Agreement of Lease #1
96t 1f Z 9 ZS'o/ I<;f" ><:fTL
.~
2.0Co fa.'Q.s.
AGREEMENT OF LEASE
between
MIAMI BEACH REDEVELOPMENT AGENCY,
Owner
and
MB REDEVELOPMENT, INC.
Tenant
Dated as of September 20, 1996
PREPARED BY:
Andrew L. Jagoda, Esq.
Squire, Sanders & Dempsey
350 Park Avenue
15th Floor
New York, New York 10022
RECORD AND RETURN TO:
Kolleen O.P. Cobb, Esq.
Hughes Hubbard & Reed LLP
201 South Biscayne Boulevard
Suite 2500
Miami, Florida 33131
DOB :[04984. DOCS .MIAMI]GLEASE _9-19-96
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . , . . . . , . . . , . . . . . . . . . . . . . . . , . . . , , . . .. 1
TERMS OF AGREEMENT
3
ARTICLE 1.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . .. 3
ARTICLE 2.
DEMISE OF LAND AND TERM OF LEASE. . . . . . . . . . . . . . . . . . , . . . , .. 18
Section 2.1.
Section 2.2.
Section 2.3.
ARTICLE 3.
Demise of Land for Term. ...........,.,......., 18
No Encumbrances. ...................,.."... 18
Sale of Entire Interest. . . . . . . . . . . . . . . . . . , . . . , . .. 18
RENTAL .,......."",................................. 19
Section 3 .1,
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
ARTICLE 4.
Method and Place of Payment. . , , . , . . . . . . . . . . . . , .. 19
Base Rent. ......,.,....................... 19
Distributions of Net Cash Flow After Debt Service: Percentage
Rent. .........,......................... 20
Impositions. .............................., 24
Net Proceeds of Certain Capital Transactions. . . . . . . . . . .. 26
Net Lease. ................................ 29
LATE CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . .. 30
Section 4.1. Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ,. 30
ARTICLE 5.
INFLATION ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . ., 31
Section 5. 1.
Inflation Ad iustment ..................,.,..... 31
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ARTICLE 6.
USE
Section 6.1.
Section 6.2.
Section 6.3.
Section 6.4.
Section 6.5.
Section 6,6.
Section 6.7.
ARTICLE 7.
INSURANCE.
Section 7. 1.
Section 7,2.
Section 7,3,
Section 7.4.
Section 7.5.
Section 7.6.
Section 7,7.
Section 7.8.
Section 7.9.
Section 7. 10.
Section 7. 11.
Section 7.12.
Section 7,13.
Section 7.14.
ARTICLE 8.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
Use. , . . . . . , , . . , . . . . . . , , , . . . . . . . . . , , . . . .. 32
Prohibited Uses. . . . . . . . . . . . , , . . . . . . 32
Prohibition of Competinl! Proiects. .......... 33
Ouality Standards. .......,............. 34
Owner's Use of Public Areas. .............. 42
Convention Center .,................... 42
Exceptions to Use Covenants . . . . . . . . . . . . . . . . . . . .. 43
44
Insurance Requirements. , , . . . . .
Treatment of Proceeds. , . , . . . . . , ,
General Provisions Applicable to All Policies. . . . .
Additional Coverage. . . . . . . . . . . . . . . . . .
No Re1'resentation as to Adequacy of Coverage. .,
Blanket or Umbrella Policies. . . , . . . . . . . . . . .
Liability Insurance Requirements. "........,....
Property Insurance Requirements. ...,
Other Insurance Requirements. . . . , . . . . . . , . . .
Construction Insurance Requirements. . . . . . . , . . .
Annual Aggregates. . . . . . . . , , . . . . . , , , . . . .
Determination of Replacement Value. , . . . . . .. ,....
Subleases. .............,..........
Additional Interests. .................. .....
44
44
45
46
47
47
47
48
50
51
51
51
52
52
DAMAGE, DESTRUCTION AND RESTORATION . . . . . . . . . . , , . . . . . . . .. 53
Section 8.1. Notice to Owner. ............................ 53
Section 8.2. Casualty Restoration. . . . . . . . . . , , . . . . . . , . . . . . , .. 53
Section 8.3. Restoration Funds. ....,.................... 53
Section 8.4. Effect of Casualty on This Lease. ...............,.. 55
ARTICLE 9.
CONDEMNATION
Section 9.1.
Section 9.2.
Section 9.3.
56
Substantial Taking. . . . . . . . . . . . . .
Less Than A Substantial Taking. . . . , , . . .
Restoration Funds. ................
56
57
58
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Section 9,4.
Section 9.5,
Section 9.6.
Section 9.7.
Section 9.8,
Section 9.9.
Section 9.10.
ARTICLE 10.
Temporary Taking, . . . . . . . . . . . . . . . . . . . . . . . . . .. 60
Governmental Action Not Resulting in a Taking. . . . . . . . .. 60
Collection of Awards. ,........................ 61
Negotiated Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 61
Intention of Parties. .......................... 61
Intentionallv Omitted . . . . . . . . . . . . . . . . . . . . . . . . .. 61
Effect of Taking on This Lease. ................... 61
ASSIGNMENT, TRANSFER AND SUBLETTING. . . . . . . , , . , . . . . . . . . . .. 62
Section 10.1.
Section 10,2.
ARTICLE 11.
Tenant's Right to Assign. Transfer or Enter into a Sublease. .. 62
Sublease Requirements. ..................."... 68
MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 70
Section 11.1.
Section 11.2.
Section 11.3.
Section 11.4.
Section 11.5.
Section 11.6.
Section 11.7.
Section 11.8.
Section 11.9.
Section 11. 10.
Section 11. 11.
Section 11.12.
ARTICLE 12.
Right to Mortgage ........................... 70
Definitions. .........",.......",......... 71
Effect of Mortgages. ...... . . . . . . . . . . . . . . . . . . .. 72
Notice and Right to Cure Tenant's Defaults. , , . . . . . . . . .. 72
Execution of New Tenant's Documents. ..."..,..,... 74
Application of Proceeds from Insurance or Condemnation Awards.76
Appearance at Condemnation Proceedines. . . . . . . . . . . . .. 77
Rights Limited to Recognized Mortgagees. . . . , . . , , . . . .. 77
No Surrender or Modification .................... 77
Recognition by Owner of Recognized Mortgagee Most Senior in
Lien. ..........."..............,.".... 77
Recognized Mortgagee's Assignment Rights. ,........,. 77
Refinancing of a Recognized Mortgage. .............. 78
NO SUBORDINATION .......,.,............................ 80
Section 12.1. No Subordination. ...."....".......,....... 80
ARTICLE 13.
HOTEL CONSTRUCTION AND FURNISHING . . . . . . . . . . . . . . . . . . . . . ., 81
Section 13.1. Tenant's Obligation to Construct Hotel . . . . . . . . . . . . . .. 81
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ARTICLE 14.
MAINTENANCE AND REPAIR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 82
Section 14.1.
Section 14.2.
Section 14,3.
Section 14.4.
Section 14.5.
Section 14.6.
ARTICLE 15.
Maintenance of Premises ....................... 82
Removal of Building Equipment. , , , . . . . . . . . , . . . . . .. 82
No Obligation to Repair or to Supply Utilities. ..,....... 82
Waste Disposal. . . . . . . . . , . . . . . . . . . . , , . . . . . . .. 83
Agency Maintenance Obligations. .,..............,. 83
Alterations. ...................,."........ 83
REQUIREMENTS . . . . . . . . . , . . . . . . . , . . . . , . , , . . . . , , . . . . . . . . .. 86
Section 15.1. Requirements....."........................ 86
ARTICLE 16.
HOTEL MANAGER AND MANAGEMENT AGREEMENT. . . . . . . . . . . . . . .. 87
Section 16.1.
Section 16.2.
Section 16.3.
Section 16.4,
Section 16.5.
Section 16.6.
ARTICLE 17.
Management Agreement. ....................... 87
Term of Management Agreement. . . . . . . . . , . . . . . . . .. 88
Transfer of Hotel Manager's Interest in the Management
Agreement. . , , , . . . . . . . , , . . . . , . . . . . . . , . . , . ., 88
Management and Other Fees. . . . . . . . . , . . . . . . . . . . .. 91
Owner's Rights and Remedies. ............"..... 92
FF&E Reserve. .......".......".......... 94
DISCHARGE OF LIENS ..................................... 96
Section 17.1.
Section 17,2.
Section 17.3.
ARTICLE 18.
REPRESENTATIONS
Section 18. 1.
Section 18.2.
Creation of Liens. .........",............... 96
Discharge of Liens. . . . , . , . . . . . , , , . . . . . . , . . . . .. 96
No Authority to Contract in Name of Owner. . . . , . . . . . .. 97
. . . . . . . . , . , . . . . . . . . , . . . . . , , . . . . . . . . . . .. 98
No Brokers. ......,........................ 98
No Other Representation, ....",................ 98
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ARTICLE 19.
NO LIABILITY FOR INJURY OR DAMAGE ETC. . . . . . . . . . . . . . . . . . . . .. 99
Section 19, 1.
Section 19.2.
Section 19.3.
Section 19.4.
ARTICLE 20.
Liability of Owner or Tenant. ".................. 99
Owner's Exculpation. ......................... 100
Notice of Injury or Damage, ...."............... 100
Tenant's Exculpation. ........................ 101
INDEMNIFICATION . . . . . , . . . . . . . . . . , . . . . . . . . . . . . . . . . , . . . . . . 102
Section 20.1.
Section 20.2.
Section 20.3,
Section 20.4.
Section 20.5.
Section 20.6.
Section 20.7.
ARTICLE 21.
Indemnification of Owner. .....""".,...,..,.. 1 02
Indemnification of Tenant. ..........,........... 102
Contractual Liability, . . . . . . . . . . . . . . . . . . . . . . . , . . 102
Defense of Claim. Etc. ............,........... 103
Notification and Payment. , . . . . . . . . . . . . . . . . . . . . . . 103
Governs Lease. ..,................,......... 104
Survival. .....,...................,....... 104
AGENCY IMPROVEMENTS . . . . . . , . . . . . . . . . . . . . . . . . . . . , . . . . . . , 105
Section 21.1.
Section 21.2.
Section 21. 3.
Section 21.4.
Section 21.5.
Section 21. 6.
Section 21.7.
ARTICLE 22.
Garage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Construction of State Streetscape Improvements . , . . . . . . . . 105
Construction of Roadway Extension . . . . . . . . . . . . . . . . . 105
Broadwalk Extension. .......".........,..,... 105
Parking Meters: Taxi Line. ....,.,."..... . . . , . . . 105
Beach Easement. .......",......,........... 106
Cooperation .............".,..........".. 106
OWNER'S SECURITY INTERST IN BUILDING EQUIPMENT AND FF&E
107
Section 22.1. Grant of Security Interest ,. . . . . . . . . . . . . , . . . . . . . . 107
ARTICLE 23.
[RESERVED] .........................................,.. 108
ARTICLE 24.
RIGHT TO PERFORM THE OTHER PARTY'S COVENANTS. , . . . . . . . . . . . . 109
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Section 24. 1.
Section 24.2.
Section 24.3.
Section 24.4.
ARTICLE 25.
Right to Perform Other Party's Obligations, . . . . . . . . . . . . 109
Discharge of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Reimbursement for Amounts Paid Pursuant to this Article. .. . 110
Waiver. Release and Assumption of Obligations, . . . . . . . . . 110
EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES, ETC. 111
Section 25. 1.
Section 25.2.
Section 25.3.
Section 25.4.
Section 25.5.
Section 25.6.
Section 25.7.
Section 25.8.
Section 25.9.
Section 25.10.
ARTICLE 26.
Definition. .......,..............,....,.,.. 111
Enforcement of Performance: Damages: and Termination. .., 113
Expiration and Termination of Lease. . . . . . . . . . . . . . . . . 113
Waiver of Rilzhts of Tenant and Owner. ....,......,.. 114
Receipt of Moneys after Notice or Termination. ......... 114
Strict Performance. . . . , . . . . . . . . . . . . . . . . . . . . . . . 114
RilZht to Enjoin Defaults . . , , . . . . . . , . . . . . . . . . . . . . 115
Remedies Under Bankruptcy and Insolvency Codes. ....,.. 115
Funds Held by Tenant. . . . . . . . , , , . . . . . . . . . . . . . . . 116
Insoection. .....,.......................,.. 116
NOTICES, CONSENTS AND APPROVALS
117
Section 26.1.
Section 26.2.
ARTICLE 27.
Service of Notices and Other Communications. . . . . . . . . . . 117
Consents and Approvals. ..............,........ 118
CERTIFICATES BY OWNER AND TENANT
121
Section 27.1.
Section 27.2.
ARTICLE 28.
Certificate of Tenant. . . . . . . . . . , , . . . . . . . . . . . , . . . 121
Certificate of Owner. . . . . . . . . , , , . . . . . . . . . . . . . . . 121
FINANCIAL REPORTS AND RECORDS
122
Section 28.1.
ARTICLE 29.
Books and Records: Audit Rights.
122
SURRENDER AT END OF TERM
126
Section 29.1.
Section 29.2.
Surrender of Premises. , . . . . . . . . . . . . . . . . . . , . . . . . 126
Delivery of Subleases. etc. .........,..........., 126
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Section 29.3.
Section 29.4.
Section 29.5.
Section 29.6.
Section 29.7,
ARTICLE 30.
QUIET ENJOYMENT
Title to Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 126
Title to FF&E Reserve Account. . . . . . . . . . . . . . . . . . . . 127
Cash and Accounts Receivable , . . . , , . . . , . . . . . . . . . , 127
Personal Propertv. ........................... 127
Survival Clause. , . . . . . . . . . . . . . . . . . . . . . . . . . . , . 127
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
Section 30.1. Ouiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
ARTICLE 31.
APPRAISAL AND ARBITRATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
Section 31. 1.
Section 31.2.
Section 31.3.
Section 31.4.
ARTICLE 32.
Procedure for Appraisals. ,.,.".......,....,.." 129
Arbitration. ............................... 130
Election of Remedies. ......................... 131
Emergencv Provisional Relief . . . . . . . . . . . . . . . . . . . . . 132
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS, CONTESTS, ETC.
133
Section 32.1.
Section 32.2.
Section 32.3.
Section 32.4.
ARTICLE 33.
NONDISCRIMINATION
Tax Contest Proceedings. .....................,. 133
Imposition Contest Proceedings. ................,.. 133
Requirement Contest. ".........,............. 134
Owner's Participation in Contest Proceedings. . . . . . . . . , . . 135
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136
Section 33.1. Nondiscrimination.................,....,..... 136
ARTICLE 34.
INDICTMENT, INVESTIGATIONS, ETC.
137
Section 34,1. Cooperation in Investigations. ..........,......... 137
ARTICLE 35.
HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
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Section 35.1.
Section 35.2.
Section 35.3.
Section 35.4.
Section 35.5.
Section 35,6.
Section 35.7.
Section 35.8.
Section 35.9.
ARTICLE 36.
Definitions. .....,......................,.. 138
Use of Hazardous Materials. ..................... 139
Indemnification. . . . , . . . , . . . . . . . . . . . . . . . . . . . . , 139
Compliance, ......................."....,. 140
Notices. . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . , 140
Owner's Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Defaults. ................................. 140
Owner Responsibility , . . , , , . . . . . . . . . , . . , . . . . , . . 141
Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
OPTION TO PURCHASE; RIGHT OF FIRST REFUSAL
Section 36, 1.
Section 36.2.
Section 36.3.
ARTICLE 37.
MISCELLANEOUS
Section 37.1.
Section 37.2.
Section 37.3.
Section 37.4.
Section 37.5.
Section 37.6.
Section 37.7.
Section 37.8.
Section 37.9.
Section 37.10.
Section 37.11.
Section 37.12.
Section 37.13.
Section 37.14.
Section 37.15.
Section 37.16.
Section 37.17.
Section 37.18.
EXHIBITS
Exhibit A
Exhibit B
Rieht of First Refusa1. . . . . . . . . . . . . . . . . . , . . . . . . . 142
Option to Purchase. . . . . . . . . . . . . . . . . . . . , . . . . . . . 144
Assienment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Governing l..aw. . . . . . . , . . . . . . . . . . . . . . . . . . . . , .
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Entire Agreement. etc. . . . , , . . . . , . . . . . . . . . . . . . . .
Invalidity of Certain Provisions. ...................
Merger. . . . , , . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remedies Cumulative. .........,....... . . . . . . . ,
Performance at Each Party's Sole Cost and Expense. ......
Recognized Mortgagee Charges and Fees. .....,.......
Successors and Assigns. .............. . , . . . . . . . .
Recordim! of Lease. ",...."......,....,...,.
Notice of Defaults. ........ . . . , , , . . . . . . . . . . . . .
C011>orate Obligations ..............."........
Nonliability of Officials and Employees. . , . . . . , , . . . . , .
Conflict of Interest. . . . . . , , . . . . , . . . . . . . . . . , . . . .
No Partnership ........,........."...,.....
Time Periods . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . .
Radon Notice .................".........,.
No Third Party Beneficiaries ..... , . . , . , . . . . . . . . . .
IRR Examples
Description of the l..and
DOB: [04984. DOCS ,MIAMI]GLEASE _9-19-96
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142
147
147
147
147
148
148
148
149
149
149
149
149
149
150
150
150
151
151
151
Exhibit 2.1
Exhibit 3.2(a)
Exhibit 6.3
Exhibit 6.4(b)
Exhibit 6.4( c)
Exhibit 8.2
Exhibit 14.5
Exhibit 21.2
Exhibit 21.4
Exhibit 35.3
Exhibit 36.2
Title Matters
Examples of Increases in Base Rent
Description of Territory
Benchmark Hotels
Operational and Physical Standards
Article 2 of Hotel Development Agreement
Beach Concession Agreement Terms
State Streetscape Improvements
Beachwalk Extension
Environmental Reports
Purchase Option
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AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE, dated as of this 20th day of September 1996 (the
"Commencement Date"), between MIAMI BEACH REDEVELOPMENT AGENCY, a public
body corporate and politic, as Owner, and MB REDEVELOPMENT, INC" a Florida
corporation, as Tenant.
RECITALS:
A. In February 1993, the City Center/Historic Convention Village Redevelopment
and Revitalization Area was officially established by the adoption of a Redevelopment Plan (the
"Redevelopment Plan", as further defined below), resulting from the combined efforts of the
City of Miami Beach, a municipal corporation of the State of Florida (the "City"), Owner,
Metropolitan Dade County and the State of Florida. The purposes of the Redevelopment Plan
are, among other things, to eliminate blight, establish redevelopment, foster the development
of convention quality hotels, ancillary improvements and facilities, and necessary linkages to
the Miami Beach Convention Center.
B. Pursuant to the Redevelopment Plan, Owner acquired land ("Land", as more
specifically defmed below), known as Site I-A, which Owner has agreed to make available for
a convention headquarters hotel (the "Hotel", as further defined below).
C. In furtherance of the Redevelopment Plan, the City published a Request for
Proposals (the "RFP") dated November 29, 1993, seeking, among other things, proposals for
the development and operation of a convention headquarters hotel.
D. By virtue of a resolution adopted on July 21, 1994, after a public review
process, Owner selected Tenant's predecessor from among the groups which submitted
proposals pursuant to the RFP and directed representatives of Owner to negotiate the terms
under which Tenant's predecessor would develop, construct, own and operate the Hotel in
accordance with requirements of the RFP.
E, Owner and Tenant's predecessor entered into a Letter of Intent (as the same may
have been amended from time to time, the "Letter of Intent"), dated May 3, 1995, and
approved by Loews Hotels Holding Corporation, a Delaware corporation ("LHHC"), and the
City, which, among other things, provides for the development, construction, furnishing and
equipping of the Hotel.
F. Owner, the City (to the extent provided therein) and Tenant (acting as
"Developer") have entered into that certain Hotel Development Agreement (the "Hotel
Development Agreement") dated as of the date hereof, pursuant to which Tenant (acting as
"Developer") has agreed to construct the Hotel and related Improvements (as defined below)
in accordance with the terms thereof.
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G, By that certain bill of sale from Owner to Tenant dated as of the date hereof,
Owner has conveyed to Tenant Owner's right, title and interest in and to the Improvements
existing as of the date hereof (except for any parking meters (including, without limitation, the
meters and poles comprising the parking meters and the money contained therein)).
H. Owner and Tenant desire to enter into a definitive agreement for the lease of the
Land and the leasing, ownership, management and operation of the Hotel.
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TERMS OF AGREEMENT
NOW, THEREFORE, it is hereby mutually covenanted and agreed by and
between the parties hereto that this Lease is made upon the terms, covenants and conditions
hereinafter set forth.
ARTICLE 1.
DEFINITIONS
For all purposes of this Lease the terms defined in this Article 1 shall have the following
meanings and the other provisions of this Article 1 shall apply:
"Accounting Principles" means the Uniform System of Accounts for Hotels Eighth
Revised Edition 1986 (as in effect on the Commencement Date), except as otherwise provided
by this Lease, with such changes as Owner and Tenant shall mutually agree are consistent with
this Lease in order to reflect technologies and methodologies not addressed in the Accounting
Principles.
"Additional Operating Shortfalls" means the amount of cash contributed by Tenant,
in its sole discretion, up to $5,000,000, to fund Operating Expenses and Debt Service of the
Hotel in excess of Hotel Revenue and the Operating Shortfall Reserve.
"Additional Reserve Deposit" has the meaning provided in Section 6.4(j).
"Affiliate" or "Affiliates" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls or is controlled by, or is
under common control with, such Person. For purposes hereof, the term "control" (including
the terms "controlled by" and "under common control with") shall mean the possession of
a Controlling Interest. Unless the context otherwise requires, any reference to "Affiliate" in
this Lease shall be deemed to refer to an Affiliate of Tenant.
"Affiliate Debt" has the meaning provided in Section 11.12(a).
"Affiliate Mortgage" has the meaning provided in Section 11.I(b).
"Affiliate Mortgagee" means the holder of an Affiliate Mortgage.
"Agency" means the Miami Beach Redevelopment Agency.
"Agency Assistance" has the meaning provided in Section 6.3(a).
" Alterations" has the meaning provided in Section 14.6(a).
"Annual Financial Statements" has the meaning provided in Section 28.1(c).
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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"Assignee" has the meaning provided in Section lO.l(b).
"Assignment" has the meaning provided in Section 10.I(b).
"Balance" has the meaning provided in Section 11.12(a).
"Base Rent" has the meaning provided in Section 3.2.
"Beach Easement" has the meaning provided in Section 21.6.
"Benchmark Anniversary" has the meaning provided in Section 6.4(b).
"Benchmark Hotels" has the meaning provided in Section 6.4(b).
"Bonds" has the meaning provided in Section 36.2(b).
"Broadwalk Extension" has the meaning provided in Section 21.4.
"Building Equipment" means all installations incorporated in, located at or attached
to and used or usable in the operation of, or in connection with, the Premises and shall include,
but shall not be limited to, machinery, apparatus, devices, motors, engines, dynamos,
compressors, pumps, boilers and burners, heating, lighting, plumbing, ventilating, air cooling
and air conditioning equipment; chutes, ducts, pipes, tanks, fittings, conduits and wiring;
incinerating equipment; elevators, escalators and hoists; washroom, toilet and lavatory
plumbing equipment; window washing hoists and equipment; and all additions or replacements
thereof, excluding, however, any personal property which is owned by Subtenants, licensees,
concessionaires or contractors (except to the extent any of the foregoing are Affiliates of
Tenant or Parent), FF&E and Operating Equipment.
"Building Index" has the meaning provided Section 7.12(b).
"Business Day" or "business day" means a day other than Saturday, Sunday or a day
on which banking institutions in the State of Florida are authorized or obligated by law or
executive order to be closed.
"Capital Transaction" has the meaning provided in Section lO.l(b).
"Casualty Restoration" has the meaning provided in Section 8.2(a),
"Chairman" means the chairman of the governing body of the Agency.
"City" has the meaning provided in the Recitals to this Lease.
"Class E Person" has the meaning provided in Section 3.5(b)(i).
DOB : [04984. DOCS .MIAMI]GLEASE _9-19-96
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"Closely Held Affiliate" means, with respect to any Person (the "subject Person"),
any other Person all of the Equity Interests in which are owned, directly or indirectly, by the
same Persons that own, directly or indirectly, all of the Equity Interests of the subject Person.
"Code" has the meaning provided in Section 36.2(c).
"Commissioner" means a commissioner of the Commission of the City of Miami
Beach.
"Commencement Date" has the meaning provided in the preamble of this Lease.
"Competitive Area" has the meaning provided in Section 6.3(a).
"Condemnation Restoration" has the meaning provided in Section 9.2(b).
"Condominium" means the condominium regime created by the Declaration of
Condominium.
"Condominium Association" means the "Association" under the Declaration of
Condominium.
"Condominium Unit Lease" means that certain lease from Owner to Tenant of the
Public Areas Unit.
"Connection Fees" has the meaning provided in the Hotel Development Agreement.
"Consenting Party" has the meaning provided in Section 26.2(c).
"Construction Agreements" means all agreements executed in connection with any
Construction Work affecting the Premises and the Improvements, including, without limitation,
a Restoration, Alteration or other Construction Work performed in connection with the use,
maintenance or operation of the Premises.
"Construction Commencement Date" has the meaning provided In the Hotel
Development Agreement.
"Construction Work" means any construction work performed under any provision
of this Lease affecting the Premises and the Improvements, including, without limitation, the
initial construction of the Hotel, a Restoration, Alteration or other construction work performed
in connection with the use, maintenance or operation of the Premises.
"Controlling Interest" means the ownership of greater than 50 % of the voting Equity
Interests in a Person or the ownership of greater than 50 % of the votes necessary to elect a
majority of the Board of Directors or other governing body of such Person.
"Convention Center" shall have the meaning provided in Section 6.6.
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
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"Convention Center Agreement" has the meaning provided in Section 6.6.
"Convention Hotel" has the meaning provided in Section 6.3(a).
"Date of Taking" has the meaning provided in Section 9.1(c).
"Debt Service" has the meaning provided in Section 3.3(d).
"Declarant" means any "Declarant" or "Co-Declarant" under the Declaration of
Condominium.
"Declaration of Condominium" means that certain Declaration of Condominium for
Loews Miami Beach Hotel, a Condominium, dated as of the date hereof, between MB
Redevelopment, as Developer, and the Agency,
"Default" means any condition or event, or failure of any condition or event to occur,
which constitutes, or would after the giving of notice and lapse of time (in accordance with the
terms of this Lease) constitute, an Event of Default.
"Default Notice" has the meaning provided in Section 25.1(b).
"Delay Date" has the meaning provided in Section 3.2(a).
"Designated Components" has the meaning provided in Section 6.4(c).
"Designated Component Deficiency" has the meaning provided in Section 6.4(d).
"Designated Holder" has the meaning provided in Section lO.l(d).
"Designee" has the meaning provided in Section ll.ll(c).
"Development Budget" has the meaning provided in the Hotel Development
Agreement.
"Development Cost Overruns" means the amount of actual Hotel Construction Costs
(as defined in the Hotel Development Agreement) in excess of $110,000,000, which excess
amount shall in no event exceed $11,000,000.
"Disqualified Person" has the meaning provided in Section lO.l(b)(iv).
"Distribution Net Proceeds" has the meaning provided in Section 3.5(b)(iv).
"Distribution Sale" has the meaning provided in Section 3.5(b).
"Distribution Sale Transferee" has the meaning provided in Section 3.5(b)(v).
DOB : [04984. DOCS .MIAMI]GLEASE _9-19-96
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"Environment" has the meaning provided in Section 35.1(c).
"Environmental Complaint" has the meaning provided in Section 35.5.
"Environmental Condition" has the meaning provided in Section 35.1(d).
"Environmental Damages" has the meaning provided in Section 35.1(e).
"Environmental Laws" has the meaning provided in Section 35.1(b).
"EPA" means the Environmental Protection Agency of the United States,
"Equity Interest" has the meaning provided in Section lO.l(b).
"Event of Default" has the meaning provided in Section 25.1.
"Exercise Date" has the meaning provided in Section 36.2(d).
"Expiration of the Term" means the expiration of this Lease and the Term on the
Fixed Expiration Date or on such earlier date as this Lease may be terminated as provided
herein.
"Extension Period" has the meaning provided in Section 6.4(g).
"Facilities and Services" has the meaning provided in Section 6.4(a).
"FF&E" means all furniture, wall, floor and ceiling coverings, fIxtures and equipment
(other than Building Equipment and Operating Equipment) located at or used in connection
with the Hotel, including (without limitation): (a) all furniture, furnishings, built-in serving
or service furniture, carpeting, draperies, decorative millwork, decorative lighting, doors,
cabinets, hardware, partitions (but not permanent walls), television receivers and other
electronic equipment, interior plantings, interior water features, artifacts and artwork, and
interior and exterior graphics; (b) offIce furniture; (c) communications equipment; (d) all
fIxtures and specialized hotel equipment used in the operation of kitchens, laundries, dry
cleaning facilities, bars and restaurants; (e) telephone and call accounting systems; (f) rooms
management systems, point-of-sale accounting equipment, front and back offIce accounting,
computer, duplicating systems and offIce equipment; (g) cleaning and engineering equipment
and tools; (h) vehicles; (i) recreational equipment; and (j) all other similar items which are used
in the operation of the Hotel, excluding, however, any personal property which is owned by
Subtenants, licensees, concessionaires or contractors (except to the extent any of the foregoing
are Affiliates of Tenant or Parent).
"FF&E Reserve Account" has the meaning provided in Section 16.6(a).
"Final CO" means a certifIcate(s) of occupancy issued by the City's Building
Department for all or a portion of the Improvements, other than a Temporary CO(s).
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
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"Fixed Expiration Date" means the date which is the last day of the month in which
the one-hundredth (l00th) anniversary of the Commencement Date shall occur.
"Foreclosure Transferee" and "Foreclosure Transfer" have the meanings provided
in Section ll.ll(c).
"Foreign Instrumentality" has the meaning provided in Section 16.3(b).
"Funded Equity" means the sum of (i) the cash contribution of Tenant applied to Hotel
costs pursuant to the Hotel Development Agreement, which shall not be in excess of
$15,000,000 whether or not Tenant contributes equity in excess of $15,000,000, (ii) any
amounts refunded to Owner pursuant to Section 6,1 of the Hotel Development Agreement and
(iii) the excess, if any, of "Target Savings" (as defined in the Hotel Development Agreement)
over the aggregate "Optional Savings" (as defined in the Hotel Development Agreement), if
any, actually realized pursuant to the Hotel Development Agreement.
"Garage" means the Garage described in the Garage Easement Agreement.
"Garage Development Agreement" has the meaning provided in Section 21.1.
"Garage Easement Agreement" means that certain Garage Easement Agreement,
dated as of the date hereof, between Owner and Tenant.
"GDP Implicit Price Deflator Index" means the implicit price deflator index for gross
domestic product as published by the U. S. Department of Commerce (1987 = 1(0), or any
successor index thereto, appropriately adjusted,
"Governmental Authority or Authorities" means the United States of America, the
State of Florida, the City of Miami Beach, Metropolitan Dade County, the Agency (in its
governmental as opposed to proprietary capacity) and any agency, department, commission,
board, bureau, instrumentality or political subdivision (including any county or district) of any
of the foregoing, now existing or hereafter created, having jurisdiction over Tenant or over or
under the Premises or any portion thereof or any street, road, avenue or sidewalk comprising
a part of, or in front of, the Premises, or any vault in or under the Premises, or airspace over
the Premises.
"Hazardous Materials" has the meaning provided in Section 35.1(a).
"Hotel" has the meaning provided in Section 13.1.
"Hotel Chain" has the meaning provided in Section 6.3(b).
"Hotel Construction Costs" has the meaning provided in the Hotel Development
Agreement.
DOB :[04984.DOCS. MIAMI]GLEASE _ 9-19-96
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"Hotel Development Agreement" has the meaning provided in the Recitals to this
Lease.
"Hotel Documents" has the meaning provided in Section 28.1(f).
"Hotel Manager" means Loews Miami Beach Hotel Operating Company Inc., a
Delaware corporation (an Affiliate of LHHC), engaged by Tenant to manage and operate the
Hotel, or any successor or assign thereof permitted by the terms of this Lease.
"Hotel Opening Date" means the date on which the Hotel is opened to the public for
business in accordance with the Management Agreement, but not later than the date that is
thirty (30) days following the date of Substantial Completion of the Hotel in accordance with
the Hotel Development Agreement.
"Hotel Operating Profit" has the meaning provided in Section 3.3(d).
"Hotel Portion" means the portion of the Improvements that constitute the Hotel Unit.
"Hotel Revenue" has the meaning provided in Section 3.3(d).
"Hotel Unit" means the condominium unit owned by Tenant pursuant to the Declaration
of Condominium.
"Imposition" or "Impositions" has the meaning provided in Section 3.4(b).
"Improvement(s)" means any building (including footings and foundations), Building
Equipment, FF&E, and other improvements and appurtenances of every kind and description
now existing or hereafter erected, constructed, or placed upon the Land (whether temporary
or permanent), and any and all alterations and replacements thereof, additions thereto and
substitutions therefor.
"Institutional Lender" means a Person which, at the time it becomes an Institutional
Lender, is a state or federally chartered savings bank, savings and loan association, credit
union, commercial bank or trust company or a foreign banking institution (in each case whether
acting individually or in a fiduciary or representative (such as an agency) capacity); an
insurance company organized and existing under the laws of the United States of America or
any state thereof or a foreign insurance company (in each case whether acting individually or
in a fiduciary or representative (such as an agency) capacity); an institutional investor such as
a publicly held real estate investment trust, an entity that qualifies as a "REMIC" under the
Code or other public or private investment entity (in each case whether acting as principal or
agent); a brokerage or investment banking organization (in each case whether acting
individually or in a fiduciary or representative (such as an agency) capacity) as principal or
agent); an employees' welfare, benefit, pension or retirement fund; an institutional leasing
company; any governmental agency or entity insured by a governmental agency or any
combination of Institutional Lenders; provided that each of the above entities shall qualify as
an Institutional Lender only if (at the time it becomes an Institutional Lender) it shall (y) have
DOS : [04984. DOCS .MIAMI]GLEASE _9-19-96
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assets of not less than $100,000,000 adjusted for inflation and (z) not be an Affiliate of Tenant
(it being further agreed that none of the standards set forth in this definition shall be applicable
to participants or co-lenders in a loan secured by a Mortgage which is held by an Institutional
Lender (whether acting individually or in a fiduciary or representative (such as an agency)
capacity). The term "Institutional Lender" also includes an Affiliate of an Institutional
Lender as described in this paragraph.
"Internal Rate of Return" or "IRR" means the cumulative and compounded return
on and return of a cash investment (or, in the case of Owner, the designated cash value of an
investment), as calculated in the manner described on Exhibit A attached hereto.
"Land" means the real property described on Exhibit B attached hereto.
"Late Charge Rate" has the meaning provided in Section 4.1.
"Lease" means, collectively, this Agreement of Lease and all exhibits and attachments
hereto, as any of the same may hereafter be supplemented, amended, restated, severed,
consolidated, extended, revised and otherwise modified, from time to time, either in
accordance with the terms of this Lease or by mutual agreement of the parties.
"Lease Year" means (a) the period commencing on the Hotel Opening Date and
expiring on the last day of the next occurring December which is at least twelve (12) months
thereafter; (b) each succeeding 12-month period during the Term; and (c) the fInal shorter
period, if any, ending on the last day of the Term.
"Letter of Intent" means that certain letter of intent with respect to the development
and operation of the Hotel dated May 3, 1995, executed by the Agency, the City, SMHC and
LHHC, and any replacements, substitutions, restatements or amendments thereof.
"LHHC" has the meaning provided in the Recitals to this Lease.
"Major Alteration" has the meaning provided in Section 14.6(a).
"Management Agreement" means a written agreement between Tenant and Hotel
Manager pursuant to which Hotel Manager has agreed to manage and operate the Hotel in
accordance with the terms thereof, and any replacements, substitutions, restatements or
modifIcations thereof.
"Management Engagement" has the meaning provided in Section 16.3(a).
"Management Transfer" has the meaning provided in Section 16.3(c).
"Management Transferee" has the meaning provided in Section 16.3(c).
"Manager's Parent" has the meaning provided in Section 16.3(c).
DOB :[04984. DOCS .MIAMI]GLEASE_9-19-96
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"MB Redevelopment" means MB Redevelopment, Inc., a Florida corporation.
"Mayor" means the Mayor of the City.
"Member" means a member of the governing body of the Agency.
"Mortgage" has the meaning provided in Section 1l.2(a).
"Mortgagee" means the holder of a Mortgage.
"Net Cash Flow After Debt Service" has the meaning provided in Section 3.3(d).
"Net Condemnation Award" has the meaning provided in Section 9.1(c).
"Net Insurance Proceeds" has the meaning provided in Section 8.2(a).
"Net Proceeds" has the meaning provided in Section 3.5(b).
"New Tenant" shall have the meaning provided in Section 1l.5(b),
"New Tenant's Documents" has the meaning provided in Section 1l.5(b).
"Notice" has the meaning provided in Section 26.1.
"Notice of Failure to Cure" has the meaning provided in Section 1l.4(a).
"Offeree Owner" has the meaning provided in Section 36.1(b).
"Operating Equipment" means all chinaware, glassware, linens, silverware, uniforms
and menus.
"Operating Expenses" has the meaning provided in Section 3.3(d).
"Operating Shortfall Reserve" means the amount of cash provided by Tenant, up to
$10,000,000, to fund Operating Expenses and Debt Service (including, without limitation,
amounts paid for interest rate protection agreements and arrangements, whenever acquired) of
the Hotel in excess of Hotel Revenue pursuant to the requirements of a Recognized Mortgagee.
"Operational Standards" has the meaning provided in Section 6.4(c).
"Option Interest" has the meaning provided in Section 36.1(a).
"Option Premises" has the meaning provided in Section 36.1.
"Option Transaction" has the meaning provided in Section 36.1(a).
DOR: [04984. DOCS .MIAMI]GLEASE _9-19-96
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"Outside Offer" has the meaning provided in Section 36.1(b).
"Outside Offer Notice" has the meaning provided in Section 36.1(b).
"Owner" means the Agency (or the City if the City shall succeed to the interest of the
Agency hereunder), acting in its proprietary capacity, and any assignee or transferee of the
entire Owner's Interest in the Premises, from and after the date of the assignment or transfer
pursuant to which the entire Owner's Interest in the Premises was assigned or transferred to
such assignee or transferee.
"Owner Indemnified Parties" means, collectively, the Agency (and any successor
Owner), the City and their respective elected and appointed officials (including the Agency's
Chairman and Members and the City's Mayor and City Commissioners), directors, officials,
officers, shareholders, members, partners, holders of other ownership interests, employees,
successors, assigns, agents, contractors, subcontractors, experts, licensees, lessees, mortgagees,
trustees, partners, principals, invitees and Affiliates. An "Owner Indemnified Party" shall
mean any of the foregoing,
"Owner's Interest in the Premises" means (i) for so long as the Condominium exists,
(w) Owner's interest in the Land, (x) Owner's interest in this Lease, (y) Owner's interest in
the Public Areas Unit and (z) Owner's interest in the Condominium Unit Lease, and (ii)
following the termination of the Condominium, (s) Owner's interest in the Land, (t) Owner's
interest in this Lease and (u) Owner's interest in the Public Areas.
"Parent" has the meaning provided in Section 10.I(b).
"Percentage Rent" has the meaning provided in Section 3.3(b).
"Percentage Rent Portion" has the meaning provided in Section 3.5(a).
"Permit" has the meaning provided in Section 35.1(1).
"Permitted Debt" has the meaning provided in Section 1l.1(c).
"Permitted Operator" has the meaning provided in Section 16.3(d).
"Permitted Sale" has the meaning provided in Section 10.1(j).
"Permitted Transfer" has the meaning provided in Section 16.3(c).
"Person" means an individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, estate, trust, unincorporated association or other entity;
any Federal, state, county or municipal government or any bureau, department, political
subdivision or agency thereof; and any fiduciary acting in such capacity on behalf of any of
the foregoing.
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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"Physical Standards" has the meaning provided in Section 6.4(c).
"Plans and Specifications" has the meaning given to such term m the Hotel
Development Agreement,
"Post-Option Sale" has the meaning provided in Section 36.2(d).
"Premises" means, collectively, the Land and the Improvements (including, without
limitation, the Public Areas Unit and the Hotel Unit).
"Pre-opening Period" means the period of time from the Commencement Date through
the Hotel Opening Date.
"Prohibited Uses" has the meaning provided in Section 6.2(a).
"Project Documents" means this Lease, the Hotel Development Agreement, the Garage
Development Agreement, the Garage Easement Agreement and the Convention Center
Agreement.
"Public Areas" means the portion of the Improvements that constitute the Public Areas
Unit.
"Public Areas Unit" means the condominium unit owned by Owner pursuant to the
Declaration of Condominium (and referred to therein as the "Public Unit") and leased to
Tenant pursuant to the Condominium Unit Lease.
"Public Company" means a Person that is required to comply with the reporting
requirements under the Securities Exchange Act of 1934, as amended, or any successor statute.
"Purchase Option" has the meaning provided in Section 36.2(a).
"Quality Deficiency" has the meaning provided in Section 6.4(d).
"Quality Report" has the meaning provided in Section 6.4(d).
"Quality Review" has the meaning provided in Section 6.4(e).
"Quality Standard" has the meaning provided in Section 6.4(c).
"Quality Standard Anniversary" has the meaning provided in Section 6.4(c).
"Rater" has the meaning provided in Section 6.4(k).
"Rater's Qualifications" has the meaning provided in Section 6.4(j).
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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"Recognized Accounting Firm" means Ernst & Young/Kenneth Leventhal; Coopers
& Lybrand; Arthur Andersen; Price Waterhouse; Deloitte & Touche; KPMG Peat Marwick;
Pannell, Kerr & Foster; or any successor entity of any of the foregoing or any other national
certified public accountants mutually acceptable to Tenant and Owner.
"Recognized Mortgage" has the meaning provided in Section 1l.2(b).
"Recognized Mortgagee" means the holder of a Recognized Mortgage; provided,
however, that, except to the extent permitted by Section 1l.2(b), a Recognized Mortgagee may
not be an Affiliate of Tenant (except if Tenant is an Affiliate of a Recognized Mortgagee that
has caused the Lease to be assigned to such Affiliate in lieu of foreclosure of the Recognized
Mortgage of such Recognized Mortgagee).
"Redevelopment Plan" means that certain plan addressing the rehabilitation,
conservation and redevelopment of that certain City Center/Historic Convention Village
Redevelopment and Revitalization Area described therein, of which the Land forms a part, as
the same was adopted in February of 1993 by the Agency and the City and approved by the
Board of County Commissioners of Dade County, Florida in March, 1993, and expiring on
March 30, 2023. As used herein, references to the "Redevelopment Plan" shall not include
any extensions or amendments thereof.
"Release" has the meaning provided in Section 35.1(g).
"Remediation Percentage" has the meaning provided in Section 6.4(j).
"Remediation Plan" means a remediation plan to remedy a Designated Component
Deficiency or Quality Deficiency as provided in Section 6.4(f) and Section 6.4(g), as
applicable.
"Rental" means Base Rent, Percentage Rent, Impositions, and any other sums, costs,
expenses or deposits which Tenant is obligated, pursuant to any of the provisions of this Lease,
to pay and/or deposit.
"Replacement Value" has the meaning provided in Section 7.12(a),
"Reports" has the meaning provided in Section 35.3(a).
"Requesting Party" has the meaning provided in Section 26.2(c).
"Requirements" has the meaning provided in Section 15.1(b).
"Restoration" means either a Casualty Restoration or a Condemnation Restoration, or
both.
"Restriction" has the meaning provided in Section 6.3(a).
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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"Retail Space" has the meaning provided in the Garage Easement Agreement.
"Roadway Extension" has the meaning provided in Section 21.3(b).
"Rooms Revenue" means such part of the Hotel Revenue as is derived from the sale
or rental of rooms, suites or other sleeping accommodations.
"Sale of the Hotel" has the meaning provided in Section 10.I(b).
"Shortfall Amount" has the meaning provided in Section 11.12(a).
"Significant Alteration" has the meaning provided in Section 14.6(a).
"Site I-B" has the meaning provided in Section 19.1(c).
"SMHC" means St. Moritz Hotel Corp.
"State Streetscape Improvements" has the meaning provided in Section 21.2(b).
"Sublease" has the meaning provided in Section 10.I(b).
"Substantial Completion" has the meaning provided in the Hotel Development
Agreement.
"Substantial Controlling Interest" means the ownership of greater than 50% of the
Equity Interests in a Person and the ownership of greater than 50 % of the votes necessary to
elect a majority of the Board of Directors or other governing body of such Person.
"Substantially All of the Premises" has the meaning provided in Section 9.1(c).
"Subtenant" has the meaning provided in Section 10.1(b).
"Taxi Line" has the meaning provided in Section 21.5.
"Temporary CO" means a temporary certificate of occupancy, as the same may be
amended from time to time, issued by the City's Building Department for all or a portion of
the Improvements.
"Tenant" means MB Redevelopment and any assignee or transferee of the entire
Tenant's Interest in the Premises that is permitted under this Lease, from and after the date of
the permitted assignment or transfer pursuant to which the entire Tenant's Interest in the
Premises was assigned or transferred to such assignee or transferee.
"Tenant Indemnified Parties" means Tenant and its directors, officers, shareholders,
employees, successors, assigns, subtenants, agents, contractors, subcontractors, experts,
licensees, lessees, mortgagees, joint venturers, members, holders of other ownership interests,
DOB: [04984. DOCS .MIAMI]GLEASE _9-19-96
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partners of a partnership constituting a partner of Tenant, trustees, partners, principals, invitees
and Affiliates.
"Tenant's Interest in the Premises" means (i) for so long as the Condominium is in
existence, (x) Tenant's interest in the Hotel Unit, (y) Tenant's interest in the Condominium
Unit Lease and Tenant's leasehold estate thereunder and (z) Tenant's interest in this Lease
(including, without limitation, Tenant's interest in this Lease following a termination of the
Condominium), and (ii) following the termination of the Condominium, (t) Tenant's interest
in this Lease and (u) Tenant's interest in the Hotel Portion.
"Term" means the term of years commencing on the Commencement Date and, subject
to earlier termination as provided hereunder, expiring at 11:59 p.m, on the Fixed Expiration
Date.
"Territory" has the meaning provided in Section 6.3(a).
"Threat of Release" has the meaning provided in Section 35.1(h).
"Tier", "Tiers", "Tier 1", "Tier 2", "Tier 3", "Tier 4", "Tier 5A", "Tier 5B" and
"Tier 6" have the meanings provided in Section 3.3(a).
"Tier 5B Sale" has the meaning provided in Section 3.5(b).
"Title Matters" has the meaning provided in Section 2.1.
"Transfer" has the meaning provided in Section lO.l(b).
"Transferee" has the meaning provided in Section lO.l(b).
"Treasury Yield" has the meaning provided in Section 6.3(a).
"UCF Account" has the meaning provided in Section 3.3(d).
"Unavoidable Delays" means delays due to strikes, slowdowns, lockouts, acts of God,
inability to obtain labor or materials, war, enemy action, civil commotion, fIre, casualty,
catastrophic weather conditions, a court order which causes a delay (unless resulting from
disputes between or among the party alleging an Unavoidable Delay, present or former
employees, officers, members, partners or shareholders of such alleging party or Affiliates (or
present or former employees, officers, partners, members or shareholders of such Affiliates)
of such alleging party), the application of any Requirement, or another cause beyond such
party's control or which, if susceptible to control by such party, shall be beyond the reasonable
control of such party. Such party shall use reasonable good faith efforts to notify the other
party not later than twenty (20) days after such party knows of the occurrence of an
Unavoidable Delay; provided, however, that either party's failure to notify the other of the
occurrence of an event constituting an Unavoidable Delay shall not alter, detract from or negate
its character as an Unavoidable Delay or otherwise result in the loss of any benefit or right
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
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granted to the delayed party under this Lease. In no event shall (i) any party's financial
condition or inability to fund or obtain funding or financing constitute an "Unavoidable Delay"
with respect to such party and (ii) any delay arising from a party's (or its Affiliate's) default
under any Project Document constitute an "Unavoidable Delay" with respect to such party's
obligations hereunder, The times for performance set forth in this Lease (other than for
monetary obligations of a party) shall be extended to the extent performance is delayed by
Unavoidable Delay, except as otherwise expressly set forth in this Lease.
"Undistributed Cash Flow" has the meaning provided in Section 3.3(d).
"Undistributed Cash Flow Cost" has the meaning provided in Section 3.3(d).
"Weights" has the meaning provided in Section 6.4(c).
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ARTICLE 2.
DEMISE OF LAND AND TERM OF LEASE
Section 2.1. Demise of Land for Term.
Owner does hereby demise and lease to Tenant, and Tenant does hereby lease and take
from Owner, the Land, together with all the appurtenances, rights, privileges and
hereditaments thereto, subject to (a) the terms and conditions of this Lease and (b) the matters
set forth in Exhibit 2.1 (the "Title Matters"), to have and to hold unto Tenant, its successors
and assigns for a term commencing on the Commencement Date and expiring on the Fixed
Expiration Date, unless sooner terminated pursuant to the terms hereof.
Section 2.2. No Encumbrances.
Except for the Declaration of Condominium and the Condominium Unit Lease, Owner
will not permit or suffer any encumbrance, mortgage, pledge or hypothecation of Owner's
Interest in the Premises except with respect to those matters (such as utility easements and
nonmonetary reciprocal easement agreements) reasonably approved by Tenant and which do
not adversely affect the operation or development of the Hotel. Any such mortgage, pledge,
encumbrance or hypothecation in violation of this Section 2.2 is void. Notwithstanding the
foregoing, Owner shall have the absolute right to pledge its interest in the Rental payable
hereunder so long as such pledge does not include a pledge of Owner's Interest in the Premises
(other than the Rental payable hereunder), and the pledgee shall have no rights under this Lease
other than the right to receive payments of Rental. Any pledge of Rental permitted hereunder
shall not create any rights in the pledgee thereunder to enforce any of the provisions of this
Lease. Owner shall deliver to Tenant and any Recognized Mortgagee, within fifteen (15) days
after the effective date thereof, a true and correct copy of any pledge instrument permitted
hereunder.
