This instrument was prepared by and after recording should be returned to:
Whitford Baines & Driscoll LLP 1221 Avenue of the Americas, Suite 4400 New York, NY 10020
Attention: Philip Tarrant Corporation, Esq.
SPACE ABOVE THIS LINE RESERVED FOR RECORDING DATA (Monroe County Clerk of the Circuit Court)
Property Folio Number: 00460780-000100
Property Address: 99000 Overseas Highway, Key Largo, Monroe County, FL 33037
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage") is made and entered into as of the _ day of ____, 2023, by and between:
CORAL PALMS RESORT HOLDINGS LLC, a Florida limited liability company, having an address at 1400 Bayshore Boulevard, Suite 2200, Miami, FL 33131 (hereinafter referred to as "Mortgagor" or "Borrower"),
and
PINNACLE ATLANTIC CAPITAL, LLC, a Delaware limited liability company, having an address at 200 Lexington Avenue, 38th Floor, New York, NY 10016 (hereinafter referred to as "Mortgagee" or "Lender").
RECITALS
WHEREAS, Borrower and Lender have entered into that certain Loan Agreement of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), pursuant to which Lender has agreed to make a loan to Borrower in the original principal amount of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00) (the "Loan"), subject to the terms and conditions set forth therein;
WHEREAS, the Loan is evidenced by that certain Promissory Note of even date herewith, in the original principal amount of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00), made by Borrower in favor of Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Note");
WHEREAS, repayment of the Loan is partially guaranteed by that certain Guaranty Agreement of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Guaranty"), executed by Verimark Hospitality Group Inc., a Delaware corporation (the "Guarantor"), in favor of Lender;
WHEREAS, Mortgagor is the fee simple owner of certain real property located in Monroe County, Florida, more particularly described in Exhibit A attached hereto and made a part hereof (the "Land"), together with all buildings, structures, improvements, fixtures, and appurtenances thereon and thereto, known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, FL 33037 (collectively, as more particularly defined herein, the "Property");
WHEREAS, Lender has agreed to make the Loan to Borrower upon the condition, among others, that Borrower execute and deliver this Mortgage to Lender to secure all of Borrower's obligations under the Loan Documents (as hereinafter defined), including, without limitation, the repayment of the Indebtedness (as hereinafter defined) and the performance of all covenants, agreements, and conditions contained herein and in the other Loan Documents; and
WHEREAS, Mortgagor desires to execute and deliver this Mortgage for the purposes set forth herein.
NOW, THEREFORE, in consideration of the Loan, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the prompt and complete payment and performance of all Obligations (as hereinafter defined), Mortgagor hereby irrevocably grants, bargains, sells, conveys, mortgages, pledges, hypothecates, assigns, transfers, and sets over unto Mortgagee, and its successors and assigns, forever, all of Mortgagor's right, title, and interest in and to the Mortgaged Property (as hereinafter defined), subject only to the Permitted Encumbrances (as hereinafter defined).
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ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Mortgage, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.
"Borrower" means Coral Palms Resort Holdings LLC, a Florida limited liability company, and its successors and permitted assigns.
"Cash Management Agreement" means that certain Cash Management 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.
"Commitment Letter" means that certain Commitment Letter dated December 9, 2022, issued by Lender to Borrower with respect to the Loan, as the same may have been amended, restated, supplemented, or otherwise modified prior to the date hereof.
"Default" means any event or condition that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.
"Environmental Indemnity Agreement" means that certain Environmental Indemnity Agreement of even date herewith, executed by Borrower and Guarantor in favor of Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Event of Default" has the meaning ascribed to such term in Section 9.1 of this Mortgage and, as applicable, the meaning ascribed to such term in the Loan Agreement.
"Fixtures" means all fixtures, equipment, machinery, building materials, appliances, and other items of property now or hereafter attached to, installed in, or used in connection with the Property, including, without limitation, all heating, ventilating, and air conditioning systems and equipment, electrical systems and equipment, plumbing systems and equipment, elevator systems and equipment, fire suppression and detection systems, security systems, telecommunications systems, and all other equipment and personal property of every kind and nature whatsoever now or hereafter owned by Mortgagor, which are or may be attached to or used in connection with the Property, together with all accessions, replacements, and substitutions therefor and all proceeds thereof.
"Guarantor" means Verimark Hospitality Group Inc., a Delaware corporation, and its successors and permitted assigns.
"Guaranty" means the Guaranty Agreement, as defined in the Recitals.
"Impositions" means all taxes, assessments, water rates, sewer rents, governmental charges, levies, and impositions of every kind and nature whatsoever, whether general, special, ordinary, or extraordinary, foreseen or unforeseen, which at any time may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on, the Property or any part thereof, or any appurtenance thereto, or the Rents, issues, income, or profits thereof, or any use or occupancy thereof, or any estate, right, title, or interest therein, or any occupancy, use, or possession of or activity conducted on the Property or any part thereof.
"Improvements" means all buildings, structures, and improvements of every kind and description now or hereafter located on the Land, including, without limitation, the resort hotel containing approximately three hundred forty-two (342) guest rooms and suites, approximately twenty-eight thousand five hundred (28,500) square feet of meeting and event space, an approximately eighteen thousand (18,000)-square-foot spa, a forty-two (42)-slip marina, three (3) food and beverage outlets, a one thousand two hundred (1,200)-space parking structure, and all other improvements constituting the Coral Palms Grand Resort & Spa, having a gross building area of approximately four hundred twelve thousand (412,000) square feet, together with all replacements, additions, substitutions, alterations, and expansions thereof.
"Indebtedness" means the principal sum of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00), together with all interest thereon (including interest at the default rate, if applicable), and all other fees, charges, premiums, costs, expenses, and all other amounts due and payable under the Note, this Mortgage, the Loan Agreement, and any other Loan Document.
