1021-00007 · Verimark Hospitality Group · Title & Survey

title-objection-letter.docx DOCUMENT Real Estate

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PRIVILEGED AND CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

100 Southeast Second Street, Suite 3800 Miami, Florida 33131 Telephone: (305) 814-7200 Facsimile: (305) 814-7201 www.calderwoodharkness.com

January 11, 2023

Via Email and Sundial Data Systems

Meridian Title & Escrow, Inc.

Attn: Lisa Portman, Title Officer

9100 South Dadeland Boulevard, Suite 1500 Miami, Florida 33156

Re: Title Objection Letter — Coral Palms Grand Resort & Spa 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 Proposed $160,000,000 First Mortgage Refinancing Loan Borrower: Coral Palms Resort Holdings LLC Lender: Pinnacle Atlantic Capital, LLC Calderwood & Harkness LLP Client Matter No. 1021-00007 Title Commitment No. MC-2022-041587 (Effective Date: December 15, 2022)

Dear Ms. Portman:

1. Introduction and Purpose

This firm represents Coral Palms Resort Holdings LLC, a Florida limited liability company (the "Borrower"), and its parent company, Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Guarantor"), in connection with the proposed $160,000,000 first mortgage refinancing loan (the "Loan") to be made by Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (the "Lender"), to the Borrower. The Loan will be secured by, among other things, a first-priority mortgage lien on the property commonly known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"), together with all improvements, fixtures, and appurtenances thereto.

We are in receipt of that certain Commitment for Title Insurance (the "Title Commitment") issued by Meridian Title & Escrow, Inc. (the "Title Company"), bearing Commitment No. MC-2022-041587 and having an effective date of December 15, 2022, committing to issue a lender's title insurance policy in connection with the Loan. We have completed our review of the Title Commitment, including all Schedule A information, Schedule B-I requirements, and Schedule B-II exceptions set forth therein, together with copies of underlying recorded instruments referenced in the Title Commitment that have been made available to us.

The purpose of this letter is to set forth the Borrower's objections to certain Schedule B-II exceptions contained in the Title Commitment, and to identify those exceptions that must be removed, cured, endorsed over, or affirmatively insured over as a condition precedent to the closing of the Loan. This letter also identifies the title insurance endorsements that will be required in connection with the lender's title insurance policy to be issued at closing.

This letter is delivered pursuant to the requirements of that certain Commitment Letter dated December 9, 2022, between the Borrower and the Lender (the "Commitment Letter"), and the initial draft Loan Agreement circulated by Whitford Baines & Driscoll LLP ("Lender's Counsel") on December 19, 2022 (the "Draft Loan Agreement"), both of which require delivery of a lender's title insurance policy free and clear of all liens, encumbrances, and exceptions other than those expressly approved by the Lender and its counsel. The Commitment Letter specifically requires that all title objections be raised and resolved prior to closing, and that the lender's title insurance policy reflect a first-priority lien in favor of the Lender, subject only to the Permitted Exceptions (as such term will be defined in the final Loan Agreement).

We respectfully request that a copy of this letter and any and all responses thereto be provided simultaneously to Lender's Counsel, Whitford Baines & Driscoll LLP, Attention: Philip Tarrant Corporation, Partner, and Catherine Yee, Associate, 1221 Avenue of the Americas, Suite 4400, New York, New York 10020 (email: pnordstrom@whitfordbaines.com; cyee@whitfordbaines.com).

2. Property Identification

The Property that is the subject of the Title Commitment is more fully described as follows:

A portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more particularly described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida.

The Monroe County Property Appraiser's Folio Number for the Property is 00460780-000100.

Schedule A of the Title Commitment identifies the fee simple owner of the Property as Coral Palms Resort Holdings LLC, a Florida limited liability company. We confirm that this vesting is consistent with the Borrower's organizational records, the current state of title as understood by the Borrower, and the proposed loan documents being negotiated in connection with the Loan.

For purposes of providing context to the title matters discussed in this letter, the Property consists of an approximately 22.4-acre waterfront site located on the oceanfront in Key Largo, Monroe County, Florida. The improvements situated on the Property include a 342-room full-service luxury oceanfront resort hotel with an integrated conference center encompassing approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, a 42-slip marina, three (3) food and beverage outlets, a 1,200-space parking structure, and related resort amenities and infrastructure. The gross building area of all improvements on the Property is approximately 412,000 square feet. The waterfront nature of the Property, its location in the Florida Keys, and the presence of the marina and related waterfront infrastructure give rise to certain title considerations that are specifically addressed in this letter, including matters relating to riparian and littoral rights, submerged lands, and flood zone designations.