Section 2.3. Sale of Entire Interest.
Owner shall not sell, transfer, conveyor assign Owner's Interest in the Premises, and
the holder of any Equity Interest in Owner shall not sell, convey, transfer or assign such Equity
Interest, except for a sale, transfer, conveyance or assignment of the entire Owner's Interest
in the Premises or the entire Equity Interest, as the case may be, subject to Tenant's rights
under Sections 36.1 and 36.2.
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ARTICLE 3,
RENTAL
Section 3.1. Method and Place of Pavment.
Except as otherwise specifically provided herein, all Rental shall be paid without notice
or demand. All Rental payable to Owner (except Impositions, if the Requirements governing
such payment are to the contrary) shall be paid by good checks (payable upon presentment)
drawn on a U,S. or state chartered bank, in currency of the United States of America. Rental
that is payable to Owner (other than Impositions) shall be payable at the address of Owner set
forth herein or at such other place as Owner shall direct by notice to Tenant. Impositions shall
be payable in the form and at the location provided by Requirements governing the payment
of such.
Section 3.2. Base Rent.
(a) Base Rent. Tenant shall pay Owner annual base rent for each Lease Year ("Base
Rent") during the Term in the amount of $500,000 commencing on the earlier to occur of (i)
the Hotel Opening Date and (ii) the date which is thirty (30) months after the Construction
Commencement Date (the "Delay Date"). Notwithstanding the foregoing, if Tenant is unable
to cause the Hotel Opening Date to occur prior to the Delay Date as a result of an Unavoidable
Delay, Tenant shall be required to pay only fifty (50%) percent of the Base Rent set forth
above from and after the Delay Date for a period equal to the period of such Unavoidable
Delay; provided, however, in all cases (notwithstanding any Unavoidable Delay), the full
amount of the Base Rent shall be payable by Tenant commencing on the earlier to occur of the
Hotel Opening Date and the date which is forty-eight (48) months after the Construction
Commencement Date. Any Base Rent payable as a result of an Unavoidable Delay prior to
the Hotel Opening Date shall be a Development Cost Overrun. The initial Base Rent of
$500,000 shall be increased every 10 years from the Hotel Opening Date in the same
proportion as the increase, if any, from the Hotel Opening Date which the then appraised fair
market value of the land (on a vacant and unimproved basis and unencumbered by this Lease)
bears to a base value of $24,000,000, subject to a cap on the amount of such proportionate
increase equal to the percentage increase in the GDP Implicit Price Deflator Index from the
Hotel Opening Date. In no event shall Base Rent during an escalation period be less than the
Base Rent during the prior period. Attached hereto as Exhibit 3.2(a) are examples of the
determination of increases in Base Rent. Such examples are attached for illustrative purposes
only and in no way modify the provisions of this Section 3.2(a) or any other provision of this
Lease.
(b) Payment of Base Rent. Base Rent shall be paid in monthly installments equal to
one-twelfth of the then applicable annual Base Rent and shall be paid in advance, commencing
on the date provided in Section 3.2(a) and on the first day of each and every calendar month
thereafter during the Term. All Base Rent which is due for any period of less than a full
month or a full calendar year shall be appropriately apportioned.
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Section 3.3. Distributions of Net Cash Flow After Debt Service: Percentage Rent.
(a) Net Cash Flow After Debt Service. Net Cash Flow After Debt Service as determined
by the Annual Financial Statements shall be distributed annually pursuant to Section 3.3(c)
below pursuant to the following tiers in the following order of priority (each a "Tier" and
collectively, the "Tiers"):
Tier 1. 100% to Tenant until the Operating Shortfall Reserve plus interest at
15% compounded annually (which is equivalent to 1.1715%
compounded monthly), as calculated from the date such amounts are
applied to Operating Expenses or Debt Service of the Hotel, is repaid
to Tenant ("Tier 1 to).
Tier 2. 100% to Tenant until Tenant receives a 15 % per annum cumulative
(not compounded) return on the Funded Equity, as calculated from
the Hotel Opening Date ("Tier 2"),
Tier 3. 100% to Tenant until Tenant receives a 15% per annum cumulative
(not compounded) return on funds provided by Tenant to meet
Development Cost Overruns, and Additional Operating Shortfalls, as
calculated from the later to occur of the date such amounts are funded
and the Hotel Opening Date ("Tier 3").
Tier 4. 80% to Tenant and 20% to the Owner until Tenant has (i) received
25 % IRR on its Funded Equity (including payments made to Tenant
in Tier 2), as calculated from the Hotel Opening Date, and (ii) been
repaid Development Cost Overruns and Additional Operating
Shortfalls referred to in Tier 3 ("Tier 4").
Tier 5A. 20% to Tenant and 80% to the Owner until the Owner has received
(as calculated from the Hotel Opening Date and including Base Rent
and Percentage Rent actually paid and Distribution Net Proceeds and
Net Proceeds distributed to Owner pursuant to Section 3.5) an 8%
IRR on the Land at a fixed value of $24,000,000 ("Tier SA").
Tier 5B. 100% to Owner until Owner has received an amount equal to 15 % of
the aggregate Undistributed Cash Flow Cost, if any ("Tier 5B").
Tier 6. 85 % to Tenant, 15 % to the Owner ("Tier 6").
(b) Percentage Rent. From and after the date Tenant determines the Percentage Rent due
to Owner hereunder, the amount of such Percentage Rent shall be held by Tenant in trust for
Owner until delivered to Owner. All amounts payable to Owner pursuant to Tier 4, Tier 5A,
Tier 5B and Tier 6 or as otherwise provided in this Lease shall constitute "Percentage Rent"
for purposes of this Lease.
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(c) Payment of Percentage Rent. Net Cash Flow After Debt Service shall be distributed
annually in accordance with the Tiers, and Tenant shall pay Percentage Rent, if any, in annual
installments, in arrears, on the date the Annual Financial Statements are made available to
Owner pursuant to Section 28.1(c), for the preceding Lease Year. The obligation to pay
Percentage Rent shall survive Expiration of the Term as to any Percentage Rent (if any) which
accrued prior to the Expiration of the Term, subject to Article 28.
Notwithstanding the foregoing provisions of this Section 3.3(c), Net Cash Flow After
Debt Service shall be deemed to be distributed to Tenant on the same date Percentage Rent is
payable (regardless of whether any Percentage Rent is actually due) to Owner pursuant to this
Section 3.3(c); provided, however, that any Undistributed Cash Flow shall not be deemed
distributed to Tenant until the earliest to occur of:
(i) the date Tenant is permitted to make distributions to Parent, any
Affiliate of Tenant or Parent or any Person that holds an Equity
Interest in Tenant of any Undistributed Cash Flow under the
provisions of a Recognized Mortgage;
(ii) the date the agent or any lender under a Recognized Mortgage
actually receives any Undistributed Cash Flow pursuant to a
foreclosure or otherwise; and
(iii) the Expiration of the Term.
Any Undistributed Cash Flow shall be deposited in the UCF Account and shall be dealt
with in accordance with the terms of a Recognized Mortgage. All interest or other earnings,
if any, earned on any available cash or investments in the UCF Account shall be deemed part
of Hotel Revenue. All Undistributed Cash Flow that may be distributed or is deemed
distributed shall be distributed or deemed distributed in accordance with the Tiers. The
portion, if any, of any Undistributed Cash Flow that is payable to Owner shall be paid to
Owner on the date that such Undistributed Cash Flow is deemed distributed to Tenant.
(d) Certain Definitions.
(i) "Debt Service" means all payments in respect of principal and interest on
Permitted Debt (including, without limitation, the net cost to Tenant of interest rate protection
agreements and arrangements, and any and all fees paid to the lender(s), administrative fees
and charges, extension fees, and the like),
(ii) "Hotel Operating Profit" means Hotel Revenue after deduction of
Operating Expenses. Hotel Operating Profit shall be determined on a cumulative basis from
and after the Hotel Opening Date with any losses not funded from the Operating Shortfall
Reserve and the Additional Operating Shortfalls carried forward.
(iii) "Hotel Revenue" means, without duplication, total revenue of any kind
(whether in cash or in kind) from the operation of the Hotel and all other portions of the
DOB: [04984. DOCS .MIAMI]GLEASE _9-19-96
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Premises from and after the Hotel Opening Date as determined under the Accounting Principles
and shall include, without limitation, all income of every kind (whether in cash or in kind) and
all proceeds of sales of any kind (whether in cash or on credit or otherwise) resulting from the
operation of the Hotel, and all other portions of the Premises, and all of the facilities therein
and goods and services provided thereby, including, without limitation, all income and
proceeds from the rental of rooms, food and beverage sales, telephone revenues, parking
revenues received by Tenant from or with respect to parking facilities located on the Premises,
the Garage or any other parking facility or from valet or other parking services provided to
Hotel guests and other patrons of the Hotel, leasing, brokerage and management fees and
commissions, or other compensation, derived by Tenant or any Affiliate of Tenant under any
leasing agreement, management agreement, master lease or similar agreement regarding the
leasing or management of the Retail Space entered into by Tenant or any Affiliate of Tenant
with the owner of the Garage, all revenues derived by Tenant or any Affiliate of Tenant from
the operation of any concession agreements (including, without limitation, the concession
agreement described in Section 14.5), any gross vending income and commissions, all income
and proceeds received from tenants, lessees, licensees, concessionaires and other persons
occupying space at the Hotel and or rendering services to Hotel guests or other patrons of the
Hotel (but not including the gross receipts of such tenants, lessees, licensees, concessionaires
and other persons), interest income (except as expressly excluded below) and the proceeds
(after deducting all necessary expenses incurred in the adjustment or collection thereof) of
business interruption insurance actually received by Tenant which replace lost revenues with
respect to the operation of the Hotel or any other portion of the Premises. The following shall,
however, be excluded from Hotel Revenue:
(1) Federal, state and municipal excise, sales, resort, use, and other taxes collected
from patrons or guests as a part of or based upon the sales price of any goods
or services, including with limitation, gross receipts, room, bed, admission,
cabaret, or similar taxes;
(2) Any gratuities collected;
(3) Allowances, rebates and refunds not included in Hotel Revenue in accordance
with the Accounting Principles;
(4) The proceeds of any financing or refinancing;
(5) Interest on funds in the FF&E Reserve Account;
(6) Proceeds from the sale of any Building Equipment or FF&E; and
(7) Proceeds from the sale of the Hotel.
Notwithstanding anything to the contrary contained herein, the funds described in
clauses (5) and (6) above shall be deposited into the FF&E Reserve Account upon receipt
thereof, and such deposit shall be in addition to, and not in lieu of, the deposits otherwise
required pursuant to Section 16.6.
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(iv) "Net Cash Flow After Debt Service" means Hotel Operating Profit after
deduction of Debt Service. Net Cash Flow After Debt Service shall be determined on a
cumulative basis from and after the Hotel Opening Date with any losses not funded from the
Operating Shortfall Reserve and Additional Operating Shortfalls carried forward.
(v) "Operating Expenses" means, without duplication, all costs and expenses
incurred in owning, maintaining, conducting and operating the Hotel and all other portions of
the Premises, other than Debt Service and any other payments of principal or interest (whether
or not permitted hereunder (and this reference thereto not constituting consent or approval
thereot)), Percentage Rent, depreciation, amortization and the original costs of constructing and
furnishing the Hotel pursuant to the Hotel Development Agreement. Operating Expenses shall
include, without limitation, all operating costs; all wages and benefits and payroll taxes; the
cost of all food, beverages, Operating Equipment and other goods, supplies, utilities and
services; all repairs and maintenance; all professional fees and expenses; all costs of
advertising, marketing and promotion; all costs incurred by Tenant relating to parking facilities
and services (including, but not limited to, payments under the Garage Easement Agreement);
all costs incurred by Tenant or any Affiliate of Tenant under any leasing agreement,
management agreement, master lease or other similar agreement regarding the leasing or
management of the Retail Space entered into by Tenant or any Affiliate of Tenant with the
owner of the Garage; all costs incurred by Tenant or any Affiliate of Tenant in connection with
the operation of any concession agreements (including, without limitation, the concession
agreement described in Section 14.5); Base Rent; all Hotel Manager fees and payments to the
extent permitted under Article 16; all capital additions and improvements (including, without
limitation, expenditures for Building Equipment and FF&E, other than such expenditures
funded through the FF&E Reserve Account) except that no deduction shall be permitted for
Alterations which under this Lease require the consent of Owner (unless such consent has been
obtained or is deemed to be obtained); all insurance costs (including self-insured risks and
deductibles); all payments under equipment leases; all real estate, personal property and other
taxes, assessments, governmental charges and other Impositions (other than income taxes,
unless imposed in lieu of any of the foregoing taxes, assessments, charges or Impositions); all
payments into the FF&E Reserve Account (including without limitation, any Additional
Reserve Deposit); and annual reimbursement of Connection Fees, together with interest
thereon, as provided in the Hotel Development Agreement. Any Operating Expense payable
to an Affiliate of Tenant or Hotel Manager shall be deemed an Operating Expense only to the
extent of the fair market value of the goods or services supplied by such Affiliate. The
immediately preceding sentence shall not apply, however, to amounts payable under the Hotel
Management Agreement in accordance with Article 16 hereunder.
(vi) "UCF Account" means a separate account maintained in accordance with
and subject to the requirements of a Recognized Mortgage.
(vii) "Undistributed Cash Flow" means any Net Cash Flow After Debt Service
that would have been distributed pursuant to the Tiers pursuant to Section 3.3(a), but which
Tenant is prohibited from so distributing pursuant to restrictions contained in a Recognized
Mortgage (provided, however, that such restrictions have been negotiated on an arms' - length
basis) .
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(viii) "Undistributed Cash Flow Cost" means a 15 % per annum cumulative
(but not compounded) return on the Undistributed Cash Flow from time to time held in the
UCF Account after deducting annual interest earned on the UCF Account.
Section 3.4. Impositions.
(a) Obligation to Pay Impositions. From and after the Commencement Date, Tenant
shall pay, in the manner provided in Section 3.4(c), all Impositions that at any time thereafter
are assessed, levied, confirmed, imposed upon, or charged to Owner or Tenant with respect
to (i) the Premises, or (ii) any vault, passageway or space in, over or under any sidewalk or
street in front of or adjoining the Premises, or (iii) any other appurtenances of the Premises,
or (iv) any personal property, FF&E, Building Equipment or other facility used in the
operation thereof, or (v) any document to which Tenant is a party creating or transferring an
interest or estate in the Premises of, by or to Tenant, or (vi) the use and occupancy of the
Premises, or (vii) this transaction.
(b) Definition.
"Imposition" or "Impositions" means the following imposed by a Governmental
Authority or the Condominium Association or any other governing body of any other
condominium regime comprising any portion of the Premises:
(i) real property taxes and general and special assessments (including,
without limitation, any special assessments for business improvements or imposed by any
special assessment district);
(ii) personal property taxes;
(Hi) sales taxes on Rental;
(iv) real property taxes and general and special assessments, condominium
assessments and charges and other charges payable by Owner or Tenant
under any condominium regime comprising any portion of the
Premises;
(v) water, water meter and sewer rents, rates and charges;
(vi) excises;
(vii) levies;
(viii) license and permit fees;
(ix) any other governmental levies of general application, fees, rents,
assessments or taxes and charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, now or hereafter enacted of any kind whatsoever;
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(x) service charges of general application with respect to police and fire
protection, street and highway maintenance, lighting, sanitation and water supply; and
(xi) any fines, penalties and other similar governmental charges applicable
to the foregoing, together with any interest or costs with respect to the foregoing.
(c) Pavment of Impositions.
(i) Subject to the provlSlons of Section 32.2, from and after the
Commencement Date, Tenant shall pay each Imposition or installment thereof not later than
the date the same may be paid without interest or penalty (which is the date of delinquency).
However, if by law of the applicable Governmental Authority any Imposition may at the
taxpayer's option be paid in installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Tenant may exercise the option to pay the Imposition in such
installments and shall be responsible for the payment of such installments with interest, if any.
(ii) If Tenant twice fails within any thirty-six (36) month period to make any
payment of an Imposition (or installment thereof) on or before the date the same may be paid
without penalty, Tenant shall, at Owner's request, and notwithstanding paragraph (i) above,
pay all Impositions or installments thereof thereafter payable by Tenant not later than twenty
(20) days before the date of delinquency. However, if Tenant thereafter makes all such
payments as required in this paragraph (ii) for thirty-six (36) consecutive months without
failure, the Imposition payment date in paragraph (i) above shall again become applicable,
unless and until there are two further failures within a thirty-six (36) month period, in which
case Tenant shall again have the right to cure the failure so that the payment date in paragraph
(i) above shall again be applicable, and this provision shall continue to be applicable to each
situation in which there are two further failures within a thirty-six (36) month period. Nothing
in this paragraph shall be construed to limit Owner's Default remedies as set forth elsewhere
in this Lease after failure by Tenant timely to pay any Imposition.
(d) Evidence of Pavment. Tenant shall furnish to Owner, within thirty (30) days
after the date of Owner's request therefor, an official receipt of the appropriate taxing authority
or other proof reasonably satisfactory to Owner, evidencing the payment thereof.
(e) Evidence of Non-Payment. Any certificate, advice or bill of the appropriate
official designated by law to make or issue the same or to receive payment of any Imposition
asserting non-payment of such Imposition shall be prima facie evidence that such Imposition
is due and unpaid at the time of the making or issuance of such certificate, advice or bill, at
the time or date stated therein. Tenant shall, immediately upon receipt of any such certificate,
advice or bill, deliver a copy of the same to Owner.
(f) Apportionment of Imposition. Any Imposition relating to a fiscal period of the
taxing authority, a part of which occurs after the Commencement Date and a part of which
occurs before the Commencement Date or after the Expiration of the Term, shall be
apportioned pro rata between Owner and Tenant.
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(g) Exclusions from Impositions. Except as expressly set forth above, nothing
contained herein shall be construed to require Tenant to payor to be charged for any portion
of (i) municipal, state or federal income or gross receipts taxes assessed against Owner (other
than sales taxes imposed on Rental); (ii) municipal, state or federal capital levy, estate,
succession, inheritance, transfer or gains taxes, of Owner; (iii) corporation or franchise taxes
imposed on Owner or any corporate owner of the fee of the Land; or (iv) any penalties or late
charges assessed against Owner (unless the same result from Tenant's failure to timely pay
Impositions) .
(h) Tax Abatements and Reductions, Tenant shall be entitled to the benefit of any
tax abatements and reductions as are, or may be, available under applicable law as if Tenant
were the fee owner of the Premises. Owner shall not be required to join in any action or
proceeding in connection with such abatement or reduction unless the provisions of any
Requirement at the time in effect require that such action or proceeding be brought by and/or
in the name of Owner. If so required, Owner shall join and cooperate in such proceedings or
permit them to be brought by Tenant in Owner's name, in which case Tenant shall pay all
reasonable costs and expenses (including, without limitation, attorneys' fees and disbursements)
incurred by Owner in connection therewith.
Section 3.5. Net Proceeds of Certain Capital Transactions.
(a) Distribution of Net Proceeds. In the event of a Distribution Sale, financing or
refinancing transaction, the Distribution Net Proceeds of such Distribution Sale or the Net
Proceeds of such financing or refinancing shall be distributed to the various Tiers in the same
manner as Net Cash Flow After Debt Service in accordance with the terms of Section 3.3, and
any amounts distributed to Owner in Tier 4, Tier 5A, Tier 5B or Tier 6 shall be deemed to be
and treated as Percentage Rent. Subsequent to such Distribution Sale, financing or refinancing,
Net Cash Flow After Debt Service shall continue to be distributed in accordance with the terms
of Section 3.3, but after taking into account any Distribution Net Proceeds and Net Proceeds
previously distributed to Tenant and Owner as set forth above. Without limiting the foregoing
provisions of this Section 3.5(a) or the provisions of Article 10 or Article 11, in the event of
a Distribution Sale, financing or refinancing the following procedures shall be applicable:
(i) In the event of a Distribution Sale, Tenant shall provide Owner with notice
of such Distribution Sale as soon as practicable prior to the closing of such Distribution Sale
taking into account the obligations of Tenant under this Section 3.5. In the event of a
financing or refinancing, Tenant shall provide Owner with notice of such financing or
refinancing as soon as practicable prior to the closing of such financing or refinancing taking
into account the obligations of Tenant under this Section 3.5, such notice to contain the name
and address of the lender, the principal terms and conditions of such financing or refinancing
and such additional information as Owner shall reasonably request or as may be required under
Article 11.
(ii) The notice required by the preceding paragraph (i) shall include an estimate
of the Distribution Net Proceeds or the Net Proceeds of such Distribution Sale, financing or
refinancing and an estimate of the portion thereof (the "Percentage Rent Portion"), if any,
DOS: [04984.DOCS. MIAMI]GLEASE _9.19-96
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that will be distributable to Owner as Percentage Rent. The estimate of such portion of such
Distribution Net Proceeds or Net Proceeds shall be based upon the then current budget and
projections of Percentage Rent for the then current Lease Year.
(Hi) Upon the consummation of such Distribution Sale, financing or refinancing,
the Percentage Rent Portion shall be delivered, in escrow, to a Recognized Mortgagee or, if
there is no Recognized Mortgagee, a nationally recognized title insurance company mutually
acceptable to Owner and Tenant and, in either case, deposited in an segregated, interest-bearing
account in a state or federally chartered commercial bank or trust company that is an
Institutional Lender. The Percentage Rent Portion shall be held in escrow pursuant to an
escrow agreement that is mutually acceptable to Owner, Tenant and such Recognized
Mortgagee or title insurance company until the Percentage Rent Portion is distributed pursuant
to paragraph (iv) below.
(iv) The Percentage Rent Portion (together with the Distribution Net Proceeds
or Net Proceeds of which such Percentage Rent Portion is a part) shall be distributed in
accordance with the Tiers in the same manner as Net Cash Flow After Debt Service, in
accordance with the provisions of this Section 3.5(a) and Section 3.3.
The foregoing procedures shall in no way limit or otherwise modify the obligations of
Tenant hereunder with respect to any Distribution Sale, financing or refinancing. Without
limiting the preceding sentence, if the Percentage Rent Portion is determined to be (a) less than
the amount actually required to be distributed to Owner as Percentage Rent in connection with
any Distribution Sale, financing or refinancing, Tenant shall nevertheless be required to pay,
in addition to the Percentage Rent Portion, the excess of such amount over the Percentage Rent
Portion, and (b) more than the amount actually required to be distributed to Owner as
Percentage Rent in connection with any Distribution Sale, financing or refinancing, Tenant
shall be entitled to a reimbursement of the amount by which the Percentage Rent Portion
exceeds the amount required to be distributed to Owner. Notwithstanding anything contained
herein to the contrary, the provisions of this Section 3.5 shall not apply to any Recognized
Mortgagee, in its capacity as a Recognized Mortgagee, in connection with a Foreclosure
Transfer. In addition, a Recognized Mortgagee, in its capacity as a Recognized Mortgagee
(but not as escrow agent pursuant to Section 3.5(a)(iii)), shall not be liable for the payment
of any Net Proceeds or Distribution Net Proceeds.
(b) Certain Definitions.
(i) "Distribution Sale" means:
(I) any direct or indirect transfer (by operation of law or otherwise and
including, without limitation, a Foreclosure Transfer or other foreclosure) by Tenant of
Tenant's Interest in the Premises to a Person other than a Closely Held Affiliate of the
transferor; or
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(II) any direct or indirect transfer (by operation of law or otherwise and
including, without limitation, a Foreclosure Transfer or other foreclosure) of any Equity
Interest in Tenant to a Person that is not a Closely Held Affiliate of the transferor, or the
issuance by Tenant of additional Equity Interests in Tenant to a Person that is not a Closely
Held Affiliate of Tenant; or
(III) if and only if Tenant constitutes all or substantially all of Parent's assets,
the issuance of an Equity Interest in Parent to a Person that is not a Closely Held Affiliate of
Parent; or
(IV) if and only if Tenant constitutes all or substantially all of Parent's assets,
the transfer (by operation of law or otherwise and including a foreclosure) of an Equity Interest
in Parent to a Person that is not a Closely Held Affiliate of Parent; or
(V) the issuance of stock, partnership interests, limited liability company
membership interests or other ownership interests of a Person (a "Class E Person") to a
Person that is not a Closely Held Affiliate of Parent, the value of, and the income from which
stock, partnership interest, limited liability company membership interest or other ownership
interest, is substantially or entirely based on, directly or indirectly, Tenant's Interest in the
Premises; or
(VI) any direct or indirect transfer (by operation of law, foreclosure or
otherwise) of an Equity Interest in Tenant or Parent (if Tenant constitutes all or substantially
all of Parent's assets) the purpose of which transaction is to circumvent the effect of this
Section 3.5.
Notwithstanding the foregoing proViSiOns of this Section 3.5(b)(i), the term
"Distribution Sale" shall not include the first direct or indirect transfers (by operation of law,
Foreclosure Transfer, foreclosure or otherwise), whether or not such transfers are related, of
Equity Interests in Tenant, aggregating up to ten percent (10%). In addition, any subsequent
direct or indirect transfers (by operation of law, Foreclosure Transfer or otherwise) of such ten
percent (10%) shall also not be "Distribution Sales" for the purposes of this Lease. If the first
such transfer of Equity Interests is a single transfer, or a series of related transfers, of Equity
Interests in Tenant aggregating more than fifteen percent (15%), then the first sentence of this
paragraph shall not be applicable.
(ii) "Net Proceeds" means the excess of (v) the aggregate amount of
consideration (whether cash or the cash equivalent of non-cash proceeds) from a Distribution
Sale, financing (other than the initial financing obtained by Tenant to fund the initial
construction of the Hotel) or refinancing of a Mortgage over (w) the aggregate amount of (I)
the actual debt (including, without limitation, equity from an Affiliate of Tenant pursuant to
Section 11.2(b) and/or Section 11.12) repaid and (II) all reasonable and customary out-of-
pocket transaction costs incurred by the seller in connection with such Distribution Sale or the
borrower in such financing or refinancing. Notwithstanding the foregoing, with respect to any
Tier 5B Sale, "Net Proceeds" shall mean the excess of the aggregate amount of consideration
(in cash or the cash equivalent of non-cash proceeds) from such Tier 5B Sale over the
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aggregate amount of: (1) the actual debt (including, without limitation, equity from an Affiliate
of Tenant pursuant to Section 11.2(b) and/or Section 11.12) repaid, (2) all reasonable and
customary out-of-pocket transaction costs incurred by the seller in connection with such Tier
5B Sale and (3) an amount equal to (I) the consideration (whether cash or the cash equivalent
of non-cash proceeds) paid by such seller to acquire the interests that are the subject of the
transaction (excluding any debt that such seller has incurred, assumed or taken subject to in
connection with the acquisition of such interests, except to the extent such debt has been paid
by such seller or an Affiliate of such seller from a source other than Hotel Revenue) and (II)
all reasonable and customary out-of-pocket transaction costs incurred by such seller in
acquiring such interests. For the purposes of calculating Net Proceeds, the proceeds received
shall also include: (i) (A) any amounts received by a Hotel Manager that is a Closely Held
Affiliate of Tenant or Parent or (B) any amounts received by a Hotel Manager that is an
Affiliate of Tenant or Parent ( but only to the extent such consideration is distributed from such
Affiliate to Tenant, Parent or a Closely Held Affiliate of Tenant or Parent) as consideration
for the transfer, modification or termination of such Hotel Manager's interest in or terms of
the Management Agreement; (if) any amounts received by (A) Tenant, (B) any Closely Held
Affiliate of Tenant or Parent or (C) any Affiliate of Tenant or Parent (but only to the extent
such amounts are distributed from such Affiliate to Tenant, Parent or a Closely Held Affiliate
of Tenant or Parent) as consideration for non-competition agreements; and (iiz) any similar
consideration or payments made or received in connection with such transaction.
(iii) "Tier 5B Sale" means a Sale of the Hotel that is consummated following the first
Sale of the Hotel, but only if, in the most recently completed Lease Year preceding the Lease
Year in which such Sale of the Hotel is consummated, no portion of Net Cash Flow After Debt
Service is distributable as Percentage Rent in Tier 6 (as conclusively determined by the Annual
Financial Statement for such Lease Year (whether or not such Annual Financial Statement has
been received at the time such Sale of the Hotel is consummated)).
(iv) "Distribution Net Proceeds" means, with respect to any Distribution Sale, the
portion of the Net Proceeds from such Distribution Sale equal to the product of (x) the Net
Proceeds from such Distribution Sale and (y) the percentage ownership of the Distribution Sale
Transferee in such Distribution Sale that is represented by the Equity Interests in such
Distribution Sale Transferee that are owned, directly or indirectly, by Persons that are not
Closely Held Affiliates of Tenant.
(v) "Distribution Sale Transferee" means any Person to whom Equity Interests in
Tenant, Parent or a Class E Person, as the case may be, are transferred or issued pursuant to
paragraphs (I) - (VI) of Section 3.5(b)(i).
Section 3.6. Net Lease.
It is the intention of Owner and Tenant that (a) Rental be absolutely net to Owner
without any abatement, diminution, reduction, deduction, counterclaim, setoff or offset
whatsoever, except to the extent expressly set forth in this Lease, and (b) Tenant pay all costs,
expenses and charges of every kind or nature (except as expressly provided for herein to the
contrary) relating or allocable to the Premises that may arise or become due or payable during
or after (but attributable to a period falling within) the Term.
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ARTICLE 4.
LATE CHARGES
Section 4. 1. Late Charges.
If Tenant shall fail to make any payment of Base Rent or other Rental within thirty (30)
days after the same shall be due, the late payment shall bear interest from the date due until
the date paid at a rate (the "Late Charge Rate") equal to the lesser of (a) four percent (4%)
per annum in excess of the prime rate in effect from time to time at Citibank, N.A. (or The
Chase Manhattan Bank, N .A., if Citibank, N .A. shall not then have an established prime rate;
or the prime rate of any major banking institution doing business in New York City, as
selected by Owner, if none of the aforementioned banks shall be in existence or have an
established prime rate) and (b) the maximum interest rate permitted by law. All interest
payable under this Section shall be deemed Rental (but shall not be compounded) and shall be
due and payable by Tenant on fifteen (15) days' demand. The collection by Owner of any
interest under this Section shall not be construed as a waiver of Tenant's default or of Tenant's
obligation to perform any term, covenant or condition of this Lease nor shall it affect any other
right or remedy of Owner under this Lease.
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ARTICLE 5.
INFLATION ADJUSTMENT
Section 5.1. Inflation Adiustment.
Unless otherwise expressly provided hereunder, any dollar amount described in this
Lease as "adjusted for inflation" or "subject to adjustment for inflation" (or words of
similar import) shall be adjusted by multiplying such amount by a fraction, the numerator of
which shall be the GDP Implicit Price Deflator Index for the calendar year immediately
preceding the date of such adjustment, and the denominator of which shall be the GDP Implicit
Price Deflator Index for the calendar year during which the Hotel Opening Date occurred. All
amounts subject to adjustment hereunder shall be adjusted effective as of January 1 of each
year pursuant to the formula described above. If the GDP Implicit Price Deflator Index ceases
to be published, and there is no successor thereto, such other reasonably similar index as
Owner and Tenant mutually designate shall be substituted for the GDP Implicit Price Deflator
Index.
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ARTICLE 6.
USE
Section 6.1. Use.
(a) Continuous Legal Use. Tenant shall use and operate the Premises throughout
the Term as required by this Lease. In any event, the Premises shall be used only in
accordance with the Final COs therefor (or Temporary COs, to the extent that Final COs have
not been issued therefor).
(b) Scope of Use. In accordance with Tenant's obligations to meet and comply with
the Quality Standards and other provisions of this Lease, Tenant shall, from and after the Hotel
Opening Date, operate the Premises as a first class convention center hotel with appropriate
ancillary uses and amenities, and for no other purpose, without interruption (except for
Unavoidable Delays and except in the ordinary course of business). Notwithstanding the
preceding sentence, Tenant reserves the right to close or restrict access to any portion of the
Premises in connection with Alterations undertaken in accordance with the provisions of this
Lease or to such extent as may, in the reasonable opinion of Tenant's counsel, be legally
necessary to prevent a dedication thereof or the accrual of prescriptive rights to any Person or
Persons .
Section 6.2. Prohibited Uses.
(a) Without limiting the provisions of Section 6.1, Tenant shall not use or occupy
the Premises or any part of the Premises, and neither permit nor suffer the Premises to be used
or occupied, for any of the following ("Prohibited Uses"):
(i) for any unlawful or illegal business, use or purpose;
(ii) for any use which is a public nuisance; or
(iii) in such manner as may make void or voidable any insurance then in
force with respect to the Premises.
(b) Without limiting the provisions of Section 6.1 or any other provision of this
Lease, the use of any ownership structure such as time share, time interval, cooperative or
condominium (other than as contemplated by the Declaration of Condominium creating the
Public Areas constituting a portion of the Premises) shall be permitted, but shall only allow the
individual owners to own their unit, ownership interest, or share for investment purposes and
shall not include the right to possession or occupancy of rooms or space in the Hotel except
as a guest in the ordinary course of business of the Hotel. Notwithstanding the use of such
ownership structures or the ownership structure provided for under the Declaration of
Condominium, Tenant's use of the Premises shall be consistent with the operation of a first-
class convention center hotel in accordance with this Lease, and Tenant shall be bound by and
comply with this Lease and the Convention Center Agreement in accordance with their
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respective terms with respect to the entire Premises (notwithstanding the fact that portions of
the Premises are owned by other Persons in accordance with such ownership structures or the
ownership structure provided for under the Declaration of Condominium).
(c) Immediately upon its discovery of any Prohibited Use, Tenant shall take all
reasonably necessary steps, legal and equitable, to compel discontinuance of such business or
use, including, if necessary, the removal from the Premises of any Subtenants, licensees,
invitees or concessionaires, subject to applicable Requirements.
Section 6.3. Prohibition of Competing Projects.
(a) Operating Restrictions. Tenant hereby covenants for itself and its Affiliates, (i)
not to operate, without the prior consent of Owner, and (ii) to cause Hotel Manager (and its
Affiliates), not to operate, without the prior written consent of Owner, a Convention Hotel
within the area described on Exhibit 6.3 hereto (the "Territory"); provided, however, that if
any other hotel located in the Competitive Area receives any Agency Assistance, then the
foregoing restriction (the "Restriction") shall be deemed modified so as to be no more
restrictive (or no longer applicable, as the case may be) as the restriction, if any, imposed by
the Agency or the City upon any such other hotel or the operator or franchisor of such hotel.
For purposes hereof, a "Convention Hotel" shall mean a hotel containing 600 or more rooms
and 40,000 or more square feet of meeting space (including any meeting space made available
to such hotel on a long-term basis pursuant to any license or shared facilities agreements or
otherwise); "Competitive Area" shall mean the area in the City of Miami Beach located north
of 5th Street and south of 44th Street; "Agency Assistance" shall mean the receipt of in excess
of $5,000,000 in value, as adjusted for inflation (and, with respect to value payable over time,
as discounted to the date of the initial disbursement from the date of receipt using a discount
factor equal to the Treasury Yield) of Agency or City funds, or funds disbursed at the
discretion of the Agency or City (including any incentive tax benefits granted to any such hotel
which are not generally available on a non-discretionary basis to all hotels (including the Hotel)
within the Competitive Area); provided, however, that" Agency Assistance" shall not include
any funds or other value given to such hotel which is of a type that the Agency or City, as the
case may be, would customarily bestow upon such hotel in the usual and customary discharge
or performance of its obligations or functions as a governmental entity, including, without
limitation, the installation, repair or enhancement of off-site infrastructure located in the
Competitive Area. For purposes hereof, the "Treasury Yield" shall mean the yield for the
then most recently issued United States Treasury obligations (excluding those commonly known
as "flower bonds") with a maturity date (month and year) as close as possible to the number
of years during which the Agency Assistance shall be payable (month and year) using the
average of the yield rates as most recently (to the date of calculation) published in The Wall
Street Journal or, if The Wall Street Journal no longer publishes such information, in another
authoritative source reasonably selected by Owner.
(b) Exclusions from Restrictions. Notwithstanding anything to the contrary
contained in Subsection (a) above, the Restriction shall terminate or exclude certain properties,
as described below, as applicable, upon the occurrence of any of the following events:
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(i) if (x) the Hotel is acquired by a Person already owning two (2) or more
hotels as part of a chain (a "Hotel Chain"), (y) the Hotel is acquired by a Person who is an
Affiliate of a Hotel Chain, or (z) Tenant or Hotel Manager, or an Affiliate of either, purchases
a Hotel Chain, then in any such case the Restriction shall not be applicable to any hotels
comprising a portion of the Hotel Chain at the time the Hotel is purchased or the Hotel Chain
is acquired, as applicable;
(ii) upon the purchase by Tenant of the Owner's Interest in the Premises,
the Restriction shall terminate; and
(iii) upon the termination of the Redevelopment Plan (without regard to any
extensions thereof), the Restriction shall terminate.
(c) Enforcement. Tenant acknowledges that Owner will be irreparably harmed in
the event Tenant violates the Restriction and that money damages would be inadequate to
compensate Owner for such harm. Consequently, Tenant agrees that Owner, in addition to all
of its rights and remedies contained herein, shall have the right to apply for, seek and demand
injunctive relief to compel the cure of such violation.
Section 6.4. Ouality Standards.
(a) First Class Convention Center Hotel. (i) Tenant shall operate, maintain and
manage, or shall cause the operation, maintenance and management of, the Hotel as a first
class, convention center hotel, which Hotel shall contain first class facilities and services
customarily found in convention center hotels, including, without limitation, guest rooms,
reservation services, front door and check-in services and facilities, banquet facilities,
convention and meeting services and facilities, multiple food and beverage outlets, room
service, bell service, laundry and valet service and a health and fitness facility (the "Facilities
and Services"), at the level of quality provided by the Benchmark Hotels, as provided herein,
consistent with the Hotel's physical facilities (as supplemented by FF&E expenditures pursuant
to this Lease).
(ii) Tenant will maintain the appearance (without regard to matters of taste as
the same relate to decor, styling and aesthetics) and quality of the Hotel, the Facilities and
Services and the FF&E therein, and will conduct the operation and management of the Hotel
and its Facilities and Services, or cause the same to be managed and operated, at a level of
quality comparable to that provided at the Benchmark Hotels as determined in accordance with
this Section 6.4( d). In order to measure the level of quality of the Hotel and the Benchmark
Hotels, the parties have established the Quality Standard, consisting of the Physical Standards
and the Operational Standards which are more fully described in Section 6.4(c).
(b) Benchmark Hotels. (i) Prior to the date hereof, the parties have selected the
comparable first class convention center hotels (which number at least three but no more than
five) listed on Exhibit 6.4(b) hereof (the "Benchmark Hotels") to be representative of the
level of Quality Standard to be achieved by Tenant with respect to the Hotel pursuant to
Section 6.4(a) above. The Benchmark Hotels shall, subject to the provisions of this Lease,
DOB:[04984.DOCS .MIAMI]GLEASE _9-19-96
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be reestablished as of the fifth (5th) anniversary of the Hotel Opening Date and every five (5)
years thereafter (the "Benchmark Anniversary") as follows:
commencing six (6) months prior to each Benchmark
Anniversary, Owner and Tenant shall, in order to determine the
successor Benchmark Hotels by the next occurring Benchmark
Anniversary, meet and in good faith negotiate the selection of at
least three (3), but no more than five (5), comparable first class,
convention center hotels to serve as Benchmark Hotels until the
same shall be reselected pursuant to the terms hereof; provided,
however, that if Owner and Tenant shall not have agreed on the
successor Benchmark Hotels within six (6) months after the
applicable Benchmark Anniversary, then either party may, not
later than thirty (30) days thereafter, by written notice to the
other determine that a "Dispute" has arisen which shall be
subject to the provisions of Article 31. Until such time as the
successor Benchmark Hotels have been determined pursuant to
the terms thereof, the previous Benchmark Hotels shall continue
as such for all purposes under this Lease.
(ii) The parties acknowledge that, unless otherwise agreed in writing, the Benchmark Hotels
shall consist of first class, convention center hotels in the continental United States which have
been designed and constructed generally at a level comparable to that of the Hotel and compete
generally for the same business at the same market-level as the Hotel.
(c) Physical and Operational Standards. The parties have set forth on Exhibit 6.4(c)
hereof the components of the physical standards (the "Physical Standards") and the
operational standards (the "Operational Standards" together with the Physical Standards, the
"Quality Standard") which form the basis on which the Hotel and the Benchmark Hotels shall
be evaluated from time to time as set forth in this Lease. Also set forth on Exhibit 6.4(c) are
(i) the relative weights for each of the components of the Quality Standard (the "Weights"),
which Weights are to be taken into account by the Rater during its evaluation as provided
below, and (ii) certain components of the Quality Standard which the parties have designated
as the "Designated Components". In order to assure that the Hotel continues to be operated
and maintained as a first class, convention center hotel in accordance with this Lease, the
parties recognize that the components of the Quality Standard, as well as their respective
Weights, may require modification from time to time during the term of this Lease and hereby
agree that subject to the provisions of this Lease, the components of the Quality Standard shall
be re-evaluated as of the tenth (10th) anniversary of the Hotel Opening Date and every ten (10)
years thereafter (the "Quality Standard Anniversary") as follows:
commencing six (6) months prior to each Quality Standard
Anniversary, Owner and Tenant, in order to determine the need,
if any, for re-evaluation of the Quality Standard, and the Weights
thereof, by the next occurring Quality Standard Anniversary,
shall meet and in good faith re-evaluate the components of the
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Quality Standard and their respective Weights and make such
changes therein, if any, which are consistent with this Lease as
they may deem necessary, to serve as the Quality Standard until
the same shall be re-evaluated pursuant to the terms hereof;
provided, however, that if Owner and Tenant shall not have
agreed with respect to the foregoing within six (6) months after
the applicable Quality Standard Anniversary, then either party
may, not later than 30 days thereafter, by written notice to the
other determine that a "Dispute" has arisen which shall be
subject to the provisions of Article 31. Until such time as the
successor components of the Quality Standard and their
respective Weights shall be determined pursuant to the terms
hereof, the existing components and their respective Weights
shall remain in full force and effect.
Any such modification of the Quality Standard shall be consistent with this Lease and no such
modification shall require a re-evaluation of matters of taste as the same relate to the decor,
styling and aesthetics of the Hotel or of the Hotel's design (i.e., the design of the physical
structure (building and appurtenances and Building Equipment) which has been or will be
determined with the approval of Owner under the Hotel Development Agreement).
(d) Report on Ouality Review.
(i) The Rater's report on Quality Review (the "Quality Report") shall (1)
address each component of the Quality Standard with specificity comparing the level of quality
at the Hotel with the level of quality at the Benchmark Hotels, (2) address whether a Quality
Deficiency or Designated Component Deficiency shall have occurred and (3) take into account
the age of the Hotel and such other matters as the Rater deems relevant to the evaluation of
the Hotel in accordance with this Lease. The Rater shall consult with Owner and Tenant prior
to issuing the Quality Report.
(ii) In conducting its Quality Review and measuring the Hotel's Quality
Standard, the Rater shall not take into account matters (x) of taste as the same relate to the
decor, styling and aesthetics of the Hotel, or (y) relating to the design, construction or
operation of the Garage. In addition, the Rater shall recognize that the Quality Standard is not
intended to evaluate the Hotel's design (i.e., the design of the physical structure (building and
appurtenances and Building Equipment) which has been or will be determined with the
approval of Owner under the Hotel Development Agreement).
(iii) If the Rater determines that the Hotel has failed to provide to its guests a
level of quality with respect to the Quality Standard substantially comparable to that provided
at the Benchmark Hotels (on average), then there shall be deemed to have occurred a "Quality
Deficiency" .
(iv) If the Rater determines that no Quality Deficiency has occurred, but has
determined that the level of quality of any Designated Component is unacceptable as a
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component of a first-class convention center hotel based on the level of quality of any such
Designated Component at the Benchmark Hotels (on average), then there shall be deemed to
have occurred a "Designated Component Deficiency".
(v) In the event Tenant or Owner, each acting reasonably, contests the
determination of the Rater with respect to the existence of a Quality Deficiency or a Designated
Component Deficiency as contained in the Quality Report, a Dispute shall be deemed to have
arisen which shall be subject to the arbitration provisions of Article 31 hereof.
(e) Rating of Hotel
(i) Commencing on the fourth (4th) anniversary of the Hotel Opening Date,
Owner shall have the right to cause the Rater to conduct an evaluation of the Hotel and the
Benchmark Hotels in accordance with the provisions of this Lease (a "Quality Review") not
more frequently than three (3) times during any ten (10) year period thereafter.
(ii) In addition, notwithstanding the foregoing, during the twelve (12) month
period commencing six (6) months after any Sale of the Hotel by Tenant or a Management
Transfer or a Management Engagement, Owner shall have the right to require one additional
Quality Review.
(iii) Before requiring a Quality Review, if Owner believes Tenant has failed to
meet the Quality Standard, Owner shall endeavor to give Tenant sixty (60) days prior written
notice during which time the parties shall meet in a good faith effort to attempt to resolve any
claim by Owner that Tenant has failed to meet the Quality Standard.
(iv) All costs of a Quality Review shall be borne as follows:
(1) By Tenant, if the Quality Review determines that there has been a
Quality Deficiency, and such costs shall not be an Operating Expense
or deductible in determining Hotel Operating Profit; provided, however,
that, if following a foreclosure of a Recognized Mortgage or an
assignment of lease in lieu of the foreclosure of a Recognized
Mortgage, Tenant is a Recognized Mortgagee or an Affiliate of a
Recognized Mortgagee, then during the period in which such
Recognized Mortgagee or Affiliate of a Recognized Mortgagee is
Tenant such costs shall be an Operating Expense in determining Hotel
Operating Profit.
(2) By Tenant, if the Quality Review determines that there has been no
Quality Deficiency, but that there has been a Designated Component
Deficiency, and such costs shall be an Operating Expense and deducted
in determining Hotel Operating Profit.
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(3) By Owner, if the Quality Review determines that there has been no
Quality Deficiency or Designated Component Deficiency, and such
costs shall be paid by Owner from its own funds.
(f) Designated Component Deficiency: Remedy. If the Quality Report concludes
that a Designated Component Deficiency has occurred, then:
(i) Tenant shall, within sixty (60) days after the receipt of the Quality Report,
prepare, commence and diligently pursue implementation of a Remediation Plan which in the
opinion of the Rater is designed to remedy such Designated Component Deficiency within a
reasonable amount of time given the nature of such Designated Component Deficiency; but in
all events (i) to the extent the Remediation Plan addresses deficiencies in the Operational
Standards, the Remediation Plan shall be designed to remedy such deficiencies within a period
of six (6) months to twelve (12) months (as determined by the Rater taking into account the
adverse impact of the deficiency on the Hotel and the amount of time reasonably required to
remedy the same as well as any adverse impact on the on-going operations of the Hotel (such
as bookings and Tenant's ability to have access to the area(s) to be repaired)) from
establishment of the Remediation Plan and (ii) to the extent the Remediation Plan addresses
deficiencies in the Physical Standards, the Remediation Plan shall be designed to remedy such
deficiencies within four (4) years from establishment of the Remediation Plan. If Tenant and
the Rater cannot reasonably agree upon a Remediation Plan, a Dispute shall be deemed to have
arisen, which shall be subject to the provisions of Article 31.
(ii) If the remediation of the Designated Component Deficiency relates to a
Physical Standard which requires the expenditure of funds from the FF&E Reserve Account,
then, at Tenant's election, Hotel Manager may be required to deposit the Additional Reserve
Deposit into the FF&E Reserve Account in the manner set forth in Article 16 hereof until such
time as the Designated Component Deficiency is remedied; provided, however, that if such
Designated Component Deficiency is not remedied within three (3) years from establishment
of the Remediation Plan, Hotel Manager shall be required, until such deficiency is cured, to
deposit the Additional Reserve Deposit into the FF&E Reserve Account pursuant to Article 16
and Tenant shall cause an amount equal to the Remediation Percentage multiplied by the funds
in the FF&E Reserve Account (on an annual basis) to be expended on remediation of the
deficiencies in the Physical Standards addressed in the Remediation Plan; provided such use
of FF&E Reserve Account funds is otherwise permitted under this Lease.
(Hi) Owner shall have the right to cause Rater to monitor the implementation
of such Remediation Plan (the cost of which shall be an Operating Expense) and, to the extent
Tenant shall fail to implement such plan in accordance with its terms, no Event of Default shall
be deemed to occur, but Owner shall be entitled to specific performance to ensure such
implementation.
(g) Ouality Deficiency: Remedy. If the Quality Report concludes that a Quality
Deficiency has occurred, then:
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(i) Tenant shall, within sixty (60) days after receipt of the Quality Report,
prepare, commence and diligently pursue implementation of a Remediation Plan which in the
opinion of the Rater is designed to remedy such Quality Deficiency within a reasonable amount
of time given the nature of such Quality Deficiency; but in all events (i) to the extent the
Remediation Plan addresses deficiencies in the Operational Standards, the Remediation Plan
shall be designed to remedy such deficiencies within a period of six (6) months to twelve (12)
months (as determined by the Rater after taking into account the adverse impact of the
deficiency on the Hotel and the amount of time reasonably required to remedy the same as well
as any adverse impact on the on-going operations of the Hotel (such as bookings and Tenant's
ability to have access to the area(s) to be repaired)) from establishment of the Remediation Plan
and (ii) to the extent the Remediation Plan addresses deficiencies in the Physical Standards, the
Remediation Plan shall be designed to remedy such deficiencies within four (4) years from
establishment of the Remediation Plan. If Tenant and the Rater cannot reasonably agree upon
a Remediation Plan, a Dispute shall be deemed to have arisen, which shall be subject to the
provisions of Article 31.
(ii) Until such time as the Quality Deficiency is remedied, if the Remediation
Plan provides for the expenditure of funds for FF&E, then the Additional Reserve Deposit shall
be deposited into the FF&E Reserve Account pursuant to Article 16 and Tenant shall cause
an amount equal to the Remediation Percentage multiplied by the funds in the FF&E Reserve
Account (on an annual basis) to be expended on remediation of the deficiencies in the Physical
Standards addressed in the Remediation Plan; provided such use of funds in the FF&E Reserve
Account is otherwise permitted under this Lease.