"Insurance Policies" means all policies of insurance required to be maintained under the Loan Agreement and this Mortgage, together with all renewals, replacements, and substitutions therefor.
"Intangible Property" means all accounts, general intangibles, contract rights, licenses, permits, approvals, franchises, certificates of occupancy, entitlements, development rights, trademarks, trade names, goodwill, and all other intangible personal property of Mortgagor relating to or used in connection with the ownership, use, operation, or management of the Property, including, without limitation, any and all rights of Mortgagor in and to the trade name "Coral Palms" and all variations thereof.
"Land" means the real property described in Exhibit A attached hereto and made a part hereof, being a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more particularly described therein, containing approximately twenty-two and four-tenths (22.4) acres, together with all right, title, and interest of Mortgagor in and to any land lying in the bed of any street, road, or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof, and all right, title, and interest of Mortgagor in and to any and all sidewalks, alleys, strips, and gores of land adjacent to or used in connection with the Land.
"Leases" means all leases, subleases, licenses, concessions, occupancy agreements, hotel guest agreements, and all other agreements, whether oral or written, pursuant to which any person or entity is entitled to occupy, use, or possess all or any portion of the Property, together with all security deposits, advance rentals, and other sums deposited thereunder, and all amendments, modifications, extensions, renewals, and replacements thereof.
"Lender" means Pinnacle Atlantic Capital, LLC, a Delaware limited liability company, and its successors and assigns.
"Loan" means the loan in the original principal amount of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00) made by Lender to Borrower pursuant to the Loan Agreement.
"Loan Agreement" means the Loan Agreement of even date herewith between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" means, collectively, the Loan Agreement, the Note, this Mortgage, the Guaranty, the Environmental Indemnity Agreement, the Cash Management Agreement, the Reserve Agreement, and all other documents, instruments, agreements, and certificates executed and/or delivered by or on behalf of Borrower, Guarantor, or any other person or entity in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgaged Property" means, collectively, the Land, the Improvements, the Fixtures, the Personal Property, the Rents, the Leases, and the Intangible Property, together with all proceeds and products of the foregoing.
"Note" means the Promissory Note of even date herewith in the original principal amount of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00), made by Borrower in favor of Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Obligations" means all present and future obligations, indebtedness, liabilities, and duties of Borrower to Lender arising under or in connection with the Loan Documents, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, and howsoever evidenced.
"Permitted Encumbrances" means, collectively, the encumbrances, exceptions, and other matters listed on Exhibit B attached hereto and made a part hereof.
"Personal Property" means all tangible and intangible personal property now or hereafter owned by Mortgagor and located at, on, or in, or used in connection with, the Property, including, without limitation, all furniture, fixtures, and equipment (FF&E), inventories, supplies, machinery, tools, apparatus, appliances, goods, chattels, and articles of personal property of every kind and nature whatsoever, together with all accessions, replacements, and substitutions therefor and all proceeds thereof, all as more particularly described in Exhibit C attached hereto and made a part hereof.
"Property" means the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, FL 33037, including, without limitation, the Land, the Improvements, the Fixtures, the Personal Property, and all appurtenances thereto.
"Rents" means all rents, revenues, income, receipts, royalties, profits, room revenues, food and beverage revenues, spa revenues, marina revenues, parking revenues, conference and event revenues, and all other sums of every kind and nature derived from or arising out of the ownership, use, occupancy, operation, management, or leasing of the Property or any portion thereof, whether now due, past due, or to become due.
"Reserve Agreement" means 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.
"Title Policy" means the mortgagee title insurance policy issued by Meridian Title & Escrow, Inc. insuring the lien of this Mortgage as a first-priority lien on the Mortgaged Property, together with all endorsements thereto.
Section 1.2 — Rules of Construction
(a) All capitalized terms used but not defined in this Mortgage shall have the respective meanings ascribed to such terms in the Loan Agreement.
(b) References in this Mortgage to "Articles," "Sections," and "Exhibits" shall be deemed to refer to Articles, Sections, and Exhibits of and to this Mortgage unless the context otherwise requires. All Exhibits attached hereto are incorporated herein by reference and made a part hereof for all purposes.
(c) Unless the context otherwise requires, (i) words importing the singular number shall include the plural number and vice versa, (ii) words importing the masculine gender shall include the feminine and neuter genders and vice versa, (iii) the words "herein," "hereof," "hereunder," and words of similar import refer to this Mortgage as a whole and not to any particular provision hereof, and (iv) the word "including" shall mean "including, without limitation."
(d) References to any law, statute, ordinance, rule, or regulation shall mean such law, statute, ordinance, rule, or regulation as amended, supplemented, or otherwise modified from time to time, and any successor thereto.
(e) References to any agreement, instrument, or document shall mean such agreement, instrument, or document as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof and, unless otherwise expressly provided, shall include all exhibits, schedules, and appendices thereto.