3. Schedule B-I Requirements — Acknowledged

We have reviewed the Schedule B-I requirements set forth in the Title Commitment and acknowledge that certain conditions must be satisfied in order for the Title Company to issue the lender's title insurance policy. The Borrower is actively working to satisfy all Schedule B-I requirements, and we anticipate that all such requirements will be fulfilled at or prior to the closing of the Loan. Without limitation, we acknowledge and are addressing the following Schedule B-I requirements:

(a) Payment of all applicable title insurance premiums, including premiums for the lender's title insurance policy and all requested endorsements, in amounts to be confirmed by the Title Company;

(b) Recording of the new mortgage instrument (Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing) in favor of Pinnacle Atlantic Capital, LLC in the Public Records of Monroe County, Florida;

(c) Satisfaction and discharge of the existing mortgage held by Tidewater National Bank, N.A., as more particularly described in Section 4.1 below, including the recording of a satisfaction and discharge of mortgage in the Public Records of Monroe County, Florida and the filing of a UCC-3 Termination Statement with the Florida Secured Transaction Registry;

(d) Delivery of organizational documents and evidence of authorization for Coral Palms Resort Holdings LLC, including its Articles of Organization, current Operating Agreement, certificate of good standing from the Florida Division of Corporations, and resolutions or consents authorizing the execution and delivery of the Loan documents and the granting of the mortgage lien, together with similar organizational documents and evidence of authorization for Verimark Hospitality Group Inc. as the sole member of the Borrower and as Guarantor;

(e) Execution and delivery of a gap indemnity or similar undertaking by the Borrower and/or the Guarantor, in form and substance acceptable to the Title Company, to protect the Title Company against any liens, encumbrances, or adverse matters arising during the gap period between the effective date of the Title Commitment and the recording date of the new mortgage; and

(f) Delivery and certification of an ALTA/NSPS Land Title Survey of the Property prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS, Florida License No. LS-7284), meeting the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys. We note that this survey has been completed, delivered, and is being reviewed separately by this firm and by the Title Company. A copy of the survey is enclosed with this letter for the Title Company's reference in connection with the resolution of survey-related exceptions discussed herein.

We will coordinate with your office to ensure timely satisfaction of all Schedule B-I requirements in advance of the anticipated closing date. Should the Title Company identify any additional Schedule B-I requirements or conditions not already reflected in the Title Commitment, we ask that you notify us promptly so that we may address them without delay.

4. Schedule B-II Exceptions — Objections and Requests

Set forth below are the Borrower's specific objections and requests with respect to the Schedule B-II exceptions identified in the Title Commitment. Each exception is addressed individually. To the extent any Schedule B-II exception is not specifically discussed below, such exception is not accepted and is deemed objected to unless and until the Borrower and the Lender expressly agree to its inclusion as a Permitted Exception.

4.1 Exception No. 1 — Existing Mortgage in Favor of Tidewater National Bank, N.A.

Exception as Shown: Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing granted by Coral Palms Resort Holdings LLC to Tidewater National Bank, N.A., in the original principal amount of $125,000,000.00, dated June 1, 2019, and recorded on June 5, 2019, in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida (the "Existing Mortgage"), together with all amendments, modifications, supplements, and assignments thereof, if any.

We also note the associated UCC-1 Financing Statement filed with the Florida Secured Transaction Registry under File No. 202219087643 (the "Existing UCC Filing"), which secures the personal property, fixtures, and related collateral described in the Existing Mortgage.

Objection: This exception must be removed in its entirety from the final lender's title insurance policy as an absolute condition to the closing of the Loan. The Lender requires a first-priority mortgage lien on the Property, and the continued existence of the Existing Mortgage on the title is wholly incompatible with the Lender's requirements and the terms of the Commitment Letter and Draft Loan Agreement.

Basis and Cure: The Existing Mortgage is to be paid off and satisfied in full from the proceeds of the new $160,000,000 Loan at the closing. Based on the most recent information available to the Borrower, the outstanding principal balance under the Existing Mortgage is approximately $118,500,000.00 as of October 15, 2022, together with accrued and unpaid interest at a rate of SOFR plus 2.25% per annum. Additionally, if the payoff occurs prior to March 1, 2023, a prepayment premium of 1.0% of the then-outstanding principal balance will be due, which based on the foregoing balance would equal approximately $1,185,000.00. We anticipate receiving an updated payoff letter from Tidewater National Bank, N.A. reflecting the precise payoff amount as of the anticipated closing date, including all accrued interest, the prepayment premium, and any other fees, costs, or charges required for full satisfaction and discharge.

Request: We request that the Title Company confirm that it will issue the lender's title insurance policy in favor of Pinnacle Atlantic Capital, LLC without this exception upon receipt at closing of each of the following:

(a) A payoff letter from Tidewater National Bank, N.A. (to be addressed to the Title Company as closing agent), issued by its authorized representative, Alan Prescott, Senior Vice President — Commercial Real Estate, at 600 Waterside Drive, Norfolk, Virginia 23510, stating the full payoff amount required to satisfy and discharge the Existing Mortgage and confirming that upon receipt of the payoff amount, Tidewater will deliver a satisfaction and discharge of mortgage in recordable form;

(b) A Satisfaction and Discharge of Mortgage (or Release of Mortgage) executed by Tidewater National Bank, N.A. in recordable form, sufficient for recording in the Public Records of Monroe County, Florida, to release and discharge the lien of the Existing Mortgage from the Property;

(c) A UCC-3 Termination Statement with respect to the Existing UCC Filing (File No. 202219087643), executed by Tidewater National Bank, N.A. as secured party, in form sufficient for filing with the Florida Secured Transaction Registry; and

(d) Wire transfer of the full payoff amount from the closing escrow account held by the Title Company to Tidewater National Bank, N.A. in accordance with the wire instructions set forth in the payoff letter.

