel or (4) in connection with any legal proceeding (or alternative dispute resolution procedure) between City and Lessee and/or Operator, provided that Lessee and Operator shall use reasonable efforts to obtain confidential treatment of same. (a) Subject to City's obligations under the Public Records Act, City shall use its good faith efforts to provide timely written notice to Lessee and Operator of any request received by City pursuant to the Public Records Act requesting information held by City to which Lessee or Operator may assert "confidential business information" or"trade secret" status under the Public Records Act, all for the purpose of providing Lessee and Operator an opportunity to seek to protect such information from disclosure by timely filing an appropriate action in a court of competent jurisdiction seeking non-disclosure of the requested information. ARTICLE V STANDARDS OF HOTEL OPERATION 5.01 Standards. At all times during the term of this Agreement, the Lessee shall, to the extent the Hotel is being operated (or, pursuant to the Lease, required to be operated), cause the Operator to operate and manage the Hotel in accordance with the Management Agreement and (to the extent the Hotel is required to be operated pursuant to the Lease) the applicable provisions of the Lease. At all times when there is no Management Agreement, Lessee shall, to the extent the Hotel is being operated, operate, or cause an Operator to operate, the Hotel in a manner generally consistent with the general physical and service standards applicable to other upscale convention center hotels and (to the extent the Hotel is required to be operated pursuant to the Lease) in accordance with the applicable provisions of the Lease. 156 ARTICLE VI STANDARDS OF CENTER OPERATION 6.01. Standards. During the Term, City shall operate and maintain the Convention Center to at least the standard of quality consistent with the principal convention centers operated in Orlando, Atlanta, New Orleans, Dallas, Houston, Boston, Chicago, San Francisco, San Diego and Los Angeles, as of the Effective Date (the "Standard of Operation"). ARTICLE VII NO LIABILITY FOR PROPOSED CONVENTION CENTER CUSTOMER; LESSEE RESPONSIBILITY TO CAUSE OPERATOR TO PERFORM; INDEMNITY 7.01 No Liability to City. In no event shall City be in any way responsible or liable for the performance by any Potential Convention Center Customer of its obligations under its contract with the Lessee or Operator or for any charges, liabilities or other sums owed by, or liabilities of, such Potential Convention Center Customer (or for those for whom it blocks rooms) to either Lessee or Operator. 7.02 Lessee and Operator Responsibility; Authority to Grant Consents and Make Decisions. Lessee shall cause Operator to perform all of the covenants and agreements of the Operator under this Agreement, and to cause the Operator to observe all of the covenants and agreements of Operator hereunder, and by entering into a Management Agreement Operator shall, notwithstanding any contrary provision of its Management Agreement, be directly responsible to City for the performance of the Operator's obligations hereunder. Furthermore, all actions, consents, decisions, elections, offers, and determinations made hereunder by the Operator with respect to covenants and obligations of the Operator under this Agreement shall be binding upon both Lessee and Operator for purposes of this Agreement. As of the Effective Date, Lessee has delegated the performance of the obligations and rights assigned to the Operator hereunder to the Initial Hotel Operator under a Management Agreement (for so long as the same remains in effect) and, upon its termination, shall delegate any or all of such responsibilities hereunder to any subsequent Operator pursuant to a subsequent Management Agreement, but no such delegation shall release or relieve Lessee from its obligation to perform, or cause to be performed, all of its covenants and agreements set forth herein. All consents, decisions, waivers, and determinations to be made or given hereunder by City may be made and given by the City Manager(or any person designated from time to time by the City Manager by Notice to Lessee and Operator) and no inference to the contrary shall be made because the defined term "City" is used in some places in this Agreement and the phrase "City Manager" is used in others. 7.03. Indemnification. The Lessee shall indemnify, defend and hold harmless the City and its officers, employees, agents and instrumentalities from any and all liability, losses or damages, including attorney's fees and costs of defense, which the City or its officers, employees, agents or instrumentalities may incur as a result of claims, demands, suits, causes of actions or proceedings of any kind or nature arising out of, relating to or resulting from the performance of the Room Block Agreement by the Lessee, Operator, or their respective employees, agents, partners, principals or subcontractors. The Lessee shall pay all claims and losses in connection therewith, and shall investigate and defend all claims, suits or actions of any kind or nature in the name of the City, where applicable, including appellate proceedings, 157 and shall pay all costs, judgments, and attorney's fees which may be incurred thereon. The above indemnification provisions shall survive the expiration or termination of this Agreement. ARTICLE VIII EVENTS OF DEFAULT 8.01 Default. A default under the terms of this Agreement shall occur if any party hereto shall default in the performance of any of the terms, conditions or covenants contained in this Agreement to be performed or observed by it, and such party does not remedy such default within thirty (30) days after Notice or, if the default is of such character as to require more than thirty (30) days to remedy, then if such party fails to commence to cure and correct the default within said thirty (30) day period and thereafter prosecute such corrective action diligently and without interruption and complete the cure thereof within ninety (90) days following the original Notice of such default (an "Event of Default"). Notwithstanding the foregoing, the failure of Lessee or Operator to comply with the provisions of Article III hereof within the time frames set forth therein shall, if not cured within three (3) Business Days following written notice from City to Lessee and Operator, constitute an Event of Default by Lessee hereunder without the need of any additional Notice and without any further opportunity to cure such Event of Default. All Notices of default shall be provided to Lessee and to Operator and shall also be given to Lessee's mortgagee (provided such mortgagee has provided Notice to City of its name and address where Notices to it hereunder are to be sent). 8.02 Remedies. If an Event of Default shall have occurred because of a breach of any provision hereof by City, on the one hand, or Lessee on the other hand then the nondefaulting party shall have the right, at any time after the occurrence of said Event of Default to (i) initiate and thereafter prosecute an action in equity for the specific performance of any covenants or obligations to be performed by the defaulting party hereunder (City shall also have the right to seek and obtain an order of specific performance against the Operator so as to compel Operator, in its capacity as such under the Management Agreement, to comply herewith) or (ii) exercise such other rights as shall be available at law or in equity. In no event, however, shall this Agreement be terminated due to an Event of Default (provided that the foregoing shall not limit the provisions of Section 2.02). Each party acknowledges and agrees that its covenants, obligations and agreements set forth in this Agreement are a material and fundamental inducement to the City in executing and delivering the Lease and any other agreements referenced therein, such that actual damages may not be an adequate remedy at law for the breach hereof by City, the Lessee or the Operator. Accordingly, any party shall be entitled to seek relief mandating action by City, the Lessee and/or Operator hereunder in accordance with this Agreement. In addition, each party recognizes and agrees that monetary damages could not be calculated to compensate the other party for any breach by the defaulting party of the covenants and agreements contained in this Agreement. Each party may restrain and enjoin any breach or threatened breach of any covenant, duty or obligation of the other party contained in this Agreement without the necessity of (i) posting a bond or other security, (ii) any showing of irreparable harm, balance of harms, consideration of public interest or the inadequacy of monetary damages as a remedy, or(iii) that the administration of an order for injunctive relief would be impracticable. In the event of any breach or threatened breach of any covenant, duty or obligation contained in this Agreement, the party breaching (or threatening breach) stipulates and agrees that the balance of hardships which weigh in favor of injunctive relief and that non-breaching party may seek and obtain 158 injunctive or other form of ancillary relief from a court of competent jurisdiction in order to maintain the status quo and enforce the terms of this Agreement on an interim basis pending the outcome of the dispute or controversy hereunder. Lessee agrees to include in each Management Agreement a provision similar to the foregoing whereby the Operator makes such agreements to Lessee with respect hereto and specifically agrees that City shall have the right to specifically enforce against the Operator the provisions of this Agreement. 8.03 Lessee's Reservation of Rights. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall in no way limit Lessee's or Operator's rights and remedies against a Potential Convention Center Customer resulting from such Potential Convention Center Customer's default under a contract with Lessee or Operator. ARTICLE IX ADDITIONAL PROVISIONS 9.01 Exculpation. The liability of Lessee (and of any successor "Lessee") under this Agreement shall be limited to its interest in the Hotel. City agrees that none of the Lessee's or Operator's direct or indirect partners, members, managers, joint venturers, shareholders, directors, officers, agents and employees shall have any personal liability with respect to, or arising out of, this Agreement. In no event shall any officer, director, agent, or consultant of City, nor any employee or public official of the City, ever have any personal liability with respect to or arising out of this Agreement. Nothing within this Section 9.01 shall limit the right of any party to seek specific performance of the terms and provisions of this Agreement as provided in Article VIII. 9.02 Miscellaneous. If any term of this Agreement or any application thereof shall be invalid or unenforceable, the remainder of this Agreement and any other application of such term shall not be affected thereby. This Agreement may be changed, waived, modified or supplemented only by an instrument in writing signed by Lessee and City. The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument. 9.03 Estoppel Certificate. Within ten (10) Business Days after request therefor by any party hereto or by Operator or by the holder of any loan made to Lessee or Operator, the other party(ies) and Operator shall execute and deliver to the requesting party a statement in writing and reasonably satisfactory to the requesting party and directed to the requesting party (and, if requested, to the holder of any loan made to Lessee or Operator) certifying to such factual matters as may be reasonably requested by such requesting party, including without limitation (if such be the case) that (a) this Agreement is unmodified and in full force and effect, (b) to the certifying party's knowledge the requesting party is not in default hereunder or, if in default, the nature thereof in reasonable detail, and (c) there are no defenses or offsets to the Agreement claimed by the other party. 9.04 Notices. Each Notice to be provided or given hereunder must be in writing (in some instances in this Agreement the words "written Notice" or "notice in writing" may be used and in others simply the word "Notice" or "notice" may be used; no inference is to be drawn therefrom as all Notices must be in writing) and must be delivered or provided in one of the following methods: (a) certified mail, return receipt requested, postage pre-paid and addressed 159 to the party to whom such Notice is intended to be delivered; or (b) personal delivery to the addressee by courier or other means of hand delivery. Notice delivered by certified mail pursuant hereto shall be effectively given and received on the third (3rd) business day following deposit of the same in the United States Mail, postage pre-paid, addressed properly to the party to whom such notice intended. Notice by personal delivery shall be effectively given and received upon acceptance thereof by the addressee as confirmed in writing by a receipt executed by and retained by the party delivering such Notice. to City: City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Attention: with a copy to: City Attorney's Office City of Miami Beach 1700 Convention Center Drive, 4th Floor Miami Beach, Florida 33139 to the Lessee: with a copy to: to the Operator: Any mortgagee, trustee or beneficiary under any mortgage or deed of trust on the Hotel may by Notice to the parties set forth hereinabove designate an address to which Notices to it hereunder shall be sent. Any such party may from time to time by Notice as herein provided, designate a different address to which Notices to it shall be sent. 9.05 Transfer of Lessee's or Operator's Interest. (a) In the event of the sale, assignment or transfer by Lessee of its fee interest in the Hotel Site (other than a collateral assignment to secure a debt of Lessee) to a successor in interest (who shall, upon acceptance of title to or an interest in the Hotel Site or any part thereof, be deemed to have assumed the obligations of Lessee hereunder arising from 160 and after the date of such acceptance), the transferring Lessee shall be released or discharged from all of its covenants and obligations hereunder, except such obligations as shall have accrued prior to any such sale, assignment or transfer; and City agrees to look solely to such successor in interest of Lessee for performance of such subsequently occurring obligations. Notwithstanding the provisions of the preceding sentence, any successor Lessee hereunder shall in all respects be obligated to honor any contract or agreement previously executed with a Potential Convention Center Customer in accordance with its terms and shall be bound by any outstanding Initial Offers or Amended Offers, each Room Block Request Notice and the Event Rate then in effect subject to and in accordance with the provisions of Article III. (b) In the event that the Management Agreement with any Operator shall expire or terminate for any reason then the Operator under such Management Agreement shall be relieved from any obligations arising hereunder from and after the date upon which, as a consequence thereof, such Operator is no longer operating the Hotel. Lessee shall be obligated to secure the written consent and agreement of any replacement third-party Operator to comply with all of the terms, provisions and conditions set forth herein; provided, that, a failure by the Lessee to do so shall in no way release or relieve Lessee or any such third-party replacement Operator from performing the obligations of the Lessee and Operator hereunder. 9.06 Superiority of Agreement; Covenant Running with the Hotel Site. The provisions of this Agreement shall constitute a restrictive covenant running with the Hotel Site binding upon each Lessee thereof, and any and all operators or managers of the improvements thereon, and each and every other person or entity claiming or holding any interest in the Hotel Site, shall inure to the benefit of the City, and shall apply to any hotel now or hereafter located on the Hotel Site, or any portion thereof. 9.07 Gender; Singular and Plural. As used herein, the neuter gender includes the feminine and masculine, the masculine includes the feminine and neuter, and the feminine includes the masculine and neuter, and each includes a corporation, partnership or other legal entity when the context so requires. The singular number includes the plural, and vice versa, whenever the context so requires. 9.08 Nature and Extent of Agreement. This Agreement contains the complete agreement of the parties regarding the terms and conditions of the Agreement. There are no oral or written conditions, terms, understandings or other agreements pertaining to the room block arrangements which have not been incorporated herein. 9.09 Governing Law. This Agreement shall be governed as to performance, interpretation and jurisdiction by the laws of the State of Florida, without regard to conflicts of law rules. This Agreement shall be enforceable in Miami-Dade County, Florida, and if legal action is necessary by either party with respect to the enforcement of any or all of the terms or conditions herein, exclusive venue for the enforcement of same shall be in Miami-Dade County, Florida. 9.10 Binding Effect. Subject to express provisions hereof to the contrary, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and assigns during the Term hereof. Furthermore, and notwithstanding any provision hereof to the contrary, (a) the City is an express, intended, third party beneficiary of the obligations, duties and covenants of the Lessee hereunder, (b) the City has the right to enforce all of the covenants, obligations and agreements of the Lessee hereunder, (c) City may at any time, without the need of prior notice to or consent from the 161 Lessee, assign this Agreement to the City or to any other entity designated by the City (provided that no such assignment shall be effective against Lessee until Notice thereof is provided to Lessee, and provided further that the City expressly assumes all of the obligations of City hereunder and agrees to be bound by the terms and provisions of this Agreement) and (d) this Agreement shall automatically be deemed assigned and transferred to the City upon any dissolution of City (but only if the City expressly assumes all of the obligations of City arising hereunder from and after the date of such assignment [and not attributable to a default by City arising prior to the date of such assignment or transfer] and agrees to be bound by the terms and provisions of this Agreement). In addition, the Operator shall be an express third party beneficiary of the obligations, duties and covenants of City hereunder. (signature pages to follow) 162 Each of the parties hereto have caused this Agreement to be duly executed by their lawfully authorized representatives effective as of the Effective Date. Lessee: Portman Miami Beach, LLC By: Name: Title: CITY OF MIAMI BEACH, FLORIDA By: Philip Levine Mayor Approved for form and legal sufficiency By: City Attorney ATTEST By: City Clerk 163 EXHIBIT A HOTEL SITE See Exhibit 0 to Development and Ground Lease Agreement 164 EXHIBIT "M" OWNERSHIP INTERESTS IN LESSEE Portman Holdings, LLC 165 EXHIBIT "N" UNIFORM SYSTEM SUMMARY OF OPERATING STATEMENT (See attached pages) 166 --en m V Z n V O O -] O -] O >C -1 70 9 O E.' 7a m o N rr zo ,', _�m � o vvcv,>9 m o � -3cnn�m o z� --�'nnz9 < o A C� a p n n m i s p o H .,m a A 9 6{01_n d o o'e El _.m E 0 0 fe m, - Q = -1 v -1 6f N� o 'o - � d o"ii � o ='arc o 4 � C Z'.°.m m G –O 3 � m rn °� rt� 3 y �c 6� 3 F o m 3 y w�, > 9 � l..•. a a >dN A 3 O Co `� N ?. fa D- o cN a Os- o c32 ?A A m ^ o Co 3 ?c3i`�_'o o m m < 'o a 3 '^' n C 'o H m O G o m o. `� o � I1....�� O u v^i 6^ m g A ^ d 4 u e;p..C a m 7 0l v m 3 a 7 p� `rod m 3 2 p o > i o - 1� C O 0'� L'''' i N 9 3 x Q G -r1 O T7 A A -Oi 7�e�< K DO fD G 7 C v T. m N � ry m 7 m P7 D'p i m'-S.^ � R 3 H 9 H d m 3 5, F 'n i m DG C .. .O.d N 7 ]o.d. x t� 1 W n g^o. c A. 3 LT a o .nN ^ 6{ oo m m� oo m fo 2 w'T1<- a , m o r, v E o m o �u CD N 4 3 fD �rB� m m 'H -�. x � " x y o B fD ^ 9 '1] N G. 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J .D 01 N N.+.O O].D m N O.+V w 1p O O.D.P A (b to r NO NO A 01 A F+ oT o J W A N'N p O aN 0 0,O.: o:A O W p p p N W Wrn? o N p p N 0 O W 0 0 p O"V a.w w to o 0 0 0 1 voO A oW eJ oo O e veN e e e,eeeeeee v000v 168 EXHIBIT "0" TRANSACTION RENT EXAMPLE OF TRANSACTION RENT CALCULATION The example of Transaction Rent in this Exhibit"0" is for illustrative purposes only. 1. Assuming that, for the first Transfer for which Transaction Rent would be payable, (i) Owner #1 sells a 51% Controlling interest in the Lessee to Owner #2 for a gross sales price (less typical closing adjustments and credits) of$250,000,000, then no Transaction Rent would be payable in connection with this first Transfer, as the gross sales price did not exceed $290,000,000 (50% of the $580 million hurdle applicable to the first Transfer pursuant to Section 4.4(b)). 2. Assuming that, for the second Transfer for which Transaction Rent would be payable, (i) Owner #2 sells a 51% Controlling interest in the Lessee to Owner#3 for a gross sales price (less typical closing adjustments and credits) of $300,000,000, then the Transaction Rent payable in connection with such Transfer would be calculated as follows: Gross sales price(less adjustments) $300,000,000.00 Transaction Rent: $750,000.00 (i.e., .25% of$300,000,000) 3. Assuming that, for the third Transfer for which Transaction Rent would be payable, a 75% interest in the Lessee is sold, with Owner#3 selling a 38% interest in the Lessee to Owner#4 for a gross sales price (less typical closing adjustments and credits) of$200,000,000, and Owner#1 selling a 37% interest to Owner#4 for a gross sales price (less typical closing adjustments and credits) of$190,000,000, then the Transaction Rent payable to City would be calculated as follows: Owner#3 Transfer Gross sales price(less adjustments) $200,000,000.00 Transaction Rent: $500,000.00 (i.e., .25% of$200,000,000) Owner#1 Transfer Gross sales price (less adjustments) $190,000,000.00 Transaction Rent: $475,000 169 EXHIBIT "P" LOCATION OF GEOTHERMAL SYSTEM (See attached pages) 170 O P b Fill 5? E4 i m: :;,, �; gk€i tig W '. ® ., : sh a hi;p1 y ��'' I •_ gyp} 12i 4' - iaa ° „41,111! 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O isr ig Will 1 1 i ri la /E 1;1 -Ili ilag )).,,,:::/4/1 HIM It•lair 53,77° Liiii IA M = !!I ; jj ;; i' g ttttt't!.::�u ii, IP' I . it :all ;0! 0 11111 illi i 11 11 1 !Ili: tioo ci ci � ci 1 Q_:=_-_-_ _-_��___ _______ 180 ...op.,mamma a mmosana-al ea PT.,..r..)4,6!.f!-a6LmrNT..v...rx Ail-me'a ds".1•v9 N_v se EXHIBIT "Q" RESERVED 181 EXHIBIT "R" SCHEDULE OF MINIMUM FIXED RENT Lease Amount Year $209,279* , $492,545 $829 706 $1,458,413 !�,' 4s $1,458177,,_5___3 1 d y,� �,tiwtil"f�, � °¢ $1, !,-� $1,547,679 ,. , ii `µ $1,578,633 $1,610,206 s n- $1,642,410 10_ *As provided in Section 4.4(a), this amount shall apply from the Rent Commencement Date to December 31 of the year in which the first anniversary of the Rent Commencement Date occurs, prorated for any partial months and partial calendar years. 182 EXHIBIT "S" MANDATORY HOTEL PROJECT DESIGN ELEMENTS A full-service convention hotel of not-to-exceed 800 rooms, including: 1. approximately (but not to exceed) 800 rooms (with a breakdown between kings, double/double or double/queen rooms and suites necessary to obtain the Brand Approval by the Initial Hotel Operator); 2. if required by the Initial Hotel Operator, a club lounge; 3. a minimum of approximately 72,000 net square feet (+/- 5%) of hotel conference space for meetings or other events, including a minimum of 20,000 net square feet (+/- 5%) grand ballroom, 10,000 net square feet (+/- 5%)junior ballroom, and 42,000 net square feet (+/- 5%) of breakout meeting space; 4. appropriate space for kitchen facilities, used for room service and serving conference and meeting rooms; 5. food and beverage locations of a total square footage size that is not greater than the square footage size of food and beverage locations that are consistent with the size and number of rooms in comparable 4 Diamond hotels in comparable locations, not less than 600 seats, in the aggregate, contained within a three-meal restaurant, specialty restaurant, pool bar and grill, lounge and lobby bar (such restaurants and bars are to be developed primarily along the perimeter of the ground floor of the Hotel Project) and as necessary to obtain Brand Approval from the Initial Hotel Operator; 6. a non-specialty retail facility which may consist of a sundry and/or coffee shop(s) selling products such as news, coffee, overnight supplies, and travel necessities as necessary to obtain Brand Approval from the Initial Hotel Operator; 7. a pool, fitness center and spa; 8. the exterior elements depicted in Exhibit E, subject to a height restriction of a maximum three hundred (300) feet, in accordance with the provisions of the City's Land Development Regulations; 9. a minimum of .40 parking spaces per room on-site, in accordance with the provisions of the City's Land Development Regulations; and 10. the Skybridge. For the avoidance of doubt, the Lessee may elect to include in the Hotel Project ballroom and meeting space of a size that is greater than the 5% variances provided for above without City's Approval (and Lessee shall not be deemed to have made a Prohibited Hotel Project Change or to have failed to include the Mandatory Hotel Project Design Elements as a result of the inclusion of such excess ballroom and meeting space). 183 EXHIBIT "T" LESSEE'S LLC DOCUMENTS (See attached pages) 184 Delaware PAGE 1 2�ie First State I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF FORMATION OF "PORTMAN MIAMI BEACH, LLC", FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF JUNE, A.D. 2015, AT 10:43 O'CLOCK A.M. 7ikti7-- 4r 5768204 8100 Jeffrey W.Bullock,Secretary of State •.��`° % AUT:,- to ION: 2475278 150932145 41Aw�'� DATE: 06-17-15 You may verity this certificate online at corp.ddlavare.gov/authver.shtal 185 State of Delaware Secretary of State Division of po�rations Delivered 10:46 A f 06/17/2015 FIZBD 10:43 AN 06/17/2015 SRV 150932145 - 5768204 FILE CERTIFICATE OF FORMATION OF PORTMAN MIAMI BEACH,LLC THIS CERTIFICATE OF FORMATION of PORTMAN MIAMI BEACH, LLC(the"Company")is being executed by the undersigned for the purpose of forming a limited liability company pursuant to the Delaware Limited Liability Company Act. FIRST: The name of the Company is: Portman Miami Beach,LLC SECOND: The Company's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. LN WITNESS WHEREOF, the undersigned, beinmn authorized person of the Company,has executed this Certificate of Formation on thist5ay of June,2015. Neal Kamin,Authorized Person 26196746v 186 EXHIBIT "U" FILLMORE THEATER PARKING (See attached page) 187 1 i I I 1 1 I (I i -I - - • H - I ( ) i t _ a S °' I $ a) i r -I 'S ti J _8 °„ ..:. il T”—,-..."- ---- irir=7.--+, ilf a.4 ii UJ I �, 6ai J 1 _,____4, 1 i 1 1 z d w 1 Is f - [ I I I l l uJ � UJ � 1 ! l i .0 I - s ,rz F-- I . 1 ! 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O K<U K °.'try g i ;• ♦ $'T i '4 T ' �...�� 11 J Z g hmrcn orcggatf : <> aP Z N ei h<8 'g -it N ' 06' W: ' F gi z� ° O sill ' _ a m o L1� wr- 4 N ffay=�=hh 0h N „ ate I W �N _I. =" °°..,66. -.._gg o rc- zx V Z m°W EFL" _. c 07� r.. • ow w 1 m mF�8°LLiN W$ ° #G Ir u tY y � �_ a c0 W:: x I 0 h q cC I- —� �i1gx�1<WFyi,<S h _ < 91 \W\ •°z �8 i2�� � ° /rZ�i� wtl�8F000'U°o,rn3p1'0 ii"A``-'m << . 6L 'g!,3 1Ys `Wz J �v ;?1 . ,,,. a� z< �`TfhL J Note re: Legal Description on Prior Page: If approved as part of the regulatory Design Review Board/development process, the cantilevered elements on the north property line, depicted in Appendix E of the Lease with respect to the 4th Level of the proposed Hotel, will be included within the legal description for the Leased Property. APPENDIX 3 1 Appendix 3 Schedule of Proposed Minimum Fixed Rent Minimum Variable Percentage Fixed Rent Growth Rent Growth Rent Growth 2016 - - - 2017 - - - 2018 - - - 1 2019 $209,279 $209,279 $418,557 2 2020 492,545 135.4% 492,545 135.4% 985,089 135.4% 3 2021 829,706 68.5% 829,706 68.5% 1,659,413 68.5% 4 2022 1,458,413 75.8% 1,458,413 75.8% 2,916,826 75.8% 5 2023 1,487,581 2.0% 1,517,403 4.0% 3,004,984 3.0% 6 2024 1,517,333 2.0% 1,577,800 4.0% 3,095,133 3.0% 7 2025 1,547,679 2.0% 1,640,308 4.0% 3,187,987 3.0% 8 2026 1,578,633 2.0% 1,704,994 3.9% 3,283,627 3.0% 9 2027 1,610,206 2.0% 1,771,930 3.9% 3,382,136 3.0% 10 2028 1,642,410 2.0% 1,841,190 3.9% 3,483,599 3.0% 11 2029 1,675,258 2.0% 1,878,013 2.0% 3,553,271 2.0% 12 2030 1,708,763 2.0% 1,915,574 2.0% 3,624,337 2.0% 13 2031 1,742,938 2.0% 1,953,885 2.0% 3,696,824 2.0% 14 2032 1,777,797 2.0% 1,992,963 2.0% 3,770,760 2.0% 15 2033 1,813,353 2.0% 2,032,822 2.0% 3,846,175 2.0% 16 2034 1,849,620 2.0% 2,073,479 2.0% 3,923,099 2.0% 17 2035 1,886,612 2.0% 2,114,948 2.0% 4,001,561 2.0% 18 2036 1,924,345 2.0% 2,157,247 2.0% 4,081,592 2.0% 19 2037 1,962,832 2.0% 2,200,392 2.0% 4,163,224 2.0% 20 2038 2,002,088 2.0% 2,244,400 2.0% 4,246,488 2.0% 21-99 385,946,474 432,657,370 818,603,844 Total $416,663,864 $466,264,660 $882,928,524 NPV @5% $35,209,343 $38,907,292 $74,116,635 Note: The minimum fixed rent adjusts up or down every 10 years to 55%of the prior five year's average total rent paid. APPENDIX 4 1. As requested by Commissioner Grieco, revise Section 4.2(b) as follows: Section 4.2. Restrictive Covenants (b) Use Restrictions. The Hotel Project shall not be used by Lessee, nor shall Lessee knowingly permit the use thereof by any other Person for the following: (i) any unlawful or illegal business, use or purpose; (ii) any business, use or purpose which is immoral, disreputable (including "adult entertainment establishments" and "adult" bookstores) or extra-hazardous; (iii) a nightclub where the sale of food is only incidental to the sale of alcoholic beverages and where the establishment is licensed and primarily operated - _- "A e-e •_ - cctab1-shmcnt (from midnight to 5:00 a.m. as a "Dance hall" or "Entertainment Establishment" as defined by Section 114-1 of the City of Miami Beach Code (other than and specifically excluding the Hotel's lobby bars, rooftop bars or cocktail lounges, pool bars, restaurants, banquet functions or other similar food and beverage operations contemplated as part of the Approved Plans or the Mandatory Hotel Project Design Elements); (iv) any Gaming Establishment (whether or not such use is permitted by applicable law), or (v) any use that constitutes a public nuisance of any kind. Lessee shall have no right to convert the use of the Hotel Project or any portion thereof to any time sharing, time interval or cooperative form of ownership, or to subject the same to any condominium regime. 2. As requested by Commissioner Grieco, revise Section 4.2(f) as follows: Section 4.2(f): Room Block Agreement. Lessee shall operate, and cause the Hotel Operator to operate, the Leased Property in material compliance with the terms of the Room Block Agreement throughout the Term. In addition, Lessee shall not receive any commission, rebate or other compensation from any hotel located in the City of Miami Beach with respect to any group room block or room bookings made by any such Miami Beach hotel. 3. As requested by Commissioner Weithorn, revise Section 4.5 as follows: Section 4.5 Covenants for Payment of Public Charges by Lessee (a) Payment of Public Charges. Payment of Public Charges includes: (i) Lessee, in addition to the Rent and all other payments due to City hereunder, covenants and agrees timely to pay and discharge, before any fine, penalty, interest or cost may be added, all real and personal property taxes, all ad valorem real property taxes, all taxes on Rents payable hereunder and under Subleases, tourist, room and restaurant taxes, public assessments (including, without limitation, permit fees, impact fees and other public charges; and (ii) Special Assessments pursuant to Section 4.5(d), electric, water and sewer rents, rates and charges levied, assessed or imposed by any Governmental Authority against the Leased Property, including all Lessee Improvements thereon, in the same manner and to the same extent as if the same, together with all Lessee Improvements thereon were owned in fee simple by Lessee. (collectively, "Public Charges"); (b) Lessee's obligation to pay and discharge Public Charges levied, assessed or imposed against or with respect to the Leased Property shall not commence until the Possession Date. All such charges shall be prorated if the Possession Date is not at the beginning of the calendar year. Lessee, upon written request, shall furnish or cause to be furnished to the City, official receipts of the appropriate taxing authority, or other proof satisfactory to the City evidencing the payment of any Public Charges. 4. As requested by Commissioners Grieco, Weithorn and Steinberg, add new section 4.5(e) as follows: (e) No Tax Abatements or Other Public Subsidies to Lessee. Lessee shall not receive any tax abatement, public subsidy or rebate with respect to any Public Charges (including, without limitation, City, Miami-Dade County, or State of Florida taxes of any kind), other than any tax benefits generally available or provided to other similarly situated or similarly sized hotels or businesses. 