ARTICLE II — GRANT OF MORTGAGE AND SECURITY INTEREST
Section 2.1 — Grant of Mortgage
To secure the Obligations, Mortgagor hereby grants, bargains, sells, conveys, mortgages, and warrants unto Mortgagee, and its successors and assigns, forever, the following described property (collectively, the "Mortgaged Property"):
(a) Land. The Land described in Exhibit A attached hereto and incorporated herein by reference, being 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, containing approximately twenty-two and four-tenths (22.4) acres;
(b) Improvements. All Improvements now or hereafter located on the Land, including, without limitation, all buildings, structures, facilities, and appurtenances constituting the Coral Palms Grand Resort & Spa, including the resort hotel containing approximately three hundred forty-two (342) guest rooms and suites, meeting and event space, spa, marina, food and beverage outlets, parking structure, and all other improvements, together with all additions, replacements, substitutions, alterations, and expansions thereof;
(c) Fixtures. All Fixtures now or hereafter attached to or installed in the Property, or used in connection with the ownership, operation, or management of the Property, together with all accessions, replacements, and substitutions therefor and all proceeds thereof;
(d) Appurtenances and Related Rights. All easements, hereditaments, appurtenances, rights-of-way, strips and gores of land, streets, alleys, passages, sewer rights, water rights, riparian rights, submerged land rights, and marina rights, whether now existing or hereafter arising, appertaining to or in any way belonging to or pertaining to the Land, including, without limitation, all right, title, and interest of Mortgagor in and to any land lying in the bed of any street, road, avenue, or highway, opened or proposed, in front of or adjoining the Land, to the center line thereof, and all right, title, and interest of Mortgagor in and to any and all strips and gores of land adjacent to or used in connection with the Land;
(e) Personal Property. All Personal Property now or hereafter owned by Mortgagor and located at, on, or in, or used in connection with, the Property, including all tangible and intangible personal property, all furniture, fixtures, and equipment (FF&E), and all other items of personal property described in Exhibit C attached hereto, together with all accessions, replacements, and substitutions therefor and all proceeds thereof;
(f) Leases and Rents. All Leases now or hereafter affecting the Property or any portion thereof, together with all Rents, issues, profits, and income derived therefrom, and all security deposits, advance payments, and other sums held or to be held in connection therewith;
(g) Condemnation Awards. All awards, proceeds, payments, and compensation heretofore made or hereafter to be made by any governmental authority, whether as a result of a partial or total taking, condemnation, or damage to the Property or any portion thereof under the power of eminent domain, or by reason of any change of grade, or by reason of any other injury to or diminution in value of the Property;
(h) Insurance Proceeds. All proceeds of and any unearned premiums on any Insurance Policies now or hereafter covering the Property or any portion thereof, whether or not Lender obtained such Insurance Policies, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
(i) Utility and Development Rights. All water rights, water stock, water and sewer taps and connections, utility capacity and deposits, development rights, air rights, mineral rights, oil, gas, and other hydrocarbon substances relating to the Property, and all rights, privileges, and franchises appurtenant thereto;
(j) Intangible Property. All accounts, general intangibles, contract rights, licenses, permits, approvals, certificates of occupancy, certificates of compliance, entitlements, governmental authorizations, franchises, trademarks, trade names, service marks, logos, goodwill, domain names, telephone numbers, and all other intangible personal property of Mortgagor relating to or used in connection with the ownership, use, operation, management, or leasing of the Property, including, without limitation, any and all rights of Mortgagor in and to the trade name "Coral Palms" and all variations thereof; and
(k) Proceeds and Products. All proceeds and products of all of the foregoing, whether now existing or hereafter arising, and all replacements, substitutions, additions, and accessions thereto.
Section 2.2 — Security Interest (UCC)
In addition to the mortgage lien created by Section 2.1, Mortgagor hereby grants to Mortgagee a continuing security interest under the Florida Uniform Commercial Code (Chapter 679, Florida Statutes) in all Personal Property, Fixtures, Rents, Leases, Intangible Property, and all other property described herein that constitutes personal property or fixtures under the Florida Uniform Commercial Code (collectively, the "UCC Collateral"). This Mortgage shall constitute a "security agreement" within the meaning of the Florida Uniform Commercial Code with respect to all UCC Collateral. Mortgagor hereby authorizes Lender to file, and Mortgagor shall execute and deliver to Lender, such financing statements (UCC-1), continuation statements (UCC-3), and other instruments and documents as Lender may from time to time request or as may be necessary or desirable to perfect, maintain, and protect the security interest granted herein, including, without limitation, filings with the Florida Secured Transaction Registry maintained by the Florida Department of State, Division of Corporations. Mortgagor irrevocably authorizes Lender to file any such financing statement or continuation statement without the signature of Mortgagor to the extent permitted by applicable law.
Section 2.3 — Fixture Filing
This Mortgage is intended to constitute and shall serve as a "fixture filing" under Section 679.5021, Florida Statutes, as amended, with respect to all Fixtures now or hereafter forming a part of the Property. The following information is provided for purposes of this fixture filing:
Debtor (Record Owner of Land): Coral Palms Resort Holdings LLC, a Florida limited liability company Organizational Identification Number: [To be inserted]
Address: 1400 Bayshore Boulevard, Suite 2200, Miami, FL 33131
Secured Party: Pinnacle Atlantic Capital, LLC, a Delaware limited liability company
Address: 200 Lexington Avenue, 38th Floor, New York, NY 10016
Description of Real Property to Which Fixtures Are Affixed: The Land described in Exhibit A attached hereto, being a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, Folio No. 00460780-000100.
Section 2.4 — Habendum / Defeasance
TO HAVE AND TO HOLD the Mortgaged Property, together with all rights and appurtenances thereto belonging, unto Mortgagee and its successors and assigns, forever.
PROVIDED, HOWEVER, that if Mortgagor shall punctually and fully pay and perform all of the Obligations in accordance with the terms and conditions of the Loan Documents, and shall otherwise comply with each and every covenant, agreement, condition, and provision of this Mortgage and the other Loan Documents, then this Mortgage and the estate, lien, security interest, and rights hereby granted shall cease, terminate, and become void and of no further force or effect, and Mortgagee shall, at Mortgagor's sole cost and expense, execute and deliver to Mortgagor a satisfaction and discharge of this Mortgage in form and substance reasonably satisfactory to Mortgagor and suitable for recording in the Official Records of Monroe County, Florida. Until such time as all Obligations have been paid and performed in full, this Mortgage shall remain in full force and effect.
