DRAFT — Prepared by Calderwood & Harkness LLP C&H Matter No. 1021-00007
UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF VERIMARK HOSPITALITY GROUP INC. IN LIEU OF A SPECIAL MEETING
[____], 2023
The undersigned, constituting all of the members of the Board of Directors (the "Board") of Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware (the "Company" or the "Guarantor"), with its principal executive offices located at 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131, and whose shares of common stock are listed on the Nasdaq Stock Market under the ticker symbol "VMRK," hereby adopt the following resolutions by unanimous written consent in lieu of a special meeting of the Board, pursuant to Section 141(f) of the Delaware General Corporation Law (the "DGCL") and Article III, Section 12 of the Company's Amended and Restated Bylaws, as currently in effect. This Unanimous Written Consent (this "Consent") shall be effective as of the date on which the last undersigned director executes and delivers this Consent, and shall have the same force and effect as if adopted at a duly called and held special meeting of the Board at which all directors were present and voting.
RECITALS
WHEREAS, Coral Palms Resort Holdings LLC, a Florida limited liability company (the "Borrower"), is a wholly owned indirect subsidiary of the Company. The Company holds one hundred percent (100%) of the membership interests of the Borrower through one or more wholly owned intermediate holding entities. The Borrower is the fee simple owner of that certain full-service luxury oceanfront resort hotel commonly known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"). The Property consists of approximately 22.4 acres of waterfront land improved with a 342-room guest room and suite complex containing approximately 412,000 gross square feet, together with a 42-slip deep-water marina, approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, three (3) food and beverage outlets, a 1,200-space parking structure, and all related amenities, improvements, fixtures, and appurtenances. The Property is more particularly described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida, and identified by Monroe County Property Appraiser Folio No. 00460780-000100 (Recital A);
WHEREAS, the Property is currently encumbered by a first priority mortgage lien securing a loan in the original principal amount of One Hundred Twenty-Five Million and No/100 Dollars ($125,000,000.00) (the "Existing Loan") made by Tidewater National Bank, N.A. (the "Existing Lender") to the Borrower, pursuant to that certain Loan Agreement dated as of June 1, 2019, by and between the Existing Lender and the Borrower. As of October 15, 2022, the outstanding principal balance of the Existing Loan is approximately One Hundred Eighteen Million Five Hundred Thousand and No/100 Dollars ($118,500,000.00). The Existing Loan is secured by, among other things, 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, together with a UCC-1 Financing Statement filed with the Florida Secured Transaction Registry under File No. 202219087643. The Existing Loan currently bears interest at a rate equal to the Secured Overnight Financing Rate ("SOFR") plus 2.25% per annum, as adjusted pursuant to that certain LIBOR Transition and Benchmark Replacement Amendment dated as of March 15, 2022, by and between the Existing Lender and the Borrower. The Existing Loan has a stated maturity date of June 1, 2024 (Recital B);
WHEREAS, the Borrower proposes to enter into a first mortgage loan in the principal amount of One Hundred Sixty Million and No/100 Dollars ($160,000,000.00) (the "Loan") with Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (the "Lender"), which Lender is an affiliate of Greystone Peak Asset Management LP, a Delaware limited partnership. The proceeds of the Loan will be used to (i) refinance and pay off the outstanding balance of the Existing Loan in full, including any applicable prepayment premiums, accrued and unpaid interest, and defeasance or yield maintenance costs, (ii) fund upfront reserves for real estate taxes, insurance, furniture, fixtures and equipment reserves, seasonality reserves, and other reserves as may be required under the Loan Documents, (iii) pay all transaction costs, title insurance premiums, recording fees, origination fees, legal fees, and other closing costs associated with the Loan, and (iv) return excess loan proceeds, if any, to the Borrower for distribution. The material terms of the Loan, as set forth in that certain Commitment Letter dated December 9, 2022, issued by the Lender and accepted by the Borrower (the "Commitment Letter"), include the following:
(a) Interest Rate: Fixed rate of 5.35% per annum;
(b) Term: Five (5) years from the date of closing;
(c) Amortization: Interest-only payments during the first two (2) loan years, followed by principal and interest payments based on a thirty (30)-year amortization schedule during loan years three (3) through five (5);
(d) Extension Options: Two (2) successive one (1)-year extension options, each subject to satisfaction of specified conditions, including without limitation a minimum Debt Service Coverage Ratio ("DSCR") of not less than 1.25x and payment of an extension fee equal to 0.25% of the then-outstanding principal balance of the Loan for each extension exercised;
