CASH MANAGEMENT AGREEMENT

CASH MANAGEMENT AGREEMENT
[BORROWER'S MARKUP — CALDERWOOD & HARKNESS LLP]
[Redline of WBD Initial Draft dated December 19, 2022]
[C&H Comments dated January 9, 2023]
[Calderwood & Harkness LLP — Matter No. 1021-00007]
by and among
CORAL PALMS RESORT HOLDINGS LLC, a Florida limited liability company ("Borrower")
and
PINNACLE ATLANTIC CAPITAL, LLC, a Delaware limited liability company ("Lender")
Property:
Coral Palms Grand Resort & Spa 99000 Overseas Highway Key Largo, Monroe County, Florida 33037
Loan Amount: $160,000,000
CONFIDENTIAL TREATMENT REQUESTED — ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL — This document is a redline markup prepared by Calderwood & Harkness LLP on behalf of Coral Palms Resort Holdings LLC and reflects the attorney-client work product of counsel. Distribution is limited to authorized representatives of Borrower and Lender and their respective counsel.
Right-click to update Table of Contents
CASH MANAGEMENT AGREEMENT
This CASH MANAGEMENT AGREEMENT (this "Agreement") is entered into as of ___, 2023 (the "Effective Date"), by and between CORAL PALMS RESORT HOLDINGS LLC, a Florida limited liability company ("Borrower"), and PINNACLE ATLANTIC CAPITAL, LLC, a Delaware limited liability company ("Lender").
RECITALS
WHEREAS, Lender has agreed to make a first mortgage loan in the original principal amount of One Hundred Sixty Million and No/100 Dollars ($160,000,000) (the "Loan") to Borrower, pursuant to that certain Loan Agreement of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), by and between Borrower and Lender;
WHEREAS, the Loan is secured by, among other things, that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the "Mortgage") encumbering the real property known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"), to be recorded in the Public Records of Monroe County, Florida;
WHEREAS, as a condition to the making of the Loan, Lender has required that Borrower enter into this Agreement to establish a cash management structure for the revenues generated by the Property; and
WHEREAS, Borrower has agreed to enter into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings ascribed to them below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
"Borrower" shall mean Coral Palms Resort Holdings LLC, a Florida limited liability company, having its principal address at c/o Verimark Hospitality Group Inc., 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131.
"Business Day" shall mean any day other than a Saturday, a Sunday, or any other day on which national banks located in the City of New York, State of New York, or the City of Miami, State of Florida, are authorized or required by law or executive order to close.
"Cash Management Account" shall mean the segregated account established at the Cash Management Bank, designated by Lender, into which funds from the Lockbox Account are swept in accordance with Section 2.2 hereof, and from which disbursements are made in accordance with the Waterfall set forth in Section 4.2 hereof.
"Cash Management Bank" shall mean  .
> [C&H Comment: The WBD draft contains no minimum asset threshold for the Cash Management Bank. Borrower requires that the Cash Management Bank be a federally insured institution of appropriate size and financial stability. We have inserted a $5 billion minimum asset requirement. This is consistent with market practice for institutional commercial mortgage loans of this size.]
"Cash Management Period" shall mean the period commencing upon the occurrence of a Trigger Event described in Section 3.1 hereof and continuing until termination of such period in accordance with Section 3.3 hereof.
"Cash Sweep Event" shall have the meaning set forth in Section 3.2 hereof.
"Cash Sweep Reserve Account" shall mean a segregated reserve account established and maintained by Lender at the Cash Management Bank into which Excess Cash Flow is deposited during a Cash Sweep Event.
"Clearing Account" shall mean the operating account maintained by Borrower at a bank designated by Borrower, into which amounts released from the Cash Management Account are disbursed in accordance with the Waterfall, for use by Borrower in paying Property operating expenses and other purposes permitted under the Loan Documents.
"Closing Date" shall mean the date on which the Loan is funded by Lender to Borrower.
"Debt Service" shall mean all scheduled payments of principal (if applicable) and interest due and payable under the Loan Agreement and the Promissory Note. During the interest-only period (Loan Years 1 and 2), annual Debt Service shall equal One Hundred Sixty Million and No/100 Dollars ($160,000,000) multiplied by 5.35%, or Eight Million Five Hundred Sixty Thousand and No/100 Dollars ($8,560,000) per annum (Seven Hundred Thirteen Thousand Three Hundred Thirty-Three and 33/100 Dollars ($713,333.33) per month). During any amortization period, Debt Service shall include scheduled amortization payments as set forth in the Promissory Note.
"Debt Yield" shall mean, as of any date of determination, the ratio (expressed as a percentage) of (a) Net Operating Income for the applicable calculation period to (b) the outstanding principal balance of the Loan as of such date of determination. The minimum Debt Yield threshold per the Commitment Letter is 9.5% for loan extension purposes.
"DSCR" or "Debt Service Coverage Ratio" shall mean, as of any date of determination, the ratio of (a) Net Operating Income for the applicable calculation period to (b) Debt Service for the same period.  
> [C&H Comment: The WBD draft is ambiguous as to whether the DSCR is based on trailing actual results or projected/underwritten NOI. Borrower insists that DSCR be based on trailing 12-month actual NOI. The use of projected or underwritten figures gives Lender unilateral discretion to manipulate the DSCR calculation. This is a significant issue.]
"Deposit Account Control Agreement" or "DACA" shall mean a deposit account control agreement executed by Borrower, Lender, and the applicable depository institution with respect to the Lockbox Account, the Cash Management Account, or any other account required to be subject to a control agreement under this Agreement or any other Loan Document.
"Effective Date" shall have the meaning set forth in the preamble to this Agreement.
"Event of Default" shall have the meaning set forth in Section 8.1 hereof.
"Excess Cash Flow" shall mean, with respect to any Monthly Distribution Date, the amount remaining in the Cash Management Account after application of all prior priority items in the Waterfall set forth in Section 4.2 hereof. Excess Cash Flow represents revenue available for release to Borrower absent the existence of a Cash Sweep Event or Cash Management Period.
"FF&E Reserve Account" shall mean the reserve account established and maintained pursuant to the Reserve Agreement for the purpose of funding the replacement of furniture, fixtures, and equipment at the Property, initially funded with a portion of the upfront reserve deposit of Four Million Eight Hundred Thousand and No/100 Dollars ($4,800,000).
