borrower-authorizing-resolutions-draft.docx

1021-00007 · Verimark Hospitality Group · Entity & Authorization

borrower-authorizing-resolutions-draft.docx DOCUMENT Real Estate

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DRAFT — Prepared by Calderwood & Harkness LLP Client Matter No. 1021-00007 For discussion purposes only — not yet authorized for execution

UNANIMOUS WRITTEN CONSENT OF THE MANAGERS OF CORAL PALMS RESORT HOLDINGS LLC, A FLORIDA LIMITED LIABILITY COMPANY, IN LIEU OF A SPECIAL MEETING

Dated as of [_], 2023

The undersigned, being all of the managers (the "Managers") of Coral Palms Resort Holdings LLC, a limited liability company organized and existing under the laws of the State of Florida (the "Company"), acting pursuant to and in accordance with the provisions of the Operating Agreement of the Company, as amended through the date hereof and currently in effect (the "Operating Agreement"), and Section 605.04074 of the Florida Revised Limited Liability Company Act, as amended (the "Act"), which collectively authorize the Managers to take any action by unanimous written consent without the necessity of convening a formal meeting, hereby adopt the following recitals and resolutions, which shall have the same force and effect as if adopted at a duly convened special meeting of the Managers at which all Managers were present and voting:

RECITALS

A. Identification of the Company. The Company is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Florida. The Company's principal place of business and the address of the property owned by the Company is 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037. The Company is governed by its Operating Agreement, as amended and currently in effect. The Company is a wholly owned indirect subsidiary of Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Parent"). The Parent, through intermediate holding entities, holds one hundred percent (100%) of the membership interests in the Company.

B. The Property. The Company is the fee simple owner of the real property commonly known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037, together with all improvements, appurtenances, easements, and other rights pertaining thereto, more particularly described as a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more fully set forth in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida (collectively, the "Property"). The Property Folio Number is 00460780-000100. A legal description of the Property is attached hereto as Exhibit A and incorporated herein by reference.

C. Description of the Property. The Property constitutes a full-service luxury oceanfront resort hotel comprising approximately 342 guest rooms and suites, approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, a 42-slip marina, three (3) food and beverage outlets, a 1,200-space parking structure, with a gross building area of approximately 412,000 square feet situated on a site of approximately 22.4 acres.

D. Existing Loan. The Property is currently encumbered by a first mortgage lien in favor of Tidewater National Bank, N.A. (the "Existing Lender") securing that certain first mortgage loan in the original principal amount of One Hundred Twenty-Five Million Dollars ($125,000,000), originated on June 1, 2019, with an outstanding principal balance of approximately One Hundred Eighteen Million Five Hundred Thousand Dollars ($118,500,000) as of October 15, 2022 (the "Existing Loan"). The Existing Loan is evidenced by, among other documents: (i) that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing recorded in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida (the "Existing Mortgage"); and (ii) that certain UCC-1 Financing Statement filed with the Florida Secured Transaction Registry, File No. 202219087643.

E. Proposed Refinancing. The Company desires to refinance the Existing Loan by entering into a new first mortgage loan with Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (the "Lender" or "PAC"), in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000) (the "Loan"). The Lender and the Company entered into, or are about to enter into, that certain Commitment Letter dated December 9, 2022 (the "Commitment Letter"), pursuant to which the Lender has agreed to make the Loan to the Company, subject to the terms and conditions set forth therein. A reference copy of the Commitment Letter is attached hereto as Exhibit C.

F. Loan Terms. The principal terms of the Loan, as set forth in the Commitment Letter, include the following: (i) an original principal amount of $160,000,000; (ii) a fixed interest rate of 5.35% per annum; (iii) a term of five (5) years from the closing date; (iv) interest-only payments during years one (1) and two (2) of the Loan term; (v) amortization on a thirty (30)-year schedule commencing with year three (3) of the Loan term; and (vi) two (2) one (1)-year extension options, each subject to, among other conditions, (a) no event of default, (b) a debt service coverage ratio of not less than 1.25x, and (c) payment of an extension fee equal to 0.25% of the then-outstanding principal balance per extension. The maximum loan-to-value ratio under the Commitment Letter is 68.0% based on the Lender's appraised value, and the minimum debt yield required is 9.5%.

G. Use of Proceeds. The proceeds of the Loan will be used to: (i) pay off and discharge the Existing Loan in full, including a prepayment premium of approximately One Million One Hundred Eighty-Five Thousand Dollars ($1,185,000) based on 1.0% of the outstanding principal balance; (ii) fund upfront reserves in the aggregate amount of approximately Four Million Eight Hundred Thousand Dollars ($4,800,000), covering tax reserves, insurance reserves, furniture, fixtures and equipment ("FF&E") reserves, and capital improvement reserves; (iii) pay estimated closing costs of approximately Three Million Two Hundred Fifty Thousand Dollars ($3,250,000), including title insurance premiums, recording fees, legal fees of borrower's counsel and lender's counsel, appraisal, environmental, survey, and other customary closing costs; and (iv) distribute remaining excess proceeds to the Company.

H. Engagement of Counsel and Service Providers. The Company has engaged Calderwood & Harkness LLP as its legal counsel in connection with the Loan and the transactions contemplated hereby. Whitford Baines & Driscoll LLP is acting as counsel to the Lender. Meridian Title & Escrow, Inc. is acting as title insurer and escrow agent for the transaction and will issue an ALTA lender's title insurance policy in favor of the Lender.