(e) Maximum Loan-to-Value Ratio: 68.0%, based on the appraised value of the Property as determined by an independent MAI appraisal satisfactory to the Lender;
(f) Minimum Debt Yield: 9.5%, calculated as Net Operating Income divided by the outstanding principal balance of the Loan;
(Recital C);
WHEREAS, as a condition precedent to the Lender making the Loan to the Borrower, the Lender requires the Company, in its capacity as the indirect parent entity of the Borrower, to execute and deliver a limited recourse guaranty agreement (the "Guaranty Agreement") in favor of the Lender, providing for recourse liability to the Company with respect to certain specified "bad boy" carve-out events, including, but not limited to, fraud, intentional misrepresentation, misapplication or misappropriation of rents or insurance proceeds, voluntary bankruptcy filings, violation of single-purpose entity covenants, and other enumerated non-recourse carve-out events and conditions as more particularly set forth in the Loan Documents. The Board acknowledges and notes that the Guaranty Agreement is limited recourse and carve-out in nature and does not constitute a full recourse guaranty of the Loan (Recital D);
WHEREAS, as a further condition precedent to the Lender making the Loan to the Borrower, the Lender requires the Company, together with the Borrower, to execute and deliver an environmental indemnity agreement (the "Environmental Indemnity Agreement") in favor of the Lender, pursuant to which the Company and the Borrower will jointly and severally indemnify, defend, and hold harmless the Lender and its successors, assigns, participants, and servicers from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and costs of investigation and remediation) arising out of or relating to the presence, release, threatened release, or disposal of hazardous substances at, on, under, or migrating to or from the Property, including any violation of applicable environmental laws (Recital E);
WHEREAS, the Loan will be evidenced and secured by, among other things, the following documents, instruments, and agreements (collectively, the "Loan Documents"):
(i) a Loan Agreement by and between the Borrower and the Lender;
(ii) a Promissory Note in the principal amount of $160,000,000.00 executed by the Borrower in favor of the Lender;
(iii) a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing granted by the Borrower in favor of the Lender, to be recorded in the Public Records of Monroe County, Florida;
(iv) the Guaranty Agreement executed by the Company in favor of the Lender;
(v) the Environmental Indemnity Agreement executed by the Company and the Borrower in favor of the Lender;
(vi) a Cash Management Agreement among the Borrower, the Lender, and the cash management bank;
(vii) a Reserve Agreement by and between the Borrower and the Lender governing the establishment, funding, and disbursement of required reserve accounts; and
(viii) such other documents, instruments, certificates, and agreements as may be required by the Lender in connection with the origination and closing of the Loan;
The Loan Documents are being prepared by Whitford Baines & Driscoll LLP, counsel to the Lender, and have been and continue to be reviewed and negotiated on behalf of the Borrower and the Company by Calderwood & Harkness LLP, counsel to the Borrower and the Company (Recital F); and
WHEREAS, the Board of Directors has reviewed the terms of the proposed Loan and the Loan Documents, including the Guaranty Agreement and the Environmental Indemnity Agreement, and, after careful consideration and deliberation, has determined that the execution, delivery, and performance by the Company of the Guaranty Agreement, the Environmental Indemnity Agreement, and the other Loan Documents to which the Company is or may become a party, are in the best interests of the Company and its stockholders, taking into account, among other things, the following considerations:
(a) the Company's indirect ownership of one hundred percent (100%) of the equity interests in the Borrower and the Company's resulting economic interest in the Property;
(b) the substantial benefit to the Company of refinancing the Existing Loan on more favorable terms, including the conversion to a fixed interest rate, the extension of the loan maturity, and the availability of cash-out proceeds to be utilized by the Borrower and the Company for general corporate purposes, capital improvements, and strategic initiatives;
(c) the limited recourse nature of the Guaranty Agreement, which limits the Company's exposure to specified carve-out events and does not constitute a full recourse guaranty of the Loan;
(d) the Company's consolidated revenue for the fiscal year ended December 31, 2022, of approximately Four Hundred Eighty-Seven Million and No/100 Dollars ($487,000,000.00) and the Company's total enterprise value of approximately One Billion Nine Hundred Million and No/100 Dollars ($1,900,000,000.00), demonstrating the Company's financial capacity to undertake the obligations contemplated by the Guaranty Agreement and the Environmental Indemnity Agreement; and
(e) the Company's diversified portfolio of fourteen (14) luxury and upscale resort properties located across the Southeastern United States and the Caribbean, which provides the Company with substantial asset backing and revenue diversification;
(Recital G).
