THIS INSTRUMENT PREPARED BY AND AFTER RECORDING RETURN TO:
Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006
Attention: Sophie Tremblay
COPIES TO:
Crescent Harbor Bank, National Association 600 Lexington Avenue, 34th Floor New York, NY 10022
Attention: Anika Holm, Director, Loan Syndications
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
Property Appraiser's Parcel Identification Numbers:
DOCUMENTARY STAMP TAX AND INTANGIBLE TAX LEGEND
Documentary stamp tax on the obligation secured hereby has been computed and paid in accordance with Florida Statutes §§ 201.01 et seq. and § 201.08, at the rate of $0.35 per $100 of the face amount of the indebtedness secured hereby. Florida intangible tax has been computed and paid in accordance with Florida Statutes § 199.133, at the rate of $0.002 per $1.00 of the obligation secured, subject to applicable credits and exemptions for the refinanced portion of the indebtedness, all as set forth in this instrument.
CUSIP: 92347LAB8 (Term Loan B)
Cross-Reference: Credit Agreement dated as of July 21, 2022, among Verimark Hospitality Group Inc., the Guarantors party thereto, Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, and the Lenders party thereto.
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
Dated as of July 21, 2022
by
PALMETTO BEACHFRONT HOTELS LLC a Florida limited liability company
as Mortgagor
to
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION as Collateral Agent for the benefit of the Secured Parties
as Mortgagee
Securing Obligations Under That Certain Credit Agreement Dated as of July 21, 2022
CUSIP: 92347LAB8
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ARTICLE I — DEFINITIONS AND RECITALS
Section 1.1 — Parties
Mortgagor. PALMETTO BEACHFRONT HOTELS LLC, a Florida limited liability company, having its principal office at 8200 West Palmetto Park Road, Suite 1500, Boca Raton, Florida 33433 (the "Mortgagor"). Mortgagor is a wholly owned subsidiary of Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Borrower"). Mortgagor was organized under the laws of the State of Florida and has been assigned Florida Department of State filing number L22000187432. Mortgagor is the fee simple owner of the twelve (12) Florida coastal resort hotel properties described herein and in Exhibit A attached hereto.
Mortgagee. CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, having offices at 600 Lexington Avenue, 34th Floor, New York, New York 10022, in its capacity as Collateral Agent for the benefit of the Secured Parties (as defined in the Credit Agreement referenced below) (in such capacity, together with its successors and assigns in such capacity, the "Collateral Agent" or the "Mortgagee"). Crescent Harbor Bank, National Association also serves as Administrative Agent under the Credit Agreement. References in this Mortgage to the "Collateral Agent" or the "Mortgagee" shall be to Crescent Harbor Bank, National Association acting in its capacity as Collateral Agent for the benefit of the Secured Parties, unless the context otherwise requires.
Section 1.2 — Recitals
WHEREAS, Verimark Hospitality Group Inc. ("Borrower"), a Delaware corporation listed on the New York Stock Exchange under the ticker symbol "VMRK," has entered into that certain Credit Agreement dated as of July 21, 2022 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Guarantors party thereto (including Palmetto Beachfront Hotels LLC), Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, and the Lenders (as defined therein) from time to time party thereto;
WHEREAS, the Credit Agreement provides for, among other things, a senior secured Term Loan B facility (the "Term Loan B") in the aggregate principal amount of Seven Hundred Million Dollars ($700,000,000), the proceeds of which are to be used: (i) to refinance in full the existing Six Hundred Twenty-Five Million Dollar ($625,000,000) Term Loan B facility under that certain Credit Agreement dated as of March 15, 2019, among VHG, the guarantors party thereto, Greystone Federal Credit Corp., as administrative agent, and the lenders party thereto (the "Existing Credit Agreement"); (ii) to fund up to Seventy-Five Million Dollars ($75,000,000) for permitted acquisitions and general corporate purposes of the Borrower and its subsidiaries; and (iii) to pay fees and expenses incurred in connection therewith;
WHEREAS, Palmetto Beachfront Hotels LLC is a Guarantor under the Credit Agreement and under the Guarantee Agreement dated as of July 21, 2022 (the "Guarantee Agreement"), among the Guarantors party thereto and Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, and is the owner of certain real property located in the State of Florida, comprising twelve (12) coastal resort hotel properties (collectively, the "Mortgaged Properties"), as more particularly described in Exhibit A attached hereto and made a part hereof;
WHEREAS, it is a condition to the obligations of the Lenders under the Credit Agreement (delivered as a post-closing deliverable pursuant to that certain Post-Closing Letter Agreement dated as of July 21, 2022 (the "Post-Closing Letter Agreement"), among the Borrower, the Guarantors, and the Collateral Agent, with a delivery deadline of August 5, 2022) that Palmetto Beachfront Hotels LLC execute and deliver this Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (this "Mortgage") to secure the Obligations (as defined herein) as they relate to the Mortgaged Properties;
WHEREAS, the Term Loan B and the existing Four Hundred Million Dollar ($400,000,000) revolving credit facility (the "Revolving Credit Facility") provided under the Credit Agreement, with Crescent Harbor Bank, National Association also serving as revolving credit facility agent (the "RCF Agent"), share a first-priority lien on the collateral securing the Obligations on a pari passu basis, in each case pursuant to the terms of the Amended and Restated Intercreditor Agreement dated as of July 21, 2022 (the "Intercreditor Agreement"), among the Borrower, the Guarantors, Crescent Harbor Bank, National Association, as Administrative Agent, Collateral Agent, and RCF Agent, and each other secured party from time to time party thereto;
WHEREAS, Palmetto Beachfront Hotels LLC has executed and delivered (a) the Guarantee Agreement, pursuant to which it has guaranteed the Obligations of the Borrower under the Credit Agreement and the other Loan Documents, and (b) the Pledge and Security Agreement dated as of July 21, 2022 (the "Pledge and Security Agreement"), among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, National Association, as Collateral Agent, pursuant to which Palmetto Beachfront Hotels LLC has granted a security interest in its personal property assets to the Collateral Agent for the benefit of the Secured Parties; and
WHEREAS, Palmetto Beachfront Hotels LLC will directly benefit from the making of the Term Loan B to the Borrower, and execution and delivery of this Mortgage is a condition to the extension of credit by the Lenders under the Credit Agreement and is in the best interests of Palmetto Beachfront Hotels LLC.