(iii) If the Rater shall determine that Tenant has failed to remedy the
deficiencies in the Operational Standards addressed by the Remediation Plan as provided above
within the appropriate time period provided above, Owner shall provide Tenant with notice of
such failure. If the Rater thereafter determines that Tenant has failed to remedy such
deficiencies within three (3) months after Tenant's receipt of such notice, the same shall
constitute an Event of Default hereunder, but in all cases subject to the provisions of Article
25.
(iv) If the Rater shall determine that Tenant has failed to remedy the
deficiencies in the Physical Standards addressed by the Remediation Plan within four (4) years,
Owner shall provide Tenant with notice of such failure. If the Rater thereafter determines that
Tenant has failed to remedy such deficiencies within one (1) year after Tenant's receipt of
Owner's notice (the "Extension Period"), the same shall constitute an Event of Default
hereunder, but in all cases subject to the provisions of Article 25. To the extent funds in the
FF&E Reserve Account are not sufficient to accomplish the remediation of the deficiencies in
the Physical Standards addressed by the Remediation Plan during the Extension Period, Tenant
shall provide the funds necessary to complete such remediation by the expiration of the
Extension Period. For so long as (i) MB Redevelopment (or another Affiliate of LHHC) is
the Tenant hereunder and (ii) LHHC (or a Person in which LHHC owns a Controlling Interest)
owns a Controlling Interest in Tenant, any funds so expended by Tenant pursuant to a
Remediation Plan in excess of the funds available in the FF&E Reserve Account shall be
amortized over the useful life of the FF&E (as determined in accordance with the Code) to
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which such monies are allocable and deducted as an Operating Expense in accordance with
such amortization schedule. If a Person other than MB Redevelopment (or another Affiliate
of LHHC) shall be the Tenant hereunder, any such excess funds shall not be amortized or
otherwise deducted as an Operating Expense; provided, however, that if following the
foreclosure or assignment of lease in lieu of the foreclosure of a Recognized Mortgage, Tenant
is a Recognized Mortgagee or an Affiliate of a Recognized Mortgagee, then during the period
in which such Recognized Mortgagee or Affiliate of a Recognized Mortgagee is Tenant any
such excess funds may be amortized or otherwise deducted as an Operating Expense.
(v) Owner shall have the right to cause Rater to monitor the implementation of
the Remediation Plan (the cost of which shall be an Operating Expense) and, to the extent
Tenant shall fail to implement such plan in accordance with its terms, Owner shall be entitled,
in addition to any other remedy available to Owner under this Lease, to specific performance
to ensure such implementation.
(h) Remediation Plan. Any Remediation Plan pursuant to Section 6(1) or Section
6(g) shall be subject to and consistent with the requirements of Section 6( d)(ii} and the other
provisions of this Lease. Accordingly, except as provided in the next sentence, a Remediation
Plan may not require structural changes or the construction of additions to, or the removal of
any portion of, the Hotel. Subject to the foregoing, a Remediation Plan to cure a Quality
Deficiency may provide, in addition to FF&E expenditures in accordance with Section 6(g)(ii),
for reconfigurations which may involve structural changes to portions of the Hotel other than
the guest rooms which (i) in the aggregate will not cost more than ten percent (10%) of the
value of the expenditures required by such Remediation Plan; (ii) do not require modifications
to the Hotel's certificate of occupancy and (Hi) do not conflict with any Requirements. Except
as otherwise provided in the last sentence of Section 6(g)(iv) and subject to the penultimate
sentence of such subsection, all costs incurred in complying with any Remediation Plan shall
be an Operating Expense (except to the extent expenditures made pursuant to the Remediation
Plan are out of the FF&E Reserve Account).
(i) Cooperation. Tenant shall cooperate with Owner (and the Rater) in order to
enable Owner to exercise its rights pursuant to this Article, which cooperation shall include
(subject to the provisions of Section 28.1(1)), without limitation. the inspection by Owner (and
the Rater) of all records relating to customer satisfaction (i.e., complaints) and the inspection
of the Premises by Owner, the Rater and their representatives, upon reasonable advance notice
to Tenant and no such inspection shall unreasonably interfere with the operations of the Hotel.
No advance notice shall be necessary in connection with the inspection of those areas of the
Premises accessible to the general public.
(j) Certain Definitions.
(i) "Additional Reserve Deposit" shall mean one (1 %) percent of Hotel
Revenue or, if Net Cash Flow After Debt Service is inadequate to fund such amount, then such
lesser amount as is available from Net Cash Flow After Debt Service.
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(ii) "Remediation Percentage" shall mean the percentage obtained by dividing
3.5 % by the aggregate percentage obtained by adding the Additional Reserve Deposit
percentage equivalent to 4 %. By way of example, if the Additional Reserve Deposit is
equivalent to 1 % of Hotel Revenue, then the Remediation Percentage shall equal the quotient
obtained by dividing 3.5% by 5%, Le., 70%.
(iii) "Rater Qualifications" shall mean the following qualifications required for
any Person to be qualified to be a Rater:
(I) The Rater shall have extensive experience in evaluating the qualitative
performance of hotels;
(II) The Rater shall not have been employed or engaged by a party
hereto or its hotel consultants within the previous five (5) year period, except as a "Rater"
pursuant to the terms of this Lease; and
(III) The Rater shall (w) be neutral and independent of the parties to
this Lease and their then current respective hotel consultants; (x) not be affiliated with either
party's auditors; (y) not have a conflict of interest with (including, without limitation, any bias
towards or against) a party hereto or its then current hotel consultants; and (z) have (1)
experience in evaluating the qualitative performance of hotels and (2) a business reputation, in
each case comparable to that as of the date hereof of the Persons listed in Section 6.4(k) or
any other Person employed as a Rater hereunder as of the date such Person was designated to
serve as a Rater hereunder.
(k) Rater: Designation of Rater.
Prior to the commencement of a Quality Review, Owner shall notify Tenant of Owner's
choice for the "Rater" to perform the Quality Review. Such notice shall include a statement
describing how such proposed Rater has all of the Rater Qualifications in accordance with the
standards set forth herein (including, without limitation, a statement from the Owner that its
selected Rater is willing and able to perform the functions contemplated by this Lease, and is
otherwise qualified to serve as the Rater hereunder, including, without limitation, that Owner
knows of no conflict of interest between its selected Rater and a party hereto and/or its hotel
consultants). Within ten (10) business days after receipt of Owner's notice, Tenant shall notify
Owner either that Tenant (i) approves of Owner's choice for the Rater, or (ii) believes that the
Rater selected by Owner is not qualified to serve as the Rater hereunder (including, without
limitation, as a result of a conflict of interest with a party hereto and/or its hotel consultants),
and such notice shall state Tenant's reasons for disapproval with reasonable specificity. Failure
of Tenant to so notify Owner within such ten (10) business day period shall be deemed to
constitute Tenant's approval of the Rater selected by Owner. If Tenant so disapproves of
Owner's selection for the Rater, the parties shall, within ten (10) business days after Tenant's
notice, meet and endeavor in good faith to select an alternate Rater having all of the Rater's
Qualifications .
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If the parties are unable to mutually designate an alternate Rater within thirty (30) days
after the giving of Tenant's notice as provided above, such alternate Rater shall be determined
by the arbitrator in accordance with the provisions of Article 31 hereof; provided, however,
that the arbitrator shall be entitled to reinstate the disputed Rater as the Rater for purposes
hereof if the arbitrator shall find that claims regarding the disputed Rater are without merit.
Tenant and Owner agree not to (i) designate or approve any Rater of which such party has
knowledge of an actual or potential conflict of interest and (ii) employ any Rater (except as the
"Rater" pursuant to the terms of this Lease) within the three (3) year period after such Rater
has performed a Quality Review.
As of the date hereof, the parties agree that the Persons listed below qualify as an
acceptable Rater; provided, however, that Tenant may object to Owner's designation of such
Rater if Owner selects such Rater for a Quality Review and at such time Tenant believes that
the Rater is not qualified to serve as the Rater hereunder (including, without limitation, as a
result of a conflict of interest with a party hereto):
(1) David Richey Assoc.;
(2) The Gettys Group; and
(3) Linda Novey Enterprises, Inc.
Section 6.5. Owner's Use of Public Areas.
Tenant agrees to make the appropriate meeting rooms within the Public Areas available
for the Agency's and the City's use for meetings of the City's and Agency's boards,
committees, agencies and governing bodies for an aggregate of ten (10) days during each Lease
Year, provided the Agency or City, as applicable, gives notice of its intent to use such meeting
rooms at least thirty (30), but no more than sixty (60), days prior to the date the Agency or
City, as applicable, desires to utilize such meeting rooms and provided further that the dates
of such intended use do not conflict with any previously scheduled uses of the meeting rooms
within the Public Areas. In connection with such use, the Agency or City, as applicable,
agrees to pay Tenant the rate charged by Tenant to the general public for the use of such
meeting rooms. The City's or Agency's right to use the meeting rooms within the Public Areas
as aforesaid shall not be assignable. Nothing herein shall be deemed to limit the Agency's or
City's ability to negotiate for the use of such meeting rooms to the same extent such meeting
rooms are made available to the general public in the ordinary course of the operations of the
Hotel.
Section 6.6. Convention Center.
Tenant has entered into an agreement with the City (or its designated nominee) (the
"Convention Center Agreement"), pursuant to which, among other things, (i) Hotel Facilities
and Services shall be made available for support of the City of Miami Beach Convention
Center events and (ii) Tenant and the City shall undertake joint marketing efforts, in
accordance with the terms thereof. The term of the aforesaid agreement shall terminate upon
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the earlier to occur of (x) March 30, 2023 and (y) subject to Unavoidable Delays, the City's
failure to maintain the location of the Miami Beach Convention Center at the site bounded by
the streets in Miami Beach, Florida that as of the date hereof bear the following names:
Convention Center Drive, Dade Boulevard, Washington Avenue and 17th Street, with a gross
building area of no less than one million (1,000,000) square feet and exhibit hall capacity
aggregating not less than five hundred thousand (500,000) square feet (the "Convention
Center") .
Section 6.7. Exceptions to Use Covenants.
Notwithstanding the foregoing provisions of this Article 6, if, at any time during the
Term, the Convention Center ceases to be open and available for business (except for
Unavoidable Delays), including, without limitation, as a result of a condemnation or casualty,
then (a) during such period of time, Tenant shall be required to operate the Premises as a hotel
(but shall not be required to operate the Premises as a first-class convention center hotel), and
for no other purpose (except as permitted hereunder), without interruption (except for
Unavoidable Delays and except in the ordinary course of business), and (b) the provisions of
Sections 6.4 and 6.5 shall be inapplicable during such period of time and for twelve (12)
months thereafter. In addition, if within ninety (90) days following the date that the
Convention Center ceases to be open and available for business (except for Unavoidable
Delays), the City does not elect, by Notice to Tenant, to restore and/or re-open the Convention
Center, and, thereafter, diligently pursue the completion of any such restoration or re-opening,
then for the remainder of the Term, the provisions of Sections 6.4, 6.5 and 6.6 shall be
inapplicable and, notwithstanding the provisions of Section 6.1(b), Tenant shall be required
to operate the Premises as a hotel (but shall not be required to operate the Premises as a first
class convention center hotel), and for no other purpose (except as permitted hereunder),
without interruption (except for Unavoidable Delays and except in the ordinary course of
business) .
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ARTICLE 7.
INSURANCE
Section 7. 1. Insurance Requirements.
(a) Liability Insurance. At all times during the Term, Tenant, at its sole cost and
expense (as an Operating Expense), shall carry or cause to be carried insurance against liability
with respect to the Premises and the operations related thereto, whether conducted on or off
the Premises in an amount of not less than fifty million dollars ($50,000,000) per occurrence,
combined single limit, and designating Tenant as a named insured and Owner, the City and,
if required by a Recognized Mortgage, a Recognized Mortgagee as additional insureds. Such
insurance shall meet all of the standards, limits, minimums and requirements described in
Section 7.7.
(b) Property Insurance. At all times during the Term, Tenant at its sole cost and
expense, as an Operating Expense, shall carry or cause to be carried "All Risk" (or its
equivalent) property damage insurance protecting Tenant, Owner and the City as their interests
may appear against loss to the Premises and Improvements and meeting all of the standards,
limits, minimums and requirements described in Section 7.8.
(c) Other Insurance. At all times during the Term, Tenant shall procure and carry
insurance meeting all of the standards, limits, minimums, and requirements described in
Section 7.9.
(d) Construction Insurance. Prior to the commencement of any Construction Work,
Tenant shall procure or cause to be procured, and after such dates shall carry or cause to be
carried, until final completion of such work, in addition to and not in lieu of the insurance
required by the foregoing subsections (a), (b), and (c), the insurance described in Section 7.10.
Section 7.2. Treatment of Proceeds.
(a) Proceeds of Casualty Insurance in General. Insurance proceeds payable with
respect to a property loss shall be payable either to a Recognized Mortgagee or other
Institutional Lender pursuant to a mutually acceptable insurance trust agreement, either of
which shall hold such proceeds in trust for the purpose of paying the cost of the Casualty
Restoration, or shall be payable to Tenant with respect to insurance proceeds not exceeding
$1,000,000 (adjusted for inflation) per occurrence, and such proceeds shall be applied to the
payment in full of the cost of such Casualty Restoration in accordance with the provisions of
Article 8.
(b) Proceeds of Rent Insurance. Rent Insurance referred to in Section 7.9 shall be
carried in the name of Tenant as named insured and shall be payable to Owner and Tenant to
be applied to Base Rent for the period from the occurrence of the damage or destruction until
completion of the Restoration as determined in accordance with the provisions of Article 8.
Without limiting the foregoing provisions of this Section 7.2(b), if required by a Recognized
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Mortgage, such amounts shall be paid to a Recognized Mortgagee so long as all Base Rent is
first paid to Owner.
(c) Cooperation in Collection of Proceeds. Tenant, Owner and any Recognized
Mortgagee shall cooperate in connection with the collection of any insurance proceeds that may
be due in the event of a loss, and Tenant, Owner and any Recognized Mortgagee shall as soon
as practicable execute and deliver such proofs of loss and other instruments as may be required
of Tenant, Owner or any Recognized Mortgagee, respectively, for the purpose of obtaining the
recovery of any such insurance proceeds.
(d) Adiustments for Claims. All property insurance policies required by this Article
shall provide that all adjustments for claims with the insurers involving a loss in excess of
$1,000,000, adjusted for inflation be made jointly with Tenant, Owner and the Recognized
Mortgagee.
Section 7.3. General Provisions Applicable to All Policies.
(a) Insurance Companies. All of the insurance policies required by this Article shall
be procured from companies licensed or authorized to do business in the State of Florida that
have a rating in the latest edition of "Best's Key Rating Guide" of" A:X" or better or another
comparable rating reasonably acceptable to Owner, considering market conditions.
(b) Required Forms. All references to forms and coverages in this Article shall be
those used by the Insurance Services Organization (ISO) or equivalent forms reasonably
satisfactory to Owner in all material respects.
(c) Required Certificates. Certificates of insurance evidencing the issuance of all
insurance required by this Article, describing the coverage and providing for thirty (30) days
prior notice to Owner by the insurance company of cancellation or non-renewal, shall have
been delivered to Owner by the Commencement Date, and in the case of any policies replacing
or renewing any policies expiring during the Term, not later than thirty (30) days before the
expiration dates of any expiring policies. The certificates of insurance shall be issued by or
on behalf of the insurance company and shall bear the original signature of an officer or duly
authorized agent having the authority to issue the certificate. The insurance company issuing
the insurance shall also deliver to Owner, together with the certificates, proof reasonably
satisfactory to Owner that the premiums for at least the first year of the term of each policy
(or installment payments to the insurance carrier then required to have been paid on account
of such premiums) have been paid. During the performance of any Construction Work, Tenant
shall deliver to Owner an entire duplicate original or a copy (certified by Tenant to be true,
complete and correct) of each policy. At all other times, Tenant shall deliver to Owner an
entire duplicate original or a copy (certified by Tenant to be true, complete and correct) of
each policy within a reasonable period of time after Owner's request therefor. Tenant shall
notify Owner of any material changes in the coverage provided under any policy promptly after
requesting an insurance company to make such change or receiving any notice from an
insurance company advising Tenant of any such change; provided, however, that no such
change may reduce or otherwise modify the insurance coverage required under this Lease.
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(d) Comoliance With Policy Requirements. Tenant shall not violate or permit to
be violated any of the conditions, provisions or requirements of any insurance policy required
by this Article, and Tenant shall perform, satisfy and comply with, or cause to be performed,
satisfied and complied with, all conditions, provisions and requirements of all insurance
policies.
(e) Required Insurance Policy Clauses. Each policy of insurance required to be
carried pursuant to the provisions of this Article and each certificate issued by or on behalf of
the insurer shall contain (i) a provision stating substantially that no act or omission of Tenant
(or any other Person) or any use or occupation of the Premises for purposes more hazardous
than are permitted by the policy shall invalidate the policy as to Owner or affect or limit the
obligation of the insurance company to pay to Owner the amount of any loss sustained and that
no act or omission of Owner shall invalidate the policy as to Tenant or affect or limit the
obligation of the insurance company to pay to Tenant the amount of any loss; (ii) a written
waiver of the right of subrogation against all of the named insureds and additional insureds,
including Owner in its capacity as owner of the Land and the Public Areas and any Recognized
Mortgagee named in such policy, with respect to losses payable under such policy; (iii) a
clause designating Owner, the City and any Recognized Mortgagee as loss payee or additional
insured, as their interests may appear for losses in excess of $1,000,000, adjusted for inflation;
and (iv) an agreement by the insurer that such policy shall not be canceled, materially
modified, or denied renewal without at least thirty (30) days prior written notice to Owner and
the holder of the Recognized Mortgage named under a standard New York form of mortgagee
endorsement or its equivalent, specifically covering, without limitation, cancellation or
non-renewal for non-payment of premium.
(f) Separate Insurance. Tenant shall not carry separate liability or property
insurance concurrent in form or contributing in the event of loss with that required by this
Lease to be furnished by Tenant, unless Owner, the City and any Recognized Mortgagee are
included therein as additional insureds with respect to liability or loss payee with respect to
property, as their interests may appear, with loss payable as in this Lease provided. Tenant
shall immediately notify Owner of the carrying of any such separate insurance and shall cause
the same to be delivered as in this Lease hereinbefore required.
(g) Duration of Policies. Tenant shall procure policies for all insurance required
by any provision of this Lease for periods of not less than one (1) year and shall procure
renewals thereof from time to time at least thirty (30) days before the expiration thereof, except
that Builders' Risk Insurance shall only be renewed for the term of any construction period.
Section 7.4. Additional Coverage.
(a) Other Insurance. Tenant shall maintain such other insurance, in such
amounts as from time to time reasonably may be required by Owner, against such other
insurable hazards as at the time are commonly insured against in the case of oceanfront hotels
in South Florida of a size, nature and character similar to the size, nature and character of the
Hotel.
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(b) Adjustment of Limits. All of the limits of insurance required pursuant
to this Article 7 shall be subject to review by Owner and, in connection therewith, Tenant shall
carry or cause to be carried such additional amounts as Owner may reasonably require from
time to time, but Owner may not impose such new limits any more frequently than once in
every five (5) year period from the date of Substantial Completion of the Hotel. Any request
by Owner that Tenant carry or cause to be carried additional amounts of insurance shall not
be deemed reasonable unless such additional amounts are commonly carried in the case of
oceanfront hotels in South Florida of a size, nature and character similar to the size, nature and
character of the Hotel; provided, however, that the provisions of this subsection (b) shall not
relieve Tenant of its obligation to carry or to cause to be carried All Risk insurance in an
amount not less than the Replacement Value as provided in Section 7 . 12(a) . Except as
otherwise provided herein, Owner shall also have the right, throughout the Term, to approve
the amount of any loss deductible contained in any insurance policy required pursuant to the
provisions hereof. Tenant shall be responsible for all deductibles.
Section 7.5. No Representation as to Adequacy of Coverage.
The requirements set forth herein with respect to the nature and amount of insurance
coverage to be maintained or caused to be maintained by Tenant hereunder shall not constitute
a representation or warranty by Owner or Tenant that such insurance is in any respect
adequate.
Section 7.6. Blanket or Umbrella Policies.
The insurance required to be carried by Tenant pursuant to the provisions of this Lease
may, at Tenant's election, be effected by blanket, wrap-up and/or umbrella policies issued to
Tenant covering the Premises and other properties owned or leased by Tenant or its Affiliates,
provided such policies otherwise comply with the provisions of this Lease and allocate to the
Premises the specified coverage, including, without limitation, the specified coverage for all
insureds required to be named as insureds or additional insureds hereunder, without possibility
of reduction or coinsurance by reason of, or because of damage to, any other properties named
therein. If the insurance required by this Lease shall be effected by any such blanket or
umbrella policies, Tenant shall furnish to Owner, upon Owner's request, certificates of
insurance and copies (certified by Tenant to be true, complete and correct) of such policies as
provided in Section 7.3(c), together with schedules annexed thereto setting forth the amount
of insurance applicable to the Premises.
Section 7.7. Liability Insurance Requirements.
The insurance required by Section 7.1(a) shall consist of commercial general liability
insurance protecting against liability for bodily injury, death, property damage and personal
injury. Such insurance shall (within the limits of the insurance required by Section 7.1(a)):
(a) include a broad form property damage liability endorsement with fire
legal liability limit of not less than $150,000, subject to adjustment for inflation;
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(b) contain blanket contractual liability insurance covering written and oral
contractual liability;
(c) contain contractual liability insurance specifically covering Tenant's
indemnification obligations under Article 20, to the extent such indemnification obligation is
for an insurable risk;
(d) contain independent contractors coverage;
(e) contain a notice of occurrence clause;
(f) contain a knowledge of occurrence clause;
(g) contain an errors and omissions clause;
(h) contain coverage for suits arising from the use of reasonable force to
protect persons and property;
(i) contain an endorsement providing that excavation and foundation work
are covered and the "XCV" exclusions have been deleted;
(j) contain a waiver of completion and occupancy condition;
(k) contain no exclusions unless approved by Owner, other than the industry
standard exclusions for hotels of similar size and location;
(l) contain Products Liability/Completed Operations coverage; and
(m) provide for a deductible determined by Tenant, but not more than
$150,000 per loss, subject to adjustment for inflation.
Section 7.8. Property Insurance Requirements.
The insurance required by Section 7.1(b) shall consist at least of property damage
insurance under an "All Risk" policy or its equivalent covering the Premises and all
Improvements with replacement cost valuation and a stipulated value endorsement (to be
provided not later than promptly following the Substantial Completion of the Hotel) in an
amount not less than the full Replacement Value (determined in accordance with Section 7.12)
and including the following coverages or clauses:
(a) coverage for physical loss or damage to the Improvements;
(b) a replacement cost valuation without depreciation or obsolescence clause;
(c) debris removal coverage;
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(d) provision for a deductible determined by Tenant, but not (for other than
flood or windstorm) more than $150,000 per loss, subject to adjustment for inflation;
(e) contingent liability from operation of building laws;
(f) demolition cost for undamaged portion coverage;
(g) increased cost of construction coverage;
(h) an agreed or stipulated amount endorsement (to be provided not later
than promptly following the Substantial Completion of the Hotel) in an amount not less than
the full Replacement Value negating any coinsurance clauses;
(i) flood coverage (to the extent available at commercially reasonable rates,
limits and deductibles);
(j) windstorm coverage (to the extent available at commercially reasonable
rates, limits and deductibles);
(k) coverage for explosion caused by steam pressure-fIred vessels (which
coverage may be provided under a separate policy reasonably approved by Owner);
(1) business interruption coverage in accordance with Section 7.9;
(m) a clause designating Owner, the City and a Recognized Mortgagee as
additional insured; and
(n) contain no exclusions unless approved in writing by Owner, other than
the industry standard exclusions for hotels of similar size and location.
Tenant shall be named insured, and Owner, the City and any Recognized Mortgagee
shall be additional insureds. The Recognized Mortgagee or Owner shall be designated loss
payee on such All Risk policy for the benefit of Owner, Tenant and any Recognized
Mortgagee. If not included within the All Risk coverage above, Tenant shall also carry or
cause to be carried coverage against damage due to (i) water and sprinkler leakage and
collapse, which shall be written with limits of coverage of not less than the full Replacement
Value per occurrence, with a deductible of not more than $150,000, subject to adjustment for
inflation and (ii) flood, which shall be written with limits of coverage not less than
$10,000,000, with a deductible of not more than $500,000, subject to adjustment for inflation,
to the extent available at commercially reasonable rates and deductibles.
If Tenant elects to insure Tenant's personal property used in connection with the
Premises, the replacement value of such personal property shall be added to the amount of
insurance required by this Section.
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For the purposes of this Section 7.8, any rate, limit or deductible shall be
"commercially reasonable" if such rate, limit or deductible is comparable to the rates, limits
or deductibles in the insurance carried by oceanfront hotels in South Florida of a size, nature
and character similar to the size, nature and character of the Hotel.
Section 7.9. Other Insurance Requirements.
The insurance required by Section 7.1(c) shall consist at least of the following:
(a) Business Interruption Insurance to include Rent Insurance on an "All
Risk" basis in an amount equal to (i) prior to the Substantial Completion of the Hotel, not less
than the annual Base Rent and (ii) following the Substantial Completion of the Hotel, not less
than the aggregate amount of annual Base Rent and annual Percentage Rent, if any (based upon
the then current budget prepared by Tenant). The insurance specified in this subsection shall:
(i) provide coverage against all insurable risks of physical loss or
damage to the Improvements;
(ii) Extra Expense coverage, with a limit of at least $1,000,000 to
cover overtime and other extra costs incurred to expedite repairing or rebuilding the damaged
portion of the Premises.
(iii) provide for coverage through the attainment of pre-existing
business levels;
(iv) contain flood and windstorm coverage to the extent available at
commercially reasonable rates, limits and deductibles;
(v) contain explosion caused by steam pressure fired vessels coverage
(which coverage may be provided under a separate policy reasonably approved by Owner);
(vi) provide for a deductible determined by Tenant, but for other than
flood or windstorm not more than $150,000 per loss, subject to adjustment for inflation;
(vii) designate Owner, Tenant and any Recognized Mortgagee as loss
payee but shall be payable only to Tenant with respect to Business Interruption proceeds not
exceeding $500,000 per occurrence; and
(viii) contain no exclusions, unless approved by Owner, other than
industry standard exclusions for hotels of similar size and location.
(b) Statutory Workers' Compensation and Disability Benefits Insurance and
any other insurance required by law covering all persons employed by Tenant, contractors,
subcontractors, or any entity performing work on or for the Premises or the Improvements
(unless and to the extent provided by such other parties), including Employers Liability
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coverage, all in amounts not less than the statutory minimum, except that Employers Liability
coverage shall be in an amount not less than $1,000,000.
(c) Boiler and Machinery Insurance, covering the entire heating, ventilating
and air-conditioning systems, in all its applicable forms, including Broad Form, boiler
explosion, extra expense and loss of use in an amount not less than the replacement cost of
such heating, ventilating and air conditioning systems, located on any portion of the Premises
and other machinery located on any portion of the Premises, which shall designate Tenant as
named insured and loss payee and designate Owner, the City and any Recognized Mortgagee
as additional insureds.
Section 7.10. Construction Insurance Requirements.
The insurance required by Section 7.1(d) shall consist at least of the following:
(a) Builder's Risk Insurance (standard" All Risk" or equivalent coverage)
in an amount not less than the cost of reconstruction, written on a completed value basis or a
reporting basis, for property damage protecting Tenant, Owner, the City, the general
contractor, and any Recognized Mortgagee, with a deductible determined by Tenant of not
more than $150,000, subject to adjustment for inflation (except as to flood and windstorm),
to include rental payment coverage from the date of projected completion and extending for
at least twelve (12) months following such date of projected completion.
(b) Automobile liability insurance covering any automobile or other motor
vehicle used in connection with work being performed on or for the Premises in an amount not
less than $1,000,000 per occurrence, with a deductible determined by Tenant of not more than
$150,000, subject to adjustment for inflation.
(c) The insurance required pursuant to Section 7.7.
Section 7.11. Annual Aggregates.
If there is imposed under any liability insurance policy required hereunder an annual
aggregate which is applicable to claims other than products liability and completed operations,
such an annual aggregate shall not be less than two (2) times the per occurrence limit required
for such insurance.
Section 7.12. Determination of Replacement Value.
(a) Definition. The current replacement value of the Improvements (the
"Replacement Value") shall be the full cost of replacing the Improvements according to
Requirements in effect at that time, including, without limitation, all hard costs of construction
as well as the costs of post-casualty debris removal, and soft costs, including without
limitation, architects', engineers', surveyors', assessors' and other professional fees and
development fees. Upon Substantial Completion of the Premises, Replacement Value of the
Improvements shall be deemed to be an amount equal to the actual costs incurred or expended
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in connection with the construction of the Premises as certified by the architect upon
completion of the Premises, other than foundations and financing and other soft costs not
applicable to replacement, adjusted for each year after completion of the Premises in
accordance with the percentage change in the Building Index. If the insurance required by
Section 7.8 above is not sufficient to cover the Replacement Value, then within fifteen (15)
days after such adjustment, said insurance shall be increased or supplemented to fully cover
such Replacement Value. In no event shall such Replacement Value be reduced by
depreciation or obsolescence of the Improvements.
(b) Buildim! Index. As used herein, the "Building Index" shall mean the
Marshall and Swift Cost Index or such other published index of construction costs which shall
be selected from time to time by Owner and reasonably agreed to by Tenant, provided that
such index shall be a measure of construction costs widely recognized in the insurance industry
and appropriate to the type and location of the Improvements.
Section 7.13. Subleases.
All Subleases shall require the Subtenant to carry liability insurance naming Tenant,
Owner, the City and any Recognized Mortgagee as additional insureds with limits reasonably
prudent under the circumstances.
Section 7.14. Additional Interests.
All liability policies shall contain a provlSlon substantially to the effect that the
insurance provided under the policy is extended to apply to Owner and the City. Any holder
of a Recognized Mortgage which, pursuant to the Recognized Mortgage, is required to be
named under any of the insurance carried hereunder shall be named under a standard New
York form of mortgagee endorsement or its equivalent.
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ARTICLE 8.
DAMAGE, DESTRUCTION AND RESTORATION
Section 8.1. Notice to Owner.
If the Premises are damaged or destroyed in whole or in any material part by fire or
other casualty, Tenant shall notify Owner of same as soon as reasonably possible after Tenant's
discovery of same.
Section 8.2. Casualty Restoration.
(a) Obligation to Restore. If all or any portion of the Premises are damaged
or destroyed by fire or other casualty, ordinary or extraordinary, foreseen or unforeseen,
whether prior to or after completion of the initial construction of the Hotel, Tenant shall, in
accordance with the provisions of this Article 8 and Article 2 of the Hotel Development
Agreement (a copy of which is attached hereto as Exhibit 8.2; the provisions of which shall
be deemed to apply to all Construction Work necessary to complete the Casualty Restoration,
to the extent the same are not inconsistent with the terms hereof) restore the Premises to the
condition thereof as it existed immediately before such casualty (a "Casualty Restoration"),
regardless of whether the Net Insurance Proceeds shall be sufficient therefor. "Net Insurance
Proceeds" shall mean the actual amount of insurance proceeds paid following a ftre or other
insured casualty.
(b) Commencement of Construction Work. Subject to Unavoidable Delays,
Tenant shall commence the Construction Work in connection with a Casualty Restoration
within ninety (90) days after receipt of the Net Insurance Proceeds by the Recognized
Mortgagee or Owner arising from the damage or destruction which caused the need for such
Casualty Restoration and shall diligently pursue the completion of such Casualty Restoration.
(c) Paydown of Mortgages Prohibited. No Mortgagee (Recognized or
otherwise) shall have the right to apply any insurance proceeds paid in connection with any
casualty toward payment of the sum secured by its Mortgage to the extent that this Lease
requires that Tenant effect a Casualty Restoration with such proceeds.
Section 8.3. Restoration Funds.
(a) Except as may otherwise be required by any Recognized Mortgage, all
Net Insurance Proceeds shall, if in an amount equal to $1,000,000, adjusted for inflation, or
less per occurrence, be paid to Tenant and applied as provided herein. If greater than
$1,000,000, adjusted for inflation, then all Net Insurance Proceeds shall be deposited with the
Recognized Mortgagee, or, if none, with another Institutional Lender pursuant to a mutually
acceptable trust agreement. Provided Tenant is conducting the Casualty Restoration in
accordance with this Lease, the Net Insurance Proceeds shall be paid out from time to time as
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the Casualty Restoration progresses, upon the written request of Tenant, which request shall
be accompanied by the following:
(i) A certificate signed by Tenant and the architect or engineer in
charge of the Casualty Restoration, reasonably satisfactory to Owner, dated not more than
fifteen (15) days prior to such request, setting forth:
(1) that the sum then requested either has been paid by Tenant
or is justly due to contractors, subcontractors, materialmen, engineers, architects
or other persons who have rendered services or furnished materials for the work
specified, and stating that no part of such expenditures has been or is being
made the basis of any previous or then pending request for the withdrawal of
the Net Insurance Proceeds;
(2) a brief description of the services and materials;
(3) that, except for the amount described in Section
8.3(a)(i)(1), there is no outstanding indebtedness actually known to the persons signing
such certificate, after due inquiry, which is then due for labor, materials, or services
in connection with the Casualty Restoration; and
(4) that the cost, as estimated by the persons signing such
certificate, of the work required to complete the Casualty Restoration does not exceed
the amount of the remaining Net Insurance Proceeds, plus any amount deposited by
Tenant to defray the expenses of the Casualty Restoration;
(5) that the work described has been completed in accordance
with the plans and specifications applicable thereto, in a good and workerlike manner
and in accordance with all Requirements;
(ii) Lien waivers, title insurance company reports or such other
evidence, reasonably satisfactory to Owner, to the effect that there has not been filed with
respect to the Premises, any vendor's, mechanic's, laborer's, materialman's or other lien which
has not been discharged of record, except such as will be discharged by payment of the amount
then requested; and
(iii) Such other documentation regarding the Casualty Restoration as
Owner or the Recognized Mortgagee shall reasonably require.
(b) Tenant shall, prior to the commencement of the Casualty Restoration,
furnish to Owner an estimate of the total cost of the Casualty Restoration certified by the
architect or engineer in charge of the Casualty Restoration. If such cost estimate or any subse-
quent estimate provided pursuant to Section 8.3(a) shall show that the cost of completing the
Casualty Restoration is in excess of the amount of the Net Insurance Proceeds then available,
Tenant shall promptly deposit with the holder of the Net Insurance Proceeds an amount equal
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to such excess. The amount so deposited shall be included in the Net Insurance Proceeds for
all purposes of this Article.
(c) Upon compliance by Tenant with the foregoing proVISIOns of this
Article, the holder of the Net Insurance Proceeds shall pay, to Tenant or the persons named
in the certificate referred to in Section 8.3(a), from the Net Insurance Proceeds, an amount
equal to ninety percent (90%) of the cost of the Casualty Restoration which is evidenced by
the request. At the completion of each contract or subcontract in connection with the Casualty
Restoration, the balance of the Net Insurance Proceeds relating to that portion of the work, to
the extent of and as required to complete the payment of Casualty Restoration costs relating
to that portion of the work, shall be paid to Tenant and Tenant shall, promptly following the
release of the retainage, provide to Owner reasonable evidence that the Casualty Restoration
relating to that portion of the work has been paid for in full.
(d) If the amount of any Net Insurance Proceeds, excluding deposits made
by Tenant pursuant to Section 8.3(b) above, shall exceed the entire cost of the Casualty
Restoration, such excess, upon completion of the Casualty Restoration, shall, if this Lease shall
be in full force and effect, be disbursed in accordance with the Tiers in the same manner as
Net Cash Flow After Debt Service pursuant to the terms of Section 3.3 or if this Lease is no
longer in full force and effect, such excess shall be paid to and retained by Owner and shall
be deemed to be Percentage Rent hereunder. Any amounts deposited by Tenant pursuant to
Section 8.3(b) above shall be returned to Tenant to the extent the same are not necessary to
fund the cost of the Casualty Restoration.
Section 8.4. Effect of Casualty on This Lease.
This Lease shall not terminate, be forfeited or be affected in any manner, and there
shall be no reduction or abatement of Rental (except to the extent Owner receives the net
proceeds of the insurance described in Section 7.9(a)), by reason of damage to, or total or
partial destruction of, or untenantability of, the Premises or any part thereof resulting from
such damage or destruction. Tenant's Rental obligations hereunder shall continue as though
the Premises had not been damaged or destroyed and shall continue without abatement,
suspension, diminution or reduction whatsoever. Subject to Unavoidable Delays and taking
into account Tenant's Casualty Restoration obligations (including, without limitation, the effect
of the casualty and the Casualty Restoration on the Tenant's ability to comply with the Quality
Standard), Tenant's non-Rental obligations hereunder shall continue as though the Premises had
not been damaged or destroyed and shall continue without abatement, suspension, diminution
or reduction whatsoever.
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ARTICLE 9.
CONDEMNATION
Section 9.1. Substantial Taking.
(a) Termination of Lease for Substantial Taking. If all or Substantially All
of the Premises are taken (excluding a taking of the fee interest in the Premises if, after such
taking, Tenant's rights under this Lease are not affected (including, without limitation, the
Purchase Option) and no rights of any Recognized Mortgagee are affected) for any public or
quasi-public purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement among Owner, Tenant, Recognized
Mortgagee and those authorized to exercise such right, this Lease shall terminate on the Date
of Taking and the Rental payable by Tenant hereunder shall be apportioned and paid to the
Date of Taking.
(b) Disbursement of Award. If all or Substantially All of the Premises are
taken or condemned as provided in Section 9.1(a), the Net Condemnation Award paid or
payable to Owner, Tenant or any lender or mortgagee claiming through either of them in
connection with such taking or condemnation shall be apportioned as follows: (1) there shall
first be paid to Owner that portion of the Net Condemnation Award equal to the amount the
Owner would have received from Tenant if Tenant exercised the Purchase Option on the date
of such taking; provided that notwithstanding any separate award therein for the value of the
Land, such amount shall be determined by agreement (after taking into account the separate
award) among Owner, Tenant and the holder of the first Recognized Mortgage or, if they are
unable to agree within thirty (30) days of vesting of title in the taking authority, in accordance
with the appraisal provisions of Article 31; (2) except as may otherwise be required by a
Recognized Mortgage, there shall next be paid to Tenant that portion of the Net Condemnation
Award (which is for or attributable to the fair market value of the Land taking into account the
current state of title as well as the continued existence of this Lease) equal to the difference
between the fair market value of the Land and the amount paid to Owner in clause (1) above;
(3) there shall next be paid to the Recognized Mortgagee so much of the Net Condemnation
A ward as shall equal the unpaid principal indebtedness secured by such Recognized Mortgagee
with interest thereon at the rate specified therein to the date of payment (including any
prepayment fees thereon and any so-called "yield maintenance" or "make-whole" amounts
or other sums intended to assure to the Recognized Mortgagee a certain rate of return under
the loan secured by the Recognized Mortgage, if any, as well as any costs payable by Tenant
in connection with such Recognized Mortgage pursuant to any "swap" or other interest rate
protection or hedging mechanism); and (4) the remaining Net Condemnation Award shall be
disbursed in accordance with the Tiers in the same manner as Net Cash Flow After Debt
Service pursuant to Section 3.3 of the Lease.
(c) Definitions.
(i) "Date of Taking" means the earlier of (1) the date on which actual
possession of all or Substantially All of the Premises, or any part thereof, as the case may be,
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is acquired by any lawful power or authority pursuant to the provisions of applicable law or
(2) the date on which title to all or Substantially All of the Premises, or any part thereof, as
the case may be, has vested in any lawful power or authority pursuant to the provisions of
applicable law.
(ii) "Substantially All of the Premises" means such portion of the Premises
as, when so taken, would leave, in Tenant's good faith determination, a balance of the
Premises that, due either to the area so taken or the location of the part so taken in relation to
the part not so taken, would not, under economic conditions, physical constraints, zoning laws,
building regulations and other Requirements then existing, readily accommodate a new or
reconstructed building or buildings and other improvements of a type fully comparable to the
Improvements existing at the Date of Taking. Tenant shall notify Owner, on or about the Date
of Taking, in writing of its determination as to whether or not "Substantially All of the
Premises" has been taken. If Tenant does not determine that "Substantially All of the
Premises" has been taken, then this Lease shall not terminate and expire but shall continue in
force and effect, subject to the other provisions of this Article 9. If Tenant determines that
"Substantially All of the Premises" has been taken, then this Lease shall terminate and expire
on the Date of Taking pursuant to Section 9.1(a).
(iii) "Net Condemnation Award" shall mean the actual amount of the award
paid in connection with or arising from the acquisition or other taking of all or Substantially
All of the Premises or any portion of the Premises by any authority, less all reasonable out -of-
pocket expenses incurred by Owner, Tenant or Recognized Mortgagee in connection with
obtaining such award, including, without limitation, all reasonable attorneys' fees and
disbursements incurred in connection therewith.
Section 9.2. Less Than A Substantial Taking.
(a) Taking of Less than Substantially All of the Premises. If less than
Substantially All of the Premises are taken for any public or quasi-public purpose by any lawful
power or authority by the exercise of the right of condemnation or eminent domain or by
agreement among Owner, Tenant, any Recognized Mortgagee and the entity authorized to
exercise such right, whether prior to or after the completion of the initial construction of the
Hotel, this Lease shall continue for the remainder of the Term (subject to paragraph (b) below)
without diminution of any of Tenant's obligations hereunder, but with a fair and equitable
abatement of Base Rent.
(b) Obligation to Restore the Premises. If less than Substantially All of the
Premises are taken as provided in Section 9.2(a), whether prior to or after the completion of
the initial construction of the Hotel, Tenant shall, in accordance with the provisions of this
Article 9 and Article 2 of the Hotel Development Agreement (a copy of which is attached
hereto as Exhibit 8.2; the provisions of which shall be deemed to apply to all Construction
Work necessary to complete the Condemnation Restoration, to the extent the same are not
inconsistent with the terms hereof) restore the remaining portion of the Premises, to the extent
feasible, to the condition thereof as it existed immediately before such taking (a
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"Condemnation Restoration"), regardless of whether the Net Condemnation Award shall be
sufficient therefor.
(c) Disbursement. If less than Substantially All of the Premises are taken
as provided in Section 9.2(a), the Net Condemnation Award payable to Owner, Tenant and
any lender or mortgagee claiming through either of them shall be apportioned as follows: (1)
first to the cost of the Condemnation Restoration; and (2) second to Owner and (subject to the
rights of any Recognized Mortgagee) Tenant, which, as to Owner, shall be in the same
proportion as the loss attributable to the Land bears to the sum of the loss attributable to the
Land and Tenant's leasehold estate in the Land and, as to Tenant, shall be in the same
proportion as the loss attributable to Tenant's leasehold estate bears to the sum of the loss
attributable to the Land and Tenant's leasehold estate in the Land.
(d) Commencement of Construction Work. Subject to Unavoidable Delays,
Tenant shall commence the Construction Work in connection with a Condemnation Restoration
within ninety (90) days after receipt of the Net Condemnation Award arising from the taking
which caused the need for such Condemnation Restoration and shall diligently pursue the
completion of such Condemnation Restoration.
(e) Paydown of Mortgages Prohibited. No Mortgagee (Recognized or
otherwise) shall have the right to apply any award proceeds paid in connection with any taking
toward payment of the sum secured by its Mortgage to the extent that this Lease requires that
Tenant effect a Condemnation Restoration with such proceeds.
Section 9.3. Restoration Funds.
(a) If in connection with a taking the Net Condemnation Funds are in excess
of $1,000,000, adjusted for inflation, then the Net Condemnation Award shall be deposited
with the Recognized Mortgagee, or, if none, with an Institutional Lender pursuant to a
mutually acceptable trust agreement. Except as may otherwise be required by a Recognized
Mortgagee, if such Net Condemnation Funds are less than or equal to $1,000,000, adjusted for
inflation, the same shall be paid directly to Tenant to be applied as provided herein. Provided
Tenant is conducting the Condemnation Restoration in accordance with this Lease, the Net
Condemnation A ward shall be paid out from time to time as the Condemnation Restoration
progresses, upon the written request of Tenant, which request shall be accompanied by the
following:
(i) A certificate signed by Tenant and the architect or engineer in
charge of the Condemnation Restoration, reasonably satisfactory to Owner, dated not more than
fifteen (15) days prior to such request, setting forth:
(1) that the sum then requested either has been paid by Tenant
or is justly due to contractors, subcontractors, materialmen, engineers, architects
or other persons who have rendered services or furnished materials for the work
specified, and stating that no part of such expenditures has been or is being
DOB : [04984. DOCS. MIAMl]GLEASE _9-19-96
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made the basis of any previous or then pending request for the withdrawal of
the Net Condemnation Award;
(2) a brief description of the services and materials;
(3) that, except for the amount described in Section
9.3(a)(i)(1), there is no outstanding indebtedness actually known to the persons signing
such certificate, after due inquiry, which is then due for labor, materials, or services
in connection with the Condemnation Restoration; and
(4) that the cost, as estimated by the persons signing such
certificate, of the work required to complete the Condemnation Restoration does not
exceed the amount of the remaining Net Condemnation Award, plus any amount de-
posited by Tenant to defray the expenses of the Condemnation Restoration;
(5) that the work described has been completed in accordance
with the plans and specifications applicable thereto, in a good and workerlike manner
and in accordance with all Requirements;
(ii) Lien waivers, title company reports or such other evidence,
reasonably satisfactory to Owner, to the effect that there has not been filed with respect to the
Premises, any vendor's, mechanic's, laborer's, materialman's or other lien which has not been
discharged of record, except such as will be discharged by payment of the amount then
requested; and
(iii) Such other documentation regarding the Condemnation Restoration
as Owner or the Recognized Mortgagee shall reasonably require.
(b) Tenant shall, prior to the commencement of the Condemnation
Restoration, furnish to Owner an estimate of the total cost of the Condemnation Restoration
certified by the architect or engineer in charge of the Condemnation Restoration. If such cost
estimate or any subsequent estimate provided pursuant to Section 9.3(a)(i)(4) shall show that
the cost of completing the Condemnation Restoration is in excess of the amount of the Net
Condemnation Award then available, Tenant shall promptly deposit with the holder of the Net
Condemnation Award an amount equal to such excess. The amount so deposited shall be
included in the Net Condemnation Award for all purposes of this Article.
(c) Upon compliance by Tenant with the foregoing provisions of this
Article, the holder of the Net Condemnation Award shall pay to Tenant or the persons named
in the certificate referred to in Section 9.3(a)(i), from the Net Condemnation Award, an
amount equal to ninety percent (90 %) of the cost of the Condemnation Restoration which is
evidenced by the request. At the completion of each contract or subcontract in connection with
the Condemnation Restoration, the balance of the Net Condemnation Award relating to that
portion of the work, to the extent of and as required to complete the payment of Condemnation
Restoration costs relating to that portion of the work, shall be paid to Tenant and Tenant shall,
DOB: [04984. DOCS .MIAMI]GLEASE _9-19-96
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promptly following the release of the retainage, provide to Owner reasonable evidence that the
Condemnation Restoration relating to that portion of the work has been paid for in full.
(d) If the amount of any Net Condemnation A ward, excluding deposits made
by Tenant pursuant to Section 9.3(b) above, shall exceed the entire cost of the Condemnation
Restoration, such excess, upon completion of the Condemnation Restoration, shall, if this
Lease shall be in full force and effect, be disbursed in accordance with the Tiers or if this
Lease shall not be in full force and effect, such excess shall be paid to and retained by Owner
and shall be deemed to be Percentage Rent hereunder. Any amounts deposited by Tenant
pursuant to Section 9.3(b) above shall be returned to Tenant to the extent the same are not
necessary to fund the cost of the Condemnation Restoration.
Section 9.4. Temporary Taking.
(a) Notice of Temporary Taking. If the temporary use of the whole or any
portion of the Premises is taken for a public or quasi-public purpose by a lawful power or
authority by the exercise of the right of condemnation or eminent domain or by agreement
between Tenant and those authorized to exercise such right, Tenant shall give Owner notice
within five (5) business days thereof. The Term shall not be reduced or affected in any way
by reason of such temporary taking and Tenant shall continue to pay to Owner the Rental
without reduction or abatement; provided, however, if such temporary taking is for a period
in excess of ninety (90) days, then such taking shall be deemed a permanent taking and the
provisions of Sections 9.1 and 9.2, as applicable, shall apply.
(b) Temporary Taking Not Extending Beyond the Term. If the temporary
taking is for a period not extending beyond the Term (including a taking restricted entirely to
Tenant's Interest in the Premises and not affecting Owner's Interest in the Premises in any
way), Tenant shall apply the award it receives in compensation therefor toward a
Condemnation Restoration in accordance with Section 9.3, and Tenant shall, subject to the
rights of any Recognized Mortgagee, be entitled to retain any remaining amount of such award.
(c) Temporary Taking Extending Beyond the Expiration of the Term. If
the temporary taking is for a period extending beyond the Expiration of the Term, the award
or payment shall first be disbursed pursuant to Section 9.3 to be applied toward such
restoration of the Improvements as may have been necessitated by such taking, and the
remainder shall be equitably apportioned between Owner and Tenant as of the Expiration of
the Term.
Section 9.5. Governmental Action Not Resulting in a Taking.
In case of any governmental action not resulting in the taking or condemnation of any
portion of the Premises but creating a right to compensation therefor, such as the changing of
the grade of any street upon which the Premises abut, then this Lease shall continue in full
force and effect without reduction or abatement of Rental. Any award payable thereunder shall
be applied first to reimburse Tenant for any Construction Work performed by Tenant resulting
DOB: [04984. DOCS. MIAMl]GLEASE _9-19-96
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from such governmental action and any balance shall be distributed in the same manner as Net
Cash Flow After Debt Service in accordance with Section 3.3.
Section 9.6. Collection of Awards.
Each of the parties shall execute such documents as may be reasonably required to
facilitate collection of any awards made in connection with any condemnation proceeding
referred to in this Article.
Section 9.7. Negotiated Sale.
In the event of a negotiated sale of all or a portion of the Premises in lieu of
condemnation, the proceeds shall be distributed as provided in cases of condemnation.
Section 9.8. Intention of Parties.