I. Authority of the Managers. The undersigned constitute all of the Managers of the Company. The Managers are authorized to act by unanimous written consent in lieu of a meeting pursuant to the Operating Agreement and applicable provisions of the Act. The Parent, Verimark Hospitality Group Inc., as the sole indirect member of the Company, has approved (or will contemporaneously approve) the Company's entry into the Loan and the execution and delivery of the Loan Documents (as defined below) and the consummation of the transactions contemplated herein. Evidence of such approval by the Parent shall be maintained with the records of the Company.

J. Benefit to the Company. The Managers have carefully reviewed the terms and conditions of the Commitment Letter and the proposed Loan and have determined that the refinancing of the Property through the Loan is in the best interests of the Company and its members, taking into account the current interest rate environment, the favorable terms of the Loan, the opportunity to access additional proceeds through the refinancing, and the long-term financial objectives of the Company and the Parent.

NOW, THEREFORE, BE IT:

RESOLUTIONS

Resolution 1: Approval of the Refinancing Transaction

RESOLVED, that the refinancing of the Property through the Loan in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000) from Pinnacle Atlantic Capital, LLC, on substantially the terms and conditions set forth in the Commitment Letter dated December 9, 2022, is hereby approved, ratified, and confirmed in all respects, and the Managers of the Company are hereby authorized and directed to cause the Company to consummate the Loan and the transactions contemplated thereby, including, without limitation, the payoff and discharge of the Existing Loan, the granting of security interests and mortgage liens on the Property and related collateral in favor of the Lender, the funding of required reserves, and the distribution of excess loan proceeds, all as more particularly described in these resolutions.

Resolution 2: Authorization to Execute and Deliver Loan Documents

RESOLVED, that the Company is hereby authorized, empowered, and directed to execute, deliver, and perform its obligations under the following documents (collectively, and together with all amendments, modifications, supplements, and restatements thereof, the "Loan Documents"), each in such form as the authorized signatories designated herein, with the advice of counsel, shall approve, such approval to be conclusively evidenced by such authorized signatory's execution and delivery thereof:

(a) Loan Agreement between the Company, as borrower, and Pinnacle Atlantic Capital, LLC, as lender (the "Loan Agreement"), setting forth the terms and conditions of the Loan, including representations, warranties, covenants, conditions precedent, events of default, and remedies;

(b) Promissory Note in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000), payable to the order of Pinnacle Atlantic Capital, LLC (the "Note"), evidencing the Company's unconditional obligation to repay the Loan in accordance with its terms;

(c) Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, encumbering the Property in favor of the Lender (the "Mortgage"), to be recorded in the Official Records of Monroe County, Florida, and granting the Lender a first priority lien on and security interest in the Property and all related rights, interests, and collateral;

(d) Environmental Indemnity Agreement in favor of the Lender, pursuant to which the Company (and, as applicable, the Parent and/or individual guarantors) shall indemnify the Lender against all losses, liabilities, costs, and expenses arising from or related to hazardous materials or environmental conditions affecting the Property;

(e) Cash Management Agreement governing lockbox arrangements, cash sweep mechanisms, waterfall provisions, and the collection and application of rents, revenues, and other income from the Property, including provisions governing trigger events and cash trap periods;

(f) Reserve Agreement governing upfront and ongoing reserves, including tax reserves, insurance reserves, FF&E reserves, and capital improvement reserves, and setting forth the terms and conditions under which such reserves will be funded, held, and disbursed;

(g) Such other agreements, instruments, certificates, and documents as may be required or contemplated by the Loan Agreement, the Commitment Letter, or any of the other Loan Documents, or as the authorized signatories may deem necessary or advisable in connection with the Loan and the transactions described herein, including, without limitation, the following:

(i) escrow instructions to Meridian Title & Escrow, Inc.;

(ii) UCC-1 financing statements and any amendments thereto, to be filed with the Florida Secured Transaction Registry and/or the appropriate filing offices;

(iii) deposit account control agreements with respect to accounts maintained by the Company;

(iv) certificates of the Company, including certificates of formation, certificates of good standing, incumbency certificates, and closing certificates;

(v) estoppel certificates as required by the Lender;

(vi) subordination, non-disturbance, and attornment agreements with respect to existing leases and franchise agreements;

(vii) guaranty agreements, if any, required by the Lender in connection with the Loan, including any non-recourse carve-out guaranty and environmental indemnity guaranty;

(viii) any comfort letters, opinion letters, or other deliverables required by the Lender or its counsel; and

(ix) any and all other closing documents, agreements, and instruments contemplated by the Commitment Letter or the Loan Agreement.

A list of the Loan Documents shall be finalized prior to closing and is expected to be set forth in a schedule to the Loan Agreement. A preliminary list of anticipated Loan Documents is attached hereto as Exhibit B.

Resolution 3: Authorization of Payoff of Existing Loan

RESOLVED, that the Company is hereby authorized and directed to cause the payoff and discharge of the Existing Loan held by Tidewater National Bank, N.A. in full, including payment of all outstanding principal (approximately One Hundred Eighteen Million Five Hundred Thousand Dollars ($118,500,000)), all accrued and unpaid interest through the date of payoff, the prepayment premium (estimated at One Million One Hundred Eighty-Five Thousand Dollars ($1,185,000), based on 1.0% of the outstanding principal balance, applicable if the Existing Loan is prepaid prior to March 1, 2023), and any and all other amounts, fees, costs, and charges required under the Existing Loan documents to obtain a complete payoff and discharge thereof; and it is further

RESOLVED, that the authorized signatories designated herein are hereby authorized and directed to execute and deliver, or cause to be executed and delivered, all payoff letters, payoff instructions, wire transfer requests, and other documents and instruments necessary or desirable to effect such payoff and discharge, including, without limitation, requesting and obtaining from the Existing Lender: (i) a satisfaction and discharge of the Existing Mortgage recorded in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida, suitable for recording in the Official Records of Monroe County, Florida; and (ii) a UCC-3 termination statement terminating that certain UCC-1 Financing Statement, File No. 202219087643, filed with the Florida Secured Transaction Registry; and the authorized signatories are further authorized to execute and deliver any and all other instruments necessary to release and discharge any and all liens, security interests, assignments, and encumbrances held by the Existing Lender with respect to the Property and the Company's personal property and other collateral.