5. As requested by Commissioner Grieco, revise Section 14.12 as follows: Section 14.12. Amendments. No amendments to this Lease shall be binding on either Party unless in writing and signed by both Parties. Solely to the limited extent as may be necessary to reasonably facilitate lender financing for the Hotel Project, the City Manager shall have the delegated authority (but not the obligation), after consultation with the City's Chief Financial Officer and City Attorney, to negotiate and execute modifications to Article 9, Article 10, Sections 6.1(a)(vi) through 6.1(a)(ix), and Sections 6.1(b) through 6.1(k) of this Lease; and to negotiate and execute the easements contemplated pursuant to Section 4.1(g) of this Lease. All other amendments must be approved by majority vote of the City Commission, subject to the requirements of the City Charter and applicable law, except that the restrictions provisions of+n Sections 4.2(b), 4.2(g), 4.5(a) through (e), and Section A.1 of Exhibit "A" hereto may not be modified except by a 617th vote of the City Commission and approval of such modifications by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(b)(3) of the City Charter, and the Base Rent and Minimum Fixed Rent set forth in Section 4.4(a) may not be modified except by approval of such modification by at least sixty percent (60%) of the voters voting thereon in a City-wide referendum, in the same manner as required for approval of the initial Lease pursuant to Section 1.03(b)(3) of the City Charter. The City shall not be obligated to expend any money or undertake any obligation connected with any such amendment proposed by Lessee, or otherwise connected with any action requested by or for the benefit of Lessee under this Lease, and shall be reimbursed by Lessee for all out of pocket expenses (including third party consultants and attorneys) incurred by the City. Prior to the City taking action regarding any such request, Lessee shall deposit with the City the estimated amount of such costs, as reasonably determined by the City. APPENDIX 5 • Appendix 5 Planning Analysis M I AM I BEACH PLANNING DEPARTMENT COMMISSION MEMORANDUM TO: Jimmy L. Morales, City Manager FROM: Thomas R. Mooney, AICP Planning Director DATE: June 25, 2015 SUBJECT: Analysis of Proposed Ground Lease Agreement for a Convention Hotel at the approximately 2.6 acre site located on the 1700 Block of Convention Center Drive. BACKGROUND Section 82-38 of the Code of the City of Miami Beach requires that any proposed sale or lease of City-owned land be analyzed from a planning perspective so that the City Commission and the public are fully apprised of all conditions relating to the proposed sale or lease. The proposal is to execute a lease agreement between the City of Miami Beach (landlord) and Portman Miami Beach LLC (lessee), for the development of a Convention Hotel at the approximately 2.6 acre site located on the 1700 Block of Convention Center Drive. The following is an analysis based on the criteria delineated in the Code. ANALYSIS 1. Whether or not the proposed use is in keeping with city goals and objectives and conforms to the city comprehensive plan. Consistent — The future land use designation of the site is Public Facility: Convention Center Facilities (PF-CCC). The proposed Convention Hotel use is consistent with the purpose of the PF-CCC designation which permits the following: Public Facility: Convention Center Facilities (PF-CCC) Purpose: To provide development opportunities for existing convention center and facilities necessary to support the convention center. Uses which may be permitted: Convention facilities. Intensity Limits: Intensity may be limited by such set back, height, floor area ratio and/or other restrictions as the City Commission acting in a legislative capacity determines can effectuate the purpose of this land use category and otherwise implement complementary public policy. However, in no case shall the intensity exceed a floor area ratio of 2.75. Analysis of Proposed Lease Agreement for Convention Hotel June 25, 2015 Page 2 of 3 2. The impact on adjacent property, including the potential positive or negative impacts such as diminution of open space, increased traffic, noise level or enhanced property values, improved development patterns and provision of necessary services. Based on the proposed use of the property, the city shall determine the potential impact of the project on city utilities and other infrastructure needs and the magnitude of costs associated with needed infrastructure improvements. Should it become apparent that further evaluation of traffic impact is needed, the proponent shall be responsible for obtaining a traffic impact analysis from a reputable traffic engineer. Consistent — No negative impacts are anticipated by the proposed use of the property. A preliminary traffic analysis indicates that there will be net reduction of peak hour trips in the area as a result of the proposal, since it will encourage conventions where guests arrive to the area by shuttles or other means rather than by single occupancy vehicles. However, additional reviews will take place as the project develops further. The site is currently used as a paved, surface parking lot; therefore there will be no diminution of public open space. The use should enhance commercial property values, because it will provide additional patrons for the area's businesses. 3. A determination as to whether or not the proposed use is in keeping with a public purpose and community needs, such as expanding the city's revenue base, creating jobs, creating a significant revenue stream, and improving the community's overall quality of life. Consistent—This proposed use does keep with the public purpose and community needs. The lease agreement expands the City's revenue base. It is expected that the convention hotel will improve the quality of conventions drawn to the convention center, which will generate jobs and encourage economic development. 4. A determination as to whether or not the development is in keeping with the surrounding neighborhood, will block views or create environmental intrusions, and evaluation of the design and aesthetic considerations of the project. Consistent—The surrounding area consists of civic uses; including the Convention Center, City Hall, and public parking garages. Therefore, the development will not block views for other property owners or create environmental intrusions. The design and aesthetic considerations will be further analyzed as part of the Design Review process that is required of new development pursuant to the Land Development Regulations. • We are committed to providing excellent public service and safely to all who live,work,and play in our vibrant,tropical,historic community. Analysis of Proposed Lease Agreement for Convention Hotel June 25, 2015 Page 3 of 3 5. The impact on adjacent properties, whether or not there is adequate parking, street and infrastructure needs. - Consistent — The convention hotel will be providing adequate parking on-site pursuant to the requirements of the Land Development Regulations. Additional modifications will be made to the surrounding streets and infrastructure as the project is developed further. 6. Such other issues as the city manager or his authorized designee, who shall be the city's planning director, may deem appropriate in analysis of the proposed disposition. Not applicable — The Planning Department has no other issues it deems appropriate to analyze for this proposal. CONCLUSION The proposed use for the site is consistent with the Goals, Objectives, and Policies. The use will generate no negative impacts for the surrounding area. The property would continue to serve the public interest. TRM/RAM T:IAGENDA120151July\Convention Hotel-Planning Analysis.docx We are committed to providing excellent public service and safety to all who live, work,and ploy in our vibrant, tropical, historic community. APPENDIX 6 c9.01S— / 1:14 r t(c) it APPRAISAL REPORT OF A PROPOSED GROUND LEASE ON REAL PROPERTY Miami Beach Convention Center Hotel Site Northeast corner of 17th Street and Convention Center Drive Miami Beach, Florida 33139 Report 201533 PREPARED FOR Ms. Maria Hernandez City of Miami Beach 1700 Convention Center Drive Miami Beach,FL 33139 PREPARED BY BLAZEJACK& COMPANY 172 W Flagler Street, Suite 340 Miami, Florida 33130 Phone: (305) 372-0211 Fax: (305)374-1948 John@Blazejack.com Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 August 24,2015 Ms.Maria Hernandez City of Miami Beach 1700 Convention Center Drive Miami Beach,FL 33139 Re: Appraisal of Proposed Ground Lease Terms on Real Property-201533 Miami Beach Convention Center Hotel site Comprised of 2.65 acres,located at the Northeast corner of 17th Street and Convention Center Drive Miami Beach,Florida 33139 Dear Ms.Hernandez: At your request,we have completed an appraisal of proposed ground lease terms for the above referenced real property. The purpose of the appraisal is to estimate whether or not the terms of the proposed ground lease on this property reflect the market rent that it is capable of generating. This appraisal is subject to various Assumptions and Limiting Conditions and Extraordinary Assumptions set forth in this report. The physical inspection and analysis that form the basis of the report have been conducted by the undersigned. Our analyses have been prepared in compliance with the standards and regulations of the Uniform Standards of Professional Practice(USPAP). The accompanying report includes pertinent data secured in our investigation, exhibits and the details of the processes used to arrive at our conclusion of value. We have estimated the rent for the subject site based on the terms of its proposed ground lease. Based on the enclosed analysis,and considering the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report,it is our opinion that the proposed terms of the ground lease described herein for the 2.65-acre Miami Beach Convention Center Hotel site would produce a stabilized base contract rent of approximately $2,515,700. Furthermore, this base rent amount, and the terms of this lease, appear to be synonymous with the market rent including the rental rate,terms and lease parameters as of July 27,2015. Respectfully submitted, BLAZEJACK&COMPANY John Digitally signed by John Blazejack DN:cn=John Blazejack,o,ou, BlazeJ jack DateI2015 861412:20:42-04'00'5 John Blazejack,MAI,CRE,FRICS J Guthrie Mlinar,MAI,SRA Partner Consultant Cert Gen RZ-0093 Cert.Gen.RZ 1916 BLAZEJACK & COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SUMMARY OF FACTS AND CONCLUSIONS 4 \, e r' - ' ' 0:- . - •Y. n y � yy� ` w ./.rti '"CAF' _ �, # ..�I Y v .. .. ., .1, f -,."';..",'"'". • ,,,..4 vat,,q.,„:, d x , ., ANT, w �, , r x r ,.< --/.;<.t.',.':':'- ,,.,„ ' . ti. ' . - ,' e—.'"' "14v , tz..v.- , prim, ,, , , V. �7 7J' , - . - R► 1 r .X 4 .� a _.R'\ ',-"'�r -4„,,� y':.'8'i .� ,�! . _� - rte.._- ___- Y ta. 41 g 1 : „ a� ''' - - ,,"..i : '_':" ---' -tilt, is A . ',,,.41,-,.- 1 . 1,4;fai. ...% si -\,.... 1 , ,._ . . Property Name: Miami Beach Convention Center Hotel Site Property Type: 2.65-Acre hotel development site Location: Northeast corner of 17th Street and Convention Center Drive in Miami Beach,Florida 33139 Interest Appraised: Leased Fee Client: City of Miami Beach Intended Use: For the Client's internal use in negotiating a land lease for the site of a hotel serving the adjacent Miami Beach Convention Center Purpose of the Appraisal: To determine if the terms of proposed land leases on the subject property are synonymous with its market rent. Date of Appraisal: July 27,2015 Dates of Inspection: June 20,2015 Date of Report: August 24,2015 BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Zoning: CCC,Convention Center District,City of Miami Beach Planned Development: Full-service, 800-room convention center hotel including multiple food and beverage outlets, extensive meeting room spaces, a recreational spa, parking garage and ancillary amenities consistent with a luxury/upscale chain hotel operation Highest and Best Use: As Vacant: Consistent with its planned development As Improved—Redevelopment consistent with its planned use Real Estate Taxes(2014) Exempt Estimated Rent Terms Estimated Base Contract Rent: $2,515,700(at stabilization) Estimated Market Rental Rate: Synonymous with the Estimated Base Contract Rent stated above Exposure&Marketing Times: Less than 12 months BLAZEJACK& COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 TABLE OF CONTENTS CERTIFICATE OF VALUE 1 ASSUMPTIONS AND LIMITING CONDITIONS 2 SECTION I INTRODUCTION 5 -IDENTIFICATION OF THE PROPERTY 6 INTEREST APPRAISED AND DATE OF THE APPRAISAL 6 INTENDED USE AND INTENDER USER OF THE APPRAISAL 6 SCOPE AND PURPOSE OF THE APPRAISAL 6 HISTORY OF THE SUBJECT 7 DEFINITIONS OF VALUE AND INTEREST APPRAISED 7 LEGAL DESCRIPTION 8 SECTION II MARKET ANALYSIS 14 INVESTMENT CRITERIA&FINANCING AVAILABILITY 15 HOTEL MARKET ANALYSIS 17 SECTION III DESCRIPTIVE DATA 29 SITE DESCRIPTION 30 DESCRIPTION OF IMPROVEMENTS 32 REAL PROPERTY TAXES AND ASSESSMENTS 32 ZONING 33 HIGHEST AND BEST USE 33 SECTION IV: LEASE ANALYSIS 37 GROUND LEASE ANALYSIS 38 ESTIMATE OF CURRENT GROUND LEASE PAYMENTS 42 MARKET VALUE OF THE SITE(IN FEE SIMPLE) 51 • ANALYSIS OF THE PROPOSED RENT FOR THE SITE 65 CONCLUSIONS 69 ADDENDA Exhibit A Engagement Letter Exhibit B Proposed Ground Lease&Neutrality Agreement to Subject Site Exhibit C Portman Holdings Hotel Development Description&Plan Exhibit D Description of Land Sales Exhibit E Miami-Dade County Regional Analysis Summary Exhibit F Qualifications of the Appraisers BLAZEJACK & COMPANY REAL ESTATE COUNSELORS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 CERTIFICATE OF VALUE Uwe certify that,to the best of my knowledge and belief, • the statements of fact contained in this report are true and correct. • the reported analyses,opinions,and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal,unbiased professional analyses,opinions,and conclusions. • we have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. • we have performed no appraisal or other services regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. • we have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • our engagement in this assignment was not contingent upon developing or reporting predetermined results. • our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of subsequent event directly related to the intended use of this appraisal. • our analyses,opinions,and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. • John Blazejack and J Guthrie Mlinar have made a personal inspection of the property that is the subject of this report. • no one provided significant real property appraisal assistance to the persons signing this certification. • the reported analyses,-opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. • the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative. • as the date of this report John Blazejack and J Guthrie Mlinar have completed the continuing education program of the Appraisal Institute. BLAZEJACK&COMPANY John Digitally signed by John Blazejack Blazejack�[ DN:cn=John Blazejack,o,ou, BIazejack DateI2015 82141221:52 04'00'5 John Blazejack,MAI,CRE,FRICS J Guthrie Mlinar,MAI,SRA Partner Consultant Cert Gen RZ-0093 Cert.Gen.RZ 1916 BLAZEJACK& COMPANY 1 CERTIFICATE 1 Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 ASSUMPTIONS AND LIMITING CONDITIONS The appraisal is subject to the following assumptions and limiting conditions: 1. No survey of the subject property was undertaken. 2. The subject property is free and clear of all liens except as herein described. No responsibility is assumed by the appraiser for matters which are of a legal nature, nor is any opinion on the title rendered herewith. Good and marketable title is assumed. 3. The information contained herein has been gathered from sources deemed to be reliable. No responsibility can be taken by the appraiser for its accuracy.Correctness of estimates,opinions,dimensions,sketches and other exhibits, which have been furnished and have been used in this report are not guaranteed. The value estimates rendered herein are considered reliable and valid only as of the date of the appraisal,due to rapid changes in the external factors that can significantly affect the property value. 4. This study is to be used in whole and not in part. No part of it shall be used in conjunction with any other appraisal.Publication of this report or any portion thereof without the written consent of the appraiser is not permitted. 5. The appraisers, herein,by reason of this report,are not required to give testimony in court with reference to the property appraised unless notice and proper arrangements have been previously made therefore. 6. The value estimate assumes responsible ownership and competent management. The appraiser assumes no responsibility for any hidden or unapparent conditions of the property, subsoil,or structures, which would render it more or less valuable. No responsibility is assumed for engineering, which might be required to discover such factors. 7. Neither all nor any part of the contents of this report shall be conveyed to the general public through advertising, public relations, news, sales or other media without the written consent and approval of the author, particularly as to valuation conclusions, the identity of the appraiser or firm with which he is connected,or any reference to the Appraisal Institute. 8. The existence of potentially hazardous material used in the construction or maintenance of the site or its improvements, such as the presence of urea formaldehyde foam insulation, and/or the existence of toxic waste which may or may not be present on the property, was not observed by the appraiser; nor does the appraiser have any knowledge of the existence of urea-formaldehyde foam insulation or other potentially hazardous waste material of the improvements and the site may have an effect on the value of the property. We urge the client to retain an expert in this field if needed. 9. Building floor plans, hotel room counts, capacities of food and beverage outlets, and other details of the proposed development of the subject property were obtained from the client's Request for Proposals(RFP No. 2015-103-ME) for the development of a convention headquarter hotel adjacent to the Miami Beach Convention Center. This RFP also contains the proposed terms of the land lease on the subject property, and was reviewed by the appraisers. The data contained therein was assumed to be correct for the purposes of this valuation study. Other information was also obtained from hotel operation proposals from four major international hotel chains, and from the winning bidder on the RFP,Portman Holdings. These were also relied upon by the appraisers and are assumed to be correct for the purposes of this report 10. The Americans with Disabilities Act (ADA) became effective January 26, 1992 sets strict and specific standards for handicapped access to and within most commercial and industrial buildings. For purposes of this appraisal, we are assuming the building is in compliance; however, we recommend an architectural inspection of the building to determine compliance or requirements for compliance. We assume no BLAZEJACK& COMPANY 2 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 responsibility for the cost of such determination and our appraisal is subject to revision if the building is not in compliance. Extraordinary Assumptions 1. The proposed lease for the subject site,which is presented in the Addenda of this report,calls for an annual base contract rent this is comprised of a percentage of the gross revenues generated by the hotel operations which will occur on the site, if unencumbered. This hotel development will be comprised of an 800-room luxury hotel under a major international hotel chain affiliation. It will also include multiple food and beverage outlets, a health and beauty spa, substantial meeting room space, a rooftop pool over a parking garage structure, and ancillary amenities consistent with a luxury convention center hotel operation in a major North American market. The description of this redevelopment and expansion to the existing subject property is provided in the client's Request for Proposals (RFP No. 2015-103-ME) for this development, and in the proposed development outlined by the winning bidder of this RFP, Portman Holdings. Therefore, it is an Extraordinary Assumption that the proposed development of this property will occur at a level that is consistent with these proposals. Any deviation from this proposed redevelopment and expansion plan for the appraised property may result in a variance from the market rent that the property is capable of generating. 2. The estimate of market rent assumes responsible ownership and competent management, as noted in the preceding Assumptions and Limited Conditions. This is particularly true for hospitality properties such as that outlined in the development of the hotel that is proposed for the subject site. Therefore, it is also an Extraordinary Assumption that the estimate of market rent contained herein assumes proper management providing operations to the hotel, that are both consistent with the RFP from the client and that of the winning bidder(Portman Holdings). 3. It is an Extraordinary Assumption that the redevelopment of this property will result in a full-service luxury hotel property that is comparable to the competitive set of hotels that are described in the Hotel Market Analysis section of this report. The degree to which this redeveloped hotel product is comparable to these sets of hotels is outlined in this report, with its occupancy and rate penetration relative to this and other competitive hotel sets,is assumed to be reasonable for the purposes of this report. 4. The proposed ground lease for the property requires approval from the citizens (registered voters) of the City of Miami Beach. For the purposes of this analysis, it is an extraordinary assumption that the proposed convention center hotel development to the subject site, detailed in this report, has already been approved by all necessary parties as of the valuation date. If this or other approvals do not occur, the estimates of market rent and values contained herein and its applicability to the subject site are null and void. 5. The estimate of base contract rents and market rents contained herein assume that the development of this proposed 800-room convention center hotel to this site(as described in this report)has been completed and is generating a stabilized level of gross revenues from its hotel operations as of the current date of valuation, with no rent concessions in place. Furthermore, it also an extraordinary assumption that this development plan for the subject property,as proposed,represents its highest and best use. 6. A use restriction in the form of a Neutrality Agreement has been proposed for the subject site. This Neutrality Agreement,which would be between the eventual operator of the hotel(the hotel user)and labor unions, allows for the right of a labor union ("Union") to recruit union members from the hotel's employees. Under this Agreement, the Union would be allowed to recruit during non-business hours in order to obtain a membership of a majority of certain categories of qualified employees of the subject hotel. This agreement does not mandate union membership by these hotel employees, but allows for the enforcement of a neutral environment by the hotel and its operator if a labor union wishes to recruit various categories of hotel employees to join the Union as members. This Agreement would effectively encumber the site by restricting its hotel operator from actively opposing any such recruitment by a labor union of BLAZEJACK& COMPANY 3 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 these qualified hotel employees. If a majority of the qualified hotel employees decide to join a Union, the Union may be allowed to bargain collectively for those employees regarding their employment terms including pay, benefits, hours worked, etc. A description of the basic terms of the proposed Neutrality Agreement that would encumber the site's use is presented in the Addenda of this report. For the purposes of this analysis of the subject property,it is an Extraordinary Assumption that this Agreement is assumed to be in effect as an encumbrance to the use of the site as of the appraisal and valuation dates. 7. Implicit in the estimates of value is the presumption of good quality construction, competent management, aggressive marketing,and economic stability. The value estimates are subject to unforeseeable events that could alter market conditions prior to the effective date of the opinion. BLAZEJACK& COMPANY 4 ASSUMPTIONS AND LIMITING CONDITIONS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION I INTRODUCTION BLAZEJACK& COMPANY 5 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 IDENTIFICATION OF THE PROPERTY The subject is a rectangular site with approximately 2.65 acres, located at the northeast corner of 17th Street and Convention Center Drive in the South Beach neighborhood of Miami Beach, Miami-Dade County, Florida. This location is immediately south of the Miami Beach Convention Center, and west of the Fillmore(Jackie Gleason)performing arts theater. INTEREST APPRAISED AND DATE OF THE APPRAISAL The purpose of this appraisal is to analyze the terms of a proposed ground lease for this property in order to determine if these terms represent a market lease rate and structure, under economic conditions prevailing on July 27, 2015,the date of the appraisal. A leased fee interest in this property is considered in this valuation as of this current valuation date, along with a Fee Simple interest in the value of the underlying site. INTENDED USE AND INTENDER USER OF THE APPRAISAL It is understood that the intended use of this report is for asset management by the client, the City of Miami Beach, in negotiating a ground lease for this property. SCOPE AND PURPOSE OF THE APPRAISAL This appraisal is presented in a narrative format that is consistent with USPAP and the client's requirements for research and analysis in this assignment. Its purpose is to estimate whether the terms of the proposed ground lease terms reflect a rental rate that is similar to that which could be obtained in the market (synonymous with market rent). This includes an analysis of the estimated base contract rent for the subject is synonymous with the Market Rent for the site, and the site's value in fee simple, considering the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report. As part of this appraisal, a number of independent investigations and analyses were required. The scope of this analysis was to inspect the property, consider market characteristics and trends, collect and analyze pertinent data, develop a conclusion and estimate the property's ground rent. This includes an analysis of the potential gross revenue generation from an 800- room, full-service, luxury convention center hotel operation at this site. This potential gross BLAZEJACK& COMPANY 6 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 revenue estimate was formulated from data of other similar hotel operations and from estimates provided by several major international hotel chains. The extent of verification consisted of assembling and analyzing raw data gathered from a variety of sources including public records data services, news periodicals and in-house files. Where possible, transactions were verified through discussions with buyers, sellers,brokers and knowledgeable third parties. A Sales Comparison Approach was used to estimate the value of the subject site in fee simple; returns on an investment in that site were analyzed to determine if the terms of the proposed lease on the site were consistent with its rent-producing capabilities in the open market. Finally, all assumptions and limiting conditions that affect the analyses, opinions and conclusions were set forth. Data sources included four major international hotel chains (which are not identified in order to conform to their confidentiality requirements), Smith Travel Research, various investor surveys, press releases and interviews from buyers and sellers of hotel (re)development sites in the market,public records,and other outlets. HISTORY OF THE SUBJECT The subject is owned by the City of Miami Beach. The site is part of the City's convention center property, which is proposed for lease as the site of the convention center's headquarters hotel. A.lease abstract describing the primary terms of the proposed lease on the subject site is presented in Section IV of this report. No sales of this property were observed by the appraisers during the last five years, and the property is not listed for sale. DEFINITIONS OF VALUE AND INTEREST APPRAISED According to the Code of Federal Regulations, Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), and according to the 12th Edition of The Appraisal of Real Estate, market value is defined as follows: Market Value The most probable price, which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: BLAZEJACK& COMPANY 7 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 1. Buyer and seller are typically motivated. 2. Both parties are well informed or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure on the open market. 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto;and 5. The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Fee Simple Interest Absolute ownership unencumbered by any other interest or estate,subject only to the limitations imposed governmental powers of taxation,eminent domain,police power,and escheat. Leased Fee Interest An ownership interest held by a landlord with the right to use and occupancy conveyed by a lease to others; usually consists of the right to receive rent and the right to possession at termination of the lease. Market Rent The rental income that a property would most probably command on the open market; indicated by current rents paid and asked for comparable space as of the date of the appraisal. Source: Appraisal Institute,The Appraisal of Real Estate, 13th Edition,(Chicago,2008) LEGAL DESCRIPTION Not available; the property is part of the larger site of the Miami Beach Convention Center,which has a total of approximately 37 acres. EXPOSURE TIME AND MARKETING PERIOD Exposure time is that time the property is assumed to have been on the market before the sale assumed on the date of appraisal. It is our opinion that with a reasonable listing price and aggressive marketing, the subject exposure time for finding a qualified land tenant would be less than 12 months under the described leasing scenario, and the Assumptions and Limiting Conditions and Extraordinary Assumptions outlined in this report. Marketing time is that time, at any price, that the property would take to sell from the date of appraisal forward, i.e., after the date of appraisal. The relationship between price and marketing time is straightforward and normally, the lower the price, the less time to market. Based on.investor expectations and marketing times for similar properties, both the exposure and marketing periods for leasing the subject property are estimated to be less than 12 months. BLAZEJACK& COMPANY 8 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 REGIONAL ANALYSIS The subject is located in Miami-Dade County, the southernmost of three counties comprising the South Florida regional market. A summary of economic trends found in this regional market is presented in the Addenda of this report. NEIGHBORHOOD ANALYSIS According to the Appraisal of Real Estate, 12th Edition, a neighborhood is a group of complimentary land uses. Social, economic, governmental and environmental forces influence property values in the vicinity of the subject property, which, in turn, directly affect the value of the subject property itself. The area of influence is the area within which the forces affect all surrounding properties in the same way. The boundaries of the neighborhood are drawn by observing the extent to which the four forces affect all properties in the same way. Miami Beach Overview The subject property is in the city of Miami Beach in Miami-Dade County, Florida. This municipality is on a barrier island across Biscayne Bay from the mainland areas of Miami- Dade County, whose developed areas are anchored by city of Miami. Miami Beach is geographically divided into three sections. South Beach, extending from Government Cut north to the Collins Canal along Dade Boulevard (as far north as 24th Street), has the city's world- famous Art Deco district along with the Miami Beach Convention Center, the Lincoln Road retail/entertainment area, and cultural attractions. Mid-beach or Central Miami Beach extends to the north of South Beach to 63rd Street and is the area of resort hotels and high-rise condominiums. Commercial development in this area is principally served by Arthur Godfrey Road. North Beach extends from 63rd Street north to the city's limits at the Town of Surfside, and includes Normandy Isle and commercial areas centered around 71St Street and along Collins Avenue between 69th and 74th Streets. BLAZEJACK& COMPANY 9 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 li k City of Miami Beach North 1 Herding I Avenue Beach �+ 71st Street dm I si Middle Beach �, r or asst Street . _.40:-.