In the alternative, if the executed Satisfaction and Discharge of Mortgage cannot be obtained from Tidewater National Bank, N.A. prior to or simultaneously with the closing of the Loan, we request that the Title Company agree to issue the lender's title insurance policy with a pending disbursement clause or, alternatively, affirmatively insure over this exception pursuant to an appropriate indemnity arrangement, with the Title Company committing to record the Satisfaction and Discharge of Mortgage in the Public Records of Monroe County, Florida promptly upon receipt from Tidewater. In such event, we would expect the Title Company to issue a post-closing letter or undertaking confirming its obligation to record the satisfaction and to provide us and Lender's Counsel with evidence of such recording, including a certified copy of the recorded satisfaction instrument.

4.2 Exception No. 2 — Real Estate Taxes and Assessments

Exception as Shown: Real estate taxes and assessments for the year 2022 and subsequent years, not yet due and payable, and any special assessments or non-ad valorem assessments levied by Monroe County or any other taxing authority with jurisdiction over the Property.

Objection: While the exception for current and subsequent year taxes not yet due and payable is a standard exception that the Borrower anticipates will remain in the final policy, we object to the extent this exception is drafted in a manner that could encompass delinquent or prior-year taxes. The exception should be limited to taxes for the current tax year (2022, payable in 2023) and subsequent tax years that are not yet due and payable as of the date of the policy.

Request: We request the following confirmations and modifications:

(a) The Title Company shall confirm in writing that all real estate taxes on the Property (Monroe County Property Folio No. 00460780-000100) for all years prior to the current tax year have been paid in full and that no delinquent taxes, tax liens, or tax certificates exist with respect to the Property;

(b) The Title Company shall confirm that there are no pending or threatened tax sales, tax deed applications, or tax lien foreclosures affecting the Property;

(c) The exception shall be modified to read substantially as follows: "Real estate taxes and assessments for the year 2022 (payable in 2023) and subsequent years, not yet due and payable, which are not yet a lien"; and

(d) If any special assessments, non-ad valorem assessments, or improvement district assessments are shown as affecting the Property, the Title Company shall identify each such assessment by levying authority, amount, and current status (including whether any installments are delinquent or past due), and provide copies of the assessment lien or notice of assessment.

4.3 Exception No. 3 — Easements, Restrictions, and Encumbrances of Record

Exception as Shown: Easements, restrictions, and other encumbrances of record affecting the Property, including but not limited to utility easements, access easements, drainage easements, marina and dock easements, and coastal setback or conservation easements.

Objection: The Borrower objects to any blanket, general, or unspecified easement exception. The inclusion of a general reference to "easements, restrictions, and other encumbrances of record" without specific identification of each instrument by its recording reference is unacceptable in a commercial mortgage loan transaction of this size and nature. The Lender's Counsel has indicated that the Lender will not accept a title policy containing vague or unspecified easement exceptions.

Request: We request that each easement, restriction, and encumbrance of record be specifically identified in the Schedule B-II exceptions by its recording reference (Official Records Book and Page number or instrument number) and that the following actions be taken:

(a) The Title Company shall provide this firm and Lender's Counsel with copies of each recorded easement, restriction, and encumbrance instrument identified in the Title Commitment;

(b) The Title Company shall confirm that each easement of record has been plotted on the ALTA/NSPS Land Title Survey prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS), a copy of which is enclosed herewith, and that the location of each easement as shown on the survey is consistent with the recorded instrument;

(c) The Title Company shall confirm that none of the easements of record materially impair or interfere with the current use, operation, or enjoyment of the Property as a full-service luxury resort hotel, marina, spa, conference center, and related facilities, or with the Borrower's ability to continue such use and operation in the ordinary course;

(d) To the extent any recorded easement encroaches upon or overlaps with the footprint of existing improvements on the Property, including any building, the parking structure, marina infrastructure (docks, piers, seawalls, fueling stations), or other permanent structures, the Title Company shall identify such encroachment and either remove the exception, provide affirmative insurance against loss arising from the encroachment, or confirm that the easement does not prohibit or restrict the maintenance and use of the existing improvements within the easement area; and

(e) The Title Company shall issue an ALTA 9-06 endorsement (Restrictions, Encumbrances, Minerals) or its equivalent, providing affirmative coverage with respect to recorded covenants, conditions, and restrictions affecting the Property, including coverage confirming that the insured interest is not subject to forfeiture or reversion by reason of any violation of any recorded covenant, condition, or restriction.

We reserve the right to raise additional objections to specific easements or restrictions once copies of all recorded instruments have been reviewed by this firm and by Lender's Counsel.

4.4 Exception No. 4 — Survey Matters

Exception as Shown: Any matters that would be disclosed by an accurate and complete survey of the Property, including but not limited to encroachments, overlaps, boundary disputes, shortages in area, and any other matters not of record.