"Gross Revenue" shall mean all revenue from the operation of the Property, including, without limitation: (a) room revenue (342 guest rooms and suites); (b) food and beverage revenue (three (3) food and beverage outlets); (c) spa revenue (approximately 18,000 square feet of spa facilities); (d) marina revenue (42-slip marina); (e) meeting and event space revenue (approximately 28,500 square feet of meeting and event space); (f) parking revenue (1,200-space parking structure); and (g) all ancillary and other income derived from the operation of the Property, including, without limitation, resort fees, in-room dining, minibar revenue, laundry services, gift shop revenue, telecommunications charges, and any other revenues from whatever source derived at or from the Property.
"Guarantor" shall mean Verimark Hospitality Group Inc., a Delaware corporation (Nasdaq: VMRK), having its principal address at 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131.
"Guaranty Agreement" shall mean that certain Guaranty Agreement of even date herewith, executed by Guarantor in favor of Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Insurance Reserve Account" shall mean the reserve account established and maintained pursuant to the Reserve Agreement for the purpose of funding insurance premium payments for the Property, including premiums for property, general liability, and windstorm coverage provided by Southland Mutual Insurance Company, and flood insurance coverage provided by Bayfront Specialty Insurance Corp.
"Lender" shall mean Pinnacle Atlantic Capital, LLC, a Delaware limited liability company, having its principal address at 200 Lexington Avenue, 38th Floor, New York, New York 10016, together with its successors and assigns.
"Loan" shall mean the first mortgage loan in the original principal amount of One Hundred Sixty Million and No/100 Dollars ($160,000,000) made by Lender to Borrower pursuant to the Loan Agreement.
"Loan Agreement" shall mean that certain Loan Agreement of even date herewith, by and between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" shall mean, collectively, the Loan Agreement, the Promissory Note, the Mortgage (to be recorded in the Public Records of Monroe County, Florida), the Guaranty Agreement, the Environmental Indemnity Agreement, the Reserve Agreement, this Agreement, and all other documents, instruments, and agreements executed and delivered in connection with the Loan, as each of the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lockbox Account" shall mean the segregated depository account established at the Lockbox Bank, into which all Gross Revenue of the Property is required to be directly deposited, as more particularly described in Section 2.1 hereof.
"Lockbox Bank" shall mean  .
> [C&H Comment: Same minimum asset threshold request as for the Cash Management Bank. Additionally, Borrower requests the right to approve the identity of the Lockbox Bank, subject to Lender's reasonable consent. The WBD draft gives Lender sole discretion, which is not market-standard for a borrower of this profile.]
"Monthly Distribution Date" shall have the meaning set forth in Section 4.3 hereof.
"Mortgage" shall mean that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing encumbering the Property, to be recorded in the Public Records of Monroe County, Florida, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Net Operating Income" or "NOI" shall mean  . As of September 30, 2022 (trailing twelve-month period), Net Operating Income is Eighteen Million Four Hundred Thousand and No/100 Dollars ($18,400,000).
> [C&H Comment: This is a critical definition. The WBD draft allows Lender to use "adjusted" or "normalized" NOI, which gives Lender significant discretion to manipulate the NOI figure for purposes of DSCR and Debt Yield testing. Borrower insists that NOI be based on trailing 12-month actual results, consistent with the methodology in the Loan Agreement. Lender's ability to unilaterally "adjust" NOI is not market-standard and creates unacceptable uncertainty. Current T-12 NOI ending September 30, 2022 is $18,400,000.]
"Obligations" shall mean all obligations of Borrower under the Loan Documents, including, without limitation, the obligation to repay the Loan, all interest, fees, costs, expenses, indemnification obligations, and all other amounts due from Borrower to Lender under the Loan Documents.
"Operating Budget" shall have the meaning set forth in Section 4.1 hereof.
"Operating Expenses" shall mean all costs and expenses incurred in connection with the operation, maintenance, and management of the Property, including, without limitation, payroll and employee benefits, utilities, real property taxes and assessments, insurance premiums, management fees (whether to an affiliate or a third-party manager), maintenance and repairs, supplies, marketing and advertising, franchise taxes or fees (if any), professional fees, FF&E contributions, and all other expenses of operating the Property in the ordinary course of business.
"Permitted Investments" shall mean  .
> [C&H Comment: The WBD draft is silent on the definition of Permitted Investments, stating only "as directed by Lender." Borrower has expanded the definition to include standard investment options. This is market-standard for reserve and escrow account investments.]
"Promissory Note" shall mean that certain Promissory Note of even date herewith, made by Borrower in favor of Lender in the original principal amount of the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Property" shall mean the real property and improvements known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037, Tax Folio No. 00460780-000100, as more particularly described in the Mortgage, together with all personal property, fixtures, and intangible property associated therewith.
"Reserve Accounts" shall mean, collectively, the Tax Reserve Account, the Insurance Reserve Account, the FF&E Reserve Account, and the Capital Reserve Account, each as described in the Reserve Agreement of even date herewith, initially funded with an aggregate upfront deposit of Four Million Eight Hundred Thousand and No/100 Dollars ($4,800,000).
"Reserve Agreement" shall mean that certain Reserve Agreement of even date herewith, by and between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Tax Reserve Account" shall mean the reserve account established and maintained pursuant to the Reserve Agreement for the purpose of funding real property tax payments for the Property.
"Trigger Event" shall have the meaning set forth in Section 3.1 hereof.
"Waterfall" shall mean the priority of disbursement from the Cash Management Account as set forth in Section 4.2 hereof.
Section 1.2 — Rules of Construction
(a) Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa, and words importing the masculine gender shall include the feminine and neuter genders and vice versa.
(b) References in this Agreement to "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" and shall not be construed to limit any general statement preceding such term to the specific or similar items or matters immediately following such term.
(c) References to any statute, regulation, or other governmental requirement shall be deemed to include all amendments, supplements, replacements, and successor provisions thereto and thereof.
(d) References to Sections, Articles, Exhibits, and Schedules shall refer to the Sections, Articles, Exhibits, and Schedules of this Agreement unless otherwise specifically provided.
(e) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, as set forth in Section 11.1 hereof.
(f) In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any other Loan Document, the applicable provisions of the Loan Agreement shall control, except as otherwise expressly provided herein or therein.