NOW, THEREFORE, in consideration of the premises, the extension of credit by the Lenders under the Credit Agreement, the agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Palmetto Beachfront Hotels LLC hereby agrees as follows:
Section 1.3 — Defined Terms
Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement dated as of July 21, 2022. For convenience of reference, the following terms shall have the following meanings when used in this Mortgage:
"Administrative Agent" means Crescent Harbor Bank, National Association, in its capacity as administrative agent under the Credit Agreement, together with its successors and assigns in such capacity.
"Adjusted Term SOFR" means, for purposes of calculating interest on the Term Loan B, the Term SOFR Rate plus the SOFR Adjustment, in each case as defined in the Credit Agreement, subject to a floor of 0.50% per annum.
"Borrower" means Verimark Hospitality Group Inc., a Delaware corporation.
"Collateral Agent" means Crescent Harbor Bank, National Association, in its capacity as collateral agent under the Credit Agreement and this Mortgage, for the benefit of the Secured Parties, together with its successors and assigns in such capacity.
"Credit Agreement" means that certain Credit Agreement dated as of July 21, 2022, among Verimark Hospitality Group Inc., the Guarantors party thereto, Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, and the Lenders from time to time party thereto, as the same may be amended, restated, supplemented, replaced, or otherwise modified from time to time.
"Event of Default" has the meaning assigned to such term in the Credit Agreement.
"Guarantors" means, collectively, Verimark Resort Properties LLC, a Delaware limited liability company; VHG Management Services Inc., a Delaware corporation; Verimark Convention Holdings LLC, a Delaware limited liability company; Palmetto Beachfront Hotels LLC, a Florida limited liability company; and Cascadia Hospitality Corp., a Washington corporation, together with each other entity that becomes a guarantor under the Guarantee Agreement after the date hereof.
"Intercreditor Agreement" means that certain Amended and Restated Intercreditor Agreement dated as of July 21, 2022, among the Borrower, the Guarantors, Crescent Harbor Bank, National Association, as Administrative Agent, Collateral Agent, and RCF Agent, and each other secured party from time to time party thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lenders" means the financial institutions from time to time party to the Credit Agreement as lenders. As of the date hereof, the initial Lenders and their respective Term Loan B commitments are as follows:
"Loan Documents" means, collectively, the Credit Agreement, the Guarantee Agreement, the Pledge and Security Agreement, the Intercreditor Agreement, this Mortgage, and all other agreements, instruments, documents, and certificates executed and delivered in connection therewith or pursuant thereto, in each case as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Maturity Date" means July 21, 2029.
"Mortgage" means this Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgaged Properties" means the twelve (12) Florida coastal resort hotel properties more particularly described in Exhibit A attached hereto, together with all buildings, improvements, structures, fixtures, equipment, and other property described in the Granting Clauses of Article II hereof.
"Obligations" means all obligations of the Borrower and the Guarantors under or in respect of the Credit Agreement and the other Loan Documents, including, without limitation: (a) the obligation to repay the principal amount of the Term Loan B in the aggregate amount of Seven Hundred Million Dollars ($700,000,000); (b) all accrued and unpaid interest thereon (at a rate of Adjusted Term SOFR plus 375 basis points, with a SOFR floor of 0.50% per annum); (c) all fees, including the annual administrative agent fee of One Hundred Fifty Thousand Dollars ($150,000); (d) all costs and expenses (including attorneys' fees and disbursements); (e) all indemnification obligations; and (f) all other amounts owing to the Secured Parties under the Credit Agreement and the other Loan Documents, whether now existing or hereafter arising, whether voluntary or involuntary, whether or not jointly owed with others, whether direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created, or incurred.
"Permitted Liens" has the meaning assigned to such term in the Credit Agreement.
"Required Lenders" has the meaning assigned to such term in the Credit Agreement.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, the Lenders, and each other holder of Obligations from time to time.
"Term Loan B" means the senior secured term loan facility in the aggregate principal amount of Seven Hundred Million Dollars ($700,000,000) made available under the Credit Agreement.
Section 1.4 — Rules of Construction
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The word "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein or in the Credit Agreement), (ii) any reference herein to any person shall be construed to include such person's successors and assigns, (iii) the words "herein," "hereof," and "hereunder," and words of similar import, shall be construed to refer to this Mortgage in its entirety and not to any particular provision hereof, and (iv) all references herein to Articles, Sections, Exhibits, and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Mortgage.
(b) References herein to any statute, including the Florida Statutes, the Uniform Commercial Code as in effect in the State of Florida (the "UCC"), and any applicable recording statutes, shall be deemed to refer to such statute as amended from time to time and to any successor statute.
(c) The headings and captions of this Mortgage are for convenience of reference only and shall not define or limit the provisions hereof.
(d) The Exhibits and Schedules attached to this Mortgage are incorporated herein by reference and shall be deemed a part of this Mortgage as fully as if set forth herein at length.
(e) This Mortgage shall be interpreted in a manner consistent with the Credit Agreement. In the event of a conflict between the terms of this Mortgage and the terms of the Credit Agreement, the terms of the Credit Agreement shall control, except to the extent that the laws of the State of Florida mandate a different result with respect to the creation, perfection, priority, or enforcement of the lien created hereby.