Resolution 4: Authorization of Deposits and Fees

RESOLVED, that the following deposits and fees incurred or to be incurred in connection with the Loan are hereby ratified, confirmed, and approved:

(i) the good faith deposit in the amount of One Million Six Hundred Thousand Dollars ($1,600,000) deposited with Meridian Title & Escrow, Inc. on or about December 12, 2022;

(ii) the rate lock deposit in the amount of Eight Hundred Thousand Dollars ($800,000) deposited with Meridian Title & Escrow, Inc. on or about January 5, 2023;

(iii) the commitment fee in the amount of Eight Hundred Thousand Dollars ($800,000) (representing 0.50% of the Loan amount), payable to the Lender at closing;

(iv) the Lender's counsel legal fee cap of Two Hundred Seventy-Five Thousand Dollars ($275,000), plus reasonable out-of-pocket disbursements, payable by the Company as borrower; and

(v) all title insurance premiums, recording fees, escrow fees, environmental report costs, appraisal fees, survey costs, documentary stamp taxes, intangible taxes, and all other customary closing costs and expenses incurred or to be incurred in connection with the Loan and the transactions contemplated hereby;

and the authorized signatories designated herein are hereby authorized to pay, or cause to be paid, all such deposits, fees, costs, and expenses from the proceeds of the Loan, from the Company's existing funds, or from such other sources as the authorized signatories may determine in their discretion.

Resolution 5: Authorization of Reserve Funding

RESOLVED, that the Company is hereby authorized and directed to fund upfront reserves in the aggregate estimated amount of Four Million Eight Hundred Thousand Dollars ($4,800,000), as required under the Reserve Agreement and the Loan Agreement, to be allocated among tax reserves, insurance reserves, FF&E reserves, and capital improvement reserves in such amounts and in such manner as specified in the Reserve Agreement and the Loan Agreement, and the Company is further authorized to make ongoing monthly reserve contributions in such amounts and at such times as required thereunder throughout the term of the Loan; and the authorized signatories designated herein are hereby authorized to execute and deliver any and all documents and instruments necessary or desirable to establish, fund, and maintain such reserve accounts in accordance with the Loan Documents.

Resolution 6: Designation of Authorized Signatories

RESOLVED, that each of the following individuals is hereby authorized, empowered, and directed, acting alone or together, on behalf of the Company, to negotiate, execute, and deliver each of the Loan Documents and any and all other agreements, instruments, certificates, documents, notices, requests, applications, and communications contemplated thereby, or necessary or advisable in connection with the Loan and the transactions described in these resolutions:

(a) Conrad W. Elliston, in his capacity as Chairman and Chief Executive Officer of Verimark Hospitality Group Inc. (the indirect sole member of the Company);

(b) Natasha Ricard, in her capacity as Chief Financial Officer of Verimark Hospitality Group Inc.;

(c) Derek Huang, in his capacity as Senior Vice President — Capital Markets & Treasury of Verimark Hospitality Group Inc.; and

(d) such other officers, managers, or authorized representatives of the Company or the Parent as may from time to time be designated by the Managers of the Company in a writing filed with the records of the Company;

(each, an "Authorized Signatory" and, collectively, the "Authorized Signatories"); and it is further

RESOLVED, that each Authorized Signatory shall have the full power and authority to execute any and all of the Loan Documents and related agreements, instruments, certificates, and documents on behalf of the Company, and the execution by any one (1) of such Authorized Signatories shall be sufficient and binding upon the Company without the need for any additional signature or approval, and the Lender, the title company, the escrow agent, and all other parties dealing with the Company may conclusively rely on the authority of any such Authorized Signatory without inquiry into the circumstances of the execution or the existence of any limitations on such authority; and it is further

RESOLVED, that any Authorized Signatory is hereby authorized to approve, on behalf of the Company, any modifications to the terms of the Loan Documents that are not materially adverse to the Company, and to execute and deliver any amendments, modifications, or supplements to the Loan Documents reflecting such modifications.

Resolution 7: Authorization to Grant Mortgage Lien and Security Interests

RESOLVED, that the Company is hereby authorized, empowered, and directed to grant to Pinnacle Atlantic Capital, LLC, or its successors and assigns, a first priority mortgage lien on and security interest in the Property, including all real property, improvements, fixtures, and appurtenances comprising the Property, and to grant security interests in all personal property, fixtures, furniture, furnishings, equipment, rents, revenues, income, profits, leases, license agreements, franchise agreements, accounts, deposit accounts, general intangibles, and all other collateral as required under the Mortgage, the Loan Agreement, and the other Loan Documents; and the Authorized Signatories are hereby authorized to execute and file, or cause to be executed and filed, all UCC-1 financing statements, UCC-3 amendments, continuation statements, and any other filings with the Florida Secured Transaction Registry or any other appropriate filing office as may be required by the Lender in order to perfect and maintain the Lender's security interests in the personal property and other collateral of the Company.

