Exhibit A 2. , ,912 ,
EXHIBIT " A "
RESOLUTION NO.' 2015-29115
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, 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 -
163.3243, FLORIDA STATUTES, AND SECTION 82-37 OF THE CITY
CODE, BETWEEN THE CITY AND PORTMAN MIAMI BEACH, LLC
("PORTMAN"), FOR THE DEVELOPMENT OF AN 800-ROOM
CONVENTION HEADQUARTER HOTEL AND RELATED FACILITIES,
INCLUDING UP TO 95,000 SQUARE FEET OF CONFERENCE AND
BALLROOM FACILITIES, AND UP TO 37,400 SQUARE FEET OF
RESTAURANT FACILITIES (THE "HOTEL"), ON AN APPROXIMATELY
2.65 ACRE SITE ON THE NORTHEAST CORNER OF 17TH STREET
AND CONVENTION CENTER DRIVE, BOUNDED ROUGHLY BY THE
MIAMI BEACH CONVENTION CENTER TO THE NORTH, 17TH
STREET TO THE SOUTH, THE FILLMORE MIAMI BEACH AT THE
JACKIE GLEASON THEATER TO THE EAST, AND CONVENTION
CENTER DRIVE TO THE WEST (THE "LEASED PROPERTY");
DELINEATING THE CONDITIONS FOR THE DESIGN,
CONSTRUCTION, EQUIPPING AND OPERATION OF THE HOTEL ON
THE LEASED PROPERTY, WITH NO CITY FUNDING THEREFOR;
PROVIDING FOR A 99-YEAR TERM OF THE LEASED PROPERTY
ONCE CERTAIN CONDITIONS ARE SATISFIED; PROHIBITING
GAMBLING ESTABLISHMENTS ON THE LEASED PROPERTY; AND
PROVIDING FOR ANNUAL BASE RENT TO THE CITY, AFTER THE
HOTEL OPENS, OF THE GREATER OF MINIMUM FIXED RENT OR A
PERCENTAGE OF THE GROSS OPERATING REVENUES OF THE
HOTEL, AMONG OTHER RENT.
WHEREAS, the Mayor and City Commission desire to promote economic development
within the City of Miami Beach by attracting a more robust mix of conferences and conventions
to the Miami Beach Convention Center ("MBCC" or "Convention Center"), including "fly-in"
conferences and conventions drawing national and international attendance, that would reduce
the MBCC's reliance on "drive-in" events that primarily attract local/commuter attendance; and
WHEREAS, in support of the foregoing and in an effort to maintain the competitiveness
of the Convention Center as a local and regional asset that supports the South Florida tourism
economy, the City is proceeding with the Miami Beach Convention Center Renovation and
Expansion Project (the "MBCC Renovation Project"), a public construction project that includes
a complete renovation of the MBCC, expansion of ballroom and auxiliary spaces, parking above
portions of the MBCC, exterior landscaping, and creation of a 6.5 acre public park; and
WHEREAS, in addition to and separate from the MBCC Renovation Project, the City
desires to attract more "fly-in" conferences and conventions to the MBCC through the
development of a convention headquarter hotel that is (i) entirely privately-funded; (ii)
sufficiently close to the Convention Center to serve as an "on-site" hotel option for conference
attendees; and (iii) large enough to provide the group room blocks necessary to support and
secure national and international conferences and conventions at the Convention Center; and
WHEREAS, on November 19, 2014, the Mayor and City Commission adopted
Resolution No. 2014-28836, approving an Amended and Restated Interlocal Cooperation
Agreement between the City and Miami-Dade County ("County"), whereby, in recognition that a
convention hotel in the proximity of the Convention Center will generate additional Convention
Development Tax ("CDT") and resort tax revenues, the County has agreed to provide the City
with up to $1,500,000 per year in an additional allocation of CDT revenues once a convention
hotel opens, with such additional payments to the City continuing annually until 2048; and
WHEREAS, on January 27, 2015, the City Commission authorized the issuance of
Request for Proposals No. 2015-103-ME for the Development of a Headquarter Convention
Hotel Adjacent to the Miami Beach Convention Center (the RFP), with an opening date of April
10, 2015; and
WHEREAS, the RFP solicited proposals for the development of an approximately (but
not to exceed) 800-room hotel and related hotel facilities (the "Hotel") on approximately 2.65
acres on the northeast corner of 17th Street and Convention Center Drive, bounded roughly by
the Miami Beach Convention Center to the North, 17th Street to the South, the Fillmore Miami
Beach at the Jackie Gleason Theater to the East, and Convention Center Drive to the West, as
described in Appendix 2 to the September 2, 2015 Commission Memorandum accompanying
this Resolution (the "Leased Property"); and
WHEREAS, the City received proposals from the following firms: (1) Portman Holdings,
LLC; and (2)Oxford Capital Group/RLB Swerdling ("Oxford Capital"); and
WHEREAS, on April 21, 2015, the City Manager notified Oxford Capital that its proposal
was not responsive to the RFP's minimum requirements; and
WHEREAS, on April 29, 2015, the City Manager, via Letter to Commission (LTC) No.
176-2015, appointed an Evaluation Committee (the "Committee"), which convened on May 7,
2015 to interview the Portman Holdings team and consider its proposal; and
WHEREAS, on May 20, 2015, the Mayor and City Commission approved Resolution No.
