Contract analysis

I. PURPOSE AND SCOPE The purpose of this memorandum is to set forth the results of our review and analysis of the existing first mortgage loan (the "Existing Loan") made by Tidewater National Bank, N.A. ("Tidewater" or "TNB") to Coral Palms Resort Holdings LLC ("CPRH" or the "Borrower"), secured by the Coral Palms Grand Resort & Spa located in Key Largo, Monroe County, Florida (the "Property"). This review has been u

II. SUMMARY OF KEY FINDINGS AND RECOMMENDATIONS Set forth below is a summary of our principal findings and recommendations resulting from the review described herein. Each of these items is discussed in greater detail in the sections that follow.

1. Prepayment Premium — Timing Is Critical. Prepayment of the Existing Loan is permitted in full at any time, subject to payment of a prepayment premium of 1.0% of the outstanding principal balance if the prepayment occurs prior to March 1, 2023. The premium drops to zero on and after March 1, 2023, at which point the Existing Loan is "open" for prepayment without penalty. At the current approximate outstanding balan

2. No Lender Consent Required for Payoff. The Loan Agreement does not require Tidewater's consent to the prepayment or refinancing of the Existing Loan. CPRH has the unilateral right to prepay the Existing Loan in full, subject only to the premium schedule and the requirement that written notice of prepayment be provided at least thirty (30) calendar days in advance of the proposed prepayment date. The notice, once d

3. Defeasance Is Not Economically Advantageous. The Loan Agreement includes a defeasance provision permitting the substitution of collateral with U.S. Treasury obligations. However, given the upcoming open prepayment window commencing March 1, 2023, and the relatively modest prepayment premium of 1.0% if prepayment occurs before that date, defeasance is not economically advantageous and should not be pursued.

4. Assignment of Rents Terminates Automatically. The assignment of leases and rents contained within the Mortgage terminates automatically upon full payment and satisfaction of the Existing Loan and the recording of a satisfaction and discharge of the Mortgage. No separate release instrument is required.

5. UCC-3 Termination Statement Required. The UCC-1 financing statement filed by Tidewater (File No. 202219087643) must be terminated via a UCC-3 termination statement filed with the Florida Secured Transaction Registry upon payoff of the Existing Loan. The payoff request letter to Tidewater should expressly request delivery of an executed UCC-3 termination statement at or prior to closing.

6. Mortgage Satisfaction and Discharge. The existing Mortgage must be satisfied and discharged of record in the Public Records of Monroe County, Florida, at or in connection with the closing of the new PAC loan. The closing must be structured to ensure the Tidewater Mortgage is satisfied and the new PAC mortgage is recorded in proper first lien priority sequence, in coordination with Meridian Title & Escrow, Inc.

7. No Impediments Identified. Subject to the timing considerations regarding the prepayment premium, and subject to the surviving environmental indemnity (which warrants further attention as discussed in Section IV.L below), we have not identified any material impediments to the proposed refinancing in the Existing Loan documents.

III. LOAN SUMMARY A. Parties. The parties to the Existing Loan are as follows: Borrower: Coral Palms Resort Holdings LLC, a Florida limited liability company. CPRH was organized under the laws of the State of Florida for the specific purpose of acquiring and holding title to the Property and operating the Coral Palms Grand Resort & Spa. CPRH is a wholly owned indirect subsidiary of VHG, with its membership interests

IV. DETAILED ANALYSIS OF KEY PROVISIONS A. Prepayment Provisions

1. Prepayment Premium Schedule. Article 2 of the Loan Agreement and Section 3 of the Note contain the prepayment provisions governing the Existing Loan. Both instruments provide that the Borrower may prepay the outstanding principal balance of the Existing Loan, in whole or in part, at any time, subject to the payment of a prepayment premium calculated as follows: (a) Prior to March 1, 2023: A prepayment premium equa

2. Prepayment Notice Requirements. Section 2.4 of the Loan Agreement requires that the Borrower provide written notice of its intent to prepay the Existing Loan at least thirty (30) calendar days prior to the proposed prepayment date. The notice provisions contain several important requirements: (a) The prepayment notice must specify the proposed prepayment date, the amount to be prepaid (or, in the case of a full pr

3. Partial Prepayment. Section 2.5 of the Loan Agreement permits partial prepayments of the outstanding principal balance in minimum increments of $1,000,000, subject to the same prepayment premium schedule described above. Partial prepayments are applied first to accrued and unpaid interest and then to outstanding principal in inverse order of maturity (i.e., applied to the last scheduled payments first). Partial pr

4. Timing Considerations for the Refinancing. The prepayment premium schedule creates a clear economic incentive to time the PAC refinancing closing to occur on or after March 1, 2023. The potential savings of $1,185,000 are substantial and warrant careful coordination of the closing timeline. We summarize the economic analysis as follows: Scenario 1 — Closing Before March 1, 2023: Scenario 2 — Closing On or After Ma

Article 2 of the Loan Agreement also includes a defeasance provision, set forth at Section 2.7, which provides the Borrower with an alternative to prepayment with premium. The defeasance provision permits the Borrower to substitute the real property collateral with a portfolio of U.S. Treasury obligations (the "Defeasance Collateral") sufficient to generate cash flows equal to all remaining scheduled payments of prin

1. UCC-1 Financing Statement. In addition to the real property mortgage lien, Tidewater holds a perfected security interest in the personal property of the Borrower located at or used in connection with the Property. This security interest was perfected by the filing of a UCC-1 financing statement with the Florida Secured Transaction Registry. The key details of the UCC-1 are as follows: The collateral description in

2. UCC-3 Termination. Upon payoff of the Existing Loan, Tidewater is obligated to file, or authorize the Borrower to file, a UCC-3 termination statement with the Florida Secured Transaction Registry, terminating the UCC-1 financing statement bearing File No. 202219087643. Under Section 9-513 of the Florida Uniform Commercial Code, a secured party is required to file a termination statement within twenty (20) days aft

3. Fixture Filing. The Mortgage, as recorded in Official Records Book 2892, Page 0445, Public Records of Monroe County, Florida, includes a fixture filing component covering all fixtures located on the Property. The fixture filing was made in accordance with Section 9-502(c) of the Florida Uniform Commercial Code by recording a financing statement (as part of the Mortgage instrument) in the real property records of M

I. Insurance and Casualty Provisions

Article 6 of the Loan Agreement and the corresponding provisions of the Mortgage require the Borrower to maintain comprehensive insurance coverage with respect to the Property at all times during the term of the Existing Loan. The required insurance coverages include, without limitation: (a) Property and Casualty Insurance: "All risk" or "special form" property insurance covering the full replacement cost of all impr

V. PAYOFF PROCESS AND MECHANICS A. Steps Required for Payoff Based on our review of the Existing Loan documents, the following steps must be completed in connection with the payoff of the Existing Loan and the transition to the new PAC mortgage: Step 1. Send a formal payoff request letter to Tidewater National Bank, N.A. (Attention: Alan Prescott, Senior Vice President – Commercial Real Estate, 600 Waterside Drive, N