ARTICLE II — GRANTING CLAUSES
Section 2.1 — Grant of Mortgage Lien
Palmetto Beachfront Hotels LLC, in consideration of the premises and for good and valuable consideration, including the making of the Term Loan B in the aggregate principal amount of Seven Hundred Million Dollars ($700,000,000) to the Borrower under the Credit Agreement, the guarantee obligations assumed by Palmetto Beachfront Hotels LLC under the Guarantee Agreement, and the sum of Ten Dollars ($10.00) and other valuable consideration in hand paid by the Collateral Agent, the receipt and sufficiency of which are hereby acknowledged, does hereby mortgage, grant, bargain, sell, convey, assign, transfer, pledge, and hypothecate to CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, as Collateral Agent for the benefit of the Secured Parties, and does hereby grant a first-priority mortgage lien upon and security interest in, the following described property (collectively, the "Mortgaged Property" or the "Collateral"):
(a) Real Property
All those certain lots, pieces, or parcels of real property (collectively, the "Land"), comprising twelve (12) parcels of real property located in the State of Florida, owned in fee simple by Palmetto Beachfront Hotels LLC, as more particularly described in Exhibit A attached hereto and made a part hereof (the legal descriptions for each of the twelve (12) properties), together with all buildings, structures, improvements, and fixtures now or hereafter located thereon, including, without limitation, all hotel buildings, resort facilities, swimming pools, pool decks, cabana structures, parking structures, parking garages, surface parking areas, restaurants, bars, lounges, spa and wellness facilities, fitness centers, conference rooms, ballrooms, meeting rooms, gift shops, retail spaces, lobbies, corridors, guest rooms, suites, kitchens, laundry facilities, and all other improvements and related structures of every kind and nature.
(b) Improvements. All improvements, buildings, structures, and fixtures of every kind and description now or hereafter erected, constructed, placed, or located upon the Land, including, without limitation, all heating, ventilating, and air conditioning systems ("HVAC"), all boilers, chillers, cooling towers, air handling units, elevators, escalators, plumbing systems, sprinkler systems, fire suppression systems, fire alarm systems, electrical systems, lighting fixtures, generators, transformers, switchgear, telecommunications systems, cabling, wiring, security systems, access control systems, and all hotel furnishings, finishes, and equipment that are attached to or form a part of the realty, together with all additions thereto and replacements thereof.
(c) Fixtures. All fixtures and equipment of every kind and nature now or hereafter attached to, affixed to, installed in, placed upon, or used in connection with the Land or the improvements thereon, including, without limitation, all furnishings, apparatus, machinery, and equipment constituting fixtures under applicable law. This Mortgage constitutes a fixture filing under the Florida Uniform Commercial Code, specifically Florida Statutes § 679.5021, and is to be filed for record in the real property records of each county in the State of Florida in which a Mortgaged Property is located. For purposes of the fixture filing:
Debtor (record owner of the real property): Palmetto Beachfront Hotels LLC, a Florida limited liability company, 8200 West Palmetto Park Road, Suite 1500, Boca Raton, Florida 33433.
Secured Party: Crescent Harbor Bank, National Association, as Collateral Agent, 600 Lexington Avenue, 34th Floor, New York, New York 10022.
Description of Real Property: See Exhibit A attached hereto.
(d) Easements, Rights, and Appurtenances
All easements, rights-of-way, strips, gores, riparian rights, littoral rights, water rights, water permits, beach access rights, dune preservation areas, mineral rights, air rights, development rights, privileges, tenements, hereditaments, and appurtenances belonging or in any way appertaining to the Land or the improvements thereon, and all right, title, and interest of Palmetto Beachfront Hotels LLC in and to any streets, alleys, passages, and other rights-of-way included in, adjacent to, or used in connection with the Land, and all right, title, and interest of Palmetto Beachfront Hotels LLC in and to any and all sidewalks and sidewalk spaces, vault spaces, and vault areas adjacent to or used in connection with the Land.
(e) Leases and Rents
All leases, subleases, licenses, concession agreements, occupancy agreements, room rental agreements, hotel management agreements (including any agreement with any third-party hotel operator or franchisor), and all other agreements now or hereafter affecting the use or occupancy of all or any portion of the Mortgaged Properties, together with all guarantees thereof and all amendments, modifications, supplements, renewals, and extensions thereof (collectively, the "Leases"), and all rents, revenues, royalties, income, issues, profits, room revenues, food and beverage revenues, banquet and catering revenues, parking revenues, spa and recreation revenues, resort fees, and all other sums of money now or hereafter due or payable under any such Lease or agreement, or otherwise arising from the use, operation, or occupancy of the Mortgaged Properties (collectively, the "Rents"), all as more fully described in Article IV hereof.
(f) Proceeds and Awards
All proceeds, products, and profits of any sale, exchange, transfer, collection, or other disposition of the Mortgaged Properties or any part thereof; all proceeds of any insurance policies covering the Mortgaged Properties or any part thereof, including, without limitation, proceeds of property insurance, casualty insurance, business interruption insurance, flood insurance, and liability insurance; and all awards, compensation, settlements, and other payments heretofore or hereafter made by any governmental authority or any other person for or on account of any taking, condemnation, or diminution in value of all or any part of the Mortgaged Properties, whether by eminent domain, inverse condemnation, or otherwise, including any award for a change of grade of any street or highway.
(g) Personal Property
All tangible and intangible personal property of every kind and nature now or hereafter owned by Palmetto Beachfront Hotels LLC and located on, used in connection with, or relating to the operation of the Mortgaged Properties, including, without limitation: all accounts; inventory; equipment (including all furniture, furnishings, and equipment ("FF&E") not constituting fixtures); contract rights (including rights under hotel management agreements, franchise agreements, and service contracts); general intangibles (including goodwill, trademarks, trade names, service marks, and domain names relating to the Mortgaged Properties); permits and licenses (including liquor licenses, food service licenses, health department permits, and certificates of occupancy); intellectual property; computer software and hardware; telephone numbers; websites; reservation systems; loyalty program interests; and all books, records, and files relating to the Mortgaged Properties.
(h) After-Acquired Property
All property of the types described in subsections (a) through (g) above hereafter acquired by Palmetto Beachfront Hotels LLC and located on, relating to, or used in connection with the Mortgaged Properties, including, without limitation, all additions, accessions, replacements, substitutions, and proceeds thereof.
All of the foregoing property described in subsections (a) through (h) above is hereinafter collectively referred to as the "Mortgaged Property" or the "Collateral."