(g) The headings and captions of the Articles, Sections, and subsections of this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any provisions hereof.
(h) References to any Loan Document shall include all amendments, restatements, supplements, and modifications thereof.
ARTICLE II — LOCKBOX AND CASH MANAGEMENT ACCOUNTS
Section 2.1 — Establishment of Lockbox Account
(a) Borrower shall establish and maintain a Lockbox Account at a Lockbox Bank  .
> [C&H Comment: The WBD draft gives Lender sole discretion over the choice of Lockbox Bank. Borrower requires mutual approval rights, with each party acting reasonably. This is consistent with the revised definition of "Lockbox Bank" in Section 1.1.]
(b) All Gross Revenue from the Property shall be deposited directly into the Lockbox Account. Borrower shall cause all hotel guests, credit card processors, direct bill accounts, tenants, marina operators, spa operations, food and beverage operations, meeting and event clients, parking operations, and all other sources of revenue to direct payments to the Lockbox Account. Without limiting the foregoing, Borrower shall:
(i) within fifteen (15) Business Days following the Closing Date, deliver written instructions to all credit card processors (including Visa, Hollowell Partners LLC, Pinnacle Partners LLC, and Aldermere Corporation) to direct settlement deposits for all credit card transactions processed at the Property to the Lockbox Account;
(ii) within fifteen (15) Business Days following the Closing Date, deliver written instructions to all direct bill accounts, corporate accounts, group accounts, and travel agency accounts to remit payment directly to the Lockbox Account;
(iii) cause all cash and check receipts at the Property to be deposited into the Lockbox Account within one (1) Business Day of receipt;
(iv) amend, or cause to be amended, any credit card processing agreements, merchant services agreements, and similar arrangements to the extent necessary to ensure that all settlement funds are directed to the Lockbox Account; and
(v) provide Lender with evidence of all such redirections and amendments within five (5) Business Days after the same have been implemented.
(c) A Deposit Account Control Agreement with respect to the Lockbox Account shall be executed by Borrower, Lender, and the Lockbox Bank in accordance with Section 2.4 hereof.
(d)  
> [C&H Comment: The WBD draft requires establishment of the Lockbox Account ten (10) Business Days prior to Closing. This is impracticable given the operational complexity of redirecting revenue streams for a 342-room resort hotel with multiple revenue sources. Borrower proposes establishment within fifteen (15) Business Days after the Closing Date, which allows for a reasonable operational transition period. In the interim, Borrower will deposit all Gross Revenue into a designated account, subject to Lender's security interest.]
(e) Borrower shall not close, modify, or transfer the Lockbox Account without the prior written consent of Lender.
Section 2.2 — Sweeps to Cash Management Account
(a) 
> [C&H Comment: This is the single most material commercial point in this Agreement. The WBD draft imposes a day-one hard lockbox structure, under which all Property revenue is swept to a Lender-controlled account from the Closing Date forward, regardless of whether the Property is performing satisfactorily. This is commercially unreasonable and not market-standard for a stabilized hospitality asset with a current DSCR of 2.15x (more than double the proposed trigger level). Borrower's position is that a soft lockbox (borrower-controlled disbursements) should apply until a Cash Management Period is triggered, at which point the hard lockbox structure engages. This is the standard structure for institutional commercial mortgage loans on stabilized hospitality assets. Borrower will not accept a day-one hard lockbox. This is a deal point.]
(b) The Cash Management Account shall be maintained at the Cash Management Bank designated in accordance with Section 1.1 hereof.
(c) 
> [C&H Comment: The WBD draft is silent on interest allocation. Borrower insists that interest earned on amounts in the Cash Management Account and Lockbox Account be for Borrower's benefit. These are Borrower's operating revenues being held in Lender-controlled accounts; it would be inequitable for Lender to retain interest earned thereon.]
Section 2.3 — Clearing Account / Operating Account
(a)   amounts from the Cash Management Account to Borrower's Clearing Account in accordance with the Waterfall set forth in Section 4.2 hereof. 
(b) The Clearing Account shall be maintained at a bank designated by Borrower and reasonably acceptable to Lender.
(c) Borrower shall use funds in the Clearing Account solely for the payment of Property operating expenses and other purposes permitted under the Loan Documents; provided, however, that  .
> [C&H Comment: The WBD draft imposes ongoing reporting requirements and expenditure approval conditions on Borrower even after Excess Cash Flow has been released from the Cash Management Account. This is inconsistent with the purpose of the Waterfall, which is to establish a priority of payments. Once Excess Cash Flow has been paid to Borrower through the Waterfall, Borrower should be free to use such funds without restriction. The $50,000 approval threshold for non-budgeted expenditures is unworkable for a 342-room resort hotel and is deleted.]
Section 2.4 — Deposit Account Control Agreements
(a) Borrower shall execute Deposit Account Control Agreements with respect to each of the Lockbox Account and the Cash Management Account (and any other account required to be subject to a control agreement under the Loan Documents).
(b) Each DACA shall be in form and substance  .
> [C&H Comment: Borrower should have the right to review and provide input on the form of DACA. Borrower also requires that the DACA include provisions granting Borrower the right to receive periodic account statements and notices regarding account activity.]
(c) Each DACA shall grant Lender a first-priority perfected security interest in each such account and all funds on deposit therein. 
> [C&H Comment: The WBD draft provides Lender with exclusive control over account disposition from day one, regardless of whether a Cash Management Period exists. This is inconsistent with the soft lockbox structure proposed by Borrower in Section 2.2. The DACA should provide for "springing" control, i.e., the depository institution acts on Borrower's instructions until a Cash Management Period is triggered, at which point Lender's exclusive control activates. This is the standard structure for DACAs in institutional mortgage lending on stabilized assets.]
(d) Lender's security interest in the accounts described herein is in addition to, and not in lieu of, the lien of the Mortgage and any other security interest granted to Lender under the Loan Documents.
(e) 
Section 2.5 — Account Maintenance Costs
(a) Borrower shall pay all fees and costs of establishing and maintaining the Lockbox Account, the Cash Management Account, and the Clearing Account, including, without limitation, account maintenance fees, wire transfer fees, sweep fees, and any fees charged by the applicable depository institution in connection with the DACA.