RESOLUTIONS
NOW, THEREFORE, BE IT RESOLVED, as follows:
Resolution 1 — Approval of the Guaranty Agreement
RESOLVED, that the Company is hereby authorized, empowered, and directed to execute and deliver the Guaranty Agreement in favor of Pinnacle Atlantic Capital, LLC, as Lender, in connection with the Loan in the principal amount of One Hundred Sixty Million and No/100 Dollars ($160,000,000.00) to be made by the Lender to Coral Palms Resort Holdings LLC, as Borrower. The Guaranty Agreement shall be a limited recourse guaranty providing for carve-out recourse liability as described in the recitals hereto and as more particularly set forth in the form of Guaranty Agreement to be negotiated and finalized by the parties and their respective counsel. The Guaranty Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflicts of law principles. The execution and delivery of the Guaranty Agreement in substantially the form reviewed by the Board, with such changes, modifications, and amendments thereto as the authorized signatories executing the same shall approve, such approval to be conclusively evidenced by such officer's execution thereof, is hereby authorized and approved in all respects.
Resolution 2 — Approval of the Environmental Indemnity Agreement
RESOLVED, that the Company is hereby authorized, empowered, and directed to execute and deliver the Environmental Indemnity Agreement in favor of Pinnacle Atlantic Capital, LLC, as Lender, together with Coral Palms Resort Holdings LLC, as Borrower, indemnifying the Lender and its successors, assigns, participants, and servicers with respect to environmental matters, hazardous substances, and environmental liabilities relating to the Property, in substantially the form reviewed by the Board, with such changes, modifications, and amendments thereto as the authorized signatories executing the same shall approve, such approval to be conclusively evidenced by such officer's execution thereof.
Resolution 3 — Approval of Other Loan Documents
RESOLVED, that the Company is hereby authorized, empowered, and directed to execute and deliver such other Loan Documents, certificates, instruments, agreements, and ancillary documents as may be required by the Lender or its counsel, Whitford Baines & Driscoll LLP, in connection with the origination, closing, and funding of the Loan and as to which the Company is or may become a party, including without limitation any closing certificates, incumbency certificates, good standing certificates, organizational documents certifications, opinion letter reliance confirmations, and such other documents as the Company's counsel, Calderwood & Harkness LLP, may deem necessary, appropriate, or advisable in connection with the transactions contemplated hereby. A complete list of the Loan Documents to which the Company is or may become a party is set forth on Exhibit A attached hereto and incorporated herein by this reference.
Resolution 4 — Designation of Authorized Signatories
RESOLVED, that each of the following officers of the Company is hereby authorized and directed to execute and deliver, on behalf of the Company, the Guaranty Agreement, the Environmental Indemnity Agreement, and any and all other Loan Documents, certificates, instruments, and agreements to which the Company is or may become a party in connection with the Loan:
(a) Conrad W. Elliston, Chairman of the Board and Chief Executive Officer; and
(b) Natasha Ricard, Chief Financial Officer.
Any one (1) of the foregoing officers, acting individually and alone, without the joinder of the other, shall have full power and authority to execute and deliver the foregoing documents and instruments on behalf of the Company and to bind the Company thereby. The signature of any one such authorized officer shall be sufficient and conclusive evidence of the Company's authorization to execute and deliver any such document. Specimen signatures of the foregoing authorized signatories shall be made available upon request by the Lender or its counsel.