>„_—_—.117 ,may Lincoln 94isms f"' Road Illi „_, coikns Avenue Hotel Alton District Road l Ocean South Wen Drwa Beach ' Collins •- rti Avenue Retail 5th St . ‘'` t Distnct Nilit Land use in the area is predominantly residential with hotels scattered along the city's oceanfront and along Collins and Washington Avenues. Supporting retail uses can be found along these two streets, along with Alton Road in South Beach, 41st Street (Arthur Godfrey Road)in Mid-beach, and 71st Street in North Beach. Miami Beach is internationally recognized as a prime beach resort destination. Since the early 1990s it has experienced a rebirth due to a major gentrification that has taken place BLAZEJACK& COMPANY 10 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 especially in the South and Central Beach areas, a trend that has continued to spread northward across the island community over time. Once known as a moderate-income retirement community, gentrification made Miami Beach, and particularly South Beach, a world-famous . leisure destination for visitors from around the globe. A wide range of amenities including white-sand beaches, favorable weather (particularly during the winter months), world-famous Art Deco architecture, and shops, restaurants and hotels catering to every budget are available for attracting leisure visitors to this market, and innumerable residential condominium projects catering to part-and fulltime residents. South-Beach Overview The boundaries of the subject's South Beach neighborhood in Miami Beach are formed by natural boundaries including the Atlantic Ocean to the east, Biscayne Bay to the west and Government Cut to the south. Its north boundary is generally formed by the Collins Canal along the southeast side of Dade Boulevard, reaching as far north as 24th Street between Indian Creek and the Atlantic Ocean. It also includes the Sunset Harbour neighborhood across Dade Boulevard to the north, between Biscayne Bay to the west of Alton Road and Sunset Drive. This neighborhood comprises the southern part of a barrier island that connects with the mainland areas of Miami-Dade County via two causeways — the MacArthur Causeway (Interstate 395) which connects northern portions of downtown Miami with 5th Street in South Beach, and the Venetian Causeway which continues west from the west end of Dade Boulevard and 17th Street across the Venetian islands in Biscayne Bay to a connection at Biscayne Boulevard/U.S. Highway 1 in Miami. Over the past 25 years, South Beach has undergone an enormous revival—transforming from a run-down retirement community to an ultra-chic oceanfront tourist destination. It includes four- and five-star resort hotels along the oceanfront, many within renovated existing Art Deco buildings, along with popular retail districts and top-drawer restaurants that have received world-wide accolades. Land uses in South Beach are generally comprised of low- to mid-rise hotels along Ocean Drive, a mixture of low- to mid-rise hotels and apartment buildings on Collins Avenue and Washington Avenue to the immediate west, and low-rise apartment buildings on streets between Washington Avenue and West Avenue. High-rise condominium towers dominate the immediate Biscayne Bay frontage of the community to the west of West Avenue and Bay Road BLAZEJACK& COMPANY 11 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 in South Beach. North of 15th Street along Collins Avenue in South Beach is the Collins Avenue Hotel District, which includes high-rise luxury hotels along the oceanfront and low- to mid-rise hotels and apartments to the west of Collins Avenue. This beachfront neighborhood offers numerous amenities for attracting tourists and visitors beyond its wide sandy beaches and balmy weather. The Miami Beach Convention Center is located along the west side of Washington Avenue in South Beach, and has one million square feet of flexible space, including 500,000 square feet of exhibit space and 70 meeting rooms comprised of 127,000 square feet. The City announced a bid to re-vamp this facility and add an adjacent 800-room convention center hotel, subject to voter approval in November 2015. Immediately south of the convention center is the Fillmore Miami Beach (a.k.a. Jackie Gleason)Theater, a performing arts facility in a classic Art Deco building. Across 17th Street to the south is the New World Center, the home of the New World Symphony orchestral academy. Designed by Frank Gehry, this 756-seat facility opened in 2011 accompanied by an outdoor projection wall and a 2.5-acre public park. Other cultural attractions are centered around Collins Park to the west of Collins Avenue at 22nd Street, and include the Bass Museum and the headquarters for the Miami City Ballet. Lincoln Road is an open-air, pedestrian-only retail/entertainment area running east/west between 16th and 17th Streets from Alton Road to Washington Avenue. The mall is well landscaped with shelters, greenery and seating. Lincoln Road now features over 200 shops including designer boutiques, national retailers, sidewalk cafes and restaurants, the Colony Theater and a multi-screen movie theater. Major retailers include the Gap, Banana Republic, Zara, H&M, Lucky Brand, Loft/Ann Taylor, the Apple Store, Sunglass Hut, Pottery Barn, BCBG Max Azria, Williams-Sonoma, Sketchers and French Connection. Balan's, Yuca, Quattro, Rosinella, Segafredo, Rosa Mexicano, Meat Market and Sushi Samba Dromo are among the restaurants found along Lincoln Road. Rents for prime retail space along this pedestrian mall range from $250 per square foot, triple net, or among the highest in South Florida. Older Art Deco hotels along Collins Avenue between 5th and 8th Streets have been gutted and remodeled for single-tenant retail store use, and now include tenants such as Armani Exchange, The Gap, Kenneth Cole, Nine West, Ralph Lauren, the Levi's Store, Tommy Hilfiger, Sephora and Victoria's Secret. Other retail areas include a new vertical shopping BLAZEJACK& COMPANY 12 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 center at 5th Street and Alton Road featuring Best Buy, TJ Maxx, Staples and Ross Dress for Less. Additional supporting retail uses are found along 5th Street and Alton Road in this market. The subject property is located along 17th Street at Convention Center Drive, immediately south of the Miami Beach Convention Center and west of the Fillmore Theater. The New World Center is located across 17th Street to the south. Accessibility The main north/south arteries in the South Beach area include Alton Road on the western side, Collins Avenue on the east side and Meridian and Washington Avenues in between. Major east/west cross streets include 5th, 16th and 17th Streets along with Dade Boulevard and 23rd Street. The accessibility throughout the neighborhood is good. Access to the mainland is provided by the MacArthur Causeway (Interstate 395) at 5th Street and the Venetian Causeway at 17th Street/Dade Boulevard, although the latter is undergoing rebuilding thus currently lacks a connection to the mainland. The MacArthur Causeway directly intersects with Interstate 95 (I- 95) at the northern edge of downtown Miami and continues westward as State Road 836 to connect with Miami International Airport, State Road 826 (the Palmetto Expressway) and Florida's Turnpike. Miami International Airport is located approximately 10 miles west of the subject property, just north of State Road 836 and west of N.W. 42 Avenue. Fort Lauderdale/Hollywood International Airport is about 22 miles to the north along I-95 just south of Interstate 595. This neighborhood is also proximate to Port Miami, the world's busiest cruise ship terminal,which is just east of downtown Miami on Dodge Island. Conclusion The immediate area of the subject reflects a mix of cultural uses and the Miami Beach Convention Center. The subject property has a good location along the north side of 17th Street adjacent to this convention center and next door to the Fillmore Theater. The Lincoln Road retail/entertainment area is located one block to the south, and South Beach's attractive Atlantic Ocean beaches are located approximately four blocks to the east. The subject offers excellent access to the abundant recreational, shopping, dining and cultural attractions in its South Beach neighborhood, with good accessibility to Miami International Airport and the cruise port at Port Miami. BLAZEJACK& COMPANY 13 SECTION I INTRODUCTION Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION II MARKET ANALYSIS BLAZEJACK& COMPANY 14 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 INVESTMENT CRITERIA&FINANCING AVAILABILITY Nationwide, investment and development prospects for hotel properties are expected to fall near the middle of the range among various other commercial property types. This is illustrated by the tables below, which are obtained from Emerging Trends 2015, published by PricewaterhouseCoopers,LLP,which is based on trends occurring prior to the start of that year: l orostemmt Prospects Development Prospects Warehouse industrial Warehouse indtria 3.74 Central city office Lirrtd-servicehate:_ 3.52 Lirnited-serv�eehatels 3.35 Apartment— Medea!Ace 3 35 moderale iconic Medical arrce 2.47 Neigr dt ormn 3 27 Full-sermehahets Centtaialyathce 3. Apartment— Apartment- high income a�� moderate in corm 3' mmemeemm Student honeying Student housing 3.. Noimm R&D ildeshiel R&D industriar 3.• Suburban atFice Full-service Ix ; 3'34 Neighborhoodisommunty Power;.enters Insttlboriel°91311or Rte— I rstttutiana far recd single larnily single family Regional mails Suburban at lice Power centers Regional malls t I 1 1 2 3 4 5 Amine Pear Far Good Excellent Abysmal Poor Fair Good Ended Exdv t 4-9 Hotel Investment Prospect Trends +�i'��� Fuld-se flncB hotels • AO Limned-scice haieis poor 2005 2007 2009 2011 2013 2015 Scarce:Ernergirg Trends in Peal Estate surveys. BLAZEJACK& COMPANY 15 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 However, this includes investment and development attitudes for all lodging properties nationwide. This source indicates that the surveyed hotel investors recommended buying hotel properties in the Miami market more than any other hotel market nationwide: Exhibit 5-11 U.S. Hotel Property Buy/Hold/Sell Recommendations ?/iarni 17.4 Los Angeles . .. Nas1wifle 1L New York—Broa idyn Bvstan Oklahoma City San Francisco - Hc+ustr Seattle ' .1 w Detroit 11111111.... Inthanapaks ¢ .. ., Austin New York Man Charlotte Denver 1112".1111.111111111111 shi`a I a �i District Dallas/Fort Worth -' ' Chicago Atlanta Baltimore S3.4 0% 20% 40% 60% 80% 100% Jones Lang LaSalle also tracks sales and investment trends for hospitality properties nationwide. According to this source's 2015 Hotel Investment Outlook, global hotel investment is expected to rise to $68 billion, a 15% increase over the previous year, driven by $34.5 billion in transactions in the U.S. Leading these investments for mature hotel markets (such as North America) will be investment funds and private equity firms, followed by hotel operators and REITs: BLAZEJACK& COMPANY 16 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Acquisition volume by market type 100% • Sovereign%teeth fund 90% Real es to investment 8 trust Investment fend' 10% Private equity 60% Other Hotel 40% ill High net torth indvidual 30% Developer a'R.:party 20% II Corporates 10% ortsl 0% kwestor Emerging Source:JLL Research Financing sources for hotels nationwide include CMBS, financial institutions, insurance companies, pension and debt funds, and REITs. Terms and pricing vary by source, and are dependent on current cash flow performance. HOTEL MARKET ANALYSIS Economic Trends Affecting Hotel Demand Amid measureable improvements across most commercial sectors of the economy, the Miami-Dade hotel industry has shown steady improvement and investment since 2010, emerging as one of the top U.S. hotel property markets for investment and development. While unemployment rates remain higher than the national average, labor markets have posted consistent growth with a decline in this rate over time. Long term, Miami's infrastructure expansion(ongoing port, air and rail projects which tie into each other and mass transit), strong ties to international trade and the area's market position as an international tourist hot-spot position the city's hotel market to outperform much of the rest of the U.S., competing favorably with other major hotel markets in the country during the near term. BLAZEJACK& COMPANY 17 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The Miami hotel market has experienced a corresponding improvement in its rate and occupancy performance since 2010, according to data from Smith Travel Research (STR), placing it among the top five markets in the U.S. in terms of ADR, occupancy and RevPAR (Revenues Per Available Room): Hotel Occupancy: U.S.Average 62.3% in 2013(Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York 84.6% 83.7% 81.9% 2 Oahu Island 83.7% 84.7% 75.0% 3 San Francisco 83.0% 80.3% 75.3% 4 Miami 77.9% 76.5% 71.4% 5 Los Angeles 76.8% 75.4% 71.1% Hotel ADR: U.S.Average$110.50 in 2013(per Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York $258.57 $251.15 $275.04 2 Oahu Island $209.01 $183.57 $169.44 3 San Francisco $187.79 $171.80 $156.13 4 Miami $176.66 $163.44 $160.14 5 Boston $164.34 $158.89 $153.70 Hotel RevPAR: U.S.Average$68.69 in 2013 (per Smith Travel Research) 2013 Rank City 2013 2012 2011 1 New York $218.65 $210.11 $225.24 2 Oahu Island $174.89 $155.42 $127.01 3 San Francisco $155.83 $137.98 $117.54 4 Miami $137.60 $125.00 $114.35 5 Boston $120.26 $113.92 $102.14 BLAZEJACK& COMPANY 18 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 In 2014, STR reported that RevPAR for Miami hotels increased by 7% over the previous year, to $144.87. With occupancy growing by 0.4 percentage points in this market to 78.3% 2014, this RevPAR growth rate was also attained from a 5.8% increase in ADR (to $185.12) in 2014. RevPAR growth in Miami was also reported by Jones Lang LaSalle to be among the top five US hotel markets since the peak that preceded the Great Recession. Additionally, Miami hotels recorded the greatest nominal ADR growth (33%) over the past decade when compared to other major cities, with RevPAR growth reported by Jones Lang LaSalle among the top five US markets since the peak that preceded the Great Recession. This premium is driven by high-rated properties and the significant number of upper-tier hotel developments and conversions(including redevelopment)throughout the metropolitan area. Hotel market cycle 2014 North America 1 RevPAR RevPAR • growth tilling slowing. Los Angeles RevPAR RevPAR Miami UP rising decline Chicago ,`, slowing San Francisco Toronto Some: Jones Lang LaSalle Washington,D.C. These improvements, along with the numerous development announcements and hotel site sales, have made hoteliers very bullish on Miami. According to the Greater Miami Convention&Visitors Bureau, as well as various news releases,new hotel development in 2014 was predominated by properties introduced in Miami Beach, totaling 2,651 new rooms. This included the Redbury, the Gale, the Hilton Cabana and the Marriott Edition in Miami Beach. A BLAZEJACK& COMPANY 19 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 lower number of new hotels are expected to open in this market in 2015, with several in the following list opening in June 2015. PLANNED HOTEL DEVELOPMENT-MIAMI BEACH Hotel Name Location Rooms Status Coaspledou Nautilus Hotel 1825 Collins Ave. 252 Under Renovation 2015 Riu Plaza 3101 Collins Ave. 284 Under Renovation 2015 AC Hotel by Marriott 2912 Collins Ave. 150 Under Construction 2015 Faena Hotel 3201 Collins Ave. 169 Under Construction 2015 Aloft Hotel 2360 Collins Ave. 239 Under Renovation 2015 One Hotel 2377 Collins Ave. 417 Under Renovation 2015 Berkeley Shore 1610 Collins Ave. 64 Under Renovation 2015 Hyatt South Beach 1600 Coffins Ave. 105 Under Construction 2015 Jade Hotel James Ave.& 18th St. 70 Proposed 2016 (keystone 1920 Collins Ave. 97 Proposed 2017 Total 1,847 This will be followed by a surge of new hotels slated for the Miami CBD and Brickell markets in mainland areas of Miami-Dade County in 2016 and 2017: PLANNED HOTEL DEVELOPMENT-DOWNTOWN MIIAMI/BRICKELL Hotel Name Location Rooms Status Completion Langford Hotel 121 S.E. 1st St./CBD 132 Under Renovation 2015 EAST Hotel Brickell CityCentre 263 Mid-Construction 2016 SLS Brickell 1300 South Miami Ave. 133 Mid-Construction 2016 ME Melia Hotel Biscyane Bl.&NE 10 St. 135 Planned Renovation 2016 Atton Hotel 1500 S.W. 1st Ave. 270 Early Construction 2016 Homewood Suites 1750 S.W. 1st Ave. 103 Mid-Construction 2016 Met Square Marriott Met Square 188 Early Construction 2016 Canopy by Hilton 1001 S.W. 1st Ave. 247 Proposed 2017 Hotel Indigo 145 S.W. 11 Street 140 Proposed 2017 Marriott Marquis Miami World Center 1,800 Proposed 2017 Cambria Suites 165 S.W. 12 Street 110 proposed 2017 Panorama Hotel 1101 Brickell Avenue 250 Proposed 2017 SLS Lux 1300 South Miami Ave. 60 Proposed 2017 Hyatt One Brickell 200 Proposed 2018 Unnamed(Melo) N.E. 14 St.&N.E.2nd Ave. 200 Proposed 2018 Total 4,231 The Miami area is a popular destination for domestic tourism, in addition to being an international crossroads that functions as the"Gateway to the Americas" connecting the Central and South American economies with North America. According to statistics compiled by the Greater Miami Convention and Visitors Bureau, there were more than 14.2 million overnight visitors to Miami in 2013, an increase of 2.2% over the previous year, of which just over half BLAZEJACK& COMPANY 20 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 were international visitors. These figures increased 2.4% in 2014 to 14.6 million overnight visitors. Due to the strengthening U.S. dollar, the increase in visitation was primarily led by domestic visitors in 2014. Increased visitation has led to higher room night sales for area hotels. Overnight Visitors to Greater Miami and The Beaches Domestic and International Origins %Change 2010 2011 2012 2013 2014 2014 v. 2013 (000) (000) (000) (000) (000) Domestic Visitors 6,544.0 6,948.5 7,074.9 7,087.2 7,303.2 3.05% International Visitors 6,060.1 6,495.7 6,833.7 7,131.7 7,260.0 1.80% Total Overnight Visitors 12,604.1 13,444.2 13,908.6 14,218.9 14,563.2 2.42% Domestic Visitors 51.9% 51.7% 50.9% 49.8% 50.1% International Visitors 48.1% 48.3% 49.1% 50.2% 49.9% Total Overnight Visitors 100.0% 100.0% 100.0% 100.0% 100.0% Source: Greater Miami Convention& Visitors Bureau BLAZEJACK& COMPANY 21 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Distribution of Total Overnight Visitors By Area of Lodging,2014k Coral Gables, South Miami Key Biscayne, 3..� Dade, 3.9% 1.5°� �. i;, Doral, 3.39 Coconut ...-,,.r; Grove, 1.5% North ., Dade/Sunny Isles Beach, 8.8% Airport Area, 12.8% Downtow ", ' m i, 19.2%_ The following chart shows passenger trends through Miami International Airport (MIA) from 2005 through 2014, a gauge of visitation trends in this market. After the impact of the Great Recession during the last decade, passenger traffic regained its previous growth pattern. Passenger Volume Trends-Miami International Airport International Total Passengers %of Passengers % Period (000s) Total (000s) change 2005 14,241 45.9% 31,008 2006 14,728 45.3% 32,534 4.9% 2007 15,541 46.1% 33,740 3.7% 2008 16,147 47.4% 34,064 1.0% 2009 15,970 47.1% 33,890 -0.5% 2010 16,892 47.3% 35,698 5.3% 2011 18,418 48.1% 38,314 7.3% 2012 19,372 49.1% 39,467 3.0% 2013 20,202 49.8% 40,563 2.8% 2014 20,097 49.1% 40,942 0.9% Source: Miami-Dade County Aviation Dept. Miami's role as an important international destination shows in the increasing share of total travel by international passengers which increased from 45.3% in 2006 to almost 50.0% in BLAZEJACK& COMPANY 22 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 2013. The weakening of the U.S. dollar, coupled with robust economic performance in the Latin America region, helped fuel continued growth of international visitation during that period. In 2014, the dollar began to strengthen, while some European economies weakened and economic sanctions targeting Russia took effect. This may explain the minor decline in international arrivals to Miami that year. Nonetheless, overall passengers handled at MIA continued to grow, supported by an increase in domestic passengers in 2014. Hotel Demand—South Beach Hotels in the subject's South Beach market primarily accommodate leisure demand from vacationers visiting this resort market. Demand from the group segment of the market is secondary, and is primarily influenced by events and trade shows staged at the Miami Beach Convention Center (MBCC). This facility is located between Washington Avenue and Convention Center Drive in South Beach, to the north of 17th Street. It has one million square feet of flexible space, including 500,000 square feet of exhibit space and 70 meeting rooms comprised of 127,000 square feet. Historic trends in attendance and hotel room night sales from events at the MBCC are noted below: MBCC Events,Attendance and Room Nights Number of Room Events Attendance Nights FY 2009 94 632,700 229,000 FY 2010* 105 708,800 103,100 FY 2011 118 661,600 199,200 FY 2012 132 661,300 175,500 FY 2013 115 589,700 132,600 FY 2014 134 738,000 141,400 *Super Bowl in Miami. Source:MBCC and GMCVB. BLAZEJACK& COMPANY 23 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The City of Miami Beach is planning a renovation and expansion of this facility, with a winning bid provided to plans submitted by Portman Holdings. The project will include renovation of the exhibit halls and meeting rooms, pre-function and support spaces including loading areas, kitchens, bathrooms, and exteriors. The expansion will provide 60,000 square feet of additional ballroom and meeting space, and the conversion of the MBCC's parking lot across Convention Center Drive into a 6.5-acre public park, with replacement parking moved to the roof of the convention center building. Most hotels in this market have minimal meeting space as this market segment is a secondary demand generator for room night sales due to the neighborhood's beachfrontlresort location. A secondary amount of corporate/business guest demand is also present. Most of the demand from the leisure market segment peaks in the winter season, when the entire Miami area enjoys peak occupancies and average rates, and during special event weekends such as the Miami International Boat Show, the Coconut Grove Arts Festival, Art Basel, and college football bowl games. Additional leisure demand is generated by the South American and European tourist markets during July and August. Leisure Segment The leisure market segment consists of individuals and families who are spending time vacationing in the area. Their travel purposes may include recreational activities such as lounging on the region's numerous beaches or at hotel pools, playing golf or tennis, spa/fitness and health, swimming and relaxation. Other activities include shopping, touring, dining, nightclubbing, sightseeing, etc. Leisure demand is strongest Friday and Saturday nights, and all week during holiday periods. Peak periods occur from November through March, when Miami's balmy weather attracts visitors escaping the winter chill in other areas of North America. Future leisure demand is related to the overall economic health of the national and global markets; this is evident from the data on passenger traffic at Miami International Airport, which is roughly half domestic and half international. Trends showing changes in state and regional unemployment and disposable personal income often have a strong impact on leisure visitation. As the national and global economies have recovered from the effects of the Great Recession, hotel occupancies and rates in this market have improved as additional room night BLAZEJACK& COMPANY 24 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 sales have occurred from the leisure segment of this market. South Beach is a premier vacation destination with a worldwide appeal, offering wide sandy beaches, shopping, dining, nightlife and recreational amenities for attracting visitors and room night demand in this market segment; these were outlined in the Neighborhood Analysis section of this report. Group Segment The meeting and group market includes meetings, seminars, conventions, trade association shows, and similar gatherings of ten or more people. Peak convention demand typically occurs in the spring and fall. Because of vacations, the summer months represent the slowest period for this market segment; winter demand varies. Due to the dominant demand from the leisure segment, most hotels in this market feature limited meeting space. Most demand for room night sales from the group segment is generated by activity at the Miami Beach Convention Center in this market. Primary group demand sources include corporate groups, associations, and SMERF (social, military, educational,religious, and fraternal)groups. Corporate groups take the form of training programs, sales meetings, division conferences, and similar events with a business purpose. Association group demand includes national, regional, and state associations. Professional associations and/or those supported by members' employers. The SMERF market consists of groups that are social, military, educational, religious, or fraternal in nature. Group guests at the subject property are anticipated to be minimal, as the property will not offer significant event space to attract this market segment. Business/Commercial Segment The commercial segment incorporates demand derived from the local businesses. Commercial demand is relatively constant throughout the year, although some declines are noticeable in late December and during other holiday periods. The commercial segment includes individual business travelers and corporate accounts. Corporate accounts are generated by local companies; demand in this sub-segment may include employees of the firm or its affiliates, and often consists of training groups. Miami Beach's corporate community features creative firms in the entertainment and fashion industries. Most of the regional business employment is centered in the Central Business Districts of Miami and Coral Gables,. in areas surrounding Miami International BLAZEJACK& COMPANY 25 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Airport, and areas between the Palmetto Expressway and Florida's Turnpike north of State Road 836. Commercial demand is expected to increase consistent with the ongoing recovery in the local and national economies. Existing Competitive Supply Once the proposed development is completed, the subject will be among the largest full- service hotels in Miami Beach, with a major international luxury hotel chain affiliation. It will be located several blocks from the city's attractive Atlantic Ocean beaches, but will be adjacent to its convention center and one block north of the popular Lincoln Road pedestrian retail/entertainment area. The primary competition for the subject is anticipated similar larger and/or chain-affiliated luxury hotels in this market, although these are primarily located along the city's beaches. These are summarized below: Hotel Rooms MORI Rack ?Rack) The Fontainebleau 1,440 $547 $204 Loews Miami Beach 790 $469 $267 Eden Roc 627 $384 $326 The James Royal Palm 393 $569 $243 W Hotel South Beach 349 $742 $449 Shore Club South Beach 308 $416 $239 The Palms Hotel& Spa 251 $362 $215 Marriott Stanton 224 $599 $199 Hilton Bentley 95 $599 $279 Total/Average 4,477 $521 $269 BLAZEJACK& COMPANY 26 SECTION II MARKET ANALYSIS i Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 r ' l Eden Roc Hotel' f 1 The Fontainebleau T(TOyff 1 1 The Palms Hotel&Spar r� w N a - , r aa,1 / '� i 1 z f. CB > -/ il 1 - ! o.; 1,4W'Hotel South Beach j ` Atlantic ' The Shore Club South Beach Ocean SUBJECT HOTEL SITE ]N WAY VENETIAN WAY _ — r i Loots Miami BeacJ '111414t- ' . +O t'The James Royal Palm i island I‘ -rill A Hibiscus island a g° :_..■ " ., U L_ ,,,, Star Island al - - -46`.' 1,'",,., S ST ST J Marriott Stanton I - + pax&� - Hilton Bentley 1 d South Pointe Park The following table summarizes the historical occupancy, ADR, and RevPAR - performance of this set of competitive hotels based on data compiled by STR, for each trailing 12-month period ending in November of that year(the most-recent data available for this set of hotels). Month F1 E Noy. Month FYE Nov. Month 11.E\ol. Year 2012 Year 2013 Year 2014 No.Days 366 No.Days 365 No.Days 365 Room Nights Available 1,638,582 Room Nights Available 1,634,105 Room Nights Available 1,634,105 Occupancy 75.9% Occupancy 77.0% Occupancy 78.5% Room Night Sales 1,244,298 Room Night Sales 1,257,955 Room Night Sales 1,282,826 ADR $295.71 ADR $321.53 ADR $338.53 Total Revenues(000s) $367,947 Total Revenues(000s) $404,475 Total Revenues(000s) $434,277 RevPAR $224.55 RevPAR $247.52 RevPAR $265.76 In conclusion, the Miami-area and Miami Beach hotel markets are experiencing a favorable period for investment and revenue growth, with high levels of occupancy and healthy increases in ADR and RevPAR. Despite the introduction of several new and BLAZEJACK& COMPANY 27 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 redeveloped hotel properties that are expected to occur in this market in the near term, the long-term outlook for hotel performance and investment in this market remains quite positive. BLAZEJACK& COMPANY 28 SECTION II MARKET ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION III DESCRIPTIVE DATA BLAZEJACK& COMPANY 29 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SITE DESCRIPTION 8 EDGE OF FLLMORE ',. .••e• • • PS Of • • II z A .,, �. rR • � �;�., POTENTIAL c, E s Y;44 • • FEE • • , OACMG • 3 EASEMENT • h C A�1` • ,0 555 SOOT • • I • g • • 1 0.....••••••. ••• S E R V I C E R EgUlt,DIN G E b i i g ... a r EDGE OF AREA WITHIN .� ` i E 1 c NEW HOTEL SITE 2 2.65 ACRES I x et 115,265 SOFT •ISM*Vat 11011347 a W p ' E f «. { 4 l t." ' ' : ' ,14:4411PAti ktiOtOku_k2k4kS\AN \ \ \\ 11 _44 ' 1 H .' Location: Northeast corner of 17th Street and Convention Center Drive,Miami Beach,Florida,33139. The property is west of the Fillmore(Jackie Gleason)Theater and south of the Miami Beach Convention Center. Parcel Folio No.(Parent Tract): 02-3227-0000-0090 Site Area: 2.65 acres(approximately)or 115,265 square feet Shape: Generally rectangular Topography: Generally level and at road grade Zoning Designation: CCC,Convention Center District,City of Miami Beach. Future Land Use Designation: PF(CCC),Public Facility,Convention Center,City of Miami Beach BLAZEJACK& COMPANY 30 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Historic District Designation: None Soil Conditions: No soil report of the subject parcel has been reviewed;however,it is assumed the soil is of sufficient load-bearing capacity to support the structure. No evidence to the contrary was observed upon our physical inspection of the site. Utilities: Water: Miami-Dade County Sewer: Miami-Dade County Electric: FPL Phone: Available Access: 17th Street,Convention Center Drive Land Use Restrictions: If fully approved,the proposed lease for the site also places it under a Restrictive Covenant, limiting the site's use to an 800-room convention center hotel with related meeting/banquet space, food and beverage operations,and amenities. Flood Insurance: According to the Federal Emergency Management Agency's Flood Emergency Management Agency's Flood Insurance Map, Community Panel No. 12086 CO 317L, dated Sep 11 2009, the property appears to be within the Zone AE (EL-8). Insurance requirements applies, however, a qualified insurance agent should verify and render a final opinion. Current Improvements: Parking lot,ancillary buildings to the neighboring Fillmore Theater Comments: The site appears to have an adequate width and depth to support its proposed highest and best use. It will be leased under"as is"terms with its current improvements and conditions in place. 1 y FF i , `.} y vim... *mot . • —-.tie• ',,;_. �., Hotel e . ii Site N.,. - 4 ,,, ,7 :737,4011 It imr a '-''. ir : *-r4,.. 14 air '- I, .4.w4 ► it iis S,4444-10 'A l�. a _ ., , i R ;v, ,_. , _ .., r . N, I 14 f $ 411ili1I I it BLAZEJACK& COMPANY 31 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 DESCRIPTION OF IMPROVEMENTS The subject is currently improved with a parking lot and low-rise ancillary buildings for the adjacent Fillmore (Jackie Gleason) Theater to the immediate east. If the proposed redevelopment and ground lease are approved, however, this does not represent the property's highest and best use. The City has sought bids to develop the subject with an 800-room luxury hotel that will serve as the headquarters hotel facility for the adjacent Miami Beach Convention Center. The City requires that this hotel will also offer meeting space and food and beverage facilities that are comparable to other North American convention center hotels that maintain a four-diamond rating by AAA. The property must also contain a parking structure with a minimum ratio of 0.4 spaces per guest room, and the total building cannot have a height exceeding 300 feet (which is approximately 30 stories). The developer will also be provided an easement to construct an enclosed pedestrian skybridge connecting the hotel directly to the Miami Beach Convention Center. A further description of the proposed redevelopment of this property by its awarded bidder(Portman Holdings) is presented in the Addenda of this report. Also, the owner of these improvements that have been proposed are assumed to be subject to a Neutrality Agreement described in the Extraordinary Assumptions presented elsewhere in this report. REAL, PROPERTY TAXES AND ASSESSMENTS The subject property is assessed under the jurisdiction of Miami-Dade County, Florida. The assessment for the property is established each year as of January 1st by the County Property Appraiser's Office at 100 percent of "Just Value". Just Value has been equated to Market Value less closing costs. While the State of Florida requires real estate to be assessed at 100 percent of Just Value, in reality, the ratio of the assessed value to sales price is generally below 100 percent. Tax due is computed according to annual millage rates established by the city, county and state. Millage rates are the amount paid per $1,000 of assessed value. The 2014 calendar year is the most recent year for which assessed valuation information is available. The subject is part of the larger, 37-acre Miami- Beach Convention Center tract, which includes the BLAZEJACK& COMPANY 32 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 con v entio n center and the Fillmore Theater. The total assessment for this parent tract was $171,976,229. As the property is owned by a municipality(the City of Miami Beach), it is fully exempt from property taxes. ZONING The subject property is zoned CCC, Convention Center District, by the City of Miami Beach. This facilitates the use of the site with the Miami Beach Convention Center which is located to the immediate north. The City has proposed a lease of the site for a convention center hotel development. Thus, if this lease is approved, the site is zoned for the specific convention center hotel development outlined in the Description of Improvement section of this report. HIGHEST AND BEST USE According to The Dictionary of Real Estate Appraisal, published by the American Institute of Real Estate Appraisers, the highest and best use may be defined as: 1 That reasonable and probable use that supports the highest present value of vacant land or improved property,as defined,as of the date of appraisal. 2 The reasonably probable and legal use of land or sites as though vacant,found to be physically possible, appropriately supported,financially feasible,and that results in the highest present land value. 