(b) 
> [C&H Comment: Borrower should not be subject to extraordinary charges or above-market fees imposed by a bank selected by Lender. This protection is standard.]
ARTICLE III — CASH MANAGEMENT PERIODS AND TRIGGER EVENTS
Section 3.1 — Cash Management Period; Trigger Events
(a) A "Cash Management Period" shall commence upon the occurrence and during the continuance of any of the following events (each, a "Trigger Event"):
(i) Monetary Default. Borrower's failure to make any payment of principal, interest, or other amounts due under the Loan Documents within   after the applicable due date therefor.
> [C&H Comment: Five (5) Business Days is a more reasonable grace period for monetary defaults. Three (3) Business Days is too short given the operational cash management cycle for a resort property of this size.]
(ii) DSCR Trigger. The DSCR falls below   for  .
> [C&H Comment: The 1.25x level proposed by WBD is the same threshold as the extension condition in the Commitment Letter and should not also serve as a day-to-day cash management trigger. Borrower proposes 1.15x, which is more appropriate for a cash management trigger. At current NOI of $18,400,000 and annual interest-only Debt Service of $8,560,000, the current DSCR is 2.15x. A 1.15x trigger would require a decline in NOI of approximately 54% (to approximately $9,844,000) before activation. The 1.25x level would trigger at NOI of approximately $10,700,000, which represents a decline of approximately 42% — still providing substantial cushion but less headroom than is appropriate for a cash management trigger. Additionally, one quarter is insufficient for testing; two consecutive quarters smooths seasonal variation, which is critical for a Florida Keys resort property.]
(iii) Debt Yield Trigger. The Debt Yield falls below   for  .
> [C&H Comment: The WBD draft sets the Debt Yield trigger at 8.5%, which would trigger at NOI of approximately $13,600,000. The current Debt Yield is 11.50% ($18,400,000 ÷ $160,000,000). Borrower proposes reducing the trigger to 7.5%, which would trigger at NOI of approximately $12,000,000 — still representing a significant decline of approximately 35% from current performance. The 8.5% level provides an excessive buffer and should be reserved for extension or default provisions, not cash management triggers. As with the DSCR trigger, two consecutive quarters is more appropriate than one quarter.]
(iv) Material Event of Default.  
> [C&H Comment: The WBD draft cross-references all Events of Default under the Loan Agreement, including purely technical defaults that may have no bearing on the Property's cash flow or Lender's collateral position. Borrower proposes limiting this trigger to material Events of Default that remain uncured after expiration of applicable cure periods. Technical defaults (e.g., late delivery of a report) should not trigger a Cash Management Period.]
(v) Bankruptcy/Insolvency. (A) The filing of a voluntary petition by Borrower or Guarantor under Title 11 of the United States Code (the "Bankruptcy Code") or any similar state or federal law; (B) the filing of an involuntary petition against Borrower or Guarantor under the Bankruptcy Code or any similar state or federal law that is not dismissed within   after the date of such filing; (C) the appointment of a receiver, trustee, custodian, or liquidator of Borrower or Guarantor or any substantial part of the assets of Borrower or Guarantor; or (D) the making by Borrower or Guarantor of a general assignment for the benefit of creditors.
> [C&H Comment: Sixty (60) days is a more appropriate period for dismissal of involuntary petitions. Thirty (30) days is often insufficient to address a frivolous involuntary filing.]
> [C&H Comment: DELETE ENTIRELY. RevPAR is not a standard cash management trigger in hospitality finance and is not appropriate for inclusion in a Cash Management Agreement. RevPAR is an operational metric that is influenced by numerous factors, including market conditions, competitive supply, and management strategy (e.g., a property may deliberately reduce occupancy to increase ADR and NOI). The DSCR and Debt Yield triggers adequately capture underperformance from a debt service coverage and collateral value perspective. A standalone RevPAR trigger is duplicative and potentially misleading. We are not aware of any institutional lender that includes a RevPAR-only trigger in a cash management agreement for a stabilized resort property.]
  Insurance Casualty / Condemnation.  
> [C&H Comment: The WBD draft triggers a Cash Management Period upon any uninsured casualty or even a threatened condemnation. This is overbroad. Borrower proposes narrowing this trigger to (a) actual condemnation (not threatened) of a material portion of the Property, or (b) a casualty with estimated costs exceeding $5,000,000. Minor casualties or speculative condemnation threats should not trigger a full Cash Management Period at a 342-room resort property.]
(b) The occurrence of a Trigger Event shall be determined by Lender in good faith based on information provided by Borrower and other information available to Lender, including reports and certificates delivered pursuant to Article VI hereof.
(c) Upon the occurrence of a Trigger Event, Lender shall promptly notify Borrower in writing of the commencement of a Cash Management Period, specifying the applicable Trigger Event and the basis therefor.
Section 3.2 — Cash Sweep Events
(a) 
> [C&H Comment: The WBD draft makes the Cash Sweep Event co-extensive with the Cash Management Period, meaning that any Trigger Event that activates a Cash Management Period also activates a cash sweep. This is overly aggressive. A Cash Management Period (which imposes Lender oversight and control of disbursements) is a less severe remedy than a Cash Sweep Event (which traps all Excess Cash Flow). Cash Sweep Events should be triggered only by more severe conditions — specifically, a deeper DSCR decline (below 1.10x), an uncured Event of Default, or a bankruptcy/insolvency event. This tiered approach is market-standard for institutional hospitality loans.]
(b) During a Cash Sweep Event, Borrower shall not be entitled to receive Excess Cash Flow. All Excess Cash Flow shall be deposited into the Cash Sweep Reserve Account held by Lender as additional collateral for the Loan.
(c) 
> [C&H Comment: Borrower should receive the benefit of interest on trapped Excess Cash Flow, and such funds should be released upon cure. The WBD draft is silent on both points, which could result in Lender retaining trapped cash even after the triggering condition has been cured.]
Section 3.3 — Cure and Termination of Cash Management Period
(a) A Cash Management Period shall terminate, and Lender shall   to the pre-Cash Management Period cash management structure described in Section 2.2(a)(i) hereof, upon the occurrence of the following, as applicable:
(i) Monetary Default Cure. With respect to a Cash Management Period triggered under Section 3.1(a)(i), the cure of the applicable monetary default and payment of all late charges and default interest, if any, in respect thereof.