Resolution 8: Authorization to Establish and Maintain Accounts

RESOLVED, that the Company is hereby authorized, empowered, and directed to establish and maintain such deposit accounts, reserve accounts, lockbox accounts, collection accounts, operating accounts, and other accounts as may be required under the Cash Management Agreement, the Reserve Agreement, the Loan Agreement, and the other Loan Documents, at such financial institutions as the Lender may require or approve; and the Authorized Signatories are hereby authorized to execute and deliver deposit account control agreements, blocked account agreements, and any related documentation in favor of the Lender or its designee, granting the Lender control over such accounts as required under the Loan Documents and applicable law, including Article 9 of the Uniform Commercial Code as in effect in the State of Florida.

Resolution 9: Ratification of Prior Actions

RESOLVED, that all actions heretofore taken by the Managers, officers, Authorized Signatories, or other authorized representatives of the Company in connection with the negotiation, preparation, and execution of the Commitment Letter, the engagement of Calderwood & Harkness LLP as borrower's counsel, the deposit of the good faith deposit of $1,600,000 and the rate lock deposit of $800,000 with Meridian Title & Escrow, Inc., the ordering of third-party reports including appraisals, environmental site assessments, property condition assessments, surveys, and title searches, the negotiation of loan terms with the Lender, and any and all other actions taken in furtherance of the transactions contemplated by these resolutions, are hereby ratified, confirmed, and approved in all respects, nunc pro tunc.

Resolution 10: General Authorization

RESOLVED, that the Authorized Signatories are hereby authorized, empowered, and directed to take or cause to be taken any and all further actions, to execute and deliver or cause to be executed and delivered any and all further agreements, instruments, certificates, notices, consents, waivers, amendments, modifications, supplements, restatements, and documents, and to pay or cause to be paid any and all fees, costs, taxes (including without limitation documentary stamp taxes, intangible taxes, and recording fees), and expenses, in each case as such Authorized Signatories may in their sole judgment deem necessary, appropriate, or advisable to carry out the intent and purposes of the foregoing resolutions and to consummate the Loan and the transactions contemplated hereby, the execution and delivery thereof by any such Authorized Signatory to be conclusive evidence of the Company's authorization thereof and of such Authorized Signatory's determination that such action was necessary, appropriate, or advisable; and it is further

RESOLVED, that any and all actions taken by any Authorized Signatory on behalf of the Company in good faith in connection with the transactions described in these resolutions shall be, and hereby are, deemed to be authorized by these resolutions, notwithstanding any failure to specifically describe or identify such actions herein.

Resolution 11: Effectiveness

RESOLVED, that these resolutions shall be effective as of the date first written above and shall remain in full force and effect until expressly modified, amended, or revoked by subsequent action of the Managers of the Company; and it is further

RESOLVED, that this Unanimous Written Consent may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Unanimous Written Consent by facsimile, portable document format (.pdf), or other electronic transmission shall be equally as effective as delivery of an original executed counterpart of this Unanimous Written Consent; and it is further

RESOLVED, that this Unanimous Written Consent shall be filed with the minutes of the proceedings of the Managers of the Company and shall be maintained with the permanent records of the Company as required by the Operating Agreement and the Act.

SIGNATURES

IN WITNESS WHEREOF, the undersigned, being all of the Managers of Coral Palms Resort Holdings LLC, have executed this Unanimous Written Consent as of the date first written above.

CORAL PALMS RESORT HOLDINGS LLC

By: ________

Name: Conrad W. Elliston

Title: Manager

Date: ________

By: ________

Name: Natasha Ricard

Title: Manager

Date: ________

By: ________

Name: Derek Huang

Title: Manager

Date: ________

EXHIBIT A

Description of the Property

The real property located in Monroe County, Florida, more particularly 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.

Property Folio No.: 00460780-000100

Street Address: 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037

Together with all and singular the tenements, hereditaments, easements, rights-of-way, privileges, and appurtenances thereunto belonging or in anywise appertaining, and all improvements now or hereafter located thereon, including without limitation all buildings, structures, fixtures, and other improvements of every kind and description.

[Note: The full metes and bounds legal description to be confirmed by survey and attached prior to execution.]

EXHIBIT B

List of Loan Documents

To be finalized prior to closing. The following is a preliminary, non-exhaustive list of anticipated Loan Documents:

1. Loan Agreement between Coral Palms Resort Holdings LLC, as Borrower, and Pinnacle Atlantic Capital, LLC, as Lender

2. Promissory Note in the original principal amount of $160,000,000

3. Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing

4. Environmental Indemnity Agreement

5. Cash Management Agreement

6. Reserve Agreement

7. Non-Recourse Carve-Out Guaranty (if applicable)

8. Environmental Indemnity Guaranty (if applicable)

9. Deposit Account Control Agreement(s)

10. UCC-1 Financing Statement(s)

11. Borrower's Certificate and Closing Certificate

12. Incumbency Certificate

13. Good Standing Certificate(s)

14. Certified copies of Organizational Documents (Certificate of Formation, Operating Agreement)

15. Escrow Instructions to Meridian Title & Escrow, Inc.

16. Estoppel Certificates (as applicable)

17. Subordination, Non-Disturbance, and Attornment Agreements (as applicable)

18. Opinion of Borrower's Counsel (Calderwood & Harkness LLP)

19. Such other documents, instruments, and certificates as required under the Loan Agreement or the Commitment Letter

EXHIBIT C

Form of Commitment Letter dated December 9, 2022

[Reference copy of the Commitment Letter between Pinnacle Atlantic Capital, LLC and Coral Palms Resort Holdings LLC, dated December 9, 2022, to be attached.]