The existence of any present or future law or statute notwithstanding, Tenant and Owner
waive all rights to quit or surrender the Premises or any part thereof by reason of any
condemnation or taking of less than Substantially All of the Premises.
Section 9.9. Intentionallv Omitted.
Section 9.10. Effect of Taking on This Lease.
Except as provided in Section 9.1, this Lease shall not terminate, be forfeited or be
affected in any manner, and there shall be no reduction or abatement of Rental, by reason of
any taking of the Premises or any part thereof. Except as provided in Section 9.2(a), Tenant's
Rental obligations hereunder shall continue as though the Premises had not been taken and shall
continue without abatement, suspension, diminution or reduction whatsoever. Subject to
Unavoidable Delays and taking into account Tenant's Condemnation Restoration obligations
(including, without limitation, the effect of the taking and the Condemnation Restoration on
the Tenant's ability to comply with the Quality Standard), Tenant's non-Rental obligations
hereunder shall continue as though the Premises had not been taken and shall continue without
abatement, suspension, diminution or reduction whatsoever.
DOB:[04984. DOCS .MIAMI]GLEASE _9-19-96
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ARTICLE 10.
ASSIGNMENT, TRANSFER AND SUBLETTING
Section 10.1. Tenant's Right to Assign. Transfer or Enter into a Sublease.
(a) Owner's Consent.
(i) A Permitted Sale shall not require the consent or approval of
Owner. Except with respect to a Permitted Sale, Tenant may not effect a Sale of the Hotel
without the prior written consent of Owner, which consent may not be unreasonably withheld,
delayed, conditioned, or denied in accordance with this Article 10 and with Article 26 hereof.
(ii) Notwithstanding Section 10. 1 (a)(i) hereof, a Foreclosure Transfer
to a Person that is not a Foreign Instrumentality shall not require the consent of Owner.
(b) Definitions.
(i) "Assignment" means a sale, exchange, assignment, Sublease,
transfer or other disposition (other than subleases in the ordinary course of business (such as
subleases for restaurants, retail space or other space at the Premises)) by Tenant of Tenant's
Interest in the Premises, whether by operation of law or otherwise, which is not a Transfer.
The creation or granting of a Mortgage shall not constitute an Assignment or a Transfer.
(ii) "Assignee" means a purchaser, assignee, transferee, or other
Person which acquires all or any portion of Tenant's Interest in the Premises.
(iii) "Capital Transaction" means an Assignment or Transfer.
(iv) "Disqualified Person" means any of the following Persons:
(A) Any Person (or any Person whose operations are directed or
controlled by a Person) that has been convicted of or has pleaded guilty in a criminal
proceeding for a felony or that is an on-going target of a grand jury investigation convened
pursuant to applicable Requirements concerning organized crime; or
(B) For so long as the Agency or the City, or any instrumentality of
the Agency or the City is Owner, a Foreign Instrumentality; or
(C) Any Person organized in or controlled from a country, the effects
of the activities with respect to which are regulated or controlled pursuant to the following
United States laws and the regulations or executive orders promulgated thereunder: (x) the
Trading with the Enemy Act of 1917, 50 U.S.C. App. ~1, et seq., as amended (which
countries are, as of the date hereof, North Korea and Cuba); (y) the International Emergency
Economic Powers Act of 1976, 50 U.S.C. ~1701, et seq., as amended (which countries are,
DOB: [04984. DOCS . MIAMI]GLEASE _ 9-19-96
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as of the date hereof, Libya, Iran and Iraq); and (z) the Anti-Terrorism and Arms Export
Amendments Act of 1989, codified at Section 6(j) of the Export Administration Act of 1979,
50 U.S.C. App. ~ 2405(j), as amended (which countries are, as of the date hereof, Iran, Sudan
and Syria); or
(D) Any Person that has owned at any time in the preceding three (3)
years any property which, while in the ownership of such Person, was acquired by
Metropolitan Dade County, Florida by tax deed foreclosure or other proceeding relating to the
failure of taxes to be paid, other than a property in which Metropolitan Dade County, Florida
has released (or is in the process of releasing) its interest to such Person; or
(E) A Person registered under any Requirement as a lobbyist for any
Foreign Instrumentality; or
(F) Any Affiliate of any of the Persons described in paragraphs (A),
(C), (D) or (E) above.
(v) "Equity Interest" means, with respect to any entity, (1) the legal
(other than as a nominee) or beneficial ownership of outstanding voting or non-voting stock of
such entity if such entity is a business corporation, a real estate investment trust or a similar
entity, (2) the legal (other than as a nominee) or beneficial ownership of any partnership,
membership or other voting or non-voting ownership interest in a partnership, joint venture,
limited liability company or similar entity, (3) a legal (other than as a nominee) or beneficial
voting or non-voting interest in a trust if such entity is a trust and (4) any other voting or non-
voting interest that is the functional equivalent of any of the foregoing.
(vi) "Parent" means LHHC, which Tenant represents to Owner is,
as of the date hereof, the present beneficial owner of all of the common stock of Tenant and
is the parent company of the Loews chain of hotels, and shall include any successor to LHHC
as the holder of a Controlling Interest in the Loews hotels chain. Provided that Parent's
interests in Tenant do not constitute all or substantially all of Parent's assets, notwithstanding
anything herein to the contrary, a transfer of any interest in the Parent shall not be deemed an
Assignment, Transfer or Sale of the Hotel. Upon a Sale of the Hotel, a new definition of
"Parent" and, if applicable, "Manager's Parent", consistent with the intention of the Owner
and Tenant contemplated herein, will be determined by Owner and the new tenant.
(vii) "Sale of the Hotel" means an Assignment or Transfer, or any
series of Assignments or Transfers, by operation of law or otherwise, with the result that (i)
Tenant has conveyed Tenant's Interest in the Premises to a Person in which Parent, or a Person
whose ultimate owners are identical to those of Parent, does not own a Substantial Controlling
Interest or (ii) a Substantial Controlling Interest of Tenant ceases to be held, directly or
indirectly, by Parent, or a Person whose ultimate owners are identical to those of Parent.
(viii) "Sublease" means any sublease (including a sub-sublease or any
further level of subletting) of all or any portion of the Premises, but does not include subleases
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serving the functional equivalent of a Recognized Mortgage or subleases in the ordinary course
of business (e.g., subleases for restaurants, retail space or other space at the Premises).
(ix) "Subtenant" means any party granted rights by Tenant under a
Sublease or by any other Subtenant (immediate or remote) under a Sublease.
(x) "Transfer" means (i) any change, by operation of law or
otherwise, in ownership of an Equity Interest in Tenant, where such change in ownership
directly or indirectly produces any change in the Substantial Controlling Interest of Tenant, or
(ii) any transaction or series of transactions, by operation of law or otherwise, including,
without limitation, the issuance of additional Equity Interests or the direct or indirect revision
of the beneficial ownership or control structure of the management or operation of Tenant or
any direct or indirect constituent entity of Tenant, which, in either case, produces any change,
by operation of law or otherwise, in the Substantial Controlling Interest in Tenant.
(xi) "Transferee" means a Person to which a Transfer is made.
(c) Notice to Owner. Subject to Requirements, in addition to any notice
that may be required pursuant to Section 3.5(a), Tenant shall provide notice (which may be
the notice required under Section 3.5(a)(i)) to Owner of any Capital Transaction not requiring
Owner's consent not later than two (2) Business Days after the occurrence of such Capital
Transaction or promptly after becoming aware of a Capital Transaction to which Tenant is not
a party. The notice required by this Section 10.1(c) shall contain the following information:
(i) the name and address of the Assignee or Transferee; and
(ii) the nature of the Capital Transaction and the percent interest
conveyed; and
(iii) if the applicable Capital Transaction is a Permitted Sale, then
Tenant shall provide Owner with (x) if the Assignee or Transferee is not a Public Company,
disclosure of the ownership of the Controlling Interest of the Assignee or Transferee, but only
to the extent that such information is reasonably available to Tenant after making reasonable
inquiry, and (y) a copy of the instrument described in Section lO.I(g).
(d) Approvals. In any instance in which a Sale of the Hotel requires
Owner's consent, Tenant shall submit to Owner a written request for Owner's consent to such
Sale of the Hotel, which request shall include the following information:
(i) the name, address and a description of the nature and character
of the business operations of the proposed Assignee or Transferee, including, without
limitation, the name and address of the Person that the proposed Assignee or Transferee intends
to engage as the Hotel Manager;
(ii) (A) if the proposed Assignee or Transferee (or its parent,
if such parent owns, directly or through its subsidiaries, all or substantially all of such
proposed Assignee or Transferee) is a Public Company, Tenant shall provide a copy of the
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security ownership information disclosed in the most recent filing for such company (or any
Person filing with respect to such company) under the Securities Exchange Act of 1934, as
amended, or its successor, with the Securities and Exchange Commission or its successor;
(B) if the proposed Assignee or Transferee is not a Public
Company and is a partnership, Tenant shall provide a certificate from the managing general
partner or other authorized Person of the proposed Assignee or Transferee, which certificate
shall contain the names of (i) any general partners holding (whether individually or together
with their respective Affiliates) more than five percent (5 %) of the general partnership interests
in such proposed Assignee or Transferee (a "Designated Holder") and (ii) any limited partners
holding (whether individually or together with their respective Affiliates) more than ten percent
(10%) of the limited partnership interests in such proposed Assignee or Transferee (also, a
"Designated Holder"); provided, however, that if the general partnership interests disclosed
pursuant to the foregoing provisions of this paragraph (B) aggregate to less than fifty-one
percent (51 %) of the general partnership interests in such proposed Assignee or Transferee,
then there shall be disclosed the names of the President, Chief Operating Officer, Chief
Executive Officer (or the individuals holding the equivalent positions), and members of the
Board of Directors (or other governing body) of the proposed Assignee or Transferee;
(C) if the proposed Assignee or Transferee is not a Public
Company and is a limited liability company ("LLC"), trust or other entity (other than a
partnership or corporation), Tenant shall provide a certificate from the managing member,
trustee or other authorized Person of the proposed Assignee or Transferee, which certificate
shall contain the names of (i) any Person holding (whether individually or together with its
Affiliates) a voting interest which voting interest comprises more than five percent (5 %) of the
total voting interests in such LLC, trust or other entity (a "Designated Holder") and (ii) any
Person holding (whether individually or together with its Affiliates) a non-voting interest which
non-voting interest comprises more than ten percent (10%) of the total non-voting interests in
such LLC, trust or other entity (also, a "Designated Holder"); provided, however, that if the
voting interests disclosed pursuant to the foregoing provisions of this paragraph (C) aggregate
to less than fifty-one percent (51 %) of the total voting interests in such LLC, trust or other
entity, then there shall be disclosed the names of the President, Chief Operating Officer, Chief
Executive Officer (or the individuals holding the equivalent positions), and members of the
Board of Directors (or other governing body) of the proposed Assignee or Transferee;
(D) if the proposed Assignee or Transferee is a corporation that
is not a Public Company, Tenant shall provide a certificate from an authorized officer or other
authorized Person of the proposed Assignee or Transferee, which certificate shall contain the
names of (i) any holder (whether individually or together with its Affiliates) of voting stock
which voting stock comprises more than five percent (5 %) of any class of the outstanding
voting stock of such corporation (a "Designated Holder"), and (ii) any holder (whether
individually or together with its Affiliates) of more than ten percent (10%) of any class of the
outstanding nonvoting stock of such corporation (also a "Designated Holder"); provided,
however, that if the voting interests disclosed pursuant to the foregoing provisions of this
paragraph (D) aggregate to less than fifty-one percent (51 %) of each class of the outstanding
voting stock of such corporation, then there shall be disclosed the names of the President,
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Chief Operating Officer, Chief Executive Officer (or the individuals holding the equivalent
positions), and members of the Board of Directors (or other governing body) of the proposed
Assignee or Transferee;
(E) with respect to any Designated Holder disclosed pursuant to
paragraphs (B), (C) or (D), there shall also be disclosed the name of the natural person or
Public Company holding, directly or indirectly through one or more intermediaries, a
Controlling Interest in such Designated Holder; provided, however, that if no natural person
or Public Company holds a Controlling Interest in such Designated Holder, then there shall be
disclosed the names of the President, Chief Operating Officer, Chief Executive Officer (or the
individuals holding the equivalent positions), and members of the Board of Directors (or other
governing body) of the Designated Holder;
(iii) a certificate of an authorized officer, managing general partner,
managing member, trustee, or other authorized Person, whichever shall be applicable, of the
proposed Assignee or Transferee stating whether the proposed Assignee or Transferee is a
Disqualified Person;
(iv) the principal terms and conditions of the proposed Sale of the
Hotel;
(v) a proposed form of the applicable instrument described in Section
10.I(g);
(vi) banking and financial information with respect to the proposed
Assignee or Transferee reasonably sufficient to enable Owner to determine the fInancial
responsibility of the proposed Assignee or Transferee, to the extent reasonably available to
Tenant; and
(vii) such other additional information (including, but not limited to,
banking and fInancial information) as Owner shall reasonably request in connection with its
evaluation of the proposed Sale of the Hotel, to the extent reasonably available to Tenant;
provided Owner shall make such request within ten (10) Business Days after receipt of
Tenant's request for consent.
(e) Owner's Approval. Owner shall consent or refuse to consent to any
transaction proposed pursuant to Section 10.I(d) in accordance with Article 26 hereof within
ten (10) Business Days after receipt of Tenant's request for consent or Owner's receipt of such
additional information. Notwithstanding the foregoing, if any change in circumstances prior
to the closing of the proposed Sale of the Hotel renders the information provided in Section
10.I(d) materially incomplete or materially incorrect, any consent previously given by Owner
shall be deemed null and void and Tenant shall notify Owner of the change. Upon the receipt
of such notice, Owner shall thereupon have ten (10) Business Days to notify Tenant whether
Owner's consent to such changed Sale of the Hotel is given or denied.
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Notwithstanding anything to the contrary contained herein, Owner's decision
whether to consent or refuse to consent to a proposed Sale of the Hotel pursuant to Section
10.1(d) shall be based only upon the following factors: (i) whether the proposed Assignee or
Transferee has the capability to carry out the remaining financial obligations of Tenant under
this Lease; (ii) if the proposed Assignee or Transferee is not (and does not intend to engage)
a Permitted Operator, whether the proposed Hotel Manager which such proposed Assignee or
Transferee intends to engage for the Hotel has the capability to carry out the obligations of the
Hotel Manager under this Lease; (Hi) whether the proposed Assignee or Transferee (or its
parent if its parent owns, directly or through it subsidiaries, all or substantially all of the
Assignee or Transferee) is a Disqualified Person; and (iv) such other reasonable matters
relating to the proposed Sale of the Hotel.
(f) Absolute Limitations on Right to Assign. Notwithstanding anything to
the contrary contained herein, Tenant shall not Assign Tenant's Interest in the Premises, except
for an Assignment of the entire Tenant's Interest in the Premises. Tenant shall not Assign any
interest in this Lease, the Improvements, the Hotel Unit or the Condominium Unit Lease unless
such Assignment is appurtenant to an Assignment of the entire Tenant's Interest in the
Premises.
(g) Sale of the Hotel Instruments. In the case of a Sale of the Hotel, Tenant
shall deliver to Owner, or shall cause to be delivered to Owner, within ten (10) Business Days
after the execution and delivery thereof, a true and correct copy of the instrument(s)
effectuating such transfer, including an instrument of assignment and assumption, if applicable.
(h) Assumption of Liability. If Tenant does not survive a Sale of the Hotel
as the tenant under this Lease and the holder of the Tenant's Interest in the Premises, then the
successor to Tenant shall assume and be deemed to assume this Lease, the other Project
Documents, the Declaration of Condominium and the Condominium Unit Lease to the extent
that Tenant (or any Assignee or Transferee) is a party (or a successor-in-interest to a party)
thereto and shall be liable for the payment of Rental and the performance of and compliance
with all the terms, covenants, conditions and agreements contained in this Lease, the Project
Documents, the Declaration of Condominium and the Condominium Unit Lease on the part of
Tenant (or any successor-in-interest to Tenant) to be performed accruing from and after the
date of such Assignment or Transfer (provided, however, that such Assignee or Transferee
shall be liable for any Defaults of Tenant continuing after the date of Assignment or Transfer).
No Assignment or Transfer shall be binding on Owner unless and until such Assignee or
Transferee shall enter into a written agreement containing a covenant of assumption as
aforesaid. Upon Owner's receipt of such assumption instrument from such Assignee or
Transferee, Tenant shall, to the extent Tenant has conveyed the entire Tenant's Interest in the
Premises as required hereunder, be released from liability accruing after the date of such
Assignment or Transfer.
(i) Invalidity of Transactions. Any Sale of the Hotel entered into without
Owner's consent as and if required in this Article 10 or sought to be entered into without the
execution, and delivery to Owner within ten (10) Business Days thereafter, of the instruments
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provided in Section 10.I(g) (unless such Capital Transaction is effected by operation of law,
in which case no such instrument shall be required), shall have no validity and shall be null
and void and without effect until such time as such consent (if required) is obtained and/or such
instruments are delivered.
G) Permitted Sale. Prior to the Hotel Opening Date, any Sale of the Hotel
shall require the consent of Owner as provided for herein. From and after the Hotel Opening
Date, Tenant shall have the right, without the consent of Owner (a "Permitted Sale"), to
effectuate a Sale of the Hotel if at the time of such Sale of the Hotel, (i) the Assignee or
Transferee is (x) an Institutional Lender, which Institutional Lender has engaged or intends to
engage a Permitted Operator for the Hotel, or (y) a Permitted Operator that has assets of not
less than $100,000,000, adjusted for inflation, and (ii) the Assignee or Transferee is not a
Disqualified Person.
Section 10.2. Sublease Requirements.
(a) Required Sublease Clauses. Each Sublease shall provide as follows:
(i) It is subordinate and subject to this Lease.
(ii) Except for security deposits and any other amounts deposited with
Tenant or with any Recognized Mortgagee in connection with the payment of insurance
premiums, real property taxes and assessments and other similar charges or expenses, and any
rent paid in advance upon execution of the Sublease (but not to exceed an amount equal to two
(2) months' rent), the Subtenant shall not pay rent or other sums payable under the Sublease
to Tenant for more than one (1) month in advance (unless Owner gives its consent to a longer
period).
(iii) At Owner's option, on the termination of this Lease pursuant to
Article 25, the Subtenant shall attorn to, or shall enter into a direct lease (on terms identical
to its Sublease, consistent, however, with the terms hereof) with, Owner for the balance of the
unexpired term of the Sublease.
(iv) With respect to those Subleases providing for the payment of
percentage rent by such Subtenants to Tenant, Subtenant shall maintain full and accurate books
of account and records of Subtenant's business operations at the Premises, which books and
records shall be so kept and maintained for at least three (3) years after the end of each Lease
Year during the term of such Sublease.
(b) Subtenant Obligations. During the Term, Tenant shall use commercially
reasonable efforts to cause all Subtenants to comply with their obligations under their
Subleases. A violation or breach of any of the terms, provisions or conditions of this Lease
that results from, or is caused by, an act or omission by a Subtenant shall not relieve Tenant
of Tenant's obligation to cure such violation or breach.
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(c) Schedule of Subleases. etc. At any time upon Owner's demand, Tenant
shall deliver to Owner, within ten (10) business days following such demand, (1) a schedule
of all Subleases (and licensees, franchises and concession agreements), giving the names of all
Subtenants (and licenses, franchisees and concessionaires), a description of the space that has
been sublet or licensed, expiration dates, rentals and other fees, and such other information as
Owner reasonably may request, and (2) photostatic copies of all Subleases (including licenses,
franchises and concession agreements) which have not been previously delivered (unless
modified subsequent to such delivery). Upon reasonable request of Owner, Tenant shall permit
Owner and its agents and representatives to inspect original counterparts of all Subleases (and
licenses, franchises and concession agreements) available to Tenant. Owner agrees to act
reasonably with respect to the frequency of its requests for schedules and investigation of
documents as provided above.
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ARTICLE 11.
MORTGAGES
Section 11.1. Right to Mortlmge.
(a) Except as otherwise expressly provided for in this Lease, Tenant shall not
mortgage, pledge, hypothecate or otherwise encumber Tenant's Interest in the Premises. In
connection with the condominium regime described in the Declaration of Condominium that
will be created upon Tenant's leasehold estate hereunder, the provisions of this Article 11 shall
also apply to any mortgage of Tenant's Interest in the Premises.
(b) Notwithstanding the foregoing, Tenant shall have the right to secure
indebtedness in an amount not to exceed Permitted Debt without Owner's approval by (i)
Recognized Mortgage(s), (ii) Mortgage(s) held by an Affiliate of Tenant, provided such
Mortgage meets the requirements of Section 11.2(b)(ii) and (iii) (an "Affiliate Mortgage"),
and (Hi) Affiliate Debt pursuant to Section 11.12.
(c) "Permitted Debt" means (i) the principal amount of up to $66,000,000
for so long as MB Redevelopment is the Tenant hereunder; (ii) after a Sale of the Hotel or a
Foreclosure Transfer, the principal amount equal to not more than the greater of $66,000,000
or the actual principal amount of debt secured by Tenant's Interest in the Premises; provided,
however, that such actual principal amount shall not exceed 75% of the consideration received
by Tenant (which, in the case of a sale to an Affiliate, shall not exceed the fair market value
of the Hotel) directly for such Sale of the Hotel (including, however, any Mortgage debt
assumed or taken subject to by such transferee) and (Hi) any greater principal amount approved
by Owner pursuant to Section 11.1(b). In addition, Permitted Debt shall include any debt
obtained in connection with (I) a required Casualty Restoration or Condemnation Restoration,
as applicable, if the Net Insurance Proceeds are, or the Net Condemnation Award is,
inadequate to achieve the required Casualty Restoration or Condemnation Restoration, as
applicable and (II) any advances made by a Recognized Mortgagee with respect to Tenant's
Interest in the Premises for the payment of taxes, assessments, insurance premiums or other
costs incurred for the protection of Tenant's Interest in the Premises or the liens created by the
Recognized Mortgage, and reasonable expenses incurred by such Recognized Mortgagee, by
reason of a default by Tenant under such Recognized Mortgage, together with any sums
payable by Tenant (as Grantee) under the Garage Easement Agreement; provided, however,
that (x) the Net Insurance Proceeds are not inadequate as a result of the failure by Tenant to
maintain the insurance required hereunder, (y) any such debt (including any refinancing thereof
by the Tenant that incurred such debt) shall increase the amount of Permitted Debt only for
the purposes of effecting such Casualty Restoration or Condemnation Restoration or paying the
advances set forth in the preceding clause (II) and, following the repayment of such debt by
the Tenant that incurred such debt, the provisions of clauses (i), (ii) and (Hi) shall govern the
level of Permitted Debt (except to the extent the provisions of this clause apply to a subsequent
casualty or condemnation or such payment under or in connection with a Recognized
Mortgage); and (z) with respect to any purchaser of the Hotel from any Tenant that incurred
such debt, the provisions of clauses (i), (ii) and (iii) shall govern the level of Permitted Debt
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(except to the extent the provISiOns of this sentence apply to a subsequent casualty or
condemnation or such payment under a Recognized Mortgage). Notwithstanding the provisions
of this Section 1l.I(c), from and after a Foreclosure Transfer, if the Recognized Mortgagee
(or an Affiliate thereof) is the successful bidder and by operation of law the applicable
Recognized Mortgage is extinguished, then the applicable Recognized Mortgage and the
advances described in the preceding clause (II) shall be deemed to be applicable to Tenant's
Interest in the Premises for all purposes of this Lease, which purposes shall include, without
limitation, the deduction of the Debt Service that would have been payable on the applicable
Recognized Mortgage (had the Recognized Mortgage not been extinguished as a matter of law)
from Hotel Operating Profit in determining Net Cash Flow After Debt Service.
Section 11.2. Definitions.
(a) "Mortgage" means any mortgage or deed of trust, and all extensions,
spreaders, splitters, consolidations, restatements, replacements, modifications and amendments
thereof, that constitutes a lien on all or a portion of Tenant's Interest in the Premises, and any
security interest in or assignment of the Lease or the rents, issues or profits related thereto.
(b) "Recognized Mortgage" means a Mortgage (i) that is held by a Person
(other than an Affiliate, except as provided below) which is an Institutional Lender, (ii) which
expressly provides that it is subject and subordinate to Owner's Interest in the Premises and
to the terms of this Lease and the Condominium Unit Lease, (iii) that is in a principal amount
not more than the then Permitted Debt and (iv) a photostatic copy of which is, following the
execution and delivery thereof, delivered to Owner, together with a certification by Tenant
confirming that the photostatic copy is a true copy of the Mortgage and a certification by the
Recognized Mortgagee thereunder confirming the address of such Recognized Mortgagee for
notices. Notwithstanding anything contained herein to the contrary, an Affiliate may be part
of a lending group constituting a Recognized Mortgagee for so long as such Affiliate (i) does
not own more than a forty-nine (49%) percent beneficial interest in the debt held by such
Recognized Mortgagee with respect to Tenant or the Hotel and (ii) is not the lead lender or
agent for the lending group. Without limiting the preceding sentence, if a member of a lending
group constituting a Recognized Mortgagee fails to fulfill its commitment to advance all or a
portion of a loan, an Affiliate of Tenant may provide substitute financing (temporary or
permanent), in the form of an equity contribution and/or a loan, which substitute financing
shall be deemed to (x) be "Permitted Debt" hereunder (but shall not increase the maximum
amount of Permitted Debt permitted under Section 11.1(c)) and (y) yield a return or bear
interest, as the case may be, for purposes of determining Debt Service hereunder in an amount
equal to the Debt Service which would have been payable in respect of the loan which such
member of the lending group had failed to advance. Any such Debt Service shall, for the
purposes of this Lease, be payable at the same time as Debt Service on the Recognized
Mortgage of such Recognized Mortgagee. Owner shall, within ten (10) days after receipt of
a Recognized Mortgage, execute an instrument acknowledging such receipt of such Recognized
Mortgage; provided, however, that Owner's failure to execute such an instrument shall not
affect the status or validity of the Recognized Mortgage or the rights of the Recognized
Mortgagee.
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Section 11. 3. Effect of Mortgages.
(a) Owner's Interest. No Mortgage shall extend to or be a lien or
encumbrance upon, Owner's Interest in the Premises or any part thereof or any appurtenant
rights thereto which have not been granted to Tenant under this Lease, the Declaration of
Condominium or under the Condominium Unit Lease. A Mortgage may extend to and be a
lien or encumbrance upon the entire Tenant's Interest in the Premises.
(b) Mortgagee's Rights Not Greater than Tenant's. The execution and
delivery of an Affiliate Mortgage or a Recognized Mortgage shall not give or be deemed to
give an Affiliate Mortgagee or a Recognized Mortgagee any greater rights against Owner than
those granted to Tenant hereunder, except as otherwise expressly provided in this Lease.
Section 11.4. Notice and Right to Cure Tenant's Defaults.
(a) Notice to Recognized MortJ?:agee. Owner shall give to the Recognized
Mortgagee and/or Affiliate Mortgagee, in the manner provided by the provisions of Section
26.1 at such address as such Recognized Mortgagee or Affiliate Mortgagee may confirm to
Owner in the certification delivered to Owner pursuant to Section 1l.2(b) or given by notice
to Owner in accordance with Section 26.1, a copy of each notice of Default at the same time
as it gives notice of Default to Tenant, and no such notice of Default shall be deemed effective
with respect to any Recognized Mortgagee or Affiliate Mortgagee unless and until a copy
thereof shall have been so received by or refused by such Recognized Mortgagee or Affiliate
Mortgagee, as applicable. Owner shall also give the Recognized Mortgagee notice ("Notice
of Failure to Cure") in the event Tenant fails to cure a Default within the period, if any,
provided in this Lease for such cure, promptly following the expiration of such period (i.e.,
an Event of Default). Only Events of Default expressly described in the Notice of Failure to
Cure may give rise to a termination of the Lease by Owner pursuant to its termination rights
hereunder.
(b) Right and Time to Cure. The Recognized Mortgagee shall have a period
of sixty (60) days after receipt of the Notice of Failure to Cure, in the case of any Event of
Default, to (1) cure the Event of Default referred to in the Notice of Failure to Cure or (2)
cause it to be cured, subject to the provisions of Section 25.1(b). Nothing contained herein
shall be construed as imposing any obligation upon any Mortgagee to so perform or comply
on behalf of Tenant. Anything contained in this Lease to the contrary notwithstanding, Owner
shall have no right to terminate this Lease prior to the delivery of a Notice of Failure to Cure
or following the delivery of a Notice of Failure to Cure if, within thirty (30) days after receipt
of Owner's Notice of Failure to Cure, any Recognized Mortgagee shall:
(1) notify Owner of such Recognized Mortgagee's desire to cure the matter
described in such Notice of Failure to Cure, and
(2) payor cause to be paid all Rental then due and in arrears as specified
in the Default Notice from Owner to such Recognized Mortgagee
(provided, however, that such Recognized Mortgage shall not be
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required to payor cause to be paid any amounts payable by Tenant
under Section 28.1(b) to the extent such amounts relate to any Lease
Year other than the Lease Year for which the most recent Annual
Financial Statements have been made available to Owner), and
(3) cure all Defaults by Tenant in the observance or performance of any
term, covenant or condition of this Lease on Tenant's part to be
observed or performed (other than the payment of Rental), or if any
such Default is of such a nature that it cannot reasonably be remedied
within such thirty (30) day period (but is otherwise reasonably
susceptible to cure), Recognized Mortgagee shall, (i) within thirty (30)
days after the giving of such Notice of Failure to Cure, advise Owner
of such Recognized Mortgagee's intention to institute all steps (and
from time to time, as reasonably requested by Owner, such Recognized
Mortgagee shall advise Owner of the steps being taken) necessary to
remedy such Default (which such steps shall be reasonably designed to
effectuate the cure of such Default in a professional manner), and (ii)
thereafter diligently prosecute to completion all such steps necessary to
remedy the same, it being acknowledged by Owner that, if possession
or control of the Premises is required to effect such cure, the diligent
prosecution of a foreclosure of a Recognized Mortgage, and the
continuing efforts by such Recognized Mortgagee to effect such cure
following completion of such foreclosure, shall constitute a part of the
steps necessary to remedy such Default. Nothing in this Lease shall
require a Recognized Mortgagee or its Designee or Foreclosure
Transferee to cure any default of Tenant not reasonably susceptible of
being cured by such Person (e.g., a bankruptcy-related default).
Notwithstanding the foregoing provisions of this Section 1l.4(b),
following the delivery of a Notice of Failure to Cure, within five (5) Business Days following
the written request of any Recognized Mortgagee (which request may be contained in the notice
from such Recognized Mortgagee to Owner given pursuant to Section 1l.4(b)(1)), Owner shall
deliver to such Recognized Mortgagee a statement certifying the aggregate amount of Rental
then due and in arrears hereunder and the estimated per diem increase in such amount, but no
such request shall increase any of the time periods provided for in this Section 1l.4(b).
(c) Acceptance of Mortgagee's Performance. Owner shall accept
performance by a Mortgagee of any covenant, condition or agreement on Tenant's part to be
performed hereunder with the same force and effect as though performed by Tenant.
(d) Other Rights of Mortgagees. Notwithstanding any other provision of
this Lease, no payment made to Owner by any Mortgagee shall constitute the Mortgagee's
agreement that such payment was, in fact, due under the terms of this Lease.
(e) Owner's Self-Help Rights. Notwithstanding the foregoing provisions
of this Section 11.4, if a Recognized Mortgagee fails (for any reason) to cure any Default by
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Tenant described in paragraph (3) of Section 11.4(b) within thirty (30) days following receipt
of the Notice of Failure to Cure regarding such Default, then Owner may upon notice, but
shall be under no obligation to, perform the obligation of Tenant the breach of which gave rise
to such Default, without waiving or releasing Tenant from its obligations with respect to such
Default. Tenant hereby grants Owner access to the Premises in order to perform any such
obligation. Any amount paid by Owner in performing Tenant's obligations as provided in this
Section ll.4(e), including all costs and expenses incurred by Owner in connection therewith,
shall constitute Rental hereunder and shall be reimbursed to Owner within thirty (30) days
following Owner's demand therefor, together with a late charge on amounts actually paid by
Owner, calculated at the Late Charge Rate from the date of notice of any such payment by
Owner to the date on which payment of such amounts is received by Owner.
Section 11.5. Execution of New Tenant's Documents.
(a) Notice of Termination. If this Lease is terminated by reason of an Event
of Default, or by reason of the rejection thereof by or on behalf of the Tenant in bankruptcy
or for any other reason, Owner shall give prompt notice thereof to each Recognized Mortgagee
and Affiliate Mortgagee.
(b) Request for and Execution of New Tenant's Documents. If, within sixty
(60) days of receipt of the notice referred to in Section 1l.5(a), the Recognized Mortgagee
shall request, in writing, a new lease, Declaration of Condominium and Condominium Unit
Lease (collectively, "New Tenant's Documents") to the Recognized Mortgagee or to a
Designee or Foreclosure Transferee identified in such request (other than a Foreign
Instrumentality (if the Premises are owned by the Agency or the City or any instrumentality
of the Agency or the City) or an Affiliate of Tenant), then, subject to the provisions of
Sections 11.5(c) and 11.6, within ninety (90) days after Owner shall have received such
request, Owner shall execute and deliver New Tenant's Documents covering the remainder of
the Term to the Recognized Mortgagee or to any Designee or Foreclosure Transferee that has
satisfied the requirements set forth in Sections 10.I(g) and (h), and such Recognized
Mortgagee (or its Designee or Foreclosure Transferee) shall execute and deliver such New
Tenant's Documents to Owner within thirty (30) days following receipt thereof by such
Recognized Mortgagee (or Designee or Foreclosure Transferee). Such New Tenant's
Documents shall be effective upon the execution thereof by both Owner and such Recognized
Mortgagee or its Designee or Foreclosure Transferee. The New Tenant's Documents shall be
at the then current Rental and otherwise contain all of the covenants, conditions, limitations
and agreements, and all of Tenant's rights and remedies, contained in this Lease (including,
without limitation, a conveyance by Owner of all then-existing Improvements), the Declaration
of Condominium and the Condominium Unit Lease; provided, however, Owner shall not be
deemed to have represented or covenanted that such New Tenant's Documents are superior to
claims of Tenant, its other creditors or a judicially appointed receiver or trustee for Tenant,
provided, however, such New Tenant's Documents will have the same priority over any
encumbrances on the estate of Owner which Tenant has or had by virtue of this Lease, the
Declaration of Condominium and the Condominium Unit Lease and the Recognized Mortgagee
(or its Designee or Foreclosure Transferee) will not have any obligation to perform any acts
under the Lease which shall at such time have already been performed by Tenant.
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Simultaneously with the making of such New Tenant's Documents, the party obtaining such
New Tenant's Documents and all other parties junior in priority of interest in the Premises
shall, at the option the Recognized Mortgagee or its Designee or Foreclosure Transferee,
execute, acknowledge and deliver such new instruments, including new mortgages and new
Subleases, as applicable, and shall make such payments and adjustments among themselves,
as shall be necessary and proper for the purposes of restoring to each of such parties as nearly
as reasonably possible, the respective interest and status with respect to the Premises which was
possessed by the respective parties prior to the termination of the Lease as aforesaid.
Concurrently with the execution and delivery of such New Tenant's Documents, Owner
shall assign to the tenant, declarant or co-declarant (the "New Tenant") named therein all of
its right, title and interest in and to moneys (including, without limitation, (i) subrents collected
which have not been applied or are not being held for application to rent and the costs incurred
by Owner to operate, maintain and repair the Premises and (ii) insurance and condemnation
proceeds which have not been applied or are not being held for application to the costs incurred
by Owner to restore the Premises), if any, then held by or payable to Owner which Tenant
would have been entitled to receive but for termination of this Lease or Owner's exercise of
its rights upon the occurrence of an Event of Default; provided, however, that Owner shall not
be required to assign such moneys to such New Tenant unless and until such New Tenant shall
have cured all Events of Default that existed under the this Lease prior to the execution of such
New Tenant's Documents to the extent such Events of Default are reasonably susceptible to
cure by such New Tenant.
Upon the execution and delivery of New Tenant's Documents under this Section
1l.5(b), all Subleases which theretofore may have been assigned to Owner shall be assigned
and transferred, without recourse, representation or warranty, by Owner to the New Tenant
named in such New Tenant's Documents. Between the date of termination of this Lease and
the date of execution and delivery of the New Tenant's Documents (but not later than thirty
(30) days following receipt of such New Tenant's Documents by such Recognized Mortgagee,
as provided in Section 1l.5(b)), if a Recognized Mortgagee shall have requested such New
Tenant's Documents as provided in this Section 1l.5(b), Owner shall not enter into any new
Subleases, cancel or modify any then existing Subleases or accept any cancellation, termination
or surrender thereof (unless such termination shall be effected as a matter of law on the
termination of this Lease) without the written consent of a Recognized Mortgagee, except as
permitted in the Subleases.
(c) Conditions Precedent to Owner's Execution of New Tenant's
Documents. The provisions of Section 11.5(b) notwithstanding, Owner shall not be obligated
to enter into New Tenant's Documents with a Recognized Mortgagee or its Designee or
Foreclosure Transferee unless:
(i) the Recognized Mortgagee or its Designee or Foreclosure
Transferee shall pay to Owner, concurrently with the execution and delivery of the New
Tenant's Documents, all unpaid Rental due under this Lease up to and including the date of
the commencement of the term of the New Tenant's Documents and all reasonable
out-of-pocket expenses, as evidenced by receipted bills therefor, including, without limitation,
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reasonable attorneys' fees and disbursements and court costs, incurred in connection with the
Default or Event of Default, the termination of this Lease and the preparation of such New
Tenant's Documents, less the net revenue of the Premises actually received by Owner from the
date of termination of this Lease to the date of execution of the New Tenant's Documents, with
any excess of the total of such sums and expenses to be applied by Owner to the payment of
fixed rent and additional rent due under such New Tenant's Documents, and
(ii) in the case of a Default or Event of Default, the Recognized
Mortgagee or its Designee or Foreclosure Transferee shall promptly after execution of the New
Tenant's Documents, satisfy all obligations and cure all Events of Defaults existing or
continuing under this Lease at the time of its termination (as though the Term had not been
terminated) and which are reasonably susceptible to cure by such Recognized Mortgagee (or
its Designee or Foreclosure Transferee).
(d) No Waiver of Default. The execution of New Tenant's Documents
shall not constitute a waiver of any Default existing or continuing immediately before
termination of this Lease and, except as to a Default which is not reasonably susceptible of
being cured by the Recognized Mortgagee or its Designee or Foreclosure Transferee (e.g., the
insolvency of Tenant), the New Tenant under the New Tenant's Documents shall cure, within
the applicable periods in such New Tenant's Documents (which periods shall be identical to
the periods set forth in Section 25.1), all Defaults existing under this Lease immediately before
its termination. Nothing in this Lease shall require a Recognized Mortgagee or its Designee
or Foreclosure Transferee, as a condition to the exercise of its right to enter into New Tenant's
Documents, to cure any default of Tenant not reasonably susceptible of being cured by such
Person (e.g., a bankruptcy-related default).
(e) Payments under Lease. If the Recognized Mortgagee or its Designee
or Foreclosure Transferee shall enter into New Tenant's Documents pursuant to this Article
and if, upon such termination of this Lease, Tenant, but for such termination, would have been
entitled to receive any amount pursuant to the provisions of this Lease, then Owner agrees that,
subject to any rights of setoff Owner may have, the same shall be paid to the Recognized
Mortgagee or its Designee or Foreclosure Transferee, as the New Tenant under the New
Tenant's Documents, in the same manner and to the same extent as it would have been paid
or apply the same to or for the benefit of the Recognized Mortgagee or its Designee or
Foreclosure Transferee as if this Lease had not been terminated.
(f) The provisions of this Section 11.5 shall survive the Expiration of the
Term.
Section 11.6. Application of Proceeds from Insurance or Condemnation Awards.
To the extent that this Lease requires that insurance proceeds paid in connection with
any damage or destruction to the Premises, or the proceeds of an award paid in connection
with a taking referred to in Article 9, be applied to restore any portion of the Premises, no
Mortgagee shall have the right to apply the proceeds of insurance or awards toward the
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payment of the sum secured by its Mortgage, except for the reasonable costs of collection
thereof.
Section 11.7. Appearance at Condemnation Proceedings.
A Recognized Mortgagee shall have the right to appear In any condemnation
proceedings and to participate in any and all hearings, trials and appeals in connection
therewith.
Section 11.8. Rights Limited to Recognized Mortga~ees.
The rights granted to a Recognized Mortgagee under the provisions of this Lease shall
not apply in the case of any Mortgagee that is not a Recognized Mortgagee.
Section 11.9. No Surrender or Modification.
Owner agrees not to accept a voluntary surrender, termination or modification of this
Lease at any time while such Recognized Mortgage(s) shall remain a lien on Tenant's leasehold
estate. It is further understood and agreed that any such Recognized Mortgagee(s) shall not
be bound by any surrender, termination or modification of this Lease unless such surrender,
termination or modification is made with the prior written consent of such Recognized
Mortgagee, and this Lease shall not terminate by merger or otherwise as long as the lien of the
Recognized Mortgage(s) remains undischarged. The foregoing is not meant to and shall not
prohibit a sale of the fee to Tenant so long as no merger of estates shall result therefrom unless
all Recognized Mortgagees are satisfied concurrently therewith. Notwithstanding the
foregoing, Owner's waiver or postponement of any obligation of Tenant or any remedy Owner
may have under this Lease shall not constitute a modification for purposes hereof.
Section 11.10. Recognition by Owner of Recognized Mortgagee Most Senior in Lien.
If there is more than one Recognized Mortgagee, only that Recognized
Mortgagee, to the exclusion of all other Recognized Mortgagees, whose Recognized Mortgage
is most senior in lien shall be recognized as having rights under Sections 11.4 or 11.5, unless
such first priority Recognized Mortgagee has designated in writing to Owner a Recognized
Mortgagee whose Mortgage is junior in lien to exercise such right.
Section 11.11. Recognized Mortgagee's Assignment Rights.
(a) Notwithstanding anything contained in Article 10 or elsewhere in this Lease to
the contrary, a Foreclosure Transfer (other than to a Foreign Instrumentality for so long as the
Agency or the City is the Owner) shall not require the consent of Owner or constitute a breach
of any provision of or a Default under this Lease. Upon any such Foreclosure Transfer,
Owner shall recognize the Foreclosure Transferee as Tenant hereunder, provided, however,
that such new Tenant shall deliver to Owner, or shall cause to be delivered to Owner, within
thirty (30) days after the execution thereof, the appropriate instruments provided in Sections
10.I(g) and (h) (subject to the provisions of Section 11.11(b)).
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(b) Notwithstanding anything contained in this Lease to the contrary, no Mortgagee
or other Foreclosure Transferee shall be liable under this Lease unless and until such time as
it becomes Tenant hereunder, and then only for so long as it remains Tenant hereunder.
(c) Definitions:
(i) "Foreclosure Transfer" means a transfer occurring as a result
of the foreclosure of a Recognized Mortgage, or any sale of Tenant's Interest in the Premises,
or any other transfer or assignment of Tenant's Interest in the Premises by judicial proceedings
pertaining to a Recognized Mortgage or by virtue of the exercise of any power contained in
a Recognized Mortgage, or by assignment-in-lieu or other consensual conveyance, or
otherwise:
(x) by or on behalf of Tenant to a Recognized Mortgagee (or
its Designee or Foreclosure Transferee); or
(y) by or on behalf of a Tenant or a Recognized Mortgagee
(or its Designee or Foreclosure Transferee) to a purchaser of Tenant's Interest
in the Premises at a foreclosure sale pursuant to a Recognized Mortgage or by
a Recognized Mortgagee (or its Designee or its Foreclosure Transferee) after
consummating a Foreclosure Transfer as described in clause (x) above.
(ii) "Foreclosure Transferee" means the purchaser, transferee or
other assignee in a Foreclosure Transfer of Tenant's Interest in the Premises.
(iii) "Designee" means an Affiliate of a Recognized Mortgagee that
is the designee or nominee of such Recognized Mortgagee.
Section 11.12. RefInancing of a RecOlznized Mortgage.
(a) If Tenant is unable to obtain financing from an Institutional Lender on terms
satisfactory to Tenant, in its sole discretion, sufficient to repay in full the outstanding principal
balance (the "Balance") of a Recognized Mortgage at the maturity thereof (the amount by
which such financing, if any, so obtained by Tenant is less than the Balance is herein called
the "Shortfall Amount", which may be equal to the Balance if Tenant does not obtain any
such financing), then Tenant may, until such time as it secures such fInancing, provide the
Shortfall Amount through" Affiliate Debt" (which term includes an Affiliate Mortgage, an
unsecured loan by an Affiliate, an equity contribution from an Affiliate, or any combination
of the foregoing). For purposes of determining Debt Service, Affiliate Debt shall bear interest
or yield a return at a rate equal to two percent (2%) plus the prime rate of Citibank, N.A. (or
any successor thereto as provided in Article 4) and to require principal amortization based on
a twenty (20) year amortization schedule on a self-amortizing basis. Debt Service on Affiliate
Debt shall be payable not more frequently than monthly and shall be deducted from Hotel
Operating Profit in determining Net Cash Flow After Debt Service.
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(b) If Tenant has determined that it is unable to obtain such financing from an
Institutional Lender, it shall offer to enter into negotiations with the City for the City to
provide all, but not less than all, of the Shortfall Amount on terms acceptable to Tenant and
the City, in their sole discretion, but at an interest rate not to exceed the prime rate of
Citibank, N.A. and with principal amortization based on a twenty (20) year amortization
schedule on a self-amortizing basis. Any such offer by Tenant to enter into negotiations is in
all cases subject to Requirements and any conditions on junior financing imposed by the
Mortgagee providing financing up to the Shortfall Amount, if any. Despite any offer by
Tenant to enter into negotiations, the City is under no obligation to provide such financing to
Tenant and Tenant is under no obligation to accept such financing. In addition, no such offer
or negotiations shall preclude Tenant from financing the Shortfall Amount through Affiliate
Debt. Debt Service on any financing provided by the City shall be payable not more
frequently than monthly and shall be deducted from Hotel Operating Profit in determining Net
Cash Flow After Debt Service.
(c) Any such financing provided by the City or Affiliate Debt shall be deemed
Permitted Debt for all purposes under the Lease.
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ARTICLE 12.
NO SUBORDINATION
Section 12.1. No Subordination.
Owner's Interest in the Premises, including, without limitation, Owner's interest in this
Lease, as the same may be modified, amended or renewed in accordance with the provisions
of this Lease, shall not be subject or subordinate to (a) any Mortgage now or hereafter existing,
(b) any other liens or encumbrances hereafter affecting Tenant's Interest in the Premises or (c)
any Sublease or any mortgages, liens or encumbrances now or hereafter placed on any
Subtenant's interest in the Premises. Tenant's Interest in the Premises, including, without
limitation, this Lease and the leasehold estate of Tenant created hereby and all rights of Tenant
hereunder, are and shall be subject to the Title Matters.
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ARTICLE 13.
HOTEL CONSTRUCTION AND FURNISHING
Section 13.1. Tenant's Obligation to Construct Hotel.
The parties acknowledge that Tenant shall construct on the Land a first class convention
center hotel and other improvements described in the Plans and Specifications in accordance
with the terms of the Hotel Development Agreement and the terms hereof (together with any
and all permitted additions thereto and replacements thereof, the "Hotel"). If, with respect
to a matter relating to the Construction Work for the initial construction of the Hotel, a conflict
arises between the terms of the Hotel Development Agreement and the terms of this Lease, the
terms of the Hotel Development Agreement shall govern until the Hotel Opening Date, and
thereafter the terms of this Lease shall govern.
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ARTICLE 14.
MAINTENANCE AND REPAIR; ALTERATIONS
Section 14.1. Maintenance of Premises.
(a) Maintenance and Repair. Tenant shall take good care of, and keep and
maintain, the Premises in good and safe order and condition, and shall make all repairs therein
and thereon, interior and exterior, structural and nonstructural, ordinary and extraordinary,
foreseen and unforeseen, necessary to keep the Premises in good and safe order and condition
and as a first class convention center hotel, however the necessity or desirability therefor may
arise.
(i) Tenant shall not commit, and shall use all reasonable efforts to prevent,
waste, damage or injury to the Premises.
(ii) All repairs made by Tenant shall be substantially equal in quality and
class to the original quality of the Improvements being repaired and shall be made in
compliance with the Requirements.
(b) Cleaning of Premises. Tenant shall keep clean and free from dirt, mud,
standing water, rubbish, obstructions and physical encumbrances all areas of the Premises.
Section 14.2. Removal of Buildimz Equipment.
(a) Premises. Tenant shall not, without the consent of Owner, remove or dispose
of any Building Equipment and/or FF&E from the Premises unless such Building Equipment
and/or FP&E (i) is promptly replaced by Building Equipment and PF&E of at least equal
utility and quality, or (ii) is removed for repairs, cleaning or other servicing, provided Tenant
reinstalls such Building Equipment and FF&E with reasonable diligence; except, however,
Tenant shall not be required to replace any Building Equipment or FF&E that performed a
function that has become obsolete, unnecessary or undesirable in connection with the operation
of the Premises in accordance with the terms of this Lease.
(b) Other Areas. Tenant shall promptly rectify any damage or interference caused
by Tenant to any equipment, structures or vegetation located in the areas described on Exhibit
14.5.
Section 14.3. No Oblil!ation to Repair or to SupplY Utilities.
Owner (in its proprietary capacity only) shall not be required to supply any facilities,
services or utilities whatsoever to the Premises. Owner shall not have any duty or obligation
to make any alteration, change, improvement, replacement, Restoration or repair with respect
to the Premises.
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Section 14.4. Waste Disposal.
Tenant shall dispose of waste from all areas of the Premises In accordance with
Requirements and in a prompt and sanitary manner.
Section 14.5. Agency Maintenance Obligations.
From and after the Hotel Opening Date, Owner shall, or shall cause the appropriate
Governmental Authority to, take good care of, and keep and maintain, the broadwalk adjacent
to the Premises and the beach area described in the last sentence of this Section 14.5 in good
and safe order and condition and shall make all repairs therein and thereon necessary to keep
such beach area and broadwalk in good and safe order and condition as an amenity to the first
class nature of the Hotel. The provisions of this Section 14.5 shall survive any expiration or
termination of this Lease until March 30, 2023. In addition, prior to the Hotel Opening Date,
the City and Tenant shall enter into a concession agreement covering the area of the beach
west and east of the sand dunes immediately adjacent to the easterly boundary line of the Land
and having a width from the northerly boundary to the southerly boundary of the Land on the
terms set forth on Exhibit 14.5 attached hereto.