Objection: The Borrower objects to the inclusion of a general survey exception. A current ALTA/NSPS Land Title Survey of the Property has been prepared by Landis & Shaw Surveying, Inc. under the direction of Robert Tran, PLS (Florida License No. LS-7284), certified to the Title Company, the Borrower, the Lender, and their respective counsel. The survey meets the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, including Table A items as specified by the Lender. Accordingly, there is no basis for retention of the general survey exception, and its inclusion is inconsistent with standard commercial lending practice.

Request: We request the following:

(a) The general survey exception shall be deleted in its entirety from Schedule B-II;

(b) In lieu of the general survey exception, the Title Company may include specific survey-related exceptions based on matters actually disclosed by the ALTA/NSPS survey, provided that each such exception is described with particularity and referenced to the survey;

(c) The Title Company shall confirm that it has received, reviewed, and accepted the ALTA/NSPS survey prepared by Landis & Shaw Surveying, Inc. and that the survey is sufficient for the Title Company to delete the general survey exception and issue the endorsements described herein;

(d) The Title Company shall issue an ALTA 25-06 endorsement (Same as Survey) confirming that the legal description of the Property in the title policy is the same as the property depicted on the survey; and

(e) If any encroachments are shown on the survey — including but not limited to fences, signs, walls, structures, or improvements from or onto adjacent parcels — the Title Company shall identify each such encroachment and either provide affirmative insurance against any loss or damage arising therefrom or confirm that the encroachment has been resolved. We note that a preliminary review of the survey has disclosed what appears to be a minor encroachment of a perimeter landscape wall onto an adjacent parcel along the northern boundary; we request the Title Company's assessment and proposed treatment of this matter.

4.5 Exception No. 5 — Riparian/Littoral Rights and Submerged Lands

Exception as Shown: Rights of the State of Florida in and to any submerged lands, tidal lands, or lands below the mean high water line adjacent to or underlying the Property; and any limitation on, or absence of, riparian or littoral rights appurtenant to the Property.

Objection: Given the waterfront and oceanfront nature of the Property, and particularly the presence of the 42-slip marina and associated waterfront improvements (including seawalls, docks, piers, boat lifts, and fueling facilities), this exception is of material significance to the Borrower and the Lender. A broad and unqualified exception for riparian and littoral rights and submerged lands could potentially exclude from coverage significant portions of the marina infrastructure and waterfront improvements that are integral to the operation and value of the Property.

Request: We request the following clarifications and actions:

(a) The Title Company shall clarify the precise extent of this exception and identify, by reference to the survey and the legal description, the boundary between upland (insured) property and any state-owned submerged lands or sovereign lands;

(b) The Title Company shall confirm whether the Borrower's marina facilities (including the 42-slip marina, all docks, piers, seawalls, boat lifts, and fueling stations) and other waterfront improvements are located within the boundaries of the insured property or whether any portion of such facilities extends over or upon state-owned submerged lands or sovereign lands;

(c) To the extent insurable under Florida law and the Title Company's underwriting guidelines, the Title Company shall provide affirmative coverage or an endorsement addressing the Borrower's riparian and littoral rights appurtenant to the Property, including the right of access to navigable waters, the right of view, and the right to construct and maintain docks, piers, and marina facilities;

(d) If the Borrower's marina or waterfront improvements are situated in whole or in part upon state-owned submerged lands or sovereignty lands, the Title Company shall identify any applicable submerged land lease, consent of use, or similar authorization issued by the State of Florida (through the Board of Trustees of the Internal Improvement Trust Fund or the Florida Department of Environmental Protection), and shall provide copies of any such lease or consent currently in effect; and

(e) The Title Company shall confirm whether any portion of the Property is subject to a state sovereignty submerged lands lease and, if so, the term, renewal provisions, and current status of such lease.

4.6 Exception No. 6 — Zoning and Land Use Restrictions

Exception as Shown: Any existing or future zoning, land use, or building code violations, restrictions, or regulations imposed by any governmental authority having jurisdiction over the Property.

Objection: The Borrower objects to any general zoning or land use exception. The Property is currently improved and operating as a full-service luxury resort hotel with ancillary marina, spa, conference center, parking, and food and beverage facilities. The Lender requires confirmation through the title policy and endorsements that the Property's current use is lawful and permitted under applicable zoning and land use regulations.

Request: We request the following:

(a) The Title Company shall issue an ALTA 3.1-06 endorsement (Zoning — Completed Structure) confirming that the Property's current use as a full-service resort hotel with marina, spa, conference center, parking structure, and food and beverage outlets is a permitted use under the applicable Monroe County zoning and land use regulations, and that the existing improvements comply with applicable zoning requirements as to use, floor area ratio, building height, setbacks, parking, and density (or, to the extent any nonconformity exists, that such nonconformity is a lawful, grandfathered, or legally nonconforming use);

(b) If any special permits, special exceptions, variances, conditional use permits, or development orders have been issued with respect to the Property or any portion thereof, the Title Company shall identify each such permit, variance, or order by reference number, issuing authority, and date, and shall confirm that each remains in full force and effect and is not subject to any pending appeal, revocation proceeding, or expiration that would affect the current use of the Property; and

(c) The Title Company shall provide copies of any zoning compliance letters, certificates of occupancy, or other governmental determinations relied upon by the Title Company in issuing the ALTA 3.1-06 endorsement.