DRAFT — Subject to Review and Revision Prepared by Calderwood & Harkness LLP Matter No. 1021-00007 For discussion purposes only — not yet authorized for execution

DRAFT — Prepared by Calderwood & Harkness LLP Client Matter No. 1021-00007 For discussion purposes only — not yet authorized for execution
UNANIMOUS WRITTEN CONSENT OF THE MANAGERS OF CORAL PALMS RESORT HOLDINGS LLC, A FLORIDA LIMITED LIABILITY COMPANY, IN LIEU OF A SPECIAL MEETING
Dated as of [_], 2023
The undersigned, being all of the managers (the "Managers") of Coral Palms Resort Holdings LLC, a limited liability company organized and existing under the laws of the State of Florida (the "Company"), acting pursuant to and in accordance with the provisions of the Operating Agreement of the Company, as amended through the date hereof and currently in effect (the "Operating Agreement"), and Section 605.04074 of the Florida Revised Limited Liability Company Act, as amended (the "Act"), which collectively authorize the Managers to take any action by unanimous written consent without the necessity of convening a formal meeting, hereby adopt the following recitals and resolutions, which shall have the same force and effect as if adopted at a duly convened special meeting of the Managers at which all Managers were present and voting:
RECITALS
A. Identification of the Company. The Company is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Florida. The Company's principal place of business and the address of the property owned by the Company is 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037. The Company is governed by its Operating Agreement, as amended and currently in effect. The Company is a wholly owned indirect subsidiary of Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Parent"). The Parent, through intermediate holding entities, holds one hundred percent (100%) of the membership interests in the Company.
B. The Property. The Company is the fee simple owner of the real property commonly known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037, together with all improvements, appurtenances, easements, and other rights pertaining thereto, more particularly described as a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more fully set forth in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida (collectively, the "Property"). The Property Folio Number is 00460780-000100. A legal description of the Property is attached hereto as Exhibit A and incorporated herein by reference.
C. Description of the Property. The Property constitutes a full-service luxury oceanfront resort hotel comprising approximately 342 guest rooms and suites, approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, a 42-slip marina, three (3) food and beverage outlets, a 1,200-space parking structure, with a gross building area of approximately 412,000 square feet situated on a site of approximately 22.4 acres.
D. Existing Loan. The Property is currently encumbered by a first mortgage lien in favor of Tidewater National Bank, N.A. (the "Existing Lender") securing that certain first mortgage loan in the original principal amount of One Hundred Twenty-Five Million Dollars ($125,000,000), originated on June 1, 2019, with an outstanding principal balance of approximately One Hundred Eighteen Million Five Hundred Thousand Dollars ($118,500,000) as of October 15, 2022 (the "Existing Loan"). The Existing Loan is evidenced by, among other documents: (i) that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing recorded in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida (the "Existing Mortgage"); and (ii) that certain UCC-1 Financing Statement filed with the Florida Secured Transaction Registry, File No. 202219087643.
E. Proposed Refinancing. The Company desires to refinance the Existing Loan by entering into a new first mortgage loan with Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (the "Lender" or "PAC"), in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000) (the "Loan"). The Lender and the Company entered into, or are about to enter into, that certain Commitment Letter dated December 9, 2022 (the "Commitment Letter"), pursuant to which the Lender has agreed to make the Loan to the Company, subject to the terms and conditions set forth therein. A reference copy of the Commitment Letter is attached hereto as Exhibit C.
F. Loan Terms. The principal terms of the Loan, as set forth in the Commitment Letter, include the following: (i) an original principal amount of $160,000,000; (ii) a fixed interest rate of 5.35% per annum; (iii) a term of five (5) years from the closing date; (iv) interest-only payments during years one (1) and two (2) of the Loan term; (v) amortization on a thirty (30)-year schedule commencing with year three (3) of the Loan term; and (vi) two (2) one (1)-year extension options, each subject to, among other conditions, (a) no event of default, (b) a debt service coverage ratio of not less than 1.25x, and (c) payment of an extension fee equal to 0.25% of the then-outstanding principal balance per extension. The maximum loan-to-value ratio under the Commitment Letter is 68.0% based on the Lender's appraised value, and the minimum debt yield required is 9.5%.
G. Use of Proceeds. The proceeds of the Loan will be used to: (i) pay off and discharge the Existing Loan in full, including a prepayment premium of approximately One Million One Hundred Eighty-Five Thousand Dollars ($1,185,000) based on 1.0% of the outstanding principal balance; (ii) fund upfront reserves in the aggregate amount of approximately Four Million Eight Hundred Thousand Dollars ($4,800,000), covering tax reserves, insurance reserves, furniture, fixtures and equipment ("FF&E") reserves, and capital improvement reserves; (iii) pay estimated closing costs of approximately Three Million Two Hundred Fifty Thousand Dollars ($3,250,000), including title insurance premiums, recording fees, legal fees of borrower's counsel and lender's counsel, appraisal, environmental, survey, and other customary closing costs; and (iv) distribute remaining excess proceeds to the Company.
H. Engagement of Counsel and Service Providers. The Company has engaged Calderwood & Harkness LLP as its legal counsel in connection with the Loan and the transactions contemplated hereby. Whitford Baines & Driscoll LLP is acting as counsel to the Lender. Meridian Title & Escrow, Inc. is acting as title insurer and escrow agent for the transaction and will issue an ALTA lender's title insurance policy in favor of the Lender.