Section 14.6. Alterations.
(a) Subject to the terms and conditions of this Article 14 and the other applicable
provisions of this Lease, Tenant may, at any time and from time to time, at its sole cost and
expense, make alterations, additional installations, substitutions, improvements, renovations or
betterments (collectively, "Alterations"; but Alterations shall not encompass the addition,
renewal and replacement of FF&E) in and to the Premises or any portion thereof provided that:
(i) in connection with the performance of any Alterations (or series of
related Alterations) estimated to cost more than $500,000, adjusted for inflation (as estimated
by Tenant's architect or engineer) (a "Significant Alteration"), Tenant shall provide broad
form Builders All Risk insurance, on a completed value (or reporting form) which insurance
shall be effected by policies complying with all of the provisions of Article 7;
(ii) no Significant Alteration and no Alteration affecting the structural
portions, roofs or the heating, air conditioning, elevator, plumbing, electrical, sanitary,
mechanical or other service or utility systems shall be undertaken except under the supervision
of a licensed architect or licensed professional engineer;
(iii) no Significant Alteration shall be undertaken prior to Tenant delivering
to Owner, at Tenant's option, either (x) a performance bond and a labor and materials payment
bond (issued by a surety company reasonably satisfactory to Owner and licensed to do business
in the State of Florida), each in an amount equal to 100% of the estimated cost and otherwise
in form reasonably satisfactory to Owner or (y) such other security for the completion of the
Significant Alterations, as may be reasonably satisfactory to Owner;
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(iv) the Alterations will not result in a violation of any Requirement or
require a material change in any certificate of occupancy applicable to the Premises;
(v) the outside appearance, character or permitted use of the Premises shall
not be materially adversely affected, and the Alterations shall not materially (1) weaken or
impair the structure, (2) reduce the size or (3) lessen the value of, the Premises;
(vi) the proper functioning of any of the heating, air conditioning, elevator,
plumbing, electrical, sanitary, mechanical and other service or utility systems of the Premises
shall not be materially adversely affected; and
(vii) if any Alteration is (or related series of Alterations are) estimated to cost
more than $1,000,000, adjusted for inflation (as estimated by Tenant's architect or engineer),
Tenant shall obtain the prior written consent of Owner for such Alterations (a "M~or
Alteration") in accordance with the provisions of Section 14.6(d) below.
(b) Reimbursement of Owner's Expenses. Tenant shall reimburse Owner for all
actual out-of-pocket architectural and engineering expenses for architectural and engineering
review reasonably incurred by Owner in connection with its decision to grant or withhold
consent to a proposed Major Alteration and inspecting the Major Alteration to determine
whether the same is being or has been performed in accordance with the terms of this Lease,
including only the actual reasonable fees and expenses of any architect or engineer employed
for such purposes. Any Major Alteration for which consent has been received shall be
performed substantially in accordance with the approved plans and specifications, and no
material amendments or material additions to the plans and specifications shall be made without
the prior consent of Owner in accordance with the terms hereof.
(c) Approvals. Tenant, at its expense, shall obtain all necessary permits and
certificates from Governmental Authorities for the commencement and prosecution of any
Alterations and final approval from Governmental Authorities upon completion, promptly
deliver copies of the same to Owner and cause the Alterations to be performed in compliance
with all applicable Requirements and requirements of Mortgagees and insurers of the Premises,
and any Board of Fire Underwriters, Fire Insurance Rating Organization, or other body having
similar functions, and in good and workerlike manner, using materials and equipment at least
equal in quality and class to the original quality of the installations at the Premises that are
being replaced.
(d) Submission and Review of Alterations.
(i) Tenant shall submit to Owner plans and specifications showing in
reasonable detail any proposed Major Alteration. Within forty-five (45) days after Owner's
receipt of such plans and specifications, Owner shall notify Tenant of its approval or
disapproval thereof.
(ii) If Tenant desires to modify in any material respect previously approved
plans and specifications (as such may have been modified by approved plans and
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specifications), Tenant shall submit any such proposed modifications to Owner for Owner's
approval. Within twenty (20) days of its receipt of the proposed modifications, Owner shall
notify Tenant in writing with specificity of any material inconsistencies of which Owner
disapproves between the plans and specifications as modified and the plans and specifications
previously approved by Owner. Tenant shall, at its election, have the option of (x) submitting
Owner's disapproval to arbitration as to the (i) materiality of the inconsistency and/or (ii)
reasonableness of disapproval or (y) submitting revised modifications to the plans and
specifications to meet Owner's objections (which revised plans and specifications shall be
reviewed as hereinabove provided).
(e) Costs of Alterations. The costs of all Alterations shall be borne by Tenant and
accounted for as an Operating Expense, subject to Section 3. 3 (d)(v) .
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ARTICLE 15.
REQUIREMENTS
Section 15.1. Requirements.
(a) Tenant's Obligation to Comply. In connection with any Construction Work, and
with the maintenance, management, use and operation of the Premises and Tenant's
performance of its obligations hereunder, Tenant shall comply promptly with all Requirements,
without regard to the nature of the work required to be done, whether extraordinary or
ordinary, and whether requiring the removal of any encroachment (but Tenant may seek to
obtain an easement in order to cure an encroachment, if permitted by Requirements), or
affecting the maintenance, management, use or occupancy of the Premises, or involving or
requiring any structural changes or additions in or to the Premises and regardless of whether
such changes or additions are required by reason of any particular use to which the Premises,
or any part thereof, may be put. No consent to, approval of or acquiescence in any plans or
actions of Tenant by Owner, in its proprietary capacity as landlord under this Lease, or
Owner's designee shall be relied upon or construed as being a determination that such are in
compliance with the Requirements, or, in the case of construction plans, are structurally
sufficient, prudent or in compliance with the Requirements.
(b) Definition.
"Requirements" means:
(i) any and all laws, rules, regulations, constitutions, orders, ordinances,
charters, statutes, codes, executive orders and requirements of all Governmental Authorities
having jurisdiction over a Person and/or the Premises or any street, road, avenue or sidewalk
comprising a part of, or lying in front of, the Premises or any vault in, or under the Premises
(including, without limitation, any of the foregoing relating to handicapped access or parking,
the Building Code of the City and the laws, rules, regulations, orders, ordinances, statutes,
codes and requirements of any applicable Fire Rating Bureau or other body exercising similar
functions);
(ii) the temporary and/or permanent certificate or certificates of occupancy
issued for the Premises as then in force; and
(Hi) any and all provisions and requirements of any property, casualty or
other insurance policy required to be carried by Tenant under this Lease.
(c) Owner's Obligation to Comply. In connection with the performance of Owner's
obligations hereunder, Owner shall comply promptly with all Requirements.
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ARTICLE 16.
HOTEL MANAGER AND MANAGEMENT AGREEMENT
Section 16. 1. Management Agreement.
(a) Tenant shall cause the Hotel to be operated and managed exclusively by the
Hotel Manager in accordance with the terms and conditions of this Lease, including, without
limitation, Article 6 and this Article, pursuant to a written Management Agreement providing
for services, and containing terms and conditions, reasonable and customary for the operation
of a fIrst class convention center hotel in accordance with the terms of this Lease. The
services to be performed by Hotel Manager shall include, without limitation, the following:
(i) Hotel Manager will provide technical services to assist Tenant in the
construction, furnishing and equipping of the Hotel. These services will include, among other
things, (1) review and approval of architectural plans, plans for design and decor and plans for
furnishing, all of which will be subject to Hotel Manager's approval to ensure that the Hotel
will meet the standards set forth in this Lease; (2) develop criteria for furniture and equipment
and assistance in obtaining sources of supply; and (3) assistance in coordinating purchases and
installation of furnishings and equipment. Hotel Manager shall be entitled to a one-time fee
of $300,000 payable by Tenant for providing technical services, plus reimbursement of actual
costs (which will not include the wages of managerial or executive employees) in providing
technical services during the Pre-opening Period, as such costs are more particularly set forth
in the Development Budget.
(ii) Hotel Manager will provide required services to Tenant to prepare the
Hotel for opening, including, without limitation, (1) recruiting, training and employing Hotel
staff; (2) pre-opening marketing and advertising; (3) negotiating contracts for stores,
concessions, leases, supplies and similar items; (4) assistance in obtaining necessary licenses
and permits; and (5) assistance in purchasing initial operating supplies. Hotel Manager will
be reimbursed by Tenant for the costs of providing these pre-opening services, including the
wages of executive and staff employees, and out-of-pocket expenses, as such costs are more
particularly set forth in the Development Budget.
(b) Tenant shall provide in the Management Agreement that Hotel Manager shall
operate and manage the Hotel in accordance with the provisions of this Lease, including
without limitation, Article 6 hereof.
(c) Tenant hereby agrees to incorporate the covenants and agreements contained in
this Article in the Management Agreement as covenants and agreements of the Hotel Manager.
(d) The Hotel Manager's interest in the Management Agreement shall be subject and
subordinate to the Owner's Interest in the Premises and to the terms and conditions of this
Lease. As between Owner and Tenant, in the event of any conflict between the terms of this
Lease and the terms of the Management Agreement, the terms of this Lease shall govern.
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Tenant shall remain responsible for performing all of its obligations hereunder notwithstanding
the fact that the Hotel is being managed by the Hotel Manager.
Section 16.2. Term of Management Agreement.
(a) The initial Management Agreement shall provide for a term of thirty (30) years,
and may include up to four (4) renewal options of fifteen (15) years each and a final renewal
option of ten (10) years. Any subsequent Management Agreement shall be for a term not
greater than the balance of the term remaining under the prior Management Agreement. Hotel
Manager may not, without the prior written consent of Owner, exercise the first renewal option
unless Owner has received by the time of such renewal an eight (8 %) per annum cumulative
(not compounded) return (including payments of Base Rent and Percentage Rent including the
amount of Distribution Net Proceeds and Net Proceeds distributed to Owner pursuant to
Section 3.5) on the Land at a fixed value of $24,000,000 from and after the Hotel Opening
Date through the date such renewal option is exercised; provided, however, that the foregoing
requirement will cease to be applicable if Owner has received an eight (8 %) percent IRR
(including Base Rent and Percentage Rent (including the amount of Distribution Net Proceeds
and Net Proceeds distributed to Owner pursuant to Section 3.5) actually paid) on the value of
the Land (fixed at $24,000,000) from and after the Hotel Opening Date. Hotel Manager
and/or Tenant will have the right to cure any shortfall with respect to the required eight (8%)
cumulative (not compounded) return by direct payment of the amount of such shortfall to
Owner, with any such direct payment being deemed Percentage Rent and applied pursuant to
Tier 4, Tier SA, Tier 5B or Tier 6, as appropriate.
Section 16.3. Transfer of Hotel Manager's Interest in the Management Agreement.
(a) Approval Rights. Except for a Permitted Transfer, any (i) Management
Transfer, (ii) termination of the Management Agreement or (iii) engagement of a new manager
for the Hotel (a "Management Engagement") shall be subject to the prior written approval
of Owner.
(b) Foreign Instrumentality. Tenant acknowledges that for so long as the Premises
are owned by the Agency, the City or any other instrumentality of the Agency or the City,
Owner may disapprove a Management Transfer to or a Management Engagement of, a
foreign (i.e., non-United States) government or instrumentality thereof or Person controlled
thereby (a "Foreign Instrumentality"), and such disapproval shall be conclusively deemed
reasonable for purposes hereof. A Person shall be deemed to be "controlled by" a foreign
government or instrumentality if such government or instrumentality directs or causes the
direction of the management and policies of such Person.
(c) Definitions.
(i)
Transfer is made.
"Management Transferee" means a Person to which a Management
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(ii) "Permitted Transfer" means (1) a Management Transfer to a Permitted
Operator or a Person that is an Affiliate of a Permitted Operator or the Hotel Manager or (2)
a Management Engagement of a new operator that is a Permitted Operator or a Person that is
an Affiliate of a Permitted Operator or the Hotel Manager.
(Hi) "Management Transfer" means any transaction or series of
transactions, by operation of law or otherwise, with the result that (1) Hotel Manager has
conveyed a greater than fifty percent (50%) ownership interest in the Management Agreement
to a Person in which Hotel Manager's Parent does not have a Controlling Interest or (2) a
Controlling Interest of the Hotel Manager ceases to be held, directly or indirectly, by the Hotel
Manager's Parent. Notwithstanding anything else herein to the contrary, provided Tenant does
not constitute substantially all of the assets of Parent, a transfer of a Controlling Interest in the
Parent shall not be deemed a Management Transfer. For purposes hereof, "Manager's
Parent" shall mean Parent. Upon a Management Transfer or Management Engagement, a new
definition of "Manager's Parent", consistent with the intention of Owner and Tenant
contemplated herein, will be determined by Owner and Tenant.
(d) Permitted Operator. The term "Permitted Operator" shall mean a Person that
(i) is not a Foreign Instrumentality (for so long as the Agency, the City or any instrumentality
of the Agency or the City is the Owner hereunder); and (ii) together with its Affiliates (1) has
been engaged in the operation or management of hotels for at least the five years prior to the
date such Person will become the Hotel Manager hereunder and has operated or managed for
such five year period at least one convention hotel (i.e., a hotel containing 600 or more rooms
and 40,000 or more square feet of meeting space) which meets the Quality Standard set forth
in Article 6 of this Lease, and (2) has a national marketing operation under a "national flag"
or has entered into an agreement pursuant to which the Hotel shall be operated as part of a
Hotel Chain which has a national marketing operation under a "national flag"; provided,
however, that, prior to a Sale of the Hotel to a Person that is not an Affiliate of LHHC, LHHC
and its Affiliates shall be deemed to be Permitted Operators for the purposes of this Lease;
provided, further, however, that immediately following any such sale to a Person that is not
an Affiliate of LHHC, if an Affiliate of LHHC continues to operate the Hotel as the Hotel
Manager, then so long as an Affiliate of LHHC continuously operates the Hotel as the Hotel
Manager, LHHC and its Affiliates shall be deemed to be Permitted Operators for the purposes
of this Lease.
(e) Notice to Owner. Tenant and Hotel Manager shall notify Owner of any
Management Engagement, Permitted Transfer or Management Transfer within two (2) business
days after such occurrence or promptly after becoming aware of such occurrence, if later. The
notice required by this Section 16.3(e) shall contain the following information:
(i) the name and address of the new Hotel Manager or transferee;
(ii) the nature of such transaction and the percent interest conveyed; and
(Hi) in the case of a Management Engagement, a true and complete copy of
the instrument effectuating such transaction; and
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(iv) a copy of any new Management Agreement or any modifications to an
existing Management Agreement.
(f) Approvals. In any instance in which a Management Transfer or Management
Engagement requires Owner's consent, Tenant shall, prior to such Management Transfer or
Management Engagement, submit to Owner a written request for Owner's consent to such
transaction, which request shall contain or be accompanied by the following information:
(i) the name, address and a description of the nature and character of the
business operations of the proposed Management Transferee or new Hotel Manager;
(ii) disclosure of the ownership of the Controlling Interest of such proposed
Management Transferee or new Hotel Manager (unless the Person that owns such Controlling
Interest is a Public Company;
(iii) the principal terms and conditions of the proposed transaction;
(iv) a proposed form of the instrument effectuating such transaction;
(v) a copy of the proposed Management Agreement or any modifications
to the then existing Management Agreement;
(vi) such other additional information as Owner shall reasonably request,
which information may include information regarding ownership, banking and financial
matters, in connection with its evaluation of such transaction to the extent reasonably available
to Tenant, provided Owner shall make such request within ten (10) business days after receipt
of Tenant's request for consent.
(g) Owner's Approval. Owner shall approve or disapprove any transaction proposed
pursuant to Section 16.3(1) in accordance with Article 26 hereof within ten (10) business days
after receipt of Tenant's request for consent or Owner's receipt of such additional information.
Notwithstanding the foregoing, if any change in circumstances prior to the closing of the
proposed Management Transfer or Management Engagement renders the information provided
in this Section materially incomplete or materially incorrect, any consent previously given by
Owner shall be deemed null and void and Tenant shall notify Owner of the change. Upon
receipt of such notice, Owner shall thereupon have ten (10) business days to notify Tenant
whether Owner's consent to such changed Management Transfer or Management Engagement
is given or denied.
(h) Transfer Instruments. Tenant shall deliver to Owner, or shall cause to be
delivered to Owner, within ten (10) business days after the execution thereof, a true and correct
copy of the instrument of transfer or engagement and a true and correct copy of (i) in the case
of a Management Transfer, the instrument of assumption by the assignee or transferee of Hotel
Manager's obligations under the Management Agreement accruing from and after the date of
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such assignment or transfer and any modifications to the Management Agreement and (ii) in
the case of a Management Engagement, the new Management Agreement.
(i) Invalidity of Transactions. Any Management Engagement or Management
Transfer which is not a Permitted Transfer and is (i) entered into without Owner's consent as
and if required in this Article or (ii) sought to be entered into without the execution, and
delivery to Owner within ten (10) business days thereafter, of the instrument of transfer or
engagement, if applicable (unless such Management Transfer or Management Engagement is
effected by operation of law, in which case no instrument shall be required), shall have no
validity and shall be null and void and without effect until such time as such consent (if
required) is obtained and/or the applicable instrument is received. If Hotel Manager enters into
any such transaction without compliance with the terms of this Lease, Tenant shall diligently
pursue its remedies against Hotel Manager.
Section 16.4. Management and Other Fees.
(a) Hotel Manager shall be entitled to the following annual fees for services
rendered in connection with its operation of the Hotel, and payments to Hotel Manager in
excess of such fees, however described, shall not be permitted under the Management
Agreement:
(i) Base Fee:
Three (3 %) percent of Hotel Revenue.
(ii) Group Marketing Fee:
One and one-quarter (1.25%) percent of Hotel Revenue. The Group
Marketing Fee represents payment for chain wide advertising and
marketing services provided by LHHC's home office, including
overhead expenses of regional sales offices. These services will include
a central sales and marketing operation supported by regional sales
offices and nationwide corporate advertising, marketing and promotion
programs. The Hotel Manager will provide these services to the Hotel
on the same basis as it provides similar services to other hotels in its
chain.
(iii) Reservation Fee:
The cost of centralized reservation services provided by the Hotel
Manager (or through a third party service provider) shall be allocated
to the Hotel on a pass-through basis with no mark-up, but in no event
shall the cost per booking increase by more than the system-wide
increase charged to other hotels in the chain.
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(iv) Franchise Fee:
Upon the execution of a Management Agreement with a hotel operator
other than LHHC or an Affiliate thereof, such hotel franchisor's usual
and customary franchise fee, not to exceed two percent (2 %) of Rooms
Revenue.
(b) Hotel Manager shall be entitled to reimbursement under the Management
Agreement for out-of-pocket expenditures reasonably and properly incurred in the course of
the management and operation of the Hotel including, without limitation, travel and
entertainment, telephone and other incidental expenses of employees in performing services
actually and specifically incurred in connection with the Hotel; provided, however, in no event
shall Hotel Manager be reimbursed for overhead expenses of Hotel Manager's corporate
facilities or compensation of home office employees.
(c) Notwithstanding the provisions of Sections 16.4 (a)(i) and (a)(ii) above, in the
event a management agreement shall be entered into with a hotel operator other than LHHC
or an Affiliate thereof, such hotel operator shall be entitled to modify the percentage of Hotel
Revenue paid as the Base Fee and Group Marketing Fee, provided the aggregate of the same
shall not exceed four and one-quarter percent (4.25%) of Hotel Revenue.
Section 16.5. Owner's Rights and Remedies.
(a) Tenant will (i) perform or cause to be performed Tenant's material obligations
under the Management Agreement, (ii) enforce the performance by Hotel Manager of all of
Hotel Manager's material obligations under the Management Agreement, (iii) give Owner
prompt written notice and a copy of any notice of default, event of default, termination or
cancellation sent or received by Tenant and (iv) promptly deliver to Owner executed copies of
any amendment or modification of the Management Agreement, or if applicable, any new
Management Agreement.
(b) Tenant shall cause Hotel Manager (and any new Hotel Manager, prior to the
engagement of any such Hotel Manager) to enter into an attornment agreement with Owner and
Tenant providing as follows: (i) Hotel Manager will give Owner prompt written notice and
a copy of any notice of default, event of default, termination or cancellation sent or received
by Hotel Manager, (ii) Hotel Manager will promptly deliver to Owner executed copies of any
amendment or modification of the Management Agreement, or if applicable, any new
Management Agreement, (iii) Hotel Manager will not assert any right it might have to
terminate the Management Agreement or performance of its services thereunder as the result
of a default by Tenant without giving written notice thereof to Owner, specifying the claimed
default, and notwithstanding the occurrence of any such default, Hotel Manager shall take no
action to rescind or terminate the Management Agreement and shall, at the request of Owner,
continue performance of its obligations thereunder, in accordance with the terms thereof,
provided that the default shall be cured in accordance with the terms hereof, and Hotel
Manager shall be paid for its services in accordance with the fee schedules set forth in the
Management Agreement; in furtherance of the foregoing, Hotel Manager shall afford Owner
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an opportunity to cure defaults under the Management Agreement, which rights shall be
coincident and coterminous with the right of Tenant to effect such cure, except that Owner
shall have an additional sixty (60) day period, after the expiration of the period in which
Tenant is required to effect such cure, to effect the same (and performance by Owner shall be
accepted by Hotel Manager as though the same had been performed by Tenant), and there shall
be no default deemed to exist under the Management Agreement unless such cure shall not
have been completed within such period, (iv) in the event Owner shall terminate Tenant's
leasehold interest in the Premises or shall otherwise succeed to the rights of Tenant and no
New Tenant's Documents are delivered, the Management Agreement shall, at Owner's option,
exercisable by written notice to Hotel Manager within fifteen (15) business days after such
termination or other succession, remain in full force and effect, and Hotel Manager shall
continue to perform its services thereunder for the benefit of Owner, provided, however, that
(x) if Owner fails to timely exercise such right, Owner shall have no right to cause Hotel
Manager to continue performance as described herein, and (y) if Owner timely exercises such
right, then the Management Agreement shall be deemed to have been amended in the following
respects (and, at the request of Owner, the parties shall enter into a modification of the
Management Agreement to evidence such amendments):
(1) There shall be no payment by Owner of any administration fee,
termination fee or any other fee or charge under the Management Agreement in connection
with termination of Tenant's leasehold interest or Owner's succession to the rights of Tenant
under the Management Agreement;
(2) Owner shall have the right to terminate the Management Agreement at
any time, with or without cause, and without payment of any administration fee, termination
fee, or any other fee or charge, provided that in the event of a termination without cause
Owner shall give Hotel Manager not less than thirty (30) days prior written notice of such
termination;
(3) Hotel Manager shall have the right to terminate the Management
Agreement at any time, with or without cause, and without payment of any administration fee,
termination fee, or any other fee or charge, provided that in the event of a termination without
cause Hotel Manager shall give Owner not less than one hundred twenty (120) days prior
written notice of such termination;
(4)
Manager shall:
Upon termination or expiration of the Management Agreement, Hotel
(A) to the extent of Hotel Manager's interest and to the extent
permitted by Requirements, surrender and assign to Owner or its designee any and all licenses,
permits and/or governmental authorizations required for the operation of the Hotel;
(B) deliver to Owner any and all of Owner's properties within the
possession of Hotel Manager, including, without limitation, all keys, locks and safe
combinations, reservation lists, ledgers, bank statements for the Hotel accounts, books and
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records, insurance policies, bonds and other documents, agreements, leases and licenses
required for the operation of the Hotel; and
(C) remit to Owner the balance of any Hotel accounts, after
computation and disbursement to Hotel Manager of all accrued and unpaid management fees
and reimbursable costs;
(5) Hotel Manager shall not be permitted to undertake any actions not
provided for in the then-effective annual plan of the Hotel (other than in connection with the
day-to-day operations of the Hotel) without the prior written consent of Owner; and
(6) Owner shall not incur any liability to Hotel Manager under the
Management Agreement except to the extent Owner has liability under the Lease;
(v) if the Management Agreement shall terminate for any reason, or be rejected or disaffIrmed
pursuant to any bankruptcy law or any other law affecting creditors' rights, Hotel Manager
shall, if notice has not theretofore been provided to Owner, immediately notify Owner of such
termination, rejection or disaffirmance, and Owner shall have the right, exercisable by notice
to Hotel Manager within sixty (60) days after Owner obtains possession of the Hotel, to enter
into a new Management Agreement for the management of the Hotel on the same terms and
conditions as are contained in the Management Agreement (as amended above) for the
remainder of the term of the Management Agreement; the execution of such new Management
Agreement shall be subject to the curing by Owner of any outstanding defaults under the
Management Agreement which are reasonably susceptible to cure by Owner; in connection
with any prospective sale of Owner's Interest in the Premises and at the request of Owner,
Hotel Manager will execute and deliver to the party so requesting an estoppel certificate
indicating that the Management Agreement is unmodified (or, if modified, setting forth the
modifications) and in full force and effect, and that to the knowledge of Hotel Manager there
is no default (or specifying any default of which Hotel Manager has knowledge or notice), the
date of expiration of the term of the Management Agreement, and the date through which Hotel
Manager has received payment under the Management Agreement, it being understood that any
such certificate may be relied upon by Owner; and, Owner will give Hotel Manager a copy of
any default notice under the Lease and afford Hotel Manager the right to cure the same
(provided such cure is effectuated within the time period provided herein for Tenant to cure
the same).
(c) The rights of Owner set forth in this Section 16.5 shall, to the extent in conflict
with the rights of any Recognized Mortgage, be subject to the rights of such Recognized
Mortgagee provided such Recognized Mortgagee is in the process of, and is diligently,
exercising its rights under the applicable Recognized Mortgage.
Section 16.6. FF&E Reserve.
(a) Tenant shall cause (and the Management Agreement shall so provide) the Hotel
Manager to establish, in Tenant's name and for the benefit of Tenant, a separate interest-
bearing account (the "FF&E Reserve Account") solely for the purpose of funding the renewal,
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replacement and additions of FF&E and Building Equipment required for the operation of the
Hotel in accordance with the terms of this Lease from and after the Hotel Opening Date. To
fund the FF&E Reserve Account, Tenant shall deposit, or shall cause the Hotel Manager to
deposit, within thirty (30) days after the end of each month during the term of this Lease from
and after the Hotel Opening Date for such month an amount equal to the percentage of Hotel
Revenues as set forth in the following schedule:
Lease Year
Percentage of Hotel Revenues
1
2
3
4 and thereafter
1%
2%
3%
4%
To the extent Net Cash Flow After Debt Service (without regard to the required FF&E Reserve
Account payments) for any month is insufficient to allow for the FF&E Reserve Account
deposit required above, Tenant shall, within thirty (30) days after the end of each Lease Year,
deposit into the FF&E Reserve Account an amount sufficient to cause the FF&E Reserve
Account to be fully funded as so required above.
(b) Tenant shall cause the Hotel Manager to make expenditures from the FF&E
Reserve Account for the purposes permitted hereunder as is necessary to maintain the Hotel
in accordance with this Lease (including, without limitation, Section 6.4 hereof).
(c) Tenant hereby grants to Owner a security interest in the FF&E Reserve Account,
and all profits and proceeds thereof, in order to secure Tenant's obligations under this Section
16.6, which security interest shall be automatically fully subject and subordinate only to the
rights of the Recognized Mortgagee and purchase money lender in such FF&E Reserve
Account. Tenant hereby agrees not to grant a security interest in the FF&E Reserve Account
to any Person other than a Recognized Mortgagee, Owner or a purchase money lender. Owner
shall execute and deliver all such instruments as any Recognized Mortgagee or purchase money
lender shall reasonably require in order to confmn Owner's subordination of its security
interest as aforesaid.
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ARTICLE 17.
DISCHARGE OF LIENS
Section 17.1. Creation of Liens.
(a) Tenant shall not create, cause to be created, or suffer or permit to exist (a) any
lien, encumbrance or charge upon this Lease, the leasehold estate created hereby, the income
therefrom or the Premises or any part thereof or appurtenance thereto, which is not removed
within the time period required pursuant to Section 17.2, (b) any lien, encumbrance or charge
upon any assets of, or funds appropriated to, Owner, or (c) any other matter or thing whereby
Owner's Interest in the Premises or any part thereof or appurtenance thereto might be
materially impaired. Notwithstanding the above, Tenant shall have the right to execute
Mortgages, Subleases and other instruments (including, without limitation, equipment leases)
as provided by, and in accordance with, the provisions of this Lease, including, without
limitation, any liens on FF&E.
(b) Owner shall not create, cause to be created, or suffer or permit to exist (a) any
lien, encumbrance or charge upon this Lease, the leasehold estate created hereby, the income
therefrom (except as otherwise set permitted in Article 2) or the Premises or any part thereof
or appurtenance thereto, which is not removed within the time period required pursuant to
Section 17.2, (b) any lien, encumbrance or charge upon any assets of, or funds appropriated
to, Tenant, or (c) any other matter or thing whereby Tenant's Interest in the Premises or any
part thereof or appurtenance thereto might be materially impaired.
Section 17.2. Discharge of Liens.
(a) If any mechanic's, laborer's, vendor's, materialman's or similar statutory lien
(including, without limitation, tax liens, provided the underlying tax is an obligation of Tenant
by law or by a provision of this Lease) is filed against the Premises or any part thereof, or if
any public improvement lien created, or caused or suffered to be created by Tenant shall be
filed against any assets of, or funds appropriated to, Tenant or Owner, Tenant shall, within
thirty (30) days after Tenant receives notice of the filing of such mechanic's, laborer's,
vendor's, materialman's or similar statutory lien or public improvement lien, cause it to be
discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or
otherwise. However, Tenant shall not be required to discharge any such lien if Tenant shall
have (a) furnished Owner with, at Tenant's option, a cash deposit, bond, letter of credit from
an Institutional Lender (in form reasonably satisfactory to Owner) or other security (such as
a personal guaranty or title company indemnity) reasonably satisfactory to Owner, in an
amount sufficient to pay the lien with interest and penalties and (b) brought an appropriate
proceeding to discharge such lien and is prosecuting such proceeding with diligence and
continuity; except that if, despite Tenant's efforts to seek discharge of the lien, Owner
reasonably believes that a court judgment or order foreclosing such lien is about to be entered
or granted and so notifies Tenant, Tenant shall, within ten (10) days after notice to such effect
from Owner (but not later than three (3) business days prior to the entry or granting of such
judgment or order of foreclosure), cause such lien to be discharged of record or Owner may
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thereafter discharge the lien in accordance with Section 24.2 and look to the security furnished
by Tenant for reimbursement of its cost in so doing.
(b) Notwithstanding anything to the contrary contained in Section 17.2(a), if any
mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including, without
limitation, tax liens, provided the underlying tax is an obligation of Owner by law or by a
provision of this Lease) is filed against the Premises or any part thereof or Tenant's Interest
in the Premises or Owner's Interest in the Premises as a result of any action of Owner, its
officers, employees, representatives or agents, Owner shall, within thirty (30) days after Owner
receives notice of the filing of such mechanic's, laborer's, vendor's, materialman's or similar
statutory lien, cause it to be discharged of record by payment, deposit, bond, order of a court
of competent jurisdiction or otherwise. However, Owner shall not be required to discharge
any such lien if Owner shall have (i) furnished Tenant with, at Owner's option, a cash deposit,
bond, letter of credit from an Institutional Lender (in form reasonably satisfactory to Tenant)
or other security (such as a personal guaranty or title company indemnity) reasonably
satisfactory to Tenant, in an amount sufficient to pay the lien with interest and penalties and
(ii) brought an appropriate proceeding to discharge such lien and is prosecuting such
proceeding with diligence and continuity; except that if, despite Owner's efforts to seek
discharge of the lien, Tenant reasonably believes that a court judgment or order foreclosing
such lien is about to be entered or granted and so notifies Owner, Owner shall, within ten (10)
days of notice to such effect from Tenant (but not later than three (3) business days prior to
the entry or granting of such judgment or order of foreclosure), cause such lien to be
discharged of record or Tenant may thereafter discharge the lien in accordance with Section
24.2 and look to the security furnished by Owner for reimbursement of its cost in so doing.
Section 17.3. No Authority to Contract in Name of Owner.
Nothing contained in this Article shall be deemed or construed to constitute the consent
or request of Owner, express or implied, 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 Premises or any
part thereof, nor as giving Tenant 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 Owner's Interest in the Premises or any part
thereof or against assets of Owner, or Owner's interest in any Rental. Notice is hereby given,
and Tenant shall cause all Construction Agreements to provide, that to the extent enforceable
under Florida law, Owner shall not be liable for any work performed or to be performed at
the Premises or any part thereof for Tenant or any Subtenant or for any materials furnished
or to be furnished to the Premises or any part thereof for any of the foregoing, and no
mechanic's, laborer's, vendor's, materialman's or other similar statutory lien for such work
or materials shall attach to or affect Owner's Interest in the Premises or any assets of Owner,
or Owner's interest in any Rental. The foregoing shall not require Tenant to request advance
waivers of lien from contractors or subcontractors.
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ARTICLE 18.
REPRESENT A TIONS
Section 18 .1. No Brokers.
Each of Owner and Tenant represents to the other that it has not dealt with any broker,
finder or like entity in connection with this Lease or the transactions contemplated hereby, and
each party shall indemnify the other against any claim for brokerage commissions, fees or other
compensation by any Person alleging to have acted for or dealt with the indemnifying party in
connection with this Lease or the transactions contemplated hereby.
Section 18.2. No Other Representation.
Tenant accepts the Premises in existing condition and state of repair and Tenant
confirms that: except for the representation contained in Section 18.1 (and any other
representation expressly set forth in this Lease), (i) no representations, statements, or
warranties, express or implied, have been made by, or on behalf of, Owner with respect to the
Premises or the transactions contemplated by this Lease, the status of title thereto (except as
set forth in Exhibit 2.1), the physical condition thereof (including but not limited to subsurface
conditions), the leases and occupancies thereof or with respect thereto, if any, the zoning,
wetlands or other laws, regulations, rules and orders applicable thereto or the use that may be
made of the Premises, or the presence or absence of "hazardous substances" (as defmed in
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 USCA ~9601 et seq.) on or under the Premises, (ii) Tenant has relied on no such
representations, statements or warranties, and (Hi) Owner shall not be liable to Tenant, in any
event whatsoever, to correct any latent or patent defects in the Premises.
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ARTICLE 19.
NO LIABILITY FOR INJURY OR DAMAGE ETC.
Section 19.1. Liability of Owner or Tenant.
(a) Owner Not Liable for Injury or Damage. Etc. The Owner Indemnified Parties
shall not be liable to any Tenant Indemnified Party for, and Tenant shall indemnify and hold
the Owner Indemnified Parties harmless from and against, any loss, cost, liability, claim,
damage, expense (including, without limitation, reasonable attorneys' fees and disbursements),
penalty or fine incurred in connection with or arising from any injury (whether physical
(including, without limitation, death), economic or otherwise) to Tenant or to any other Person
in, about or concerning the Premises or any damage to, or loss (by theft or otherwise) of, any
of Tenant's property or of the property of any other Person in, about or concerning the
Premises, irrespective of the cause of injury, damage or loss (including, without limitation, the
acts or negligence of any tenant or occupant of the Premises or of any owners or occupants of
adjacent or neighboring property or caused by any Construction Work or by operations in
construction of any private, public or quasi-public work) or any latent or patent defects in the
Premises, except to the extent any of the foregoing is due to the gross negligence or willful
misconduct of any Owner Indemnified Party. The Owner Indemnified Parties shall not be
liable, to the extent of Tenant's insurance coverage (if available to cover the loss and in any
case exclusive of deductibles), for any loss or damage to any Person or property even if due
to the gross negligence or willful misconduct of any Owner Indemnified Party and, to that
extent, Tenant relieves the Owner Indemnified Parties from such liability. Without limiting
the generality of the foregoing, except to the extent caused by the gross negligence or willful
misconduct of any of the Owner Indemnified Parties (and then only in such Owner Indemnified
Party's proprietary capacity as opposed to its governmental capacity), the Owner Indemnified
Parties shall not be liable for (a) any failure of water supply, gas or electric current, (b) any
injury or damage to person or property resulting from gasoline, oil, steam, gas, electricity, or
hurricane, tornado, act of God, act of war, enemy action, flood, wind or similar storms or
disturbances, water, rain or ice, or (c) leakage of gasoline or oil from pipes, appliances, sewer
or plumbing works, except as otherwise provided in Article 35.
(b) Zoning Changes. Owner hereby assigns to Tenant any and all rights of Owner,
as owner of the Land, under Requirements to execute objections or waivers of objections to
applications for variances or other exceptions or exemptions from zoning or other
Requirements by (i) the owner of Site I-B or (ii) the owner of any other property with respect
to which, under applicable Requirements, the owner of the Land would have the right to object
or consent to variances or other exceptions or exemptions from zoning or other Requirements.
Such assignment shall in no way limit or otherwise restrict any other rights of the City or the
Agency, any instrumentalities of the Agency or the City, or any elected or appointed officials
or employees of the Agency or the City, in their respective governmental capacities, from
taking or refraining from taking any action or expressing any views and opinions in connection
with such application.
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(c) Cooperation. In connection with the development of that certain land located
adjacent to the Land at 1545 Collins Avenue ("Site I-B"), Owner (and the City, if the City
succeeds to the interests of the Agency as owner of Site I-B), as owner of Site I-B, and Tenant
hereby covenant and agree to work together to attempt to minimize any materially negative
effect of shadows on the Premises and/or the adjacent beach caused by any proposed
improvements to Site I-B. The term "Site I-B" shall also include 1535 Collins Avenue during
such time, if any, that Owner or the City owns such property.
(d) Survival. The provisions of this Section shall survive the Expiration of the
Term.
Section 19.2. Owner's Exculpation.
(a) Except as such liability may be eliminated or reduced by any constitutional,
statutory, common law or other protections afforded to public bodies or governments (for such
time as Owner is the City, the Agency or any instrumentality of the City or the Agency),
including, but not limited to, sovereign immunity statutes, the liability of Owner (including,
without limitation, with respect to any gross negligence or willful misconduct), or of any other
Person who has at any time acted as Owner (for such time as Owner is the City, the Agency
or any instrumentality of the City or the Agency) hereunder, for damages or otherwise, arising
out of or in connection with any breach of this Lease or any injury (whether physical (including
death) economic or otherwise) incurred in connection with this Lease or the Premises, shall be
limited to $10,000,000, adjusted for inflation. As used in the preceding sentence, the terms
"breach" and "injury" shall include all breaches and injuries arising out of the facts and
circumstances resulting in such breach or injury.
(b) Except for conversion, fraud or willful misconduct (and then only to the extent
such party acted in its proprietary capacity as opposed to its governmental capacity), none of
the Owner Indemnified Parties (except Owner as provided in Section 19.2(a)) shall have any
liability (personal or otherwise) hereunder, and except for Owner's Interest in the Premises (to
the extent permitted by applicable Requirements), no property or assets of the Owner
Indemnified Parties shall be subject to enforcement procedures for the satisfaction of Tenant's
remedies hereunder or any other liability of the Owner Indemnified Parties arising from or in
connection with this Lease or the Premises. Nothing contained herein shall be deemed a
waiver or limitation of any equitable remedies available to Tenant.
(c) Nothing contained in this Section or elsewhere in this Lease is in any way
intended to be a waiver of the limitation placed upon Owner's and the City's liability as set
forth in ~768.28, Fla. Stat. , or of any other constitutional, statutory, common law or other
protections afforded to public bodies or governments; provided, however, that this Section
19.2 shall not be applicable to Owner's indemnity pursuant to Section 35.3(b) herein.
Section 19.3. Notice of Injury or Damage.
Tenant shall notify Owner within thirty (30) days of any occurrence at the Premises of
which Tenant has notice and which Tenant believes could give rise to a claim of two hundred
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fifty thousand dollars ($250,000) (adjusted for inflation) or more, whether or not any claim has
been made, complaint filed or suit commenced; however, Tenant's failure to so notify Owner
shall not constitute or result in a breach or default of any of the terms or conditions of this
Lease or result in a loss of any benefit or right granted to Tenant under this Lease.
Section 19.4. Tenant's Exculpation.
Except for (a) Tenant's liability for conversion, willful misconduct or fraud, (b)
liabilities of Tenant arising under applicable Requirements when Owner is acting in or pursuant
to its governmental capacity, and (c) liability with respect to Tenant's obligation to pay Rental
that is past due but not yet paid, and except with respect to any rights or remedies for non-
monetary relief (including, without limitation, equitable relief), the liability of Tenant under
this Lease and with respect to the Premises for damages or other monetary amounts shall be
limited to Tenant's Interest in the Premises, and no other property or assets of Tenant shall be
subject to levy of execution or enforcement procedure for the satisfaction of Owner's remedies
hereunder or any other liability of Tenant arising from or in connection with this Lease or the
Premises. Without limiting the preceding sentence, if, and only if, a Tenant Indemnified Party
other than Tenant engages in conversion, fraud or willful misconduct, then such Tenant
Indemnified Party shall have personal liability hereunder and the property and assets of such
Tenant Indemnified Party shall be subject to levy of execution or enforcement procedure for
the satisfaction of Owner's remedies hereunder with respect to such conversion, fraud or
willful misconduct. Nothing contained herein shall be deemed a waiver or limitation of any
equitable remedies available to Owner.
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ARTICLE 20.
INDEMNIFICATION
Section 20. 1. Indemnification of Owner.
Tenant shall indemnify and hold the Owner Indemnified Parties harmless from all loss,
cost, liability, claim, damage and expense (including, without limitation, reasonable attorneys'
fees and disbursements), penalties and fines, incurred in connection with claims by a Person
against an Owner Indemnified Party arising from (a) the use or occupancy or manner of use
or occupancy of the Premises by Tenant or any Person claiming through or under Tenant or
(b) any acts, omissions or negligence of Tenant, the Condominium Association, Tenant, as a
Declarant under the Declaration of Condominium, or any Person claiming through or under
Tenant, the Condominium Association, Tenant, as such a Declarant, or of the contractors,
agents, servants, employees, guests, invitees or licensees of Tenant, the Condominium
Association or Tenant, as such Declarant, or any Person claiming through or under such
Person, in each case to the extent in, about or concerning the Premises either during or after
the expiration or termination of the Term, including, without limitation, any acts, omissions
or negligence in connection with any Construction Work or in the making or performing of any
repairs, restoration, alterations or improvements, except to the extent any of the foregoing is
caused by the gross negligence or willful misconduct of any of the Owner Indemnified Parties.
Section 20.2. Indemnification of Tenant.
Owner shall indemnify and hold the Tenant Indemnified Parties harmless from all loss,
cost, liability, claim, damage and expense (including, without limitation, reasonable attorneys'
fees and disbursements), penalties and fines, incurred in connection with claims by a Person
against a Tenant Indemnified Party arising from any acts, omissions or negligence of Owner
made in its proprietary capacity, in each case to the extent in, about or concerning the Premises
either during, or after the expiration of, the Term, except to the extent any of the foregoing
is caused by the gross negligence or willful misconduct of any of the Tenant Indemnified
Parties.
Section 20.3. Contractual Liability.
(a) The obligations of Tenant under this Article or Article 19 shall not be affected
in any way by the absence or presence of insurance coverage (or any limitation thereon,
including any statutory limitations with respect to Workers' Compensation insurance), or by
the failure or refusal of any insurance carrier to perform an obligation on its part under
insurance policies affecting the Premises; provided, however, that if Owner actually receives
any proceeds of Tenant's insurance with respect to an obligation of Tenant under this Article,
the amount thereof shall be credited against, and applied to reduce, any amounts paid and/or
payable hereunder by Tenant with respect to such obligation.
(b) The obligations of Owner under this Article or Article 19 shall not be affected
in any way by the absence or presence of insurance coverage, or by the failure or refusal of
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any insurance carrier to perform an obligation on its part under insurance policies affecting the
Premises; provided, however, that if Tenant actually receives any proceeds of Owner's
insurance with respect to an obligation of Owner under this Article, the amount thereof shall
be credited against, and applied to reduce, any amounts paid and/or payable hereunder by
Owner with respect to such obligation.
Section 20.4. Defense of Claim. Etc.
(a) If any claim, action or proceeding is made or brought against any Owner
Indemnified Party by reason of any event to which reference is made in Section 20.1 or
Article 19, then, upon demand by Owner or such Owner Indemnified Party, Tenant shall either
resist, defend or satisfy such claim, action or proceeding in such Owner Indemnified Party's
name, by the attorneys for, or approved by, Tenant's insurance carrier (if such claim, action
or proceeding is covered by insurance) or such other attorneys as Owner shall reasonably
approve. The foregoing notwithstanding, such Owner Indemnified Party may at its own
expense engage its own attorneys to defend such Owner Indemnified Party, or to assist such
Owner Indemnified Party in such Owner Indemnified Party's defense of such claim, action or
proceeding, as the case may be.
(b) If any claim, action or proceeding is made or brought against any Tenant
Indemnified Party by reason of any event to which reference is made in Section 20.2 or
Article 19, then, upon demand by Tenant or such Tenant Indemnified Party, Owner, or any
successor owner, as applicable, shall either resist, defend or satisfy such claim, action or
proceeding in such Tenant Indemnified Party's name, by the attorneys for, or approved by,
Owner's insurance carrier (if such claim, action or proceeding is covered by insurance) or by
such other attorneys as Tenant shall reasonably approve. The foregoing notwithstanding, such
Tenant Indemnified Party may at its own expense engage its own attorneys to defend such
Tenant Indemnified Party, or to assist such Tenant Indemnified Party in such Tenant
Indemnified Party's defense of such claim, action or proceeding, as the case may be.
Section 20.5. Notification and Payment.
(a) Each Owner Indemnified Party shall promptly notify Tenant of the imposition
of, incurrence by or assertion against such Owner Indemnified Party of any cost or expense
as to which Tenant has agreed to indemnify such Owner Indemnified Party pursuant to the
provisions of this Article 20. Tenant agrees to pay such Owner Indemnified Party, as Rental
hereunder, all amounts due under this Article 20 within sixty (60) days after receipt of the
notice from such Owner Indemnified Party.
(b) Each Tenant Indemnified Party shall promptly notify Owner of the imposition
of, incurrence by or assertion against such Tenant Indemnified Party of any cost or expense
as to which Owner has agreed to indemnify such Tenant Indemnified Party pursuant to the
provisions of this Article 20. Owner agrees to pay such Tenant Indemnified Party all amounts
due under this Article 20 within sixty (60) days after receipt of the notice from such Tenant
Indemnified Party.
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Section 20.6. Governs Lease.
The provisions of this Article shall govern every other provision of this Lease. The
absence of explicit reference to this Article in any particular provision of this Lease shall not
be construed to diminish the application of this Article to such provision.
Section 20.7. Survival.
The provisions of this Article shall survive the Expiration of the Term.
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ARTICLE 21.
AGENCY IMPROVEMENTS
Section 21.1. Garage.
Subject to Unavoidable Delays, Owner shall, at Owner's expense, cause the
construction of the Garage in accordance with the "Development Drawings" and "Construction
Plans" (as such terms are defined in the Garage Development Agreement) provided for
pursuant to that certain Garage Development Agreement (the "Garage Development
Agreement") dated of even date herewith between Owner and SMHC, by the Hotel Opening
Date, notwithstanding any termination of the Garage Development Agreement.
Section 21.2. Construction of State Streetscape Improvements.
(a) Subject to Unavoidable Delays, the City shall, at the City's expense, use good
faith efforts to cause the construction of the State Streetscape Improvements by the Hotel
Opening Date.
(b) "State Streetscape Improvements" means those certain streetscape
improvements on Collins Avenue from Lincoln Road to 15th Street, as such improvements are
more particularly described on Exhibit 21.2.
Section 21.3. Construction of Roadway Extension.
(a) Subject to Unavoidable Delays, the City, at the City's expense, shall construct,
or cause the construction of, the Roadway Extension by the Hotel Opening Date.
(b) "Roadway Extension" means the extension of 16th Street from Washington
Avenue to Collins Avenue.
Section 21.4. Broadwalk Extension.
Subject to Unavoidable Delays, the City, at the City's expense, shall cause the
construction of an Agency or City owned and maintained pedestrian walkway to be connected
to the existing boardwalk or broadwalk (subject to applicable Environmental Laws) on or
immediately east of the Premises from 21 st Street to Lummus Park, all as more particularly
described on Exhibit 21.4 attached hereto (the "Broadwalk Extension"), by the Delay Date;
provided, however, that the portion of such walkway immediately adjacent to the Hotel shall
be completed by the Hotel Opening Date.
Section 21.5. Parking Meters: Taxi Line.
During the Term, (i) neither Owner nor the City shall install or permit to be installed
any parking meters on the south side (heading east) of 16th Street between Washington Avenue
and Collins A venue, and any meters existing as of the date hereof, if any, shall be removed
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by the City, at its expense, and (ii) Tenant shall, without the payment of any fee imposed by
the Agency or the City, have the exclusive right to maintain a taxi line on the south side
(heading east) of 16th Street, subject to the traffic safety needs of the City (the "Taxi Line").
The provisions of the preceding sentence shall survive the Expiration of the Term for so long
as the Improvements are operated as a first class convention center hotel.
Section 21.6. Beach Easement.
The Agency, the City and Tenant have entered into an easement agreement (the "Beach
Easement") pursuant to which the Agency has granted an easement providing the general
public with pedestrian access from Collins A venue to the Atlantic Ocean beach along the
southerly boundary of the Land, on the terms and conditions set forth in the Beach Easement.
Section 21.7. Cooperation.
Owner and Tenant shall cooperate with each other in the scheduling and construction
of the foregoing improvements described in this Article.
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ARTICLE 22.
OWNER'S SECURITY INTEREST IN BUILDING EQUIPMENT AND FF&E
Section 22. 1. Grant of Security Interest.