(ii) DSCR Cure. With respect to a Cash Management Period triggered under Section 3.1(a)(ii), the DSCR equals or exceeds   for  , in each case tested on a trailing twelve (12) month basis.
> [C&H Comment: The cure threshold should not exceed the trigger threshold by more than a reasonable margin. The WBD draft requires DSCR of 1.30x for two quarters to cure a Cash Management Period that was triggered at 1.25x. Borrower proposes 1.25x (which is the extension threshold per the Commitment Letter) for one quarter. Two-quarter testing for cure is unnecessarily punitive and delays Borrower's return to normal operations.]
(iii) Debt Yield Cure. With respect to a Cash Management Period triggered under Section 3.1(a)(iii), the Debt Yield equals or exceeds   for  , in each case tested on a trailing twelve (12) month basis.
> [C&H Comment: Consistent with the DSCR cure comment above. One quarter testing is sufficient for cure. The cure threshold of 8.5% (versus the 7.5% trigger) provides a reasonable hysteresis band to prevent cycling.]
(iv) Event of Default Cure. With respect to a Cash Management Period triggered under Section 3.1(a)(iv), the cure of the applicable Event of Default in accordance with the terms and conditions of the Loan Agreement, and the written acknowledgment by Lender that such Event of Default has been cured.
(v) Bankruptcy/Insolvency Cure. With respect to a Cash Management Period triggered under Section 3.1(a)(v), (A) in the case of an involuntary petition, the dismissal of such petition with prejudice, (B) in the case of a receiver or similar appointment, the discharge of such receiver, trustee, custodian, or liquidator, or (C) in the case of any other Bankruptcy/Insolvency event, the cure thereof to Lender's reasonable satisfaction.
(b) 
> [C&H Comment: Borrower should have the ability to cure a financial covenant-based Cash Management Period by posting additional collateral in lieu of meeting the re-entry financial thresholds. This provides Borrower with operational flexibility during periods of temporary underperformance (e.g., due to hurricanes, renovations, or market disruptions common in the Florida Keys).]
(c) 
> [C&H Comment: DELETE. The "one-time only" cure limitation is commercially unreasonable and non-standard. Borrower should have an unlimited ability to cure and re-enter normal cash management upon satisfaction of the applicable cure conditions. A one-time cure provision effectively converts a springing lockbox into a permanent lockbox after a single occurrence, which renders the entire trigger-and-cure framework illusory. We are not aware of any market precedent supporting this provision for a stabilized hospitality asset with strong coverage ratios.]
Section 3.4 — Lender Discretion During Cash Management Period
(a) During a Cash Management Period, Lender shall have the right to direct disbursements from the Cash Management Account in accordance with the Waterfall set forth in Section 4.2 hereof.
(b) During a Cash Management Period, Lender shall have the right to  .
> [C&H Comment: Line-item approval authority is unworkable for a 342-room resort hotel with approximately 600 employees, three food and beverage outlets, a marina, a spa, and meeting/event facilities. Lender does not have the operational expertise to approve individual line-item expenditures, and requiring such approval would create unacceptable delays in Property operations. Lender's approval right should be limited to the annual Operating Budget as a whole. This is market-standard.]
(c) Notwithstanding the foregoing, during a Cash Management Period, Borrower shall continue to have the right to make emergency expenditures in accordance with Section 4.1(e) hereof without Lender's prior approval.
ARTICLE IV — WATERFALL AND DISBURSEMENTS
Section 4.1 — Operating Budget
(a) No later than   prior to the commencement of each calendar year during the term of the Loan (commencing with the first full calendar year following the Closing Date), Borrower shall submit to Lender a proposed annual operating budget for the Property (each, an "Operating Budget"), setting forth in reasonable detail Borrower's good faith projections for the upcoming calendar year, including:
(i) projected Gross Revenue, broken down by department (rooms, food and beverage, spa, marina, meeting/event, parking, and other);
(ii) projected Operating Expenses, broken down by category;
(iii) projected Capital Expenditures;
(iv) projected Debt Service;
(v) projected contributions to Reserve Accounts; and
(vi) projected Net Operating Income and Excess Cash Flow.
> [C&H Comment: Forty-five (45) days is a more reasonable lead time for preparation and submission of an Operating Budget for a property of this complexity. Thirty (30) days does not provide adequate time for management review and approval prior to submission.]
(b) Lender shall approve or provide written comments on the Operating Budget within   of receipt thereof.  
> [C&H Comment: This is a critical provision. The WBD draft provides that failure to respond constitutes deemed disapproval, which gives Lender an effective veto by simply failing to act. Borrower insists on a "deemed approved" provision. This is necessary to prevent Lender from paralyzing Property operations by failing to respond to the Operating Budget. Additionally, Borrower proposes that if the parties cannot agree on the Operating Budget, the prior year's approved Operating Budget shall apply with a five percent (5%) inflationary increase, as set forth in subsection (c) below.]
(c) 
(d) Borrower may deviate from the approved Operating Budget by up to   of any individual line item and   in the aggregate without Lender's prior written approval; provided, that Borrower shall notify Lender of any such deviation in the monthly operating statements delivered pursuant to Section 6.1 hereof.
> [C&H Comment: The five percent (5%) line-item and three percent (3%) aggregate variance thresholds in the WBD draft are too restrictive for a resort property with significant seasonal and variable revenue and expense patterns. Ten percent (10%) and five percent (5%), respectively, are more commercially reasonable and are consistent with market practice for hospitality assets.]
(e) Emergency Expenditures. Notwithstanding anything to the contrary in this Section 4.1, Borrower may incur expenditures outside the approved Operating Budget for bona fide emergencies threatening the health, safety, or welfare of guests, employees, or invitees of the Property, or necessary to prevent material damage to the Property, without obtaining Lender's prior written approval; provided, that:
(i) Borrower shall notify Lender of such emergency expenditure within   after the expenditure is incurred;
(ii) the amount of any single emergency expenditure shall not exceed   per occurrence; and
(iii) the aggregate amount of all emergency expenditures in any calendar year shall not exceed  .
> [C&H Comment: The WBD thresholds are too low for a resort property of this size and value. A single emergency at a 342-room resort in the Florida Keys (e.g., emergency generator repair, hurricane preparation, water intrusion repair, life-safety system failure) could easily exceed $100,000. The proposed $250,000 per occurrence and $500,000 annual aggregate are more appropriate. The one (1) Business Day notification period is also impractical during an actual emergency; three (3) Business Days is more reasonable.]