4.7 Exception No. 7 — Covenants, Conditions, and Restrictions (CC&Rs)

Exception as Shown: Covenants, conditions, restrictions, and declarations of record affecting the Property, including any deed restrictions or declarations of restrictive covenants imposed by prior owners or applicable governmental authorities.

Objection: The Borrower objects to any covenants, conditions, or restrictions ("CC&Rs") that restrict the use of the Property in a manner inconsistent with its current operation as a luxury resort hotel with marina, spa, conference center, and related hospitality facilities, or that could give rise to a right of forfeiture, reversion, or re-entry.

Request: We request the following:

(a) The Title Company shall provide copies of all recorded CC&Rs, declarations of restrictive covenants, and deed restrictions affecting the Property, identified by recording reference;

(b) The Title Company shall confirm that no existing violation of any recorded CC&R, declaration, or deed restriction exists that would give rise to a right of forfeiture, reversion, re-entry, or termination of the Borrower's estate in the Property;

(c) The Title Company shall issue an endorsement or provide affirmative coverage confirming that (i) no violation of any CC&R exists as of the date of the policy that would result in forfeiture or reversion of title, and (ii) the CC&Rs do not prohibit or restrict the use of the Property for its current purposes; and

(d) If any CC&R contains a right of first refusal, consent requirement, or approval right in favor of any third party that could be triggered by the granting of the mortgage or by a foreclosure or deed in lieu of foreclosure, the Title Company shall identify such provision and provide affirmative coverage or an endorsement addressing the Lender's interest in the event of such triggering.

4.8 Exception No. 8 — Mechanics' and Materialmen's Liens

Exception as Shown: Rights of parties claiming by, through, or under mechanics' liens, construction liens, or claims of lien for labor performed or materials furnished in connection with the construction, renovation, or improvement of the Property.

Objection: The Borrower objects to this exception. The most recent comprehensive renovation of the Property was completed in August 2021 at a total cost of approximately $47,000,000. Under Section 713.22, Florida Statutes, the one-year limitation period for recording a claim of lien following final furnishing of labor, services, or materials has long since expired. Accordingly, no basis exists for the retention of a mechanics' lien exception in the title policy.

Request: We request the following:

(a) The Title Company shall confirm that no mechanics' liens, construction liens, or claims of lien are currently of record or have been filed against the Property in the Public Records of Monroe County, Florida;

(b) The Title Company shall confirm that no notices of commencement are currently of record with respect to the Property that remain open or unexpired;

(c) If any such liens, claims of lien, or notices of commencement are of record, the Title Company shall immediately identify them and provide copies, and the Borrower shall take prompt action to cause the satisfaction, release, or bonding off of any such liens pursuant to Section 713.24, Florida Statutes;

(d) This exception shall be deleted from Schedule B-II in its entirety; and

(e) In the alternative, if the Title Company is unwilling to delete this exception entirely, the Title Company shall provide affirmative coverage confirming that the Title Company will insure the Lender against any loss or damage arising from mechanics' liens or construction liens relating to work performed or materials furnished prior to the date of the policy, and the Borrower will provide an owner's affidavit confirming the completion date of the renovation and the absence of any known unpaid claims.

4.9 Exception No. 9 — Environmental and Flood Zone Matters

Exception as Shown: Any lien or encumbrance arising from environmental contamination, hazardous substances, or environmental protection laws, and any matters relating to the location of the Property within a special flood hazard area.

Objection: The Borrower objects to any general environmental exception to the extent it purports to exclude from title insurance coverage any lien imposed by environmental protection laws or arising from the presence, release, or remediation of hazardous substances on the Property. Environmental contamination issues are being separately and thoroughly addressed through a Phase I Environmental Site Assessment (the "Phase I ESA") prepared by Oakridge Environmental Consulting Group, Inc., under the direction of Dr. James Whitmore, Lead Consultant, in accordance with ASTM Standard E 1527-21. The Phase I ESA is being delivered separately to the Lender and Lender's Counsel as a condition to closing.

With respect to flood zone matters, we note that the Property is located in Monroe County (Florida Keys) and portions of the Property may be situated within one or more designated Special Flood Hazard Areas as identified on the applicable FEMA Flood Insurance Rate Map. The applicable flood zone designations are reflected on the ALTA/NSPS survey prepared by Landis & Shaw Surveying, Inc.

Request: We request the following:

(a) The Title Company shall issue an environmental protection lien endorsement, providing affirmative coverage against loss arising from any environmental protection lien that attains priority over the insured mortgage lien;

(b) The Title Company shall identify the applicable FEMA flood zone designation(s) for the Property as shown on the most current Flood Insurance Rate Map (FIRM) and as depicted on the survey, for informational purposes;

(c) For the avoidance of doubt, the Borrower confirms that flood insurance coverage is separately being procured through Bayfront Specialty Insurance Corp. (surplus lines flood insurance) supplementing National Flood Insurance Program ("NFIP") coverage, with all insurance matters being coordinated by Castlegate Risk Advisors LLC (Monica Iglesias, Account Executive). Flood insurance is not a title insurance matter, but this information is provided for completeness; and

(d) The general environmental exception, to the extent it goes beyond environmental protection liens that attain priority over the insured mortgage, should be narrowed or deleted. The Title Company's coverage should not purport to exclude coverage for environmental protection liens that are otherwise insurable under the ALTA policy form and applicable endorsements.