Section 2.2 — Habendum Clause
TO HAVE AND TO HOLD the Mortgaged Property, together with all and singular the rights, privileges, and appurtenances thereunto belonging or in anywise appertaining, unto Crescent Harbor Bank, National Association, as Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, forever; PROVIDED, HOWEVER, that if the Borrower and the Guarantors (including Palmetto Beachfront Hotels LLC) shall pay, satisfy, and discharge all of the Obligations in full, and if the Credit Agreement and the commitments thereunder shall have been terminated and all letters of credit issued thereunder shall have expired or been terminated (or fully cash collateralized or backstopped), and if all other conditions for release set forth in the Credit Agreement shall have been satisfied, then this Mortgage and the estate, lien, and security interest hereby granted shall become null and void and shall be released and discharged at the expense of Palmetto Beachfront Hotels LLC.
Section 2.3 — Secured Obligations
This Mortgage is given to secure the full and prompt payment, performance, and observance of each and all of the following (collectively, the "Secured Obligations"):
(i) All principal, interest (including interest accruing at the applicable rate, as well as default interest at the applicable rate plus two hundred (200) basis points per annum), fees, premiums, and all other amounts owing under the Credit Agreement in respect of the Term Loan B in the aggregate principal amount of Seven Hundred Million Dollars ($700,000,000), including, without limitation, quarterly amortization payments in the amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) per quarter and the balloon payment of the remaining outstanding principal balance (estimated to be approximately Six Hundred Fifty-One Million Dollars ($651,000,000), subject to adjustment for voluntary and mandatory prepayments) at the Maturity Date of July 21, 2029;
(ii) All obligations of Palmetto Beachfront Hotels LLC under the Guarantee Agreement dated as of July 21, 2022;
(iii) All obligations of Palmetto Beachfront Hotels LLC under the Pledge and Security Agreement dated as of July 21, 2022;
(iv) All costs, expenses, and indemnification obligations owing by the Borrower or any Guarantor (including Palmetto Beachfront Hotels LLC) under the Credit Agreement or any other Loan Document, including, without limitation, attorneys' fees and disbursements, appraisal costs, environmental assessment costs, title insurance premiums, recording fees, and all other out-of-pocket costs and expenses;
(v) All amounts owing in respect of any amendments, waivers, extensions, refinancings, increases (including incremental term loans and incremental revolving commitments), modifications, or replacements of any of the foregoing, to the extent such amounts constitute Obligations under the Credit Agreement; and
(vi) All other obligations and liabilities of the Borrower or any Guarantor (including Palmetto Beachfront Hotels LLC) to the Secured Parties now existing or hereafter arising under or in connection with the Credit Agreement or any other Loan Document.
The maximum principal indebtedness secured by this Mortgage is Seven Hundred Million Dollars ($700,000,000) (as the same may be increased by permitted incremental facilities under the Credit Agreement), plus all interest, fees, premiums, costs, and expenses as described in the Loan Documents. The Secured Obligations secured by this Mortgage include obligations in respect of both the Term Loan B and the Revolving Credit Facility, which share a first-priority lien on the Collateral on a pari passu basis pursuant to the Intercreditor Agreement. Nothing in this Mortgage shall be deemed to limit or modify the relative rights and priorities of the Secured Parties as among themselves as set forth in the Intercreditor Agreement.
ARTICLE III — REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MORTGAGOR
Palmetto Beachfront Hotels LLC hereby represents, warrants, and covenants to and with the Collateral Agent (for the benefit of the Secured Parties) as follows:
Section 3.1 — Title and Ownership
Palmetto Beachfront Hotels LLC represents and warrants that it is the owner of and holds good and marketable fee simple title to each of the twelve (12) Mortgaged Properties described in Exhibit A attached hereto, free and clear of all liens, encumbrances, claims, charges, security interests, and defects of title of any kind whatsoever, except for Permitted Liens (as defined in the Credit Agreement) and the title exceptions set forth in Exhibit B attached hereto, which have been accepted by the Collateral Agent. Title insurance policies with respect to each Mortgaged Property have been or will be issued by Continental Fidelity Title Company, 1221 Brickell Avenue, Suite 900, Miami, Florida 33131 (the "Title Company"), insuring the lien of this Mortgage as a valid first-priority mortgage lien on each of the Mortgaged Properties, subject only to the Permitted Liens and the title exceptions set forth in Exhibit B, in form and substance satisfactory to the Collateral Agent.
Section 3.2 — Authority and Enforceability
(a) Palmetto Beachfront Hotels LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Florida, and has all requisite power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted.
(b) The execution, delivery, and performance by Palmetto Beachfront Hotels LLC of this Mortgage has been duly authorized by all necessary limited liability company action on the part of Palmetto Beachfront Hotels LLC and its sole member, Verimark Hospitality Group Inc. No further consent, approval, authorization, or order of any court, governmental authority, or any other person is required in connection with the execution, delivery, or performance of this Mortgage.
(c) This Mortgage has been duly executed and delivered by Palmetto Beachfront Hotels LLC and constitutes the legal, valid, and binding obligation of Palmetto Beachfront Hotels LLC, enforceable against Palmetto Beachfront Hotels LLC in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors' rights generally and general principles of equity (whether considered in a proceeding in equity or at law).
Section 3.3 — No Conflicts
The execution, delivery, and performance of this Mortgage by Palmetto Beachfront Hotels LLC does not and will not: (a) violate, contravene, or conflict with the articles of organization, operating agreement, or other organizational documents of Palmetto Beachfront Hotels LLC; (b) violate, contravene, or conflict with any law, statute, rule, regulation, order, judgment, injunction, decree, or determination of any governmental authority applicable to Palmetto Beachfront Hotels LLC or any Mortgaged Property; or (c) violate, contravene, conflict with, result in a breach of, constitute a default under, or require any consent or approval under any material agreement, contract, instrument, or obligation to which Palmetto Beachfront Hotels LLC is a party or by which it or any of its properties may be bound.
Section 3.4 — Payment of Obligations
Palmetto Beachfront Hotels LLC covenants and agrees that it shall cause the Borrower (Verimark Hospitality Group Inc.) to promptly pay and perform the Obligations when due and payable, in accordance with the terms of the Credit Agreement and the other Loan Documents, including, without limitation: (a) quarterly amortization payments in the amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) per quarter; (b) all interest at the applicable rate of Adjusted Term SOFR plus 375 basis points per annum (with a SOFR floor of 0.50% per annum); (c) the annual administrative agent fee of One Hundred Fifty Thousand Dollars ($150,000); and (d) all other fees, costs, expenses, and amounts owing under the Loan Documents. Palmetto Beachfront Hotels LLC further acknowledges and confirms its obligations as a Guarantor under the Guarantee Agreement to pay all Obligations upon demand if the Borrower fails to do so.