Solely for the purpose of securing Tenant's obligations to deliver to Owner the
Improvements upon Expiration of the Term, Tenant hereby grants to Owner a security interest
in all of the Building Equipment and FF&E now or hereafter located on the Premises and
owned by Tenant, and in all products and proceeds thereof; provided, however, that Owner's
security interest shall be automatically fully subordinate and subject to any purchase money
financing permitted hereunder and any Recognized Mortgagee's security interest in the Building
Equipment and FF&E. Upon the Expiration of the Term, Owner shall be entitled to all of the
rights, remedies, powers and privileges available to a secured party under (and subject to the
provisions of) the Uniform Commercial Code enacted by the State of Florida. Tenant shall
execute and deliver all such instruments and take all such action as Owner, from time to time,
may reasonably request in order to obtain the full benefits of the security interest described in
this Section and of the rights and powers herein created and to maintain and perfect the security
interest granted above. To the extent permitted by Requirements, Tenant irrevocably
authorizes Owner to file financing statements and continuation statements with respect to the
foregoing collateral without the signature of Tenant. Owner shall execute and deliver all such
instruments as any Recognized Mortgagee or permitted purchase money lender shall reasonably
require in order to confIrm Owner's subordination of its security interest as aforesaid. Subject
to Section 14.2(a), Tenant may, during the Term, remove, replace and otherwise deal with the
Building Equipment and FF&E in the ordinary course of the operation of the Hotel. Owner
hereby waives any statutory lien for rent provided to Owner pursuant to applicable
Requirements.
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ARTICLE 23.
[RESERVED]
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ARTICLE 24.
RIGHT TO PERFORM THE OTHER PARTY'S COVENANTS
Section 24.1. Ril!ht to Perform Other Party's Obligations.
(a) If a Default shall occur and be continuing beyond any applicable grace period,
Owner may, but shall be under no obligation to, perform the obligation of Tenant the breach
of which gave rise to such Default, without waiving or releasing Tenant from any of its
obligations contained herein, provided that Owner shall exercise such right only in the event
of a bona fide emergency or after five (5) business days notice, and Tenant hereby grants
Owner access to the Premises in order to perform any such obligation.
(b) If a default by Owner under this Lease shall occur and be continuing beyond any
applicable grace period, Tenant may, but shall be under no obligation to, perform the
obligations of Owner (other than those described in Article 21 hereof and those which are
governmental as opposed to proprietary obligations) the breach of which gave rise to such
default or event of default, without waiving or releasing Owner from any of its obligations
contained herein, provided that Tenant shall exercise such right only in the event of a bona fide
emergency or after five (5) business days notice to Owner or the City, as applicable.
Section 24.2. Discharge of Liens.
(a) If Tenant fails to cause any mechanic's, laborer's, vendor's, materialman's or
similar statutory lien (including, without limitation, tax liens, providing the underlying tax is
an obligation of Tenant by law or by a provision of this Lease) to be discharged of record in
accordance with the provisions of Article 17, Owner may, but shall not be obligated to,
discharge such lien of record either by paying the amount claimed to be due or by procuring
the discharge of such lien by deposit or by bonding proceedings. If all or any portion of
Owner's Interest in the Premises or Owner's title is threatened or a material interest of Owner
is impaired, Owner may also, if Tenant has not done so (or bonded such lien), compel the
prosecution of an action for the foreclosure of such lien by the lienor and the payment of the
amount of the judgment in favor of the lienor with interest, costs and allowances.
(b) If Owner fails to cause any mechanic's, laborer's, vendor's, materialman's or
similar statutory lien (including, without limitation, tax liens, providing the underlying tax is
an obligation of Owner by law or by a provision of this Lease) to be discharged of record in
accordance with the provisions of Article 17, Tenant may, but shall not be obligated to,
discharge such lien of record either by paying the amount claimed to be due or by procuring
the discharge of such lien by deposit or by bonding proceedings. If Tenant's Interest in the
Premises (or any portion thereof) is threatened or a material interest of Tenant is impaired,
Tenant may also, if Owner has not done so (or bonded such lien), compel the prosecution of
an action for the foreclosure of such lien by the lienor and the payment of the amount of the
judgment in favor of the lienor with interest, costs and allowances.
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Section 24.3. Reimbursement for Amounts Paid Pursuant to this Article.
(a) Any amount paid by Owner in performing Tenant's obligations as provided in
this Article, including, without limitation, all costs and expenses incurred by Owner in
connection therewith, shall constitute Rental hereunder and shall be reimbursed to Owner
within thirty (30) days of Owner's demand, together with a late charge on amounts actually
paid by Owner, calculated at the Late Charge Rate from the date of notice of any such payment
by Owner to the date on which payment of such amounts is received by Owner.
(b) Any amount paid by Tenant in performing Owner's obligations as provided in
this Article, including, without limitation, all costs and expenses incurred by Tenant in
connection therewith, shall be reimbursed to Tenant within thirty (30) days of Tenant's
demand, together with a late charge on amounts actually paid by Tenant, calculated at the Late
Charge Rate from the date of notice of any such payment by Tenant to the date on which
payment of such amounts is received by Tenant.
Section 24.4. Waiver. Release and Assumption of Obligations.
(a) Owner's payment or performance pursuant to the provisions of this Article shall
not be, nor be deemed to constitute, Owner's assumption of Tenant's obligations to payor
perform any of Tenant's past, present or future obligations hereunder.
(b) Tenant's payment or performance pursuant to the provisions of this Article shall
not be, nor be deemed to constitute, Tenant's assumption of Owner's obligations to payor
perform any of Owner's past, present or future obligations hereunder.
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ARTICLE 25.
EVENTS OF DEFAULT, CONDITIONAL
LIMITATIONS, REMEDIES, ETC.
Section 25.1. Definition.
Each of the following events shall be an "Event of Default" hereunder:
(a) if Tenant fails to make any payment (or any part thereof) of Rental due
hereunder and such failure continues for a period of thirty (30) days after notice is given by
Owner that the same is past due;
(b) if Tenant shall default in the observance or performance of any term, covenant
or condition of this Lease on Tenant's part to be observed or performed (other than the
covenants for the payment of Rental or as expressly set forth below) and Tenant shall fail to
remedy such Default within thirty (30) days after notice by Owner of such Default (the
"Default Notice"), or if such a Default is of such a nature that it cannot reasonably be
remedied within thirty (30) days (but is otherwise susceptible to cure), Tenant shall not (i)
within thirty (30) days after the giving of such Default Notice, advise Owner of Tenant's
intention to institute all steps (and from time to time, as reasonably requested by Owner,
Tenant shall advise Owner of the steps being taken) necessary to remedy such Default (which
such steps shall be reasonably designed to effectuate the cure of such Default in a professional
manner), and (ii) thereafter diligently prosecute to completion all such steps necessary to
remedy the same.
(c) if an "Event of Default" shall have occurred under the Hotel Development
Agreement;
(d) if a Quality Deficiency shall occur and Tenant shall not cure the same within the
applicable time periods provided for in Article 6;
(e) to the extent permitted by law, if Tenant admits, in writing, that it is generally
unable to pay its debts as such become due;
(f) to the extent permitted by law, if Tenant makes an assignment for the benefit
of creditors;
(g) to the extent permitted by law, if Tenant files a voluntary petition under Title
11 of the United States Code, or if Tenant files a petition or an answer seeking, consenting to
or acquiescing in, any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future Federal bankruptcy code or any
other present or future applicable Federal, state or other bankruptcy or insolvency statute or
law, or seeks, consents to, acquiesces in or suffers the appointment of any trustee, receiver,
custodian, assignee, sequestrator, liquidator or other similar official of Tenant, of all or any
substantial part of its properties, or of all or any part of Tenant's Interest in the Premises, and
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the foregoing are not stayed or dismissed within one hundred and fifty (150) days after such
filing or other action;
(h) to the extent permitted by law, if, within one hundred and fifty (150) days after
the commencement of a proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the present or any
future Federal bankruptcy code or any other present or future applicable Federal, state or other
bankruptcy or insolvency statute or law, such proceeding has not been dismissed, or if, within
one hundred and eighty (180) days after the appointment, without the consent or acquiescence
of Tenant, of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar
official of Tenant, of all or any substantial part of its properties, or of all or any part of
Tenant's Interest in the Premises, such appointment has not been vacated or stayed on appeal
or otherwise, or if, within one hundred and eighty (180) days after the expiration of any such
stay, such appointment has not been vacated; or
(i) if a levy under execution or attachment in an aggregate amount of $250,000,
adjusted for inflation, at anyone time, is made against the Premises or any part thereof or
rights appertaining thereto (except for a levy made in connection with actions taken by Owner
(other than solely as holder of Owner's Interest in the Premises)), the income therefrom, this
Lease or the leasehold estate created hereby and such execution or attachment is not vacated
or removed by court order, bonding or otherwise within a period of sixty (60) days after such
levy or attachment, subject to Unavoidable Delays.
In the event of a Default which with the giving of notice to Tenant and the passage of time
would constitute an Event of Default, Owner's notice of such Default to Tenant shall state with
specificity the provision of this Lease under which the Default is claimed, the nature and
character of such Default, the facts giving rise to such Default, the date by which such Default
must be cured, and that the failure of Tenant to cure such Default by the date set forth in such
notice will result in Owner having the right to terminate this Lease. Owner's allegation of a
Default hereunder shall be subject to arbitration in accordance with the provisions of Article
31, provided Tenant shall initiate any such arbitration within the applicable grace period
provided in Section 25.1 or within ten (10) business days after the giving of Owner's notice
if no such grace period is provided therein.
Notwithstanding the foregoing, no Event of Default shall be deemed to have occurred until
such time as Owner shall have given Tenant notice of the occurrence of an Event of Default
(an "Event of Default Notice"). An Event of Default Notice shall state which one remedy
Owner is electing from among the remedies stated in Sections 25.2(a), (b) or (c). If Owner's
Event of Default Notice does not state that it will seek the remedy of termination, then Owner
shall be deemed to have waived any right to such remedy as to that particular Event of Default
in the event it is determined that such Event of Default has occurred. Any Dispute regarding
the occurrence of an Event of Default shall be resolved as provided in Section 31.3.
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Section 25.2. Enforcement of Performance: Damages: and Termination.
If an Event of Default occurs, Owner may elect to: (a) enforce performance or
observance by Tenant of the applicable provisions of this Lease; (b) recover damages for
breach of this Lease; or (c) terminate this Lease pursuant to Section 25.3(a) if Owner has
elected the remedy of termination in the applicable Event of Default Notice. Owner's election
of a remedy hereunder with respect to an Event of Default shall not limit or otherwise affect
Owner's right to elect any of the remedies available to Owner hereunder with respect to any
other Event of Default, except for an election to terminate the Lease.
Section 25.3. Expiration and Termination of Lease.
(a) Subject to Section 31.3(a), if an Event of Default occurs, provided Owner has
elected the remedy of termination in its Event of Default Notice, Owner may, within ten (10)
Business Days after the date of entry by a court of a final judgment that an Event of Default
exists (but without Tenant waiving any rights it may have to stay the termination pending
appeal), give Tenant and any Recognized Mortgagee notice stating that this Lease and the Term
shall terminate on the date specified in such notice, which date shall not be less than ten (10)
days after the giving of the notice, and this Lease and the Term and all rights of Tenant under
this Lease shall expire and terminate as if the date specified in the notice were the Fixed
Expiration Date, and Tenant shall quit and surrender Tenant's Interest in the Premises and
possession thereof forthwith. If such termination is stayed by order of any court having
jurisdiction over any case described in Sections 25.1(g) or (h) or by federal or state statute,
then, following the expiration of any such stay, or if the trustee appointed in any such case,
Tenant or Tenant as debtor-in-possession fails to assume Tenant's obligations under this Lease
within the period prescribed therefor by law or within thirty (30) days after entry of the order
for relief or as may be allowed by the court, Owner, to the extent permitted by law or by leave
of the court having jurisdiction over such case, shall have the right, at its election, to terminate
this Lease on five (5) days' notice to Tenant, Tenant as debtor-in-possession or the trustee.
Upon the expiration of the five (5) day period, this Lease shall expire and terminate and
Tenant, Tenant as debtor-in-possession and/or the trustee immediately shall quit and surrender
Tenant's Interest in the Premises and possession thereof forthwith.
(b) If this Lease is terminated as provided in Section 25.3(a), Owner may, without
notice, re-enter and repossess Tenant's Interest in the Premises (which may include, but not
be limited to, re-entering and repossessing the Premises) and may dispossess Tenant by
summary proceedings, writ of possession, proceedings in bankruptcy court or otherwise,
subject to applicable Requirements.
(c) If this Lease is terminated as provided in Section 25.3(a):
(i) Tenant shall pay to Owner all Rental payable under this Lease by Tenant
to Owner to the date upon which the Term shall have expired and come to an end and Tenant
shall surrender to Owner Tenant's Interest in the Premises (and possession thereof) in the
manner required by this Lease, and both parties shall be relieved of all further obligations
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hereunder, except to the extent this Lease expressly provides that an obligation hereunder shall
survive the Expiration of the Term; and
(ii) In no event shall Tenant be entitled to receive any credit or payment
with respect to the value of the Land and Improvements, title to which shall automatically vest
in Owner upon such termination.
Section 25.4. Waiver of Rights of Tenant and Owner.
To the extent not prohibited by law, Owner and Tenant hereby waive and release all
rights now or hereafter conferred by statute or otherwise that would have the effect of limiting
or modifying any of the provisions of this Article. Notwithstanding the foregoing, (i) neither
party shall be deemed to have waived the benefit of any automatic stay provisions under any
present or future bankruptcy code and (ii) Owner shall not be deemed to have waived or
released any rights conferred by any sovereign immunity conferred by statute or otherwise, as
provided in Section 19.2(c) hereof.
Section 25.5. Receipt of Moneys after Notice or Termination.
No receipt of money by Owner from Tenant after the termination of this Lease, or after
the giving of any notice of the termination of this Lease, shall reinstate, continue or extend the
Term or affect any notice theretofore given to Tenant, or operate as a waiver of the right of
Owner to recover Tenant's Interest in the Premises (which may include, but not be limited to,
recovering possession of the Premises) by proper remedy. After the service of notice to
terminate this Lease or the commencement of any suit or summary proceedings or after a final
order or judgment for the possession of Tenant's Interest in the Premises (which may include,
but not be limited to, a judgement for possession of the Premises), Owner may demand,
receive and collect any moneys due or thereafter falling due without in any manner affecting
the notice, proceeding, order, suit or judgment, all such moneys collected being deemed
payments on account of the use and occupation of Tenant's Interest in the Premises (including,
without limitation, the use and occupation of the Premises) or, at the election of Owner, on
account of Tenant's liability hereunder.
Section 25.6. Strict Performance.
No failure by Owner or Tenant to insist upon strict performance of any covenant,
agreement, term or condition of this Lease or to exercise any right or remedy available to such
party by reason of the other party's default or an Event of Default, and no payment or
acceptance of full or partial Rental during the continuance (or with Owner's knowledge of the
occurrence) of any Default or Event of Default, shall constitute a waiver of any such Default
or Event of Default or of such covenant, agreement, term or condition or of any other
covenant, agreement, term or condition. Subject to Section 11.9, no covenant, agreement,
term or condition of this Lease to be performed or complied with by either party, and no
default by either party, shall be waived, altered or modified except by a written instrument
executed by the other party. No waiver of any Default or Event of Default shall affect or alter
this Lease, but each and every covenant, agreement, term and condition of this Lease shall
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continue in full force and effect with respect to any other then existing or subsequent Default.
Payment by Tenant to Owner of any Rental shall be without prejudice to, and shall not
constitute a waiver of, any rights of Tenant against Owner provided for under this Lease or
at law or in equity. Tenant's compliance with any request or demand made by Owner shall not
be deemed a waiver of Tenant's right to contest the validity of such request or demand.
Section 25.7. Right to Enjoin Defaults.
Subject to the provisions of Article 31, in the event of Tenant's Default or Event of
Default, Owner shall be entitled to seek to enjoin the Default or Event of Default and shall
have the right to invoke any rights and remedies allowed at law or in equity or by statute or
otherwise, except to the extent Owner's remedies are expressly limited by the terms hereof.
Subject to the provisions of Article 31, in the event of any default by Owner of any term,
covenant or condition under this Lease, Tenant shall be entitled to seek to enjoin the default
and shall have the right to invoke any rights and remedies allowed at law or in equity or by
statute or otherwise, except to the extent Tenant's remedies are expressly limited by the terms
hereof. Each right and remedy of Owner and Tenant provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for in this Lease
or now or hereafter existing at law or in equity or by statute or otherwise except to the extent
Owner's remedies and Tenant's remedies are expressly limited by the terms hereof, and the
exercise or beginning of the exercise by Owner or Tenant of anyone or more of the rights or
remedies provided for in this Lease or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by Owner or Tenant
of any or all other rights or remedies provided for in this Lease or now or hereafter existing
at law or in equity or by statute or otherwise, except to the extent Owner's remedies and
Tenant's remedies are expressly limited by the terms hereof.
Section 25.8. Remedies Under Bankruptcv and Insolvency Codes.
If an order for relief is entered or if any stay of proceeding or other act becomes
effective against Tenant or Tenant's Interest in the Premises or Owner or Owner's Interest in
the Premises as applicable, in any proceeding which is commenced by or against Tenant or
Owner, as applicable, under the present or any future Federal Bankruptcy Code or in a
proceeding which is commenced by or against Tenant or Owner, as applicable, seeking a
reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any other present or future applicable federal, state or other bankruptcy or
insolvency statute or law, Owner or Tenant, as applicable, shall be entitled to invoke any and
all rights and remedies available to it under such bankruptcy or insolvency code, statute or law
or this Lease (except to the extent Owner's remedies and Tenant's remedies are expressly
limited by the terms hereof).
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Section 25.9. Funds Held by Tenant.
From and after the date, if any, on which an Event of Default (including, without
limitation, any Event of Default that occurs during the course of the Construction Work for
the initial construction of the Hotel) has been deemed to have occurred pursuant to the last
paragraph of Section 25.1 and while such Event of Default shall be continuing, Tenant shall
not pay, disburse or distribute any rents, issues or profits of the Premises, or portion thereof,
the proceeds of any insurance policies covering or relating to the Premises or any portion
thereof, or any awards payable in connection with the condemnation of the Premises or any
portion thereof (except to the extent such insurance proceeds or condemnation awards are
required in connection with any Restoration to be performed pursuant to Article 8 or 9) or any
undistributed proceeds from any sale or financing (except in accordance with Section 3.3)
except to (i) creditors which are not Affiliates, in payment of amounts then due and owing by
Tenant to such creditors with respect to work at the Premises, (ii) Affiliates, in payment of
amounts then due and owing by Tenant to such Affiliates for items and services provided to
Tenant in connection with its operations conducted at the Premises or any portion thereof, only
to the extent such amounts do not exceed that which is customarily and reasonably paid in
arms-length transactions to Persons who are not Affiliates for comparable items and services,
and (iii) the holder of a Recognized Mortgage, in payment of the principal amount of, and all
unpaid and accrued interest then outstanding under, such Recognized Mortgage and any other
amounts payable pursuant to such Recognized Mortgage and any instruments and documents
related thereto.
Section 25.10. Inspection.
Owner and its representatives shall have the right, upon twenty-four (24) hours prior
notice to Tenant, to enter upon the Premises (a) to inspect the operation, sanitation, safety,
maintenance and use of the same (but Owner shall not thereby assume any responsibility or
liability for the performance of Tenant's obligations hereunder, nor any liability arising from
the improper performance thereof) and (b) to conduct inspections for the purpose of
determining whether a Default or Event of Default has occurred, provided that Owner shall be
accompanied by a representative of Tenant (in areas of the Hotel other than areas readily
available to the general public), and provided further that such entry shall not unreasonably
interfere with the operation of the Premises. Tenant agrees to make a representative of Tenant
available to accompany Owner on any such inspection.
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ARTICLE 26.
NOTICES, CONSENTS AND APPROVALS
Section 26.1. Service of Notices and Other Communications.
(a) In Writing. Whenever it is provided herein that notice, demand, request,
consent, approval or other communication shall or may be given to, or served upon, either of
the parties by the other (or any Recognized Mortgagee), or whenever either of the parties
desires to give or serve upon the other any notice, demand, request, consent, approval or other
communication with respect hereto or to the Premises, each such notice, demand, request,
consent, approval or other communication (referred to in this Section 26.1 as a "Notice") shall
be in writing (whether or not so indicated elsewhere in this Lease) and shall be effective for
any purpose only if given or served by certified or registered U.S. Mail, postage prepaid,
return receipt requested, personal delivery with a signed receipt or a recognized national
courier service, addressed as follows:
if to Tenant prior to the Hotel Opening Date:
MB Redevelopment, Inc.
407 Lincoln Road
Suite 6-K
Miami Beach, Florida 33139
Attention: Mr. Eric A. Nesse
if to Tenant on or after the Hotel Opening Date:
MB Redevelopment, Inc.
c/o Loews Miami Beach Hotel
General Manager
1601 Collins Avenue
Miami Beach, Florida 33139
in each case with a copy to:
Loews Hotels Holding Corporation
667 Madison Avenue
New York, New York 10021
Attention: Corporate Secretary
and to:
Hughes Hubbard & Reed
201 S. Biscayne Boulevard, Suite 2500
Miami, Florida 33131
Attention: William A. Weber, Esq.
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if to Owner:
Miami Beach Redevelopment Agency
Executive Director
1700 Convention Center Drive
Miami Beach, Florida 33139
with a copy to:
Miami Beach Redevelopment Agency
General Counsel
1700 Convention Center Drive
Miami Beach, Florida 33139
and
City of Miami Beach
City Manager
1700 Convention Center Drive
Miami Beach, Florida 33139
with a copy to:
City of Miami Beach
City Attorney
1700 Convention Center Drive
Miami Beach, Florida 33139
Any such Notice may be given, in the manner provided in this Section 26.1, (x) on either
party's behalf by its attorneys designated by such party by notice hereunder, and (y) at
Tenant's request, on its behalf by any Recognized Mortgagee designated in such request.
(b) Effectiveness. Every Notice shall be effective on the date actually received, as
indicated on the receipt therefor or on the date delivery thereof is refused by the recipient
thereof.
(c) References. All references in this Lease to the "date" of Notice shall mean the
effective date, as provided in the preceding subsection (b).
Section 26.2. Consents and Approvals.
(a) Effect of Granting or Failure to Grant Approvals or Consents. All consents and
approvals which may be given under this Lease shall, as a condition of their effectiveness, be
in writing. The granting by a party of any consent to or approval of any act requiring consent
or approval under the terms of this Lease, or the failure on the part of a party to object to any
such action taken without the required consent or approval, shall not be deemed a waiver by
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the party whose consent was required of its right to require such consent or approval for any
other act.
(b) Standard. All consents and approvals which may be given by a party under this
Lease shall not (whether or not so indicated elsewhere in this Lease) be unreasonably withheld
or conditioned by such party and shall be given or denied within the time period provided, and
if no such time period has been provided, within a reasonable time. Upon disapproval of any
request for a consent or approval, the disapproving party shall, together with notice of such
disapproval, submit to the requesting party a written statement setting forth with specificity its
reasons for such disapproval.
(c) Deemed Approval.
(i) If a party entitled to grant or deny its consent or approval (the "Consenting
Party") within the specified time period shall fail to do so, then, except as otherwise provided
in Section 26.2(c)(ii) and (Hi), and provided that the request for consent or approval (and the
envelope in which such request is transmitted to the extent permitted by the carrier) bears the
legend set forth below in capital letters and in a type size not less than that provided below,
the matter for which such consent or approval is requested shall be deemed consented to or
approved, as the case may be:
"FAILURE TO RESPOND TO THIS REQUEST WITHIN THE TIME PERIOD
PROVIDED IN THE HOTEL LEASE AGREEMENT BETWEEN MIAMI BEACH
REDEVELOPMENT AGENCY AND MB REDEVELOPMENT, INC. [NAME OF
CURRENT TENANT] SHALL CONSTITUTE AUTOMATIC APPROVAL OF
THE MATTERS DESCRIBED HEREIN WITH RESPECT TO SECTION [FILL
IN APPLICABLE SECTION] OF SUCH HOTEL LEASE AGREEMENT. "
(ii) If the matter to which consent or approval is requested pertains to
ARTICLE 10 or ARTICLE 16, then such matter shall not be deemed consented to or
approved unless (i) the Consenting Party shall fail to timely respond to the other party's (the
"Requesting Party's") initial request, which request (and the envelope in which such request
is transmitted to the extent permitted by the carrier) shall bear the legend set forth above and
(ii) the Requesting Party shall thereafter send a second request to the Consenting Party which
request (and the envelope in which such request is transmitted to the extent permitted by the
carrier) conspicuously bears the legend set forth above, and Owner shall fail to timely respond
to such second request.
(iii) Notwithstanding anything to the contrary contained in this Lease,
including, without limitation, Sections 26.2(c)(i) and (ii) above, if the Agency, the City or any
instrumentality of the Agency or the City shall be the "Owner" hereunder and the matter
(other than a matter referred to in Section 26.2(c)(iv)) to be consented to or approved requires
the consideration of the Agency's board of directors, the City Commission and/or the
governing body of such other instrumentality of the Agency or the City as applicable (whether
pursuant to Requirements or the written opinion of the City Attorney, the Agency's General
Counselor the chief legal officer of such other instrumentality of the Agency or the City) then,
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provided Owner gives Tenant notice of such requirement within the time period provided for
such consent or approval, such matter shall not be deemed approved or consented to unless the
Owner shall fail to respond to Tenant's request (or second request if the provisions of Section
26.2(c)(ii) are applicable) by the date which is fifteen (15) days after the first regular meeting
of the Agency's board of directors (and/or of the City Commission and/or such other
instrumentality's governing body, as applicable) which occurs no earlier than ten (10) days
following the receipt of such request (or second request, as applicable); but in any event not
later than sixty (60) days following such request (or second request), as applicable.
(iv) Owner hereby agrees, for so long as the Agency, the City or any other
Governmental Authority shall be the "Owner" hereunder, that, subject to Requirements, the
Executive Director of the Agency, the City Manager or the chief operating officer of such
other Governmental Authority, as applicable, shall be authorized to grant consents or approvals
on behalf of the Agency, the City and/or other Governmental Authority as applicable, with
respect to the following Sections of this Lease: Article 7 and Sections 14.2(a), 14.6(a)(iii),
16.5(b)(iv)(5), 20.4, 32.2(b) and 32.3.
(v) The foregoing provisions of this Subsection shall not be construed to
modify or otherwise affect a party's right to arbitrate the failure of a party to act reasonably
in granting or denying a request for consent or to timely respond to a request for a consent,
but such right to arbitrate shall not serve to delay the time period within which a grant or
denial of such request is required hereunder.
(d) Remedy for Refusal to Grant Consent or Approval. If, pursuant to the terms
of this Lease, any consent or approval by Owner or Tenant is alleged to have been
unreasonably withheld, conditioned or delayed, then any dispute as to whether such consent
or approval has been unreasonably withheld, conditioned or delayed shall be settled by
arbitration in accordance with Article 31 hereof. In the event there shall be a final
determination that the consent or approval was unreasonably withheld, conditioned or delayed
so that the consent or approval should have been granted, the consent or approval shall be
deemed granted and the Requesting Party shall be entitled to any and all damages resulting
therefrom, subject to the limitations provided in this Lease.
(e) No Fees. etc. Except as specifically provided herein, no fees or charges of any
kind or amount shall be required by either party hereto as a condition of the grant of any
consent or approval which may be required under this Lease (provided that the foregoing shall
not be deemed in any way to limit Owner acting in its governmental, as distinct from its
proprietary, capacity from charging governmental fees on a nondiscriminatory basis).
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ARTICLE 27.
CERTIFICATES BY OWNER AND TENANT
Section 27.1. Certificate of Tenant.
Tenant shall, within fifteen (15) days after request by Owner for reasonable purposes,
execute, acknowledge and deliver to Owner, or any other Person specified by Owner, a written
statement (which may be relied upon by such Person) (a) certifying (i) that this Lease is
unmodified and in full force and effect (or if there are modifications, that this Lease, as
modified, is in full force and effect and stating such modifications) (and, if so requested, that
the annexed copy of this Lease is a true, correct and complete copy of this Lease), and (ii) the
date to which each item of Rental payable by Tenant hereunder has been paid, and (b) stating
(i) whether Tenant has given Owner written notice of any default, or any event that, with the
giving of notice or the passage of time, or both, would constitute a default, by Owner in the
performance of any covenant, agreement, obligation or condition contained in this Lease,
which default or event has not been cured, and (ii) whether, to the actual knowledge of Tenant
(but without independent inquiry), Owner is in default in performance of any covenant,
agreement, obligation or condition contained in this Lease, and, if so, specifying in detail each
such default.
Section 27.2. Certificate of Owner.
Owner shall, within fifteen (15) days after request by Tenant for reasonable purposes,
execute, acknowledge and deliver to Tenant, or such other Person specified by Tenant, a
written statement (which may be relied upon by such Person) (a) certifying (i) that this Lease
is unmodified and in full force and effect (or if there are modifications, that this Lease, as
modified, is in full force and effect and stating such modifications) (and, if so requested, that
the annexed copy of this Lease is a true, correct and complete copy of this Lease), and (ii) the
date to which each item of Rental payable by Tenant hereunder has been paid, and (b) stating
(i) whether an Event of Default has occurred or whether Owner has given Tenant notice of any
event that, with the giving of notice or the passage of time, or both, would constitute an Event
of Default, which Default or Event of Default has not been cured, and (ii) whether, to the
actual knowledge of Owner (but without independent inquiry), Tenant is in default in the
performance of any covenant, agreement, obligation or condition contained in this Lease, and,
if so, specifying, in detail, each such Default or Event of Default.
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ARTICLE 28.
FINANCIAL REPORTS AND RECORDS
Section 28.1. Books and Records: Audit Rights.
(a) Tenant shall at all times during the Term of this Lease keep and maintain
(separate from any of Tenant's other books, records and accounts), and shall cause the Hotel
Manager to keep and maintain, accurate and complete records pertaining to the Hotel and the
Construction Work related thereto, including, without limitation, books of account reflecting
the operations of the Hotel and such other matters referenced in this Lease, in accordance with
the Accounting Principles with such exceptions as may be provided for in this Lease, and
provided that Tenant (and Hotel Manager) may make such reasonable modifications in such
books of account as are consistent with Hotel Manager's standard practice in accounting for
its operations under management contracts generally. Owner and its representatives shall have,
during normal business hours and upon reasonable advance notice, access to inspect (but not
photocopy) the books and records of Tenant and the Hotel Manager pertaining to the Hotel,
including, without limitation, books of account properly reflecting the operations of the Hotel,
which books and records shall be kept at the Hotel. Owner shall have the right to cause an
audit by any Recognized Accounting Firm (in accordance with the Accounting Principles) of
such books and records to be made at any time (but not more frequently than one (1) time in
any twelve (12) month period), at Owner's expense (a copy of which shall be delivered to
Tenant). Such right of inspection and audit may be exercised at any time within three (3) years
after the end of the Lease Year to which such books and records relate, and Tenant and Hotel
Manager shall maintain all such books and records for at least such period of time and, if any
Dispute between the parties has arisen and remains unresolved at the expiration of such period
of time, for such further period of time until the resolution of such Dispute.
(b) If, upon any audit by Owner as described above of the books or records of
Tenant or Hotel Manager, (i) an error (which shall mean a mistake in calculation, allocation
of overhead costs properly chargeable to Hotel Manager's home office (including the home
offices of Affiliates of Hotel Manager), an accounting error, or a cost fraudulently incurred,
but shall exclude any error based on assertions that Tenant acted imprudently or unwisely in
connection with the operation and management of the Hotel) shall be revealed which results
in there being due to Owner Percentage Rent for any Lease Year for which Annual Financial
Statements are being audited pursuant to Section 28. 1 (a) , the amounts of any such
underpayments of Percentage Rent which may be disclosed by such audit, together with interest
accrued thereon at the Late Charge Rate from the date on which such underpayment was made
until the date of payment of the correct amount, shall be paid to Owner upon thirty (30) days
demand or (ii) an error (as defined in clause (i) above) shall be revealed which resulted in an
overpayment by Tenant to Owner of Percentage Rent, Owner shall remit the amount of such
overpayment (less the cost of such audit) to Tenant within thirty (30) days after the completion
of such audit. If such error results in there being due to Owner Percentage Rent for any Lease
Year being audited pursuant to Section 28.1(a) in an amount equal to or exceeding three (3%)
percent of the Percentage Rent theretofore paid by Tenant in respect of such Lease Year, then
the cost of such audit shall be paid by Tenant to Owner upon thirty (30) days demand. If
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Owner does not notify Tenant of any error in the calculation of Percentage Rent within three
(3) years after the end of any Lease Year, then Owner shall be deemed to have conclusively
waived any and all objections with respect to any Percentage Rent payments with respect to
such Lease Year.
(c) As soon as available, but in no event later than the date which is one hundred
fifty (150) days after the end of each Lease Year, Tenant shall make available at the Hotel for
inspection and examination (but not photocopying) by Owner or its representatives, which
representatives shall have executed a confidentiality agreement as described below, a copy of
the annual financial statements (the "Annual Financial Statements") for such Lease Year
(which statements shall be audited by any Recognized Accounting Firm) accurately reflecting
the financial condition of Tenant and the Hotel and the results of the Hotel's operations,
including, without limitation, balance sheets, profit and loss statements and statements of
changes in financial condition, all prepared and certified by Tenant and such independent
certified public accountant in accordance with the Accounting Principles; all such fInancial
statements shall set forth separately the property included in, the liabilities relating to and the
results of the operations of, the Hotel.
(d) As soon as available, but in no event later than thirty (30) days after the end of
each month, Tenant shall make available at the Hotel for inspection and examination (but not
photocopying) by Owner or its representatives, which representatives shall have executed a
confidentiality agreement as described below, an unaudited profit and loss statement comparing
actual results to both the then current budget and the previous year's actual results, for both
the current month and Lease Year to date.
(e) As soon as available, but in no event later than thirty (30) days prior to the
commencement of each Lease Year, Tenant shall make available at the Hotel for inspection and
examination (but not photocopying) by Owner or its representatives, which representatives shall
have executed a confidentiality agreement as described below, an information copy of a
projected summary income and expense statement reflecting the budget of the estimated Hotel
Revenue (including, separately, gross room revenues and food and beverage revenues),
expenditures for FF&E, capital expenditures, Operating Expenses (including, separately, rooms
expense, administrative and general expense, utility expense and repair and maintenance
expense), Debt Service, and Hotel Operating Profit for such coming Lease Year.
(f) Notwithstanding any of the foregoing provisions of this Article 28, so long as
the Owner is the Agency, the City or any instrumentality of the Agency or the City, the
following provisions shall be applicable to the books and records of the Hotel, the Annual
Financial Statements and any other documents (collectively, the "Hotel Documents") required
to be made available to Owner under this Article 28:
(i) All Hotel Documents shall be maintained at the Hotel.
(ii) All Hotel Documents shall be made available to Owner and its
representatives as provided above.
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(iii) If an extract of any Hotel Document is made by Owner or any of its
representatives and delivered to Owner's offices, there shall be attached by Owner or its
representatives to the front of the first page of such Hotel Document a sheet of paper bearing
the legend set forth below in capital letters and in a type size not less than that provided below:
"THE ATTACHED DOCUMENT CONTAINS BUSINESS OR FINANCIAL
INFORMATION THAT HAS BEEN DESIGNATED AS CONFIDENTIAL BY
[INSERT NAME OF TENANT]. THE ATTACHED DOCUMENT IS TO BE
KEPT SOLELY IN THE OFFICE OF THE CITY ATTORNEY OF THE CITY OF
MIAMI BEACH, FLORIDA. THE ATTACHED DOCUMENT IS TO BE
REVIEWED ONLY IN SUCH OFFICE AND SHALL BE RELEASED SOLELY
IN ACCORDANCE WITH APPLICABLE LAW."
(iv) Any third party representatives (including, without limitation, any
Recognized Accounting Firm) of Owner that review any Hotel Documents shall execute a
confidentiality agreement mutually acceptable to Owner and Tenant. If an extract of any
Hotel Document is made by any such representative for use in the offices of such
representative, there shall be attached by Owner or its representative to the front of the fIrst
page of such Hotel Document a sheet of paper bearing the legend set forth below in capital
letters and in a type size not less than that provided below:
"THE A TT ACHED DOCUMENT CONTAINS BUSINESS OR FINANCIAL
INFORMATION THAT HAS BEEN DESIGNATED AS CONFIDENTIAL BY
[INSERT NAME OF TENANT]. THE ATTACHED DOCUMENT IS SUBJECT
TO A CONFIDENTIALITY AGREEMENT AND SHALL BE KEPT SOLELY IN
THE OFFICES OF [INSERT NAME OF REPRESENTATIVE]. THE
ATTACHED DOCUMENT IS TO BE REVIEWED ONLY IN SUCH OFFICES
AND SHALL BE RELEASED SOLELY IN ACCORDANCE WITH SUCH
CONFIDENTIALITY AGREEMENT AND APPLICABLE LAW."
(v) Promptly following receipt of a request under any Requirement for the
release of a copy of any Hotel Document, Owner shall notify Tenant of such request, but
neither Owner nor any Owner Indemnified Party shall incur any liability to Tenant or any
Tenant Indemnified Party if Owner unintentionally fails to provide any such notice.
(vi) Neither Owner nor any Owner Indemnified Party shall incur any liability
to Tenant or any Tenant Indemnified Party in the event any Hotel Document is stolen,
misplaced or otherwise unintentionally released in violation of the foregoing provisions of this
Section 28.1(1).
(g) So long as the Owner is not the Agency, the City or the State of Florida, or any
instrumentality of the Agency, the City or the State of Florida, then the provisions of this
Section 28. 1 (g) shall be applicable to Owner: "Owner acknowledges that it may acquire certain
information pursuant to its rights under this Article 28 that Tenant desires to keep confidential,
including, without limitation, the Hotel Documents and other fInancial information made
available to Owner (the "Information"). Subject to Requirements, Owner agrees (i) to keep
DOB:[04984 .DOCS.MIAMl]GLEASE _9-19-96
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such Information confidential and (ii) to disclose or permit disclosure of the Information only
(1) to securities rating agencies, reinsurers, liquidity and credit providers, legal and other
advisors and insurance and other regulatory bodies, in each case, for reasons consistent with
the performance of their duties; provided, that Owner shall obtain, for the benefit of Tenant,
from any such Person a confidentiality agreement incorporating the terms of this Section
28. 1 (g) prior to the disclosure of such Information, or (2) upon subpoena by any Governmental
Authority having jurisdiction thereof; provided, however, that Owner shall notify Tenant within
five (5) Business Days after service of such subpoena and Tenant shall thereafter have the right
to seek a protective order preventing disclosure of such Information. "
(h) The obligations of Tenant and Owner under this Article shall survive the
Expiration of the Term.
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ARTICLE 29.
SURRENDER AT END OF TERM
Section 29.1. Surrender of Premises.
Upon the Expiration of the Term (or upon a re-entry by Owner upon Tenant's Interest
in the Premises (including, without limitation, a re-entry upon the Premises) pursuant to
Article 25), Tenant, without any payment or allowance whatsoever by Owner, shall surrender
Tenant's Interest in the Premises, and shall yield up possession of the Premises, to Owner in
good order, condition and repair, reasonable wear and tear excepted and (subject to the
provisions of Article 8) damage from casualty excepted, free and clear of all Subleases, liens
and encumbrance other than as set forth below and the Title Matters. Tenant hereby waives
any notice now or hereafter required by law with respect to vacating the Premises on the
Expiration of the Term.
Section 29.2. Delivery of Subleases. etc.
Upon the Expiration of the Term (or upon a re-entry by Owner upon Tenant's Interest
in the Premises (including, without limitation, a re-entry upon the Premises) pursuant to
Article 25), Tenant shall deliver to Owner the following (to the extent then in Tenant's
possession or control): Tenant's original executed counterparts, if available (and if not
available, true and correct copies thereof), of all Subleases then in effect, any service and
maintenance contracts then affecting the Premises, true and complete maintenance records for
the Premises, all original licenses and permits then pertaining to the Premises, permanent or
temporary certificates of occupancy then in effect for the Premises, and all warranties and
guarantees then in effect which Tenant has received in connection with any work or services
performed or Building Equipment and FF&E installed in the Premises (such to be delivered
without representation or warranty by Tenant), together with a duly executed assignment
thereof (without recourse) to Owner in form suitable for recording, and all financial reports
required by Article 28 and any and all other documents of every kind and nature whatsoever
relating to the operation of the Premises and the condition of the Improvements.
Section 29.3. Title to Improvements.
Owner recognizes and agrees that until Expiration of the Term, ownership of and title
to Tenant's Interest in the Premises shall be in Tenant and that until such time, Tenant has, and
shall be entitled to, all rights and privileges of ownership of Tenant's Interest in the Premises.
Ownership of and to Tenant's Interest in the Premises shall automatically vest in Owner upon
the Expiration of the Term, without the payment of consideration therefor, and without the
necessity for the execution and delivery by Tenant of any instrument transferring title.
Notwithstanding the foregoing, Tenant covenants and agrees that upon the Expiration of the
Term, Tenant shall, upon Owner's request, execute and deliver to Owner any instrument or
document reasonably requested by Owner to confIrm title to Tenant's Interest in the Premises
in Owner.
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Section 29.4. Title to FF&E Reserve Account.
Ownership of and to the FF&E Reserve Account and all proceeds thereof shall
automatically vest in Owner (subject to the lien therein of the Recognized Mortgagee) upon the
Expiration of the Term, without the payment of consideration therefor, and without the
necessity for the execution and delivery by Tenant of any instrument transferring title thereto.
Notwithstanding the foregoing, Tenant covenants and agrees that upon the Expiration of the
Term, Tenant shall, upon Owner's request, execute and deliver to Owner any instrument or
document reasonably requested by Owner to confirm title to said FF&E Reserve Account and
proceeds thereof in Owner.
Section 29.5. Cash and Accounts Receivable.
Tenant shall retain the right to all cash and accounts receivable on or in connection with
the Premises existing as of the Expiration of the Term and Owner shall pay Tenant for all
unopened consumable supplies located at the Premises upon the Expiration of the Term (based
on Tenant's actual cost therefor); provided, however that Tenant shall turn over to Owner all
deposits, accounts receivables and other payments with respect to all bookings for periods after
the Expiration of the Term. Owner shall assume all advanced bookings for periods after the
Expiration of the Term made in the ordinary course of the operation of the Hotel. If, after the
Expiration of the Term, Owner collects any accounts receivable to which Tenant is entitled,
Owner shall promptly remit such amounts to Tenant, subject to the rights of any Recognized
Mortgagee.
Section 29.6. Personal Property.
Any personal property of Tenant or of any Subtenant which remains on the Premises
after the termination of this Lease or after the removal of Tenant or such Subtenant from the
Premises, may, at the option of Owner, be deemed to have been abandoned by Tenant or such
Subtenant, and either may be retained by Owner as its property or be disposed of, without
accountability, in such manner as Owner may see fit, in its absolute and sole discretion, but
in compliance with applicable Requirements. Owner shall not be responsible for any loss or
damage occurring to any such property owned by Tenant or any Subtenant.
Section 29.7. Survival Clause.
The provisions of this Article shall survive the Expiration of the Term.
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ARTICLE 30.
QUIET ENJOYMENT
Section 30.1. Ouiet Enioyment.
Owner covenants that, as long as this Lease is in full force and effect without an Event
of Default existing hereunder, Tenant shall and may (subject to the exceptions, reservations,
terms and conditions of this Lease) peaceably and quietly have, hold and enjoy Tenant's
Interest in the Premises for the Term without molestation or disturbance by or from Owner
(solely in its proprietary capacity) or any Person claiming by, under or through Owner (solely
in its proprietary capacity).
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ARTICLE 31.
APPRAISAL AND ARBITRATION
Section 31. 1. Procedure for Appraisals.
In each instance under this Lease where appraisal is necessary or required, such
appraisal shall be conducted as follows:
(a) The party desiring such appraisal shall give notice to that effect to the other
party, specifying therein the name and address of the person designated to act as appraiser on
its behalf, and, within fifteen (15) days after the service of such notice, the other party shall
give notice to the first party specifying the name and address of the person designated to act
as appraiser on its behalf. If either party fails to notify the other party of the appointment of
its appraiser, as aforesaid, within or by the time above specified, then the appointment of the
second appraiser shall be made in the same manner as hereinafter provided for the appointment
of a third appraiser in a case where the two appraisers appointed hereunder and the parties are
unable to agree upon such appointment.
(b) As soon as practicable, but in no event later than ninety (90) days after
appointment of the appraisers as aforesaid, each appraiser shall notify Owner and Tenant of
the appraisal value determined by such appraiser.
(c) If the lower of the two appraisal values is within ten percent (10 %) of the higher
appraisal value, the appraisal value finally adopted shall be the average of the two appraisal
values. If the difference between the lower appraisal value and the higher appraisal value is
greater than ten percent (10%) of the higher appraised value, then Owner and Tenant may
either agree on the valuation in question, or themselves appoint a third appraiser, in which case
each of Owner and Tenant shall submit to such third appraiser its appraisal value. Within a
period of thirty (30) days after the appointment of such third appraiser, such third appraiser
shall select one of the two values submitted by Owner and Tenant and such appraisal value
shall be binding on the parties.
(d) In the event the two parties are unable to agree upon the appointment of a third
appraiser within fifteen (15) days after their being unable to agree upon a valuation, then either
party, on behalf of both, may apply to the Circuit Court of Dade County, Florida for the
appointment of such third appraiser, and the other party shall not raise any question as to that
court's full power and jurisdiction to entertain the application and make the appointment.
(e) Any appraiser selected or appointed pursuant to this Section shall be a member
of the American Institute of Real Estate Appraisers (or a successor organization), shall be an
appraiser, and shall have been doing business as such in the greater Miami, Florida area for
a period of at least the fifteen (15) years immediately preceding the date of this appointment.
All appraisers chosen or appointed pursuant to this Section shall be sworn fairly and impartially
to perform their duties as such appraiser. In the event of the failure, refusal or inability of any
appraiser to act, his successor shall be appointed within ten (10) days by the party who
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originally appointed him; in the event such party fails so to appoint such successor, and in the
case of the third appraiser, his successor shall be appointed as hereinabove provided.
(f) Each party shall pay the costs associated with the appraiser acting on such
party's behalf and the parties shall share equally the costs attributable to any third appraiser
appointed pursuant to this Section.
Section 31.2. Arbitration.
(a) Any dispute, disagreement, controversy or claim between Owner, Tenant and/or
the City arising out of or relating to this Lease, or the breach hereof (a "Dispute") (except (i)
for Development Disputes, as defined in the Hotel Development Agreement, to which
expedited arbitration is applicable pursuant to the Hotel Development Agreement and (ii) as
otherwise expressly set forth in the last paragraph of Section 25.1, above, and Section 31.3,
below), shall be resolved by arbitration administered by the American Arbitration Association
("AAA") as provided in this Section 31.2 and the Commercial Arbitration Rules of the AAA
(the "AAA Rules ") in effect as of the commencement of the applicable arbitration proceeding,
except to the extent the then current AAA Rules are inconsistent with the provisions of this
Section 31.2, in which event the terms hereof shall control. The arbitration shall be governed
by the United States Arbitration Act and the Florida Arbitration Code to the extent the Florida
Arbitration Code is not inconsistent with the United States Arbitration Act and this Section
31.2, and judgment upon the award entered by the arbitrators may be entered in any court
having jurisdiction.
(b) Any arbitration pursuant to this Section 31.2 shall be conducted in Dade County,
Florida, but the arbitrators may direct that one or more hearings be held in New York City or
such other place as they believe appropriate.
(c) (i) The arbitration shall be conducted by three (3) arbitrators, which
arbitrators shall be selected in accordance with the AAA Rules, and at least one (1) of whom
(but no more than two (2) of whom) shall have had experience in the management and/or
operation of hotels, or as a consultant in connection with the management and/or operation of
hotels.
(ii) Notwithstanding Subsection(c)(i) above, if the Dispute at issue is for a
liquidated amount not in excess of $100,000, adjusted for inflation, then the arbitration shall
be conducted by one (1) arbitrator in accordance with the AAA Rules for Expedited
Procedures, which arbitrator shall be selected in accordance with the AAA Rules for Expedited
Procedures, and which arbitrator shall have had experience in the management and/or operation
of hotels, or as a consultant in connection with the management and/or operation of hotels.
(Hi) In connection with any arbitration proceeding pursuant to this Section
31.2: (A) No arbitrator shall have been employed or engaged by a party hereto or its hotel
consultants within the previous five (5) year period; (B) Each arbitrator shall be neutral and
independent of the parties to this Lease and their respective hotel consultants; (C) No arbitrator
shall be affiliated with either party's auditors; (D) No arbitrator shall be employed by any hotel
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operator or an Affiliate of any hotel operator; and (E) No arbitrator shall have a conflict of
interest with (including, without limitation, any bias towards or against) a party hereto or its
then current hotel consultants. As used in this Lease, the term "arbitrator" or "arbitrators"
shall mean the one (1) member arbitration panel or the three (3) member arbitration panel, as
applicable, described herein.
(d) The award of the arbitrators shall be accompanied by a statement of the reasons
upon which the award is based. The arbitrators shall not have the power to modify this Lease.
The award may not include, and the parties specifically waive, any award of punitive damages
or attorneys' fees and costs. Accordingly, each party shall bear its own attorneys' fees and
costs incurred in connection with any arbitration proceeding. The fees and costs of the
arbitrators shall be borne equally by the parties.
(e) The arbitrators may consolidate proceedings with respect to any Dispute under
this Lease with proceedings with respect to any related controversy, provided that any parties
to such controversy who are not parties to this Lease consent to such consolidation.
(f) The parties will cooperate in the exchange of documents relevant to any Dispute.
Deposition or interrogatory discovery may be conducted only by agreement of the parties or
if ordered by the arbitrators. In considering a request for such deposition or interrogatory
discovery, the arbitrators shall take into account that the parties are seeking to avoid protracted
discovery in connection with any arbitration proceeding hereunder.
Section 31.3. Election of Remedies.