4.10 Exception No. 10 — Gap Period / Intervening Liens

Exception as Shown: This objection relates to the gap period between the effective date of the Title Commitment (December 15, 2022) and the anticipated recording date of the new mortgage in favor of Pinnacle Atlantic Capital, LLC.

Objection and Request: The Borrower and the Lender require that no liens, encumbrances, conveyances, or other adverse matters arise or be recorded against the Property during the gap period that are not reflected in the Title Commitment. The Lender will not accept a title policy that does not provide gap coverage.

We request the following:

(a) The Title Company shall provide gap coverage from the effective date of the Title Commitment through the recording date of the new mortgage, ensuring that the lender's title insurance policy insures against any intervening liens, judgments, encumbrances, or adverse matters that may arise or be recorded during such gap period;

(b) The Title Company shall issue a bring-down or date-down endorsement at closing, confirming that no additional exceptions or adverse matters have appeared in the public records between the effective date of the Title Commitment and the closing and recording date;

(c) To the extent the Title Company requires a gap indemnity from the Borrower or the Guarantor as a condition to providing gap coverage, the Title Company shall provide its form of gap indemnity agreement for our review at the earliest practicable date; and

(d) If the effective date of the Title Commitment is more than thirty (30) days prior to the anticipated closing date, the Title Company shall issue an updated or continued Title Commitment (or a continuation or supplement thereto) extending the effective date to a date no earlier than thirty (30) days prior to closing, and shall conduct an additional search of the public records and applicable judgment, lien, and bankruptcy indices to confirm the absence of any intervening adverse matters.

4.11 Additional and Miscellaneous Exceptions

In addition to the foregoing specific objections, the Borrower objects to any and all standard printed exceptions that are customarily deleted or modified in connection with commercial mortgage loan transactions of this type. Without limiting the generality of the foregoing, the Borrower specifically objects to the following categories of standard exceptions:

(a) Parties in Possession. Any exception for rights or claims of parties in possession of the Property other than the Borrower. The ALTA/NSPS survey and the Borrower's owner's affidavit will confirm that the Property is in the sole possession of the Borrower (or its hotel manager, employees, and guests in the ordinary course of the resort hotel's operations), and that no adverse possessors, squatters, or parties claiming rights of possession inconsistent with the Borrower's fee ownership are in possession of the Property. We request that this exception be deleted upon receipt of the survey and a possession affidavit from the Borrower;

(b) Unrecorded Easements. Any exception for unrecorded easements, claims of easement, or implied easements not shown by the public records. This exception should be deleted. The survey and the Borrower's owner's affidavit will address any matters that might give rise to unrecorded easement claims;

(c) Water Rights and Mineral Rights. Any exception for water rights, mineral rights, or subsurface rights to the extent applicable. We request deletion of any such exception or, in the alternative, issuance of an ALTA 35-06 endorsement (Minerals and Other Subsurface Substances — Buildings) providing affirmative coverage against damage to existing improvements arising from the exercise of any mineral or subsurface rights;

(d) Matters Disclosed by Survey. As addressed in Section 4.4 above, any general exception for matters that would be disclosed by an accurate survey must be deleted and replaced, if at all, with specific survey-related exceptions based on the ALTA/NSPS survey actually prepared for this transaction; and

(e) Other Standard Exceptions. Any other standard or preprinted exceptions that are inconsistent with the extended coverage required by the Lender under the Commitment Letter and Draft Loan Agreement.

We request that the Title Company provide its standard form of lender's affidavit and/or owner's affidavit (or both, as applicable) to facilitate the deletion of standard exceptions. Upon receipt, we will arrange for the Borrower's execution and delivery of such affidavit(s) at or prior to closing.

5. Required Title Insurance Endorsements

The Commitment Letter and Draft Loan Agreement require that the lender's title insurance policy be issued with certain endorsements. Set forth below is the list of endorsements that will be required by Pinnacle Atlantic Capital, LLC at closing. We request the Title Company's confirmation that each of the following endorsements is available under the Title Company's underwriting guidelines and applicable Florida law, and that the Title Company will commit to issue each such endorsement at closing:

1. ALTA 3.1-06 — Zoning (Completed Structure). Confirming that the Property's current use as a resort hotel with marina, spa, conference center, parking, and food and beverage operations is a permitted use under applicable zoning and land use regulations, and that the existing improvements comply with zoning requirements;

2. ALTA 9-06 — Restrictions, Encumbrances, Minerals. Providing affirmative coverage with respect to recorded covenants, conditions, and restrictions, including coverage against forfeiture or reversion;

3. ALTA 9.6-06 or ALTA 9.7-06 — Private Rights (if applicable). To the extent any CC&R or recorded instrument contains private transfer fee obligations or other private rights that could affect the insured mortgage;

4. ALTA 17-06 — Access and Entry. Confirming that the Property has direct legal and physical access to and from a public roadway (Overseas Highway / U.S. Route 1);