2015-29029, authorizing the Administration to negotiate a Development and Ground Lease
Agreement, including a Room Block Agreement (collectively, the "Lease") with Portman
Holdings, LLC, with said Lease subject to prior approval by the Mayor and City Commission
before the final execution thereof; and
WHEREAS, as contemplated by the City's initial lease template included in Addendum 3
of the RFP, and at the request of the City Administration and the City Attorney's Office, Portman
Holdings has created a wholly-owned single-purpose limited liability company, Portman Miami
Beach, LLC("Portman")to serve as Lessee; and
WHEREAS, on June 3, 2015, the Finance and Citywide Projects Committee reviewed
and approved the terms of the proposed Lease, as required pursuant to Section 82-37(a)(1) of
the City Code; and
WHEREAS, the Planning Department has completed a planning analysis, attached as
Appendix 5 to the September 2, 2015 Commission Memorandum accompanying this
Resolution, using the criteria set forth in Section 82-39 of the City Code; and
WHEREAS, the City has obtained an independent appraisal of the Leased Property,
attached as Appendix 6 to the September 2, 2015 Commission Memorandum accompanying
this Resolution, in accordance with Section 82-39(b)of the City Code; and
WHEREAS, as part of the Lease, Portman will also be seeking to enter into a
development agreement with the City pursuant to Sections 163.3220 — 163.3243, Florida
Statutes, to memorialize, among other provisions, the terms and conditions for the development
of the Hotel Project(as hereinafter defined); and
WHEREAS, Sections 163.3220 — 163.3243, Florida Statutes, and Section 118-4 of the
City's Code require two public hearings for a development agreement, and Section 82-37(a)(2)
of the City Code also requires two readings of the proposed Lease, with the second reading to
be accompanied by a public hearing; and
WHEREAS, the Administration and Portman have negotiated the Lease, attached as
Appendix 1 to the September 2, 2015 Commission Memorandum accompanying this
Resolution, and incorporated herein by reference; and
WHEREAS, the Administration and Portman have negotiated the Room Block
Agreement, attached as Exhibit"L"to the Lease; and
WHEREAS, on July 31, 2015, following a duly noticed public hearing, the Mayor and
City Commission approved the Lease at first reading; and
WHEREAS, the Lease provides, among other provisions, the following terms and
conditions:
a. The Hotel will include approximately(but not to exceed) 800 rooms, up to 95,000 square
feet of meeting facilities, up to 37,400 square feet of restaurant facilities, 320 parking
spaces (.4 parking spaces per room, as required by the City's Land Development
Regulations), the installation of all furniture, fixtures and equipment required for the
Hotel, an overhead pedestrian walkway connecting the Hotel with the MBCC
("Skybridge"), and all supporting amenities and related facilities (collectively, the "Hotel
Project"), with a maximum height for the Hotel Project of up to 300 feet (in accordance
with the City's Land Development Regulations); and
b. Portman will be solely responsible for all costs and expenses to develop, design,
construct, finance, equip and operate the Hotel Project, with no City funding or financing
for the Hotel Project; and
c. The Lease includes the City's approval, in its proprietary capacity as owner of the
Leased Property, of the preliminary concept design for the Hotel Project attached as
Exhibit "E" to the Lease. Notwithstanding the preceding, and in further recognition that
the design for the Hotel Project will evolve as part of the City's regulatory development
process, including review and approval by the City's Design Review Board, the Lease
also requires the City's approval of substantial design changes to the Hotel Project,
including any change that materially affects the exterior façade or other exterior
elements of the Hotel Project; and
d. The term of the Lease is for a period of 99 years, commencing once Portman meets
certain key milestones with respect to the development and financing of the Hotel
Project(referred to in the Lease as Possession Conditions); and
e. The Leased Property cannot be used as a Gaming Establishment (i.e. casinos or other
gambling or wagering activities), and Portman and/or subsequent owners of the Hotel
Project cannot own, manage or operate a Gaming Establishment in Miami-Dade County.
The Lease provides that the foregoing provisions cannot be amended without a 6/7th
vote of the City Commission and approval by at least sixty percent (60%) of the voters
voting thereon in a City-wide referendum; and
f. The Leased Property must be continuously operated as a Hotel. The hotel brand, or
"flag" of the Hotel, must be an "Approved Brand," which may include Marriott, Westin,
Omni, Hyatt Regency, Sheraton, La Meridien, Hilton, or any other brand approved by the
City, in its sole discretion. The Hotel must be developed and operated so as to be able
to obtain and continuously maintain a four-diamond rating from the American Automobile
•
Association ("AAA")(the "Hotel Standards"); and
g. The Hotel Operator must either be an Approved Brand or a management company with
a franchise agreement with an Approved Brand. The Hotel Operator must operate the
Hotel in accordance with the Hotel Standards and must comply with the Room Block
Agreement; and
h. As of the Rent Commencement Date (defined in the Lease as the later of(i) the Hotel's
Opening Date, and (ii) the completion of construction at the MBCC such that the four
main exhibition halls may be used for events), the City will receive, as annual Base Rent,
the greater of (x) Minimum Fixed Rent (as specified in the Lease), or (y) a fixed
percentage of the Gross Operating Revenues of the Hotel Project, with such Gross
Operating Revenues defined to include all revenues and income from gross room sales,
gross food and beverage sales (whether a food and beverage establishment is operated
by Lessee or a Subtenant), catering receipts, internet services charges, in-room video
charges, parking and valet service receipts, among other revenues; and
i. After the end of the Third Rent Year (as defined in the Lease) and for each year of the
Term thereafter, the City will receive annual Base Rent, in the amount of the greater of
(x) the Minimum Fixed Rent or(y) 2.5% of Gross Operating Revenues; and
j. The City will also receive, as Additional Base Rent, up to 2.5% of Gross Operating
Revenues if certain projected Gross Operating Revenue hurdles/targets are exceeded;
and
k. The City will also receive Transaction Rent, in the amount of a fixed percentage of the
gross sales price of the first three Transfers of the Hotel Project that effect a sale of the
entire Hotel Project or a transfer of a controlling interest (more than 50% interest) in the
Lessee; provided that with the first such Transfer, Transaction Rent is only due if the
gross sales price exceeds $580 million (or pro rata portion if the first Transfer is of a
controlling interest in Lessee); and
I. With respect to all Transfers and, in particular, Transfers effecting a sale of the Hotel
Project or a Controlling interest in Lessee, the City shall have the right to approve
Transfers in accordance with the Acceptable Owner criteria and process outlined in
Exhibit "A" of the Lease, including limitations with respect to Transfers to Foreign
Instrumentalities; and
m. The City's rights and interest in the Lease, including with respect to all Rent payments,
will not be subordinate to any debt, mortgage, lien or encumbrance placed on Portman's
(or any subsequent owner's) interest in the Lease; and
n. Throughout the Term of the Lease, Portman (or any subsequent Lessee) must pay all
applicable ad valorem taxes and other public charges, with no tax abatements or
subsidies of any kind provided by the City; and
WHEREAS, if approved by the City Commission, the Lease is also subject to approval by
vote of at least 60% of the voters voting thereon in a City-wide referendum, pursuant to Section
1.03(b)(3)of the City Charter.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby approve, 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 - 163.3243, Florida Statutes, and Section 82-37 of the City Code, between •
the City and Portman Miami Beach, LLC ("Portman"), for the development of an 800-room
convention headquarter hotel and related facilities, including up to 95,000 square feet of
conference and ballroom facilities, and up to 37,400 square feet of restaurant facilities (the
"Hotel"), on an approximately 2.65 acre site on the northeast corner of 17th Street and
Convention Center Drive and bounded roughly by the Miami Beach Convention Center to the
North, 17th Street to the South, the Fillmore Miami Beach at the Jackie Gleason Theater to the
East, and Convention Center Drive to the West (the "Leased Property"); delineating the
conditions for the design, construction, equipping and operation of the Hotel on the Leased
Property, with no City funding therefor; providing for a 99-year term of the Leased Property once
certain conditions are satisfied; prohibiting gambling establishments on the Leased Property;
and providing for annual Base Rent to the City, after the Hotel opens, of the greater of Minimum
Fixed Rent or a percentage of the Gross Operating Revenues of the Hotel, among other rent.