Resolution 5 — Authorization of Ancillary Actions
RESOLVED, that each of Conrad W. Elliston, Chairman of the Board and Chief Executive Officer, and Natasha Ricard, Chief Financial Officer, and each other duly elected or appointed officer of the Company, is hereby authorized and empowered, in the name and on behalf of the Company, to take or cause to be taken any and all such further actions, and to execute and deliver or cause to be executed and delivered any and all such further documents, instruments, certificates, notices, and agreements, as any such officer may in his or her sole discretion deem necessary, appropriate, or advisable to carry out the intent and purposes of the foregoing resolutions and to consummate the transactions contemplated hereby, including, without limitation:
(a) the negotiation, revision, and finalization of the terms and conditions of the Guaranty Agreement, the Environmental Indemnity Agreement, and any other Loan Documents to which the Company is a party, in each case in such form as the executing officer shall approve;
(b) the execution and delivery of closing certificates, bring-down certificates, compliance certificates, and any other certifications required by the Lender, the title company, or their respective counsel in connection with the closing of the Loan;
(c) the engagement and direction of Calderwood & Harkness LLP, with offices at 100 Southeast Second Street, Suite 3800, Miami, Florida 33131, as counsel to the Company and the Borrower in connection with the refinancing transaction, and the authorization of such counsel to render legal opinions on behalf of the Company as may be required by the Lender;
(d) the execution and delivery of any amendments, modifications, supplements, or waivers to the Guaranty Agreement, the Environmental Indemnity Agreement, or any other Loan Documents to which the Company is a party, as may be required or requested by the Lender from time to time in connection with the Loan; and
(e) such other acts, deeds, and things as may be necessary, appropriate, or advisable to consummate the refinancing of the Property and the transactions contemplated by the Loan Documents;
the taking of any such action or the execution and delivery of any such document by any such officer to be conclusive evidence of such officer's determination that such action or document is necessary, appropriate, or advisable for such purposes.
Resolution 6 — Ratification of Prior Acts
RESOLVED, that all actions heretofore taken by any officer or director of the Company in connection with the proposed refinancing of the Property, the negotiation and execution of the Commitment Letter, and the preparation for the closing of the Loan, including, without limitation:
(a) the negotiation of the term sheet and the Commitment Letter dated December 9, 2022, with Pinnacle Atlantic Capital, LLC;
(b) the engagement of Calderwood & Harkness LLP as counsel to the Borrower and the Company in connection with the refinancing transaction;
(c) the deposit of a good faith deposit in the amount of One Million Six Hundred Thousand and No/100 Dollars ($1,600,000.00) with Meridian Title & Escrow, Inc. on behalf of the Borrower; and
(d) the deposit of a rate lock deposit in the amount of Eight Hundred Thousand and No/100 Dollars ($800,000.00) with Meridian Title & Escrow, Inc. on behalf of the Borrower;
are hereby ratified, confirmed, and approved in all respects as the valid and binding acts of the Company and its officers, with the same force and effect as if such actions had been specifically authorized by the Board of Directors prior to being taken.
Resolution 7 — Effectiveness and Duration
RESOLVED, that these resolutions shall remain in full force and effect and the authorizations granted hereby shall continue until the earlier to occur of (i) the closing and funding of the Loan and the execution and delivery of all Loan Documents contemplated hereby, and (ii) the termination or expiration of the Commitment Letter dated December 9, 2022, in accordance with its terms, unless these resolutions are sooner revoked, rescinded, or modified by a subsequent action of the Board of Directors. Upon the closing and funding of the Loan, the authorizations granted under Resolution 5 with respect to amendments, modifications, and post-closing matters shall survive and continue until such time as the Loan is paid in full or otherwise terminated, unless sooner revoked or modified by the Board.
GENERAL PROVISIONS
This Unanimous Written Consent may be executed in two (2) or more counterparts, including by facsimile or by electronic transmission in portable document format (PDF), each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Consent by electronic mail (including PDF) or other electronic means shall be deemed effective delivery.
This Consent shall be filed with the minutes of the proceedings of the Board of Directors of the Company and shall be maintained with the corporate records of the Company in accordance with Section 141(f) of the Delaware General Corporation Law and the Company's Amended and Restated Bylaws.
The adoption of the foregoing resolutions by unanimous written consent in lieu of a special meeting is authorized by Section 141(f) of the DGCL, which provides that, unless otherwise restricted by the certificate of incorporation or bylaws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board consent thereto in writing or by electronic transmission. The Company's Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware, and the Company's Amended and Restated Bylaws do not restrict or prohibit action by unanimous written consent of the Board.
IN WITNESS WHEREOF, the undersigned directors have executed this Unanimous Written Consent as of the date(s) set forth below their respective names.