I. Authority of the Managers. The undersigned constitute all of the Managers of the Company. The Managers are authorized to act by unanimous written consent in lieu of a meeting pursuant to the Operating Agreement and applicable provisions of the Act. The Parent, Verimark Hospitality Group Inc., as the sole indirect member of the Company, has approved (or will contemporaneously approve) the Company's entry into the Loan and the execution and delivery of the Loan Documents (as defined below) and the consummation of the transactions contemplated herein. Evidence of such approval by the Parent shall be maintained with the records of the Company.
J. Benefit to the Company. The Managers have carefully reviewed the terms and conditions of the Commitment Letter and the proposed Loan and have determined that the refinancing of the Property through the Loan is in the best interests of the Company and its members, taking into account the current interest rate environment, the favorable terms of the Loan, the opportunity to access additional proceeds through the refinancing, and the long-term financial objectives of the Company and the Parent.
NOW, THEREFORE, BE IT:
RESOLUTIONS
Resolution 1: Approval of the Refinancing Transaction
RESOLVED, that the refinancing of the Property through the Loan in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000) from Pinnacle Atlantic Capital, LLC, on substantially the terms and conditions set forth in the Commitment Letter dated December 9, 2022, is hereby approved, ratified, and confirmed in all respects, and the Managers of the Company are hereby authorized and directed to cause the Company to consummate the Loan and the transactions contemplated thereby, including, without limitation, the payoff and discharge of the Existing Loan, the granting of security interests and mortgage liens on the Property and related collateral in favor of the Lender, the funding of required reserves, and the distribution of excess loan proceeds, all as more particularly described in these resolutions.
Resolution 2: Authorization to Execute and Deliver Loan Documents
RESOLVED, that the Company is hereby authorized, empowered, and directed to execute, deliver, and perform its obligations under the following documents (collectively, and together with all amendments, modifications, supplements, and restatements thereof, the "Loan Documents"), each in such form as the authorized signatories designated herein, with the advice of counsel, shall approve, such approval to be conclusively evidenced by such authorized signatory's execution and delivery thereof:
(a) Loan Agreement between the Company, as borrower, and Pinnacle Atlantic Capital, LLC, as lender (the "Loan Agreement"), setting forth the terms and conditions of the Loan, including representations, warranties, covenants, conditions precedent, events of default, and remedies;
(b) Promissory Note in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000), payable to the order of Pinnacle Atlantic Capital, LLC (the "Note"), evidencing the Company's unconditional obligation to repay the Loan in accordance with its terms;
(c) Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, encumbering the Property in favor of the Lender (the "Mortgage"), to be recorded in the Official Records of Monroe County, Florida, and granting the Lender a first priority lien on and security interest in the Property and all related rights, interests, and collateral;
(d) Environmental Indemnity Agreement in favor of the Lender, pursuant to which the Company (and, as applicable, the Parent and/or individual guarantors) shall indemnify the Lender against all losses, liabilities, costs, and expenses arising from or related to hazardous materials or environmental conditions affecting the Property;
(e) Cash Management Agreement governing lockbox arrangements, cash sweep mechanisms, waterfall provisions, and the collection and application of rents, revenues, and other income from the Property, including provisions governing trigger events and cash trap periods;
(f) Reserve Agreement governing upfront and ongoing reserves, including tax reserves, insurance reserves, FF&E reserves, and capital improvement reserves, and setting forth the terms and conditions under which such reserves will be funded, held, and disbursed;
(g) Such other agreements, instruments, certificates, and documents as may be required or contemplated by the Loan Agreement, the Commitment Letter, or any of the other Loan Documents, or as the authorized signatories may deem necessary or advisable in connection with the Loan and the transactions described herein, including, without limitation, the following:
(i) escrow instructions to Meridian Title & Escrow, Inc.;
(ii) UCC-1 financing statements and any amendments thereto, to be filed with the Florida Secured Transaction Registry and/or the appropriate filing offices;
(iii) deposit account control agreements with respect to accounts maintained by the Company;
(iv) certificates of the Company, including certificates of formation, certificates of good standing, incumbency certificates, and closing certificates;
(v) estoppel certificates as required by the Lender;
(vi) subordination, non-disturbance, and attornment agreements with respect to existing leases and franchise agreements;
(vii) guaranty agreements, if any, required by the Lender in connection with the Loan, including any non-recourse carve-out guaranty and environmental indemnity guaranty;
(viii) any comfort letters, opinion letters, or other deliverables required by the Lender or its counsel; and
(ix) any and all other closing documents, agreements, and instruments contemplated by the Commitment Letter or the Loan Agreement.
A list of the Loan Documents shall be finalized prior to closing and is expected to be set forth in a schedule to the Loan Agreement. A preliminary list of anticipated Loan Documents is attached hereto as Exhibit B.
Resolution 3: Authorization of Payoff of Existing Loan
RESOLVED, that the Company is hereby authorized and directed to cause the payoff and discharge of the Existing Loan held by Tidewater National Bank, N.A. in full, including payment of all outstanding principal (approximately One Hundred Eighteen Million Five Hundred Thousand Dollars ($118,500,000)), all accrued and unpaid interest through the date of payoff, the prepayment premium (estimated at One Million One Hundred Eighty-Five Thousand Dollars ($1,185,000), based on 1.0% of the outstanding principal balance, applicable if the Existing Loan is prepaid prior to March 1, 2023), and any and all other amounts, fees, costs, and charges required under the Existing Loan documents to obtain a complete payoff and discharge thereof; and it is further