Section 3.5 — Maintenance and Repair
(a) Palmetto Beachfront Hotels LLC covenants and agrees to maintain and preserve each of the twelve (12) Mortgaged Properties in good order, condition, and repair, consistent with the standards of operation and maintenance of first-class hospitality properties of comparable size and quality in the relevant market. Palmetto Beachfront Hotels LLC shall promptly make all necessary repairs, renewals, replacements, and improvements to the Mortgaged Properties and shall not commit or permit any waste or deterioration of the Mortgaged Properties.
(b) Palmetto Beachfront Hotels LLC shall not, without the prior written consent of the Collateral Agent (not to be unreasonably withheld, conditioned, or delayed, except as otherwise provided in the Credit Agreement), remove, demolish, or materially alter any building, structure, or improvement now or hereafter constituting a part of any Mortgaged Property, except (i) as may be permitted under the Credit Agreement, (ii) for normal maintenance, repair, and renovation activities conducted in the ordinary course of business consistent with the operation of first-class hospitality properties, and (iii) for the replacement of worn or obsolete fixtures, furniture, and equipment with items of equal or greater value and utility.
(c) Palmetto Beachfront Hotels LLC shall comply with all applicable federal, state, and local laws, ordinances, codes, regulations, rules, and zoning requirements affecting the Mortgaged Properties, including, without limitation, all building codes, fire codes, health and safety regulations, and accessibility requirements under the Americans with Disabilities Act of 1990, as amended.
Section 3.6 — Insurance
(a) Palmetto Beachfront Hotels LLC covenants and agrees to obtain and maintain, at its sole cost and expense, insurance on the Mortgaged Properties in accordance with the requirements set forth in the Credit Agreement, including, without limitation: (i) property and casualty insurance (including coverage for fire, windstorm, hurricane, and extended coverage perils) in amounts not less than the full replacement cost of the improvements; (ii) commercial general liability insurance; (iii) business interruption insurance providing coverage for a period of not less than twelve (12) months of anticipated revenue; (iv) flood insurance for each Mortgaged Property located in a special flood hazard area as designated by the Federal Emergency Management Agency, in amounts required by the National Flood Insurance Program and any applicable state requirements; (v) workers' compensation insurance as required by applicable law; and (vi) such other insurance as may be reasonably required by the Collateral Agent.
(b) All property insurance policies shall name Crescent Harbor Bank, National Association (as Collateral Agent for the benefit of the Secured Parties) as mortgagee and loss payee pursuant to a standard mortgage clause (without contribution). All liability insurance policies shall name Crescent Harbor Bank, National Association (as Collateral Agent for the benefit of the Secured Parties) as an additional insured. All insurance policies shall provide that they may not be canceled, non-renewed, or materially modified without at least thirty (30) days' prior written notice to the Collateral Agent (or ten (10) days' prior written notice in the case of cancellation for non-payment of premiums).
(c) The insurance requirements set forth herein are consistent with and cross-reference the Insurance Certificate Review Memorandum dated July 19, 2022, prepared by Crescent Harbor Bank, N.A.'s insurance consultant in connection with the closing of the Credit Agreement.
Section 3.7 — Taxes and Assessments
(a) Palmetto Beachfront Hotels LLC covenants and agrees to pay and discharge, or cause to be paid and discharged, before the same shall become delinquent, all real estate taxes, assessments, water and sewer charges, governmental charges, and other impositions of every kind and nature levied, assessed, or imposed upon the Mortgaged Properties or any part thereof, or upon the revenues, rents, issues, income, or profits thereof, including, without limitation, all ad valorem taxes, special assessments, tourist development taxes, and any other taxes or charges that may become a lien on the Mortgaged Properties.
(b) In the event that Palmetto Beachfront Hotels LLC shall fail to pay any such taxes, assessments, or charges when due (after giving effect to any applicable grace period under the Credit Agreement), the Collateral Agent shall have the right (but not the obligation) to pay such taxes, assessments, or charges on behalf of Palmetto Beachfront Hotels LLC, and any amounts so paid by the Collateral Agent shall be added to the Obligations secured hereby, shall bear interest at the default rate under the Credit Agreement from the date of such payment, and shall be immediately due and payable upon demand.
(c) Palmetto Beachfront Hotels LLC shall have the right to contest in good faith any such taxes, assessments, or charges by appropriate proceedings, provided that (i) no Event of Default shall have occurred and be continuing, (ii) such contest effectively suspends the collection of the contested item and the enforcement of any lien securing the payment thereof, (iii) adequate reserves have been established on the books of Palmetto Beachfront Hotels LLC in accordance with GAAP, and (iv) the Mortgaged Properties are not in danger of being sold, forfeited, or lost.
Section 3.8 — Compliance with Laws
(a) Palmetto Beachfront Hotels LLC covenants and agrees to comply, and to cause all persons occupying or using the Mortgaged Properties to comply, with all applicable federal, state, and local laws, statutes, ordinances, codes, rules, regulations, and requirements, including, without limitation: (i) all environmental laws, including the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean Water Act, and the Florida Environmental Protection Act (Florida Statutes Chapter 403); (ii) the Americans with Disabilities Act ("ADA") and the Florida Building Accessibility Code; (iii) all Florida building codes, fire codes, and electrical codes; (iv) all zoning and land use regulations; and (v) all other applicable governmental requirements.
(b) Without limiting the generality of the foregoing, Palmetto Beachfront Hotels LLC shall not use, generate, manufacture, produce, store, release, discharge, or dispose of on, under, or about the Mortgaged Properties, or transport to or from the Mortgaged Properties, any Hazardous Materials (as defined in the Credit Agreement), except for those Hazardous Materials used, stored, or maintained in the ordinary course of operating hotel and resort properties (including cleaning supplies, pool chemicals, and similar materials), in each case in compliance with all applicable environmental laws and in quantities and concentrations that do not give rise to liability under any environmental law.