3 The most profitable use. Implied in these definitions is that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. Hence,in certain situations the highest and best use of land may be for parks, green belts, preservation, conservation, wildlife habitats, and the like." Highest and best use (H&BU) is analyzed under two separate applications or scenarios: (1)highest and best use of the site as though vacant and(2) highest and best use of the property as improved. The highest and best use of the site as though vacant is based on the theory that land will be put to its maximally productive use and this use will determine the highest site value. It is the basis for valuing the site. Highest and Best Use as if Vacant The first test is what is physically possible. The subject's 2.65-acre site does not impose physical development restrictions. All utilities are available to the property, whose topography is level and at road grade with its abutting streets which are both bi-directional roadways. The BLAZEJACK& COMPANY 33 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 subject site is located at the northeast corner of 17th Street and Convention Center Drive, immediately south of the Miami Beach Convention Center in South Beach. The second test concerns permitted uses. Assuming that the ground lease proposed for the property has been approved and is in place, the site may be improved with a luxury convention center hotel with up to 800 rooms that includes meeting space, food and beverage outlets, and other amenities, in a building whose height does not exceed 300 feet (about 30 stories). This hotel would serve as the headquarters hotel for meetings, trade shows and other events held at the adjacent Miami Beach Convention Center. The third and fourth tests are, respectively, which uses are financially feasible and what use will produce the highest (maximally productive) net return. Hotel development and redevelopment is actively occurring in Miami Beach as developers and investors take advantage of favorable market conditions for this property type. Rates are climbing and occupancies are strong, with the Miami-area market among the strongest hotel markets in the nation. The timing of any development to this property, if vacant, would depend on the type of hotel and its amenities. Such a development appears to be feasible in the current market,provided costs for a luxury hotel development (including, direct and indirect costs, FF&E,pre-opening and working capital costs) are budgeted properly. The maximally productive use represents the development that would provide the greatest return on the land. The proposed lease on the subject site that requires approval from the City of Miami Beach and its registered voters calls for the development of an 800-room luxury hotel with expansive meeting space and food and beverage outlets in a building whose height does not exceed 300 feet. This hotel would serve as the headquarters for meetings, trade shows and other events held at the adjacent Miami Beach Convention Center, which has a total of one million square feet of meeting and exhibit space. It is worth noting that on the opposite side of Biscayne Bay, a new 600,000-square foot convention center and meeting venue is planned as part of the proposed Miami World Center project in downtown Miami, which will also include 765,000 square feet of retail space. This convention facility at Miami World Center will be served by a much-larger headquarters hotel that will have a total of 1,800 guest rooms. This appears to suggest that a larger headquarters convention hotel may be supported by the BLAZEJACK& COMPANY 34 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Miami Beach Convention Center, given its larger size. This would provide a higher density of development at the subject site, enhancing its value to an owner and developer. However, an alternative development of a larger convention center hotel at the subject site would require an expanded analysis of the impact on such a project on the existing hotel market in Miami Beach, and on the surrounding South Beach market. Such a study is beyond the scope of this appraisal assignment. For the purposes of this appraisal, it is an assumption that the 800-room convention center hotel development proposed for the subject site represents its highest and best use, given the impact of such a facility on the surrounding market in South Beach and the possibility of gaining approval for such a development from the City of Miami Beach and its registered voters. Based on the above-cited factors, it is our opinion that the highest and best use of the property, as if vacant is consistent with its proposed development into a luxury, full-service convention center hotel with 800 guest rooms, meeting space, food and beverage outlets, a parking structure, and other amenities consistent with a four-diamond, AAA-rated convention center hotel in North America. Highest and Best Use as Improved The subject property is improved with a parking lot and low-rise ancillary buildings which are part of the adjacent Fillmore Theater to the immediate west. If the ground lease is approved, the subject site would be restricted to a convention center hotel use in a structure with a much-higher density. It is likely that these existing ancillary buildings would no longer contribute to the property's value, with a much-greater value realized if developed to its highest and best use if vacant. From this analysis, the subject's highest and best use "as improved" is synonymous with its highest and best use as if vacant. Highest and Best Use Conclusions Use Luxury Full-Service Convention Center Hotel Timing Current User Upscale Hotel Guests Buyer Hotel Developer/Investor The subject property is improved with a parking lot and low-rise ancillary buildings which are part of the adjacent Fillmore Theater to the immediate east. If the ground lease is approved,the subject site would be restricted to a convention center hotel use in a structure with BLAZEJACK& COMPANY 35 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 a much-higher density. It is likely that these existing ancillary buildings would no longer contribute to the property's value, with a much-greater value realized if developed to its highest and best use if vacant. From this analysis, the subject's highest and best use "as improved" is synonymous with its highest and best use as if vacant. BLAZEJACK& COMPANY 36 SECTION III DESCRIPTIVE DATA Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 SECTION IV: LEASE ANALYSIS BLAZEJACK& COMPANY 37 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 GROUND LEASE ANALYSIS Ground Lease Analysis Most examples of ground leases for convention hotels involve inducements by the local government to attract developers to build. An example of this is the Loews Hotel on South Beach in Miami Beach. This hotel's ground lease was set at a minimal rate, and included a purchase option of the land by the developer. This type of option would not be included during periods when the market is strong and land prices are high. Land prices in Miami Beach are quite high today compared to other markets in South Florida as this neighborhood has undergone an unprecedented period of gentrification and renewal over the past 25 years. In addition, the hotel market is also doing good business with healthy increases in average daily rates(ADR), strong occupancy and substantial interest in investment and(re)development. A ground lease reduces the amount of cash a developer has to pay up front in order to build a major project. The typical ratio of land to project cost ranges from 10% to 25%, depending on location and size. Ground lease payments are deductible, while land is not depreciable. Another important consideration is that the ground lease must have terms that are attractive for lenders seeking to provide financing. These lending sources typically prefer leases with the following provisions: • Longer lease terms, preferably 99 years; • Leases with at least 20 to 30 years remaining after loan maturity; • Language allowing for the lender's takeover of the mortgage in the event of default by the land tenant; • Language allowing the tenant to obtain a leasehold mortgage without the landlord's consent; • Assignment provisions that are sufficiently liberal in order to allow the lease to be assumed by a lender or other purchaser in a foreclosure sale, or by a party who may thereafter wish to purchase the hotel from such lender or purchaser; • Rights to control insurance proceeds to allow the tenant to rebuild after a casualty, to demand a new lease in the event the original lease is terminated due to bankruptcy of a tenant or an incurable default, to receive notice of and to cure the default of the tenant, and to approve any lease amendments. BLAZEJACK& COMPANY 38 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Aside from lender protections,rent provisions are also important. Typically,the amount of annual rent paid under a ground lease should reflect a percentage of the value of the land; this percentage should also represent a reasonable return to the fee simple owner of the property, compared to other investments. Some rent provisions also require the payment of a percentage rent of gross revenues once a certain level has been reached, or if a sale of the leasehold interest exceeds a certain dollar amount(usually at an amount that provides a fair return to the leasehold party to the site's ownership interest). There are many related issues involved in calculating the amount paid in rent under a ground lease agreement. A landowner will want to avoid subordinating its fee to a construction loan, which would put it at risk of losing the land to the developer's lender. The landowner may also want approval rights over the hotel operator in order to insure a quality project; this is particularly true in the case of ground leases for convention hotels, in which the local municipality would prefer the best possible hotel operation to maximize room taxes and expenditures from guests visiting the area. Finally, most ground leases are purely triple net, where the tenant is fully responsible for all operating costs to the site including property taxes to the land, insurance, maintenance, management and any capital improvements. The proposed ground lease for the subject convention center hotel site is summarized in the following lease abstract. BLAZEJACK& COMPANY 39 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Lessor City of Miami Beach Lessee To be determined Leased Property 2.65-acre hotel site Property Delivery Condition As is Term 99 Years Effective Date of Lease At City's acceptance of voter referendum approving the lease Possession Date Date when the site is delivered to the lessee Commencement Date Financial Closing Date Rent Commencent Date At Hotel Opening Date Rent Calculation Periods Year 1 Through end of 1st calendar year after Rent Commencement) Subsequent Years Based on calendar years for rent calculations Outside Completion Date September 30,2019 Base Rent 2.5%of Gross Operating Revenues Minimum Base Rent Year 1 $209,279 Year 2 $492,545 Year 3 $892,706 Year 4 $1,458,413 Years 5 through 99 Increases at 2.0%per year above the Year 4 minimum base Additional Percentage Rent Begins in Year 4 1st Stage 1.5%of Gross Revenues above 110%projected for that Year 2nd Stage 2.5%of Gross Revenues above 125%projected for that Year Initial Rent Concessions Year 1 -the Greater of: Minimum Base Rent or 0.5%of Gross Revenues Year 2-the Greater of: Minimum Base Rent or 1.0%of Gross Revenues Year 3 -the Greater of: Minimum Base Rent or 1.5%of Gross Revenues Gross Operating Revenues All income of any nature from the hotel including room sales,food&beverage sales,catering receipts, telecommunication services,parking/valet services, vending,gross receipts,gift shop revenues,business center revenues,&rents from third-party concessions. Additional Rent at Sale of Hotel The lesser of$2 million or 0.25%of the sale price (less closing costs)of the hotel,but only if the first sale of the property is at a price exceeding $580 million Lease Terms Fully Net Other Terms Voter approval of lease required(on Nov. 3,2015) Approved hotel operator Marriott,Westin,Omni, Hyatt Regency, La Meridien,or Hilton As can be seen in the table above, the proposed ground lease for the subject property contains terms and conditions that are typical for the market, with provisions that would be favorable for allowing for financing its potential development by the land tenant to its highest and best use(a large, full-service convention center hotel). Provisions also include City(the site owner) approval of the hotel operator at a level of quality that maximizes its potential revenue BLAZEJACK& COMPANY 40 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 generation,upon which rent payments will be made. The lease is fully triple net,with a 99-year term, with a minimum fixed rent included for the landlord's protection in case of a market downturn or other unforeseen events. Instead of basing the annual rent from this proposed lease on a return on the site's value, these annual payments are based on a percent (2.5%) of the gross revenues generated by the hotel once it is completed and commences operations. This amount is reduced in the first three P p years of the 99-year lease term in order to allow the land tenant's hotel operation to reach a stabilized level of occupancy and revenue generation, once the hotel improvements are completed and opened to guests. This is compared to the terms of leases from municipalities on other commercial properties that have occurred in South Florida, summarized below: Facilit■ Site Size Stahlized Base Percentage Location l se Lessor Term knnuat Rent Rent Parrot Jungle 19 Acres City of 60 Years $502,000 Plus 5%to 6%of Revenues Watson Island,Miami Attraction Miami Bayside Marketplace 5-10 Acres City of 75 Years $1,000,000 Or 3.5%of Net(2012 rent Downtown Miami Retail Miami was 5.75%of rental income) The Palace 1.6 Acres City of 99 Years $237,500 Plus 2%of Gross Revenue Downtown Coral Gables ACLF Coral Gables Gables Grand 2.5Acres City of 99 Years $200,000 Plus 3%of Gross Revenue Downtown Coral Gables Apartments Coral Gables Dadeland Marriott 1.0 Acre Miami-Dade 90 Years $280,000 Or 2.0%of Gross Revenue Kendall/Dadeland Area Hotel County Dadeland Station 7.5 Acres Miami-Dade 90 Years $400,000 Or 5.0%-5.5%of Gross Revenue Kendall/Dadeland Area Retail County Convention Hotel 4.4 Acres Broward County 99 Years $250,000 Plus 2.0%of Revenue Fort Lauderdale Hotel Grove Key Marina 5.2 Acres City of 2 Years $516,600 Or 10.3%of Revenue Coconut Grove Marina Miami Village of Merrick Park 8.4 Acres City of 90 Years $550,000 Plus 20%of Net Income Coral Gables Retail Coral Gables after 11%Preferred Return Bayshore Landing N/A City of 50 Years $277,500 Or 5.0%-10.0%of Gross Revenue Coconut Grove Restaurants Miami Rusty Pelican N/A City of 99 Years $360,000 2.0%-5.8%of Revenue over Vir•.nia Key Restaurant Miami $12,000,000 These leases generally call for a stated base rent plus a percentage of Gross Revenues from the improved operations at the property, ranging from 2.0% to 6.0%. Other tenants pay a percentage rent from 2.0% to 10.3% of Revenues, with a stated minimal base amount. This appears to support the percentage rent of 2.5%Gross Revenues proposed as the lease rate for the subject as reasonable. BLAZEJACK& COMPANY 41 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 However, in order to determine if this amount generated as a proportion of gross revenue from the hotel is consistent with a reasonable return on the value of the land, we have conducted the following analysis: 1) Estimate the Gross Revenues that a proposed 800-room luxury convention center hotel at the property is capable of generating, if it were complete and generating a stabilized level of occupancy and revenues; 2) Calculate the estimated stabilized rent payments on the land by multiplying 2.5% by this estimate of Gross Revenues from the hotel; 3) Estimate the value of the subject site in fee simple, as of the current valuation date; 4) Determine if the rent payment for the subject, if the hotel were complete and operating at a stabilized level of occupancy and revenue generation as of the current valuation date, represents a reasonable return for an investor/fee simple owner in the subject site. If so, then the current proposed rent structure for the ground lease on the subject property is considered to be synonymous with its market rent. ESTIMATE OF CURRENT GROUND LEASE PAYMENTS Analysis of Stabilized Gross Revenues The annual rent due on the proposed ground lease to the subject site is 2.5%of the Gross Revenues from all of the hotel's operations. In order to estimate this amount, if the hotel were complete and operating at a stabilized level of occupancy and revenue generation, the Gross Revenues of the 800-room convention center hotel that is proposed for the property must be projected. These Gross Revenues include income from room night sales to hotel guests, income from food and beverage sales at the property's bars and restaurants, income from food and beverage charged to persons attending meetings at the hotel's meeting spaces, income from the selling of services at the property's spa, and income from other departments including the gift shop,meeting space rentals,the parking garage,and miscellaneous sources. Estimate of Room Revenues In order to estimate these amounts for the proposed subject hotel, we first estimated revenues from room night sales. In the previous Hotel Market Analysis, we noted the ADR, RevPAR and occupancy performance of similar large Miami Beach hotels, many of which have BLAZEJACK& COMPANY 42 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 large international hotel chain affiliations that are similar to those proposed for the subject hotel. These are summarized below: Hotel Rooms High Rack Low Rack The Fontainebleau 1,440 $547 $204 Loews Miami Beach 790 $469 $267 Eden Roc 627 $384 $326 The James Royal Palm 393 $569 $243 W Hotel South Beach 349 $742 $449 Shore Club South Beach 308 $416 $239 The Palms Hotel& Spa 251 $362 $215 Marriott Stanton 224 $599 $199 Hilton Bentley 95 $599 $279 Total/Average 4,477 $521 $269 The High Rack rate for each hotel was obtained for a standard double-occupancy room at each property during for the period of January 14 through 17, 2016(during the peak season in this market). The Low Rack rate for each was obtained for a similar occupancy during this market's low season, or from September 10 through 13, 2015. The following table summarizes the historical occupancy, ADR, and RevPAR performance of this set of competitive hotels based on data compiled by STR, for each trailing 12-month period ending in November of that year(the most-recent data available for this set of hotels). Month FYENov-. Month FYENov. Month FYENov. Year 2012 Year 2013 Year 2014 No.Days 366 No.Days 365 No.Days 365 Room Nights Available 1,638;582 Room Nights Available 1,634,105 Room NightsAvailable 1,634,105 Occupancy 75.9% Occupancy 77.0% Occupancy 78-5% Room Night Sales 1,244,298 Room Night Sales 1,257,955 Room Night Sales 1,282,826 ADR $295.71 ADR $321.53 ADR $338.53 Total Revenues(000s) $367,947 Total Revenues(000s) $404,475 T otal Revenues(000s) $434,277 RevPAR $224.55 Rev PAR $247.52 Rev PAR $265.76 These hotels exhibited an average High Rack rate of$521 per night, with an average Low Rack rate of$269. However, each has a prime location directly along the oceanfront in Miami Beach. The subject hotel will be several blocks to the west on a landlocked site. The rate that hotels along the oceanfront are able to charge is significantly greater than those on landlocked locations due to this locational difference. BLAZEJACK& COMPANY 43 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The Miami Beach market has few larger luxury hotels with chain affiliations situated on landlocked sites. Therefore, in order to gauge this rate differential due to these two locations, data on a different set of hotels was obtained. These include luxury boutique hotels in the South Beach, some with direct beach frontage and others located just off the beach and primarily along Collins and Washington Avenues. The identity of each of these two sets of boutique hotels, separated by location(oceanfront vs. landlocked), is presented below, along with High Rack and Low Rack rate information. Oceanfront Luxur Bouti s ue Hotels Hotel Rooms High Rack Low Rack The Setai 135 $1,025 $525 Hotel Victor 91 $347 $225 SLS Hotel South Beach 140 $282 $235 The Delano 193 $399 $279 W Hotel South Beach 349 $742 $449 Soho Beach House 50 $658 $365 ----------------------------------- --- - ------------------- Total 958 $575 $346 Landlocked Luxur Bouti I ue Hotels Hotel Rooms High Rack Low Rack Kimpton The Angler's 44 $598 $298 The Gale South Beach 112 $247 $146 Crowne Plaza Z Hotel 79 $566 $286 Dream Hotel South Beach 107 $348 $220 The Betsy Hotel 61 $463 $224 Total -_--- ----- 403 --$235 As evident in the two tables above, lower average rack rates are observed for the landlocked hotels; the High Rack rate of $575 among the oceanfront luxury boutique hotels above is skewed somewhat by the substantially-greater rate of $1,025 at The Setai. Nonetheless, this overall trend translated to a higher ADR and RevPAR for oceanfront boutique hotels compared to their landlocked counterparts, for the fiscal year ending November 2014 according to Smith Travel Research: BLAZEJACK& COMPANY 44 SECTION IV:LEASE ANALYSIS P Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Oceanfront Lux ur Bouti.ue Hotels Landlocked Luxur Bouti I ue Hotels Period - FYENov. %Change ;Period FYE-Nov. Change, Year 2014 Year 2014 No.Days 365 No.Days 365 Room Night s Available 349,670 Room Nights Available 147,095 Occupancy 71.9% Occupancy 86.5% Room Night Sales 251,413 23% Room Night Sales 127,237 2.5% ADR $577.08 -0.8% ADR $280-18 2.0% Total Revenues(000s) $145,085 Total Revenues(000s) $35,649 RevPAR $414.92 1.4% RevPAR $24236 4.6% From this analysis, the trends of occupancy, rates and RevPAR among these three sets of hotels can be summarized below. It includes the nine oceanfront hotels noted in the previous Hotel Market Analysis section of this report, and the comparison among the two sets of luxury boutique hotels from this market. - - 9 Large 6 Boutique 5 Landlocked Oceanfront/ Oceanfront Boutique Chain Hotels Hotels Hotels FYE Nov.2012 Occcupancy 75.9% 68.5% 79.6% ADR $295.71 $549.47 $278.65 RevPAR $224.55 $376.39 $221.81 FYE Nov.2013 Occcupancy 77.0% 70.3% 84.4% ADR $321.53 $581.94 $274.58 RevPAR $247.52 $409.10 $231.75 FYE Nov.2014 Occcupancy 78.5% 71.9% 86.5% ADR $338.53 $577.08 $280.18 RevPAR $265.76 $414.92 $242.36 Average High Rack $521 $575 $444 Average Low Rack $269 $346 $235 The subject will be a larger, luxury chain-affiliated hotel with a landlocked location adjacent to the Miami Beach Convention Center. As such, it has physical commonalities with the nine larger oceanfront hotels, whose most-recent occupancy performance indicated that 78.5% of its available annual room nights were sold. The subject's landlocked location is also common with the five landlocked boutique hotels, whose lower rate structures benefit them by allowing for a higher occupancy performance. From this analysis, the occupancy for the subject's 800-room convention center hotel, if completed and operating at stabilization, is estimated to be 80.0%. BLAZEJACK& COMPANY 45 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 The subject's landlocked location will dictate a lower rate structure than those with a preferred oceanfront location in this market. Thus, the rate indications among the landlocked boutique hotels reflect the market in which the subject's rate structure will be situated. These landlocked hotels had an ADR of$280.18 in the fiscal year ending November 2014. Rates have been rising in this market; however, the subject will operate as the headquarters hotel for the Miami Beach Convention Center. The operator's room night sales will be influenced by the group segment attending shows and events at this convention facility, and at the subject hotel's meeting space. Attendees comprising this group business often book in advance, and may obtain an advantageous rate through blocks of rooms purchased at a discount. As such, the ADR of the subject is expected to slightly lag those of other landlocked hotels in this market whose business is primarily generated from leisure guests visiting Miami Beach. For this reason, the subject's ADR is estimated to be $280.00 if currently operating at stabilization, or similar to the rate obtained last year among other luxury hotels with landlocked locations in this market. This produces a stabilized RevPAR for the property, if completed and operating at a stabilized level as of the current valuation date,of$224.00. Estimate of Revenues from Other Hotel Departments Gross Revenues at the proposed subject convention center hotel will also be generated from food and beverage sales from its bars, restaurants and from banquets in its meeting spaces, meeting space rentals, garage parking fees, spa services, and other sources. In order to estimate the Gross Revenues from these sources, we obtained financial data provided from four major international hotel chains illustrating the stabilized Gross Revenues that could be generated from an 800-room luxury full-service convention center hotel at the subject. Each assumes an operation that is similar to the type and quality sought by the landlord (the City of Miami Beach), and are among the approved hoteliers listed in the lease proposed by the City. These are highly-sophisticated and knowledgeable hotel operators with experience in running thousands of hotels worldwide; as such, the data provided from each is considered to present a reasonable level of revenues from each departmental category that can be expected. We also included the pro forma hotel operating data from Portman Holdings, the winning bidder of the Miami Beach Convention Center redevelopment proposal, along with data from a larger luxury hotel with meeting space in downtown Miami. BLAZEJACK& COMPANY 46 SECTION IV:LEASE ANALYSIS r Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201533 Comp No - 1 z 1` 3 I 4 - - _ 5 1 6 Location MBCC - MBCC MBCC MBCC MBCC Miami CBD Total Rooms 800 800 800 800 800 411 Hotel Type Full-Service Full Service Full Service Full Service Full Service Full Service Food&Beverage* Unspecified _ 4 Outlets 5 Outlets 3 Outlets 5 Outlets 3 Outlets Meeting Space(SF) Unspecified 100,000 85,000 80,000 84,210 15,248 . Meeting Space SF/Room Unspecified - 125 106 100 105 37 Spa Unspecified 10,000 SF 7,500 SF 10,250 SF 17,476 SF 13,628 SF Parking Garage Garage Garage Garage Garage Garage Expected Year Built 2018 2019 2019 2018 2018 2007 Stabilized Projections 1 1 1 I Stabilized Year 2021 2021 2022 2021 2022 2014 Annual Room Nights 292,000 292,000 292,000 292,000 292,000 150,015 Occupancy 80.0% 78.0% 80.0% 76.0% 79.5% 74.7% Room Night Sales 233,600 227,850 233,600 221,920 232,140 112,035 %Group Sales -N/A 65.0% N/A N/A N/A N/A - Average Daily Rate $325.71 $299.29 $384.03 $398.00 $324.03 $241.10 Total(OOOs) %of Total Total(000s) %of Total Total(OOOs) %of Total Total(000s) %of Total Total(000s) %of Total Total(000s)- %of Total Room Revenues $76,086 65.2% $68,193 63.6% $89,709 66.8% $88,324 65.9% $75,232 64.5% $27,012 57.2% Food&Beverage Revenue $35,595 30.5% 533,934 31.7% $40,361 30.1% $41,361 30.9% $35,401 _ 30.3% $15,384 32.6% Food&Beverage Outlets $11,853 10.2% $8,613 8.0% $14,959 11.1% $12,004 9.0% In F&B In F&B $12,550 26.6% Meeting/Banquets $23,742 20.3% $17,992 16.8% $25,402 18.9% $29,357 21.9% In F&B In F&B $1,128 2.4% Other F&B In Outlets In Outlets $7,329 6.8% In Outlets In Outlets In Outlets In Outlets In F&B In F&B $1,706 3.6% Telecommunications $658 0.6% In Other In Other $203 0.2% In Other In Other $659 0.6% $160 0.3% Spa $1,464 1.3% In Other In Other $823 0.6% $1,307 1.0% $1,451 1.2% $2,201 4.7% Parking $1,423 1.2% In Other In Other $1,346 1.0% In Other In Other $2,397 2.1% $1,790 3.8% Other Operating Depts. $854 0.7% $4,329 4.0% $678 0.5% $1,856 1.4% $843 0.7% $186 0.4% Rent&Other Income $697 0.6% $684 0.6% $1,091 0.8% $1,078 0.8% $689 0.6% $485 1.0% Total Revenue $116,777 100.0% $107,140 100.0% $134,211 100.0% $133,926 100.0% $116,673 100.0% $47,218 100.0% BLAZEJACK&COMPANY 47 SECTION IV:LEASE ANALYSIS • Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 In the preceding table, Comparables 1 through 4 represent data from the four major international hotel operators; their identities remain confidential due to the proprietary nature of this information, but each represents data from an international hotel chain that is widely experienced in projecting the revenues and expenses that can be generated at a wide variety of convention center hotels using highly-sophisticated financial models. Considering the estimates of stabilized occupancy and inflation-enhanced ADRs from these sources, this provides further support for the occupancy and rate structure estimated for the subject. Comparable 6 is from a larger luxury hotel in downtown Miami,with data as of 2014. Finally, Comparable 5 represents the projected hotel revenues for the subject's hotel development by Portman Holdings, the awarded bidder for the redevelopment of the property and the adjacent Miami Beach Convention Center. In the case of Comparables 1 through 5, these represent projections of revenues at stabilization several years from now, after completion of construction of the subject convention center hotel and its attainment of a stabilized level of occupancy and income generation. As such, the dollar amounts for each represent inflation-adjusted totals in the future, rather than amounts reflective of currently-achievable levels in the market. However, each provides a ratio of departmental revenues to total Gross Revenues once the property is operating at stabilization. As such, these ratios are relied upon to provide the following estimates of departmental revenues for the subject hotel, if it were completed and operating at stabilization as of the current valuation date. Room Revenues: Previously, we projected an ADR of$280.00 for the subject 800-room hotel, with an occupancy rate of 80.0%, if it were completed and operating at a stabilized level of occupancy and revenue generation as of the current valuation date. This equates to an annual Room Revenue total of$65,408,000. The spreadsheets from the data sources above indicate a range of proportions of Room Revenues to Total(Gross)Revenues from 57.2%to 66.8%, with a mean of 63.9% and a median of 64.9%. However, the low end of this range is noted from the actual 2014 performance of Comparable 6, which has a lower rate structure than the other properties resulting in a lower ratio of Room Revenues to Total Revenues. Thus,Room Revenues at the subject hotel are estimated to be 65.0%of Total Revenues. Food&Beverage Revenues: With 800 guest rooms,the subject hotel will operate multiple food and beverage outlets as projected by each of the forecasts of Gross Revenues from the international hotel chains. The existing hotel (Comp. 6) also has multiple food and beverage outlets. In this category,revenues will be derived from these restaurants and bars,as well as from food and beverages provided to attendees of meetings,events and banquets held in the property's substantial meeting spaces,and other outlets that include room service and provisions in minibars. Among Comparables 1 through 4, most Other F&B Revenues are reported with those from Food & Beverage Outlets (restaurants and bars), with a combined range from 9.0% to 14.8% of Total (Gross) Revenues. Revenues from providing food and beverages for meetings and banquets BLAZEJACK& COMPANY 48 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 exhibited a range from 16.8%to 21.9%of Total Revenues,an indication of the substantial meeting and event space planned for the subject's hotel operations. The combined Food & Beverage Revenues from all sources at these six comparable properties ranged from 30.1% to 32.6%; the high end of this range is exhibited by Comparable 6,which has a lower rate structure(thus a lower proportion of Room Revenues to Total Revenues), with the other five comparables exhibiting a range of Food&Beverage Revenues that are from 30.1%to 31.7%of Total Revenues. From this analysis, Total Food & Beverage Revenues are expected to be 30.5% of Total Revenues. This breaks down to a proportion of Total Revenues that is 19.5% attributed to Food & Beverage Revenues from meetings and banquets, with 6.0%attributed to the property's food and beverage outlets and the remaining 5.0%derived from other food and beverage sources. Telecommunications Revenues: These costs include charges from in-room phones and interne access charges, and range from 0.2% to 0.6% of Total Revenues. Thus, Telecommunications Revenues at the subject are estimated to be 0.4%of Total Revenues. Spa Revenues: The subject hotel will have a recreational spa providing massages and treatments to guests. Revenues for these services were estimated to range from 0.6% to 4.7% of Total Revenues, but with a median indication from the comparables of 1.2%. Thus, Spa Revenues are projected to be 1.2%of Total Revenues. Parking Revenues: This category will derive income from parking charges at the hotel's garage. The comparable indications of revenues in this department range from 1.0% to 3.8% of Total Revenues,from which an estimate of 1.5%of Total Revenues is derived. Other Operated Departments Revenue: This category includes miscellaneous revenues from other departments that may include a gift shop, business center, or other hotel amenities. The comparable properties indicated a range of revenues in this department from 0.4% to 4.0% of Total Revenues, but with a median indication of 0.7%. Revenues from Other Operated Departments are forecast from this analysis to be 0.8%of Total Revenues. Rent & Other Income: Income from this line item includes meeting and banquet space rents, and miscellaneous income. Among the comparable properties, a range of revenues from this category from 0.6%to 1.0%of Total Revenues is evident,but with mean and median indications near the low end of this range. Thus,Rent&Other Income at the subject hotel is estimated to be 0.6%of Total Revenue. Estimate of Contract Rent The proposed ground lease for the subject projects that the rent on the site will be 2.5% of the Gross (Total) Revenues generated by its hotel operation. This will occur in fourth year after the hotel's opening, at which time its operations are expected to be stabilized. As such, this represents the base rent for the property, not including any concessions during the initial years of the lease term. Previously, we estimated the Room Revenues that the subject appears capable of generating and its ratio to the Total (Gross) Revenues that will likely be realized; this estimate assumes that the subject hotel is complete and operating at a stabilized level of occupancy and income generation as of the current valuation date. Other departmental revenues were also projected based on their ratios to Total Revenues. Using the results of this analysis, the BLAZEJACK& COMPANY 49 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 following table is our summary of the estimated Gross Revenue for the subject hotel, if completed and operating at stabilization as of the current valuation date. Property --- -------- Subject _-----_ _-- Location MBCC Total Rooms 800 Hotel Type Full-Service Food&Beverage* 4 to 5 Outlets Meeting Space(SF) 80,000-100,000 Meeting Space SF/Room 100 to 125 Spa Full Service Parking Garage Expected Year Built 2019 Stabilized Projections Current Year 2015 Annual Room Nights 292,000 Occupancy 80.0% Room Night Sales 233,600 Average Daily Rate $280.00 Total (000s) %of Total Room Revenues $65,408 65.0% Food& Beverage Revenue $30,692 30.5% Food&Beverage Outlets $6,038 6.0% Meeting/Banquets $19,622 19.5% Other F&B $5,031 5.0% Telecommunications $403 0.4% Spa $1,208 1.2% Parking $1,509 1.5% Other Operating Depts. $805 0.8% Rent&Other Income $604 0.6% Total Revenue $100,628 100.0% Estimate of Base Rent The previous estimate of Total (Gross) Revenue of$100,628,000 is multiplied by 2.5% to provide an estimate of the base contract rent for the proposed ground lease at the subject site. This produced an estimated base rent of$2,515,700, assuming the property is operating at a stabilized level of occupancy and operations as of the current valuation date. The following sections provide analyses of this proposed contract rent to determine if that amount reflects the market rent that the property would be capable of generating under this scenario. BLAZEJACK& COMPANY 50 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 MARKET VALUE OF THE SITE (IN FEE SIMPLE) The purpose of this analysis is to estimate whether the terms of the proposed ground lease to the site reflect a rental rate that is similar to that which could be obtained in the market (synonymous with market rent). The subject will be leased under terms that are fully triple-net, whereby the land tenant is responsible for all operating costs,taxes and insurance to the property during the term of the lease. As such, if the rental rate for the ground lease provides a reasonable return on the equity (value) in the site, it represents the market rent that the site is capable of generating. The Sales Comparison Approach was used to estimate the value of the subject site in fee simple; returns on an investment in that site were analyzed to determine if the terms of the proposed lease on the site were consistent with its rent-producing capabilities in the open market. The methodology that is applied is necessary to evaluate factors such as time of sale (market conditions), location, size, density, frontage and other factors when making the comparison. The subject site is located at the northeast corner of 17th Street and Convention Center Drive, immediately south of the Miami Beach Convention Center. This is a landlocked location in the city's South Beach market, with a highest and best use for the development of a luxury, full-service, 800-room convention center hotel (if approvals for such development were in place as of the current valuation date). Similar sites suitable for new development of large-scale hotels in this market are non-existent. Miami Beach has been primarily built-out since the 1950s and `60s. Much of the subject's South Beach market is subject to historic preservation zones which protect the existing architecture to many properties, prohibiting demolition and redevelopment of these properties when the economic lives of their existing improvements come to an end. As such, there are virtually no sales of similar sites suitable for large-scale hotel development in this market. However, other older hotel properties in this market periodically reach an end to their economic lives. Recently,buyers have purchased these properties for substantial redevelopment and/or expansion. This is allowed, even in historic preservation areas, provided that the architectural features of the existing buildings (often their exterior facades, at a minimum) remain intact. These buyers purchase these older hotels, gut the interiors then substantially BLAZEJACK& COMPANY 51 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 renovate them. If additional building areas are allowed by zoning, an additional expansion may also be undertaken, provided that the resulting development conforms to historic preservation ordinances. In this situation, the buyer is effectively purchasing a hotel at a price that is nearest to its "land value" for this market. The requirement to keep at least some of the older buildings' structures may provide some cost savings in redevelopment, however, in comparison with properties that could be purchased vacant with no preservation restrictions in place. We have selected four sales of this type from the subject's Miami Beach market, along with three sales of hotel development sites in Miami across Biscayne Bay to the west. Each was purchased for development for redevelopment with a luxury hotel. The sales had some inherent differences with the subject property which required adjustments to their respective sale prices. The rationale behind the adjustment process is to reflect the differences in behavior of buyers and sellers based upon certain characteristics inherent in the site. Typically, the most useful unit of comparison in land sales suitable for hotel (re)development is the sale price per (planned) guest room, as this provides a benchmark for developers regarding cost and, hence, feasibility of development. The price per square foot of site area is also used, but has limited applicability in the case of sale properties with wide variances in planned density (expressed in rooms per acre). A summary of the details of each property sale is presented below, followed by a location map. A detailed description of each sale is presented in the Addenda of this report. BLAZEJACK& COMPANY 52 SECTION IV:LEASE ANALYSIS 1 Miami Beach Convention Center Hotel Site,Miami Beach,Florida REPORT 201533 - Property Location Sale Date Size SF Zoning. Sale PropertOame O.R.Book/Page (Acres) Condition Sale_Price Price/Unit ;No. Folio No. or Instrument No.Rooms Front••.e Price/SF Rooms/Acre Comments I 3450 Biscayne Blvd.,Miami Nov-14 36,240 T6-36a-0 $4,500,000 $29,801 New mid-scale hotel development Hampton Inn Midtown Site 29417/1605 (0.83) Comml.Bldg. $124.17 181.5 with 4,435 SF of ground Floor retail 01-3230-003-0350&0390 151 Biscayne Blvd. space 2 N.Miami Ave.