ARTICLE III — OBLIGATIONS SECURED
Section 3.1 — Secured Obligations
This Mortgage and the liens, security interests, and assignments created hereby are given and made to secure the following (collectively, the "Secured Obligations"):
(a) The full and punctual payment of the Indebtedness, including, without limitation, (i) the principal sum of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00), or so much thereof as may be advanced and outstanding from time to time, (ii) interest thereon at the rate of five and thirty-five hundredths percent (5.35%) per annum (fixed), or at such other rate as may apply, including the default rate of interest specified in the Note, (iii) any applicable late charges, prepayment premiums, exit fees, yield maintenance amounts, and other charges due under the Note and the Loan Agreement, and (iv) all other sums due and payable under the Note;
(b) The full and timely performance and observance of all obligations, covenants, agreements, terms, and conditions of Borrower under the Loan Agreement, including, without limitation, the obligation to make interest-only payments during the first two (2) years of the Loan term and to make payments of principal and interest on a thirty (30)-year amortization schedule during years three (3) through five (5) of the Loan term, and all other payment obligations as set forth therein;
(c) The full and timely payment and performance of all obligations, covenants, agreements, terms, and conditions of Borrower, Guarantor, and each other obligor under the Guaranty, the Environmental Indemnity Agreement, the Cash Management Agreement, the Reserve Agreement, and all other Loan Documents;
(d) The payment of all costs, expenses, and disbursements, including, without limitation, reasonable attorneys' fees and costs, court costs, appraisal fees, environmental assessment costs, engineering fees, and all other expenses incurred by Lender in connection with the making, administration, servicing, enforcement, protection, or collection of the Loan or any of the Obligations, or the protection, preservation, maintenance, or foreclosure of the Mortgaged Property, or the exercise of any right or remedy under the Loan Documents; and
(e) The full and timely performance and observance of each and every obligation, covenant, agreement, term, and condition of Mortgagor set forth in this Mortgage.
Section 3.2 — Future Advances
This Mortgage shall also secure all future advances and re-advances made by Lender to Borrower pursuant to the Loan Documents, whether obligatory or optional, up to the maximum principal amount of ONE HUNDRED SIXTY MILLION AND 00/100 DOLLARS ($160,000,000.00), together with all interest thereon, fees, costs, and expenses, pursuant to and in accordance with Section 697.04, Florida Statutes. The lien of this Mortgage with respect to such future advances shall relate back to the date of recording of this Mortgage and shall have the same priority as the initial advance. The total amount of the Indebtedness secured by this Mortgage at any one time outstanding may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed the maximum principal amount stated above, plus interest thereon, fees, costs, expenses, and other charges payable under the Loan Documents.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF MORTGAGOR
Mortgagor hereby represents and warrants to Mortgagee as of the date hereof as follows:
Section 4.1 — Title and Ownership
Mortgagor is the sole fee simple owner of the Land and the Improvements. Mortgagor holds good, marketable, and insurable title to the Mortgaged Property, free and clear of all liens, mortgages, pledges, security interests, charges, claims, restrictions, and encumbrances of any kind or nature whatsoever, except the Permitted Encumbrances. The existing mortgage in favor of Tidewater National Bank, N.A. (recorded in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida) will be satisfied, released, and discharged in full at or prior to the closing of the Loan. Such existing mortgage in favor of Tidewater National Bank, N.A. is not a Permitted Encumbrance and shall not survive the closing of the Loan. Upon the satisfaction and discharge of such existing mortgage and the recording of this Mortgage, this Mortgage shall constitute a valid first-priority mortgage lien on the Mortgaged Property, subject only to the Permitted Encumbrances.
Section 4.2 — Entity Status and Authority
Mortgagor is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of Florida. Mortgagor has full power, authority, and legal right to own and operate the Property, to execute, deliver, and perform its obligations under this Mortgage and each of the other Loan Documents to which it is a party, and to mortgage, pledge, assign, and grant a security interest in the Mortgaged Property as provided herein. The execution, delivery, and performance of this Mortgage and each of the other Loan Documents to which Mortgagor is a party have been duly authorized by all necessary action on the part of Mortgagor, including, without limitation, all necessary approvals and consents of its sole member, Verimark Hospitality Group Inc. No other action, consent, approval, or authorization on the part of any other person or entity is required in connection with the execution, delivery, or performance of this Mortgage or any of the other Loan Documents by Mortgagor.
Section 4.3 — No Conflicts
The execution, delivery, and performance by Mortgagor of this Mortgage and the other Loan Documents to which Mortgagor is a party do not and will not (a) violate any provision of any law, statute, rule, regulation, order, writ, injunction, judgment, or decree of any court or governmental authority binding on Mortgagor or the Property, (b) violate, conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, any mortgage, indenture, agreement, contract, instrument, or other document to which Mortgagor is a party or by which Mortgagor or the Property may be bound, (c) result in the creation or imposition of any lien, charge, or encumbrance upon the Property (other than the lien of this Mortgage and the Permitted Encumbrances), or (d) violate any provision of the organizational documents of Mortgagor.
Section 4.4 — Compliance with Law
The Property and its use, occupancy, and operation comply in all material respects with all applicable laws, statutes, ordinances, rules, regulations, codes, licenses, permits, authorizations, approvals, and orders of all federal, state, and local governmental authorities having jurisdiction over the Property, including, without limitation, the Florida Building Code, the Florida Fire Prevention Code, zoning and land development regulations of Monroe County, the Americans with Disabilities Act of 1990, as amended, the Fair Housing Act, and all applicable environmental laws and regulations. Mortgagor has obtained all licenses, permits, certificates of occupancy, and other governmental authorizations required for the current use, occupancy, and operation of the Property as a resort hotel, and all such licenses, permits, certificates, and authorizations are in full force and effect.
Section 4.5 — No Litigation
No litigation, arbitration, administrative proceeding, investigation, or governmental proceeding is pending or, to Mortgagor's knowledge, threatened against or affecting the Property, Mortgagor, or Guarantor before any court, arbitrator, or governmental authority that could (a) reasonably be expected to materially and adversely affect the Property, the value thereof, or the operation thereof, (b) reasonably be expected to materially and adversely affect the ability of Mortgagor or Guarantor to perform their respective obligations under the Loan Documents, or (c) challenge the validity, enforceability, or priority of this Mortgage or any of the other Loan Documents.