PASSED AND ADOPTED this .2 day of 5e flew:Lr2015.
ATTEST: F '"
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Ra ael E. Granado, City C INCORP ORATEf hi i Levi, - 7
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MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members f, the City r ,'mmission
FROM: Jimmy L. Morales, City Manager �� COND READING
PUBLIC HEARING
DATE: September 2, 2015
SUBJECT: A RESOLUTION OF THE MA •R AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, 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 - 163.3243, FLORIDA STATUTES, AND
SECTION 82-37 OF THE CITY CODE, BETWEEN THE CITY AND
PORTMAN MIAMI BEACH, LLC ("PORTMAN"), FOR THE
DEVELOPMENT OF AN 800-ROOM CONVENTION HEADQUARTER
HOTEL AND RELATED FACILITIES, INCLUDING UP TO 95,000
SQUARE FEET OF CONFERENCE AND BALLROOM FACILITIES,
AND UP TO 37,400 SQUARE FEET OF RESTAURANT FACILITIES
(THE "HOTEL"), ON AN APPROXIMATELY 2.65 ACRE SITE ON
THE NORTHEAST CORNER OF 17th STREET AND CONVENTION
CENTER DRIVE, BOUNDED ROUGHLY BY THE MIAMI BEACH
CONVENTION CENTER TO THE NORTH, 17TH STREET TO THE
SOUTH, THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON
THEATER TO THE EAST, AND CONVENTION-CENTER DRIVE TO
THE WEST (THE "LEASED PROPERTY"); DELINEATING THE
CONDITIONS FOR THE DESIGN, CONSTRUCTION, EQUIPPING
AND OPERATION OF THE HOTEL ON THE LEASED PROPERTY,
WITH NO CITY FUNDING THEREFOR; PROVIDING FOR A 99-
YEAR TERM OF THE LEASED PROPERTY ONCE CERTAIN
CONDITIONS ARE SATISFIED; PROHIBITING GAMBLING
ESTABLISHMENTS ON THE LEASED PROPERTY; AND
PROVIDING FOR ANNUAL BASE RENT TO THE CITY, AFTER THE
HOTEL OPENS, OF THE GREATER OF MINIMUM FIXED RENT OR
A PERCENTAGE OF THE GROSS OPERATING REVENUES OF
THE HOTEL, AMONG OTHER RENT.
BACKGROUND
On January 27, 2015, the City Commission authorized the issuance of Request for Proposals No.
2015-103-ME (the RFP) for the Development of a Convention Headquarter Hotel Adjacent to the
Miami Beach Convention Center("MBCC").
'-Agenda Item P7 A
Date 4-2-I S'
L
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 2 of 12
On April 10, 2015, the City received proposals from Portman Holdings, LLC and Oxford Capital
Group/RLB Swerdling ("Oxford Capital"). On April 21, 2015, the City Manager notified Oxford
Capital that its proposal was not responsive to the RFP's minimum requirements.
On April 29, 2015, the City Manager, via Letter to Commission (LTC) No. 176-2015, appointed an
Evaluation Committee, which convened on May 7, 2015, to interview the Portman Holdings team
and score the proposal, consistent with the evaluation criteria outlined in the RFP.
On May 20, 2015, the Mayor and City Commission approved Resolution No. 2015-29029,
authorizing the Administration to negotiate a Development and Ground Lease Agreement,
including a Room Block Agreement (collectively, the "Lease") with Portman Holdings, LLC, with
said Lease subject to prior approval by the Mayor and City Commission before the final execution
thereof.
On June 3, 2015, the Administration submitted the proposed Lease for the Finance and Citywide
Projects Committee's review and input, in accordance with the requirements of Section 82-
37(a)(1) of the City Code.
On July 31, 2015, following a duly noticed public hearing, the City Commission approved the
Lease on first reading (Agenda Item R7A).
ANALYSIS
Need for a Headquarter Hotel
The City of Miami Beach has been contending with the development of its convention events
business for many years with limited success. In an effort to make the Miami Beach Convention
Center ("MBCC or "Convention Center") more competitive, the City is proceeding with its MBCC
Renovation and Expansion Project, a public construction project that is well underway and includes
a complete renovation and expansion of the Convention Center, with construction anticipated to
begin in December, 2015.
An adjacent, privately-funded, convention headquarter hotel is the next step in creating a highly
competitive convention destination. The headquarter hotel will have a dramatic impact on the City.