&NE 36 St.,Miami Jun-14 44,783 T6-12-0 $12,250,000 $41,246 Hotel/mixed-use project also with Tryptich Hotel/Mixed-Use Site 29222/2553 (1.03) Vacant $273.54 288.9 40k SF of retail,46k SF of offices,6k 01-3124-026-0010 et.al. 297 1-195 frontage SF gallery,&500-space garage. 3 1610 Colllins Ave.Miami Beach Sep-13 18,075 CD-3 $6,500,000 $67,010 Old 64-room Art Deco hotel at end o Berkeley Shore Hotel 28823/4022 (0.41) Old Hotel $359.61 233.8 its economic life,to be renovated& 02-3234-019-0790 . 97 Collins Ave. expanded to 97 rooms. 4 1500 Collins Ave.,Miami Beach Jul-13 60,445 MXF/CD-2 $34,475,000 $206,437 Old Haddon Hall Art Deco hotel& Haddon Hall Hotel&Campton Apts. 28730/3186 (1.39) Old Hotel/Apts.- $570.35 120.3 Campton Apts.;50,000 SF in 02-3.234-019-1190,1191&1200 2.8732/21.6.4 167 Collins&Wash. additional development possible 5 700 North Miami Ave.,Miami May-13 205,353 T6-60a-0 $35,000,000 $19,444 Planned hotel&600k SF convention MDM Marriott Hotel 28300/1569 (4.71) Vacant $170.44 381.8 center at west end of Miami World 01-3137-025-0011 1,800 NW 1st St. Center mixed-use project. 6 1920 Collins Ave.,Miami Beach May-12 9,375 CD-2 $7,500,000 $125,000 Boarded-up Art Deco hotel to be Greys tone Hotel 28129/1240 (0.22) Vacant Hotel $800.00 278.8 combined with apts.behind to create - 02-3226-001-0100 60 - Collins Ave. a 97-room hotel redevelopment._ 7 3720 Collins Ave.,Miami Beach Mar-I2 14,000 RM-2 $6,750,000 $67,500 Abandoned apt-hotel in central Croydon Aran Hotel 28039/1898 (0.32) Vacant Hotel $482.14 311.1 Miami Beach to be renovated with 02-3226-001-1710 100 Collins Ave. 100 rooms. Subj. 17th St.&.Cony.Center Dr. 115,265 PD Planned hotel site adjacent to the Miami Beach Cony.Ctr.Hotel Site (2.65) Mostly Vacant 301.9 MGami Beach Convention Center& Part of 02-3227-000-0090 800 17th Street Fillmore Theater BLAZEJACK&COMPANY 53 SECTION IV:LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 flzreT iti 7 l uhf : >.. s■aw ', ••l * MI� R , . - --;s — c�;. , -- ' moc t: � --':)ale 3 7:0 C ollins.' 1 ■___ rt /''N.i _iff ff 1111 p- Z : fir- . ` Sale Se MO Cahill Aw.—i"! TN O. n °. SL'S7ECT PROPERil r{.. 1 NE 1 tl�uGw t ��# t.� s 1 sale?:1610Callias.i1 e,,x %,,,..„,„ - sale J: ■ 1500 Collins.%s a 7.......--- t \ c ,ta C..X ac's F «s .it : —S-d to -_°3a1eSI:7N Noilli Mini An. (If,.:1.,T , i'(!...A3,_Ez S., (2::) .,...., I'D It is worth noting that Sale 5 represents the site of a proposed 1,800-room Marriott convention center hotel that will anchor the west end of the proposed Miami World Center project in downtown Miami. This hotel will also include a convention facility with 600,000 square feet of meeting space that will be a direct competitor with the Miami Beach Convention Center.- The remainder of Miami World Center will include 765,000 square feet of vertical retail space and at least two residential towers spread along several city blocks at the north end of the city's Central Business District. Another similar retail project, Brickell CityCentre, is under development across the Miami River to the south, and will have 490,000 square feet of retail space, a new East Hotel,two residential towers and two office buildings. Other sales of redevelopment properties were noted in Miami Beach, but these featured alternative highest and best uses (rather than hotel) thus were not included in this analysis. This includes a redevelopment property located in the 600 block of Washington Avenue that was purchased for$36 million in June 2015. Land Sales Adjustments Each of the properties sold with a fee simple interest, with terms equivalent to cash. The local hotel market has improved over the time period in which these sales have occurred, with rising ADR and RevPAR levels and strong occupancy. Hotel investment and development is BLAZEJACK& COMPANY 54 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 actively occurring in this market, demonstrating demand for properties suitable for this activity. As such, an upward adjustment was applied to the less-recent sales due to improving market conditions over the period in which these sales occurred. In the case of Sale 4, the buyer purchased a property with approximately 56,000 square feet of existing building area for redevelopment. This was a 167-unit facility housing the historic Haddon Hall hotel along Collins Avenue, and the abutting Campton Apartments to its immediate west. However, the purchase also carried property rights that allow the buyer to expand the property by another 50,000 square feet, nearly doubling its size. For this reason, a substantial downward adjustment for conditions of sale was made to the price paid for Sale 4 due to the presence of substantial development rights that were also obtained as part of the price paid. Sales 1, 2 and 5 are located in Miami, rather than in Miami Beach. However, two of these properties represent vacant hotel sites, while the third was sold with a small commercial building (similar to the subject) but with a similar highest and best use for high-density hotel development. These three Miami sales exhibit a range of prices per room from $19,444 to $41,246. The other four sales are from the subject's Miami Beach market, proximate to the Atlantic Ocean beaches,that city's convention facility, and other major attractions in this market such as the Lincoln Road retail/entertainment area and the city's Art Deco District. The four Miami Beach sales have much-higher prices per room (from $67,010 to $206,437). Thus, a substantial upward adjustment is appropriate to the prices paid for Miami Sales 1, 2 and 5 for location compared to the subject's location in South Beach. This adjustment is greater for Sale 5 since it is located in the northwest end of downtown Miami in an area that is going through the early stages of redevelopment. By contrast, Sales 1 and 2 are adjacent to the Design District, Midtown Miami and Wynwood whose stages of redevelopment and gentrification were much further along at the time of sale. Currently, the subject is improved with small, low-rise buildings that are part of the adjacent Fillmore Theater. These buildings must be demolished and removed before the subject can be developed to its highest and best use (as a luxury, full-service, 800-room convention center hotel facility). This is similar to the condition under which Sale 1 occurred, but Sales 2 and 5 sold in superior condition as vacant and ready for development. For this reason, a BLAZEJACK& COMPANY 55 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 downward adjustment was applied to the prices paid for Sales 2 and 5 for superior site condition at the time of sale. Miami Beach Sales 3,4,6 and 7 sold with existing hotel and/or apartment improvements in place. However,these improvements were near the end of their economic life. While historic preservation ordinances prohibited their total demolition, each property was purchased for substantial redevelopment(and, in some cases, expansion). This reflects the nearest similarity to a sale of a property at its land value in this market; nonetheless, the presence of existing improvements that must be partially preserved potentially reduces some of the costs of redevelopment for the buyers of Sales 3, 4, 6 and 7. As such, a downward adjustment for the potential of reduced costs of redevelopment is applied to the prices paid for these four Miami Beach sales in comparison to the subject. A price adjustment for these differences between the subject and the comparable sales would ideally be based on any quantifiable differences between these properties. In some cases, the price per room differentials between the sales provided clues regarding the appropriateness of an adjustment to sale price for locational differences and conditions of sale. In any case, the derivation of an accurate adjustment typically requires a larger array of indications from numerous recent sales, a situation that is not usually available. Nonetheless, we have attempted to quantify approximate adjustments to the prices of the comparable properties for varying differences between each and the subject property. These adjustments are summarized below: BLAZEJACK& COMPANY 56 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Salt \o. 1 2 3 4 5 6 7 Sale Data: Cash Equiv.Sale Price $4,500,000 $12,250,000 $6,500,000 $34,475,000 $35,000,000 $7,500,000 $6,750,000 Sale Price/SF $124.17 $273.54 $359.61 $570.35 $170.44 $800.00 $482.14 Sale Price/Unit $29,801 $41,246 $67,010 $206,437 $19,444 $125,000 $67,500 ADUSTMENTS: Property Rights 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0 Financing 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Conditions of Sale 0.0% 0.0% 0.0% -48.0% 0.0% 0.0% 0.0% Market Conditions 0.0% 4.0% 7.0% 8.0% 8.0% 10.0% 10.0% Preliminary Adjustment 0.0% 4.0% 7.0% -40.0% 8.0% 10.0% 10.0% Adjusted Price/SF $124.17 $284.48 $384.79 $342.21 $184.07 $880.00 $530.36 Adjusted Price/Unit $29,801 $42,896 $71,701 $123,862 $21,000 $137,500 $74,250 ADDITIONAL ADJUSTMENTS: Location 200.0% 200.0% 0.0% 0.0% 300.0% 0.0% 25.0% Water Frontage 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Site Condition 0.0% -5.0% -20.0% -20.0% -5.0% -20.0% -20.0% Topography 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Site Configuration 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Road Access 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Zoning 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Additional Adjustment 200.0% 195.0% -20.0% -20.0% 295.0% -20.0% 5.0% Adjusted Price/SF $372.52 $839.22 $307.83 $273.77 $727.09 $704.00 $556.88 Adjusted Price/Acre $89,404 $126,542 $57,361 $99,090 $82,950 $110,000 $77,963 Price/t nit High $126,542 Low $57,361 Median $89,404 Mean $91,901 Overall,these adjustments provided a range of indications from$57,361 to $126,542 per planned guest room, with a median of $89,404 per room and a mean of $91,901 per room. Based on this analysis from sales comparison, the subject site appears to have a current "as is" Market Value of$90,000 per planned room, considering a Fee Simple interest in the property and assuming approvals are in place to allow for development at its highest and best use. This highest and best use of this property is for development of a luxury, full-service, 800-room convention center hotel. With a site size of 2.65 acres, this equates to a planned development density of 301.9 rooms per acre. This development density is most similar to that of Sales 2, 6 and 7, with substantially higher or lower densities proposed in the development of the other four sales. The price per square foot of land among properties can skew significantly when potential development densities are increased or decreased. As such, the use of sales with BLAZEJACK& COMPANY 57 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 relatively-similar planned development densities is important in the analysis of properties' sale prices per square foot of site area. Among Sales 2, 6 and 7, the adjusted sale prices per square foot ranged from$556.88 to $839.22. From this range, an "as is" Market Value for the Fee Simple interest in the appraised property is estimated at approximately$700.00 per square foot of land. However, the previous analysis has not considered the Extraordinary Assumption that the subject site is encumbered by a Neutrality Agreement that has been proposed for the property. This Agreement, between a hotel operator and labor unions, will prevent the eventual user of the site (a hotel operator) from opposing efforts of labor unions to recruit new members from qualified personnel working at the hotel. This is an added encumbrance to the site that the previous value estimates per room and per square foot of land did not consider. Any encumbrance to a property, whether physical (such as an easement) or legal (such as a deed restriction), creates greater limits on a property's development and/or use. The subject site has a highly-unique landlocked location in South Beach, with a unique development density proposed for this location. There are no sales of similar properties with similar use encumbrances from which to extract an adjustment for this factor. Therefore, we have applied other methods in order to provide adjustments to the value indications of the property with this added use encumbrance. Test of Development Feasibility The value of the subject site is directly tied to its marketability. A potential purchaser will be attracted to the property if the price of acquisition is reasonable for its intended use. A buyer of a development site is attracted by the property's potential to provide a return on their investment relative of other alternatives in the market. This return is also referred to as the property's entrepreneurial profit. Profit from a development is measured using a simple formula: BLAZEJACK& COMPANY 58 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Market Value at Stabilization Less: Total Building Cost Less: Total Land Acquisition Cost Equals: Profit In order to estimate the proposed hotel's Market Value at Stabilization, we will use direct capitalization of its stabilized net operating income. The site's proposed use encumbrance would require the eventual hotel operator to maintain a neutral stance if labor unions wished to recruit members from among various qualified employees at the hotel. It does not mandate a union workforce at the hotel,but if a majority of qualified employees vote to join a labor union, it may have effects on the hotel's income generation. The previous estimate of Gross Revenues for the property was obtained from financial information from four experienced international hotel operators, along with those from the subject's hotel developer and from a similar larger hotel in Miami. Among these sources, two of the major international hotel operators provided estimated pro formas of the financial performance of the subject property considering both Union and Non-Union workforces. These are included below, along with a summary of the conclusions from an STR Analytics study: BLAZEJACK& COMPANY 59 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 Comp.\n. I 2 ti IR Anal tics Location MBCC MBCC MBCC MBCC MBCC MBCC Total Rooms 800 800 800 800 332 523 Hotel Type Full-Service Full Service Full Service Full Service Full Service Full Service Employee Type Non-Unioin Union Non-Union Union Non-Union Union Food&Beverage* 4 Outlets 4 Outlets 5 Outlets 5 Outlets 5 Outlets 5 Outlets Meeting Space(SF) 100,000 100,000 85,000 85,000 N/A N/A Meeting Space SF/Room 125 125 106 106 N/A N/A Spa 10,000 SF 10,000 SF 7,500 SF 7,500 SF N/A N/A Parking Garage Garage Garage Garage N/A N/A Expected Year Built 2019 2019 2019 2019 1983 1970 Stabilized Projections no Diff. "0 Diff. Diff. Annual Room Nights 292,000 292,000 292,000 292,000 121,180 190,895 Occupancy 78.0% 78.0% N/A N/A 78.8% 81.9% Room Night Sales 227,850 227,850 N/A N/A 95,490 156,343 %Group Sales 68.0% 68.0% N/A N/A N/A N/A Average Daily Rate $307.50 $307.50 0.0% N/A N/A $203.78 $263.05 29.1% Departmental Revenues Total(000$) Total(000s) %A Total(000s) Total(000s) %A Per$1 Per$1 %A Room Revenues $70,064 $70,064 0.0% $84,588 $84,588 0.0% Food&Beverage Revenue $35,127 $35,127 0.0% $42,101 $42,101 0.0% Restaurants&Bars $8,272 $8,272 0.0% N/A N/A Banquets&Meetings $19,121 $19,121 0.0% N/A N/A Other F&B $7,734 $7,734 0.0% N/A N/A Telecommunications In Other In Other In Other $189 $189 0.0% Spa In Other In Other In Other $944 $944 0.0% Parking In Other In Other In Other $1,213 $1,213 0.0% Other Operating Depts. $4,430 $4,430 0.0% $629 $629 0.0% Rent&Other Income $680 $680 0.0% $1,045 $1,045 0.0% Gross Revenue $110,301 $110,301 0.0% $130,709 $130,709 0.0% Departmental Expenses Rooms $14,102 $15,072 6.9% $16,103 $17,069 6.0% Food&Beverage $20,337 $21,738 6.9% $27,559 $29,461 6.9% Telecommunications In Other In Other In Other $604 $616 2.0% Spa In Other In Other In Other $755 $755 0.0% Parking In Other In Other In Other $0 $0 0.0% Other Operating Depts. $2,873 $2,949 2.6% $734 $734 0.0% Rent&Other Income $0 $0 0.0% $0 $0 0.0% Departmental Expenses $37,312 $39,759 6.6% $45,755 $48,635 6.3% $0.427 $0.473 10.8% Departmental Profit $72,989 $70,542 -3.4% $84,954 $82,074 -3.4% Undistributed Expenses'.. Admin.&General $6,759 $6,818 0.9% $7,604 $7,604 0.0% Sales&Marketing $5,670 $5,687 0.3% $8,466 $8,466 0.0% Property Maintenance $3,352 $3,827 14.2% $3,521 $3,521 0.0% Utilities $3,203 $3,203 0.0% $2,747 $2,747 0.0% Undistributed Expenses $18,984 $19,535 2.9% $22,338 $22,338 0.0% $0.217 $0.213 -1.8% Profit Before Fixed Costs $54,005 $51,007 -5.6% $62,616 $59,736 -4.6% $0.321 $0.292 -9.9% Among the hotel operators cited in the table above, no effect on the revenues from hotel workforce unionization could be supported from independent sources. RevPAR among the unionized hotels from the STR Analytics study was almost $55.00 higher than those of Non- Union hotels in this market. This indicates that the Gross Revenues at the Union hotels surveyed by this source were greater than their Non-Union counterparts. However, STR Analytics noted that the unionized hotels surveyed tended to be larger and convention hotels located in central business districts with higher rate structures compared to their Non-Union counterparts. It also may skew the trends in expenses noted by this source,but to a lesser degree BLAZEJACK& COMPANY 60 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 since these were compared to hotels located in similar city-wide markets where similar costs for labor, good and supplies, etc. would occur. Nonetheless, it does not provide a clear"apples-to- apples" comparison with regard to any impact on the Gross Revenues for the subject hotel if unionization of its workforce were to occur. Among the pro formas for Non-Union operations, the Profit Before Fixed Costs ranged from 47.9%to 49.0%of Gross Revenues. Our estimate of Gross Revenues was$100,628,000 in current dollars; since the subject is anticipated to be completed and achieving a stabilized occupancy and revenue generation by 2022, we have inflated this amount at 3.0% per year which results in an estimate of Gross Revenues at stabilization of .$123,760,000. From the comparable indications, the estimated Profit Before Fixed Costs at the subject is estimated to be 48.5%of Gross Revenues under this scenario,or$60,024,000 at stabilization. A breakdown of the additional fixed costs estimated from the two international hotel operators is summarized below: Comp No. 1 2 Employee Type Non-Union Union Non-Union Union Total (000s) Total (000s) %A Total (000s) Total (000s) % 1 Gross Revenues $110,301 $110,301 $130,709 $130,709 Profit Before Fixed Costs $54,005 $51,007 -5.6% $62,616 $59,736 -4.6% Asa%of Gross Revenues 49.0% • 46.2% . - 47.9% 45.7% Less: Fixed Costs Management Fee: 3% $3,309 $3,309 $3,921 $3,921 Property Taxes $3,905 $3,905 $3,560 $3,560 Insurance $1,044 $1,044 $2,876 $2,876 Land Rent $4,412 $2,758 $5,228 $3,268 FF&E Reserves $4,412 $4,412 $3,560 $3,560 Total Fixed Costs $17,082 $15,428 $19,145 $17,185 Net Operating Income $36,923 $35,579 -3.6% $43,471 $42,551 -2.1% Land rent was calculated at 2.5% of Gross Revenues. From the range of indications for a Non-Union hotel in the preceding table, total fixed costs at the subject are estimated to be $18,500,000. When these fixed costs are deducted from the subject estimated Profit Before Fixed Costs, a stabilized net operating income of$41,524,000 is estimated. In a subsequent analysis of the appropriate (market) returns on the subject site, we will provide support for an applicable overall capitalization rate for the subject hotel, if completed and operating at stabilization, from 5.50% to 6.00%. Applying those rates to the estimated net BLAZEJACK& COMPANY 61 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 operating income produces a value range at stabilization from $692,067,000 to $754,982,000. With 800 rooms, this equates to a stabilized value range from $865,000 to $944,000 per guest room. These calculations for the subject's proposed hotel (at stabilization)are presented below: Annual Inflation 3.0% Current Stabilized 2022 2015 High Low Non-Union Hotel Return Analysis ($ in 000s) ($in 000s) ($ in 000s) Projected Gross Revenues: Non-Union Hotel $100,628 $123,760 $123,760 Proportion of Profit Before Fixed Costs 48.5% 48.5% Estimated Profit Before Fixed Costs $60,024 $60,024 Fixed Costs at Stabilization $18,500 $18,500 Net Operating Income $41,524 $41,524 Overall Capitalizatio Rate 5.50% 6.00% Value at Stabilization $754,982 $692,067 No. of Rooms 800 800 Stabilized Value per Room $944 $865 Building Cost per Room $507 $507 Developer's Profit on Costs 86.19% 70.61% Compounded Annual Profit Rate 9.29% 7.93% The developer, Portman Holdings, has forecast a construction cost for the hotel of $405,450,398, which equates to approximately $507,000 per room. There are no costs to acquire the land, which will be leased from the City of Miami Beach. These land lease costs were previously included in the Fixed Costs at Stabilization of$18,500,000. When deducted from the value per room indications, this provides a potential profit range from 70.61% to 86.19% over costs over the seven-year period in which the hotel will be construction then brought to a stabilized level of occupancy and operations and assuming a Non-Union workforce at the subject. This is a compounded annual return rate of 7.93% to 9.29% over this seven-year period. When compared to the overall capitalization rates that are applicable to this hotel property (at stabilization) of 5.50% to 6.00%, this appears to be an attractive project for a developer to undertake. Next,we have analyzed the impact on feasibility if the qualified employees at the subject hotel were to join a labor union. The two international hotel operators provided a comparison of Profit Before Fixed Costs and net operating income considering both Union and Non-Union BLAZEJACK& COMPANY 62 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 workforces at the proposed subject. Profit Before Fixed Costs fell by 4.6% to 5.6% in these estimates when a Union workforce was in place, along with a drop in net income ranging from 2.1%to 3.6%. Comp No. 1 2 Employee Type Non-Union Union Non-Union Union Total (000s) Total (000s) % \ Total (000s) Total (000s) % \ Gross Revenues $110,301 $110,301 $130,709 $130,709 Profit Before Fixed Costs $54,005 $51,007 -5.6% $62,616 $59,736 -4.6% Asa%of Gross Revenues 49.0% 46.2% 47.9% 45.7% Less: Fixed Costs Management Fee: 3% $3,309 $3,309 $3,921 $3,921 Property Taxes $3,905 $3,905 $3,560 $3,560 Insurance $1,044 $1,044 $2,876 $2,876 Land Rent $4,412 $2,758 $5,228 $3,268 FF&E Reserves $4,412 $4,412 $3,560 $3,560 Total Fixed Costs $17,082 $15,428 $19,145 $17,185 Net Operating Income $36,923 $35,579 -3.6% $43,471 $42,551 -2.1% However, the STR Analytics study indicated a greater decline of 9.9% in Profit Before Fixed Costs due to the impact of a unionized workforce on a typical hotel property. Therefore, we have estimated that the implementation of a unionized workforce will cause a decrease of 4.0% in the net income that the subject property will generate at stabilization. In applying similar overall capitalization rates of 5.50% and 6.00%, this will cause a similar 4.0% drop in the stabilized value of the proposed hotel with a Union workforce. This equates to an adjusted value per room range from $830,000 to $906,000. When compared to the cost of construction of$507,000 per room, the following profit margins are noted: Stabilized 2022 High Low Union Hotel Return Analysis ($in 000s) ($in 000s) Stabilized Value per Room: Non-Union Hotel $944 $865 Adjustment for Union Operation -4.00% -4.00% Stabilized Value per room with Union Operation $906 $830 Building Cost per room $507 $507 Developer's Profit on Costs 78.70% 63.71% Compounded Annual Profit Rate 8.65% 7.30% Over the seven-year period to complete the proposed hotel's construction and bring its operations to stabilization, an annual profit rate of 7.30% to 8.65% on costs is estimated if BLAZEJACK& COMPANY 63 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 unionization of the hotel's qualified employees is assumed. As such, the subject remains an attractive and highly-feasible development in this market compared to the overall rate for a similar existing hotel property in this market. Although the return to the developer (via profit) remains attractive, it is nonetheless reduced if the hotel's qualified workers were unionized, posing the potential for reduced returns to a developer caused by this use restriction that is assumed to be in place at the property. Both the building improvement and land to this property contribute to the profit that can be achieved in these scenarios since feasibility remains under both a Union and Non-Union workforce application to the property. Feasibility for development disappears if a property's value falls or if costs rise to levels that do not provide for an adequate return to the developer. Once that situation occurs, it is often the land value that falls before building costs, and to a greater degree, since the building costs are based on many factors that include various materials and labor whose levels are typically less elastic. The difference in profit levels between the Union vs. Non-Union workforce scenarios above provide the following range of downward adjustments to the land value: Overall Capitalization Rate At 5.50% At 6.00% Total Profit: Non-Union Workforce Hotel 86.19% 70.61% Total Profit: Union Workforce Hotel 78.70% 63.71% Difference -8.70% -9.78% With greater elasticity to the value of land (compared to building costs), this range is rounded upward to a land value adjustment of 18.0%, or approximately double the amount from the range of differences in the preceding table. This adjustment is applied to the value of the subject site since this estimate assumes that a use encumbrance is in place(per the Extraordinary Assumptions section of this report). This equates to an estimated Market Value if encumbered with this use restriction of$74,000 per planned room or$574.00 per square foot of site area, or 18.0% less than the values previously estimated if unencumbered. Using these estimated values per room and value per square foot of land provides the following Market Value estimates for the subject site "as is" and considering a Fee Simple interest as of the current valuation date. These value estimates assume that the development of the property can occur BLAZEJACK& COMPANY 64 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 to its stated highest and best use, and are subject to the Assumptions and Limiting Conditions and Extraordinary Assumptions set forth in this report: Value Conclusion Value/Room x No Rooms = Total Value $74,000 x 800 = $59,200,000 Rounded = $59,200,000 Value Conclusion Value/SF x Site SF = Total Value $574.00 x 115,265 = $66,162,110 Rounded = $66,200,000 ANALYSIS OF THE PROPOSED RENT FOR THE SITE The proposed lease for the subject has triple-net terms, whereby the land tenant pays all of the property's taxes, insurance, maintenance and operational costs. We have previously estimated the contract rent on the subject site to be approximately$2,515,700 under the terms of the lease proposed for the property. If this amount represents a reasonable return on the site's current value(equity),then this current contract rent it is synonymous with its market rent. In the previous section of this report, we estimated the current Market Value of the site in Fee Simple at $59,200,000, using a price per room unit of comparison; this value was estimated at$66,200,000 using a price per square foot of land area comparison. Considering the estimated contract rent of the site,this produces the following returns on the value(equity)of the site,which also represents an overall capitalization rate to the land: Land Value Land Value per Land Value Unit of Comparison Per Room SF of Land Estimated Contract Rent on the Site $2,515,700 $2,515,700 Estimated Land Value in Fee Simple $59,200,000 $66,200,000 Return(Overall Rate to the Land) 4.25% 3.80% The indicated return of the contract rent on the property's value ranges from about 3.80% to 4.25%, which is reconciled at 4.00%. In order to determine if this is a reasonable return on the Fee Simple owner's equity, we have obtained similar return rates on alternative investments and compared them to this estimated return rate to the subject based on risk and other factors. BLAZEJACK& COMPANY 65 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 10-Year U.S. Treasury Yields July 2015 2.19%to 2.46% Corporate BBB Bond Yields July 2015 3.81%to 3.96% Corporate BBB Bond Yields Long-Term Average 5.88% U.S. Treasuries are considered to carry reduced risk compared to real estate investments, thus reflect a range of rates below those that would be sought on a ground lease. The yield rates on corporate bonds carrying a BBB rating are viewed as carrying risk that is more-similar to that on a ground lease for commercial properties. The range of most-recent yield rates for these bonds has ranged from 3.81% to 3.96%; however, the long-term average yield rate on corporate bonds is much higher, at 5.88%. The Federal Reserve has held a zero interest rate policy since December 2008 in an effort to reverse the effects caused by the economic downturn that began that year, affecting a downward pull on all debt rates and yields including those of governmental agencies and corporations. As such, rates and yields on these instruments are at their lowest levels in many years. Although the Federal Reserve has not changed this policy since then, recent business media reports have indicated that rates may be hiked upward before the end of this year in response to improving economic conditions. With a 99-year lease at the subject, its fee simple owner would take the long-term outlook for rates and returns into consideration when seeking a yield rate on the site. As such, the long-term return sought from a triple-net lease on the subject site would skew higher than the most-recent corporate BBB bond yields noted above. Another source of returns is provided from overall capitalization rates (OARs) on sales of operating hotels in this market. This rate reflects the proportion of net income (return) on improved hotel property investments and other net-leased commercial property investments, and was obtained from recent surveys of national investors cited in the table below: Property :arc rage Source 7v pc/('lass Range of OARS OAR RERC National Hotels 5.00% to 8.50% 6.80% 4th Qtr.2014 Integra Viewpoint Miami Class"A" 6.70% Year-End 2014 Full-Service Hotels Korpacz/PWC National Net Leased 6.98% 4th Qtr.2014 Properties CBRE US Luxury Hotels 6.60% 2nd Half 2014 Miami Luxury Hotels 5.00% to 6.00% BLAZEJACK& COMPANY 66 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 These surveys indicate a range of overall capitalization rates applicable to national hotel property investments from 5.00% to 8.50%, with the best-quality, Class "A" hotel investments trading on overall capitalization rates from 5.00% to 6.70%. The Integra and CBRE surveys provide overall rates for the best-quality (Class "A") hotel property investments in the local Miami-area market,with a range from 5.00%to 6.70%. When completed, the proposed subject hotel will be a full-service luxury hospitality facility with 800 rooms, a new age of improvements and containing substantial meeting space. It will be located in the prime South Beach resort