Section 4.6 — Environmental Representations
No Hazardous Materials (as defined in the Environmental Indemnity Agreement) exist on, under, or about the Property in violation of any applicable Environmental Laws (as defined in the Environmental Indemnity Agreement). There are no underground storage tanks located on the Property. Mortgagor has not received any notice of any environmental claim, violation, or investigation with respect to the Property. The foregoing representations are made with reference to, and are consistent with the findings of, that certain Phase I Environmental Site Assessment dated September 14, 2022, prepared by Oakridge Environmental Consulting Group, Inc. (Dr. James Whitmore, lead consultant) with respect to the Property, which Phase I Environmental Site Assessment did not identify any recognized environmental conditions requiring further investigation or remediation.
Section 4.7 — Insurance
Mortgagor maintains insurance coverage on the Property as required by the Loan Agreement, including, without limitation, property and casualty insurance with Southland Mutual Insurance Company, windstorm insurance meeting the requirements of applicable Florida law and Lender's requirements for properties located in Monroe County, and flood insurance with Bayfront Specialty Insurance Corp. and the National Flood Insurance Program (NFIP). All Insurance Policies are in full force and effect, all premiums due and payable thereon have been paid, and no notice of cancellation, non-renewal, or material modification has been received. All Insurance Policies name or will name Mortgagee as mortgagee, loss payee, and/or additional insured, as applicable, pursuant to standard mortgagee clauses satisfactory to Lender.
Section 4.8 — Assessments and Impositions
All Impositions, including all real property taxes, special assessments, water and sewer charges, and all other governmental charges and levies that are due and payable with respect to the Property for all periods prior to and including the date hereof, have been paid in full. There are no pending or, to Mortgagor's knowledge, threatened special assessments or reassessments of the Property.
Section 4.9 — Survey
Mortgagor has delivered to Lender a current ALTA/NSPS Land Title Survey of the Property prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS), dated not more than ninety (90) days prior to the date hereof and certified to Lender, Borrower, and the title company. Such survey does not disclose any material encroachments, overlaps, boundary line disputes, or violations of applicable setback requirements or other zoning or land development regulations, except as reflected in the Permitted Encumbrances. The survey accurately depicts the location of all Improvements, easements, rights-of-way, and other matters affecting the Property.
Section 4.10 — Property Condition
The Property, including all Improvements thereon, is in good condition and repair, suitable for its intended use as a luxury resort hotel. The comprehensive renovation of the Property completed in August 2021 at a cost of approximately FORTY-SEVEN MILLION AND 00/100 DOLLARS ($47,000,000.00) was performed in a good and workmanlike manner, in compliance with all applicable laws, codes, and regulations, and all work has been completed, all contractors and subcontractors have been paid in full, and no mechanic's liens or claims of lien are pending or threatened in connection therewith. All building systems, including HVAC, electrical, plumbing, elevator, fire suppression, and life safety systems, are in good working order and condition.
Section 4.11 — Independent Operation
The Property is independently operated under the "Coral Palms" trade name and is not subject to any franchise agreement, management agreement, or license agreement with any national or international hotel brand or chain. The Property is operated and managed directly by Mortgagor through its affiliates, and no third-party management company has been engaged to manage or operate the Property.
ARTICLE V — COVENANTS OF MORTGAGOR
Mortgagor hereby covenants and agrees with Mortgagee as follows:
Section 5.1 — Payment of Indebtedness
Mortgagor shall punctually pay, or cause to be paid, all Indebtedness as and when the same becomes due and payable, in strict accordance with the terms and provisions of the Note and the Loan Agreement, including, without limitation, all installments of principal, interest, late charges, prepayment premiums, exit fees, and all other sums due thereunder, without setoff, counterclaim, deduction, or defense of any kind or nature.
Section 5.2 — Payment of Impositions
Mortgagor shall pay, or cause to be paid, all Impositions before any delinquency, fine, penalty, interest, or cost may be added thereto for non-payment or late payment, and shall deliver to Lender, promptly upon request, evidence satisfactory to Lender of the timely payment of all Impositions. Notwithstanding the foregoing, Mortgagor shall have the right to contest in good faith any Imposition, provided that (a) such contest is conducted diligently and in a manner that does not jeopardize the lien of this Mortgage or the value of the Property, (b) Mortgagor shall have deposited with Lender adequate reserves, in an amount satisfactory to Lender, to cover the contested Imposition, any penalties, and interest thereon, and (c) no part of the Property shall be in danger of being sold, forfeited, or lost as a result of such contest.
Section 5.3 — Maintenance and Repair
Mortgagor shall maintain the Property in good condition and repair and in accordance with the standards maintained by prudent operators of comparable luxury resort hotel properties in the Florida Keys market and in the southeastern United States. Mortgagor shall promptly make all necessary repairs, renewals, replacements, additions, and improvements thereto, of every kind and nature, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. Mortgagor shall not commit, suffer, or permit any waste of the Property and shall not do or permit to be done anything that might impair the value of the Property or the security of this Mortgage. Mortgagor shall comply with its obligations under the Reserve Agreement with respect to FF&E replacement and capital improvement reserves, and shall apply all funds withdrawn from such reserve accounts solely for the purposes permitted under the Reserve Agreement.