5. ALTA 17.1-06 — Indirect Access and Entry (if applicable). If access to the Property is provided through an intervening parcel or by means of an access easement rather than direct frontage on a public road;

6. ALTA 18-06 — Single Tax Parcel. Confirming that the Property is assessed as a single tax parcel for real estate tax purposes under Monroe County Property Folio No. 00460780-000100;

7. ALTA 18.1-06 — Multiple Tax Parcel (if applicable). If the Property is assessed as multiple tax parcels, confirming the identity of all such parcels and providing coverage accordingly;

8. ALTA 19-06 — Contiguity (if applicable). If the Property is comprised of multiple parcels, confirming that such parcels are contiguous and together form a single integrated site;

9. ALTA 22-06 — Location. Confirming the location of the insured land in relation to the improvements shown on the survey;

10. ALTA 25-06 — Same as Survey. Confirming that the legal description of the insured land is the same as the land depicted on the ALTA/NSPS survey;

11. ALTA 28-06 — Easement (Damage or Enforced Removal). Providing coverage against loss or damage arising from the enforced removal or alteration of existing improvements that encroach onto an easement area;

12. ALTA 35-06 — Minerals and Other Subsurface Substances (Buildings). Providing coverage against damage to existing buildings resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or other subsurface substances;

13. Usury Endorsement (Florida). As required under Florida law, confirming that the insured mortgage is not rendered unenforceable by reason of any usury defense;

14. Doing Business Endorsement. Confirming that the enforceability of the insured mortgage is not affected by the failure of the Lender to be authorized to transact business in the State of Florida;

15. Comprehensive Endorsement / Lender's Extended Coverage. Providing extended coverage over standard exceptions and comprehensive protections customary for commercial mortgage loan transactions;

16. Environmental Protection Lien Endorsement. Providing coverage against loss arising from any environmental protection lien imposed under federal, state, or local law that attains priority over the insured mortgage;

17. Variable Rate / Future Advance Endorsement (if applicable). If the Loan documents provide for a variable interest rate or future advances, confirming coverage with respect to such provisions; and

18. Tie-In / Aggregation Endorsement (if applicable). If the Loan involves multiple parcels or policies, providing aggregation of coverage across policies.

We request that the Title Company provide written confirmation of the availability of each of the foregoing endorsements, together with the Title Company's premium schedule setting forth the premiums and fees for the lender's title insurance policy and each endorsement. Such information is required for inclusion in the closing cost estimates being prepared in connection with the Loan.

6. Title Policy Requirements

The lender's title insurance policy to be issued at closing must satisfy the following requirements:

(a) Policy Amount. The policy shall be issued in the amount of $160,000,000.00, equal to the principal amount of the Loan;

(b) Named Insured. The policy shall name Pinnacle Atlantic Capital, LLC as the insured lender, together with its successors and assigns;

(c) Policy Form. The policy shall be issued on the 2006 ALTA Loan Policy form (or the most current equivalent ALTA loan policy form then in effect and accepted by the Lender);

(d) First-Priority Lien. The policy must reflect and insure a valid first-priority mortgage lien in favor of Pinnacle Atlantic Capital, LLC on the Property, subject only to those Schedule B-II exceptions that the Lender has expressly approved in writing as Permitted Exceptions under the Loan Agreement;

(e) Endorsements. The policy shall include all endorsements listed in Section 5 above, together with any additional endorsements that the Lender or Lender's Counsel may reasonably require prior to closing; and

(f) Pro Forma Review. Lender's Counsel, Whitford Baines & Driscoll LLP (Attn: Philip Tarrant Corporation and Catherine Yee), must receive, review, and approve a pro forma copy of the lender's title insurance policy (including all Schedule B-II exceptions in their final form and all endorsements) in advance of the closing. We request that the pro forma title policy be delivered to Lender's Counsel no later than five (5) business days prior to the anticipated closing date.

7. Deadlines and Response Requested

Resolution of the title objections set forth in this letter is a condition precedent to the closing of the Loan. Unresolved title matters may delay or prevent closing, and any such delay may have material adverse consequences for all parties involved, including the potential expiration of the rate lock under the Commitment Letter.

We respectfully request that the Title Company respond to this letter in writing within ten (10) business days of receipt, confirming the following:

(a) Which of the objections set forth herein the Title Company can cure or remove from Schedule B-II;

(b) Which Schedule B-II exceptions the Title Company can insure over by means of endorsements, affirmative coverage, or other appropriate mechanisms;

(c) Which exceptions or objections require further documentation, action, or information from the Borrower, the Guarantor, or any third party in order to be resolved, together with a description of the specific documentation or action required;

(d) The availability and pricing of all endorsements listed in Section 5 above; and

(e) The Title Company's premium schedule for the lender's title insurance policy in the amount of $160,000,000.00, together with all endorsement premiums, search fees, and related charges.

We further reserve all rights to raise additional title objections if any updated title searches, continuations, supplements, or amendments to the Title Commitment reveal new or previously undisclosed matters affecting the Property. Similarly, the Borrower reserves the right to supplement this letter with additional objections based on the Lender's review and comments on the Title Commitment and pro forma title policy.