market of Miami Beach. Conversely, this property will be situation several blocks west of this community's prime location, which lines the attractive Atlantic Ocean beaches. In addition, the subject hotel owner will be leasing the site from the City of Miami Beach under a 99-year term, thus will not have full fee-simple control of the property. Thus, the overall capitalization rate produced by a sale of this improved property, if completed and operating at a stabilized level of occupancy and generation as of the current valuation date, would likely fall near or below the middle of the range of indications for luxury or Class"A"Miami hotels. This range is estimated to be from about 5.50%to 6.00%. As a vacant site, the return that would be accepted on the subject carries less risk than if it were improved to its highest and best use (with an 800-room luxury hotel). Over the long- term, the improved hotel property carries greater risk in its revenue stream during the ups and downs of various economic cycles. It is also subject to greater risk from unforeseen events such as hurricanes that may temporarily interrupt hotel operations, and from the process of development and investment. With reduced risk to the return on the site(via a ground lease,the expected return on the subject site is likely to be lower than that for an improved hotel investment. With an overall capitalization rate (return) for the proposed hotel operation to the subject (if stabilized) ranging from a low of 5.50% to a high of 6.00%, this compares to the 4.00%return which the subject's forecast ground lease rent appears to generate in relation to the property's equity(value). This return that is estimated from the subject's proposed ground lease is 150 to 200 basis points below those estimated for the property if occupied by an 800-room luxury hotel that was operating at a stabilized level of occupancy and revenue generation. This is reasonable, considering the reduced risk in a vacant site compared to that for a hotel operation at the property. BLAZEJACK& COMPANY 67 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 A band of investment technique is employed as an additional analysis. This technique provides ratios of the contributory value between the land and improvements, then assigning a rate of return to each; this results in a weighted average indication of the overall capitalization rate an improved property (including land and improvements), which would be a luxury 800- room convention center hotel. Those overall rates for this property, if completed and operating at stabilization, were previously estimated to be from 5.50% to 6.00%. The overall rate to the improvements is typically greater than that for the land due to the added risk in the development and investment. With this portion of the equation providing a higher overall rate to the building, a lower corresponding overall rate to the land typically results. Examples of how this equation might appear in relation to the subject with its proposed improvements,based on variable overall rates of 5.50%to 6.00%to the improvements, are presented below: "0 of ONerall "0 of Overall Iota) \ Rate to = total X Rate to = Component \aloe Component Component Nalue Component Land 15% X 4.08% = 0.61% Land 20% X 4.50% = 0.90% Improvements 85% X 5.75% = 4.89% Improvements 80% X 5.75% = 4.60% Overall Rate Indication: 5.50% Overall Rate Indication: 5.50% Land 15% X 2.67% = 0.40% Land 20% X 3.50% = 0.70% Improvements 85% X 6.00% = 5.10% Improvements 80% X 6.00% = 4.80% Overall Rate Indication: 5.50% Overall Rate Indication: 5.50% Land 15% X 1.25% = 0.19% Land 20% X 2.50% = 0.50% Improvements 85% X 6.25% = 5.31% Improvements 80% X 6.25% = 5.00% Overall Rate Indication: 5.50% Overall Rate Indication: 5.50% "i,of Overall "',of Overall Iota) \ Rate to = Iotal \ Rate to - Component Value Component Component Value Component Land 15% X 4.58% = 0.69% Land 20% X 5.00% = 1.00% Improvements 85% X 6.25% = 5.31% Improvements 80% X 6.25% = 5.00% Overall Rate Indication: 6.00% Overall Rate Indication: 6.00% Land 15% X 3.17% = 0.48% Land 20% X 4.00% = 0.80% Improvements 85% X 6.50% = 5.53% Improvements 80% X 6.50% = 5.20% Overall Rate Indication: 6.00% Overall Rate Indication: 6.00% Land 15% X 1.75% = 0.26% Land 20% X 3.00% = 0.60% Itn.rovements 85% X 6.75% = 5.74% Itnprovetnents 80% X 6.75% = 5.40% Overall Rate Indication: 6.00% Overall Rate Indication: 6.00% With greater risk to the improvements, a greater return for this component is forecast; in each case, this provides for an overall capitalization rate to the land that falls below the overall rates estimated for the property with its proposed improvements. The proposed use encumbrance that is assumed to be in place at the site further diminishes its value. As such, a lower land-to-value ratio from 15% to 20% is supported in the band of investment analysis. Altogether, this analysis produces a range of overall rate (return) indications to the land from BLAZEJACK& COMPANY 68 SECTION IV: LEASE ANALYSIS Miami Beach Convention Center Hotel Site, Miami Beach, Florida REPORT 201533 1.25%to 4.58% at a 15% land-to-value ratio. At a higher land-to-value value ratio of 20%, this range of overall rates to the land is from 2.50%to 5.00%. These ranges are generally supportive of the returns forecast from the subject's proposed ground lease on its value of approximately 4.00%. With a 99-year ground lease term, prudent investors would also seek a long-term return on the subject that exceed the current yields on BBB-rated corporate bonds, and also exceed the range of returns on safer U.S. Treasuries. This provides a hedge against future periods when higher interest rates and yields may be present. CONCLUSIONS We have estimated the rent for the subject site,based on the terms of its proposed ground lease. This stabilized amount, if applied to the estimated value of the site owner's equity as of the current valuation date, provides a return on the site of approximately 4.00%; this estimate considers the Assumptions and Limiting Conditions and the Extraordinary Assumptions set forth in this report. This is a modest return on the site and would be viewed as reasonable for a typical owner of the subject would seek under these terms for the long-term ground lease of the site, Therefore, it is our opinion that the proposed terms of the ground lease described herein for the 2.65-acre Miami Beach Convention Center Hotel site would produce a stabilized base contract rent of approximately$2,515,700. This base rent amount, and the terms of this lease,appear to be synonymous with its market rent including the rental rate, terms and lease parameters as of July 27,2015. BLAZEJACK& COMPANY 69 SECTION IV: LEASE ANALYSIS ADDENDA Exhibit A Engagement Letter EXHIBIT A BLAZEJACK & COMPANY REAL ESTATE COUNSELORS May 27,2015 Maria Hernandez Capital Projects Advisor to the City Manager Office of the City Manager 1700 Convention Center Drive,4th Floor Miami Beach,Florida 33139 Tel:305-673-7000 Ext.2584 Mari aHe rn andez @m i am i beac h fl.gov RE.: PROPOSAL Appraisal of Market Rent for a Ground Lease 2.65-Acre Site along 17th Street proposed for development with An 800-room Convention Center Hotel,adjacent to the Miami Beach Convention Center Miami Beach,Florida Dear Ms.Hernandez: This letter will serve as our proposal to appraise the above referenced property. Our estimated date of completion is no later than June 30, 2015. We will prepare a PDF version of an appraisal report setting forth a detailed description of our methodologies, research, analyses and conclusions. Our analysis will consider the physical aspects of the property and assess its competitive position in the market. We will employ all techniques that are considered to be appropriate to this valuation estimate. Our analyses and report will conform to the Uniform Standards of Professional Appraisal Practice (USPAP), the Supplemental Standards issued by the Appraisal Institute,and the requirements of the client(the City Manager's Office of the City of Miami Beach). We have previously received the Request For Proposal (RFP) No. 2015-103-ME by the City of Miami Beach, which describes the subject property and its proposed development with an 800-room convention center hotel, from Mr. Jeff Sachs of Strategic Advisory Group of Duluth, Georgia. Mr. Sachs has also provided us the Proposal for the Development of a Convention Headquarters Hotel by Portman Holdings, dated April 10, 2015. More information may be required as we progress with this assignment. If there is any other information you believe we would need in order to complete this assignment,please forward it to us. The total fee will be $10,500. Our fee for court testimony is based on $250 per hour. This proposal is submitted based on our current schedule of commitments. It may be necessary to alter the completion date unless the assignment is authorized in the near future. You may authorize this assignment by signing and returning a copy of this letter. We thank you for calling on us and we look forward to working with you. Respectfully submitted, Agreed nd Accepte Jim L. Mor,les, City Manager John A.Blazejack,CRE,MAI Partner ---Date: y /1 y State-Certified Appraiser License No.RZ093 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com M I AM I B EAC H PURCHASE ORDER/CHANGE ORDER MAIL INVOICE TO:"SHIP TO ADDRESS Procurement Division 1700 Convention Center Drive Miami Beach FL 33139 Telephone:(305)673-7490 PO/BPO NUMBER PAGE 027671 CO#0 1 of 1 VENDOR ID: DATE DATE REQUIRED: 007308 6/15/2015 VENDOR SHIP TO BLAZEJACK AND COMPANY MIAMI BEACH CONVENTION CENTER 655 SOUTH WEST MIAMI PLACE 1901 CONVENTION CENTER DRIVE MIAMI , FLORIDA 33130-3008 MIAMI BEACH, FL 33139 , FL 33130 REQUESTED BY PHONE E-MAIL PAYMENT TERMS AMY MEHU AmyMehu @miamibeachfl.gov A/P Net 30 Days REQUESTING DEPARTMENT CONTRACT AUTHORITY PURCHASE AUTHORITY F.O.B. CONVENTION CENTER ITYWIDE PRCEDURES PO 161 (WIDE PRCEDURES PO 1 DESTINATION SPECIAL INSTRUCTIONS: Quantity Unit Description Unit Price Ext.Price APPRAISAL OF MARKET RENT FOR A GROUND 10,500.00 LEASE,2.65-ACRE SITE ALONG 17th STREET PROPOSED TO DEVELOPMENT WITH AN 800-ROOM CONVENTION CENTER HOTEL, ADJACENT TO THE MIAMI BEACH CONVENTION CENTER,MIAMI BEACH, FLORIDA. PROPOSAL BY BLAZEJACK AND COMPANY TO UPDATE PREVIOUSLY COMPLETED APPRAISAL OF THE PROPOSED SITE FOR THE CONVENTION CENTER HEADQUARTER HOTEL.LOWEST OF TWO BIDDERS OF ITQ 223-2013TC. TOTAL FEE AMOUNT OF$10,500. FEE FOR COURT TESTIMONY IS BASED ON$250.00 PER HOUR. COMMENTS:THE PURCHASE ORDER NUMBER MUST APPEAR ON ALL INVOICES AND SHIPPING SUBTOTAL 10,500.00 DOCUMENTS.YOU MUST ALSO STATE YOUR PROMPT PAYMENT TERMS ON YOUR INVOICE(I.E.2%10). FAILURE TO SUBMIT INVOICES AS STATED HEREIN WILL RESULT IN A DELAY IN THE PAYMENT PROCESS TOTAL 10,500.00 SEE ADDITIONAL TERMS AND CONDITIONS CONTAINED HEREIN. - U.S.TREASURY DEPT.TAX EXEMPTION UNDER REG.NO.F59-6000372,STATE OF FLORIDA TAX EXEMPTION CERTIFICATE 85-8012621639C-9 Signature VENDOR COPY TERMS AND CONDITIONS 1. This purchase,blanket,or change order form properly signed by the Procurement Director or designee constitutes the entire agreement. Terms stated by Vendor in accepting or acknowledging this order shall not be binding unless accepted in writing by the City of Miami Beach(the"City"). Vendor may not transfer or assign this order without the City's prior written consent. The provisions of the Uniform Commercial Code-Article 2 Sales will govern this contract and all right duties of the Vendor and the City.Chapter 627.Florida Statues and the Municipal Code of the City. 2. Vendor shall suitably pack,mark,and ship in accordance with any instruction from the City and the requirements of common carriers to secure the lowest transportation costs. Vendor shall be liable for any difference in freight charge or damage to the materials by its failure to comply therewith.Vendor will send the City a"Notice of Shipment"giving the number of the order,kind and amount of materials and route at or prior to time of shipment. 3. INVOICES. Render invoices as instructed on the face hereof immediately upon shipment or completion of order. Separate invoices must be rendered in duplicate for each order. All invoices must show our purchase or blanket order number. 4. The City may return any materials which are defective,unsatisfactory,or of inferior quality or workmanship,or fail to meet specification or other requirements of this order. Such materials shall,unless by the City,remain the property of Vendor and may be returned at Vendor's risk and expense,and Vendor shall reimburse the City for all prior payments therefor and/or costs incurred in connection with delivery or return of such materials. 5. Vendor warrants the materials will conform to the description and applicable specifications,shall be of good merchantable quality and fit for the known purpose for which sold,that the materials are free clear of all liens and encumbrances, and that Vendor has good merchantable title. This is in addition to any warranty or service guarantee given by Vendor to the City as provided by law. 6. Vendor shall comply,and has complied with all State,Federal and Local laws,regulations or order applicable to the purchase,manufacture,processing and delivery of materials, including but not limited to the Fair Labor Standards Act,of 1938,as amended. The provisions of Executive Order 10925.11114,and 11246,as amended,and any subsequent executive order relating to equal opportunity for employment on government contracts and all Rules and Regulations of the President's Committee on Equal Opportunity are incorporated by reference. The nondiscrimination clause contained in Section 202.Executive Order 11246,as amended by Executive Order 11375,relative to Equal Employment Opportunity for all persons without regard to race,color,religion,sex or national origin,and the implementing rules and regulations prescribed by Secretary of Labor,are incorporated herein. 7. If Vendor shall default in any respect,or become insolvent,or if a petition in bankruptcy or insolvency is filed by or against Vendor under any State or Federal law,the City in addition to other rights or remedies,may terminate and cancel this order. A waiver of breach of any provision shall not be a waiver of any other breach of such provision or of any other provisions. The City shall not,in any event,be liable to Vendor for special,contingent,or consequential damages. 8. DELIVERY:Delivery must be made within the time specified in this order. If the material is not delivered within such specified time,the City reserves the right to cancel the order or any part thereof. When terms of delivery are FOB Destination,Vendor shall pay all transportation charges,when terms of delivery are FOB shipping point,freight charges shall be prepaid and added to invoice. All prices considered FOB Miami Beach,Florida,unless otherwise indicated.The City will not be responsible for merchandise delivered to any destination other than that specified herein.Deliveries accepted 8:30 am to 4:30 PM.Monday through Fridays,except for holidays. Perishable material will be shipped so as to arrive at destination on Monday through Friday. 9. All communications and acknowledgements concerning this order must show this purchase or blanket order number and be directed to: The City of Miami Beach City Hall—Procurement Division 1700 Convention Center Drive Miami Beach,FL 33139. 10. Vendor shall defend any suit or proceeding brought against the City,its officers,agents,and/or employees based on a claim that the manufacture or sale or the City intended use or resale of any of the materials covered constitutes infringement of any United States Letters Patent,now or hereafter issued,or violates any other proprietary interest(including copyrights, trademarks and trade secrets),if notified promptly in writing and given authority,information,and assistance(at Vendor's expense)for the defense of same:and Vendor shall pay all damages and costs,including attorney's fees,awarded against the City in such suit or proceeding. In the event the City is enjoined from use and/or resale of any of the materials covered by this order as a result of said suit or proceeding. Vendor shall(at its expense)expend all reasonable efforts to procure for the City the right to use and/or resell said materials. If Vendor cannot so procure the aforementioned right within a reasonable time, Vendor shall then promptly(at Vendor's expense): (1)modify said materials so as to avoid infringement of any patent or other proprietary interest,or(2)reinstallation costs in connection therewith,or(3)remove said materials and refund the purchase price and reimburse the City for the transportation and installation costs thereof. Vendor shall have the same obligations with respect to any claim for infringement of foreign patents or violation of other foreign proprietary interests if the City purchases hereunder for shipment to and for the use or resale in a foreign country and Vendor is so advised.The paragraph 10 shall constitute the sole agreement relating to liability for infringement or violation of proprietary rights unless expressly revised or revoked in writing. 11. Buyer's remedies,in the event of default by Vendor,shall be as provided by law,except as otherwise provided herein. 12. PACKING LISTS: Must accompany each case or parcel,showing the City's order number and complete description of contents. All barrels,boxes,bags,crates or other packages must be labeled with tag(linen tag preferred)securely fastened to packages,showing shipper's name and our order number.If not possible to attach tags,information must be printed on packages. Drop shipments and partials must be treated similarly. 13. Vendor must submit Material Safety Data Sheets with shipments for substances found on the current Florida Toxic Substances List.In accordance with Florida Statues-Chapter442. Section 6(1) 14. If bid or contract terms,conditions and/or specification differ from those of this purchase or blanket order,the bid,contract or agreement shall take precedence. 15. Vendor shall not offer any gratuities,favors,or anything of monetary value to any official,employee,or agent of the City,for the purpose of influencing consideration of this order. 16. Call 305-673-7490NOICE to request material in accessible format or information on access for persons with disabilities. For more information on ADA compliance please call 305- 673-7080. BLAZEJACK & COMPANY REAL ESTATE COUNSELORS July 21,2015 Mr.Jimmy L.Morales City Manager 1700 Convention Center Drive,4th Floor Miami Beach,Florida 33139 Tel:305-673-7000 Ext.2584 MariaHernandez @miamibeachfl.gov RE.: SUBJECT PROPERTY: A 2.65-acre site along 17th Street proposed for development with An 800-room Convention Center Hotel,adjacent to the Miami Beach Convention Center Miami Beach,Florida Dear Mr.Morales: Previously,we have provided you,the client,an appraisal and analysis of the Market Rent under the terms of a proposed Ground Lease on the above-referenced property. Per your request, we shall provide additional appraisal and consulting services on this property, which includes an estimate of the Market Rent under an alternative Ground Lease for the subject property in which certain site restrictions apply;these site restrictions for this alternative analysis will be stated in the report. This additional work to be performed by us shall also include an analysis as to whether the rent on the site under this alternative ground lease and accompanying site restrictions provides a reasonable return to the fee simple owner of the subject property(the City of Miami Beach). Our estimated date of completion of the written report is no later than August 30, 2015, with a verbal and/or summary version of our conclusions provided by July 30, 2015. We will prepare a PDF version of an appraisal report setting forth a detailed description of our methodologies, research, analyses and conclusions. Our analysis will consider the physical aspects of the property and assess its competitive position in the market. We will employ all techniques that are considered to be appropriate to this valuation estimate. Our analyses and report will conform to the Uniform Standards of Professional Appraisal Practice(USPAP),the Supplemental Standards issued by the Appraisal Institute, and the requirements of the client (the City Manager's Office of the City of Miami Beach). We have previously received the Request For Proposal (RFP) No. 2015-103-ME by the City of Miami Beach, which describes the subject property and its proposed development with an 800-room convention center hotel, from Mr. Jeff Sachs of Strategic Advisory Group of Duluth, Georgia. Mr. Sachs has also provided us the Proposal for the Development of a Convention Headquarters Hotel by Portman Holdings,dated April 10,2015,and with the terms of this alternative ground lease on the property covered under this engagement letter for this additional assignment. More information may be required as we progress with this assignment. If there is any other information you believe we would need in order to complete this assignment,please forward it to us. Due to the additional scope of work required under this assignment, the total fee will be $5,500. Additional fees for any required court testimony are based on a rate of$250 per hour. This proposal is submitted based on our current schedule of commitments. It may be necessary to alter the completion date unless the assignment is authorized in the near future. You may authorize this assignment by signing and returning a copy of this letter. We thank you for calling on us and we look forward to working with you. 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com BLAZEJACK & COMPANY REAL ESTATE COUNSELORS Respectfully submitted, ,--� .reed and ccepted \\Qe th. - — — —---- — - — -- r�p.O -------- i mmy I„tales,City Manager - ---- --- --- ----- - - -- - John A.Blazejack,CRE,MAI I•ty of Miami Beach Partner State-Certified Appraiser Eye:(0 Z j License No.RZ093 172 W Flagler Street Suite 340,Miami,FL 33130 Ph(305)372-0211. www.blazejack.com Exhibit B Proposed Ground Lease to Subject Site EXHIBIT B [EXHIBIT B COPY OF PROPOSED LEASE OMITTED AS REPETITIVE OF LEASE ATTACHED HERETO AS APPENDIX 1 TO THIS AGENDA ITEM R7A] • MEMORANDUM OF AGREEMENT THIS AGREEMENT is made and entered into by and between Portman Miami Beach, LLC ("Developer") and UNITE HERE Local 355 (the "Union"). 1. Developer is engaged in the development of a hotel project to be located at or near the Miami Beach Convention Center in Miami Beach, FL (hereinafter referred to as the "Hotel"). The Developer has not yet selected an operator for the Hotel and does not currently have in effect management agreements or other agreements with an operator for the Hotel or its various operations. This Hotel, once in operation, will create numerous jobs, including positions for hotel service workers and related positions in the Hotel's operations. The Union is interested in organizing the employees of the Hotel. This Agreement shall cover all employees employed in classifications as set forth in Exhibit A hereto, or in classifications called by different names but performing similar duties (referred to hereinafter as "Employees"), at the Hotel which during the term of this Agreement is operated by or substantially under the control of the yet to be determined operator(hereinafter referred to as "Operator/Employer"). The term "Operator/Employer" shall be deemed to include only the entity ultimately engaged by Developer to operate the Hotel, and then only with respect to "Employees" (as defined herein) at the Hotel. This Agreement shall not apply to: (i) any location other than the Hotel where the Operator/Employer has employees; (ii) any employees of the Operator/Employer other than those Employees specifically defined herein; (iii) any person, firm, partnership, corporation,joint venture or other legal entity under the control of the Operator/Employer; (iv) any subsidiary of the Operator/Employer; or(v) any person, firm, partnership, corporation,joint venture, or other legal entity which controls the Operator/Employer, except, as to any Person described in clauses (iii), (iv) or(v), to the extent any such person, firm, partnership, corporation,joint venture, or other legal entity described in clauses (iii), (iv) or(v) is acting in the place and stead of the Operator/Employer with respect to the Employees at the Hotel. In selecting the Operator/Employer, Developer will include the applicable terms of this Agreement in the operating agreement with such selected Operator/Employer. Operator/Employer shall not include the Developer or any other entity that is the owner of the Hotel, any municipality or county, any convention center authority or any subsequent owner of the Hotel, except as otherwise provided herein. 2. The parties hereby establish the following procedure for the purpose of ensuring an orderly environment for the exercise by the Employees of their rights under Section 7 of the National Labor Relations Act(the "Act") and to avoid handbilling,picketing, and/or other economic action directed at the Developer, Operator/Employer, owner of the Hotel, the City of Miami Beach and/or the Miami Beach Convention Center in the event the Union decides to conduct an organizing campaign among Employees. 3. The parties mutually recognize that national labor law guarantees employees the right to form or select any labor organization to act as their exclusive representative for the purpose of collective bargaining with their employer, or to refrain from such activity. 4. The Developer will take an approach of neutrality to the unionization or organizing of Employees at the Hotel by the Union. The Developer will not take any action nor make any statement that will directly or indirectly state or imply any support for, or opposition to 26296844v3 the selection by such Employees of a collective bargaining agent, or preference for or opposition to any particular union as a bargaining agent. 5. The Union and its representatives will not coerce or threaten any Employee in an effort to obtain authorization cards or otherwise to obtain any Employee's support for the Union. Likewise, the Developer and its representatives will not coerce or threaten any Employee in connection with his/her decision regarding whether the Employee signs an authorization card or otherwise supports the Union. 6. The Union will take all appropriate actions to support the public approval of the referendum currently scheduled for November 3, 2015 that is necessary for the Hotel to be developed. The Union and its representatives shall refrain from making any negative statements about or taking any actions against or that raise questions of its/their support for the public approval for the referendum. Should the referendum fail to receive the necessary public approval, this Agreement shall thereupon become null and void. 7. Once an Operator/Employer is selected by Developer, if the Union provides written notice to this selected Operator/Employer of the Union's intent to organize Employees covered by this Agreement, the Operator/Employer shall provide reasonable access to its premises and to such Employees by the Union consistent with the provisions of the Act. The Union may engage in communications with Employees in the cafeteria, break rooms and locker rooms of the Hotel during Employees' non-working times (before work, after work, and during meals and breaks) and/or during such other periods as the parties may mutually agree upon. 8. Within ten (10) days following its receipt of written notice of intent from the Union to organize Employees at the Hotel, the Operator/Employer will furnish the Union with a complete list of such Employees, including both full and part-time Employees, showing their job classifications, departments, phone numbers, and home addresses, subject to applicable laws including laws regarding privacy of employee or individual information. Thereafter, the Operator/Employer will provide the Union with updated lists of all such Employee information on a quarterly basis. 9. Developer and the Union agree that the Union's majority status and representation of any Employees as defined by this Agreement shall be solely determined and verified by a secret ballot election conducted by the National Labor Relations Board (NLRB) pursuant to the NLRB's rules, policies and procedures, and all applicable provisions of the Act, following the filing of an appropriate petition for representation election by the Union. 10. During the term of this Agreement, the Union will not engage in handbilling, picketing or other economic activity at the Hotel or at any of Developer's or Operator's/Employer's or their respective affilliates' offices or other property locations, or at the residences of the management, directors, officers or employees of any of the foregoing entities, and will not make disparaging or other adverse statements about the Hotel or the Developer or Operator/Employer, or their respective affiliates, or the management, directors, officers or employees of any of the foregoing entities. The Union also agrees to comply with any lawful "no solicitation/no distribution" policies of the Operator/Employer, consistent with the requirements of the Act. Operator/Employer will not engage in a lockout of the Employees during the term of this Agreement. Notwithstanding the termination provision above, if the 26296844v3 Operator/Employer voluntarily recognizes any union besides Union as the exclusive collective bargaining representative of Employees, or any of them, this paragraph shall terminate immediately and without notice. 11. In the event that the Developer sells, transfers, or assigns all or any part of its p � g Yp right, title, or interest in the Hotel or substantially all of the assets used in the development of the Hotel, or in the event there is a change in the form of ownership of the Developer, the Developer shall give the Union reasonable advance notice thereof in writing, subject to any confidentiality restrictions to which the Developer may be subject, and the Developer further agrees that as a condition to any such sale, assignment, or transfer, the Developer will obtain from its successor or successors in interest a written assumption of this Agreement and furnish a copy thereof to the Union, in which event the assignor shall be relieved of its obligations hereunder to the extent that the assignor has fully transferred its right, title, or interest. 12. In the event that the selected Operator/Employer sells, transfers, or assigns all or any part of its right, title, or interest in the management of the Hotel, or in the event there is a change in the form of ownership of the Operator/Employer, the Operator/Employer shall give the Union reasonable advance notice thereof in writing, subject to any confidentiality restrictions to which the Operator/Employer may be subject, and the Operator/Employer further agrees that as a condition to any such sale, assignment, or transfer, the Operator/Employer will obtain from its successor or successors in interest a written assumption of this Agreement and furnish a copy thereof to the Union, in which event the assignor shall be relieved of its obligations hereunder to the extent that the assignor has fully transferred its right, title, or interest. 13. The Developer and Operator/Employer shall incorporate the entirety of paragraphs 4, 7, 8, and 9 of this of Agreement in any contract, subcontract, lease, sublease, operating agreement, franchise agreement or any other agreement or instrument giving a right to any person to operate any enterprise in the Hotel employing employees as set forth as included Employee Classifications in Exhibit A, or in classifications called by different names but performing similar duties, and shall obligate any person taking such interest, and any and all successors and assigns of such person, to in turn incorporate said paragraphs in any further agreement or instrument giving a right as described above. The Operator/Employer shall exert commercially reasonable efforts to enforce such provisions against those parties with which the Operator/Employer has a direct contractual relationship. The Developer and/or the Operator/Employer shall give the Union written notice of the execution of such agreement or instrument and identify the other party(ies)to the transaction within 15 days after the agreement or instrument is signed. The terms "Developer", "Operator", "Employer" and"Hotel" shall be modified in such agreement or instrument to conform to the terminology in such agreement or instrument but retain the same meaning as in this Agreement, and the terms "Operator/Employer" and "Employees" as used herein shall be modified to refer, respectively,to the person or persons receiving a right to operate an enterprise in the Hotel and the employees of such person or persons. This paragraph only applies to included"Employees" as defined in this Agreement and particularly in Exhibit A hereto. 14. The parties agree that any disputes over the interpretation or application of this Agreement shall be submitted to expedited and binding arbitration in or near Miami, Florida, with a mutually agreed upon neutral serving as the arbitrator. If within thirty (30) calendar days of such submission, the parties are not able to agree upon a mutually acceptable person to serve 26296844v3 as the arbitrator, they shall request from the Federal Mediation and Conciliation Service a list of seven arbitrators who are members of the National Academy of Arbitrators and who reside in Florida. The parties shall, within ten (10) days of receiving the list, select the arbitrator by alternately striking names from the list. The party to strike first shall be determined by coin toss. The last name remaining on the list after each party has stricken three names shall be the arbitrator. The arbitration shall be conducted in accordance with the Federal Rules of Civil Procedure. The arbitrator shall also have the authority to order the non-compliant party to comply with this Agreement. The cost of the arbitrator shall be split equally by the parties to this Agreement. The parties hereto agree to comply with any order of the arbitrator, which shall be final and binding, and agree that judgment may be entered upon it in accordance with applicable law in the United States District Court for the Southern District of Florida, which shall have exclusive jurisdiction in any action concerning the arbitration under this Agreement. 15. In the event a party breaches the terms of this Agreement, the other party(ies), in addition to all other remedies available, and without initiating arbitration proceedings, shall be entitled to seek and obtain injunctive relieve or other equitable remedies in any court of competent jurisdiction. 