Section 4.2 — Waterfall Priorities
Amounts in the Cash Management Account (or, prior to a Cash Management Period, amounts in the Clearing Account that are subject to the Waterfall) shall be applied on each Monthly Distribution Date in the following order of priority (the "Waterfall"):
> [C&H Comment: Borrower proposes a revised ordering of the Waterfall to move Operating Expenses ahead of FF&E Reserve and Capital Reserve contributions. The Property cannot operate without paying operating expenses (including employee payroll, utilities, property taxes, insurance, and vendor obligations). It is commercially unreasonable and operationally dangerous to subordinate operating expenses to discretionary reserves. Borrower's proposed ordering is set forth below and is indicated by tracked changes.]
First: Payment of monthly Debt Service (consisting of interest and, during any amortization period, scheduled principal amortization) to Lender in accordance with the Promissory Note and the Loan Agreement.
Second: Funding of the Tax Reserve Account in an amount equal to the monthly escrow for real property taxes, as calculated in accordance with the Reserve Agreement, to ensure sufficient funds are available on each tax payment date.
Third: Funding of the Insurance Reserve Account in an amount equal to the monthly escrow for insurance premiums, including premiums for property, general liability, and windstorm coverage provided by Southland Mutual Insurance Company and flood insurance coverage provided by Bayfront Specialty Insurance Corp., as calculated in accordance with the Reserve Agreement.
> [C&H Comment: This re-ordering is critical. Under the WBD draft, if the Property experiences a revenue shortfall such that the Waterfall does not generate sufficient funds to cover all priorities, operating expenses would be unpaid while reserve accounts (which can be deferred) are funded. This creates an absurd result — the Property's employees would go unpaid and essential services would be interrupted, while discretionary reserve contributions are funded. The re-ordering ensures that the Property can continue to operate as a going concern.]
Seventh: Payment of any other amounts due and payable to Lender under the Loan Documents, including, without limitation, late charges, default interest, indemnification payments, reimbursement of costs and expenses, and any other sums owed by Borrower to Lender.
Eighth: The remaining balance, if any ("Excess Cash Flow"), shall be applied as follows:
(a) If no Cash Sweep Event is then in existence: release to Borrower's Clearing Account for unrestricted use by Borrower.
(b) If a Cash Sweep Event is then in existence: deposit into the Cash Sweep Reserve Account held by Lender as additional collateral for the Loan, to be held, invested, and released in accordance with Section 3.2(c) hereof.
Section 4.3 — Monthly Distribution Date
"Monthly Distribution Date" shall mean the   Business Day of each calendar month, commencing the first full calendar month following the Closing Date. On each Monthly Distribution Date, amounts in the Cash Management Account shall be disbursed in accordance with the Waterfall.
> [C&H Comment: The fifth (5th) Business Day is too early to reconcile the prior month's revenue and expenses for a resort property with multiple revenue streams and over 600 employees. The tenth (10th) Business Day is the standard distribution date in hospitality cash management structures, as it allows adequate time for month-end closing, credit card settlement reconciliation, and payroll processing.]
Section 4.4 — True-Up Payments
(a) If, during any  , amounts disbursed for Operating Expenses from the Cash Management Account (or, prior to a Cash Management Period, from the Clearing Account) exceed the amounts approved in the Operating Budget for such period (taking into account the permitted variance thresholds set forth in Section 4.1(d) hereof), Lender may deduct the amount of such overage from Excess Cash Flow in the  .
> [C&H Comment: True-up should be performed on a quarterly basis, not monthly. The Property is a resort hotel in the Florida Keys with significant seasonal revenue variation. Peak season runs approximately December through April, with significantly lower occupancy and revenue during the summer and early fall months. Monthly true-ups fail to account for this normal seasonality and would result in repeated, unnecessary deductions and credits. Quarterly true-ups smooth the seasonal variation and provide a more accurate picture of budget compliance.]
(b) If, during any  , amounts disbursed for Operating Expenses are less than the amounts approved in the Operating Budget for such period, the shortfall shall remain in the Cash Management Account (or the Clearing Account, as applicable) and be available for disbursement in subsequent periods or as Excess Cash Flow.
(c) In connection with each true-up, Borrower shall deliver to Lender a reconciliation statement comparing actual Operating Expenses to the approved Operating Budget, together with reasonable supporting documentation.
ARTICLE V — RESERVE FUNDING MECHANICS
Section 5.1 — Coordination with Reserve Agreement
(a) Monthly reserve contributions shall be funded from the Cash Management Account (or, prior to a Cash Management Period, from the Clearing Account) through the Waterfall in accordance with the Reserve Agreement of even date herewith.
(b) Upfront reserves in the aggregate amount of Four Million Eight Hundred Thousand and No/100 Dollars ($4,800,000) shall be funded at the Closing Date, allocated across the Tax Reserve Account, the Insurance Reserve Account, the FF&E Reserve Account, and the Capital Reserve Account in accordance with the Reserve Agreement.
(c) Monthly reserve contributions shall be in the amounts and on the schedule specified in the Reserve Agreement and shall be subject to adjustment in accordance with the terms thereof.
Section 5.2 — Reserve Account Control
(a) All Reserve Accounts shall be held at the Cash Management Bank or such other  .
> [C&H Comment: Consistent with the requirements for the Cash Management Bank and Lockbox Bank. Borrower also requests the right to receive periodic statements for all Reserve Accounts.]
(b) All Reserve Accounts shall be pledged to Lender as additional collateral for the Loan, and Lender shall have a first-priority perfected security interest in each Reserve Account and all funds on deposit therein.
(c) Borrower shall have no right to withdraw funds from any Reserve Account except in accordance with the Reserve Agreement and upon satisfaction of all conditions for release set forth therein.
(d) 
Section 5.3 — Interest on Reserve Accounts
> [C&H Comment: The WBD draft is entirely silent on interest accrual for Reserve Accounts. These are Borrower's funds being held for the benefit of the Property. Borrower should receive the benefit of interest earned on these deposits. This is a standard provision.]