Section 3.9 — No Further Encumbrances
Palmetto Beachfront Hotels LLC covenants and agrees that it will not create, incur, assume, or permit to exist any lien, mortgage, pledge, assignment, security interest, charge, or encumbrance on or with respect to the Mortgaged Properties or any part thereof, or any interest therein, or any rents, revenues, or other income therefrom, other than Permitted Liens as defined in the Credit Agreement. The Permitted Liens applicable to the Mortgaged Properties are listed in Exhibit B attached hereto.
Section 3.10 — Preservation of Lien Priority
Palmetto Beachfront Hotels LLC covenants and agrees that it will take all actions and execute and deliver all documents reasonably necessary or desirable to maintain the first-priority lien of this Mortgage on the Mortgaged Properties, including, without limitation: (a) cooperating with the Collateral Agent in the recording of this Mortgage and any amendments, supplements, or modifications hereof in the Official Records of each county in Florida in which a Mortgaged Property is located; (b) cooperating in the filing of any UCC financing statements, continuation statements, and amendments; (c) defending the title to the Mortgaged Properties and the validity and priority of the lien of this Mortgage against all adverse claims and demands; and (d) promptly notifying the Collateral Agent of any claim, lien, encumbrance, or other matter that could reasonably be expected to impair the lien of this Mortgage.
Section 3.11 — Leasing Restrictions
Palmetto Beachfront Hotels LLC covenants and agrees that it will not enter into any new lease, sublease, license, concession agreement, occupancy agreement, or hotel management agreement affecting any Mortgaged Property, or amend, modify, terminate, or surrender any existing Lease, except in accordance with the provisions of the Credit Agreement regarding Permitted Leases (as defined therein). Without limiting the foregoing, any new hotel management agreement or franchise agreement affecting a Mortgaged Property shall require the prior written consent of the Collateral Agent (acting at the direction of the Required Lenders) to the extent required by the Credit Agreement.
Section 3.12 — Financial Reporting
Palmetto Beachfront Hotels LLC covenants and agrees to comply, and to cause the Borrower to comply, with all financial reporting, compliance certificate, and information delivery obligations set forth in the Credit Agreement, including, without limitation, the delivery of (a) annual audited consolidated financial statements of the Borrower and its subsidiaries, (b) quarterly unaudited consolidated financial statements, (c) compliance certificates (including certification of compliance with the springing maximum total net leverage ratio of 4.50 to 1.00, tested on a quarterly basis when the aggregate outstanding amount of revolving loans and letters of credit (in excess of Thirty-Five Million Dollars ($35,000,000)) exceeds thirty-five percent (35%) of the aggregate revolving commitments), and (d) such other financial information as the Collateral Agent or the Required Lenders may reasonably request. Palmetto Beachfront Hotels LLC shall provide such information regarding the Mortgaged Properties as the Collateral Agent may reasonably request, including operating statements, budgets, capital expenditure plans, and occupancy and revenue reports.
ARTICLE IV — ASSIGNMENT OF LEASES AND RENTS
Section 4.1 — Assignment
(a) As additional security for the Obligations, Palmetto Beachfront Hotels LLC hereby absolutely and unconditionally assigns, transfers, and sets over to the Collateral Agent, for the benefit of the Secured Parties, all of Palmetto Beachfront Hotels LLC's right, title, and interest in and to all Leases and all Rents now existing or hereafter arising with respect to the twelve (12) Mortgaged Properties. This assignment is an absolute, present assignment and not merely an assignment for additional security, and shall be fully effective and operative without any further action on the part of any person, subject to the license granted in Section 4.1(b) below.
(b) Notwithstanding the foregoing absolute assignment, the Collateral Agent hereby grants to Palmetto Beachfront Hotels LLC a revocable license (the "License") to collect, receive, enjoy, and use all Rents from the Mortgaged Properties as they become due, subject to the terms of the Credit Agreement and this Mortgage, for so long as no Event of Default shall have occurred and be continuing. The License granted hereby shall be revocable by the Collateral Agent automatically and without notice upon the occurrence and during the continuance of an Event of Default, as more particularly provided in Section 4.2 below.
(c) The assignment of Rents made herein is intended to comply with, and shall be governed by, Florida Statutes § 697.07, as amended from time to time. Palmetto Beachfront Hotels LLC acknowledges that the assignment herein creates an interest in the Rents in favor of the Collateral Agent that is perfected upon the recording of this Mortgage in the Official Records of each county in which a Mortgaged Property is located, and that such interest is enforceable against Palmetto Beachfront Hotels LLC, any tenant, hotel guest, licensee, or other occupant of any Mortgaged Property, and any other person with an interest in the Mortgaged Properties or the Rents, to the extent provided in Florida Statutes § 697.07.
Section 4.2 — Revocation of License Upon Event of Default
(a) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may, without notice to Palmetto Beachfront Hotels LLC (to the extent permitted by applicable law) or with such notice as may be required by Florida Statutes § 697.07:
(i) Revoke the License granted to Palmetto Beachfront Hotels LLC to collect Rents;
(ii) Enter upon any Mortgaged Property, or take possession of any Mortgaged Property, and collect the Rents directly from hotel guests, tenants, licensees, concessionaires, and other obligors;
(iii) Direct any and all tenants, hotel guests, licensees, and other persons obligated to pay Rents to make payment of such Rents directly to the Collateral Agent or to such other person or account as the Collateral Agent may designate;
(iv) Apply the Rents collected to the payment of the Obligations in such order and manner as the Collateral Agent shall determine in its discretion, subject to the priorities established in the Intercreditor Agreement;
(v) Apply for the appointment of a receiver pursuant to Florida Statutes § 697.07(4), without notice to Palmetto Beachfront Hotels LLC (unless required by applicable law), without regard to the adequacy of any security for the Obligations or the solvency of Palmetto Beachfront Hotels LLC, to collect Rents, manage the Mortgaged Properties, and preserve the Collateral; and
(vi) Exercise any and all other rights and remedies available to an assignee of rents under Florida Statutes § 697.07, under any other applicable law, or under this Mortgage.