Section 5.4 — Insurance Covenants
Mortgagor shall maintain at all times during the term of the Loan the following insurance coverage, in form and substance, with deductibles, and issued by carriers, satisfactory to Lender:
(a) Property Insurance. "All risk" or "special form" property insurance covering the Property and all Improvements, Fixtures, and Personal Property in an amount not less than one hundred percent (100%) of the full replacement cost thereof (without deduction for depreciation), as determined by Lender or its designee from time to time, with agreed amount endorsement waiving any co-insurance requirements;
(b) Commercial General Liability Insurance. Commercial general liability insurance, including bodily injury and property damage liability, personal and advertising injury liability, products and completed operations liability, and liquor liability, with minimum combined single limits of not less than FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00) per occurrence and TEN MILLION AND 00/100 DOLLARS ($10,000,000.00) in the aggregate;
(c) Windstorm/Hurricane Insurance. Windstorm and hurricane insurance covering the Property, consistent with the requirements of applicable Florida law and the specific requirements for properties located in Monroe County, Florida, in the Florida Keys Special Wind Pool area, in an amount not less than one hundred percent (100%) of the full replacement cost of the Improvements, Fixtures, and Personal Property;
(d) Flood Insurance. Flood insurance in the maximum amount available under the National Flood Insurance Program (NFIP), plus excess/surplus lines flood insurance from Bayfront Specialty Insurance Corp. or another carrier acceptable to Lender, in such amounts as Lender shall require, given the Property's location in a Special Flood Hazard Area as designated by the Federal Emergency Management Agency (FEMA);
(e) Business Interruption / Loss of Rents Insurance. Business interruption and/or loss of rents insurance in an amount sufficient to cover loss of income from the Property for a period of not less than twelve (12) months, including extended period of indemnity of not less than six (6) months;
(f) Builder's Risk Insurance. During any period of construction, renovation, or alteration of the Property, builder's risk insurance in an amount equal to one hundred percent (100%) of the completed value of the work, on a completed value, non-reporting form;
(g) Workers' Compensation Insurance. Workers' compensation insurance as required by the laws of the State of Florida, together with employer's liability insurance with minimum limits of not less than ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) per accident, ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) disease per policy, and ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) disease per employee;
(h) Umbrella/Excess Liability Insurance. Umbrella or excess liability insurance in an amount of not less than TWENTY-FIVE MILLION AND 00/100 DOLLARS ($25,000,000.00) per occurrence and in the aggregate, providing coverage excess of the underlying commercial general liability, automobile liability, and employer's liability policies; and
(i) Additional Coverage. Such other insurance as Lender may from time to time reasonably require, including, without limitation, terrorism risk insurance, pollution liability insurance, crime/fidelity insurance, boiler and machinery/equipment breakdown insurance, and automobile liability insurance.
All Insurance Policies shall name Mortgagee as mortgagee, loss payee, and/or additional insured, as applicable, pursuant to standard mortgagee clauses and endorsements satisfactory to Lender. All Insurance Policies shall provide that the same shall not be canceled, not renewed, or materially modified without at least thirty (30) days' prior written notice to Mortgagee (ten (10) days' notice in the case of non-payment of premiums). Mortgagor's insurance broker is Castlegate Risk Advisors LLC (Monica Iglesias, SVP). All insurance carriers providing coverage on the Property shall maintain a minimum financial strength rating of "A-" and a minimum financial size category of "VIII" by A.M. Best Company, or an equivalent rating from Standard & Poor's or Moody's Investors Service, as acceptable to Lender.
Section 5.5 — Compliance with Laws
Mortgagor shall comply, and shall cause the Property to comply, with all applicable federal, state, and local laws, statutes, ordinances, rules, regulations, codes, orders, judgments, decrees, permits, licenses, authorizations, and requirements of all governmental authorities having jurisdiction over the Property or the use, occupancy, or operation thereof, including, without limitation, the Florida Building Code, the Florida Fire Prevention Code, all applicable environmental laws and regulations, the Americans with Disabilities Act of 1990, as amended, the Fair Housing Act, Monroe County Code of Ordinances, Monroe County land development regulations, and all applicable zoning and land use requirements. Mortgagor shall promptly notify Lender of any notice of violation, non-compliance, or potential violation received from any governmental authority.
Section 5.6 — Protection of Lien
Mortgagor shall preserve and protect the first-priority lien and security interest of this Mortgage on the Mortgaged Property. Mortgagor shall not create, incur, assume, or permit to exist any lien, mortgage, pledge, security interest, charge, encumbrance, or claim upon the Mortgaged Property, or any portion thereof, whether superior or junior to the lien of this Mortgage, except the Permitted Encumbrances. Mortgagor shall promptly pay, bond, or otherwise discharge or cause to be discharged any mechanic's lien, materialman's lien, judgment lien, or other lien or charge that may be filed or asserted against the Property, within thirty (30) days after Mortgagor first obtains knowledge thereof. Mortgagor shall promptly notify Lender of the filing of any lien or claim of lien against the Property.
Section 5.7 — Alterations and Improvements
Mortgagor shall not, without the prior written consent of Lender, (a) demolish, remove, or materially alter any of the Improvements, (b) construct any new buildings or structures on the Land, or (c) make any material alteration, improvement, or addition to the Property. Notwithstanding the foregoing, Mortgagor may, without Lender's prior written consent, make non-structural interior alterations, improvements, and repairs to the Property that (i) do not cost in excess of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) per occurrence or ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) in the aggregate in any calendar year, (ii) do not affect the structural integrity of the Improvements, (iii) do not diminish the value of the Property, (iv) are performed in a good and workmanlike manner and in compliance with all applicable laws, codes, and regulations, and (v) are performed in compliance with the terms and conditions of the Loan Agreement and the Reserve Agreement, as applicable.
Section 5.8 — Inspection Rights
Lender and its agents, representatives, engineers, consultants, and contractors shall have the right, at all reasonable times and upon reasonable prior notice (which may be oral and shall not be less than twenty-four (24) hours, except in the case of an emergency, in which case no notice shall be required), to enter upon and inspect the Property, including, without limitation, any and all buildings, structures, rooms, and areas thereof, to verify the condition, value, and operation of the Property, to verify compliance with the terms and conditions of this Mortgage and the other Loan Documents, and to conduct environmental assessments and inspections. All costs and expenses incurred by Lender in connection with any such inspection conducted following the occurrence and during the continuance of an Event of Default shall be borne by Mortgagor and shall be added to the Obligations secured by this Mortgage.