________________________________________
Name: Conrad W. Elliston
Title: Chairman of the Board and Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
________________________________________
Name: ________
Title: Director
Date: ________
[Signature page to Unanimous Written Consent of the Board of Directors of Verimark Hospitality Group Inc.]
SECRETARY'S CERTIFICATE
The undersigned, being the duly elected and acting Secretary of Verimark Hospitality Group Inc., a Delaware corporation (the "Company"), hereby certifies, as of [__], 2023, as follows:
1. True and Correct Copy. The foregoing Unanimous Written Consent of the Board of Directors of the Company (the "Consent") is a true, correct, and complete copy of the Consent adopted by all of the members of the Board of Directors of the Company by unanimous written consent in lieu of a special meeting, in accordance with Section 141(f) of the Delaware General Corporation Law and Article III, Section 12 of the Company's Amended and Restated Bylaws.
2. Full Force and Effect. The resolutions set forth in the Consent have not been amended, modified, supplemented, revoked, rescinded, or superseded in any respect and remain in full force and effect as of the date hereof.
3. Authorized Signatories. The following persons have been duly elected or appointed to the offices set forth opposite their respective names below, are currently serving in such capacities, and the signatures set forth opposite their respective names are their true and genuine signatures:
4. Incumbency. Each of the persons identified in Paragraph 3 above was duly elected or appointed to his or her respective office in accordance with the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, and each such person continues to hold such office as of the date hereof.
5. Organizational Authority. The Company's Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware, and the Company's Amended and Restated Bylaws, each as currently in effect, do not contain any provision that would prohibit, restrict, or limit the Company's authority to execute and deliver the Guaranty Agreement, the Environmental Indemnity Agreement, or any other Loan Documents to which the Company is a party in connection with the Loan described in the Consent.
6. Good Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business and in good standing in the State of Florida.
IN WITNESS WHEREOF, the undersigned has executed this Secretary's Certificate as of [__], 2023.
________________________________________
Name: ________
Title: Secretary, Verimark Hospitality Group Inc.
Date: ________
EXHIBIT A
LIST OF LOAN DOCUMENTS TO WHICH THE COMPANY IS OR MAY BECOME A PARTY
The following is a list of the Loan Documents (as defined in the Unanimous Written Consent to which this Exhibit A is attached) to which Verimark Hospitality Group Inc. (the "Company") is or may become a party in connection with the Loan in the principal amount of $160,000,000.00 to be made by Pinnacle Atlantic Capital, LLC to Coral Palms Resort Holdings LLC:
1. Guaranty Agreement — Limited recourse / carve-out guaranty agreement executed by the Company in favor of Pinnacle Atlantic Capital, LLC, as Lender, guaranteeing certain obligations of the Borrower under the Loan Agreement and the other Loan Documents upon the occurrence of specified non-recourse carve-out events.
2. Environmental Indemnity Agreement — Environmental indemnity agreement executed by the Company and Coral Palms Resort Holdings LLC, as Borrower, jointly and severally, in favor of Pinnacle Atlantic Capital, LLC, as Lender, providing indemnification with respect to environmental liabilities, hazardous substances, and environmental law compliance matters relating to the Property.
3. Closing Certificate of Guarantor — Certificate of the Company delivered at the closing of the Loan, certifying as to the accuracy of representations and warranties, the satisfaction of conditions precedent, and such other matters as the Lender or its counsel may require.
4. Incumbency Certificate of Guarantor — Certificate of the Secretary or an Assistant Secretary of the Company, certifying as to the incumbency, authority, and specimen signatures of the officers authorized to execute and deliver the Loan Documents on behalf of the Company.
5. Such other instruments, certificates, agreements, or documents as may be required by the Lender or Lender's counsel, Whitford Baines & Driscoll LLP, in connection with the origination, closing, and funding of the Loan, including without limitation any post-closing documents, amendments, modifications, or supplements to the foregoing, and any documents required by the title company, Meridian Title & Escrow, Inc., in connection with the issuance of the lender's title insurance policy.
Prepared by Calderwood & Harkness LLP — DRAFT C&H Matter No. 1021-00007 Guarantor Authorizing Resolutions — Verimark Hospitality Group Inc.
| Name | Title | Specimen Signature |
| Conrad W. Elliston | Chairman of the Board and Chief Executive Officer | ______ |
| Natasha Ricard | Chief Financial Officer | ______ |