(b) The collection of Rents by the Collateral Agent or the appointment of a receiver shall not constitute a waiver of any Event of Default or of any right or remedy available to the Collateral Agent under this Mortgage, the Credit Agreement, or applicable law, and shall not make the Collateral Agent a mortgagee in possession unless the Collateral Agent expressly elects to become a mortgagee in possession.
Section 4.3 — Subordination of Management Agreements
All hotel management agreements affecting the Mortgaged Properties shall be subordinate to this Mortgage. Palmetto Beachfront Hotels LLC shall use commercially reasonable efforts to cause each hotel manager, operator, or franchisor party to a hotel management agreement affecting any Mortgaged Property to enter into a subordination, non-disturbance, and attornment agreement ("SNDA") in form and substance reasonably satisfactory to the Collateral Agent, pursuant to which such manager, operator, or franchisor shall agree (a) to subordinate its rights under such hotel management agreement to the lien of this Mortgage, (b) to attorn to the Collateral Agent or any purchaser at a foreclosure sale, and (c) to continue to perform its obligations under such hotel management agreement following any foreclosure or other enforcement action, subject to customary non-disturbance protections.
ARTICLE V — SECURITY AGREEMENT AND FIXTURE FILING
Section 5.1 — Grant of Security Interest
In addition to the mortgage lien and assignment of leases and rents granted in Articles II and IV hereof, Palmetto Beachfront Hotels LLC hereby grants to Crescent Harbor Bank, National Association, as Collateral Agent for the benefit of the Secured Parties, a first-priority security interest (subject to Permitted Liens) in all personal property and fixtures located on, used in connection with, or relating to the Mortgaged Properties, including, without limitation, all furniture, furnishings, and equipment ("FF&E"), all accounts, all inventory, all general intangibles (including goodwill, trade names, and intellectual property), all permits, all licenses (including liquor licenses to the extent assignable under applicable law), all contract rights, all instruments, all documents, all chattel paper, all deposit accounts, all letter-of-credit rights, all commercial tort claims, and all proceeds and products of the foregoing (collectively, the "Personal Property Collateral"). This Mortgage is intended to constitute, and shall constitute, a security agreement within the meaning of the Florida Uniform Commercial Code, Florida Statutes, Chapter 679, and all other applicable provisions of the UCC.
Section 5.2 — Fixture Filing
This Mortgage shall be filed for record as a fixture filing, pursuant to Florida Statutes § 679.5021, in the Official Records of each county in the State of Florida in which a Mortgaged Property is located. The following information is provided for fixture filing purposes:
Name and Address of Debtor: Palmetto Beachfront Hotels LLC 8200 West Palmetto Park Road, Suite 1500 Boca Raton, Florida 33433
Florida Filing Number: L22000187432
Type of Organization: Limited Liability Company
Jurisdiction of Organization: Florida
Name and Address of Secured Party: Crescent Harbor Bank, National Association, as Collateral Agent 600 Lexington Avenue, 34th Floor New York, New York 10022
Description of Real Property to Which Fixtures Relate: See Exhibit A attached hereto and made a part hereof, which provides the legal descriptions of the twelve (12) Mortgaged Properties located in the State of Florida.
This fixture filing covers all fixtures and equipment of every kind and nature now or hereafter located on, attached to, or used in connection with the Mortgaged Properties, and all additions thereto, substitutions therefor, replacements thereof, and proceeds thereof.
Section 5.3 — Financing Statement Authorization
Palmetto Beachfront Hotels LLC hereby authorizes the Collateral Agent, at the cost and expense of Palmetto Beachfront Hotels LLC, to file (and refile, as necessary) UCC financing statements, UCC continuation statements, and any amendments thereto, in any filing office as the Collateral Agent may determine, naming Palmetto Beachfront Hotels LLC as debtor and Crescent Harbor Bank, National Association, as Collateral Agent, as secured party, describing the Personal Property Collateral and the fixtures covered by this Mortgage, without the signature of Palmetto Beachfront Hotels LLC. Without limiting the generality of the foregoing, Palmetto Beachfront Hotels LLC acknowledges and ratifies the filing of UCC-1 financing statement(s) with the Florida Secured Transaction Registry (Florida Department of State, Division of Corporations) on or about July 21, 2022, naming Palmetto Beachfront Hotels LLC as debtor and Crescent Harbor Bank, National Association, as Collateral Agent, as secured party, and covering all personal property and fixtures described herein and in the Pledge and Security Agreement. Palmetto Beachfront Hotels LLC agrees to execute and deliver, or to cause to be executed and delivered, any and all further instruments, financing statements, continuation statements, and other documents as the Collateral Agent may reasonably request to perfect, protect, continue, or enforce the security interests granted hereby.