The following summarizes the key impacts:
• Competitive Landscape— Out of the 30 top U.S. convention destinations, Miami Beach is
one of four that currently does not have a headquarter hotel attached or adjacent to its
convention center. The other three cities include: Ft. Lauderdale, which is in the process of
developing a hotel; Los Angeles, which is also in the process of developing a hotel; and
New York, which does not need a headquarter hotel in view of the significant hotel
inventory in the nearby Broadway District. With the addition of the headquarter hotel for the
MBCC, Miami Beach will finally be competitive as a convention destination.
• Client Demands - The City and the Greater Miami Convention and Visitors Bureau
(GMCVB) have reached out to the Convention Center's target market and continue to
receive feedback that many convention planners will only consider Miami Beach for their
event if there is an attached headquarter hotel. With a hotel, the City will finally have an
opportunity to book these events.
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 3 of 12
• Center Bookings- Case studies in other destinations that have expanded/renovated their
convention center, and developed a headquarter hotel, have shown material increases in
convention bookings. Average convention room night impact increased 42%. The City
and GMCVB are working through booking goals for the Convention Center, and are working
toward increasing convention bookings from approximately 5 annually to 25 to 30 annually,
not including Art Basel.
• Area Hotel Impact - City staff has studied the impact on existing hotels when a new
convention hotel opens. In cities where new convention hotels have been developed, hotel
room night demand exceeded the increase in room night supply within 1 to 3 years.
• Room Rate Driver - City staff has analyzed the times of year when Miami Beach realizes
its highest hotel rates. Other than New Year's Eve and large sporting events, many of the
high rate periods coincide with convention center events. More conventions booked means
more high-rate periods, which means more hotel revenues, equating to more tax revenues
that support City services.
• Traffic-While it is recognized that the development of an 800-room hotel will create more
traffic in the immediate vicinity of the hotel, this is more than offset by changing the
Convention Center's booking mix from "drive-in" consumer and trade shows to "fly-in"
conferences and conventions. The study presented to the City Commission on December
18, 2014 indicated that an average consumer show generates 24,600 vehicle trips over a
four-day period, and an average convention generates only 6,700 over a five-day period.
Changing the Convention Center's event mix will have a profound positive impact on City-
wide traffic.
• Lease Revenues The net present value (NPV) of the proposed lease payments to the
City approximate $74 million ($92,500 per room, $27.9 million per acre, $641 per square
foot of land). The rent received by the City can be spent on general City needs, or
• dedicated to specific projects that are of importance to the City's residents. The price per
room is consistent with the market. For a more detailed summary of the rent payments to
the City, see Summary of Development and Ground Lease Agreement, Item #9, on pages
6-8 of this Memorandum.
• Contractual Room Block- One of the challenges with booking the Convention Center is
that the City has no room block agreements with any hotels in the region, including large-
scale hotels capable of providing large enough group room blocks to support convention
events. Room commitments are critical to attracting premier conventions. The proposed
Room Block Agreement, which is included as part of the Development and Ground Lease
Agreement, requires the Hotel to commit 80% of its rooms to Citywide Events that are to
occur at least 30 months in the future and, among other things, includes price protection to
ensure a fair rate is offered. This is a game changer for Miami Beach. See Summary of
Development and Ground Lease Agreement, Item #13, on pages 8-9 of this Memorandum.
• Tax Impact- The Hotel will pay hotel, resort and property taxes that go to the City. The
net present value of the City taxes total $151 million over 30 years and $253 million over
the 99-year lease term. These funds support both the Convention Center itself, and a
number of other projects within the City. Public schools will receive an additional $40
million NPV from the Hotel, and the County an additional $87 million NPV.
Convention Center Headquarter Hotel-Development and Ground Lease Agreement
September 2, 2015
Page 4 of 12
• Increased Dedicated County Funding— Miami-Dade County is contractually obligated to
increase its Convention Development Tax funding to the City of Miami Beach by up to $1.5
million annually through 2044— only if a convention hotel is developed. This totals $36
million more to the City.
• Art in Public Places— Portman will contribute approximately$3.6 million to the City's Art in
Public Places fund, which may be used for Art in Public Places projects throughout the City.
• Jobs - Strategic Advisory Group has estimated the hotel will create 530 local full-time
equivalent jobs during its construction. Once open, the hotel is estimated to support 440
jobs at the hotel itself, and an additional 500 jobs directly and indirectly in support of the
hotel's operation and by guest spending outside the hotel on restaurants, retail,
entertainment and transportation.
• No Gambling — As detailed more fully below, the developer has agreed to the City's
restrictions prohibiting gambling at the headquarter hotel, and a provision to prohibit the
developer or a subsequent owner of the hotel from owning a gambling establishment within
Miami-Dade County. See Summary of Development and Ground Lease Agreement, Item
#7, on page 6 of this Memorandum.
• No City Subsidy— No City funds or City financing will be utilized in the development of the
hotel. See Summary of Development and Ground Lease Agreement, Item 2, on pages 4-5
of this Memorandum.
As outlined above, the advantages of developing the proposed convention headquarter hotels are
substantial and complement the City's investment in the MBCC Renovation and Expansion Project.
I truly believe that our investment in the Convention Center, coupled with a new headquarter hotel,
will catapult Miami Beach into a leadership position in the convention market. Failure to build an
adjacent headquarter hotel will diminish the return on our investment in the Convention Center.
SUMMARY OF DEVELOPMENT AND GROUND LEASE AGREEMENT
The proposed Lease is attached hereto as Appendix 1. As contemplated by the RFP and at the
request of the City Administration and City Attorney's Office, Portman Holdings has identified a
wholly-owned single purpose limited liability company, Portman Miami Beach, LLC ("Portman") to
serve as Lessee. The Lease includes the following terms:
1. Description of Hotel Site/Leased Property
The proposed boundaries for the leased property are described in Exhibit D to the Lease (the
"Leased Property"). The Leased Property generally consists of an approximately 2.65 acres on the
northeast corner of 17th Street and Convention Center Drive, bounded roughly by the Miami Beach
Convention Center to the North, 17th Street to the South, the Fillmore Miami Beach at the Jackie
Gleason Theater to the East, and Convention Center Drive to the West. For ease of reference, the
legal description and sketch for the Leased Property is separately included as Appendix 2 hereto.