(a) If an Event of Default Notice states that Owner has elected to seek the remedy
of termination of this Lease, then Section 31.2 shall not be applicable. In such event, Owner
shall be required to commence a proceeding against Tenant within sixty (60) days after
Tenant's receipt of the Event of Default Notice, in the Circuit Court in and for Dade County,
Florida, which court shall have the same power to review the arbitration award finding the
existence of the Default (or in the case of Section 25.1(c), the "Event of Default" under the
Hotel Development Agreement) that is the subject of the Event of Default Notice that a court
of appeals would have with respect to the judgment of a trial court sitting without a jury. Such
proceeding shall expressly seek, as an initial request for relief, among other relief not
prohibited by this Lease that may be requested at the discretion of Owner, an equitable
determination by the court that an Event of Default exists under the terms of this Lease and
an award of termination of this Lease. Tenant shall have the right to assert any counterclaim
it may have against Owner in any such proceeding. Such proceeding shall be commenced by
Owner in the Circuit Court in and for Dade County, Florida. If it is determined that the
Circuit Court does not have subject matter jurisdiction over such proceeding, then Owner shall
dismiss such action and the matter shall be submitted to arbitration in accordance with Section
31.2.
(b) If an Event of Default Notice does not state that Owner has elected to seek the
remedy of termination of this Lease, then any Dispute arising therefrom shall be subject to
arbitration in accordance with Section 31.2. If Tenant shall dispute Owner's assertion that
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such Event of Default has occurred, Tenant shall, within ten (10) business days after Tenant's
receipt of the Event of Default Notice, commence an arbitration proceeding regarding such
Dispute. In such event, an Event of Default shall not be deemed to have occurred and Owner
shall not be permitted to exercise any rights against Tenant pursuant to Section 25.2(a) or
Section 25.2(b) until such time as the arbitrators have determined that an Event of Default has
occurred.
Section 31.4. Emerl!ency Provisional Relief.
If a party determines that a Dispute presents such party with an extraordinary situation
that requires it to seek emergency provisional relief prior to the appointment of the arbitrators
who will determine such Dispute, it may seek such emergency provisional relief from any court
having jurisdiction; provided, however, that (i) in order to obtain any such relief, the court
shall determine that such party has met any applicable standards imposed by the law applicable
to the relief requested with respect to such party's rights to such relief and (H) such relief may
only be sought and obtained on the condition that any order entered by the court will expire
ten (10) days after the appointment of the arbitrators unless the party that sought the order
renews its application for emergency provisional relief to the arbitrators within such ten (10)
day period, which arbitrators shall then make de novo any findings of fact that may be required
in ruling on such renewed application.
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ARTICLE 32.
ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS, CONTESTS, ETC.
Section 32.1. Tax Contest Proceedings.
Tenant shall have the right (subject to the provisions of Section 32.2), at its sole cost
and expense, to seek reductions in the valuation of the Premises assessed for real property tax
purposes and to prosecute any action or proceeding in connection therewith by appropriate
proceedings diligently conducted in good faith, in accordance with applicable Requirements.
Section 32.2. Imoosition Contest Proceedings.
Tenant shall have the right to contest, at its sole cost and expense, the amount or
validity, in whole or in part, of any Imposition by appropriate proceedings diligently conducted
in good faith, in which event payment of such Imposition may be postponed, subject to
Requirements, if, and only as long as:
(a) Neither the Premises nor any part thereof would, by reason of such
postponement or deferment, be, in the reasonable judgment of Owner, in danger of being
forfeited to a Governmental Authority (other than Owner when the Agency or the City or an
instrumentality thereof is Owner) and Owner is not in danger of being subjected to criminal
liability or penalty or civil liability or penalty in excess of the amount for which Tenant has
furnished security as provided in Section 32.2(b) by reason of nonpayment thereof; and
(b) Tenant has deposited with a Recognized Mortgagee, if any (or if not, with a
third party escrow agent proposed by Tenant, subject to Owner's consent, not to be
unreasonably withheld (failure to respond within fifteen (15) days after notice being
conclusively deemed approval)), cash in the amount so contested and unpaid or, alternatively,
at Tenant's option, a surety company bond or an irrevocable letter of credit issued by an
Institutional Lender (in form reasonably satisfactory to Owner) or other security (for example,
a personal guaranty) reasonably satisfactory to Owner, in the amount so contested and unpaid,
together with all interest and penalties in connection therewith and all charges relating to such
contested Imposition that mayor might, in Owner's reasonable judgment, be assessed against,
or become a charge on, the Premises or any part thereof in or during the pendency of such
proceedings. Upon the termination of such proceedings, Tenant shall pay the amount of such
Imposition or part thereof as finally determined in such proceedings, the payment of which was
deferred during the prosecution of such proceedings, together with any costs, fees (including,
without limitation, reasonable attorneys' fees and disbursements), interest, penalties or other
liabilities in connection therewith, and, upon such payment, any Recognized Mortgagee or
escrow agent holding any amount or other security deposited with it with respect to such
Imposition shall (subject to the terms of any agreement between Tenant and any Recognized
Mortgagee or escrow agent) return the same, together with the interest, if any, earned thereon.
However, if such Recognized Mortgagee or escrow agent is so requested by Tenant, such
Recognized Mortgagee or escrow agent shall disburse said moneys on deposit with it directly
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to the Person to whom or to which such Imposition is payable. If at any time during the
continuance of such proceedings Owner, in its reasonable judgment, deems insufficient the
amount or nature of the security deposited, Tenant, within ten (10) days after Owner's demand,
shall make an additional deposit of such additional sums or other acceptable security as Owner
may request, and upon failure of Tenant to so do, the amount theretofore deposited, together
with the interest, if any, earned thereon, shall, upon demand by Owner, be applied by such
Recognized Mortgagee or escrow agent to the payment, removal and discharge of such
Imposition and the interest and penalties in connection therewith and any costs, fees (including,
without limitation, reasonable attorneys' fees and disbursements) or other liability accruing in
any such proceedings and the balance, if any, remaining thereafter, together with the interest,
if any, earned thereon and remaining after application by Owner as aforesaid, shall be returned
to Tenant or to the Person entitled to receive it. If there is a deficiency, Tenant shall pay the
deficiency to Owner or the Person entitled to receive it, within ten (10) days after Owner's
demand.
Section 32.3. Requirement Contest.
Tenant shall have the right to contest the validity of any Requirement or the application
thereof. During such contest, compliance with any such contested Requirement may be
deferred by Tenant provided that before instituting any such proceeding, Tenant shall furnish
such Recognized Mortgagee, if any (or if not, with a third party escrow agent proposed by
Tenant, subject to Owner's consent, not to be unreasonably withheld (failure to respond within
fifteen (15) days after notice being conclusively deemed approval)), with a surety company
bond or, alternatively at Tenant's option, a cash deposit, an irrevocable letter of credit issued
by an Institutional Lender or other security (e.g., a personal guaranty), in form and amount
reasonably satisfactory to Owner, securing compliance with the contested Requirement and
payment of all interest, penalties, fines, civil liabilities, fees and expenses in connection
therewith. Any such proceeding instituted by Tenant shall be commenced as soon as possible
after the issuance of any such contested Requirement and shall be prosecuted with diligence
to final adjudication, settlement, compliance or other mutually acceptable disposition of the
Requirement so contested. The furnishing of any bond, deposit, letter of credit or other
security notwithstanding, Tenant shall comply with any such Requirement in accordance with
the provisions of Section 15.1(a) if, in Owner's reasonable judgment, (i) noncompliance
therewith would create an emergency condition involving the health or safety of persons, (H)
the Premises, or any part thereof, are in material danger of being forfeited to an authority
(other than Owner when the Agency or the City or an instrumentality thereof is Owner) or (Hi)
Owner is in danger of being subjected to criminal liability or penalty, or civil liability in excess
of the amount for which Tenant shall have furnished security as hereinabove provided by
reason of noncompliance therewith, and any security posted by Tenant shall (subject to the
terms of any agreement between Tenant and any Recognized Mortgagee or escrow agent) be
returned to Tenant with any interest accrued thereon.
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Section 32.4. Owner's Participation in Contest Proceedings.
Owner shall not be required to join in any action or proceeding referred to in this
Article unless the provisions of any law, rule or regulation at the time in effect require that
such action or proceeding be brought by and/or in the name of Owner. If so required, Owner
shall join and cooperate in such proceedings or permit them to be brought by Tenant in
Owner's name, in which case Tenant shall pay all reasonable costs and expenses (including,
without limitation, attorneys' fees and disbursements) incurred by Owner in connection
therewith. Notwithstanding the foregoing, Owner's joinder and cooperation shall be limited
to actions necessary to enable Tenant to satisfy technical requirements of any such action or
proceeding and in no event shall Owner be required to join in any such action or proceeding
in any substantive capacity.
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ARTICLE 33.
NONDISCRIMINATION
Section 33.1. Nondiscrimination.
Tenant shall be an equal opportunity employer, and shall not engage in any unlawful
discrimination against any Person because of race, creed, national origin, sex, age, disability,
marital status or sexual orientation.
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ARTICLE 34.
INDICTMENT, INVESTIGATIONS, ETC.
Section 34.1. Cooperation in Investigations.
To the extent required by Requirements, Tenant shall cooperate fully and faithfully with
any investigation, audit or inquiry conducted by any Governmental Authority that is
empowered directly or by designation to compel the attendance of witnesses and to examine
witnesses under oath, or conducted by a Governmental Authority that is a party in interest to
the transaction, submitted bid, submitted proposal, contract, lease, permit, or license that is
the subject of the investigation, audit or inquiry. In addition, Tenant shall promptly report in
writing to the City Attorney of the City of Miami Beach, Florida any solicitation, of which
Tenant's officers or directors have knowledge, of money, goods, requests for future
employment or other benefit or thing of value, by or on behalf of any employee of the Agency,
City or other Person relating to the procurement or obtaining of this Lease by the Tenant or
affecting the performance of this Lease.
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ARTICLE 35.
HAZARDOUS MATERIALS
Section 35.1. Definitions. For the purposes of this Lease, the following terms shall
have the following definitions:
(a) "Hazardous Materials" shall mean (i) petroleum and its constituents; (ii) radon
gas, asbestos in any form which is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment which contain dielectric fluid containing levels of
polychlorinated biphenyls in excess of federal, state or local safety guidelines, whichever are
more stringent; (iii) any substance, gas, material or chemical which is or may hereafter be
defined as or included in the definition of "hazardous substances," "hazardous materials,"
"hazardous wastes," "pollutants or contaminants," "solid wastes" or words of similar
import under any Requirement including the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. ~ 9061 et ~; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. ~ 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ~ 6901, et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ~ 1251, et seq.; and Florida Statutes, Chapters
376 and 403; and (iv) any other chemical, material, gas or substance, the exposure to or
release of which is regulated by any governmental or quasi-governmental entity having
jurisdiction over the Premises or the operations thereon;
(b) "Environmental Laws" shall mean all Requirements relating to the protection of
human health or the Environment, including:
(i) all Requirements relating to reporting, licensing, permitting, investigation
and remediation of Releases or Threat of Release of Hazardous Materials, into the
Environment, or relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials; and
(ii) all Requirements pertaining to the protection of the health and safety of
employees or the public;
(c) "Environment" shall mean soil, surface waters, groundwaters, land, stream
sediments, surface or subsurface strata and ambient air;
(d) "Environmental Condition" shall mean any condition not caused by any of the
Owner Indemnified Parties (except to the extent disclosed in the Reports) with respect to the
Environment on or off the Premises, whether or not yet discovered, which could or does result
in any Environmental Damages, including any condition resulting from the operation of
Tenant's business or the operation of the business of any subtenant or occupant of the Premises
or that of any other property owner or operator in the vicinity of the Premises or any activity
or operation formerly conducted by any Person on or off the Premises;
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(e) "Environmental Damages" shall mean all claims, judgments, damages (including
punitive damages), losses, penalties, fines, liabilities (including strict liability), encumbrances,
liens, costs and expenses of investigation and defense of any claim, whether or not such is
ultimately defeated, and of any settlement or judgment, of whatever kind or nature, contingent
or otherwise, matured or unmatured, foreseeable or unforeseeable, any of which are incurred
at any time as a result of the remediation or mitigation of an Environmental Condition,
including, without limitation, fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in connection with investigation
and remediation, including the preparation of any feasibility studies or reports and the
performance of any remedial, abatement, containment, closure, restoration or monitoring work;
(f) "Permit" shall mean any environmental permit, license, approval, consent or
authorization issued by a federal, state or local governmental or quasi-governmental entity;
(g) "Release" shall mean any releasing, seeping, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the
Environment; and
(h) "Threat of Release" shall mean a substantial likelihood of a Release which requires
action to prevent or mitigate damage to the Environment which may result from such Release.
Section 35.2. Use of Hazardous Materials.
Tenant shall not cause or permit any Hazardous Material to be brought on, kept or used
in or about the Premises except as necessary or useful to Tenant's business and in compliance
with all Environmental Laws.
Section 35.3. Indemnification.
(a) Tenant hereby indemnifies and holds harmless the Owner Indemnified Parties from
and against any and all Environmental Damages, except to the extent any such Environmental
Damage is caused by any of the Owner Indemnified Parties (except to the extent that any such
Environmental Damage results from or is in connection with Environmental Conditions
disclosed pursuant to the Reports (as defined below)). Such obligation of Tenant shall include
the burden and expense of defending all claims, suits and administrative proceedings (with
counsel reasonably satisfactory to Owner), even if such claims, suits or proceedings are
groundless, false or fraudulent, and conducting all negotiations of any description, and paying
and discharging, when and as the same become due, any and all judgments, penalties or other
sums due against any of the Owner Indemnified Parties. Tenant's obligations shall not apply
with respect to Environmental Damages resulting from Environmental Conditions existing prior
to the execution hereof, except to the extent that such Environmental Conditions were disclosed
to Tenant pursuant to the documents described in Exhibit 35.3 attached hereto (the "Reports")
(regardless of whether the same were caused by any of the Owner Indemnified Parties).
Without limiting the foregoing, if the presence or Release of any Hazardous Material on or
from the Premises caused or permitted by Tenant results in any contamination of the Premises,
Tenant shall promptly take all actions at its sole cost and expense as are necessary to return
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the Premises to the condition existing prior to the introduction of such Hazardous Material;
provided that Owner's approval of such actions shall first be obtained, which approval shall
not be unreasonably withheld.
(b) Owner hereby indemnifies and holds harmless the Tenant Indemnified Parties
from and against any and all Environmental Damages resulting from Environmental Conditions
existing at the Premises prior to the execution hereof which were not disclosed to Tenant in
the Reports. Such obligation of Owner shall include the burden and expense of defending all
claims, suits and administrative proceedings (with counsel reasonably satisfactory to Tenant),
even if such claims, suits or proceedings are groundless, false or fraudulent, and conducting
all negotiations of any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against any of the Tenant Indemnified
Parties.
Section 35.4. Compliance.
Tenant, at its sole cost and expense (except as otherwise provided in this Lease), shall
comply and cause the Hotel Manager and all Subtenants to comply with all Environmental
Laws with respect to the use and operation of the Premises.
Section 35.5. Notices.
If Tenant or Owner receives any notice of a Release, Threat of Release or
Environmental Condition or a notice with regard to air emissions, water discharges, noise
emissions, recycling, violation of any Environmental Law or any other environmental, health
or safety matter affecting Tenant or the Premises (an "Environmental Complaint")
independently or by notice from any Governmental Authority having jurisdiction over the
Premises, including the EP A, or with respect to any litigation regarding Environmental
Conditions at or about the Premises, then such party shall give prompt oral and written notice
of same to the other party detailing all relevant facts and circumstances.
Section 35.6. Owner's Remedies.
Provided Tenant does not diligently commence to remediate the applicable
Environmental Conditions promptly after becoming aware of the same and thereafter diligently
pursue the completion thereof in a reasonable time (and in any event in accordance with
Requirements), Owner shall have the right, but not the obligation, to enter onto the Premises
or to take such actions as it deems necessary or advisable to cleanup, remove, resolve or
minimize the impact of or otherwise deal with any Hazardous Materials, Release, Threatened
Release or Environmental Complaint upon its obtaining knowledge of such matters
independently or by receipt of any notice from any Person, including the EPA.
Section 35.7. Defaults.
Except to the extent the same is a matter for which Owner is responsible pursuant to
Section 35.3(b) above or relates to an Environmental Condition caused by an Owner
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Indemnified Party (to the extent not set forth in the Reports), the occurrence of any of the
following events shall constitute an Event of Default under this Lease:
(a) if the EPA or any other federal, state or local body or agency creates a lien upon
the Premises which is not discharged by payment or bonding within ninety (90) days; or
(b) if the EPA or any other federal, state or local body or agency makes a claim
against Tenant (or any subtenant, licensee or other occupant of the Premises), the Premises or
Owner, for damages or cleanup costs related to a Release or an Environmental Complaint on
or pertaining to the Premises; provided however, such claim shall not constitute an Event of
Default if, within thirty (30) days of the occurrence giving rise to the lien or claim:
(i) Tenant has commenced and is diligently pursuing either: (x) cure or
correction of the event which constitutes the basis for the lien or claim and continues diligently
to pursue the cure or correction to completion and obtains the discharge of any lien, or
(y) proceedings for an injunction, restraining order or other appropriate emergent relief
preventing the body or agency from asserting the claim and, if such relief is granted, the
emergent relief is not thereafter dissolved or reversed on appeal; and
(H) Tenant has posted a bond, letter of credit or other security satisfactory
in form, substance and amount to the agency or body asserting the claim to secure the proper
and complete cure or correction of the event which constitutes the basis for the claim.
Section 35.8. Owner Responsibility.
In addition to Section 35.3(b), Owner (in its proprietary capacity) is responsible for all
Environmental Damages resulting from an Environmental Condition caused by any of the
Owner Indemnified Parties (except if such Environmental Condition was disclosed in the
Reports) .
Section 35.9. Survival.
The provisions of this Article 35 shall survive the Expiration of the Tenn.
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ARTICLE 36.
OPTION TO PURCHASE; RIGHT OF FIRST REFUSAL
Section 36.1. Right of First Refusal.
(a) Definitions.
"Option Interest" means all of the Equity Interests in Owner.
"Option Premises" means the entire Owner's Interest in the Premises.
"Option Transaction" means the sale, conveyance or other transfer, directly or
indirectly, of (i) all of Owner's estate in and to the Option Premises or (ii) all of the estate of
the holders of the Option Interest in and to such Option Interest.
(b) If, during the Term, Owner, or any successor owner of the Option Premises,
or the holder of any Option Interest, shall have received and shall desire to accept a bona fide
offer from a bona fide third party offeror (the "Outside Offer") with respect to an Option
Transaction, Owner or such holder (each an "Offeree Owner") shall first deliver to Tenant
a copy of a fully executed letter of intent or purchase contract setting forth the material terms
of such Outside Offer (including, but not limited to, the purchase price, method of payment
and financing arrangements and the closing date (which shall not be less than sixty (60) or
more than one hundred eighty (180) days from the date of the Outside Offer Notice)) and
stating that Offeree Owner desires to accept such Outside Offer (an "Outside Offer Notice").
For a period of forty-five (45) days after Tenant's receipt of the Outside Offer Notice, Tenant
shall have the right to elect in writing to consummate the Option Transaction described therein
at the price and upon such other material terms set forth in the Outside Offer Notice.
(c) If Tenant shall fail to respond to Offeree Owner with respect to the offer set
forth in an Outside Offer Notice with an election pursuant to Section 36.1(b) hereof by the end
of such forty-five (45) day period, Offeree Owner shall have the right to consummate the
proposed transaction with the Person having made the Outside Offer to Offeree Owner upon
such terms and conditions as shall be no more favorable to such Person than those which are
set forth in the Outside Offer Notice, but in all cases subject to any terms of, and applicable
restrictions imposed under, this Lease, including, without limitation, the Purchase Option and
Tenant's right of first refusal. If Offeree Owner shall fail to consummate the Option
Transaction set forth in such Outside Offer Notice by the closing date set forth therein (subject
to reasonable extensions), the provisions of this Section 36.1 shall be applicable to any such
future Option Transaction as well regardless of whether it is the same Person and/or Outside
Offer. Notwithstanding anything to the contrary contained herein, Offeree Owner may in good
faith negotiate the terms and conditions of an Outside Offer set forth in an Outside Offer
Notice which Tenant has elected not to consummate with the Person having made the Outside
Offer, provided, however, that if the material terms of such Outside Offer are modified, then
such transaction shall be deemed a new Option Transaction and the provisions of this Section
36.1 (including, without limitation, Section 36.1(b)), shall be applicable with respect to such
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Option Transaction. Offeree Owner shall give twenty (20) days notice to Tenant of the terms
of such Outside Offer as so negotiated prior to consummating the same, so that Tenant may
determine whether such modifications are sufficiently material that Tenant wishes to
consummate such Option Transaction.
(d) Offeree Owner and Tenant shall diligently and in good faith undertake to
consummate any Option Transaction involving Tenant under this Article 36 as soon as
practicable after Tenant's election as hereinabove described. If Tenant shall fail to negotiate
the terms of the Option Transaction in good faith or shall fail to close (except by reason of a
default by Offeree Owner) the Option Transaction in accordance with the terms thereof which
shall not be earlier than thirty (30) days from the date of Tenant's exercise of its right of first
refusal, the foregoing right of first refusal shall be null and void with respect to any future
Option Transaction.
(e) Offeree Owner shall be entitled to sell only all of its interest in the Option
Premises or the Option Interest, as the case may be. Any sale of only a portion of its interest
in the Option Premises or the Option Interest shall be null and void and of no effect.
(f) If Tenant does not exercise its right of first refusal and Offeree Owner
consummates its Option Transaction, Offeree Owner shall deliver to Tenant, or shall cause to
be delivered to Tenant, within ten (10) business days after the execution thereof, a true,
complete and correct copy of an executed instrument of transfer and, if the Option Transaction
is a conveyance of the Option Premises, a true, complete and correct copy of an instrument
of assumption by the transferee of Offeree Owner's obligations under this Lease, the Project
Documents and any other instruments relating to Owner's Interests in the Premises to which
Owner is a party (or a successor-in-interest to a party) accruing from and after the date of such
transfer. Such transferee, if a transferee of the Option Premises, shall be deemed to assume
this Lease, the Project Documents and any other instruments relating to Owner's Interest in
the Premises to which Owner is a party (or a successor-in-interest to a party) and shall be
liable for the performance of and compliance with the terms, covenants, conditions, and
agreements contained in this Lease and the Project Documents and any other instruments
relating to Owner's Interests in the Premises on the part of Owner (or any successor-in-interest
to Owner) to be performed, including, without limitation, monetary obligations. Upon the
consummation of an Option Transaction, Offeree Owner shall be and hereby is entirely freed
and relieved of all agreements, covenants and obligations of Owner to be performed under this
Lease (but not from any other Project Document and any other instruments relating to Owner's
Interests in the Premises, each of which shall survive (but only to the extent provided therein)
in accordance with its respective terms), accruing after the date of such Option Transaction.
No transfer shall be binding on Tenant unless and until such transferee shall enter into an
agreement containing a covenant of assumption as aforesaid.
(g) If Offeree Owner does not comply with the terms of this Article 36, any Option
Transaction entered into by Offeree Owner shall have no validity and shall be null and void
and without effect.
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Section 36.2. Option to Purchase.
(a) Tenant shall have the right and option to purchase all of Owner's Interest in the
Premises upon the terms and conditions set forth in this Section and in Exhibit 36.2 (the
"Purchase Option"). Tenant may, at any time during the Term, exercise such right and
option pursuant to a notice (the "Exercise Notice") delivered to Owner not later than sixty (60)
days prior to the proposed closing date for such purchase.
(b) The purchase price for the Premises shall be calculated as follows:
(i) While the Agency's Tax Increment Revenue Bonds, Series 1993 (in an
amount not to exceed $25,000,(00) (the "Bonds") have not been retired, the purchase price
for Owner's Interest in the Premises shall be equal to the greater of (x) the then appraised fair
market value of Owner's Interest in the Premises (in accordance with Article 31 hereof) based
upon an arm's length sale to a third party buyer that is not an Affiliate of Tenant, taking into
account the then current state of title as well as the continued existence of this Lease and the
Management Agreement as then in effect, or (y) the amount determined as follows:
(1) For all Lease Years until Percentage Rent payments have reached Tier
5A: an amount to return to the Agency an 8% IRR (which calculation
will include Base Rent and Percentage Rent payments made to Owner
and Distribution Net Proceeds and Net Proceeds distributed to Owner
pursuant to Section 3.5) on the Land with a fixed value of $24,000,000.
(2) For Lease Years in which Percentage Rent is being paid at Tier 5A, but
not Tier 5B or Tier 6: an amount equal to the greater of (i) an amount
to return to Owner an 8% IRR (which calculation will include Base Rent
and Percentage Rent payments made to Owner and Distribution Net
Proceeds and Net Proceeds distributed to Owner pursuant to Section 3.5)
on the Land with a fixed value of $24,000,000 or (ii) a ten times
multiple of the average Base Rent and Percentage Rent paid to Owner
during the three full Lease Years immediately preceding the exercise of
the Purchase Option.
(3) For Lease Years in which Percentage Rent is being paid at Tier 5B or
Tier 6: an amount equal to the sum of (i) the balance of the amounts,
if any, payable to Owner under Tier 5B, plus (ii) a ten times multiple of
the lesser of (x) average Base Rent and Percentage Rent paid to Owner
during the three full Lease Years immediately preceding the exercise of
the Purchase Option, or (y) average Base Rent and Tier 6 Percentage
Rent which would have been payable to Owner during the three full
Lease Years immediately preceding the exercise of the Purchase Option
determined as if payments were due in Tier 6 for each of such three
Lease Years.
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(ii) Notwithstanding the foregoing, (x) the purchase price with respect to the
exercise of the Purchase Option after December 1, 2004 shall be computed pursuant to (b )(i)(y)
above (without regard to (b)(i)(x) above) if at least 122 days prior to the exercise of such
option, Tenant shall have given Owner notice (the "Notice of Intent to Exercise") of Tenant's
intent to exercise the Purchase Option and unconditionally prepay Base Rent and Percentage
Rent under this Lease in an amount sufficient to redeem the Bonds in accordance with their
terms prior to the exercise of such Purchase Option, which amount shall (to the extent the same
represents prepaid Base Rent and Percentage Rent at such time) upon the exercise of the
Purchase Option be credited against the purchase price of Owner's Interest in the Premises and
(y) the purchase price with respect to the exercise of the Purchase Option at any time after the
holders of the Bonds have been paid in full all principal and interest thereon and the Bonds
have been retired (other than as a result of (b)(ii)(x) above) shall be computed pursuant to
(b)(i)(y) above (without regard to (b)(i)(x) above) and the requirements of (b)(ii)(x) above shall
not apply to the exercise of the Purchase Option.
(iii) The purchase price with respect to each exercise of the Purchase Option
shall be determined based upon the most recent Annual Financial Statement required to be
made available to Owner under Section 28.1(c) as of the earlier of (x) the date Tenant gives
the Exercise Notice and (y) the date Tenant gives the Notice of Intent to Exercise.
(c) The parties acknowledge that Section 36.2(b)(i)(x) has been included based upon
the present interpretation of Section 144(c)(2) of the Internal Revenue Code of 1986, as
amended (the "Code") in relation to the Bonds by counsel to the Agency. The parties agree
that such Section 36.2(b)(i)(x) shall not apply if at any time Tenant provides an opinion of tax
counsel knowledgeable with respect to the tax aspects of tax-exempt bonds, in form and
substance satisfactory to the Agency and its counsel, to the effect that the exercise of the
Purchase Option at the price determined pursuant to Section 36.2(b)(i)(y) will not adversely
affect the exclusion from gross income for federal income tax purposes of interest on the
Bonds.
(d) In the event, within twelve (12) months following the delivery of the Exercise
Notice by Tenant (the date of such delivery being called the "Exercise Date"), Tenant, or an
Affiliate, shall consummate the Sale of the Hotel to a third party not Affiliated with Tenant (a
"Post-Option Sale") with whom Tenant had reached an agreement in principle, evidenced in
writing, at any time during the six (6) month period prior to the Exercise Date, the Post-Option
Sale shall be deemed to have taken place on the Exercise Date and the Distribution Net
Proceeds shall be distributed in the same manner as Net Cash Flow After Debt Service in
accordance with Section 3.3, subject to a credit in favor of Tenant in an amount equal to the
purchase price theretofore paid to Owner.
(e) The provisions of this Section shall survive the Expiration of the Term.
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Section 36.3. Assignment.
The rights of Tenant pursuant to Sections 36.1 and 36.2 above shall not be severed
from Tenant's Interest in the Premises, and shall be assigned, transferred or otherwise
conveyed to the transferee only upon a Sale of the Hotel or a Foreclosure Transfer.
DOS :[04984.DOCS.MIAMI]GLEASE _9-19-96
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ARTICLE 37.
MISCELLANEOUS
Section 37.1. Governing Law.
This Lease shall be governed by, and construed in accordance with, the laws of the
State of Florida, without regard to principles of conflict of laws.
Section 37.2. References.
(a) Captions. The captions of this Lease are for the purpose of convenience of
reference only, and in no way define, limit or describe the scope or intent of this Lease or in
any way affect this Lease.
(b) Table of Contents. The Table of Contents is for the purpose of convenience of
reference only, and is not to be deemed or construed in any way as part of this Lease.
(c) Reference to Owner and Tenant. The use herein of the neuter pronoun in any
reference to Owner or Tenant shall be deemed to include any individual Owner or Tenant, and
the use herein of the words "successors and assigns" or "successors or assigns" of Owner
or Tenant shall be deemed to include the heirs, legal representatives and assigns of any
individual Owner or Tenant.
(d) Agency's and City's Governmental Capacity. Nothing in this Lease or in the
parties' acts or omissions in connection herewith shall be deemed in any manner to waive,
impair, limit or otherwise affect the authority of the Agency or City in the discharge of its
police or governmental power.
(e) Reference to "herein". "hereunder". etc. All references in this Lease to the
terms "herein", "hereunder" and words of similar import shall refer to this Lease, as
distinguished from the paragraph, Section or Article within which such term is located.
Section 37.3. Entire Agreement. etc.
(a) Entire Agreement. This Lease, together with the attachments hereto, contains
all of the promises, agreements, conditions, inducements and understandings between Owner
and Tenant concerning the Premises and there are no promises, agreements, conditions,
understandings, inducements, warranties or representations, oral or written, express or implied,
between them other than as expressly set forth herein and in such attachments hereto or as may
be expressly contained in any enforceable written agreements or instruments executed
simultaneously herewith by the parties hereto, except for that certain Hold Harmless and
Indemnification Agreement dated December 18, 1995 and December 20, 1995, between the
Agency and SMHC, as the same may have heretofore have been or may hereafter be amended.
Notwithstanding anything to the contrary set forth in this Lease, the terms of this Lease shall
supersede the terms of the Letter of Intent and the RFP and SMHC's response thereto. This
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Lease may be executed in counterparts, each of which shall be deemed an original but all of
which together shall represent one instrument.
(b) Waiver. Modification. etc. No covenant, agreement, term or condition of this
Lease shall be changed, modified, altered, waived or terminated except by a written instrument
of change, modification, alteration, waiver or termination executed by Owner and Tenant. No
waiver of any Default or default shall affect or alter this Lease, but each and every covenant,
agreement, term and condition of this Lease shall continue in full force and effect with respect
to any other then existing or subsequent Default or default thereof.
(c) Effect of Other Transactions. No Sublease, Mortgage or Capital Transaction,
whether executed simultaneously with this Lease or otherwise, and whether or not consented
to by Owner, shall be deemed to modify this Lease in any respect, and in the event of an
inconsistency or conflict between this Lease and any such instrument, this Lease shall control.
Section 37.4. Invalidity of Certain Provisions.
If any provision of this Lease or the application thereof to any Person or circumstances
is, to any extent, finally determined by a court of competent jurisdiction to be invalid and
unenforceable, the remainder of this Lease, and the application of such provision to Persons
or circumstances other than those as to which it is held invalid and unenforceable, shall not be
affected thereby and each term and provision of this Lease shall be valid and enforceable to
the fullest extent permitted by law.
Section 37.5. Merger.
Unless Owner, Tenant and all Mortgagees execute and record an agreement to the
contrary, there shall be no merger of this Lease or the leasehold estate created hereby with the
fee estate in the Premises or any part thereof by reason of the same Person acquiring or
holding, directly or indirectly, this Lease and the leasehold estate created hereby or any interest
in this Lease or in such leasehold estate as well as the fee estate in the Premises.
Section 37.6. Remedies Cumulative.
Each right and remedy of either party provided for in this Lease shall be cumulative and
shall be in addition to every other right or remedy provided for in this Lease, or now or
hereafter existing at law or in equity or by statute or otherwise (except as otherwise expressly
limited by the terms of this Lease), and the exercise or beginning of the exercise by a party
of anyone or more of the rights or remedies provided for in this Lease, or now or hereafter
existing at law or in equity or by statute or otherwise, except as otherwise expressly limited
by the terms of this Lease, shall not preclude the simultaneous or later exercise by such party
of any or all other rights or remedies provided for in this Lease or now or hereafter existing
at law or in equity or by statute or otherwise except as otherwise expressly limited by the terms
of this Lease.
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Section 37.7. Performance at Each Party's Sole Cost and Expense.
Unless otherwise expressly provided in this Lease, when either party exercises any of
its rights, or renders or performs any of its obligations hereunder, such party shall do so at its
sole cost and expense.
Section 37.8. Recognized Mortgagee Charges and Fees.
Tenant shall pay any and all fees, charges and expenses owing to a Recognized
Mortgagee in connection with any services rendered by it as a depositary pursuant to the
provisions of this Lease.
Section 37.9. Successors and Assigns.
The agreements, terms, covenants and conditions herein shall be binding upon, and
inure to the benefit of, Owner and Tenant and, except as otherwise provided herein, their
respective permitted successors and permitted assigns and shall be construed as covenants
running with the Land. If, while the Agency is Owner hereunder, the Agency shall cease to
exist, the City, by its signature hereto, hereby agrees, from and after the date the Agency shall
cease to exist, to be bound by the terms, covenants and conditions of Owner hereunder and
Tenant agrees to recognize the City as Owner hereunder.
Section 37.10. Recording of Lease.
Tenant shall cause this Lease and any amendments hereto to be recorded in the Public
Records of Dade County, Florida promptly after the execution and delivery of this Lease or
any such amendments and shall pay and discharge all costs, fees and taxes in connection
therewith.
Section 37. 11. Notice of Defaults.
Notwithstanding anything to the contrary set forth in this Lease, under no circumstances
shall any party to this Lease lose any right or benefit granted under this Lease or suffer any
harm as a result of the occurrence of any Default or default of such party as to which Default
or default such party has not received notice thereof from the other party.
Section 37.12. Corporate Obligations.
It is expressly understood that this Lease and obligations issued hereunder are solely
corporate obligations, and, except as otherwise provided in Article 19, that no personal liability
will attach to, or is or shall be incurred by, the incorporators, stockholders, officers, members,
partners, holders of other ownership interests, directors, elected or appointed officials
(including, without limitation, the Chairman and Members of the Owner and the Mayor and
Commissioners of the City and the members of any other governing body of Owner) or
employees, as such, of the Owner or Tenant, or of any successor corporation or other
successor entity, or any of them, under or by reason of the obligations, covenants or
DOB: [04984. DOCS . MIAMI]GLEASE _9-19-96
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agreements contained in this Lease or implied therefrom; and, except as otherwise provided
in Article 19, that any and all such personal liability , either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer, member, partner, holder of other ownership interest,
director, elected or appointed official (including, without limitation, the Chairman and any
Member of the Owner and the Mayor and Commissioners of the City and the members of any
other governing body of Owner) or employee, as such, or under or by reason of the
obligations, covenants or agreements contained in this Lease or implied therefrom are expressly
waived and released as a condition of, and as a consideration for, the execution of this Lease.
Section 37.13. Nonliabilitv of Officials and Employees.
Except as otherwise provided in Article 19, no member, officer, director, stockholder,
partner, holder of other ownership interest, official or employee of Owner or the City shall
be personally liable to Tenant, or any successor in interest, in the event of any default or
breach by Owner or for any amount or obligation which may become due to Tenant or
successor under the terms of this Lease; and, except as otherwise provided in Article 19, any
and all such personal liability , either at common law or in equity or by constitution or statute,
of, and any and all such rights and claims against, every such Person, or under or by reason
of the obligations, covenants or agreements contained in this Lease or implied therefrom are
expressly waived and released as a condition of, and as a consideration for, the execution of
this Lease.
Section 37.14. Conflict of Interest.
Tenant represents and warrants that, to the best of its actual knowledge, no member,
official or employee of Owner or the City has any direct or indirect financial interest in this
Lease, nor has participated in any decision relating to this Lease that is prohibited by law.
Tenant represents and warrants that, to the best of its knowledge, no officer, agent, employee
or representative of the City of Miami Beach or Owner has received any payment or other
consideration for the making of this Lease, directly or indirectly from Tenant. Tenant
represents and warrants that it has not been paid or given, and will not payor give, any third
person any money or other consideration for obtaining this Lease. other than normal costs of
conducting business and costs of professional services such as architects, engineers, and
attorneys. Tenant acknowledges that Owner is relying upon the foregoing representations and
warranties in entering into this Lease and would not enter into this Lease absent the same.
Section 37.15. No Partnership.
The parties hereby acknowledge that it is not their intention under this Lease to create
between themselves a partnership, joint venture, tenancy-in-common, joint tenancy, co-
ownership or agency relationship for the purpose of developing the Hotel, or for any other
purpose whatsoever. Accordingly, notwithstanding any expressions or provisions contained
herein, except for (i) the limited purpose of being co-declarants under the Declaration of
Condominium and (ii) the common ownership of the common elements, if any, under the
Declaration of Condominium, nothing in this Lease or the other documents executed by the
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parties with respect to the Hotel, whether based on the calculation of Rental or otherwise, shall
be construed or deemed to create, or to express an intent to create, a partnership, joint venture,
tenancy-in-common, joint tenancy, co-ownership or agency relationship of any kind or nature
whatsoever between the parties hereto. The provisions of this Section shall survive Expiration
of the Term.
Section 37.16. Time Periods.
Any time periods in this Lease of less than thirty (30) days shall be deemed to be
computed based on business days (regardless of whether any such time period is already
designated as being computed based on business days). In addition, any time period which
shall end on a day other than a Business Day shall be deemed to extend to the next Business
Day.
Section 37. 17. Radon Notice.
NOTICE REQUIRED BY CHAPTER 88-285, LAWS
OF FLORIDA
Chapter 88-285, Laws of Florida, requires the following notice to be provided with
respect to the contract for sale and purchase of any building, or a rental agreement for any
building:
"RADON GAS: 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 your county public health unit. "
Section 37.18. No Third Party Beneficiaries.
Nothing in this Lease shall confer upon any Person, other than the parties hereto and
their respective successors and permitted assigns, any rights or remedies under or by reason
of this Lease; provided, however, that a Recognized Mortgagee or its Designee shall be a third
party beneficiary hereunder to the extent such Recognized Mortgagee or such Designee is
granted rights hereunder.
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EXECUTION
IN WITNESS WHEREOF, Owner and Tenant, intending to be legally bound, have
executed this Lease as of the day and year first above written.
MIAMI BEACH REDEVELOPMENT AGENCY
By:
kokJ PaA~
Robert Parcher,
Secretary
By:
ATTEST:
STATE OF FLORIDA
)
)ss:
) ~
The foregoing instrument was acknowledged before me this 2r{) day of September,
COUNTY OF DADE
1996, by Seymour Gelber, as Chairman, and Robert Parcher, as Secretary, of the MIAMI
BEACH REDEVELOPMENT AGENCY, a public body corporate and politic, on behalf of
such public body. They are personally known to me or produced valid Florida driver's
licenses as identification. '\
~
Notary Public, SO\te of rFlori4a
Print Name: e:- (I z.-*b~-r~
My commission expires:
FORM APPROVED
REDEVELOPMENT AGENCY
GENERAL CO~
By 11( /16 .
Date r .u:J.hG
DOS: [04984.DOCS. M1AMI]GLEASE _9-19-96
- 152 -
MB REDEVELOPMENT, INC.
ATTEST:
By:
. Or.fl.:so';I
STATE OF FLORIDA )
)ss:
COUNTY OF DADE ) \1
The foregoing ~nstrument was ackn,.qwled~e<! befo~ me this ~ day of Sep~mber,
1996, by1\Ot ~~5. Aof \ t'iC, as Sf<.. V: t{ YIt(~:B'~ and ~~ J. COaJ2~ , a~eeretary,
of MB REDEVELOPMENT INC., a Florida corporation, on b half of such corporation. They
are personally known to me or produced valid Florida driver's licenses as identification.
R ~ b&(lt~ \[1 fF
~::n~:~~ic~~~;~,Fni7 bodok'05 c
My commission expires:
DOS:[04984.DOCS.MIAMI]GLEASE _9-19-96
- 153 -
SOLELY FOR THE PURPOSES OF BEING BOUND ONLY BY SECTION 14.5, SECTION
19.1(c), SECTION 21.2, SECTION 21.3, SECTION 21.4, SECTION 21.5, SECTION 21.6
AND SECTION 37.9 OF THE FOREGOING LEASE:
CITY OF MIAMI BEACH, FLORIDA
ATIEST:
BY:~
Robert Parcher,
City Clerk
STATE OF FLORIDA )
)ss:
COUNTY OF DADE ) ~
The foregoing instrument was acknowledged before me this -;wv .ky of September,
1996, by Seymour Gelber, as Mayor, and Robert Parcher, as City Clerk, of the CITY OF
MIAMI BEACH, a municipal corporation of the State of Florida, on behalf of such municipal
corporation. They are personally known to me or produced valid Florida driver's licenses as
identification.
& ~c4~;l<'
DdJtU~
Notary Public~ S~t~ Florida
Print Name: B II 'Z. t tv,
My commission expires:
fORM APPROVED
BY~ ~#~
Date ~/j.c) ;76' _
DOB: [04984.DOCS. MIAMI]GLEASE _9-19-96
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EXHIBIT A
IRR EXAMPLES
DOS : [04984. DOCS .MIAMI]GLEASE _9-19-96
- 155 -
EXHIBIT A
I RR EXAMPLES
Internal rate of return (IRR) is the rate> of return (or interest rate or discount rate) which
equates the present value of the benefits (inflows) of an investment to the capital outflows of
the investment.
The IRR is expressed as a ratio per unit of time - for example 25% per annum or 8% per
annum.
The following depicts mathematically the equation which will need to be solved to
determine when Owner or Tenant has received its required IRR.
(CF 0) +
CF1 + CF] + CF3
1 + IRR (1 + IRR)2 (1 + IRR)3
+ ........ + CFN
(1 + IRR)N
o
Where:
CFo is the cash outlay on the Hotel Opening Date. For the Tenant it will be the amount of
Funded Equity; for the Owner it will be deemed to be $24 million.
CF, is the cashflow in the first full month after the Hotel Opening Date.
CF2 is the cashflow in month 2.
CF3 is the cashflow in month 3.
CFN is the cashflow in the period when the equation is solved.
N is the number of months from the Hotel Opening Date until the equation is solved.
IRR is the discount rate. For the Tenant it will be 25% per annum which is equivalent to
1.8770% per month and for the Owner it will be 8% per annum which is equivalent to
0.6431 % per month.
The amount payable to the Tenant or Owner to yield the respective IRR at any point in time
can be calculated using the above formula.
The following is an example of how to calculate the amount required to yield the Tenant and
Owner their respective IRR at the end of Year 4 assuming the following cashflow streams:
Example
CFo
Month 12
Month 24
Month 36
Cash Flow to Tenant Cash Flow to Owner
($15,000)
2,250
2,250
4,250
($24,000)
500
500
1,000
Amount Payable to Tenant in Month 48 to Yield a 25% IRR Compounded Annually:
(CFo)
($15,000)
+ ~12
(1+IRR)12
+ CF74
(1 + IRR)24
+ $2,250 + $2,250
(1 + .01877) 12 (1 + .01877)24
($15,000) + $2,250
1.25
($15,000) + $1,800
+ $2,250
1.5625
+ $ 1 ,440
($9,584) + X 0
2.4414
X
2.4414
X - $ 9,584 x 2.4414
X - $23,398
W6-MI961850.008
$9,584
2
+ CF16
(1 +IRR)36
+ X
(1 + IRR)48
+ $4,250 +
(1 +.01877)36
- 0
X - 0
(1 + .01877)48
+ $4,250
1.9531
+ X
2.4414
+ $2,1 76
+ X
2.4414
o
- 0
Amount Payable to Owner in Month 48 to Yield an 8% IRR Compounded Annually:
(CFa)
+ CF,
1 +IRR
($24,000) + $ 500
(1 +.006431)'2
($24,000) + $ 500
1.08
($24,000) + $ 463
($22,314) + X - 0
1.3605
+ CF)
(1 + IRR)2
+ $ 500
(1 + .006431)24
+ $ 500
1 .1663
+ $ 429
X ,. $22,314
1.3605
X - $22,314 x 1.3605
X ,. $30,358
W6-MI961B50.00B
3
+ CFl
(1 +IRR)3
+ $ 1,000 +
(1 + .006431 )36
+ $ 1,000
1.2597
+ $ 794
+ X
(1 + IRR)4
- 0
X - 0
(1 + .006431)48
+ X
1 .3605
+ X
1.3605
". 0
- 0
DOS: [04984.DOCS.MIAMI]GLEASE _9-19-96
EXHIBIT B
DESCRIPTION OF THE LAND
- 156 -
HOTEL LEGAL DESCRIPTION
PARCEL I:
LOTS 1, 2, 17 AND 18, BLOCK 55, FISHER'S FIRST SUBDIVISION OF AI.. TON BEACH,
ACCORDING TO PLAT THEREOF, RECORDED IN PLAT BOOK 2, AT PAGE 77, OF THE
PUBLIC RECORDS or DADE COUNTY, FLORIDA, LESS THAT PART OF LOTS 2 ~D
17 L VING NORTH OF' A LINE. WHICH SAID LINE IS LOCATED ~D DESCRIBED .AS
FOLLOWS:
BEGIN AT THE NORTHWEST CORNER OF LOT 16, BLOCK 55, F'ISHER'S FIRST
SUBDIVISION OF AL TON BEACH, THENCE RUN SOUTHWESTERLY AlONG THE
wESTERL v LINE OF SAID LOTS 16 ~D 17 FOR A DIST N-ICE OF 72 FEET TO A
POINT. SAID POINT BEING THE POINT OF BEGINNING OF THE LINE BEING
DESCRIBED; THENCE E.ASTERL Y PARAlLEL TO THE NORTHERLY LINE OF LOT 16
AND LOT .3, BLOCK 55 OF FISHER'S FIRST SUBDIVISION OF AL. TON BEACH FOR A
DIST ANCE OF 400 FEET TO A POINT IN THE EASTERLY LINE OF LOT 2, OF SAID
BLOCK 55. F'ISHER'S FIRST SUBDIVISION OF ALTON BEACH.
A.S TO LOTS 2 AND 17, SAID PROPERTY MAY ALSO BE DESCRIBED AS lOTS 2 AND
17, LESS THE NORTH 21.3 FEET THEREOF, IN BLOCK 55, AI.. TON BEACH FISHER'S
FIRST SUBDIVISION, ACCORDING TO THE PLAT THEREOF, RECORDED IN PLAT
BOOK 2. AT PAGE 77, OF THE PUBLIC RECORDS OF DADE COUNTY, FLORIDA.
PARCEL II:
PARCEL OF lAND L VING BETWEEN BLOCK 55. OF FISHER'S FIRST SUBDIVISION OF'
A.l.. TON 9EACH, ACCORDING TO PLAT THEREOF, RECORDED IN PLAT BOOK 2, AT
PAGE 77. OF THE PUBLIC RECORDS OF DADE COUNTY, FLORIDA. AND THE HIGH
WATER MARK OF THE ATLN-ITlC OCEAN, WHICH SAID PARCEL OF LN-ID IS
PARTICULARL Y DESCRIBED .AS FOLLOWS:
9EGI~ AT THE SOUTHEAST CORNER OF S,6JD LOT 1, BLOCK 55. FISHER'S FIRST
SUBDIVISION OF AI.. TON BEACH, THENCE RUN NORTHERLY ALONG THE
EASTERL v LINE OF LOT 1 AND LOT 2 OF SAID BLOCK 55, FISHER'S FIRST
SUBDIVISION OF AI.. TON BEACH It. OIST ANCE OF 102.2 FEET MORE OR LESS TO A
POINT IN THE EASTERLY LINE OF SAID LOT 2. WHICH SAID POINT IS 72 FEET
SOUTH OF THE NORTHEAST CORNER OF LOT 3 OF SAID BLOCK 55 OF FISHER'S
. F'lRST SUBDIVISION OF AI.. TON BEACH; THENCE RUN IN AN EASTERL V DIRFCTlON
. A.l..O~G A LINE PARALLEL TO THE EASTERL v EXTENSION OF' THE NORTH LINE OF
SAJD LOT J. TO THE: HIGH WATER MARK OF THE ATLANTIC OCEAN; THENCE RUN
IN to SOUTHERL V DIRECTION ALONG THE HIGH WATER MARK OF THE ATLANTIC
OCE AN It. DIS T ANCE OF 102.2 FEET MORE OR LESS TO A POINT ON S,6JO HIGH
Wit. fER MARK or THE ATLANTIC OCEAN WHICH IS THE INTERSECTION WITH THE
E ASTERl Y EXTENSION OF THE SOUTHERLY LINE OF SAID LOT 1; THENCE IN A
WESTERL Y DIRECTION ALONG THE EASTERLY EXTENSION OF SAID SOUTH LINE
OF' LOT , TO THE POINT OF BEGINNING.
1 of j. '3
HOTEL LEGAL DESCRIPTION
PARCEL III:
LOTS 3 AND 16 AND THE NORTH 21.3 FEET (AS MEASURED AlONG LOT LINES) OF
LOTS 2 AND 17. BLOCK 55. FISHER'S FIRST SUBDIVISION OF AlTON BEACH.
ACCORDING TO THE PLAT THEREOF AS FILED FOR RECORD IN PLAT BOOK 2.