RESOLVED, that the authorized signatories designated herein are hereby authorized and directed to execute and deliver, or cause to be executed and delivered, all payoff letters, payoff instructions, wire transfer requests, and other documents and instruments necessary or desirable to effect such payoff and discharge, including, without limitation, requesting and obtaining from the Existing Lender: (i) a satisfaction and discharge of the Existing Mortgage recorded in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida, suitable for recording in the Official Records of Monroe County, Florida; and (ii) a UCC-3 termination statement terminating that certain UCC-1 Financing Statement, File No. 202219087643, filed with the Florida Secured Transaction Registry; and the authorized signatories are further authorized to execute and deliver any and all other instruments necessary to release and discharge any and all liens, security interests, assignments, and encumbrances held by the Existing Lender with respect to the Property and the Company's personal property and other collateral.
Resolution 4: Authorization of Deposits and Fees
RESOLVED, that the following deposits and fees incurred or to be incurred in connection with the Loan are hereby ratified, confirmed, and approved:
(i) the good faith deposit in the amount of One Million Six Hundred Thousand Dollars ($1,600,000) deposited with Meridian Title & Escrow, Inc. on or about December 12, 2022;
(ii) the rate lock deposit in the amount of Eight Hundred Thousand Dollars ($800,000) deposited with Meridian Title & Escrow, Inc. on or about January 5, 2023;
(iii) the commitment fee in the amount of Eight Hundred Thousand Dollars ($800,000) (representing 0.50% of the Loan amount), payable to the Lender at closing;
(iv) the Lender's counsel legal fee cap of Two Hundred Seventy-Five Thousand Dollars ($275,000), plus reasonable out-of-pocket disbursements, payable by the Company as borrower; and
(v) all title insurance premiums, recording fees, escrow fees, environmental report costs, appraisal fees, survey costs, documentary stamp taxes, intangible taxes, and all other customary closing costs and expenses incurred or to be incurred in connection with the Loan and the transactions contemplated hereby;
and the authorized signatories designated herein are hereby authorized to pay, or cause to be paid, all such deposits, fees, costs, and expenses from the proceeds of the Loan, from the Company's existing funds, or from such other sources as the authorized signatories may determine in their discretion.
Resolution 5: Authorization of Reserve Funding
RESOLVED, that the Company is hereby authorized and directed to fund upfront reserves in the aggregate estimated amount of Four Million Eight Hundred Thousand Dollars ($4,800,000), as required under the Reserve Agreement and the Loan Agreement, to be allocated among tax reserves, insurance reserves, FF&E reserves, and capital improvement reserves in such amounts and in such manner as specified in the Reserve Agreement and the Loan Agreement, and the Company is further authorized to make ongoing monthly reserve contributions in such amounts and at such times as required thereunder throughout the term of the Loan; and the authorized signatories designated herein are hereby authorized to execute and deliver any and all documents and instruments necessary or desirable to establish, fund, and maintain such reserve accounts in accordance with the Loan Documents.
Resolution 6: Designation of Authorized Signatories
RESOLVED, that each of the following individuals is hereby authorized, empowered, and directed, acting alone or together, on behalf of the Company, to negotiate, execute, and deliver each of the Loan Documents and any and all other agreements, instruments, certificates, documents, notices, requests, applications, and communications contemplated thereby, or necessary or advisable in connection with the Loan and the transactions described in these resolutions:
(a) Conrad W. Elliston, in his capacity as Chairman and Chief Executive Officer of Verimark Hospitality Group Inc. (the indirect sole member of the Company);
(b) Natasha Ricard, in her capacity as Chief Financial Officer of Verimark Hospitality Group Inc.;
(c) Derek Huang, in his capacity as Senior Vice President — Capital Markets & Treasury of Verimark Hospitality Group Inc.; and
(d) such other officers, managers, or authorized representatives of the Company or the Parent as may from time to time be designated by the Managers of the Company in a writing filed with the records of the Company;
(each, an "Authorized Signatory" and, collectively, the "Authorized Signatories"); and it is further
RESOLVED, that each Authorized Signatory shall have the full power and authority to execute any and all of the Loan Documents and related agreements, instruments, certificates, and documents on behalf of the Company, and the execution by any one (1) of such Authorized Signatories shall be sufficient and binding upon the Company without the need for any additional signature or approval, and the Lender, the title company, the escrow agent, and all other parties dealing with the Company may conclusively rely on the authority of any such Authorized Signatory without inquiry into the circumstances of the execution or the existence of any limitations on such authority; and it is further
RESOLVED, that any Authorized Signatory is hereby authorized to approve, on behalf of the Company, any modifications to the terms of the Loan Documents that are not materially adverse to the Company, and to execute and deliver any amendments, modifications, or supplements to the Loan Documents reflecting such modifications.
Resolution 7: Authorization to Grant Mortgage Lien and Security Interests
RESOLVED, that the Company is hereby authorized, empowered, and directed to grant to Pinnacle Atlantic Capital, LLC, or its successors and assigns, a first priority mortgage lien on and security interest in the Property, including all real property, improvements, fixtures, and appurtenances comprising the Property, and to grant security interests in all personal property, fixtures, furniture, furnishings, equipment, rents, revenues, income, profits, leases, license agreements, franchise agreements, accounts, deposit accounts, general intangibles, and all other collateral as required under the Mortgage, the Loan Agreement, and the other Loan Documents; and the Authorized Signatories are hereby authorized to execute and file, or cause to be executed and filed, all UCC-1 financing statements, UCC-3 amendments, continuation statements, and any other filings with the Florida Secured Transaction Registry or any other appropriate filing office as may be required by the Lender in order to perfect and maintain the Lender's security interests in the personal property and other collateral of the Company.
Resolution 8: Authorization to Establish and Maintain Accounts