2. Development and Funding of Hotel Project at Portman's Sole Cost
Portman shall be solely responsible for the development, design, construction, equipping and
operation of a full-service convention headquarter hotel with approximately(but not-to-exceed) 800
•
•
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 5of12
hotel rooms and related improvements ("Hotel"), including the design, construction and operation
of an enclosed overhead pedestrian walkway or "Skybridge" connecting the Hotel and the MBCC
(collectively, as described more fully in the Lease, the "Hotel Project"). The City shall not provide
any City subsidy or City financing for the Hotel Project.
3. The Fillmore Miami Beach Rehearsal Room and 555 17th Street
The Fillmore Miami Beach at the Jackie Gleason Theater ("The Fillmore") will remain in place and
operational during and after the Hotel Project construction. As part of its construction obligations,
Portman will be responsible for demolition of the 555 17th Street property and The Fillmore's
rehearsal or "black box" room, both of which are currently located on the Leased Property.
Portman will also be responsible for certain Off-Site Improvements, including enclosure of the
remaining portion of The Fillmore located outside the Leased Property, and the replacement of
twenty-five (25)surface parking spaces for The Fillmore personnel.
4. Proposed Hotel Program
Consistent with the RFP requirements, Portman proposes to develop an 800-room convention
headquarter hotel to include the following program elements:
Ballroom/Meetinq Space Sq. Feet Food & Beverage Seats
Grand Ballroom 26,500 3-meal 300
Junior Ballroom (2) 21,000 Lobby Lounge 180
Breakout Meeting 47,700 Pool Grille 130
Total 95_200 Rooftop 120
Club Lounge 92
Parking Spaces 320 Café 40
The 320 parking spaces proposed adheres to the requirement in the RFP of 0.4 parking spaces
per room (including ancillary uses) in accordance with the City's Land Development Regulations.
The maximum height cannot exceed 300 feet, as permitted by the City's Land Development
Regulations.
5. Lease Term
The term for the ground lease is a period of 99 years, commencing once certain development and
financing conditions are satisfied, as set forth in Section 4.1(b) of the Lease ("Possession
Conditions"). Specifically, the City will not deliver possession of the Leased Property to Portman
until Portman has met certain key milestones and satisfied a number of conditions with regard to
the development of the Hotel Project, including delivery of evidence that equity commitments and
construction loan commitments required to build the Hotel Project are in place, verification that a
management agreement with the initial Hotel Operator is in place, and evidence that all required
governmental approvals for commencement of construction have been obtained.
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 6 of 12
6. Approval of Preliminary Design; Final Design Subiect to City's Design Review Process
The Lease includes approval by the City, in its proprietary capacity as owner of the Leased
Property, of the initial preliminary concept design for the Hotel Project attached as Exhibit E to the
Lease. In recognition that the design for the Hotel Project will evolve as part of the development
process, the Lease also requires City's approval of substantial design changes to the Hotel Project,
including any change that materially affects the exterior façade or other exterior elements.
In addition, the final design for the Hotel Project shall be subject to review and approval by the
City's Design Review Board and, if applicable, the Planning Board. Portman shall be required to
obtain all final, non-appealable regulatory approvals and/or permits that may be required for the
Hotel Project, in the same manner as may be applicable to any other developer.
7. Use Restrictions/No Gambling
The Lease contains a use restriction to prohibit gambling on the Leased Property. Portman and/or
subsequent owners of the Hotel may not own, operate or manage any establishment offering
gambling or wagering in Miami-Dade County. The Lease further provides that the foregoing
provisions cannot be subsequently amended without a 6/7 vote of the City Commission, and
approval by at least sixty percent(60%)of the voters voting thereon in a City-wide referendum.
8. Approved Brand/Hotel Operator
The Leased Property must be continuously operated as a Hotel. The hotel brand, or "flag" of the
Hotel, must be an "Approved Brand," which may include national hotel operators such as Marriott,
Westin, Omni, Hyatt Regency, Sheraton, La Meridien, Hilton, or any other brand approved by the
City, in its sole discretion. The Hotel must be developed and operated so as to be able to obtain
and continuously maintain a four-diamond rating from the American Automobile Association
("AAA") (the"Hotel Standards").
Portman has indicated it intends to consider national hotel brand/operators with an established and
consistently maintained reputation for quality operations. Brands to be considered include Marriott,
Marriott Marquis, JW Marriott, Westin, Omni, Hyatt Regency, and Hilton. The Hotel Operator must
either be an Approved Brand or a management company with a franchise agreement with an
Approved Brand. The Hotel Operator must operate the Hotel in accordance with the Hotel
Standards and must comply with the Room Block Agreement, as set forth in Exhibit L of the Lease.
The initial brand/hotel operator selection is a condition which must be satisfied prior to City's
delivery to Portman of possession of the Leased Property.
9. Annual Rent Payments to the City
The Lease broadly defines Gross Operating Revenues to include all revenues and income from
the Hotel's gross room sales, gross food and beverage sales (whether a food and beverage
establishment is operated by Lessee or a Subtenant), catering receipts, internet services
charges, in-room video charges, parking and valet service receipts, among other revenues.
The Lease provides for Portman to make annual rent payments to the City, commencing upon
the later of (i) the Hotel Opening Date and (ii) the completion of construction of the Convention
Center such that the four main exhibition halls may be used for events (the "Rent
Commencement Date").
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 7 of 12
Base Rent
As a general matter, the City will receive annual rent in the amount of the greater of (x)
Minimum Fixed Rent (as defined in the Lease) or (y) Two and One Half percent (2.5%) of the
Gross Operating Revenues of the Hotel, except with respect to the first three Rent Years, to
account for the initial "ramp up" period for the Hotel, as summarized below.
