Contract analysis

1. Introduction and Purpose This firm represents Coral Palms Resort Holdings LLC, a Florida limited liability company (the "Borrower"), and its parent company, Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Guarantor"), in connection with the proposed $160,000,000 first mortgage refinancing loan (the "Loan") to be made by Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (th

2. Property Identification The Property that is the subject of the Title Commitment is more fully described as follows: A portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more particularly described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida. The Monroe County Property Appraiser's Folio Number for

3. Schedule B-I Requirements — Acknowledged We have reviewed the Schedule B-I requirements set forth in the Title Commitment and acknowledge that certain conditions must be satisfied in order for the Title Company to issue the lender's title insurance policy. The Borrower is actively working to satisfy all Schedule B-I requirements, and we anticipate that all such requirements will be fulfilled at or prior to the clo

4. Schedule B-II Exceptions — Objections and Requests Set forth below are the Borrower's specific objections and requests with respect to the Schedule B-II exceptions identified in the Title Commitment. Each exception is addressed individually. To the extent any Schedule B-II exception is not specifically discussed below, such exception is not accepted and is deemed objected to unless and until the Borrower and the L

5. Required Title Insurance Endorsements The Commitment Letter and Draft Loan Agreement require that the lender's title insurance policy be issued with certain endorsements. Set forth below is the list of endorsements that will be required by Pinnacle Atlantic Capital, LLC at closing. We request the Title Company's confirmation that each of the following endorsements is available under the Title Company's underwritin

1. ALTA 3.1-06 — Zoning (Completed Structure). Confirming that the Property's current use as a resort hotel with marina, spa, conference center, parking, and food and beverage operations is a permitted use under applicable zoning and land use regulations, and that the existing improvements comply with zoning requirements;

2. ALTA 9-06 — Restrictions, Encumbrances, Minerals. Providing affirmative coverage with respect to recorded covenants, conditions, and restrictions, including coverage against forfeiture or reversion;

3. ALTA 9.6-06 or ALTA 9.7-06 — Private Rights (if applicable). To the extent any CC&R or recorded instrument contains private transfer fee obligations or other private rights that could affect the insured mortgage;

4. ALTA 17-06 — Access and Entry. Confirming that the Property has direct legal and physical access to and from a public roadway (Overseas Highway / U.S. Route 1);

5. ALTA 17.1-06 — Indirect Access and Entry (if applicable). If access to the Property is provided through an intervening parcel or by means of an access easement rather than direct frontage on a public road;

6. ALTA 18-06 — Single Tax Parcel. Confirming that the Property is assessed as a single tax parcel for real estate tax purposes under Monroe County Property Folio No. 00460780-000100;

7. ALTA 18.1-06 — Multiple Tax Parcel (if applicable). If the Property is assessed as multiple tax parcels, confirming the identity of all such parcels and providing coverage accordingly;

8. ALTA 19-06 — Contiguity (if applicable). If the Property is comprised of multiple parcels, confirming that such parcels are contiguous and together form a single integrated site;

9. ALTA 22-06 — Location. Confirming the location of the insured land in relation to the improvements shown on the survey;

10. ALTA 25-06 — Same as Survey. Confirming that the legal description of the insured land is the same as the land depicted on the ALTA/NSPS survey;

11. ALTA 28-06 — Easement (Damage or Enforced Removal). Providing coverage against loss or damage arising from the enforced removal or alteration of existing improvements that encroach onto an easement area;

12. ALTA 35-06 — Minerals and Other Subsurface Substances (Buildings). Providing coverage against damage to existing buildings resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or other subsurface substances;

13. Usury Endorsement (Florida). As required under Florida law, confirming that the insured mortgage is not rendered unenforceable by reason of any usury defense;

14. Doing Business Endorsement. Confirming that the enforceability of the insured mortgage is not affected by the failure of the Lender to be authorized to transact business in the State of Florida;

15. Comprehensive Endorsement / Lender's Extended Coverage. Providing extended coverage over standard exceptions and comprehensive protections customary for commercial mortgage loan transactions;

16. Environmental Protection Lien Endorsement. Providing coverage against loss arising from any environmental protection lien imposed under federal, state, or local law that attains priority over the insured mortgage;

17. Variable Rate / Future Advance Endorsement (if applicable). If the Loan documents provide for a variable interest rate or future advances, confirming coverage with respect to such provisions; and

18. Tie-In / Aggregation Endorsement (if applicable). If the Loan involves multiple parcels or policies, providing aggregation of coverage across policies. We request that the Title Company provide written confirmation of the availability of each of the foregoing endorsements, together with the Title Company's premium schedule setting forth the premiums and fees for the lender's title insurance policy and each endors

6. Title Policy Requirements The lender's title insurance policy to be issued at closing must satisfy the following requirements: (a) Policy Amount. The policy shall be issued in the amount of $160,000,000.00, equal to the principal amount of the Loan; (b) Named Insured. The policy shall name Pinnacle Atlantic Capital, LLC as the insured lender, together with its successors and assigns; (c) Policy Form. The policy sh

7. Deadlines and Response Requested Resolution of the title objections set forth in this letter is a condition precedent to the closing of the Loan. Unresolved title matters may delay or prevent closing, and any such delay may have material adverse consequences for all parties involved, including the potential expiration of the rate lock under the Commitment Letter. We respectfully request that the Title Company resp

8. Copies and Distribution A copy of this letter is being simultaneously delivered to the following parties: (a) Whitford Baines & Driscoll LLP, Attention: Philip Tarrant Corporation, Partner, and Catherine Yee, Associate, 1221 Avenue of the Americas, Suite 4400, New York, New York 10020 (Lender's Counsel); (b) Pinnacle Atlantic Capital, LLC, Attention: Martin Drubeck, Managing Director, and Jennifer Kwon, Vice Presi

9. Reservation of Rights The Borrower expressly reserves all rights to supplement, modify, amend, or withdraw any or all of the objections set forth in this letter at any time prior to the closing of the Loan. Nothing in this letter shall be deemed to constitute a waiver by the Borrower or the Lender of any objection to any Schedule B-II exception, whether or not specifically addressed herein. Any and all Schedule B-