Section 5.9 — Books and Records
Mortgagor shall maintain complete, accurate, and adequate books and records relating to the ownership, operation, management, leasing, and financial condition of the Property, in accordance with generally accepted accounting principles consistently applied. Mortgagor shall furnish or cause to be furnished to Lender the following:
(a) Within one hundred twenty (120) days after the close of each fiscal year of Mortgagor, annual audited financial statements of Mortgagor and the Property, prepared by Keswick & Holt LLP (Andrew Calloway, CPA), or such other nationally or regionally recognized independent certified public accounting firm as may be acceptable to Lender, in accordance with generally accepted accounting principles;
(b) Within thirty (30) days after the close of each calendar month, monthly operating statements of the Property in such form and detail as Lender shall reasonably require, including statements of revenues, expenses, net operating income, capital expenditures, and occupancy;
(c) Penmark Enterprises (STR) reports for the Property, on a monthly basis, within thirty (30) days after the close of each calendar month, including competitive set analysis and penetration indices; and
(d) Such other financial information, reports, and data as Lender may from time to time reasonably request with respect to the Property, Mortgagor, or Guarantor.
Lender and its authorized representatives shall have the right to examine, audit, copy, and make extracts from such books and records at all reasonable times upon reasonable prior notice.
Section 5.10 — Estoppel Certificates
Within ten (10) business days following receipt of a written request from Lender, Mortgagor shall furnish to Lender, or to any person or entity designated by Lender, a written statement, duly executed and acknowledged by Mortgagor, certifying (a) the unpaid principal balance of the Indebtedness and the date to which interest has been paid, (b) whether any offsets, counterclaims, or defenses exist against the Obligations, (c) whether any Event of Default or Default has occurred and is continuing, and (d) such other matters as Lender may reasonably request. Any such statement may be relied upon by any prospective purchaser or assignee of the Loan or any interest therein.
Section 5.11 — Further Assurances
Mortgagor shall, at Mortgagor's sole cost and expense, execute, acknowledge, deliver, file, and record, or cause to be executed, acknowledged, delivered, filed, and recorded, such further documents, instruments, agreements, financing statements, continuation statements, and other assurances as Lender may from time to time reasonably request to (a) perfect, protect, confirm, and maintain the first-priority lien and security interest of this Mortgage on the Mortgaged Property, (b) correct any errors or deficiencies in this Mortgage or any other Loan Document, (c) carry out the intent and purposes of this Mortgage and the other Loan Documents, and (d) comply with any requirements of applicable law.
Section 5.12 — Transfer Restrictions
(a) Mortgagor shall not, without the prior written consent of Lender (which consent may be withheld in Lender's sole and absolute discretion), sell, convey, transfer, assign, encumber, pledge, hypothecate, or otherwise dispose of all or any portion of the Mortgaged Property, or any legal, beneficial, or equitable interest therein, whether voluntarily, involuntarily, or by operation of law. Without limiting the generality of the foregoing, the term "transfer" as used herein shall include (i) any sale, conveyance, or transfer of the Property or any portion thereof, (ii) any lease, sublease, or other occupancy agreement not otherwise permitted hereunder or under the Loan Agreement, (iii) the creation of any lien, mortgage, pledge, security interest, or other encumbrance on the Property or any portion thereof (other than the lien of this Mortgage and the Permitted Encumbrances), and (iv) any direct or indirect sale, transfer, assignment, pledge, or other disposition of any ownership interest in Mortgagor at any level of the ownership structure (including, without limitation, any transfer of membership interests in Mortgagor or any transfer of stock or other equity interests in Guarantor or any intermediate entity in the ownership chain).
(b) Notwithstanding the foregoing, the following transfers shall be permitted without Lender's consent (each, a "Permitted Transfer"):
(i) Transfers of publicly traded shares of Guarantor (Verimark Hospitality Group Inc.) on the Nasdaq Stock Market or any other nationally recognized securities exchange, provided that no such transfer or series of related transfers results in a change of control of Guarantor;
(ii) Transfers of direct or indirect ownership interests in Mortgagor among affiliates of Mortgagor, provided that (A) Guarantor remains the direct or indirect controlling owner of Mortgagor, (B) no change of control of Mortgagor occurs as a result of such transfer, (C) such transfer does not violate the SPE covenants set forth in Section 5.13, and (D) Mortgagor provides Lender with not less than fifteen (15) business days' prior written notice of such transfer, together with such information regarding the transferee as Lender may reasonably request; and
(iii) Such other transfers as may be expressly permitted under the Loan Agreement.
(c) Any transfer in violation of this Section 5.12 shall constitute an Event of Default under this Mortgage and shall entitle Lender to exercise all of its rights and remedies hereunder and under the other Loan Documents, including, without limitation, the right to declare all Obligations immediately due and payable (due-on-sale/due-on-encumbrance).
Section 5.13 — Single Purpose Entity Covenants
Mortgagor covenants and agrees that it shall at all times maintain its status as a "single purpose entity" in accordance with the following requirements:
(a) Mortgagor shall not engage in any business or activity other than the ownership, operation, management, and maintenance of the Property and activities incidental thereto;
(b) Mortgagor shall not own any real property or assets other than the Property and personal property incidental thereto;
(c) Mortgagor shall not incur any indebtedness other than the Indebtedness secured by this Mortgage and trade payables and operating expenses incurred in the ordinary course of operating the Property, which payables and expenses shall be paid when due and shall not exceed amounts customary for comparable properties;
(d) Mortgagor shall maintain its own separate books, records, financial statements, and bank accounts, distinct from those of any other person or entity, including Guarantor and any affiliate;
(e) Mortgagor shall not commingle its funds or assets with the funds or assets of any other person or entity;
(f) Mortgagor shall maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character;
(g) Mortgagor shall conduct all transactions with affiliates on an arm's-length basis;
(h) Mortgagor shall hold itself out to the public as a legal entity separate and distinct from any other person or entity;
(i) Mortgagor shall maintain its existence as a limited liability company in good standing under the laws of the State of Florida;
(j) Mortgagor shall observe all limited liability company formalities;
(k) Mortgagor shall pay its own liabilities (including salaries of its own employees) from its own funds;
(l) Mortgagor shall not guarantee or become obligated for the debts or obligations of any other person or entity; and
(m) Mortgagor shall not dissolve, wind up, liquidate, consolidate, or merge with any other person or entity.