In recognition that the first three years following the Hotel's opening represent a critical period
for the establishment and success of a hotel operation, the City has agreed to receive, as Base
Rent:
• 0.5% of the Gross Operating Revenues in the First Rent Year following the Rent
Commencement Date (with the First Rent Year defined to commence on the Rent
Commencement Date and end on December 31st of the year in which the first anniversary
of the Rent Commencement Date occurs);
• 1.0% of the Gross Operating Revenues in the Second Rent Year year following the Rent
Commencement Date; and
• 1.5% of the Gross Operating Revenues in the Third Rent Year following the Rent
Commencement Date.
As noted above, after the end of the Third Rent Year, and for each remaining year of the Term
thereafter, the City shall receive, as Base Rent, the greater of the Minimum Fixed Rent or
the fixed amount of 2.5% of the Gross Operating Revenues of the Hotel.
Minimum Fixed Rent
The schedule of Minimum Fixed Rent payments for the first ten (10) years following the Rent
Commencement Date is attached hereto as Appendix 3. These minimum guaranteed
payments are included to provide the City with greater certainty for its internal
planning/budgeting purposes as to the projected Lease revenues. Each year, the City will
receive the greater of the Minimum Fixed Rent or the percentage of Gross Operating Revenues
due to the City as set forth above, with the schedule of Minimum Fixed Rent to be re-calculated
every ten (10) years.
Additional Base Rent
Portman has also agreed to pay the City Additional Base Rent if certain projected Gross
Operating Revenue hurdles are exceeded. Beginning in the fourth year following the Rent
Commencement Date, and continuing each year thereafter for the remainder of the Term,
Portman has agreed to pay the City, as Additional Base Rent, the amount of 1.5% of Gross
Revenues, if Gross Operating Revenues exceed a hurdle of 110% of the projected pro forma
Fourth Year Gross Operating Revenues, with the hurdle to be adjusted for inflation annually.
Portman has also agreed to pay the City, as Additional Base Rent, another 1.0% of Gross
Operating Revenues, if Gross Operating Revenues exceed a hurdle of 125% of the Gross
Revenues of the projected pro forma Fourth Year Gross Operating Revenues, with the hurdle to
be adjusted for inflation annually.
•
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 8 of 12
Net Present Value of Base Rent Payments
Below is a table of the total and net present value ("NPV") of the Base Rent payments
(excluding the Additional Base Rent):
Over 30 Years Over 99 Years
NPV NPV
Total @ 5% Total @ 5%
Minimum Fixed Rent $53m $21m $417m $35m
Variable Rent 59m 23m 466m 39m
Percentage Rent $112m $44m $883m $74m
The lease stream NPV of$74 million over the term of the Lease equates to $92,500 per room.
The proposed rent structure and terms set forth above are based on labor cost assumptions
Portman has made in connection with its ongoing discussions with a hospitality industry union.
10. Transaction Rent(For Sale of Hotel or Controlling Interest in Lessee)
Portman has proposed for the City to receive additional rent in connection with the first three sales
of the Hotel to a third party, including a sale effected by a transfer of a Controlling interest in the
Lessee (i.e., in excess of 50% interest in the Lessee). Under the Lease, the City is to receive, as
Transaction Rent, the lesser of $2 million or 0.25% of the gross sales price for each such
transaction, provided that with respect to the first sale, City shall only receive payment if the gross
sales price is $580 million or higher.
11. Development Budget and Finance Plan
Portman has estimated the preliminary development budget to be $405.5 million and intends to
finance the Hotel Project with an estimated 60% in debt and 40% in equity. Portman must provide
a minimum equity contribution of $10 million and has indicated it plans to provide up to $17 million
in equity, with the remaining equity to be funded by Portman institutional relationships. Portman
has provided construction debt financing support letters from Regions Bank, PNC Bank, and an
equity support letter for up to $130 million from NorthStar Realty Finance Limited Partnership
and/or affiliates of NorthStar Asset Management Group, Inc.
12. Development Schedule
Portman is estimating the Hotel design to be complete in late 2016 and construction to be
complete in late 2018 with the Hotel opening targeted to occur prior to Art Basel 2018. The Lease
includes outside dates by which certain key development activities must take place, including an
Outside Construction Loan Closing Date, Outside Construction Commencement Date, an Outside
Completion Date, and an Outside Opening Date. The City may terminate the Lease if any of the
outside dates are not met.
13. Room Block Agreement
Portman has agreed to the City's terms outlined in the City's proposed Room Block Agreement,
which provides that a City-wide Event is an event requiring a three (3) night stay with at least 1,500
guest rooms on peak and with at least 115,000 gross square feet of MBCC space utilized for one
day or more while the event is being held. A City-wide Event shall also include the annual Orange
Bowl and any Super Bowl, even though they may not utilize the MBCC.
• For City-wide Events that are to occur at least 30 months in the future, Portman will make
available eighty percent (80%) of all guest rooms (and associated suites), for up to 14
Convention Center Headquarter Hotel-Development and Ground Lease Agreement
September 2, 2015
Page 9 of 12
nights per calendar month. Portman can book rooms in excess of that amount at its
discretion, at the rate of its choosing.
• For City-wide Events that are to occur between 18 and 30 months in the future, Portman
will make available eighty percent(80%) of all guest rooms (and associated suites) if rooms
and space are available, and will make available for City-wide Events eighty percent (80%)
of all guest rooms (and associated suites) for one consecutive four (4) day period each
month. Portman will determine the four (4) day period and will notify City on a monthly
basis. Portman may book rooms in excess of that amount at its discretion.
• For up to fourteen (14) nights per month, City may elect to require the Hotel to offer room
block pricing at 105% of Portman's average group room rates. In addition, for up to six (6)
special events per year, City may elect to require the Hotel to offer room block pricing at
100% of Portman's average group room rates.
14. Other Lease Terms
• Portman accepts the Leased Property in its"AS IS" condition.
• The Lease delineates "Acceptable Owner" criteria and requires City review and/or approval
of major transfers effecting a sale of the Hotel or Controlling Interest in Lessee, including
transfers to Foreign Instrumentalities (foreign governments or Persons Controlled thereby).