16. This Agreement shall be in full force and effect from the date it is fully executed on behalf of the Developer and the Union until eighteen (18) months after the full public opening g of the hotel, or sooner upon execution of a collective bargaining agreement between the Union and the Operator/Employer, which explicitly supersedes this document. IN WITNESS WHEREOF, the parties hereto by their duly designated representatives have hereunto set their hands. FOR THE DEVELOPER: FOR THE UNION: UNITE HERE Local 355 [fill in company name] By: By: Its: Its: Date: Date: 26296844v3 EXHIBIT A Employee Classifications included under this Memorandum of Agreement: All regular full- time and regular part-time hotel service, housekeeping, food and beverage, and on-site laundry employees (including room cleaners, housepersons, bell persons, telephone operators, kitchen employees, servers, bussers, bartenders, cashiers, and hosts, ) employed by the Employer at the Hotel. Employee Classifications and others excluded under this Memorandum of Agreement: All reservations employees, including on-site and/or centralized or off-site reservation employees; sous chefs; concierges, business center and front desk employees; employees of third-party or themed or gourmet restaurants or bars located in the Hotel; recreational employees; spa/health club employees (with the exception of housekeeping employees providing cleaning or linen services to the spa/health club); off-site laundry; secretarial, office clerical, gift shop, retail and sales employees; audio-visual employees; parking employees; landscaping employees; and maintenance employees; as well as all managers, supervisors, and guards as defined by the National Labor Relations Act. 26296844v3 Exhibit C Portman Holdings Hotel Development Description & Plan EXHIBIT C • 7 as 4s wnr .��, ESL':. -yF * .., r<. ▪ re, „-_ zr, w ..,.•,, ..'y,•,,,,.,,...„ •-.-,:k-,:,. -.., a,,,..,';',,,,,'"1,4,,,,,,''',..'i.-,'aid.,..•;:.5 '' . :.•ie l'ittiN4:14'”''''' .. 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Y t� Hotel Pro:ram, Conceptual Design & Preliminary Development Budget �,; ,. . b t .. f _� t` A , z .w. $?�.,.s,?an].'mss" �)�"'�a >", .yv ":,!t wv"' 0 t 11 i� ''.�.. -:1,' .e. ,. tt ,� Ni � tv ° 77 J r , i_ yg "�' � A 0 t ,. y +nrd� ,� ' ? �. a f 4* r , . 111111t4 -- it ., .. „.... .. . ....„.. . ., .,. . . ._ .. _ ,, ,,, -i, ., q ... , .:. ,...,.„,..?,.?„....: ,...,,,,....,. .,...,.„.a. ,.....„...._._:...... , . ..,,, . .„,..,.... ,.., ..... .: .....,. ............... . . . , ... ,...„................ .... , , .,._.,,,..:::: " . , .., _. .....,. . . ., , ,.. ...... .. . . .. , .,..„ ..,..,.,, . ... , „, . ''S- . '''',04_. .::-.. :- .., ,,,...,._ .„, t `� a� 7 .rte"^ y Lf) : O N co N i a° bD a co o i' _ m Q I o V c�) V) a) � ci c`Ln V) V) c`n I s • N 0 LO LO o 0 0 '0 LO CO LO o, co v, CO• ' N f■ U a Ln c) r. co 4) 00 CT ^ N N 4. Z � ' 1 LL i 0 . 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(� r 00 0 N .p cn Ln i �N w d' CT Ln O 0` N ; r CO i■ N _ r- O M N r co • U c y0, O co • O • - 1- a o Q in '0 0' a) 0 N v) O O cn v) • C Ln 0' > O cx3 co oz, 03 CO co i b0 ++ - CV - 00 =O a V) V) V) V) V) V) •^J -p O O O O O N If a) Q) 0 N CO 00 CT C '0 c") r C6 O b4 .C Q N = C Q) •i • • U c0 C N • p N U C CO O bO O C y O Q +_+ c b4 c6 • I p II CV N V1 �(� N .Q to R O O O tx3 O N O cn • Q N � L CO CO Q 2 V N 4- . p ' 2 O v) N O — CO CO Q O w O O �_ i I Lf) ff: Q O c O ) O = = O c6 : p = = O cu O O O • • 0 2 0 cn 2 0 cn M co co 1— cn v) u. 0 c'1) c _, 0 • • Hole, Program.C.-inoep._.al C si;i? Praia-,irary Dov ;oom nr Budget 5.2 Bran d i Specify which hotel brand(s)you intend to consider for the hotel.Each proposer shall be solely responsible to clear with the named hotel brand that there are no restrictions that would limit the brand's ability to operate the hotel. Hilton Portman Holdings intends to consider national hotel operators with an established and consistently HOTELS&RESORTS maintained reputation for quality and quality of operation.Brands meeting these criteria include Marriott,Marriott Marquis,JW Marriott,Westin,Omni,Hyatt Regency and Hilton.We would consider working with any of these brands,or any other hotel operator approved by the City of Miami Beach. T FDCAL . We intend to work with the city to determine the best fit for this hotel. I JW MARRIOTT. _arriott • OMNI HOTELS & RESORTS' • WESTI N HOTELS&RESORTS 86 Hotel Con'ept1.2: x Praiiminary De .eIcoment Bud et 5.3 F,ei �;�A-,� �c�,�� 3ucigst Provide a summary of the development budget,including estimated construction hard costs,architecture/engineering,furniture,fixtures and equipment(FF&E),development fee, other soft costs and required fees,pre-opening/working capital,art in public places(1.5% of construction costs per City Code Section 82-537),contingency and escalation,financing costs,and any other unique project costs. Soft Costs Design Architect $ 13,551,938 Construction Costs Landscape Architect $Included Above Construction Cost Hotel $235,880,136 Other Architectural $Included Above Existing Structure Demolition Included Above Traffic Engineer $Included Above Construction Contingency Included Above Civil Engineer $Included Above Skybridge $ 1,800,000 Misc.Consultants S 1,033,500 Payment&Performance Bonds $2,084,913 Legal and Administrative $ 1,000,000 FF&E $24,683,024 Real Estate Taxes $4,193,084 OS&E $ 19,264,725 Developers Fee $22,424,772 Building Permits/Fees* $ 11,120,197 Total Construction Cost $283,712,798 Insurance-Builders Risk $3,545,741 Total Project Costs $405,450,398 Pre-Opening Expense $6,680,000 Working capital $800,000 *$25,000 Referendum Fee Sewer/Water Hook Up $85,000 included in Building Permits/Fees Art in Public Places $3,643,386 Other $1,282,702 Soft Cost Contingency $20,272,520 Total Soft Cost $89,632,940 Financing Loan/Equity fees $ 11,344,436 Construction Period Interest $9,256,783 Operating Interest Reserve $11,503,442 $32,104,661 87 • • i I 5.4 Provide conceptual architectural diagrams of floor plans,elevations,and renderings of the proposed Hotel Project.It is expected that the conceptual design for the Hotel Project will further the City's design standards,and continue the City's legacy as a home to many architecturally significant buildings designed by nationally and internationally-recognized architects.It is further expected that the conceptual design of the Hotel Project will be architecturally harmonious with the surrounding area,including the design for the MBCC Renovation and Expansion Project(including its public park components),New World Symphony,SoundScape Park,and Lincoln Road. Floor plans,elevations and renderings for the Hotel Project can be found on the following pages. ti, , N.,,,,ssixt. ... 1 mini IT ,\ _ ..., „,..,,.. i „, „ , , , --rai! '.-.41,—, . ... .. IC M1p� s ` �� .`•Irif -404 ,,, 41- �`f9, _ � /i- mss. ----Ili ;. \lei.%"F. \ mos +1= ,' 441 ‘ -- r Illeimmilm"' ' '1 StNi i ---,diti A• 4.4' .'_ - ' - ...z,, , ---,_ rk.' ..,. •1 rL .�.......�.. 1 • 5.4 Ai oflitctu al DIaglams-Design Eiari r.rie THE SITE: The site represents an important opportunity—the chance to provide a strong connection between the Miami Beach Convention Center,the Gleason Theater,the Miami Beach Convention Center park and SoundScape Park.The challenge is to create a design for a new convention headquarters hotel that becomes an icon that expresses the character and spirit of Miami Beach while embracing and integrating all the components of the Miami Beach Convention Center district.The proposed design succeeds by fulfilling three goals: • CONNECT the parks—take advantage of and expand on the existing traffic patterns to connect the two parks and lead people from Lincoln Road into the MBCC district. • SHAPE the experience—open up the intersections of 17th Street with Convention Center Drive and Pennsylvania Avenue to create a grand pedestrian experience. • EXPAND the natural environment—wrap the curved streetscape in greenery to join the two parks,then carry the park-like environment up and through the hotel. CONNECT THE CURVE: The curved hotel facade provides a strong visual connection to Lincoln Road, especially when dramatically lit at night.By curving the hotel's layout and wrapping the green streetscape around the corner between SoundScape Park and the new MBCC Park,a feeling of —_ cohesiveness unites the entire area.The hotel is designed to be compatible with the revitalized and � expanded convention center and provide a connection between it,Gleason Theater,the surrounding D y.. greenspace and Lincoln Road,creating a robust synergy between the area's components.The hotel's ballrooms and expanse of outdoor event spaces augment the convention center's offerings and expand on the type of events that Miami Beach could host.A skybridge offers convenient, SHAPE direct access between the hotel and MBCC,while the ground-level arcade activates the streetscape and serves as a pleasing,curving path between the parks. THE EXPERIENCE: The concept for the hotel is centered on delivering a sensory experience.The project humanizes the built environment and creates an abundance of interplay with nature.The landscaping doesn't stop at the building's edge;it continues on throughout.Following the tone first set by SoundScape Park,greenery rises up through the hotel onto the rooftop deck of the porte cochere building,flows through the hotel tower and around to the level-seven terrace behind, I r creating a completely public experience at ground level and a semi-private enclave primarily for L L—j J� guests atop the hotel's park-like terrace and deck.The roof of the hotel tower also incorporates EXPAND open terraces for outdoor functions as well as a restaurant and bar featuring an infinity pool edging the terrace and mirroring the ocean beyond. The design is motivated by the desire to create experiential spaces for human enjoyment. The hotel's gently curving façade embraces the site while at the same time creating dynamic 90 i 5 panoramas for the 800 guestrooms.The guestroom floors begin at the eighth level,uplifted to allow views over the MBCC,again maximizing views to the water on one side and to the city on the other. The height of the guestroom tower is 300 feet to the roof level. • THE ENERGY: Lifting the guestrooms up allows for an open and inviting colonnade at street level that welcomes people to stroll through or stop and linger.The entire area is energized as the more public functions of the hotel follow the curve at street level.Here,one finds a grab-and-go market, sundry shop,the lively lobby lounge and a three-meal dining experience.Colorful banners stir • excitement for ongoing events,such as Miami Beach's famed Art Basel,and dancing water features add pleasant white noise and lively sparkle. The cylindrical porte cochere building,a glass-enclosed"drum,"holds a spectacular circular junior • ballroom featuring stunning views of area.Above that,the spa and fitness center raise the rooftop deck up to the seventh level where it is joined to the podium terrace by a grand portal through the guestroom tower.The sunny deck with its own intimate pool will be a very special place for hotel guests. The sprawling terrace on the southwest side provides a varied guest experience with multiple pools,cabanas,bars and restaurants,green lawn space,a grove of swaying palms,a sculpture garden-there is room to roam and a place to accommodate every mood. THE SOUL: Throughout the project,art contributes to the uniqueness of the experience.Even the night lighting for the project is handled in an elegant and artful way.The unifying abstract pattern of the sunscreens wrapping the porte cochere and rising up through the center of the guest room tower is also found in the pavers through the arcade and atop the terrace and deck.The pattern i , even carries through in the landscaping,carpeting,upholstery and drapes.A sculpture garden on _. ~ v the terrace,paintings and ceramics throughout the hotel,all these elements establish this as a � , �� /,�~� hotel unlike any other.;hilig With its prime location,the site presents a tremendous opportunity for the Miami Beach Convention 1 iii Center Hotel to have significant impact on the visual identity for the entire MBCC redevelopment area.Inspired by its setting,the new Miami Beach Convention Center draws inspiration from the i '�° rhythm of ocean waves.The form,a gentle arc,recalls traces of a lapping wave left behind on the sandy shore.The wave motif is found again in the rolling guestroom balconies across the face of the hotel.The unique design is quintessential Miami Beach. i I ._ 91 I - :,-,37:::: =.t..-_;;;;'3.--,.,:,:r1:.:-,,,,-„--;,;3: ;:ieS,,g.-. ?; Pr"E...!rn.i''.3;'.• Dii-3'-'7)c,fr,e[It'S'Lir".7...;::: 1 pme• wil...1 a 0 •,,. ,.tpi,.._ ...... _ . ),... 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I i \ . `` w // -D- 1 I - -a. ... .-- �- -9 Q d i l • • 1 .s. r1 • •1.1••_•••••■••••••■••••••■••111•••1M•• ••IMI•• ••_• ■•• • 8•••11 ••■•••••■••••■••■••• ••■••■••■••■••■•• 94 Level 2 1 I 1 1 r , 1 1 1 5 1 1 1 1 ........ . O 1" T. Sill PARKING Mr NIIII i 1 •� . i0 r IN o i ADMINISTRATION le &SALES • • 1.1 \ \ O - • • SERVICE '.,.,;, . , )7. 1.1!\\*) 1 s' I 1 ITC, 1 4% \ ( : 4, , /‘ \ , \ . I I lik. 1 1 \ / PORTE COCHERE \♦// I 46, .�. - I 1 I 1 BELOW ♦ t 1■/ \%‘\ /, 1 L • PRE-FUNCTION . II 1 • . 1 1 ' • 1 •••■•• ■••••∎••=••m••—••sm••..••..•. ••∎.• •��• •• •..••=.•■••..••■••■••■••■••=••■••■••...•■••...•, . 95 •Level 3 1 ._.::, = :,,, .,_ 5 imi 1 I ,,„ 1 1 o 1__ SERVICE m 1 ® _ _ 1 1 A I.., . ( 1 . j ,, ( i : 1 1 r T 1 r ( 1 • r••, GRANDBALLROOM 1 ( • MEETING 1 ROOMS 0 1 M 1 11 I • : \ I 1 . l 1 1 \\ •VICE `.` - ' - r i \\\ 1 111\ \\ / / 1. 1 r1■) I‘(-■ 1 r1, 1 rl� 1 \ ‘011411!%; / \ PRE-FUNCTION ` t \ • ii, .‘ . 0 tk, • \ '� •• : ••• 1 1 ME 1 ( • • PRESFUNCTION 1 I •. ` 1 I ♦i ." SeA�e •�`. '' / I ■ 11 I • JUNIO tROOM 1 • o • 1 1• ( ; ` • MEETING-.'•• 1 • . I \ , : 1 1 ( 1 • 1 I • \ • _Q .� ; 1 • \4 : 1 ••••••∎•._••_••_••••••_••m••_••_••L••m•• ■•••■ •• •∎u••••••••∎■■••••∎••∎••s••�••••u••••t•u•••••••• 1 I, 96 Level 4 1 5 m „.....,._••_.._.• •. .• iii • . 1 '.iij 1 it 1 BEL•� j IMEE G !)OMS • 1 1, 1ECHANICA 1 • II • 101,\\ . ��1 e‘‘ Or l' r C 1 I I)I LRQQMP3EFUNC1f103 1 I(� I S S .,,,,,..„,:s. nil I . . • . I %#' % \ O 1 ', 1 • \\�`J�J/J 1 1 11111\ •.., 1 1 1 :ELAN.. TION MEETING ROOMS 1 1 1 1 ilir ::1..•I, �.: , 1--.,A 1_r*t 1 • �`. 1 1 • 1 1 1 BELOW • !� 1 1 t , I 1 1 • . 1 1 e ��•` 1 1 • � • 1 1 •�`` i . 1 VIII*. : 1 -1•••-••∎••—••—••-••-••—••-••—u ■•∎•• •J •1 •?�•• •••••■••■•■■••■••nr••■•■■••■••=••••••■••■••a•all . 97 Level 5 m FM , 5 A • 1 , . I - 1 MECHANICAL I___. 1 I O 1 O i \ . •: •ROOM IBEL••• • ■ 1 . 10 100 1 TERRAC= 1 \\ :ELOW .`.��\ \ *10� M SERVItt CORRIDOW MECHANICAL ! 1 0 el I rel rel FOX. 1 11 \ .46\*#' 16 ‘43 i :('1I‘'l*l"k. 614 a ;'*4 1 lm1l r/W 1 .., k 1 I \o/SPA ` I o In Far ,• 1 1 , C 1 i . j , 1• 1 ..Q 1 1• ` TERRACE • • • • 1 1 FITNESS ,. BELOW , 1 ---- •____ __ 44 ..,, TERRACE � 1 1 • 1 _ I • 1 . • 1 ••ft..∎••.....=....•.,........• .. •....• •.∎.• 1::. .. ...••.••......••...•...•i..•m••...•..•........ •• ..1 1 . 98 Level 6 m m. 5 m O I •0_7 . rill.;sr-——4, , . .,..,.,,,...„,.,c..„.,... „.-,:::,•.., ,,•.,..,,,47::... •-•,....,,,-.-1-...,0„,-4,0-,•:„.7 d . . ,L__ ,, . . POOL BAR „ ; ' l+ 4. °' k' 34 1 1 ; P GRILLER 0 t { ►^ .+7. .''�,�[•: _' ,,`:vs" .' rf-~ 1 1 1 ; ` - }' � • s .i Q 1 • TERRACE �; `�••••, yv k+✓ ., � a I , + •• ` ♦ ' •1 I. %• SATev'l,:,"'''..•••'..,,,,.:12:'s;0', ' ./11 ,",-,::4-::::,--4.-••,,.. . ': , • ■ .4.• \'k''' '''';''.\P ��� 4s' "mss � � # 11 I 1 w ` ' t"�� • i J a ▪ 1 or 1 r•*. 'it,'. — i:\ '".7:....':.e.,L,.. r : .• ..-„,,,,, ;kJ', 114% : ,• ,''f . AU'''..'-'' ',,, , A' . "flhibz * ' .7e ,...cit.a.7. iii.,,,„,, :▪ 1 v v ,‘-' 4----.IA_ . i-,‘ :1,.•_,1' 43, _ 1 • -'\ TERRACE BELOW O � 1▪ 1 Level 7 m , 5 m m O am.iii i ' 1 .i.: ii: ► INS sOl• MIP 0 SO) OP Almo sao■I ► * 1NO \* \ t It \ 41112 , \-, . , , I • I I ' I , , \ ,,,, it . S.,_ * 41,_ 1,-, 4. ,f4,7 pia"..........txt IV* Mgailigli , #ipk-- i 1 , `o ` I , I , ■1 --1-/..'4'.•-a., � --1-/ 1 I i 100 Level 8-10 m , 5m O * Ai �i ... ... __ �_.. -._ .� - i� r� rT r-r r� r i i Wit till" i Ago rail y, , r i 01113 WO : ‘031, tiOakIl i `To"■*:Z k, tt , i Alt N i A 1■, ON I ■ 4440-p,‘ ■ 41 -g% i z, , , iiimiaaiiiif C i 71**Pkh „FAIT/Rebut' i \ ■,„wff L -tW *!iia r\ 101 Level 11-24 i .. 1 ' 5 1 m 1 m O f r I� 1 go IA • I11111 ' o► i O'� 1 i INFINITY B i • ,RESTAUR`N . � I 0\\ , SERVIC • ■ \ 0 A.7,1 , 1111 \ \ .44 r-vc ,,‘ br • , •.,r • O I i 1 ,k‘.-.% * 41 . : ,.., , .e .do . ....,..# . ., 1 C Poop 1 I : . it 1 . . IV : . I I 1111111111 1410111111 OA I 1 . N'1 4■i titit . 1 1 1 rte\ `\ 1 10 2 Level 2 5 ,1JL°i ;-'rogram.Conceptual Design& FC eIlnin : D ,elopn;ent Buie;: -ts(,-,.• \ ' -.S \ J ilta,* ;. , 4,—.,„, . , \44.,..,,,,./.::#-,s.,-..,.,. ,.. .,..^.. _1",_ ...,,...11..!0_..i i&A; ' . .,' . ' --- '-A- I , ...'44' 4. 46, „.., i , , . .. k �` . Itt j ...' e°i,-.40:::-,per . . u.4. , '- : 1111111111i1 • , , .,veti. 4\-- v. i c•, , - --. 103 Rooftop Level 1 H-2:-, 2' 3,5-7 3-7. '.:3n.: ■ :-..-s zr, ?_, Pre.„n- ' ; 1 5 ii, ,, ..... ...,. i::-.--- .....i i ..m. 40■•• 4...m 4.■., 4bstiv...__ 4 I i'..—.-- r--- o • , , , , ,,-.: I 1.----- 1 t .. . v \ . • 11 1.1 i • , i \ 0.\ • . IMMOINI. ,11 ,...81 . , Ats.--,• . •C eN, un HI . 1 ...2-- .,11 II ! 1 .....N '' i - , 4`. Al..1111.111ril II I i t ' \ <IL Il. 4P- 4 • -;__,___-,__ - j 4 : t 1 NI _ c, P,,‘, t, ! 4?:4 . .‘,1 s*. ' • . . Ili I I i s„.... __ ,, . --4:3:.-- N --. — As --...---.____.__ ._ _. 1 i 4..... _.... 4.— 4... 4.., 4.—.. 4.... ....— 4,—. 4— 4.... 4._ —.4. ..—...." my..... . . . = mom. somfb ■110. 1■1). :mi. ' tiZsd.. ( N i n.J u---b It Vehicular Circulation 71-..`Lin P ,--7,-arri,C3orcept.a! Design& PI limiria.i 13.E...eicolTient B'_,1, r_ g„ 1 I ' - 1 TOR * _..,- ■.■......■,............„....... .......,I 1,..._,AS / _....._.............._, •• 123 1 „: , • • 121_ i 1": ---• 1 t • i ''' ' 3 -1... t ....,..--,.....-,$ ---. • _ _ 0.1-1.-tr-00421 c- U -i, t. ____,... . L ill a 11.1101-4 t•-' ..,17 si I 0 1-01141 -7- _,,,, •--4 . •LA,. ' II- . II x-,,, iji , t _ 'I t ----....... 4, L 12 * L 11 N11il1.ls1l1 0 0d 314 .1 --t—, t 01.111111111-111-'., -----0,-..111 • 110 t ` 11111111111111.1111 j. ill ___.-11. 0111111111111111 ' IIII ! t —,-0,---• •-UI---- 01111111110111111 III r 1 t-- ------ ---" ammo. ----. iztI , 1.411L,—..sfflieN. ,•,' —,—..,.., * L7 •_i_____--:--- -`'—'--------- ---------------- -- '`....1 _______, 1, 40, •••=," . ■ al,V"i- KINt4921"11:-'''''' 1 • V1 11 ' fr... ' .. . .,:j- ilr 4._Ld , . . 1 i 1 1.--1 1 .-I,' ----,--• , _.,...-- . 15 I t . t 4 I *i _ , ------ 4 -_j----------- , 0 , , 1.--,--.1 ------'-- if---4, i, ' " ........, Li L-Iii v ________-,--• S k --- ..-1• 0. -,„------ -,-... 105 Section Looking South 1 , 2.,_,dg-:-7:...r.. ". . ____.......... . L2S ki: -4, t ' 1 ' . tn 1 t 5 _ka___ iti,-'■ 111 --,--• . fkat):14-.0,% :=.,--;- ---'.--_'*%■ I ----..-, t ,, liP ft .%--;"-,-k.7) .. .lit i __----0, I , 10.441410,%:*:kii 1 le lellit-.. 1‘ 0 ....A21-- Irt-LSOVSINVINfilleilallamaiiVI . 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'. l' --- .`• ' bi . . NIIIIIIIIIIMMIMMMNIPIIIIIIM :I. . . 1.4 ---.--• 11 ._14--- i L2 4 ti :_. 106 Section Looking West • .._ , ..c.,, ,... . . Program,Conceptua! Design& Pre!.min.-I.-, •,„.. , rj11 .7' 5 , TOR . ' •300' _.. 4,243._ • t , . , -----i-- . L23 .. ___ a 1 1'T ,,j . ----17' 1.21 1 i 11.40' ii -'4,-■ 64, r_ . __ t old'id'i ' ----,-.. 6._■_.11_) ___ Cs i'-. .',•,idi,-0 01-00.-#0.,- 1 ---,--. r -I\ ..1'itta010102-010t41, , --. . L 17 IlftWOWINal""iiiiiii0.11,-aijit....vilp,C.011„ 1. , --..--. IliitimiiiiiiinitiNalil -•0011-agill..-NOW 0.-.go# t . L II ....m.iiiiiiiiiiiiii __a ___ig ___do_010.,0 al,■■■■■■•■■). --..—.. 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'--'---.- ■ ■ , ..,.... i .. _ ,..._ . . , , 108 ..,_ . , , ...... ,..... _, ,t,t1 1 i 1 Elevation Facing North .„ i r ' I i i I I I I I I I I I i E, 1 1 1 1 1 1 1 ¶ i I ._: 1 1 1 1 1 ! i AI 1 1 1 1 1 1 1 i 1 I h 1 1 1 1 1 1 ' i j--A . ,} 1 ' 1 1 1 1 1 1 ----./ 1 1 1 1 1 1 1 i s`1 1 1 1 1 1 1 ' I I 1 1 I I i l 1 i ''r. `' c ' 1 1 1 .1 1 1 1 i I I I I I i 4 t...- 1 i ,-1I 1 1 1 ` - \ 1 1 1 1 1 1 1 l 1 1 \ \ 1 ''gyp ,: 109 Elevation Facing East 1-.— ,. Hote! 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V 1 Ir 1 !t i 1 1 I'' .4 -10111.1s*Ib. • „tr•-1,...,.1,1 , fitA •-•.., '' '7,' . .. ., - , . - 1 r, ---00."*„',;,. • , f.‘140V.;:Zste /V,. .a`k't'Ne .1''- • . -, t. f. .0 ''-'114141 •t ., t: r ' fri,i.41 fi - ffs; ::i., .. - ig- .....• - .-i i • 1;i1-,‘ ••••• • • i• , '4,:grti. 4:,,,,i..... 11 . ,,,,,, I AI--4 ..-. 111 Elevation Facing West E Y: Yydr 1, .r- , 9to � , l � .. -. g411 6"St .. 1j i, - i� i• e .j ti .�.��"''t�vi ; L-� i� ,II it 3 1.:— •t — " ''' • t..,_. . rZ,, of +' - y . '' A ► t.... t • f t ''''' _44;72 - ' x44: ,w' �1� 'q .� �• 'i';`Vit '' s€-". i fir: ., r - ``f - 0 -.: ' ..I 11,11 ' A!, '-+ _`r ill)). .... ''''',, . I ,:'.. .:...1- .''' i 1...-4:i '. :::."! , . ,. : 1.1 f ',-. . ...•:":".:7-, - i'. ?: t„.4 .......':7,-',, ' .. ..., ; t, • ' '.—:,::„.....1 701 ..„,imist„.0,', . .„.... , r-.4„,„,. �1 z 1 Street Level View from 17th Street Looking East r - • Hotel Program,Conce t„;a: !Deign P!-e,i,n,ina.. �e.,elo:;rr.ent . • Ilk- -, —: . ,�, o , J ..! �,i b i' eaa4„,, yak • ... .. _ at3 .a• yy - • of ,_F .- - 0.. -r•rt, ..-�' f _• 'ti. .. _..� 'E'; ° '1.SM.r2�!`-i-. ti +4 r r a y g 3 _1 ., S1 � t ' ti 1 . , r,f � `'� M r ../ it , * 1 1 i s___t ., 4 i:Q it IN ■ ?ems .. i /Jff!/Ihlt s. — . I(((II.'! ' J� �` ,s, .- -r r4 •.µ V. J r 4+. � , s i i i { rya Bird's Eye View over corner of 17th Street & Convention Center Drive Natal Program,C !' Conceptual Ges;:,�� r eiir;-,.,,,,-., .:,e,oprent ou g. �_ I _Js }'_ SD•DDC . -^—......- v.- .��.1'+rw _. -J r i2. - .��- .. rte.. � w.. �. _,. _� .. �. ...tA .."....i .. \ a{� "fit` ,=,- q� n ny r s e' ,.,,. ry x _ „;N:...,''+ y ♦ i if. .&`g.x �j� " y ♦( '.' y'� ^`•. i••''''''' . -4.-• ''''•:,:—' .:., .. ....--- .,:.f., . .- . _,. 1 "....'it.)....-- " ' l'0 ” f.�, � I '�6 . --f fi a : -, ' „ -, _ (00 , ,L - V r �' "�♦ o' . r r. a Vii,•, ' �+ A - - - � .-- 1 F ' •-'. ' r - • a,,..rj„r.i.1,.,z3 114 View Looking Southeast from new MBCC Park V 0li'8(l l BUcj;fit •-,.,,,,..-N\ �• t nJ � • ...,. ,A -.. —, -. , -\ \ ,.‘..,.. . . , ,,,, ( ',k .,\ • ,\N \ ., , , . \\ ,,,,., , ,,. . 4„,,,...,,,,,i„ ,, , , , ,.?„,:\,,,N,. ,. , ,1 • 1. .,,•� • 02 : f NO •S 40 ',',,.., li.ii.„' ; i . , ,,,,,rmi.. i 1 \,,kk‘\ ‘, ,_.. . ,or-, - s - ,,,,-, ki f r;,1. , ,1,- C • ..i,-OA Ns 41 . y � 7 '` V 1 ('''." 11:1,:tr ' . '` 1 !1; '11 . ,-. '4-'4• i. .._i tb/. , ' , \ '''',; ' t ' f� .. \'''. , 1,....,,,1 i ,4 . .__ , JAI ,-,„ .. .., ),,,W Bird's Eye View Above MBCC Looking Southwest Ho:el 01:8-1;?--1. _,Dr-,'.^,•`_13 ue ._, r ,4!„ 'i;,3!'/ l)edeiopme t oud,,e i.. % iii. ---------. * toriolow ,11111111W libillIC • 1 :.. - pg. Mt1' r `` r. �0 • " s a w t..'.' :: 1 .':". -' . Y.- *r t r Y Y „wft a ... R - - 'T* r�•*v�r� `'-'A.i`” , .v'b`Rc[w R 1..i. . s t 11 r■ • r , 4t, "�i ; `,f.is^- y Y • • f R;(;-r M^ '� )y�� f , a 1 rt, > < f F ,,,,,-.,?ding; 116 View Looking Northwest over SoundScape Park ' .,'''' I Pwer;IF :41ritzx_. rte " .. . i „.-----.1 ,..„. ,,,,. ... A - 1.Z 0' ir-N."‘'—, , .7trli€r;iz; , .. '• i., m ' I.'. ,.ti 1 Li/A..07,J p414. , . , -,, __,,,,,,...,_ . -... .,. ., , .... tyl if -7-,, i ---'\ '',''''' ''''::,1%:::.5,i'S:',.."'''Co:',..:;.•:: tlro' \i.ikt..-- ,it .„,:-,--. 4 .._....,---,\ ,, ___,-;,- ' ._. ,..., .., ' P"'"7"-- , 14,. i , .A.,.... qiikiii,Lit.,17:-.../1,...r, .,,, , ..,.., m ! \ I.- --s, ,4‘, , ,, .. . .t. I W4h 1■I'%■.-'I.,fa4 . 1;1! / i '^""','..' t. '---.''''` ---...„:"'''' .',-'. �. •l�Its �1������!„ -a, . ��- ' 1a I . .� ce �...... ..,:,, ,..,, , , ---, ........„ . r" �j;,..i. r �,, , -,„: ,_,_, .de it I ..........„ ._ i_ — __, .' ~'«I 104, ,-_ —'4. ' -, , .11. -- _..\_. . .: , . „_....1.7,-,.iiir -...- - : -e "'"i- :-,::". „i;'' ' '' t .. ' :'-',7.-T.' .'" --e'''..atr. ! -4. - A. * :?..4 L I i ' '''',- - .• ; \ •A , A i .9'.. 6-0 - . ,,,,- .4 ' I - P8*' *g a 1 ' '..: . 1 -- . '''' . '' '-. --:,1u. . ! k r , ":-.. ..,. ,,_„....,,_, .. ; .,,, ..-, - 4,.. of. _.,, . ,..,, , , . ,..,„ t„ , ..• , ..,,, ...,- 4,, -... :. 04' .' -:j s � � I{ 14 ii, . Entrance at Corner of 17th Street & Convention Center Drive i"at?i h1•J?idril,v0„r.;epv,,a Des,gr: & P.°_Ili?ll"d i L'-,,?'oo-ler: E_..-.:;:. „,,,,,,......wiimix5 , 4,3 F! ---v....7, . . ,.,:„.i,,-,„lip 1 1 . m .y. F t` "_ r r m r r ra.�+' ' a r Le. . ` 4 �A 5 r "'....,,„ ,"'....,,„ ,,,_.7. .t-. . �. a r • ♦ f .. I+ It.1 r 7� J, 4 R +'i r —Z.'''''S; 'k !b 1 , t r-M1,SN a t b n� < ti b v a !,�1,Vr y_ ”.'e'L.' "1„: f :4.: y<' 0, v. y yr•++ r,._,-It 1,'+4s,4 y,e •.AR .. SA ♦ * ;; 'Z n'.. ,� 4 Bird's Eye View r Hare: I Pro/Jram,`.oncectua: sign P ir.if'.:ii,i De, 1:;otl;,i.nC Fes: --_ �n r Jf —(1.---17 .—..., r e _yam s V -�Z . , te. `i( . .,„ '•.e t,-'rt - , i,. ,.mil. may? 'slrT�' F. •:s.•` ,: J,° sue 1i t if � r_ , 1 tt I - f 1 I • N a- ; � .;sue ,�airil t , 41111P `. • v ommk. 111 -_-,`_ 119 View at 17th Street showing Pedestrian Arcade r • Hotel Prorarn,Concept_,3: Cam. ; '?: :,. -_-, _ :3Qr?s.an ,i:-1, . ' \ \lk,i‘ 4,-,401,- 4, '— ' ^�.•.. '` if �f, s .' . ,R t � ... µ . P - . 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'4:-I-t1-4-ti:'.;','2 -- ',,,-.-"- ;,. , 9104 .44, ,,, .. . ..„.„..,..,„:. . ,,,.,„ . ,_ ,-,„,- ,,,,,. . , ,,,,. ,. ..:-.- . ,.. -....,..,.., ,---_.. ,, ,-... ._. . ..., - --:-... , ...-.......1., , .--,-..---,..,--N.,-,.....:,-,-- ' it i4 -- - F •` s_,,",4 ,--4.-.4--.... ..1, i°•_,.,:f:;-;.„.. - - , ., , ., ..-.,,,..„..,...„-„,..... ,. .„.. , ._. _•,,,,.- if „..... • . .,. , . _-_. , ,.. .... ..40.„,!ki, ,,,,__ - . • ..,.„,. ..:_ , ..„ ,..•......„.„--1, _..-4, :. ,ii, mri ii, - _ _ -- - . - - - - - ii ', " iikv-1 - 11: , I. . , .1, ri. ,•,• .. ' ,....:. Iti 4 �j' 120 View Looking North from Pennsylvania Avenue Hots, P;o ram, ,;;no -,a 5 , .. : . , , _ ,. _ . . • . , ,,.., ... _ , ,,. , . , .. k. % it, t it. : _ - ,,,,, . - , . do . .,........ ... . ,: , _,, 4v,, ik ili..,-- -, ,ilk, .., - ii.: .....-3:4','1,iv ''. Nob.- _4r $- e . 411611# tt li:fillh 1 .N.:40,- • '' 4 . 1'Pt ,,j111,01111 1 •1:-;1 : ..,. L , ,, ..'1, "' ' 111111-'' . ......, k 421 ,''4111111: - ilk e-s '- . 4( fiA _ F rat V it, 121 Selected Views of Landscaped Terrace at Level 7 1 5 1 .....„...............,0„,,,,noimita---- —re is If SON_• .••w...- . ..._ . it _ , ,,,,.., 11RR*laiii '...maim" tll asIaa'��' ;'m RRRU iia"" aaaaaa • aranratat aM. In*titiiil[ ., ?X a ea!ON a x--n•!. '#�aaa/aa�.. * i q :I' a .� Wa NW° — c''''''', ili 161 ' ►.' .. g ' . . ..* IP_ )111---- t . _.. , ..,,.._ .,, , .... , . .:.41'; :,..';#t.,' .. - *a.4* # - ' 0 '''' . P • , ' 'lb:' 7' \' , . y ik . _ lip, '1 i -,.N 00 104 — •�. '� � R - 0.' ' i 1! It„ cit)i. . . .:�{ a 0 4 e 4Q4:::. . inkN. 70.....,■J.c.......{..01.7...It _ ,,_, -. . '7'- Fes' - -- 'J . 122 Selected Views of Landscaped Terrace at Level 7 r -3 5 5 • ....,,,...........,._,.....,.....”......___ _________•..,, .„...,. ._ . .. .. 2015 2016 2017 2018 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun lul Aug Sep Oct Nov Dec Oct J Feb Mar Apr May Jun Aug Sep Oct Nov Dec Activity OCSClIPf1O71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 IS 16 17 18 19 20 21 22 23 24 25 26 27 41 42 43 44 45 + RR/City Ne[otiations/Referendum RFP Proposal Due •April 30,2015 at 3.pm Selection Committee Interview/Ranking •May 7,2015 1 1 - Commission Approval Selection •May 20,2015 Commission Approval of Referendum Language and Ground Lease Agreement •July 27,2015 Lease Referendum •November 3,2015 Hotel Fla[/Operator Selection Select Hotel Operator 1— .1 - Project Financing Due Diligence/Negotiation/Closing Period I Close on Project Financing I I I I •August 15,2016 project Design —1 12 Months Initial Concept Design Z _ Final Concept Design Ir■ Schematic Design kir .,., 1/3/2016-Schematic Design Complete "Schematic Design"Approval _7171 1 ( I 1 1 7 1 50%Design Development Drawings _ 3/13/2016-50%D.D.s Complete "50%Design Development Drawings'.Approval 1"° 100%Design Development Drawings 5/15/2016-100%D.D.s Complete "Design Development Drawings.'Approval 1 Mo I I I 50%Construction Drawings 8/21/2016-50%C.D.s Complete 100%Construction Drawings _ 11/30/2016-100%C.D.s Complete Permits/A[ency Approval Foundation Permit f� Structural Frame Permit 1�H.. I +-- Building Permit I I I r— ' _ z _ Hotel Construction I 27 Months I Formal NTP •August 15.2016 Mobilization I_ I _ Hotel Construction Hotel Operator Move In , I Hotel Opening 11/11/2018 Hotel Openingl• Art Basel 2018 Start 12/6/2018-Art Basel 2018 I • I I I I I I I 1 Exhibit D Description of Land Sales EXHIBIT D Land Sale No. 1 .Y a i om'r '' ,. , Y . , ; O s e iikup /r _ to - -.R , it ,1,-, ` ( ,•.■Jo r • rt: . . %-,4 v li. — il:,.,* --,..,'.- 4..,...-zi.-74..c,__,-.--;,..".' _ - , - .„,- . .,.-..,,.. .....,.„ i ,, , 4,,,,tr; __ „s7,4114,..ti;,:i..,: ,-.„: .-7, ,,,,, 7 __,:...-.,':4.: Iv:ri-ri -› , .t.-?..., , ' u,X '''----- - —-.. 66, ,.'.._ -ft. a it �' i , raZ"�.,�ro*'.r • 1tT'��r+. v"` —... _ .�::a.,_ ,•1 s Y t M 1 _ .y I.R.. 7 ,! I' - mss- ,.....-----4-..-*.'., :-,4. t- . 0 - --, IL ■ ■ r ■ ■ ■ �t ar a r.a , DNS. Property Identification Record ID 2067 Property Type Hotel, Hotel Property Name Hampton Inn Midtown Hotel Site Address 3450 Biscayne Blvd.,Miami, Miami Dade County,Florida 33137 Location SW corner Biscayne Bl. &NE 35 St. Tax ID 01-3230-003-0350&0390 MSA Miami-Ft. Lauderdale Sale Data Grantor Arti Hersi, Inc. Grantee Midtown Lodging LLC Sale Date November 24,2014 Deed Book/Page 29417/1605 Recorded Plat 3/83 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $4,500,000 Cash Equivalent $4,500,000 Adjusted Price $4,500,000 Land Sale No. 1 (Cont.) Land Data Zoning T6-36a-O,Commercial High Intensity Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.832 Acres or 36,240 SF No. Rooms Planned 151 Indicators Sale Price/Gross Acre $5,408,940 Sale Price/Gross SF $124.17 Sale Price/Unit $29,801 Remarks The seller retained a JV position in the property's development by 3H Hotels Group out of Tennessee. The property is planned for development with a 151-room Hampton Inn,which will also have 4,435 square feet of ground floor retail space along its busy Biscayne Boulevard frontage. The location is in the Edgewater area of Miami just east of Midtown and southeast of the Design District. r Land Sale No.2 " :.erg,: + - ti ■ ' ""'r t °' i K x. r .� y p r �i* "�iIwnyer.M� a.am,yxnw...yym�.,m„ �- ... .., .w ". _ .t M ,* der r `�� M,_ %' a+� ., :- is 1, a.. A. vii aYM @@ Tll1 •� ,� �` � `. � � ^. ....._�,_ _ �. ...� �1. }'ref ,.-„,..,‘,..i g,t..,.,. rub' . .. _ •., � — .:ii - ,�. -. ._ - ...• `i :'a ..t 'ter.:.: ...„._.:_._. � ,�..f►.. x JJt P •n1 U T wry -- _ 1 W {\ey - 1� f t , '''' - ' ..""illik 61 1'. ' - A. -' p ..., : , . • ; ♦`+ Val1 ... i!: ' - • Property Identification Record ID 2068 Property Type Mixed-use, Hotel Property Name Tryptich hotel and mixed-use site Address 3601 North Miami Avenue, Miami, Miami-Dade County, Florida 33137 Location NE corner No. Miami Ave. &NE 36 St. Tax ID 01-3124-026-0010 et.al. MSA Miami-Ft. Lauderdale Sale Data Grantor Fifteen Midtown Properties LLC Grantee Aventura Hotel Properties LLC Sale Date June 27,2014 Deed Book/Page 29222/2553 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $12,250,000 Cash Equivalent $12,250,000 Adjusted Price $12,250,000 Land Sale No.2 (Cont.) Land Data Zoning T6-12-0,Commercial High Intensity Topography Level Utilities All Available Shape Rectangular Land Size Information Gross Land Size 1.028 Acres or 44,783 SF No. Rooms Planned 297 Indicators Sale Price/Gross Acre $11,915,459 Sale Price/Gross SF $273.54 Sale Price/Unit $41,246 Remarks This is the former Electra condo site that was purchased by an affiliate of HES Group for high- rise mixed uses that include a full-service,297-room hotel,40,500 square feet of retail space, 46,000 square feet of office space, a 6,000-square foot gallery,and a 500-space parking garage. The property enjoys an excellent location at the crossroads between Midtown Miami to the south, the Design District to the north,and the Wynwood Arts District to the west. It also has excellent visibility with frontage to Interstate 195 at its exit ramps to North Miami Avenue. Land Sale No.3 w, . .mac :r A..___________ . a . ... - _ a ri 1 r a . v r F 1, ! t ____ I -., f L. t, t I r t „1,*a I . ' ✓J pp. �' < �...- wir,, _. t� , Ill 3 I I Property Identification Record ID 2069 Property Type Hotel, Hotel Property Name Berkeley Shore Hotel Address 1610 Collins Avenue, Miami Beach,Miami Dade County, Florida 33139 Tax ID 02-3234-019-0790 MSA Miami-Ft. Lauderdale Sale Data Grantor Guesch, Inc. Grantee Berkeley Shore LLC Sale Date September 10,2013 Deed Book/Page 28823/4022 Recorded Plat 2/77 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $6,500,000 Cash Equivalent $6,500,000 Adjusted Price $6,500,000 Land Sale No.3 (Cont.) Land Data Zoning CD-3,Commercial Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.415 Acres or 18,075 SF No. Rooms Planned 97 Indicators Sale Price/Gross Acre $15,664,730 Sale Price/Gross SF $359.61 Sale Price/Unit $67,010 Remarks This is the sale of the Berkeley Shore Hotel property, an Art Deco hotel along the west side of Collins Avenue south of 17th Street. The property was in below-average condition at the time of sale,with the improvements near the end of their economic viability. The buyer purchased the hotel property for redevelopment and an expansion to 97 rooms. Historic preservation ordinances require this redevelopment to retain the building's important architectural features, including its facade. However, considering the extent of redevelopment that was planned and required,this provides a sale price in this instance that reflects its site and development value. Land Sale No.4 v iii„\.%,J,: �i. • ,�,r" [ _ f.. ■ _ - - . . . .1.. . ...- _ - - -,) i , ri, �, a a 1''1,- -- toll _ `te r ...w_ i. .. w ' „ �A — .d •:� mss, _ . m J I -'''''", - a"I rf:. -;:17-7:-----,--47: ' P---.' )17. I a RIM _�rl� fR as-4 Property Identification Record ID 2070 Property Type Hotel,Hotel Property Name Haddon Hall Hotel&Campton Apartments Address 1500 Collins Ave. & 1455 Washington Ave., Miami Beach, Miami-Dade County, Florida 33137 Tax ID 02-3234-019-1190, 1191 & 1200 MSA Miami-Ft. Lauderdale Sale Data Grantor Haddon Hall Associates Ltd. Grantee Haddon Hall Hotel Owner LLC Sale Date July 17,2013 Deed Book/Page See Remarks Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Land Sale No.4(Cont.) Sale Price $5,995,000 Haddon Hall Hotel Cash Equivalent $5,995,000 Upward Adjustment $28,480,000 Campton Apts. Adjusted Price $34,475,000 Land Data Zoning MXE& CD-2, Commercial Topography Level Utilities All available Shape Irregular Land Size Information Gross Land Size 1.388 Acres or 60,445 SF No. Rooms Planned 167 Indicators Sale Price/Gross Acre $24,844,586 Adjusted Sale Price/Gross SF $570.35 Adjusted Sale Price/Unit $206,437 Adjusted Remarks This is the nearly-simultaneous acquisition of the 122-room Haddon Hall Hotel property at 1500 Collins Avenue and the 45-unit Campton Apartments property to the immediate west at 1455 Washington Avenue in South Beach. The total combined square footage was 56,815,but the same include rights to expand the property by up to 50,000 which would nearly double its current size. The property was in below-average condition at the time of sale,with the improvements near the end of their economic viability. The buyer purchased the hotel property for redevelopment. Historic preservation ordinances require this redevelopment to retain the important architectural features of the building,particularly for the classic Art Deco design of the Haddon Hall. However,considering the extent of redevelopment that was planned and required, this provides a sale price in this instance that reflects its site value. f Land Sale No.5 ir..... — • s ' W gT r 5t 1 A i .4.