Section 5.14 — Zoning
Mortgagor shall not initiate, join in, consent to, or acquiesce in any change of zoning, variance, special exception, conditional use, or reclassification of the Property, or any portion thereof, without the prior written consent of Lender. Mortgagor shall promptly notify Lender of any proposed or pending change of zoning or land use regulation that could affect the Property or its current use.
Section 5.15 — Condemnation Proceedings
Mortgagor shall promptly notify Lender in writing of any actual or threatened condemnation, eminent domain, or similar proceeding affecting the Property or any portion thereof. Lender shall have the right, but not the obligation, to participate in any such proceeding and to be represented by counsel of its choice. Mortgagor shall not, without the prior written consent of Lender, settle, compromise, or adjust any claim or award in connection with any condemnation proceeding, or consent to any condemnation, taking, or conveyance in lieu thereof.
ARTICLE VI — ASSIGNMENT OF LEASES AND RENTS
Section 6.1 — Assignment
Mortgagor hereby absolutely and presently assigns, transfers, conveys, and sets over to Mortgagee all of Mortgagor's right, title, and interest in and to all Leases and Rents now existing or hereafter entered into or arising with respect to the Property or any portion thereof. This assignment is intended to be, and shall be construed as, an absolute assignment of Leases and Rents pursuant to Section 697.07, Florida Statutes, and not merely an assignment for additional security. As used in this Article VI, "Leases" includes, without limitation, all room revenue agreements, hotel guest agreements, guest reservation agreements, restaurant leases, retail leases, spa concessions, marina slip agreements, marina license agreements, conference and event contracts, banquet contracts, catering agreements, parking agreements, and any and all other occupancy, use, or possession agreements of every kind and nature, whether oral or written, now in existence or hereafter entered into, affecting the Property or any portion thereof, together with all guarantees thereof, all security deposits, advance payments, prepaid rents, and other sums deposited or held thereunder, and all amendments, modifications, extensions, renewals, and replacements thereof.
Section 6.2 — License to Collect Rents
Mortgagee hereby grants to Mortgagor a revocable license to collect, receive, use, and enjoy the Rents from the Property as the same become due and payable, subject to the terms and conditions of the Cash Management Agreement. Such license shall automatically and immediately terminate, without the necessity of any notice or demand from Mortgagee, upon the occurrence of any Event of Default. Upon the revocation or termination of such license, Mortgagor shall immediately pay over to Mortgagee all Rents then held by Mortgagor and all Rents thereafter received by Mortgagor, and Mortgagee shall be entitled to collect all Rents directly from tenants, guests, licensees, and other occupants of the Property.
Section 6.3 — Lease Covenants
(a) Mortgagor shall not enter into, modify, amend, extend, renew, replace, or terminate any material Lease without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed. For purposes of this Section 6.3, a "material Lease" shall mean any Lease with a term (including renewal options) in excess of one (1) year or providing for aggregate annual rental or revenue payments in excess of TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($250,000.00).
(b) All Leases shall be subordinate to the lien of this Mortgage and shall contain such subordination, non-disturbance, and attornment provisions as Lender may reasonably require.
(c) Mortgagor shall diligently perform and observe all of the obligations imposed upon the landlord under each Lease, shall enforce all material rights and remedies of the landlord thereunder, and shall not waive or release any tenant, occupant, licensee, or concessionaire from any obligation under any Lease without Lender's prior written consent.
(d) Mortgagor shall promptly deliver to Lender copies of all new Leases, amendments, modifications, extensions, renewals, and termination notices affecting the Property.
(e) Mortgagor shall not collect any Rents more than one (1) month in advance of the date upon which the same are due and payable, without the prior written consent of Lender.
Section 6.4 — Application of Rents After Default
Upon the occurrence of an Event of Default and the revocation or termination of the license granted in Section 6.2, Mortgagee may, at its option and without limiting any other rights or remedies available to Mortgagee, enter upon and take possession of the Property (or any portion thereof), and may collect, receive, and apply all Rents to the Obligations in such order and manner as Mortgagee shall determine in its sole discretion. The collection of Rents by Mortgagee, and the application thereof as aforesaid, shall not cure or waive any Event of Default or notice of default hereunder or invalidate any act done pursuant to such notice. Mortgagee shall not be required to act as a landlord or to manage the Property, nor shall Mortgagee be liable for any failure to collect Rents or for any loss sustained by Mortgagor or any tenant or occupant of the Property in connection with the exercise of Mortgagee's rights under this Article VI.
ARTICLE VII — RESERVES AND ESCROWS
Section 7.1 — Reserve Deposits
Mortgagor shall establish and maintain all reserve accounts and make all reserve deposits as required under the Reserve Agreement, which is incorporated herein by reference. At closing, Mortgagor shall deposit with Lender upfront reserves in the aggregate amount of FOUR MILLION EIGHT HUNDRED THOUSAND AND 00/100 DOLLARS ($4,800,000.00), comprising tax reserves, insurance reserves, FF&E reserves, and capital improvement reserves, all as more particularly set forth in the Reserve Agreement. Thereafter, Mortgagor shall make monthly reserve deposits in the amounts and at the times specified in the Reserve Agreement. All reserve funds shall be held by Lender (or its servicer or agent) in accounts established for such purpose and shall be applied as provided in the Reserve Agreement.