ARTICLE VI — REPORTING AND INFORMATION COVENANTS
Section 6.1 — Monthly Operating Statements
(a) Borrower shall deliver to Lender, within   after the end of each calendar month, unaudited monthly operating statements for the Property, in the form attached hereto as Exhibit B or in such other form as may be reasonably approved by Lender, including the following:
(i) Revenue detail by department, including room revenue, food and beverage revenue (three (3) outlets), spa revenue, marina revenue, meeting and event revenue, parking revenue, and all other revenue;
(ii) Operating expense detail by category;
(iii) Net Operating Income calculation;
(iv) Occupancy, average daily rate ("ADR"), and RevPAR data;
(v) Comparison to the approved Operating Budget, including budget versus actual variance analysis for each revenue and expense category;
(vi) Accounts receivable aging (current, 30 days, 60 days, 90+ days); and
(vii) Narrative discussion of any material variances from the Operating Budget and any material events or circumstances affecting Property operations.
> [C&H Comment: Thirty (30) days is the standard delivery period for monthly operating statements in the hospitality industry. Twenty (20) days does not provide adequate time for month-end closing, reconciliation, and review for a property of this size and complexity. The additional reporting categories are acceptable.]
(b) Each monthly operating statement shall be certified by an authorized officer of Borrower as being true, correct, and complete in all material respects. The certifying officer shall be Derek Huang, SVP – Capital Markets & Treasury, or Natasha Ricard, Chief Financial Officer, or such other authorized officer as Borrower may designate by written notice to Lender.
Section 6.2 — Annual Financial Statements
(a) Borrower shall deliver to Lender, within   after the end of each fiscal year,  .
> [C&H Comment: The Property entity (Coral Palms Resort Holdings LLC) is a single-purpose entity and may not be separately audited. Borrower proposes delivery of audited consolidated financial statements of the Guarantor (which is a publicly traded company on Nasdaq and is audited by Keswick & Holt LLP), together with unaudited Property-level statements certified by Borrower. This approach provides Lender with the financial transparency it needs while avoiding the cost and burden of a separate Property-level audit. The 120-day delivery period is consistent with SEC reporting deadlines for public companies.]
(b) Annual financial statements shall include balance sheets, income statements, statements of cash flows, and such other financial information as Lender may reasonably request.
Section 6.3 — STR Reports
Borrower shall deliver to Lender copies of any STR (Penmark Enterprises) reports, or reports from similar competitive set benchmarking services, received by Borrower or its management company for the Property, within   after Borrower's receipt thereof.
> [C&H Comment: No substantive objection to this provision. Extended delivery timeframe from five (5) to ten (10) Business Days for operational convenience.]
Section 6.4 — DSCR and Debt Yield Certificates
(a) Borrower shall deliver to Lender, within   after the end of each calendar quarter, a quarterly DSCR and Debt Yield compliance certificate, substantially in the form attached hereto as Exhibit C, including:
(i) Trailing twelve (12) month Net Operating Income, calculated in accordance with the definition of Net Operating Income in Section 1.1 hereof;
(ii) DSCR calculation (Net Operating Income divided by Debt Service for the same trailing twelve (12) month period);
(iii) Debt Yield calculation (Net Operating Income divided by the outstanding principal balance of the Loan as of the last day of the applicable calendar quarter);
(iv) A statement as to whether the applicable DSCR and Debt Yield thresholds have been satisfied; and
(v) Officer certification.
> [C&H Comment: Forty-five (45) days provides adequate time for quarter-end closing and reconciliation. Ensure that all DSCR and Debt Yield calculations are consistently based on the trailing twelve (12) month actual NOI, consistent with the definition in Section 1.1.]
(b) All calculations set forth in the DSCR and Debt Yield compliance certificate shall be based on trailing twelve (12) month actual results and shall not be based on annualized quarterly results, projected results, or underwritten results.
Section 6.5 — Capital Expenditure Reports
(a) Borrower shall deliver to Lender, within forty-five (45) days after the end of each calendar quarter, a quarterly report on capital expenditures, FF&E replacements, and use of Reserve Account funds during the preceding calendar quarter.
(b) Such reports shall include invoices, contractor certifications (including lien waivers), and evidence of completion for all disbursements from Reserve Accounts in excess of Fifty Thousand and No/100 Dollars ($50,000) per project or item.
Section 6.6 — Insurance Reporting
(a) Borrower shall deliver to Lender evidence of insurance renewals, endorsements, and certificates of insurance naming Lender as mortgagee and additional insured (as applicable), at least thirty (30) days prior to the expiration of any insurance policy covering the Property.
(b) Insurance coverage shall comply with the requirements set forth in the Loan Agreement, including property, general liability, and windstorm coverage provided by Southland Mutual Insurance Company (or a replacement carrier rated at least "A-" by A.M. Best Company and authorized to do business in the State of Florida) and flood insurance coverage provided by Bayfront Specialty Insurance Corp. (or a replacement carrier of comparable rating and authorization).
(c) In the event of any material change in coverage, any notice of cancellation, or any claim in excess of Five Hundred Thousand and No/100 Dollars ($500,000), Borrower shall promptly notify Lender in writing.
ARTICLE VII — COVENANTS
Section 7.1 — Revenue Direction Covenant
(a) Borrower covenants and agrees that all Gross Revenue from the operation of the Property shall be deposited directly into the Lockbox Account, and that Borrower shall not maintain any other depository account for the receipt of Property revenue.
(b) 
> [C&H Comment: A petty cash exception is necessary for the practical operation of a resort hotel. Requiring every petty cash disbursement to be processed through the Lockbox Account is impractical. The $25,000 cap is de minimis relative to the Property's revenue and the Loan amount.]
Section 7.2 — No Commingling
Borrower shall not commingle funds in the Lockbox Account, the Cash Management Account, the Clearing Account, or any Reserve Account with funds from any other property owned by Borrower or its affiliates, or from any other entity. All accounts established hereunder shall be maintained as segregated, single-purpose accounts for the benefit of the Property.
> [C&H Comment: Acceptable. Consistent with single-purpose entity requirements in the Loan Agreement.]
Section 7.3 — Account Maintenance
(a) Borrower shall maintain the Lockbox Account, the Cash Management Account, and the Clearing Account throughout the term of the Loan, and shall not close, transfer, or modify any such account without Lender's prior written consent .