--. fo i ti ip. w rte t ` G' 1 L i d°Q i SW �gf .(4P Ire 1 py�RTOWN: �, 'a s _ NESTH ST ''',", ,. ' „ ''' Apjli *-1-.."Z,: ,I i Property Identification Record ID 1882 Property Type Vacant Land,Commercial, Vacant Property Name Old Arena Site Address 700 N Miami Avenue, Miami,Miami-Dade County,Florida 33130 Location West side of N Miami Avenue between NW 7th and NW 8th Avenue Tax ID 01 3137 025 0011 MSA Miami-Ft. Lauderdale Market Type Commercial Land Sale Data Grantor Old Arena,LLC Grantee MDM Ricardo Glass Sale Date May 15,2013 contract Property Rights Fee Simple Sale History $35 MM 10/12 $28.iMM 12/04 Verification Miami Herald; Mo Saraiya,November 07,2013; Other sources: DBR Article Sale Price $40,000,000 Cash Equivalent $40,000,000 Adjusted Price $40,000,000 Land Sale No.5(Cont.) Land Data Zoning T6-60A-O Topography Level Utilities Available Shape Slightly Irregular Land Size Information Gross Land Size 4.714 Acres or 205,353 SF Front Footage N Miami Avenue;NW 8th Street Actual/Planned Building SF 2,258,883 No.Rooms Planned 1,800 Indicators Sale Price/Gross Acre $8,484,902 Sale Price/Gross SF $194.79 Sale Price/Planned Bldg. SF $17.71 Remarks Sale of the Old Arena Site,which was previously sold in Oct. 2012 for$35MM. Ricardo Glass (MDM)has announced development plans for a 600,000 SF convention center including a 500,000 exhibition hall on various levels a 1500 seat theatre,an 80,000 SF outdoor event deck, a 2,300 car garage topped by an 1800 room Marriott hotel in 58 stories. Project plans have not been submitted to the city. The convention center project will tie into the Miami World Center retail/resort project and be physically connected to the First Coast RR project for rail service to Orlando and local points of interest. The site is just west of the AA arena and south of the Museum/Performing Arts centers and Design District retail areas. Expected to cost upwards of$1 billion,the site is currently under lease to a civic group which is using it for a public park. Development money is stated to be all private but the Park West Area has some tax incentives in place for development. MDM Ricardo Glass,the buyer,has developed several Marriot Hotels in the past including the JW Marriot located in Brickell,and the JW Marriot located in downtown Miami. The convention center space will effectively change the landscape of downtown Miami. The seller owns close to 30 acres adjacent to the site,and will benefit from the construction of the new convention center, and therefore did not charge a price increase from their October 2012 purchase of the site. I Land Sale No.6 It*: '''l ... vill 1.411----42F"' - - ...41 : t: ,°1 ,44:04,4r_.' _ , /I 4 ,ice al OM 4 Ila _ # i� ,' _. , .4. ill NINA aelLatipi il a .,, ..,. .-... _ ,i.u-_ _ ., ,,,,, 44 L, .,„; , _, .. y i 440 a . '. MOW _IOW 'e :,:day • "r al - .fit) .r,- .rm-,a�aY4 Property Identification Record ID 2071 Property Type Hotel, Hotel Property Name Greystone Hotel(Vacant) Address 1920 Collins Avenue,Miami Beach,Miami-Dade County, Florida 33139 Location SW corner Collins Ave. &20th Street Tax ID 01-3137-025-0011 MSA Miami-Ft. Lauderdale Sale Data Grantor 1920 Collins Realty LLC Grantee Greystone Terra Firma LLC Sale Date May 17,2012 Deed Book/Page 28129/1240 Recorded Plat 5/7 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification January 12,2015 Sale Price $7,500,000 Cash Equivalent $7,500,000 Adjusted Price $7,500,000 Land Sale No.6(Cont.) Land Data Zoning CD-2, Commercial Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.215 Acres or 9,375 SF No.Rooms Planned 60 Indicators Sale Price/Gross Acre $34,848,000 Sale Price/Gross SF $800.00 Sale Price/Unit $125,000 Remarks This is the acquisition of the vacant and boarded-up Greystone Hotel property by an affiliate of Vos Hospitality. In January 2014,this buyer acquired the adjacent Santa Barbara apartments to the immediate west,and plans to combine these two properties in a redevelopment that would result in a 97-room luxury boutique hotel. The property was vacant and abandoned at the time of sale,thus the improvements were at the end of their economic viability. This provides a sale price in this instance that reflects its site and development value. r Land Sale No.7 a! v - +► .0 41 w s r Y ■ .... ..._ .11.,........ ,,, ...,,,,,,.. litlit .:1 -II : t +" -%,*.: "'Mt...s Ili e t - . r„ r: .M Mite ♦ •'r��;:�• ;� a '- : ■/ „� .,,, • lilt ■■1 iii■al 1Qi Y g as a,t fir.. 'i: -- QQ rr 1 iiQ i Drr- '4 '1 - Jr�T,£' E^ wo fr rl... r..�' it■ i■1XL": IF Far° w 1 *. i, ee �' + m.4 , % i J -- ».— — - ` . ■«■ ."MI.■. i`i °9` � � °� s( �� at au es �, ■ai au■li � t; —. AZ.'` f. WC 1111 .. w ` 4■ ■il _ 77 :a " 1111 i - .. w l� 4 lI "` s ,,," 7 4 -———7[411,:i, :1 ...(1' ilialliekt-:---- -- , v {y,. e TTiTw,e a t 7: f t r � Wit* r r rr Property Identification Record ID 2072 Property Type Hotel, Hotel Property Name Croydon Arms Apartment-Hotel(Vacant) Address 3720 Collins Avenue,Miami Beach,Miami-Dade County, Florida 33140 Location SW corner Collins Ave. & 38th Street Tax ID 02-3226-001-1710 MSA Miami-Ft. Lauderdale Sale Data Grantor CIG Acquisitions Group LLC Grantee 3720 Croydon LLC Sale Date March 16, 2012 Deed Book/Page 28039/1898 Recorded Plat 5/7 Property Rights Fee Simple Conditions of Sale Arm's length Financing Cash to seller Verification May 15,2015 Sale Price $6,750,000 Cash Equivalent $6,750,000 Adjusted Price $6,750,000 Land Sale No. 7(Cont.) Land Data Zoning RM-2,MFR&Hotels Topography Level Utilities All available Shape Rectangular Land Size Information Gross Land Size 0.321 Acres or 14,000 SF No.Rooms Planned 100 Indicators Sale Price/Gross Acre $21,002,143 Sale Price/Gross SF $482.14 Sale Price/Unit $67,500 Remarks This is the sale of the Croydon Arms, an apartment-hotel that was vacant and abandoned at the time of sale. The buyer planned a redevelopment of this property into a 100-room hotel. The building was vacant and abandoned at the time of sale,thus the improvements were at the end of their economic viability. This provides a sale price in this instance that reflects its site and redevelopment value. Exhibit E Miami-Dade County Regional Analysis Summary EXHIBIT E REGIONAL ANALYSIS MIAMI-DADE COUNTY REGIONAL ANALYSIS Y ` \i •rl Overview Miami-Dade County, Florida is located in the southeast corner of the state along the Atlantic Ocean. The major city is Miami,but there are 29 total municipalities in the county including Hialeah, Miami Beach, North Miami, Coconut Grove and Coral Gables. The county encompasses 1,946 square miles with a population of just over 2.6 million people, with a density of 1,206 people per square mile. When combined with Fort Lauderdale, the Miami-Fort Lauderdale-West Palm Beach consolidated metropolitan area ("South Florida") is the eleventh largest metropolitan area in the country, with a total combined population approaching 5.8 million. The main population is concentrated close to the Atlantic coast as most of the western portion of the county, approximately 416,000 acres or 650 square miles, lies in Everglades National Park or in environmentally-protected areas associated with the "river of grass". Since Miami is the closest major US metropolitan area to Latin America, and has a large population of Spanish- and Portuguese speaking people, Miami has become a leader in Latin American trade, finance, insurance, manufacturing, telecommunication and warehousing. Tourism and its offshoots,shopping and entertainment,are main draws of the county. With 84 miles of Atlantic coastline and a sub-tropical climate, its beaches are favorite destination for tourists from Europe and Latin America, as well as the rest of the US. Miami Beach, especially South Beach, has become a premiere modeling and film spot in the world. It attracts a cosmopolitan tourist business different from other competing Florida cities such as Orlando and Tampa. BLAZEJACK & COMPANY 1 REAL ESTATE COUNSELORS REGIONAL ANALYSIS The environment is a crucial underlying thread that ties Florida to its future. Essentially dependent on its climate and natural resources,unaddressed issues concerning sustainable growth are becoming urgent concerns of all Florida industries. As the impact of past decisions effects the current economic situation, future economic potential is dependent on how these issues are handled today. . • \i esri Demographic and Income Profile P4 am-!lads Courtly,FL hI uei-bed!Densegraphics STDO Miat+i•Dads County.FL(13916) Geography:°aunty Summary Crrae**0•, 2015 2020 Populabon 2 •35 2.601006 2,743,001 Holtadlaids 867.352 902272 953.303 Families 602,,911 622.399 654,790 Menlo ii id 50x1 2.83 2,84 2.34 Owner Orc4piad Housing Units 483.874 464.317 485,548 RnrOr Occupied Housing(!rats 383,478 437,756 467,755 #ladian Age 38.1 38.3 39.2 Try 2015-2020 Annual Rate Mn. State National Pnptoka:on 1.07% 1.115% 0.75% illeurikeldi 1.11% 1.02% 0.77% Families 141% 0.95% 0.69% Owner FM 0.119% 0.91% 0.70% !Medan Household Income 3.44% 2.89% 2.66% 2015 2020 Households by Income Numbs, Percent Numbly Pei cern •$13,000 166,596 17.8% 150,463 16.7% 515.000•524,999 112,345 12.5% 97,205 9.1% S25.000-$34.999 94.104 10.3% 82,524 8.7% 335.000-349,999 131.0121 14.5% 131457 13.3% 550,000-574,999 132437 16.9% 184,370 19.3% -5.75.000-599,999 89.406 " 9.9% 111,108 11.7% 5100.000-3149,999 46,150 9.9% 104,159 10.9% $150,000• $199,999 32,866 34% 43,202 4.3% $200,000+ 42.617 4.7% 49,.587 5.2114 median Household Income 143,427 $51,429 Average Household Income 365.743 $74,461 Per Capita Intone 521980 326.047 Census 2010 2013 2020 Population by Ago Nue►uber Pei ern Number, Peme t Number Percent 0-4 149.937 6.0% 149.265 5.7% 157,468 5.7% 5-9 145,253 5.8% 154,191 5.9% 154,788 5.6% 10-14 152.541 6.1% 131.006 5.8% 164.223 6.0% 15-19 166.014 6.6% 154,861 6.8% 136.474 5.7% 20.24 176423 7.1% 178.711 6.9% 163.809 6.0% 5•34 340.467 134% 389,831 344% 413.346 15.1% 35-44 372,197 14.9% 353,919 13.6% 36+6.577 13.4% 45-54 366417 14.7% 37722i 14.5% 365.472 13.3% 55-64 271,873 10.9% 3011,70 11.8% 348,991 12.7% 65-74 186.976 7.3% 215,172 8.3% 251,407 9.2% 75-84 119.171 4.8% 125,230 4.8% 142413 5.2% Or. 45.066 1.8% 52.241 2.0% 37,833 2.1% Onto MIN LWOW 4 111 111111d M!anent as8'm l robes U.S.Crr1MO Mnerar,Cards 1010 f minviry!Ile 1_ r#tewdMe it 1013 rill aua. Lune 19,2015 BLAZEJACK & COMPANY 2 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Employment and Income Miami Dade's labor force kept pace with the rise in population from 1990- 2006. The subsequent recession hit the county very hard and unemployment rates hovered 2 to 4 percentage points over the national average through 2012. Statistics and forecasts from the first quarter of 2015 show significant improvement with rates dropping to 6.0% range, the lowest level since October, 2008. The decline came despite an increase in job seekers as the long term unemployed rejoin the ranks. A separate survey showed employers added more than 25,000 new non-faun payroll positions over the last year in each quarter of 2013. Analysis of the jobs picture reveals that the broad gains outlined in the year end employment report mesh with forecasts more hiring in 2015. Labor Force,Employment& Unemployment (In Thousands, Seasonally Adjusted) 1,350 1a% Labor Force 1.250 14% 1.150 10% Employed IMO Or► Unemployment Rate (right axis) 950 2% 020344010203040102030401020304Q302030401 2011 2012 11013 2014 2015 L)tita Source-tkir ea,of tamer Stalls:Xs.RIR Planet/pa Research&lco io+n*r anus Section. BLAZEJACK & COMPANY 3 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Unemployment Rate (Seasonally Adjusted) u% 9% __..... 5 `" b emoms Miami-Dade Florida - - US 3% 1 1 1 1 I I 1 I I I 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 02 Q3 Q4 Q1 2012 2013 2014 2015 Average Weekly Wages (2014 US Dollars) si.,as �- Paha dears urn •. 64iDedo us Nis ow ale giffiL %qv +U'" /.g_� ...,..,....m.,...y..... /q..��y�f. �y�y/�qM�y,/�:r-....y. �y..i_,.. /�::.w'./R��./.y..P/.N....�1�. y� ��•+ Yi at WGM as M GS OS 421 as Mr al QS QS 211 QS QS asYF W as as al as\i�W aisA, a �t ass Pets Dm 14 �. A recovering housing market has bolstered construction employment over the past year. Most recently,however, this trend appears to be slowing as new housing demand as the market's large number of BLAZEJACK & COMPANY 4 REAL ESTATE COUNSELORS REGIONAL ANALYSIS foreign buyers diminishes due to a strengthening U.S. dollar. Job-growth leaders in Miami-Dade include information technology,financial activities,education and health services,and leisure/hospitality. Miami-Dade Nonfarm Payroll Employment ("000s) 201.541 %Chg from X Chg from 2014: 2014:Q1 Total Nonfarm 1,111.1 0.7% 3.1% Private 972.8 0.7% 3.6% Goods Prod. 75.8 -1.3% 54% Construction 37.6 -2.5% 10.7% Manufacturing 35.2 -0.1% 1.0% Private Service 897.0 0.9% 3551% Wholesale Trade 74.6 21% 2.2% Retail Trade 146.4 0.3% 1.6% Transp.-Wrsg-Uti I. 66.3 -0.6% 2,2% Information 19.1 1.7% 5.7% Financial Activities 77.1 0.6% 5.5% Prof./Bus_Serv. 155.3 0.2% 3.0% Educ./Health Serv. 172.6 1.2% 4.0% Leisure/Hosp. 134.4 2.2% 4.6% Other Serv. 51.3 0.4% 5.2 6 Total Govt 1383 OAS -OAS I Data Source. FL Dept of Econorak Opportunity.[Seasonally Adjusted by 06)1 71 The Florida Agency for Workforce Innovation, Labor Market Statistics Center notes that the traditional employment industries in the county are shifting. Waning industries in the county are agriculture, mining, and manufacturing while the top three growth industries are expected to be healthcare, waste management and remediation services, and professional, scientific and technical services. Long term estimates are for a service based economy. BLAZEJACK & COMPANY 5 REAL ESTATE COUNSELORS I REGIONAL ANALYSIS Share cif Total Employment by Sector Miami-Dade County 2008 and 2030 Government Other Constructim Manufacturing Information Wholesale Real Estate Transportation Finance Asp. 2030 Retail 2008 Services Miami-Dade County.Departrnerdof Planrrng andZoning.Research Section 2010. Median household income continues to rise,although cost of living estimates suggest most increases will be offset by rising household expenditures. Cost of living increases have a major influence on the rise in household income. TRANSPORTATION Miami International Airport(MIA) Miami International Airport is the primary connecting point for air travel between the Americas, the Caribbean and a major gateway to Europe. Approximately 1,100 flights arrive and depart MIA each day, with over 100 airlines covering 150 destinations worldwide. MIA has a nearly $33.7 billion impact on the South Florida economy while contributing 282,724 jobs, and ranks as the second-busiest U.S. airport for international passengers. The following chart shows passenger trends through MIA from 2005 through 2014. Between 2006 and 2007,passenger traffic increased a robust 3.5% to 5.0%per year then gradually declined throughout the recession to a mere 0.5%increase in 2009. By 2010,however,traffic regained its previous growth pattern. BLAZEJACK & COMPANY 6 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Passenger Vohir_me Trends -Miami Intern ational Airport International Total Passengers %of Passengers Period (000s) Total (000s) change 2005 14.241 45.9% 31,008 2006 14,728 45.3% 32,534 4.9% 2007 15,541 46.1% 33,740 3.7% 2008 16,147 47.4% 34,064 1.0% 2009 15,970 47.1% 33,890 -0.5% 2010 16,892 47.3% 35,698 5.3% 2011 18,418 48.1% 38,314 7.3% 2012 19,372 49.1% 39,467 3.0% 2013 20,202 49.8% 40,563 2.8% 2014 20,097 49.1% 40,942 0.9% Source: Miami-Dade County Aviation Dept. The Miami-Dade Aviation Department (MDAD) is in the final stages of a $6.4 billion Capital Improvement Program designed to meet the passenger and cargo traffic growth at Miami International Airport. The program encompasses all aspects of airport operations, from terminals, roadways, cargo facilities, to the airfield. The new Miami Intennodal Center opened in 2011 across Le Jeune Road from MIA, connected by a people-mover. It contains rental car operations and connections to mass transit including the county's Metrorail Orange Line. The Tri-Rail connection to the intermodal center is anticipated to open later this year. The NW 25'x' Street Viaduct sub-project will improve connections between the Florida Interstate and Federal Highway System for ground transportation of air cargo, and construct an elevated viaduct/roadway between MIA over SR 826, and out to NW 82nd Avenue with the assistance of the FDOT. BLAZEJACK & COMPANY 7 REAL ESTATE COUNSELORS r REGIONAL ANALYSIS Air Cargo (tons) 2,500,000 2,000.000 1,500,000 1,000,000 500.000 0 2005 2006 2007 2006 2009 2010 2011 2012 2013 2014 PortMiami PortMiami, the county's seaport, contributes over $27 billion annually to South Florida's economy and directly or indirectly provides over 207,000 jobs. Miami's Port is the world's busiest cruise port,with a fleet operated by 12 cruise lines. It has the largest year-round cruise fleet in the world including the "Megaships" capable of transporting more than 19,000 guests. PortMiami has approximately 40 shipping lines calling on more than 100 countries and 253 ports,serving markets in the Far East and Europe,as well as Central and South America. An ambitious capital improvement program, of over $581 million is underway at the port. The Miami Harbor Project calls for deepening PortMiami's south channel to a depth of 50 feet from the existing 42 feet, to accommodate mega container vessels that will begin traveling through the expanded Panama Canal in 2015. Additionally, redevelopment of 80 acres of cargo terminal area will enhance cargo terminal operations. A new tunnel opened in 2014 under the ship channel which directly connects the sea port to Interstate 395/MacArthur Causeway and the region's highway network. BLAZEJACK & COMPANY 8 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Miami-Dade County, Florida Seaport Department Schedule of Annual Total Tonnage (Unaudited) Last Ten Fiscal Years(in thousands) Year Total Difference % Change 2005 9,474 0 0% 2006 8.654 (820) -8 7% 2007 7.835 (819) -9.5% 2008 7,430 (405) -5.2% 2009 6,831 (599) -8.1% 2010 7,389 558 8,29 2011 8,222 833 11 3% 2012 8.108 (114) -1.4% 2013 7,981 (127) -1,6% 2014 7.700 (2811 -3.5% Miami-Dade Seaport Department Schedule of Annual Total Passengers(Unaudited) Last Ten Fiscal Years fin thousands) Year Total Difference %Change 2005 3.605 - 0 0% 2006 3,731 126 3 5% 2007 3.787 58 1.5% 2008 4,138 351 9.3% 2009 4.110 (28) -0.7% 2010 4.145 35 0.8% 2011 4.018 (127) -3.1% 2012 3 774 (244) -5.9% 2013 4.079 305 8.1% 2014 4.939 860 211% Rail Systems The Florida East Coast Railway and CSX are the major rail freight carriers serving Miami-Dade County. Miami-Dade Transit provides all public transit services in the county. The integrated transportation system covers four major components: the Metrobus fleet, connecting most areas of Miami-Dade County; Metrorail, an electrically-powered, elevated rapid-transit system stretching 25 miles from Dadeland/Kendall to Medley,with a recently-added spur to Miami International Airport's intennodal center on the Orange Line. Metromover, a 4.4-mile elevated people mover that serves the downtown central business district of Miami, and Special Transportation Service (STS), designed to meet the needs of people with disabilities unable to use regular transit services. Currently,Miami-Dade Transit records over 353,000 daily(weekday)boardings. The City of Miami also offers a free trolley service with seven routes, while Coral Gables offers a trolley connection between its Central Business District and the Douglas Road Metrorail station. BLAZEJACK & COMPANY 9 REAL ESTATE COUNSELORS REGIONAL ANALYSIS Metrorail Stations metro rover Stations School Board Ca Nig* 11111111111 oremwt ter BiCsntonniaf P Park QCloocd) It lite Wet lig It, a Eleventh garret 4.1)-Ikamells y Park West p cop FtsedOvtn�otsf NW wokie Q Warbled • dHkt I Forswear%Jr. college/ ayside so A Nistfrtt 0�►ertf+sra► Lyric aulr1 Omen+ment • nr u,sM Centel j Center fhret Stmet sslxav► 0 kicks. Miami AvoauS *,,�� I eaytront might Park J �. Center • J grove *tree. ' Riverwafk' - t i i - R N, iR11h fs Road Stmt w Ustvirsity 5#inse ,i I butt 1.11a In I flifot Ems, �1b 5tm.t , kall Peib'nenade am, `t' 1: grd lea rtrx a oa> t,c rr a sit-i District ""'c `srar7 F Florida East Coast Industries has announced plans to start high-speed rail service along its rail right- of-way,with a connection that would carry passengers between Miami and Orlando in just over three hours. Stations are also planned for downtown Miami,Fort Lauderdale and West Palm Beach,with a starting date of 2015 for the tri-county line and the expansion to Orlando in the following two to three years. BLAZEJACK & COMPANY 10 REAL ESTATE COUNSELORS 7- REGIONAL ANALYSIS / ALL ABOARD FLORIDA JACKSONVILLE ALL ABOARD FLORIDA'S roots trace back to Florida trailblazer merry Hagler.founder of the Florida East Coast Railway and the descendant companies that have provided rail service for over a century This privately owned,operated and Y I + maintained passenger rail service will ._"''" • 'l'° be ruining in 2014,at no risk to Florida taxpayers ORLANDO . 6,000 CONSTRUCTION JOBS FOR FLORIDIANS TAMPA ; ' Ar additional 1,000 jobs will be needed ¶ to operate the rail service „:',:‘;!-.W.7.--,--irtriaw-.•:-.:. -, 50 MILLION Freouent re. E ; 'r r �k: TRAVELERS scheduled round trips x - `s' The number of annual passengers , who can benefit from rail service to Gourmet meals anal `EST PALM BEACH travel between South Florida and 1 ip Geuerage service Orlando in approximately three hours $6+BILLION Reserved business-and FORT LAUDERDALE ; The amount of money traffic coach-service seating congestion costs Florida travelers . each year due to 274 million hours • MIAMI in travel delays and 216 million Wi-Fr availability excess gallons of fuel consumed ' Vii."gtm.cm 4.i'arstal 1111*'2., '� .rar*me 0 lipret t. Access to major 3 MILLION CARS international airports. 's OFF THE ROAD seaports and existing Less highway use means taxpayer commuter rail systems like savings on reduced highway : Netrorail and SunRail ' ';•maintenance and repair a Tri-Rail, the region's commuter rail line,runs along the CSX railroad tracks to the west of Interstate 1 95, connecting Miami International Airport to the south(in 2015) with West Palm Beach to the north. It has five stations in Miami-Dade County, seven in Broward, and six stations in Palm Beach County. It connects to Metrorail's Green Line at a transfer station in eastern Hialeah, and will connect to the Orange Line of Metrorail at Miami International Airport later in 2015. Future plans call for Tri-Rail to run a new line along the All Aboard Florida tracks,with a near-term plan to connect to the All Aboard station in downtown Miami via existing rail lines between the current Metrorail transfer station near N.W. 72"`t Street that connect to to FEC line to the east. Miami Intermodal Center(MIC) The Miami Intermodal Center (MIC) project just east of the Miami International Airport was sponsored by the Florida Department of Transportation (FDOT). The first phase, which opened in 2011, BLAZEJACK & COMPANY 11 REAL ESTATE COUNSELORS REGIONAL ANALYSIS included the new, 3.4-million square foot rental car center serving MIA, with a people mover connecting riders to the airport terminal. The next stage,the Miami Central Station, opened in 2012 with a Metrorail and Metrobus station. By 2015, Amtrak and Tri-Rail, South Florida's commuter rail service, are expected to connect to Miami Central Station. Major Roads The major interstate highways serving Miami-Dade County are 1-95, on the east, and I-75, on the west, both generally running north/south through the region. Florida's Turnpike is a six-lane toll road running from Homestead at the south end of the county to Wildwood Florida just south Ocala. The Turnpike forms an outer beltway around developed areas of Miami-Dade County. State Road 826 (the Palmetto Expressway) forms an inner beltway, while State Road 836 (the Dolphin Expressway) is the primary east/west axis connecting the Miami CBD with the county's western suburbs. BLAZEJACK & COMPANY 12 REAL ESTATE COUNSELORS Exhibit F Appraiser's Qualifications EXHIBIT F QUALIFICATIONS JOHN A.BLAZEJACK,MAI,CRE,FRICS Partner Blazejack& Company Academic Florida State University,B.A. Florida International University-M.S.M. Real Estate Most Recent Courses 1992-Level II Course 520-Highest and Best Use and Market Analysis 2000-Level II Course 530-Advanced Sales Comparison and Cost Approaches 2008-Member of review team for revised course on Market Analysis&Highest&Best Use 2008-Member of the review team for new course on Advanced Market Analysis&HBU 2010—Valuation for Financial Reporting 2012—Member of review team for Marketability Studies and Advanced Marketability Studies seminars Experience Mr.Blazejack,President of Blazejack&Company,has been active as a real estate counselor since 1970. His experience includes residential and income property appraisals,market and feasibility studies,and acquisition and disposition reports. The work has been for a wide range of property types including office, industrial,commercial and special use properties,hotels and recreational facilities. These assignments have been conducted in over twenty states and extensively throughout Florida. Mr. Blazejack is a qualified expert witness who has testified in Federal district and lower courts.He is an approved instructor of both the Appraisal Institute(AI)and the American Bankers Association. Mr. Blazejack is a past president of the Greater Miami Chapter of the Society of Real Estate Appraisers and was the 1992 President of the South Florida Chapter of the Al.. Designations and Licenses MAI Member,Appraisal Institute,Certificate Number 6089,currently certified. CRE Member,American Society of Real Estate Counselors,Certificate Number 1131. FRICS Fellow of the Royal Institute of Chartered Surveyors Number 1250175 Registered Florida Real Estate Broker State-Certified General Real Estate Appraiser,License Number RZ93. Affiliations Mr. Blazejack is the past President of the Real Estate Counseling Group of America(RECGA). Published Articles The Appraisal Journal,Spring,2011 Price versus Fundamentals—From Bubbles to distressed Markets By Stephen F.Fanning,MAI John A.Blazejack,MAI and George R. Mann,MAI Real Estate Issues,Volume 34,Number 1,2009 When Will the Miami Condominium Market Recover? By Richard Langhorne,CRE,FRICS and John A.Blazejack,MAI,CRE,FRICS QUALIFICATIONS J GUTHRIE(JAY)MLINAR,MAI,SRA Blazejack& Company Academic B.B.A., Southern Methodist University, 1983 Experience 2012-Present: Consultant,Blazejack& Company, Miami, Florida. 1995-2012: Appraiser, Clobus, McLemore &Duke, Inc., Fort Lauderdale, Florida. 1994-1995: Appraiser, Investors Research Associates, Miami, Florida. 1993-1994: Appraiser, Cushman& Wakefield, Miami, Florida. 1991-1993: Appraiser, Bach Thoreen McDermott, Inc., Houston, Texas. 1988-1991: Appraiser, Georgia Federal Bank, Atlanta, Georgia. 1983-1988: Appraiser, Porcher, Bond, Wilk, Allison, Inc., Dallas Texas. 1982-1983: Salesperson, Helena Underwood Realtors, Dallas, Texas. Mr. Mlinar has been active as a real estate appraiser/analyst on a full-time basis since 1983. During this period, his real estate experience included highest and best use analyses, market studies, consulting and evaluation of office buildings, hotels/motels, apartments, condominiums, warehouses, vacant land, single-family homes, retail stores, restaurants, shopping centers, mixed-use projects, golf courses and special purpose properties. Since 1993, these assignments were primarily concentrated in South Florida, but with extensive work also completed on properties located throughout the state. Throughout his career, Mr. Mlinar has completed appraisals, analyses and consulting on properties located in 20 states and in Uruguay. Designations and Licenses MAI Member, Appraisal Institute, currently certified SRA Member, Appraisal Institute,currently certified Florida State-Certified General Real Estate Appraiser RZ1916 Florida Licensed Real Estate Salesperson SL654868 APPENDIX 7 Appendix 7 Summary of Public Revenue Impact Over 30 years Over 99 years 2022(Yr 4) Total NPV @ 5% Total NPV @ 5% CITY Hotel Lease Minimum Fixed Rent $1.5m $53m $21m $417m $35m Variable Rent 1.5m 59m 23m 466m 39m Percentage Rent (4%Gross) $2.9m 112m 44m 883m 74m Taxes CRA City(thru 3/2044) 1.1m 34m 16m 34m 16m CRA County (thru 3/2044) 0.8m 26m 12m 26m 12m New Resort Tax (Hotel 1%) 0.8m 30m 12m 229m 20m Resort Tax (Hotel 3%, F&B 2%) 3.0m 118m 48m 902m 79m CDT Allocation (thru 2044) 1.5m 36m 16m 36m 16m Property Taxes* 0.1m 13m 4m 326m 16m I Subtotal 7.2m 258m 108m 1,553m 159m 1 CITY TOTAL $10.1m $369m $151m $2,436m $233m COUNTY Convention Devl.Tax (3%) 0.8m 54m 20m 650m 44m Local Option Sales Tax (1%) 1.1m 44m 18m 336m 29m Property Taxes* 0.1m 12m 4m 266m 14m Subtotal County 2.0m 110m 42m 1,252m 87m SCHOOLS (Property Tax) 1.5m 60m 24m 453m 40m OTHER PROPERTY** 0.2m 7m 3m 55m 5m STATE SALES TAX (6%) 6.6m 264m 107m 2,019m 176m TOTAL • $20.4m $810m $327m $6,215m $540m *95%of general property taxes allocated to CRA through 3/2044 **Regional property tax and Children's Trust property tax Key Assumptions: All analysis completed on a calendar year basis Year 1 through 10 based on developer proforma Assumed 2%growth rate beginning in year 11 and beyond NPV to 2016 $1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044 Sources:Portman,City of Miami Beach,SAG. I 28 I SATURDAY.AUGUST 22.2015 Ht LOCAL&STATE Miarrtillerald.corn I MIAMI HERALD. r?,s•2cr5 ,/V\IA''vdBEACH CITY OF MIAMI BEACH NOTICE OF PUBLIC HEARING AND INTENT TO CONSIDER A DEVELOPMENT AND GROUND LEASE AGREEMENT NO110E IS HEREBY given that a Second Reading/Public Hearing will be heard by the Mayor and City Commission of the City of Miami Beach,Florida,in the Commission Chambers,3rd Floor,City Hall, 1700 Convention Center Drive,Miami Bea* Florida,on Wednesday.September 2,2015 at 11:00 a.m., or as soon thereafter as the matter can be heard,to consider. A Resolution Of The Mayor And City Commission Of The City Of Miami Beach,Approving, Following Second Reading/Public Hearing,A Development And Ground Lease Agreement,As Authorized,Respectively,Under Section 118-4 Of The City Code,Sections 163.3220-1633243, Florida Statutes,And Section 82-37 Of The City Code, Between The City And Portman Miami Beach,LLC("Portrnan"),For The Development Of An 800-Room Convention Headquarter Hotel And Related Facilities,Including UpTo 85,000 Square Feet Of Conference And Ballroom Facilities, And Up To 3/Alit)Square Feet Of Restaurant Facilities(The"Hotel"),On An Approximately 2.6b Acre Site OnThe Northeast Corner Of 17'Street And Convention Center Drive,Bounded Roughly RyThe Miami Reath Cnnventinn CenterTnThe North,17'"StreetThThe South,The Fillmore Miami Beach AtThe Jackie GleasonTheaterToThe East,And Convention Center Drive Tone West(The 'Leased Property"i; Delineating The Conditions For The Design, Construction, Equipping And Operation OfThe Hotel OnThe Leased Property With No City Funding Therefor;Providing For A 99-YearTerm OfThe Leased Property Once Certain Conditions Are Satisfied;Prohibiting Gambling Establishments OnThe Leased Property:And Providing For Annual Base RentToThe City,AfterTh e Hotel Opens,OfThe Greater of Minimum Fixed Rent Or A Percentage OfThe Gross Revenues Of The Hotel,Among Other Rent. PROPERTY The proposed Leased Property consists of a portion of Folio No.02-3227-000-0090, on an approximately 2.65 acre site on the northeast corner of 17"'Street and Convention Center Drive,bounded roughly by the Miami Beach Convention Center to the North,170'Street to the South,the Fillmore Miami Beach at the Jackie GleasonTheaterto the East,and Convention Center Drive to the West PFRMITTFD LISFS:The proposed Development and Gmund I ease Agreement does not amend the main permitted uses under the City's Land Development Regulations,which include parking lots,garages,performing arts and cultural facilities;hotel;merchandise mart;commercial or office development;landscape open space;parks and any use that is customarily associated with a convention center or governmental buildings and uses. Under the City's Land Development Regulations,the maximum building intensity for this zoning district(the CCC Civic and Convention Center district)is a floor area ratio of 2.75.The maximum building height for a hotel is 300 feet.The scale of the hotel use is limited by setback,height,floor area ratio,minimum room size,parking requirements of.4 spaces per room and other provisions of the City's Land Development Regulations.The City's Land Development Regulations do not provide for population densities for this zoning district. The height of any habitable building on the Leased Property shall not exceed 30U feet to the top of the roof,and architectural projections will comply with the terms of the City's Land Development Regulations. A copy of the proposed Development and Ground Lease Agreement is available for public inspection during normal business hours in the Office of the City Clerk, 1700 Convention Center Drive, 1st Floor, City Hall,Miami Reach,Florida 33139.Inquiries may be directed to the Office of the City Attorney at 305.673.7470. INTERESTED PARTIES are invited to appear at this meeting,or be represented by an agent, or to express their views in writing addressed to the City Commission,do the City Clerk,1700 Convention Center Drive,1'Floor,City Hall,Miami Beach,Florida 33139.This item is available for public inspection during normal business hours in the Office of the City Clerk,1700 Convention Center Drive,1"Floor, City Hall,Miami Beach,Florida 33139.This meeting,or any item therein,may be continued,and under such circumstances,additional legal notice need not be provided. Pursuant to Section 288.0105,Fla.Stat.,the City hereby advises the public that if a person decides to appeal any decision made by the City Commission with respect to any matter considered at its meeting ur its hearing, surfr perwn must ensure drat a verbatim record or the pruwetfings is made,vvlric ► record includes the testimony and evidence upon which the appeal is to be based.This notice does not constitute consent by the City for the introduction or admission of otherwise inadmissible or irrelevant evidence,nor does it authorize challenges or appeals not otherwise allowed by law. To request this material in alternate format, sign language interpreter(five-day notice required), information on access for persons with disabilities,and/or any accommodation to review any document or participate in any City-sponsored proceedings,call 305.804.2489 and select 1 for English or 2 for Spanish,than option 6 TTY users may call via 711(Florida Relay Service)_ Rafael E.Granado,City Cleric Ad 1059 City of Miami Beach W aE 7 N Hn'O «;;n Y m u r3 L m �C c.N r'C O C ...r` O m m « c- ` ---Z O O) Q)" O)- m N C m• C=> ° m LL m E v E L N L C c c E Qw 2 1•1. at ' HEufl u:n Et m COO' a UO m cA 2 d ° C >LJ a• m C m ..N m E m y >,C 7 L Y ci U - E C a. 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