RESOLVED, that the Company is hereby authorized, empowered, and directed to establish and maintain such deposit accounts, reserve accounts, lockbox accounts, collection accounts, operating accounts, and other accounts as may be required under the Cash Management Agreement, the Reserve Agreement, the Loan Agreement, and the other Loan Documents, at such financial institutions as the Lender may require or approve; and the Authorized Signatories are hereby authorized to execute and deliver deposit account control agreements, blocked account agreements, and any related documentation in favor of the Lender or its designee, granting the Lender control over such accounts as required under the Loan Documents and applicable law, including Article 9 of the Uniform Commercial Code as in effect in the State of Florida.
Resolution 9: Ratification of Prior Actions
RESOLVED, that all actions heretofore taken by the Managers, officers, Authorized Signatories, or other authorized representatives of the Company in connection with the negotiation, preparation, and execution of the Commitment Letter, the engagement of Calderwood & Harkness LLP as borrower's counsel, the deposit of the good faith deposit of $1,600,000 and the rate lock deposit of $800,000 with Meridian Title & Escrow, Inc., the ordering of third-party reports including appraisals, environmental site assessments, property condition assessments, surveys, and title searches, the negotiation of loan terms with the Lender, and any and all other actions taken in furtherance of the transactions contemplated by these resolutions, are hereby ratified, confirmed, and approved in all respects, nunc pro tunc.
Resolution 10: General Authorization
RESOLVED, that the Authorized Signatories are hereby authorized, empowered, and directed to take or cause to be taken any and all further actions, to execute and deliver or cause to be executed and delivered any and all further agreements, instruments, certificates, notices, consents, waivers, amendments, modifications, supplements, restatements, and documents, and to pay or cause to be paid any and all fees, costs, taxes (including without limitation documentary stamp taxes, intangible taxes, and recording fees), and expenses, in each case as such Authorized Signatories may in their sole judgment deem necessary, appropriate, or advisable to carry out the intent and purposes of the foregoing resolutions and to consummate the Loan and the transactions contemplated hereby, the execution and delivery thereof by any such Authorized Signatory to be conclusive evidence of the Company's authorization thereof and of such Authorized Signatory's determination that such action was necessary, appropriate, or advisable; and it is further
RESOLVED, that any and all actions taken by any Authorized Signatory on behalf of the Company in good faith in connection with the transactions described in these resolutions shall be, and hereby are, deemed to be authorized by these resolutions, notwithstanding any failure to specifically describe or identify such actions herein.
Resolution 11: Effectiveness
RESOLVED, that these resolutions shall be effective as of the date first written above and shall remain in full force and effect until expressly modified, amended, or revoked by subsequent action of the Managers of the Company; and it is further
RESOLVED, that this Unanimous Written Consent may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of this Unanimous Written Consent by facsimile, portable document format (.pdf), or other electronic transmission shall be equally as effective as delivery of an original executed counterpart of this Unanimous Written Consent; and it is further
RESOLVED, that this Unanimous Written Consent shall be filed with the minutes of the proceedings of the Managers of the Company and shall be maintained with the permanent records of the Company as required by the Operating Agreement and the Act.
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being all of the Managers of Coral Palms Resort Holdings LLC, have executed this Unanimous Written Consent as of the date first written above.
CORAL PALMS RESORT HOLDINGS LLC
By: ________
Name: Conrad W. Elliston
Title: Manager
Date: ________
By: ________
Name: Natasha Ricard
Title: Manager
Date: ________
By: ________
Name: Derek Huang
Title: Manager
Date: ________
EXHIBIT A
Description of the Property
The real property located in Monroe County, Florida, more particularly 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.
Property Folio No.: 00460780-000100
Street Address: 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037
Together with all and singular the tenements, hereditaments, easements, rights-of-way, privileges, and appurtenances thereunto belonging or in anywise appertaining, and all improvements now or hereafter located thereon, including without limitation all buildings, structures, fixtures, and other improvements of every kind and description.
[Note: The full metes and bounds legal description to be confirmed by survey and attached prior to execution.]
EXHIBIT B
List of Loan Documents
To be finalized prior to closing. The following is a preliminary, non-exhaustive list of anticipated Loan Documents:
1.  Loan Agreement between Coral Palms Resort Holdings LLC, as Borrower, and Pinnacle Atlantic Capital, LLC, as Lender
2.  Promissory Note in the original principal amount of $160,000,000
3.  Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing
4.  Environmental Indemnity Agreement
5.  Cash Management Agreement
6.  Reserve Agreement
7.  Non-Recourse Carve-Out Guaranty (if applicable)
8.  Environmental Indemnity Guaranty (if applicable)
9.  Deposit Account Control Agreement(s)
10.  UCC-1 Financing Statement(s)
11.  Borrower's Certificate and Closing Certificate
12.  Incumbency Certificate
13.  Good Standing Certificate(s)
14.  Certified copies of Organizational Documents (Certificate of Formation, Operating Agreement)
15.  Escrow Instructions to Meridian Title & Escrow, Inc.
16.  Estoppel Certificates (as applicable)
17.  Subordination, Non-Disturbance, and Attornment Agreements (as applicable)
18.  Opinion of Borrower's Counsel (Calderwood & Harkness LLP)
19.  Such other documents, instruments, and certificates as required under the Loan Agreement or the Commitment Letter
EXHIBIT C
Form of Commitment Letter dated December 9, 2022
[Reference copy of the Commitment Letter between Pinnacle Atlantic Capital, LLC and Coral Palms Resort Holdings LLC, dated December 9, 2022, to be attached.]
DRAFT — Subject to Review and Revision Prepared by Calderwood & Harkness LLP Matter No. 1021-00007 For discussion purposes only — not yet authorized for execution

RECITALS

NOW, THEREFORE, BE IT:

RESOLUTIONS

SIGNATURES

CORAL PALMS RESORT HOLDINGS LLC

EXHIBIT A

EXHIBIT B

EXHIBIT C

Record

Parties

Dates

Amounts