• City's rights and interest in the Lease will not be subordinate to any mortgage, lien or
encumbrance placed on Portman's (or any subsequent owner's) interest in the Lease.
• Portman is committed to supporting and encouraging the application of responsible wages
and local employment of City and Miami-Dade County residents.
• Portman is required to comply with the City's Art in Public Places program requirements set
forth in the City Code, and must contribute 1.5% of the construction cost for the Hotel
Project (approximately $3.6 million) to the Art in Public Places fund, which may be used for
Art in Public Places projects throughout the City.
• The Lease provides for duration of development rights for a limited period of six (6) years
as to maximum hotel height, F.A.R., and parking requirements, after which time, any
changes to the City's Land Development Regulations adopted after the Effective Date shall
apply to Portman's development applications.
• The Lease provides for arbitration of (i) disputes regarding any City disapproval of a
proposed brand, (ii) development disputes arising prior to Opening Date, i.e. disputes
involving City's disapproval of major modifications to the Approved Plans, etc.), or (iii) any
City Manager disapproval of a proposed Transfer. Notwithstanding the preceding, any
disapproval of a proposed Transfer, if such determination is made by the City Commission,
shall not be subject to arbitration and the exclusive remedy lies in a court of competent
jurisdiction in Miami-Dade County.
• The Lease provides the City Manager with delegated authority, following consultation with
City's CFO and City Attorney, to amend specific Lease provisions that impact lender rights,
in an effort to timely accommodate lender financing. All other amendments subject to City
Commission approval or further referendum approval, if applicable.
• The Lease also includes a variety of other terms, including with respect to maintenance and
repair obligations, insurance requirements, obligations to reconstruct the Hotel in the event
•
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015 .
Page 10 of 12
of force majeure or other casualty, indemnification in favor of the City, and remedies to the
City in the event of default, including termination rights.
SUMMARY OF CHANGES MADE SINCE FIRST READING AND RESPONSE TO CITY
COMMISSION COMMENTS AT FIRST READING
Commission-Requested Changes
At the July 31, 2015 City Commission meeting, Commissioners provided comments and requested
that the Administration negotiate additional provisions to clarify (1) the nightclub use restriction; (2)
that Lessee cannot receive any tax abatements/subsidies of any kind; (3) that Lessee cannot
receive room block rebates or commissions from other Miami Beach hotels; and (4) that any
amendments to the Base Rent and "no tax abatement" provisions will require another referendum
requiring approval by sixty percent (60%) of the voters voting thereon. These Commission-
requested changes are attached hereto as Appendix 4. Portman has agreed to all of the changes
in Appendix 4.
Administration-Recommended Changes
The only remaining change to the Lease that has been negotiated since first reading relates to
Section 4.2(e), which generally provides that the City will not develop another hotel project on City-
owned or City-leased property from 5th Street to 41st Street for an initial term of years following the
Hotel's opening. Section 4.2(e) has been revised so that the City does not contractually limit itself
more than may be necessary with respect to potential future hotel developments on certain City-
owned sites in the vicinity of the Convention Center, particularly as to the 17th Street Garage Site
and oceanfront property on Collins Avenue between 21St and 22"d Streets (the "Collins Site"),
where a hotel development, if one were planned, would likely constitute the highest and best use of
such property.
Currently, the City Administration has no plans for development of any other hotel project on City-
owned land, including but not limited to the Collins Site or the 17th Street Garage Site. The
Administration recommends the foregoing provision in recognition that the initial years of the
Hotel's operation will be critical to the Hotel's success and moreover, because as a practical
matter, any other hotel development project on City-owned land would take years to plan,
competitively solicit and approve in accordance with the City Charter and City Code (including, as
applicable, approval by the voters in a City-wide referendum).
Single Purpose Entity
The City's initial lease template was released to proposers on March 4, 2015 via Addendum 3 to
the RFP, and contemplated that a "single purpose entity" would lease and operate the Hotel
Project. Specifically, "single purpose entity" was defined in the City's lease template as an entity
that, through its organizational documents, will not "engage in any business other than owning,
developing, leasing and operating the Hotel Project" and will not "acquire or own material assets
other than the Hotel Project."
During negotiations, at the specific request of the City Administration and City Attorney's Office,
Portman Holdings identified and created a single-purpose entity, Portman Miami Beach, LLC
("Portman"), a wholly-owned limited liability company of Portman Holdings, LLC, to serve as the
Lessee. In addition, also as contemplated in the City's lease template, Portman Holdings, the
initial Proposer to the RFP, is specifically listed in the Lease as an Affiliate of the Lessee, and is
further listed in Appendix M as the sole owner of Portman Miami Beach, LLC.
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 11 of 12
Portman Miami Beach, LLC, far from serving as a "shell company" that will have no assets, will be
the vehicle through which Portman Holdings raises the capital/equity commitments from investors
for the Hotel Project estimated at $130-$160 million, and will be the entity that directly holds and
owns the leasehold improvements, subject to the City's rights in and to the Lease and the property.
The use of a single purpose entity to hold a real estate asset is standard in the industry and will
serve to protect the City, as it ensures that the Hotel Project, as an asset located on City-owned
land, is not commingled with other assets or affected by potential liabilities of other Portman-
related operations or subsequent lessees.
OTHER
Planning Analysis
A planning analysis, as required by Section 82-38 of the City Code, is attached hereto as
Appendix 5.
Appraisal
An appraisal of the Leased Property, as required by Section 82-39 of the City Code, is attached
hereto as Appendix 6.
Public Revenue Impact
The Leased Property is currently a parking lot that generates $263,700 annually in revenues for
the City, along with modest revenues paid to the City for the Fillmore's use of the rehearsal/"black
box" room. If the site is developed with a hotel annual (year 4) lease and tax revenue generated
is estimated to be $20.4 million. Over time the Hotel is estimated to generate:
• City: $369 million ($151 million NPV) over 30 years and $2.4 billion ($233 million NPV)
over 99 years in lease payments, resort taxes, CRA revenues, property taxes and County
CDT allocations to the City,
• County: $110 million ($42 million NPV) over 30 years and $1.25 billion ($87 million NPV)
over 99 years in convention development taxes, local option sales taxes and property
taxes.