PAGE 77. OF THE PUBLIC RECORDS OF D~E COUNTY. FLORIDA: TOGETHER
WITH: THAT CERT AlN PARCEL OF lAND L VING EAST OF AND ADJACENT TO THE
LAND DESCRIBED ABOVE; SAID lAND BOUNDED ON THE SOUTH BY THE SOUTH
LINE OF THE ABOVE DESCRIBED PARCEL EXTENDED EASTERLY BOUNDED ON
THE NORTH BY THE NORTH LINE OF THE ABOVE DESCRIBED PARCEL EXTENDED
EASTERL Y BOUNDED ON THE EAST BY THE MEAN HIGH WATER LINE OF THE
ATLANTIC OCEAN AND BOUNDED ON THE WEST BY THE EAST LINE OF SAID lOTS
2 AND 3 AFOREMENTIONED.
PARCEL IV:
LOTS 9. 10. 11, 12 AND NORTH 112 OF lOT 8 AND THE NORTH 112 OF LOT 13, BLOCK
56 OF FISHER'S FIRST SUBDIVISION OF ALTON BEACH FLORIDA. A SUBDIVISION IN
FRACTIONAL SECTION 34. TOWNSHIP 53 SOUTH, RANGE 42 EAST, ACCORDING TO
THE PLAT THEREOF, RECORDED IN PLAT BOOK 2, AT PAGE 77. OF THE PUBLIC
RECORDS OF DADE COUNTY, FLORIDA.
PARCEL V=
BEGINNING AT THE NORTHEAST CORNER OF lOT 9, IN BLOCK 56 OF FISHER'S
FIRST SUBDIVISION OF ALTON BEACH. AS THE SAME IS SHOWN MARKED AND
DESIGNATED ON A PLAT OF SAID SUBDIVISION, RECORDED IN PLAT BOOK 2. AT
PAGE 77, IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT IN AND FOR DADE
COUNTY. FLORIDA; THENCE RUN IN AN EASTERLY DIRECTION ALONG THE
NORTH LINE OF LOT 9 OF BLOCK 56, PRODUCED TO THE HIGH WATER LINE OF
THE ATLANTIC OCEAN; THENCE RUN IN A SOUTHERLY DIRECTION MEANDERING
SAID HIGH WATER LINE A DISTANCE OF 76.05 FEET PLUS OR MINUS TO A POINT,
SAID POINT BEING AT THE INTERSECTION OF THE lAST MENTIONED COURSE
WITH THE CENTER LINE OF LOT 8 OF' BLOCK 56 PRODUCED TO THE HICH WATER
LINE OF THE ATLANTIC OCEAN: THENCE RUN IN A WESTERLY DIRECTION AlONG
SAID CENTER LINE OF LOT 8. BLOCK 56 PRODUCED TO THE HIGH WATER LINE OF
THE ATLANTIC OCEAN; THENCE RUN IN A WESTERLY DIRECTION AlONG SAID
CENTER LINE OF LOT 8, BLOCK 56 PRODUCED TO THE EAST LINE OF BLOCK 56. AT
ITS INTERSECTION WITH THE CENTER LINE OF LOT 8. IN BLOCK 56: THENCE RUN
IN A NORTHERLY DIRECTION ALONG SAID EAST LINE OF BLOCK 56, A DISTANCE
OF 76.05 FEET PLUS OR MINUS TO A POINT OF BEGINNING.
I
2 of f '3
- - ........'-'lo".. J. J. J..v~l
PARCEL \/1.
BEGINNING AT THE SOUTHEAST CORNER OF LOT 10, IN BLOCK 56 A.S SHOWN By
THE PLAT ENTITLED "FISHER'S FIRST SUBDIVISION OF AL TON BEACH". SAJD PLA.T
BEING RECORDED IN PLAT BOOK 2, AT PAGE 77. OF THE PUBLIC RECORDS OF
DADE COUNTY. FLORIDA; RUN IN A NOR THERL Y DIRECTION ALONG THE EAST
LINE OF SND LOT 10, A DIST ANCE 01='" 50.7 FEET TO THE NORTHEAST CORNER or
LOT 10; THENCE RUN IN ~ EASTERL Y DIRECTION ALONG THE NORTH LINE OF
SAlD LOT 10, PRODUCED EASTERL Y TO THE HIGH WATER LINE OF" THE ATLANil:
OCEAN; THENCE RUN IN A SOUTHERLY DIRECTION, MEANDERING SAID HIGH
WATER LINE A DISTANCE OF '50.7 FEET, PLUS OR MINUS, TO A POINT; THENCE
RUN IN A WESTERLY DIRECTION ALONG THE SOUTH LINE OF LOT 10, IN BLOCK
56, PRODUCED EASTERLY, TO THE POINT OF BEGINNING.
PARCEL VII:
THE SOUTH '12 OF' LOTS 8 AND 1.3 AND ALL OF LOTS 7 AND 14, LESS THE SOUTH
12.65 FEET OF SAID LOTS 7 AND 14, TOGETHER WITH THAT PIECE OF PARCEL OF
LAND LYING BETWEEN THE NORTH AND SOUTH BOUNDARIES OF SAlO
PROPERTY EXTENDING EASTWARD TO THE ATLANTIC OCEAN, AlL LYING AND
BEING IN BLOCK 56, OF' F'ISHER'S FIRST SUBDIVISION OF' ALTON BEACH,
ACCORDING TO THE PLAT THEREOF', AS RECORDED IN PLAT BOOK 2. AT PAGE 77,
OF' THE PUBLIC RECORDS OF DADE COUNTY, F'LORIDA.
PARCEL VIII:
THA T PORTION OF AVENUE C (A/K/ A 16TH STREET> AS SHOWN IN FISHER'S FIRST
SUBDIVISION OF ALTON BEACH. RECORDED AT PLAT BOOK 2, AT PAGE 77. OF THE
PUBLIC RECORDS OF' D,4\J)E COUNTY, F'LORIDA. AND ITS EASTERLY EXTENSION
BOUNDED ON THE WEST BY THE EASTERLY RIGHT-OF'-WAY LINE or COLLINS
AVENUE AND BOUNDED ON THE EAST BY THE EROSION CONTROL LINE, ALL OF'
WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCE, AT THE NORTHWEST CORNER OF LOT 11, BLOCK 56. FISHER'S FIRST
SUBDIVISION OF' ALTON BEACH, PLAT BOOK 2, AT PAGE 77, OF' THE oUBLlC
RECORDS OF D,4\J)E COUNTY. F'LORIDA. SAID POINT BEING THE POINT or
BEGINNING: THENCE NORTH 88 DEGREES 00 MINUTES 49 SECONDS EAST ALONG
THE NORTH LINE OF' SAID BLOCK 56 AND ITS EASTERLY EXTENSION F"OR A
OIST ANCE OF 576.20 FEET TO THE POINT OF INTERSECTION WITH THE EROSION
CONTROL LINE OF' THE ATLANTIC OCEAN: THENCE NORTH 8 DEGREES 54
MINUTES 53 SECONDS EAST, ALONG THE EROSION CONTROL LINE FOR A
OIST ANCE OF 71.28 FEET TO THE POINT OF INTERSECTION WITH THE EASTERL Y
EXTENSION OF' THE SOUTH LINE OF BLOCK 55 OF THE ,tSOVE MENTIONED
FISHER'S FIRST SUBDIVISION OF' ALTON BEACH; THENCE SOUTH 88 DEGREES 00
MINUTES 49 SECONDS WEST, ALONG THE SOUTH LINE OF' SAID BLOCK 55 AND ITS
EASTERL Y EXTENSION F'OR A DISTANCE OF 577.88 FEET TO THE POINT OF
INTERSECTION WITH THE EASTERLY RIGHT-OF'-WAY OF' COLLINS AVENUE;
THENCE SOUTH 07 DEGREES 35 MINUTES 04 SECONDS WEST,AlONG THE
EASTERLY RIGHT-OF-WAY LINE OF COLLINS AVENUE F'OR A DISTANCE OF' 70.98
FEET TO THE POINT OF' BEGINNING.
3 of ;.3
DOB :[04984. DOCS .MIAMI]GLEASE _ 9-19-96
EXHIBIT 2.1
TITLE MATTERS
- 157 -
Exhibit 2.1
Title Matters
1. Taxes and assessments for the year 1996 and subsequent
years, not yet due and payable.
2. Condi tions, restrictions, easements, terms and provisions
contained in the Plat of Fisher's First Subdivision of Alton
Beach, Florida, filed in Plat Book 2, at Page 77, of the
Public Records of Dade County, Florida.
3. Rights, if any, of the public to use as a public beach or
recreational area any part of the said land lying between
the body of water abutting subject property and the natural
line of vegetation, bluff, extreme high water line or other
apparent boundary separating the publicly used area from the
upland private area.
4. Riparian and littoral rights are neither insured nor
guaranteed.
5. Erosion Control Line Plat filed at Plat Book 105, Page 62 of
the Public Records of Dade County, Florida.
6. Resolution No. 95-21593 of The Miami Beach City Corrnnission
setting forth a public hearing to consider vacating the
Right-of-Way located at 16th Street between Collins Avenue
and the Erosion Control Line and Abandoning Related Public
and Private Utilities and Easements, as appropriate, within
said Right-of-Way for the Convention Center Hotel
Development Project recorded October 13, 1995, in Official
Records Book 16950, at Page 1597, of the Public Records of
Dade County, Florida.
7. Resolution No. 95-21667 of the Mayor and City Commission of
The City of Miami Beach, Florida vacating Sixteenth Street
between Collins Avenue and the Erosion Control Line and
abandoning any public and private utili ties and easements
within that Right-of-Way, in connection with the Loews
Convention Center Hotel proj ect recorded October 13, 1995,
Official Records Book 16950, at Page 1601, of the Public
Records of Dade County, Florida.
8 .
Terms and
Book 74,
Florida.
Provisions
Page 4, of
of Bulkhead Line Plat filed at Plat
the Public Records of Dade County,
W6-MI962620.080
9. Terms and provisions of Coastal Construction Line
established in the Coastal Construction Line Plat, filed at
Plat Book 74, Page 25, of the Public Records of Dade County,
Florida.
10.
Declarations of Covenants and Restrictions
Beach Redevelopment Agency to be recorded
Records of Dade County, Florida.
made by Miami
in the Public
Owner shall not be liable for the following matters, unless
Tenant is not covered by Tenant's title insurance:
1. Rights and easements of the United States government for
commerce, navigation, recreation and fisheries in and to any
portion of said land which has been created by artificial
means or accreted to any portion so created and riparian
rights, if any.
2. Rights and easements of the State and Federal governments
for commerce, navigation, recreation and fisheries in and to
any portion of said land lying below the mean highwater line
of Atlantic Ocean.
3. Any claim that title to any portion of the present or former
bed or any body of water all or part of which within the
lands described in this policy is vested in the Trustees of
the International Improvement Fund of the State of Florida
because said portion (1) falls below what is either the
natural ordinary high water mark or natural mean high water
line of navigable water lying adj acent to or with in the
land described herein, or (2) falls wi thin what is or was
the bed of non-navigable body of water which is or was
subj ect to the ebonflow of tide; (3) has been created by
other than natural means has accreted to any such portion
created.
4. Rights, if any, of the public to use as a public beach or
recreational area any part of the land lying between the
body of water abutting subject property and the natural line
of vegetation, bluff, extreme high water line or other
apparent boundary separating the publicly used area from the
upland private area.
5. Riparian and littoral rights.
- 2 -
W6-MI962620.0BO
EXHffiIT 3.2(a)
EXAMPLES OF INCREASES IN BASE RENT
The following examples are provided solely for illustrative purposes and in no way modify the
provisions of Section 3.2(a) of this Lease or any other provision of this Lease:
Base Ground Rent Escalation Example
Assumptions
Example of Base Rent escalation calculation assuming the Hotel opened in 1964.
Escalation occurs every ] 0 years and we assume land values outpace the GDP Implicit Price Deflator.
Year 1964 1974 1984 1994
GDP Implicit Price Deflator
A. GDP Implicit Price Deflator 27.7 44.9 91.0 126.1
B. Percent Change in GDP Implicit Price Deflator
from ]964 (i.e., assumed Hotel Opening Date) 62.09% 228.52% 355.23%
Land Value
C. Assumed Appraised Land Value $24,000,000 $40,000,000 $80,000,000 $110,000,000
D. Percent Change in Land Value from 1964
(Le., assumed Hote[ Opening Date) 66.67% 233.33% 358.33%
Base Rent
E. Percentage Increase in Base Rent (Lesser
of B or D above) 62.09% 228.52% 355.33%
F. Annual Base Rent Payable for Applicable
Period $500,000 $810,450 $1,642,600 $2,276,] 50
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
- 158 -
EXHIBIT 6.3
DESCRIPTION OF TERRITORY
1. All of Metropolitan Dade County, Florida.
2. That portion of Broward County bordered by:
a. The Metropolitan Dade County/Broward County Line to the south;
b. McN ab Road to the north;
c. The Atlantic Ocean to the east; and
d. U.S. Interstate 95 to the west.
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
- 159 -
EXHmIT 6.4(b)
BENCHMARK HOTELS
1. Sheraton Chicago Hotel & Towers
301 E. North Water Street
Chicago, Illinois 60611
2. Wyndham Anatole Hotel
2201 Stemmons Freeway
Dallas, Texas 75207
3. The Peabody Orlando
9801 International Drive
Orlando, Florida 32819
4. Renaissance Orlando Resort
6677 Sea Harbor Drive
Orlando, Florida 32821
5. Sheraton Bal Harbour
9701 Collins Avenue
Bal Harbour, Florida 33154
DOB:[04984. DOCS .MIAMI]GLEASE _9-19-96
- 160 -
EXHIBIT 6.4(c)
OPERATIONAL AND PHYSICAL STANDARDS
I. OPERATIONAL STANDARDS
Category
Relative W ei~ht
1. Reservations
2. Guest Services-Door
3. Guest Services-Bell
4. Front Desk*
5. Concierge
6. Telephone
7. Housekeeping *
8. Laundry Valet
9. Room Service
10. Ftestaurant
11. Bar/Lounge
12. Group Services-Sales, Catering,
Conference Management
13. Banquets
14. Complaint Handling/Maintenance
Requests
15. Business Amenities *
3%
1%
1%
4%
1%
3%
4%
1%
2%
2%
1%
3%
3%
4%
3%
II. PHYSICAL STANDARDS
Cateeory
Relative Weieht
1. Entrance/Lobby/Front Desk*
2. Public Restrooms
3. Dining and Bar Facilities
4. Lounge Facilities:
Lounges and Lobby Bar/Front Desk
5. Corridors/Elevators/Stairwells
6. Meeting/Pre-Function Facilities*
7. Recreation Facilities
8. Exterior Components
9. Guest Rooms *
10. Guest Bathrooms*
6%
6%
6%
6%
6%
6%
5%
3%
14%
6%
CATEGORIES MARKED WITH AN ASTERISK (*) ARE "DESIGNATED
COMPONENTS"; HOWEVER GUEST ROOMS AND GUEST BATHROOMS ARE A
SINGLE DESIGNATED COMPONENT.
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
- 161 -
OPERATIONAL STANDARDS
1. RESERVATIONS
· Answers phone promptly with professional greeting
· Informs guest of rate ranges for available rooms
· Knowledgeable of rate variances, reservation and arrival policies
· Able to answer common questions about hotel services, facilities, location
· Requests and clarifies necessary reservation information
· Offers confirmation
· Extends friendly departing comment
2. GUEST SERVICES - DOOR
· Uniformed attendant scheduled at Hotel entrance
· Extends friendly greeting when assisting a guest
· Promptly unloads guest luggage and delivers to bell staff/front desk
· Valet parking services available, which include numbered receipts and secure
storage
· Able to explain parking options and procedures
· Assists guest in procuring a taxi
· Able to provide directions to popular destinations
· Able to answer common questions and provide information about hotel
services and facilities
· Staff neatly uniformed and groomed
DOS :[04984.DOCS. MIAMI]GLEASE _9-19-96
- 162 -
3. GUEST SERVICES - BELL
· Luggage assistance available for check in and check out
· Luggage storage available
· Extends friendly greeting when assisting a guest
· Efficiently delivers luggage to guest room, placing appropriately
· Able to provide information about room features, hotel services and facilities
and to answer common questions
· Efficiently assists guests checking out by picking up luggage from guest room
· Staff neatly uniformed and groomed
· Extends friendly departing comment
4. FRONT DESK
· Provides courteous, prompt, efficient check in and check out
· Confirms rate, room type and departure by presenting written information at
check in
· Discreetly gives room number and provides room key
· Arranges for bell staff to help guests who wish luggage assistance
· Express or video check out service available
· Provides copy of bill for review
· Posts to guest's account appropriately
· Able to deliver phone messages
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
- 163 -
· Able to answer common questions and provide information about room
features, hotel services and facilities
· Staff neatly uniformed and groomed
· Extends friendly departing comment
5. CONCIERGE
· Staff available to handle requests professionally and efficiently
· Able to answer common questions and provide information about local area
attractions, events, restaurants, shopping, transportation, etc.
· Able to provide directions/maps to popular destinations
· Able to answer common questions and provide information about hotel
services and facilities
· Staff neatly uniformed and groomed
· Follows-up on open guest requests and questions
6. TELEPHONE
· Calls answered promptly
· Answers phone with professional greeting
· Prompt, efficient message service
· Wake up call requests executed properly
· Able to answer common questions and provide information about hotel
services and facilities
· Extends friendly departing comment
7. HOUSEKEEPING
· Rooms cleaned daily to a proper level of cleanliness
· Carts are orderly and clean
DOB: [04984. DOCS.MIAMI]GLEASE _9-19-96
- 164 -
· Room is entered after knocking
· Room cleaning includes emptying trash, changing linens, providing
room/bath supplies and amenities, dusting and vacuum
. Room items commonly requested are available and delivered promptly
· Staff neatly uniformed and groomed
8. LAUNDRY VALET
· Extend courteous and friendly service
· Drop-off procedure appropriately explained
· Dry cleaning and laundry professionally done and delivered on a reasonably
timely basis
· Garments attractively presented
· Receipts attached or provided
· Staff neatly uniformed and groomed
. Special requests retrieved and delivered promptly
9. ROOM SERVICE
· Private dining in guest room available
. Professionally printed menu available with suitable selection of food/beverage
· Answers phone promptly with professional greeting
· Able to answer common questions and provide information about
menu/food/beverage items
· Gives time estimate for delivery
· Delivers order professionally and efficiently
· Sets up table/tray according to guest request
DOB: [04984 ,DOCS .MIAMI]GLEASE _ 9-19-96
- 165 -
· Extends friendly departing comment
· Food is fresh in taste and attractively presented on table/tray with appropriate
accompaniments
· Portions are adequate and consistent
· Presents bill for guest approval
· Tray removed from guest room/hall as requested
10. RESTAURANT
· Extends friendly greeting when seating a guest
· Seats guests promptly
· Professionally printed menu presented with suitable selection of
food/beverage
· Able to answer common questions and provide information about menu
food/beverage items
· Delivers order professionally and efficiently
· Food is fresh in taste and attractively presented with appropriate
accompaniments
· Portions are adequate and consistent
· Presents bill for guest approval and processes payment promptly
· Extends friendly departing comment
· Tables promptly set and reset
· Reservations made and honored in a professional manner
11. BAR/LOUNGE
· Able to answer common questions and provide information about beverage
items
· Delivers order professionally and efficiently
DOB: [04984 ,DOCS .MIAMI]GLEASE _ 9-19-96
- 166 -
· Presents bill for guest approval and processes payment promptly
· Extends friendly departing comment
· Tables promptly cleared
12. GROUP SERVICES - SALES. CATERING. CONFERENCE MANAGEMENT
· Greets clients professionally
· Obtains relevant information about group
· Uses selling materials including distinctive hotel brochures and banquet
menus
· Professionally describes hotel facility and services
· Able to quote menu prices, room rates, rental charges
· Knowledgeable of credit policies, booking process and other group related
hotel policies
· Asks specific questions about group's meeting plans, making arrangements
accordingly
· Competently addresses group requests
· Follows-up on initial meeting, when appropriate
13. BANOUETS
· Meeting rooms set as requested
· Meeting rooms refreshed as scheduled
· Extends friendly greeting when assisting a guest
· Delivers order professionally and efficiently
· Food is fresh in taste and attractively presented with appropriate
accompaniments
· Portions are adequate and consistent
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
- 167 -
· Staff neatly uniformed and groomed
. Audio/visual equipment, available, properly set-up and in working order
14. COMPLAINT HANDLING/MAINTENANCE REOUESTS
· Staff trained in customer care technique
· Guests know where to make special requests/complaints, if appropriate
. Complaint and special requests handled efficiently and promptly, taking into
account nature and severity of item
· Staff uniformed and neatly groomed
· Staff helpful and courteous
15. BUSINESS AMENITIES
· Staff available to handle requests professionally and efficiently
· Staff adequately trained
· Staff able to answer common questions and provide information about
services and facilities provided
· Staff neatly uniformed and groomed
· Adequate facsimile, mail/package, duplicating, conference call, computer and
print-out services available to handle guest requests promptly
· Secretarial/word processing services available to guests
. In-coming facsimiles and mail/packages delivered promptly to guests
· Directory of local business services/resources available
DOS: [04984.DOCS.MIAMI]GLEASE _9-19-96
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PHYSICAL STANDARDS
1. ENTRANCE/LOBBY/FRONT DESK
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, ceilings, doors, vents, windows, etc.; well
maintained.
.
Condition/FF&E
Carpet, wall treatment, furnishings, window treatment,
telephone areas, lighting, etc.; well maintained.
Well organized and free of clutter; well maintained.
.
Front Desk
.
Signage
Professionally prepared; well maintained.
.
HVAC
Performs in accordance with specifications; well
maintained.
.
Safety / Security
Areas safe and secure. Emergency exits properly
identified. Key access and control areas properly
secured. Emergency lighting present and operable.
2. PUBLIC RESTROOMS
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, ceilings, vents, doors, etc.; well
maintained.
.
Condition/FF&E
Vanities, toilets and seats, urinals, chrome, wall
treatment, lighting, mirrors, etc.; well maintained.
.
Partitions/Privacy
Sufficient for privacy; locks operable; well maintained.
.
Signage
Professionally prepared; well maintained.
.
HVAC
Performs in accordance with specifications; well
maintained.
.
Amenities
Soap, towels, toilet tissue, waste receptacles, etc.,
provided.
3. DINING AND BAR FACILITIES
.
Cleanliness
Overall clean.
DOS: [04984. DOCS. MIAMI]GLEASE _9-19-96
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.
Condition/Structure -
Floors, walls, ceilings, vents, doors, etc.; well
maintained.
.
ConditionlFF&E
Carpet, buffets, wall treatment, light fixtures, high
chairs, window treatment, cashier's counter, etc.; well
maintained.
.
Condition/
FF&E Seating
Tables, chairs, bar stools, booths, etc; well maintained.
.
Service Areas
Shielded, organized.
.
Table Top/Menus
China, glassware, flatware, linens, condiment containers,
etc., clean. Menus in good condition. Professionally
prepared. Variety provided.
.
HVAC
Performs in accordance with specifications; well
maintained.
.
Safety /Security
Areas safe and secure. Emergency exits properly
identified. Key access and control areas properly
secured. Emergency lighting present and operable.
4. LOUNGE FACILITIES: LOUNGES AND LOBBY AREA
.
Cleanliness
Overall clean.
.
Condition/Structure -
Floors, walls, doors, ceilings, windows, etc.; well
maintained.
.
Condition/FF&E
Carpet, wall decor, wall treatment, light fIxtures,
window treatment, etc.; well maintained.
.
Glassware
Clean; well maintained.
.
Bar/Service Areas
Organized; well maintained.
.
HVAC
Performs in accordance with specifications; well
maintained.
.
Safety/Security
Areas safe and secure. Emergency exits properly
identified. Key access and control areas properly
secured. Emergency lighting present and operable.
DOS :[04984.DOCS. MIAMI]GLEASE _9-19-96
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5. CORRIDORS/ELEV A TORS/STAIRWELLS
. Cleanliness Overall clean.
. Conditionl Structure - Floors, walls, railings, doors, frames, room numbers,
ceilings, windows, etc.; well maintained.
. ConditionlFF&E Carpet, wall treatment, window treatment, furnishings,
telephone areas, lighting, etc.; well maintained.
. Elevators/Stairwells - Well maintained; operating properly.
. Ice Machines Well maintained; operating properly.
. HVAC Performs in accordance with specifications; well
maintained.
. Safety /Security Proper storage. Required emergency lighting and
equipment present; operable.
. Signage Adequate; well maintained.
6. MEETING/PRE-FUNCTION FACILITIES
.
Cleanliness
.
ConditionlStructure -
.
ConditionlFF&E
.
Movable Walls
.
HVAC
.
Equipment
.
Signage
.
Safety / Security
DOS: [04984.DOCS.MIAMI]GLEASE _9-19-96
Overall clean.
Floors, walls, doors, ceilings, windows, etc.; well
maintained.
Carpet, wall decor, wall treatment, furnishings, window
treatment, telephone areas, lighting, etc.; well
maintained.
Operable; well maintained.
Performs in accordance with specifications; well
maintained.
Operable; well maintained.
Adequate; well maintained.
Areas safe and secure. Emergency exits properly
identified. Key access and control areas properly
secured. Emergency lighting present and operable.
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7. RECREATION FACILITIES
. Cleanliness Overall clean.
. Condition/Structure - Floors, walls, doors, ceiling, vents, windows, etc.; well
maintained.
. Condition/FF&E Carpet, wall treatment, furnishings, lighting, pool cover,
etc.; well maintained.
. Exterior Pool Operable in accordance with specifications; well
maintained; paint, caulking, grouting and tiling in good
condition; odor-free; water clear; properly treated.
. Interior pool/Sauna - Operable in accordance with specification; well
maintained; odor-free; water clear; properly treated.
. Equipment Exercise machines clean; operable; well maintained.
. Safety/Security/
Signage/Phone Required safety equipment present; signage adequate;
professional; well maintained; emergency lighting present
and operable.
. HVAC Performs in accordance with specifications; well
maintained.
8. EXTERIOR COMPONENTS
. Cleanliness Overall clean.
. Condition/Structure - Stairs, railings, windows, doors, frames, walkways,
walls, roof, storage areas, etc.; well maintained.
. Canopy Well maintained; clearance height posted.
. On- Site Garage Adequately striped, lighted; well maintained.
. Driveway ICurbs/
Sidewalks Well marked; clean; curbs, curb stops, sidewalks, etc.;
well maintained.
. Signage Adequate; professionally prepared; in good condition and
well maintained.
DOB: [04984. DOCS .MIAMI]GLEASE _ 9-19-96
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. Safety / Security Areas safe and secure. Emergency lighting present and
operable.
. Building Facade/
Exterior Clean; windows clean.
. Entry Doors Clean; well lighted; well maintained.
. Landscape Free of weeds, litter, debris; healthy; well-kept.
9. GUEST ROOMS
. Cleanliness Overall clean; artwork, windows, and mirrors cleaned.
. Bedding Mattresses and box springs in proper condition and well
maintained.
. Condition/Structure - Floors, walls, ceilings, closets, doors, windows, vents,
etc.; in appropriate condition and well maintained.
. Cosmetic Package Carpet, window treatments, wall treatment, decor, etc.;
well maintained.
. Case Goods Mirrors, credenzas, clothes, racks, nightstand(s), desks,
desk chairs, headboards, etc.; well maintained.
. Condition/ Other
FF&E Chairs, sofas, tables, lighting, etc.; in appropriate
condition and well maintained.
. Bed Linens Mattress pads, pillows, bedspreads, linens, blankets,
etc.; well maintained.
. HVAC Performs in accordance with specifications; in good
condition and well maintained.
. Television/Radio/
Telephone/Clock Well maintained; working properly; good quality picture
and sound. Television programs listings of current date.
Remote control operative.
. Safety/Security Deadbolts, chain latches, door viewers, connecting door
hardware, etc.; present, operable and well maintained.
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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10. GUEST BATHROOMS
. Cleanliness Overall clean.
. Expendable Supplies - Required expendable supplies present; proper quantities.
. Condition/Structure - Floors, walls, doors, ceilings, etc.; in appropriate
condition and well maintained; clean and free of hair.
. 'Vanity/Fixtures 'Vanities, chrome, basin(s), soap dishes, towel bars,
shelves, etc.; well maintained.
. Bath/Fixtures Toilets, tubs, showers, shower curtains and rods,
showerheads, towel bars and shelves, soap dishes,
chrome, etc.; well maintained.
. Lighting/Mirrors Well maintained; clean and operable.
. Tub Wall/Grouting Well maintained; clean.
. Linens Bath towels, hand towels, washcloths, bathmats; proper
quantity and size and weight.
. Exhaust/'Vents Performs in accordance with specifications.
. Safety /Security Tub non-slip provisions present; in appropriate condition
and well maintained; grab bars present and secure.
DOS : [04984. DOCS .MIAMI]GLEASE _9-19-96
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EXHIBIT 8.2
ARTICLE 2 OF HOTEL DEVELOPMENT AGREEMENT
DOB: [04984. DOCS. MIAMI]GLEASE _9-19-96
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Exhibit 8.2
Article 2 of the Hotel Development Agreement
ARTICLE 2
CONSTRUCTION
Section 2.1 Conditions Precedent to Developer's Commencement of
Construction of the Project.
(a) Developer shall (subject to Unavoidable Delays) obtain all Permits and
Approvals by not more than one (I) year from the Commencement Date. Subject to Section
2.1(c), Developer shall not Commence Construction of the Project unless and until (i) Developer
shall have obtained and delivered to the Owner's Consultant copies of all Permits and Approvals
required to Commence Construction and (ii) Developer shall have delivered to the Owner
original certificates of the policies of insurance required to be carried pursuant to the provisions
of Article 7 of this Agreement.
(b) The Owner (solely in its capacity as the owner of the Project Site and not
in its governmental capacity) shall reasonably cooperate with Developer in obtaining the Permits
and Approvals required by Section 2.1(a) and any necessary utility access agreements, shall sign
any application reasonably made by Developer which is required in order to obtain such Permits
and Approvals and utility access agreements and shall provide Developer with any information
and/or documentation not otherwise reasonably available to Developer (if available to the
Owner) which is necessary to procure such Permits and Approvals and utility access agreements.
Any such accommodation by Owner shall be without prejudice to, and shall not constitute a
waiver of, Owner's rights to exercise its discretion in connection with its governmental
functions. Developer shall reimburse the Owner, within ten (10) days after the Owner's demand,
for any reasonable out-of-pocket cost or expense payable to the Owner's technical consultants
(other than the Owner's Consultant), such as architects and engineers, so incurred by the Owner
in connection with Owner's assistance in obtaining the Permits and Approvals and utility access
agreements required by Section 2.1(a).
(c) Developer shall not Commence Construction of the Project, or any portion
thereof, unless and until the Owner shall have approved the Plans and Specifications (to the
extent required herein). However, if Developer chooses to perform any Construction of the
Project on a "fast-track" basis, Developer may request the necessary approval of the Owner in
stages and perform that portion of the Construction Work which has been approved (provided
Developer shall comply with all other requirements with respect to such portion of the
Construction Work), even if progress plans and specifications for other portions of the
Construction Work have not yet been prepared.
(d) Prior to Commencement of Construction of the Project, Developer shall
furnish to the Owner a completion guarantee (the "Completion Guarantee") from Loews
W6-MI961840.029
Corporation, pursuant to which Loews Corporation guarantees timely completion of the Project,
in the form attached hereto as Exhibit 2.1 (d).
Section 2.2 Commencement and Completion of Construction of the Project.
Developer shall, subject to Unavoidable Delays, at its expense (a) Commence
Construction on or before sixty (60) days after all Permits and Approvals necessary for the
Commencement of Construction are issued (the "Construction Commencement Date") and (b)
thereafter continue to prosecute Construction of the Project with diligence and continuity to
completion. If, after Developer has Commenced Construction, Developer fails to diligently
prosecute Construction of the Project (subject to Unavoidable Delays), and such failure continues
(subject to Unavoidable Delays) for thirty consecutive (30) days after Developer's receipt of
notice of such failure, the Owner shall, in ~ddition to all of its other remedies under this
Agreement and the Ground Lease, have the right to seek such equitable relief (either mandatory
or injunctive in nature) as may be necessary to cause diligent and continuous prosecution of
Construction of the Project (subject to Unavoidable Delays) by Developer, it being understood
that Construction of the Project is a material inducement to the Owner to enter into the Ground
Lease and monetary damages shall be inadequate to compensate the Owner for harm resulting
from such failure. Notwithstanding anything to the contrary contained herein, if Developer fails
to Substantially Complete Construction of the Project by the Default Date, then the same shall
constitute an Event of Default under this Agreement and under the Ground Lease and the Owner
shall be entitled to all of its remedies hereunder and thereunder, including, without limitation, the
termination of this Agreement and the Ground Lease. Notwithstanding anything to the contrary
contained in this Agreement, the Default Date shall not be extended by reason of Unavoidable
Delay except in the event Owner fails to make Owner's Contribution in accordance with the
terms hereof.
Section 2.3 Completion of Construction of the Project.
(a) Substantial Completion of the Project shall be accomplished in a diligent
manner, and in any event by the Completion Deadline, and final completion of the construction
of the Project shall be accomplished in a diligent manner thereafter, in each case in a good and
workerlike manner, in substantial accordance with the Plans and Specifications, in accordance
with all applicable Requirements and, except as provided in Article 6, at Developer's sole cost
and expense.
(b) Upon Substantial Completion of Construction of the Project, Developer
shall furnish the Owner with the following:
(i) a certification of the Architect (certified to the Owner on the
standard AlA certification form) that it has examined the Plans and Specifications
and that, in its professional judgment, after diligent inquiry, Construction of the
Project has been Substantially Completed in accordance with the Plans and
Specifications applicable thereto and, as constructed, the Improvements comply
with all applicable Requirements;
- 2 -
W6-MI961840.029
W6-MI961>340.029
(ii) if Requirements require the same, a copy or copies of the
temporary certificates of occupancy for the Hotel (or portion thereof, as
applicable) issued by the City of Miami Beach Building Department;
(iii) lien waivers in form and substance reasonably satisfactory to
Owner from each contractor, subcontractor, supplier or materialman retained by
or on behalf of Developer in connection with the Construction of the Project,
evidencing that such Persons have been paid in full for all work performed or
materials supplied in connection with the Construction of the Project;
(iv) a complete set of "as built" plans and a survey showing the
Improvement(s) for which the Construction of the Project has been completed.
The Owner shall have an unre~tricted license to use such "as built" plans and
survey for any purpose related to the Project Site without paying any additional
cost or compensation therefor, subject to copyright and similar rights of the
Architect to prohibit use of designs for purposes unrelated to the Project Site, as
such rights exist in law or may appear in the Architect's contract, and subject to
applicable public records laws. The foregoing requirement with respect to "as
built" plans shall be satisfied by Developer furnishing to the Owner, at
Developer's expense, a complete set of Plans and Specifications, with all addenda
thereto and change orders in respect thereof, marked to show all changes,
additions, deletions and selections made during the course of the Construction of
the Project.
- 3 -
EXHIBIT 14.5
TERMS OF CONCESSION AGREEMENT (the "Concession AlP"eement")
1. Parties.
The City of Miami Beach, its successors and assigns.
Tenant, its successors and assigns, as concessionaire.
2. Term.
Five (5) years, renewable by Tenant every five (5) years during the Term of this Lease, but
expiring on March 30, 2023. Notwithstanding the preceding sentence, upon an Event of Default
under this Lease that results in a termination of this Lease, the Concession Agreement shall
terminate.
3. Location.
The Concession Agreement shall cover the beach concession for the area of the beach west and
east of the sand dunes immediately adjacent to the Hotel and having a width from the northerly
boundary to the southerly boundary of the Land (the "Concession Area").
4. Uses and Services.
Tenant will conduct only the following types of businesses and provide only the following
services:
4.1 Food and/or beverage services from pushcarts or other mobile vehicles and, if permitted
under concession agreements entered into by the City with other beach concessionaires, from permanent
locations as may be designated or permitted by the City.
4.2 Rental of beach equipment, including, but not limited to, chairs, umbrellas, rafts or other
flotation devices.
4.3 Sale of clothing and beach products.
4.4 Rental of special recreational equipment, including, but not limited to, surfboards,
windsailing, catamarans and jet skis. Any special water recreational activity shall be subject to the prior
approval of the Marine Authority and any other Governmental Authority whose approval is required
and shall be permitted only if Tenant obtains, at Tenant's sole cost and expense, insurance required and
approved by the City.
DOB :[04984.DOCS .MIAMI]GLEASE _9-19-96
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4.5 Special Events (as hereinafter defined) desired by Tenant; provided, that any Special
Event shall be subject to the prior approval of the City.
4.6 Such other businesses and services permitted by the applicable Governmental Authorities
to be conducted by other beach concessionaires from time to time.
5. Facilities.
All facilities (which may not be permanently situated structures and which must movable on a
daily basis, except that Tenant may erect permanently situated structures that are similar to any
permanently situated structures that the City permits other beach concessionaires to erect on the
beach) used in connection with the Concession Agreement shall be constructed or provided by
Tenant, at Tenant's sole cost and expense, in accordance with Requirements and the provisions
this Lease as if such facilities were part of the Premises. Tenant shall maintain such facilities
at its sole cost and expense and in accordance with Requirements and the provisions of this
Lease as if such facilities were part of the Premises. Without limiting the foregoing, Tenant
shall each day remove or cause the removal of all litter, garbage and trash in the Concession
Area. The Concession Agreement shall have no effect on Owner's obligations pursuant to
Section 14.5 of the Lease. In addition, the City will have the right to require Tenant to post,
at Tenant's sole cost and expense, a performance bond for beach concessions similar to that
required of other owners or operators of hotels in Miami Beach of a similar size and location
as the Hotel, in an amount and on such terms, and issued by a surety company, reasonably
satisfactory to Owner, in order to secure such removal obligations.
6. Concession Fees.
Tenant shall pay to the State of Florida concession fees in the amount, if any, required from
time to time by law or regulation by the State of Florida. Such fees will be subject to sales and
use taxes. Concession fees shall be net to the State of Florida.
7. Special Events.
The Concession Agreement shall provide for exclusivity for Tenant within the Concession Area.
The City will, however, have the right to allow other concessionaires to operate upon the
Concession Area covered by the Concession Agreement during Special Events approved by the
City. The Concession Area will be for the use of the public for recreation and other public
purposes, and the public's right to such use shall not be infringed upon by any activity of
Tenant. The City shall not be precluded from using the Concession Area for public and/or
civic purposes as deemed necessary or desirable. For purposes of the Concession Agreement,
the term "Special Event" shall mean a concert or other attraction which will involve production
expenses of at least $250,000.00, adjusted for inflation as provided in the Lease, including,
without limitation, expenses in connection with talent and accommodations therefor, advertising
and promotion, security, beach area clean-up, insurance, and legal and other professional
expenses.
DOS : [04984. DOCS .MIAMI]GLEASE _9-19-96
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8. Requirements.
Tenant will obtain all permits and licenses necessary for the conduct of the business and other
activities under the Concession Agreement, and Tenant will comply with all other Requirements
applicable to such business and other activities.
9. Utilities.
Tenant will be responsible for, and shall pay for, all utilities used in connection with the
business and other activities under the Concession Agreement.
10. Sil!nage.
Subject to Requirements, Tenant shall have the right to advertising, signage and po stings desired
by Tenant in the Concession Area of a type and manner allowed to owners or operators of hotels
in Miami Beach of a similar size and location as the Hotel, subject to the prior approval of the
City, if such approval is required of other owners or operators of hotels in Miami Beach of a
similar size and location as the Hotel.
11. Books and Records
The City will have the right to examine and audit Tenant's books and records regarding the
Concession Agreement in the manner provided in Article 28 of this Lease.
12. Insurance: Indemnification.
Tenant will be required to provide the City with insurance consistent with the provisions of
Article 7 of this Lease. The Concession Agreement shall contain indemnification provisions
consistent with the provisions of Article 20 of this Lease.
13. Employees: Managers: Hours of Operation.
The Concession Agreement will contain provisions governing employees, managers and hours
of operation as then required by the City for concession agreements with owners or operators
of hotels of a similar size and location as the Hotel.
14. No Lease.
The Concession Agreement shall not constitute a lease and the Tenant shall not be a tenant
thereunder or of the Concession Area.
DOB: [04984. DOCS .MIAMI]GLEASE _9-19-96
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15. Definitive Agreement.
The foregoing provisions of this Exhibit 14.5 only summarize certain of the terms and
provisions of the Concession Agreement. The actual rights and obligations of Tenant and the
City shall be only as set forth in the Concession Agreement, and the Concession Agreement
shall contain the terms and conditions set forth above and such other terms and provisions not
inconsistent with the foregoing provisions of this Exhibit 14.5 for concession agreements granted
to the owners or operators of hotels in Miami Beach of a similar size and location as the Hotel.
Without limiting the preceding sentence, upon each renewal of the Concession Agreement, the
Concession Agreement will be modified to include such terms and conditions then included in
concession agreements granted to the owners or operators of hotels in Miami Beach of a similar
size and location as the Hotel; provided, however, that such terms and conditions are not
inconsistent with the foregoing provisions of Exhibit 14.5.
DOS: [04984. DOCS. MIAMI]GLEASE _9-19-96
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EXHffiIT 21.2
ST A TE STREETSCAPE IMPROVEMENTS
The improvements for Collins A venue, between 15th Street and Lincoln Road, will include
maintenance of the street right-of-way in order to achieve four ll-foot travel lanes, widening of the
sidewalks up to 10 feet including tree grates close to the street, 2- foot curbs and gutters and drainage
structures, lighting and landscaping. The project will also include lighting and landscaping elements.
The design/engineering of these improvements is the responsibility of the Florida Department
of Transportation (FDOT), with the implementation of same being the responsibility of the City. To
accomplish the latter on a timely basis in recognition of the Hotel's schedule, the City will enter into
a Joint Participation Agreement (JP A) with FDOT allowing the City to construct said improvements
utilizing FDOT funds, in order to expedite the construction of the improvements.
The scope of work will recognize the Hotel's site plan relative to vehicular and pedestrian access
points as per civil engineering plans prepared by Consul-Tech Engineering, Inc. Various utility
connection requirements of the Hotel will also be properly coordinated by the City with FDOT. The
design/engineering and construction of these improvements will also incorporate the signalization of the
Collins Avenue/16th Street intersection, as per plans by David Plummer & Associates. The latter scope
has already been approved by FDOT and Dade County's Public Works Department.
The City, separate from FDOT's Project but requiring coordination with same, will also install
various new underground water and sewer lines below Collins Avenue and in advance of FDOT's
improvements. The scheduled date for completion of all these improvements is May 1, 1998.
DOB: [04984.DOCS.MIAMI]GLEASE _9-19-96
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EXHmIT 21.4
BROADW ALK EXTENSION
This project entails the connection of the pedestrian walkways at Lummus Park to the existing
wooden boardwalk system at 21st Street. The improvements, subject to approval by the relevant
Governmental Authorities, are proposed as consisting of a 10 to 12 foot wide on-grade walkway;
comprised of an impervious material (e.g.: frangible pavers, crushed shell-rock); low-level lighting;
a minimum of 2 crossovers contiguous to the Premises (subject to the approval of the State of Florida)
allowing access from the broad walk over the adjacent dune to the beach; 1 access way for emergency
vehicular access, as required by the City's Fire Department connecting to the Beach Easement; and
landscaping/irrigation adjacent to same and including the dune located to its immediate east.
This project is to be located on property owned by the State of Florida and to the immediate east
of the Hotel. Therefore, the City will secure required leases and approvals from the State as may be
necessary to construct the project.
The City will design the project in recognition of the Hotel's site design, as per plans by
Bradshaw Gill & Associates. Without limiting this requirement, subject to the approval of the State of
Florida, the project's dune crossovers and emergency accessway will be located to directly connect to
appropriate locations as assumed by the Hotel's site plan. The planting and lighting of the project will
be designed to be compatible with that assumed for the Hotel.
The City has retained Coastal Systems International and Bradshaw Gill & Associates to design,
engineer and permit the project. The scheduled date for completion is May 1, 1998. In the event of
a delay in securing the necessary permit(s) and/or leases, the City will use reasonable efforts to
prioritize construction of that phase of the project directly east of the Hotel.
DOB :[04984.DOCS.MIAMI]GLEASE _9-19-96
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EXHIBIT 35.3
ENVIRONMENTAL REPORTS
1. 1555 Collins A venue - formerly the Poinciana Hotel
a. Environmental Site Assessment, dated February 4, 1994, prepared by ViroGroup, Inc.
b. Review Letter, dated February 9, 1994, prepared by Bailey Hunt Jones & Busto and
addressed to David J. Berger, Broad and Cassel.
2. 1601-1611 Collins Avenue - formerly the Sands-New Yorker Hotel
a. Phase I Environmental Property Assessment, dated November 8, 1992, prepared by
ATEC Associates, Inc.
b. Subsurface Investigation, dated December 21, 1993, prepared by ATEC Associates, Inc.
3. 1565 Collins Avenue - St. Moritz Hotel
a. Phase I Environmental Site Assessment, dated March, 1994, prepared by Allied
Environmental Consultants, Inc.
b. Phase II Subsurface Investigation, dated April, 1994, prepared by Allied Environmental
Consultants, Inc.
c. Report of the Building Survey, Sampling and Evaluation of Asbestos-Containing
Materials, dated March 28, 1994, prepared by Allied Environmental Consultants, Inc.
d. Memorandum, dated June 5, 1995, from Bruce Henderson, Environmental Specialist, to
Alexander I. Tachmes, First Assistant City Attorney, regarding lead containing plumbing
within the St.Moritz Hotel.
4. 16th Street End
a. Phase I Environmental Site Assessment, dated July 3, 1996, prepared by OHM
Remediation Services Corp.
5. Updates to the foregoing Environmental Reports
a. Update of existing site conditions for the former Sands-New Yorker Hotel Site, the
former Poinciana Hotel Site, the St. Moritz Hotel Site and the Royal Palm Hotel Site,
dated July 12, 1996, prepared by OHM Remediation Services Corp.
DOB: [04984. DOCS .MIAMI]GLEASE _9-19-96
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6. Notwithstanding anything to the contrary contained in the Reports, Law
Engineering and Environmental Services, Inc. ("Law") provided that certain report dated
August 8, 1996 (the "Law Report") with respect to its review of the report described in
item 5a. of this Exhibit 35.3 entitled "Update of existing site conditions for the former
Sands-New Yorker Hotel Site, the former Poinciana Hotel Site, the St. Moritz Hotel Site and
the Royal Palm Hotel Site, dated July 12, 1996, prepared by OHM Remediation Services
Corp." OHM Remediation Services Corp. is hereinafter referred to as "OHM." With respect
to the former Poinciana Hotel Site, OHM reported that during advancement of soil borings on
July 1, 1996, soil samples collected from below the water table had strong petroleum odors
and appeared to contain free product. The Law Report states that although OHM did not
proffer an opinion on the source of the contamination, Law believes that the alleged
groundwater contamination was a result of a leaking storage tank on the Royal Palm Hotel
property, immediately south of the former Poinciana Hotel Site.
With respect to the St. Moritz property, Law also prepared that certain report
dated August 23, 1996 to Wilbur Mayorga of Waste Clean-Up Section of the Department of
Environmental Resources Management regarding the closure of an underground heating oil
tank, DERM UT-5260, file number 7358, which sets forth the procedure followed in the
removal of the underground heating oil tank and its laboratory results. Based on these
laboratory results, and the lack of contaminated soil at the site, Law concluded that an impact
to the soil or groundwater of regulatory consequence had not occurred and no further action
was needed. Therefore, the source of the alleged contamination at the former Poinciana Hotel
Site does not appear to be the above-referenced underground heating oil tank at the St. Moritz
property, and the actual source of the alleged contamination has not been determined.
Notwithstanding anything to the contrary contained in Article 35 of the Lease or
this Exhibit 35.3, Owner acknowledges that it is responsible for remediating the source of the
alleged contamination on the former Poinciana Hotel Site, as disclosed in OHM's report
referenced above, and, as of the date of the Lease, Owner has commenced remediation to the
extent required by law and in accordance with all laws. Furthermore, Owner assumes
responsibility for any surviving environmental problem which may be caused by the petroleum
contamination referenced in this paragraph 6 within the subject area on the former Poinciana
Hotel Site.
182a
W6-MI962640.075
EXHIBIT 36.2
TERMS OF OPTION TO PURCHASE
1. Purchase Price.
The Purchase Price shall be determined in accordance with Section 36.2 of this Lease and shall
be payable at the closing of the purchase by wire transfer of immediately available funds to an
account designated in writing by Owner.
2. Closing Date.
The closing of the purchase shall take place on date designated by Owner, but in any event not
less than thirty (30) days nor more than sixty (60) days following the date Tenant exercises its
option to purchase in accordance with Section 36.2 of this Lease.
3. Deed: Title.
At the closing of the purchase, Owner shall convey to Tenant (i) all of Owner's right, title and
interest to the Land and the condominium unit covered by the Condominium Unit Lease by one
or more special warranty deeds and (ii) all of Owner's right, title and interest in and to this
Lease and the Condominium Unit Lease by one or more assignments of lease. The forms of
such deeds and assignments of lease shall be mutually acceptable to Owner and Tenant but shall
not in any event provide for any representations by Owner other than a representation that
Owner has not theretofore transferred or assigned the items being transferred or conveyed
thereby and the representations and warranties customarily contained in a special warranty deed.
The Land, the condominium unit, the Lease and the Condominium Unit Lease shall be
conveyed to Tenant subject to all liens, encumbrances and other matters then affecting the title
thereto and any state of facts a survey may reveal (but in all cases subject to Owner's obligations
under Section 2.2 of the Lease). Owner shall also execute all other documents customarily used
in real estate transactions in Metropolitan Dade County, Florida; provided, however, that if
Owner is a Governmental Authority, (x) such documents shall not include those documents from
which Governmental Authorities are exempt pursuant to applicable Requirements and (y) with
respect to any title affidavit required of Owner, (i) Owner shall not be required to make any
statement or certification regarding parties-in-possession and (ii) any statement or certification
regarding mechanics' or materialmen's liens shall cover only work or materials directly
contracted for by Owner in writing.
4. Rent: Prorations.
At the closing of the purchase, all Base Rent and Percentage Rent shall be prorated through the
date of closing and paid to the party entitled thereto. No other prorations shall be made.
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5. Expenses.
Each party shall pay its own attorneys' fees. All transfer taxes, title charges, recording fees,
survey ch...rges and other expenses incurred in connection with the purchase shall be paid by
Tenant; provided, however, that Owner shall pay all documentary stamp taxes and surtax, if
any, payable in connection with the purchase.
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