ARTICLE VI — DEFAULTS AND REMEDIES
Section 6.1 — Events of Default
Each of the following shall constitute an "Event of Default" under this Mortgage: any Event of Default as defined in the Credit Agreement. Without limiting the generality of the foregoing, the Events of Default include, but are not limited to:
(a) Payment Default. Failure by the Borrower to pay any principal of the Term Loan B when due and payable, whether at stated maturity, upon mandatory or optional prepayment, by acceleration, or otherwise; or failure to pay interest or any other amount due under the Credit Agreement or any other Loan Document within the applicable grace period specified therein;
(b) Representation and Warranty Default. Any representation or warranty made by the Borrower, any Guarantor (including Palmetto Beachfront Hotels LLC), or any other Loan Party in the Credit Agreement, any other Loan Document, or in any certificate, document, or statement delivered in connection therewith shall prove to have been incorrect in any material respect when made or deemed made;
(c) Covenant Default. Violation of any covenant contained in the Credit Agreement or any other Loan Document (subject, in the case of certain affirmative covenants, to any applicable cure periods), including, without limitation, where applicable, breach of the springing maximum total net leverage ratio of 4.50 to 1.00;
(d) Cross-Default. Default by the Borrower or any material subsidiary in respect of any other material indebtedness (including, without limitation, the Four Hundred Million Dollar ($400,000,000) Revolving Credit Facility and the Two Hundred Forty-Five Million Dollar ($245,000,000) 6.250% Senior Unsecured Notes due 2028, issued pursuant to an Indenture dated as of June 1, 2021, between VHG and Atlantic Standard Trust Company, as trustee), in each case where the aggregate principal amount of such indebtedness exceeds the threshold specified in the Credit Agreement;
(e) Bankruptcy and Insolvency Events. The commencement of a voluntary or involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization, or similar law with respect to the Borrower, any Guarantor, or any material subsidiary, including the filing of a petition or application for relief under Title 11 of the United States Code or the appointment of a receiver, trustee, custodian, or liquidator;
(f) Judgment Defaults. The entry of one or more final, non-appealable judgments or orders against the Borrower or any Guarantor for the payment of money in an aggregate amount in excess of the threshold specified in the Credit Agreement, to the extent not covered by insurance or indemnification;
(g) ERISA Events. The occurrence of certain events under the Employee Retirement Income Security Act of 1974, as specified in the Credit Agreement, that could reasonably be expected to result in a Material Adverse Effect;
(h) Change of Control. The occurrence of a "Change of Control" as defined in the Credit Agreement; and
(i) Loan Document Default. Any Loan Document (including this Mortgage) shall cease to be in full force and effect, or any lien created thereby shall cease to constitute a valid, perfected lien with the priority contemplated therein, or any Loan Party shall so assert.
Section 6.2 — Remedies Upon Default
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent, acting at the direction of the Required Lenders (unless otherwise provided in the Credit Agreement), may exercise any one or more of the following remedies:
(a) Acceleration. The Collateral Agent may declare all Obligations immediately due and payable (without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by Palmetto Beachfront Hotels LLC), whereupon the same shall immediately become due and payable; provided, however, that upon the occurrence of any Event of Default described in clause (e) of Section 6.1 hereof (bankruptcy and insolvency events), all Obligations shall automatically become immediately due and payable without any declaration or other act by the Collateral Agent or any Lender.
(b) Foreclosure. The Collateral Agent may institute a judicial foreclosure action with respect to this Mortgage and the Mortgaged Properties in accordance with the provisions of Florida Statutes, Chapter 702 (the Florida mortgage foreclosure statute), and any other applicable law. The Collateral Agent shall have the right to seek a judgment of foreclosure and sale, and to pursue a deficiency judgment against Palmetto Beachfront Hotels LLC and the Borrower to the extent permitted by Florida Statutes § 702.06 and applicable law. In any foreclosure action, the Collateral Agent shall be entitled to recover all costs and expenses incident thereto, including, without limitation, reasonable attorneys' fees and disbursements (including fees of paralegals, legal assistants, and specialists), title search and examination fees, appraisal fees, environmental assessment fees, receiver fees, and all other costs of sale.
(c) Power of Sale
Palmetto Beachfront Hotels LLC and the Collateral Agent acknowledge that the State of Florida is a judicial foreclosure state and that foreclosure by power of sale is not available under Florida law. Accordingly, all foreclosures of this Mortgage shall proceed through the Circuit Court of the State of Florida for the county in which the applicable Mortgaged Property is located, in accordance with the procedures set forth in Florida Statutes, Chapter 702.
(d) Receiver. The Collateral Agent may apply to any court of competent jurisdiction for the appointment of a receiver or receivers of the Mortgaged Properties and the Rents, without notice to Palmetto Beachfront Hotels LLC (to the extent permitted by applicable law), and without regard to: (i) the adequacy of the security for the Obligations; (ii) the solvency of Palmetto Beachfront Hotels LLC, the Borrower, or any other person liable for the Obligations; or (iii) the existence of waste or any other grounds specified by applicable law. Palmetto Beachfront Hotels LLC hereby consents to the appointment of such receiver or receivers. Any receiver so appointed shall have the power to collect Rents, manage the Mortgaged Properties, complete any construction or renovation in progress, enter into leases and hotel management agreements, and take all other actions reasonably necessary to preserve the value of the Mortgaged Properties, in accordance with Florida Statutes § 697.07 and other applicable law.
(e) UCC Remedies
The Collateral Agent may exercise all rights and remedies of a secured party under the Florida Uniform Commercial Code (Florida Statutes, Chapter 679), and under any other applicable law, with respect to the Personal Property Collateral and the fixtures covered by this Mortgage, including, without limitation, the right to take possession of such property, the right to sell or otherwise dispose of such property at one or more public or private sales, and the right to collect, receive, and enforce all accounts and other rights to payment included in the Personal Property Collateral.
(f) Environmental Remedies
The Collateral Agent may, in its sole discretion, upon reasonable notice to Palmetto Beachfront Hotels LLC (except in the case of an emergency, in which case no notice shall be required), enter upon any Mortgaged Property to conduct environmental investigations, assessments, audits, monitoring, testing, and remediation activities, all at the sole cost and expense of Palmetto Beachfront Hotels LLC. Any costs and expenses incurred by the Collateral Agent in connection with such activities shall be added to the Obligations secured hereby and shall bear interest at the default rate under the Credit Agreement.
(g) Collection of Rents
The Collateral Agent may exercise all rights under the assignment of leases and rents set forth in Article IV hereof, including, without limitation, the right to revoke the License, the right to collect all Rents directly from hotel guests, tenants, licensees, and other obligors, and the right to apply such Rents to the Obligations in such order and manner as the Collateral Agent shall determine.
Section 6.3 — Application of Proceeds
All proceeds received by the Collateral Agent from any foreclosure sale, exercise of remedies, collection of Rents, disposition of Personal Property Collateral, or otherwise in connection with the enforcement of this Mortgage shall be applied in the following order of priority:
First, to the payment of all costs and expenses of foreclosure, sale, collection, and administration, including, without limitation, all reasonable attorneys' fees and disbursements, title charges, recording fees, appraisal fees, auctioneer's fees, receiver fees, and all other costs and expenses incurred by the Collateral Agent in connection with the enforcement of this Mortgage;
Second, to the payment of all amounts due to the Collateral Agent for fees, indemnities, expenses, and reimbursement obligations owing under the Credit Agreemen