> [C&H Comment: Borrower should be able to make administrative modifications to accounts (e.g., changes to authorized signatories, updating contact information, or similar administrative changes) without Lender's consent, and modifications that do not affect Lender's security interest should be subject to a reasonableness standard.]
(b) Borrower shall at all times maintain each account in good standing with the applicable depository institution and shall promptly cure any default or delinquency in connection with any such account.
Section 7.4 — Compliance with DACA
Borrower shall at all times comply with the terms and conditions of each Deposit Account Control Agreement executed in connection with this Agreement and the other Loan Documents. Borrower shall not take any action, or fail to take any action, that is inconsistent with Lender's security interest in any account subject to a DACA.
Section 7.5 — Seasonal Adjustments
> [C&H Comment: This is a new section requested by Borrower. The Florida Keys hospitality market is highly seasonal, and it is critical that the Cash Management Agreement acknowledge this reality. Without this provision, Lender could trigger a Cash Management Period based on a single weak off-season quarter, even if the Property is performing well on an annualized basis. The trailing 12-month testing requirement is reinforced here for clarity.]
ARTICLE VIII — EVENTS OF DEFAULT
Section 8.1 — Events of Default Under This Agreement
The following shall constitute Events of Default under this Agreement (each, an "Event of Default"):
(a) Failure of Borrower to deposit Gross Revenue into the Lockbox Account within   of receipt thereof ;
> [C&H Comment: Three (3) Business Days is more reasonable given the multiple revenue streams at a 342-room resort. Additionally, Borrower should receive written notice and a five (5) Business Day cure period before a failure to deposit constitutes an Event of Default.]
(b) Failure of Borrower to deliver any report, certificate, or other document required under Article VI hereof within   after written notice from Lender of such failure ;
> [C&H Comment: Ten (10) days after notice is more appropriate than five (5) days. Preparation and delivery of certain reports (e.g., quarterly DSCR certificates) may require additional time to compile and verify.]
(c) Any material misrepresentation in any report, certificate, or other document delivered by Borrower hereunder, provided that such misrepresentation was not made in good faith based on information reasonably available to Borrower at the time of delivery ;
(d) Borrower's failure to maintain the Lockbox Account, Cash Management Account, Clearing Account, or any required DACA, and such failure continues for ; and
(e) Any Event of Default under any other Loan Document that constitutes an Event of Default under the Loan Agreement, subject to any applicable notice and cure periods set forth therein.
> [C&H Comment: The WBD draft does not include adequate notice and cure periods for Events of Default. All Events of Default should be subject to notice and a reasonable cure period. This is consistent with the Loan Agreement and is market-standard. The cure period extensions for non-monetary defaults that cannot be cured within 30 days are particularly important for operational defaults at a resort property.]
Section 8.2 — Remedies Upon Event of Default
(a) Upon the occurrence and during the continuance of an Event of Default , Lender may exercise one or more of the following remedies:
(i) Exercise exclusive control over the Lockbox Account, the Cash Management Account, the Clearing Account, and all Reserve Accounts, by delivering instructions to the applicable depository institutions pursuant to the DACAs;
(ii) Direct all disbursements from the Cash Management Account  ;
(iii) Apply funds in the accounts to the Obligations under the Loan Documents ; and
(iv) Exercise all other remedies available to Lender under the Loan Documents, the DACAs, or applicable law, including the Uniform Commercial Code as adopted in the State of Florida and the real property laws of the State of Florida.
> [C&H Comment: Borrower objects to Lender's right to direct disbursements "without regard to the Waterfall." Even during an Event of Default, the Property must continue to operate as a going concern. If Lender can disregard the Waterfall entirely, the Property's employees may not be paid, utilities may be cut off, and insurance may lapse — all of which would destroy the value of Lender's collateral. Borrower proposes that Lender continue to follow the Waterfall but may redirect Excess Cash Flow. Additionally, Lender should not be able to apply account funds to accelerated Obligations unless an acceleration event has occurred under the Loan Agreement and all cure periods have expired.]
(b) 
> [C&H Comment: This protective provision is critical. Lender should not be permitted to cut off funding for essential operating expenses, even during an Event of Default. Doing so would jeopardize the Property's operations, harm guests and employees, and ultimately destroy the value of Lender's collateral.]
(c) Lender's remedies under this Agreement are cumulative and are in addition to all other remedies available to Lender under the Loan Documents or applicable law. No exercise of any remedy shall constitute a waiver of any other remedy.
ARTICLE IX — REPRESENTATIONS AND WARRANTIES
Section 9.1 — Borrower Representations
Borrower hereby represents and warrants to Lender as follows, as of the date hereof :
(a) Organization and Good Standing. Borrower is Coral Palms Resort Holdings LLC, a Florida limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Florida.
(b) Ownership. Borrower is a wholly owned indirect subsidiary of Verimark Hospitality Group Inc., a Delaware corporation (Nasdaq: VMRK).
(c) Authority. Borrower has the full power and authority to execute, deliver, and perform this Agreement, and all requisite organizational action has been taken to authorize the execution, delivery, and performance hereof (subject to delivery of authorizing resolutions on or prior to the Closing Date).
(d) No Conflict. The execution, delivery, and performance of this Agreement by Borrower does not and will not (i) violate or conflict with Borrower's organizational documents, (ii) violate or conflict with any other agreement or instrument to which Borrower is a party or by which Borrower or the Property is bound, or (iii) violate any applicable law, rule, regulation, or order.
(e) Financial Information.  , including the following:
(i) Trailing twelve (12) month Net Operating Income of Eighteen Million Four Hundred Thousand and No/100 Dollars ($18,400,000) (period ending September 30, 2022);
(ii) Trailing twelve (12) month Total Revenue of Sixty-Two Million Eight Hundred Thousand and No/100 Dollars ($62,800,000) (period ending September 30, 2022);
(iii) Occupancy of 71.3%; average daily rate ("ADR") of $389; revenue per available room ("RevPAR") of $277.36 (trailing twelve (12) month period ending September 30, 2022).
> [C&H Comment: Borrower's financial information representations should be qualified by (a) knowledge qualifiers ("to Borrower's knowledge") and (b) materiality thresholds ("in all material respects"). The WBD draft requires unqualified accuracy "in all respects," which is an absolute representation that no borrower should make with respect to