• Schools: $60 million ($24 million NPV) over 30 years and $453 million ($40 million NPV)
over 99 years in property taxes.
• State: $264 million ($107 million NPV) over 30 years and $2 billion ($176 million NPV)
over 99 years in sales taxes.
• Total: $810 million ($327 million NPV) over 30 years and $6.2 billion ($540 million
NPV) over 99 years in lease payments and taxes.
Refer to attached Appendix 7.
Voter Referendum Requirement
The Lease is contingent upon sixty percent (60%) voter approval in accordance with Section
1.03(b)(3)of the City Charter. The referendum is contemplated to occur on November 3, 2015. A
resolution adopting the ballot question will accompany this item on the September 2, 2015
Commission agenda.
Convention Center Headquarter Hotel—Development and Ground Lease Agreement
September 2, 2015
Page 12 of 12
RECOMMENDATION
The Administration recommends that the Mayor and City Commission approve, following
second reading/public hearing, the Development and Ground Lease Agreement ("Lease")
between the City of Miami Beach and Portman Miami Beach, LLC, attached hereto as Appendix
1, as authorized, respectively, under Section 118-4 of the City Code, Sections 163.3220 —
163.3243, Florida Statutes, and Section 82-37(a)(ii)of the City Code , for the development of an
800-room convention headquarter hotel and related facilities, including up to 95,000 square feet
of conference and ballroom facilities, and up to 37,400 square feet of restaurant facilities (the
"Hotel"), on an approximately 2.65 acre site on the northeast corner of 17th Street and
Convention Center Drive, bounded roughly by the Miami Beach Convention Center to the North,
17th Street to the South, the Fillmore Miami Beach at the Jackie Gleason Theater to the East,
and Convention Center Drive to the West (the "Leased Property"); delineating the conditions for
the design, construction, equipping and operation of the Hotel on the Leased Property, with no
City funding therefor; providing for a 99-year term of the Leased Property once certain
conditions are satisfied; prohibiting gambling establishments on the Leased Property; and
providing for annual Base Rent to the City after the Hotel opens, including the greater of
Minimum Fixed Rent or a percentage of the Gross Operating Revenues of the Hotel, among
other rent.
Exhibits:
Appendix 1: Development and Ground Lease Agreement
Appendix 2: Proposed boundaries for Leased Property
Appendix 3: Summary of Proposed Minimum Fixed Rent
Appendix 4: Commission-requested Changes
Appendix 5: Planning Analysis
Appendix 6: Appraisal
PP PP
Appendix 7: Summary of Public Revenue Impact
JLM/MH
T:\AGENDA\2015\September\MBCC Headquarter Hotel\2015-09-02-Headquarter Hotel-MEMO.docx
avlS- 2g11 �-.
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.
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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.
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"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 pad passu assignment of such contracts and agreements to such First Leasehold
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•
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 pad 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.
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"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
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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.
"Concurrence 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.
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"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 Maleure" 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.
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"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 Maieure 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.
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"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 any nature or kind.
"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
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
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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;
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"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.
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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 Stat u s me ans a certification by the U.S. Gr ee n Building ildin g 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.
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"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".
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"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
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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.
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"Proiect 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 "Subcfause" 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
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(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" has the meaning ascribed to it in Section 4.1(a).
"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
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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
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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.
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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)
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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
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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
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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
Y Y Y 9
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.
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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.
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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
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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:
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(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 999h
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);
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(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;
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(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
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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
i 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.
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(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 21st 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 415` 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 41st 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
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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.
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(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 (1/12th) 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
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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 (25`h) 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 (10`h) 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 1S`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
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(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.
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(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.
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(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");
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(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).
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(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;
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(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;
' 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.
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(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
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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.
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(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 of 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
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•
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
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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:
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(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
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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;
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(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.
s
(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;
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(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.
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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
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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.
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•
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.
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•
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.
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(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
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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:
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(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
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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
( ) P Y � Y
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.
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(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;
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(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).
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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.
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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
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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
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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
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(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.
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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
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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 (I/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
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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.
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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
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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
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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
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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.
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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
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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, do 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
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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.
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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
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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.
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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 elk
Print Name: Kof c..e t f 2
By: //
Pr'
'a bs ��� Philip Le /
Mayor
ATTEST Approved for form and legal sufficiency
By: &Q Acv; �----
By: y�L fir- City Attorney
City Clerk
STATE OF FLORIDA )
COUNTY OF MIAMI-DADE ) •
The foregoing instrument was acknowledged before me this 01 ,day of 5'/ �hP
2015 b ���' c v�'n-e , as r G r of -� Vkt e cc r1i �4 t,._
Who is personally known to me or who produced i as iden ication.
N. ary Public
Commission Number:
Commission Expires:
,:o4Mf a�^; WA CARDILLO
•.- MY COMMISSION#FF 155322• o :a EXPIRES:August 27,2018
.....,F ', Bonded Thru Notary Public Underwriters
83
-� fLESS
' (1_1 tint Name: � ��.,,��,,,�_
John . Port an, I I I
Print Name: We,.,k
STATE OF FLORIDA )
COUNTY OF MIAMI-DADE )
The fore oin instr a was acknowledged before me this O�� day of d(
, 2015, by John L. Kr ►d n .4- , as Qres►aer�1' of_ Qom- � � � C��-��, L-.L C
Who is personally known to me or who produced as identification.
()'
SPA
Notary P blic
•mmi ion Number:
�•m fission Expires:
STATE OF FLORIDA
YAMILEX M
COUNTY OF MIAMI-DADE =� F
) .•�'� �'', Notary'uiallc•�4.*ROM
•��y• My Comte.Espbes'lief 10.2017
''may c�= Commission t:EE.075428"
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'"t;,,,.'.:•P, Bonded.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;
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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
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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.
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