8. Copies and Distribution

A copy of this letter is being simultaneously delivered to the following parties:

(a) Whitford Baines & Driscoll LLP, Attention: Philip Tarrant Corporation, Partner, and Catherine Yee, Associate, 1221 Avenue of the Americas, Suite 4400, New York, New York 10020 (Lender's Counsel);

(b) Pinnacle Atlantic Capital, LLC, Attention: Martin Drubeck, Managing Director, and Jennifer Kwon, Vice President, 200 Lexington Avenue, 38th Floor, New York, New York 10016 (Lender — for informational purposes, delivered through Lender's Counsel); and

(c) Derek Huang, SVP — Capital Markets & Treasury, Verimark Hospitality Group Inc., 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131 (Client).

9. Reservation of Rights

The Borrower expressly reserves all rights to supplement, modify, amend, or withdraw any or all of the objections set forth in this letter at any time prior to the closing of the Loan. Nothing in this letter shall be deemed to constitute a waiver by the Borrower or the Lender of any objection to any Schedule B-II exception, whether or not specifically addressed herein. Any and all Schedule B-II exceptions not expressly accepted in this letter are deemed objected to and must be removed, cured, endorsed over, or affirmatively insured against as a condition to closing.

Furthermore, the acceptance of any Schedule B-II exception as a Permitted Exception is subject in all cases to the express written approval of Pinnacle Atlantic Capital, LLC (as Lender) and its counsel, Whitford Baines & Driscoll LLP. The Borrower does not have the unilateral authority to accept or waive any title exception on behalf of the Lender, and any indication by the Borrower that a particular exception is acceptable is subject to confirmation by the Lender.

This letter is not intended to, and shall not, create any attorney-client relationship between Calderwood & Harkness LLP and any party other than the Borrower and the Guarantor. This letter is provided for the sole purpose of communicating the Borrower's title objections and related requests to the Title Company and does not constitute a legal opinion or certification of any kind.

We appreciate the Title Company's prompt attention to the matters set forth in this letter and look forward to working with you to resolve all outstanding title issues in advance of the closing. Please do not hesitate to contact the undersigned or Douglas Fairchild at (305) 814-7215 if you have any questions or require additional information.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Grace Nakamura Senior Associate Direct: (305) 814-7238

Email: gnakamura@calderwoodharkness.com

Approved by:

________________________________________

Douglas Fairchild Partner Direct: (305) 814-7215

Email: dfairchild@calderwoodharkness.com

Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3800 Miami, Florida 33131

cc:

Douglas Fairchild, Calderwood & Harkness LLP Angela Fontaine, Calderwood & Harkness LLP Rafael Dominguez, Calderwood & Harkness LLP Philip Tarrant Corporation, Whitford Baines & Driscoll LLP Catherine Yee, Whitford Baines & Driscoll LLP Derek Huang, Verimark Hospitality Group Inc. Natasha Ricard, Verimark Hospitality Group Inc.

Encl.:

Copy of ALTA/NSPS Land Title Survey prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS, Florida License No. LS-7284) (for the Title Company's reference in resolving survey-related exceptions)

PRIVILEGED AND CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
100 Southeast Second Street, Suite 3800 Miami, Florida 33131 Telephone: (305) 814-7200 Facsimile: (305) 814-7201 www.calderwoodharkness.com
January 11, 2023
Via Email and Sundial Data Systems
Meridian Title & Escrow, Inc.
Attn: Lisa Portman, Title Officer
9100 South Dadeland Boulevard, Suite 1500 Miami, Florida 33156
Re: Title Objection Letter — Coral Palms Grand Resort & Spa 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 Proposed $160,000,000 First Mortgage Refinancing Loan Borrower: Coral Palms Resort Holdings LLC Lender: Pinnacle Atlantic Capital, LLC Calderwood & Harkness LLP Client Matter No. 1021-00007 Title Commitment No. MC-2022-041587 (Effective Date: December 15, 2022)
Dear Ms. Portman:
1. Introduction and Purpose
This firm represents Coral Palms Resort Holdings LLC, a Florida limited liability company (the "Borrower"), and its parent company, Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Guarantor"), in connection with the proposed $160,000,000 first mortgage refinancing loan (the "Loan") to be made by Pinnacle Atlantic Capital, LLC, a Delaware limited liability company (the "Lender"), to the Borrower. The Loan will be secured by, among other things, a first-priority mortgage lien on the property commonly known as the Coral Palms Grand Resort & Spa, located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"), together with all improvements, fixtures, and appurtenances thereto.
We are in receipt of that certain Commitment for Title Insurance (the "Title Commitment") issued by Meridian Title & Escrow, Inc. (the "Title Company"), bearing Commitment No. MC-2022-041587 and having an effective date of December 15, 2022, committing to issue a lender's title insurance policy in connection with the Loan. We have completed our review of the Title Commitment, including all Schedule A information, Schedule B-I requirements, and Schedule B-II exceptions set forth therein, together with copies of underlying recorded instruments referenced in the Title Commitment that have been made available to us.
The purpose of this letter is to set forth the Borrower's objections to certain Schedule B-II exceptions contained in the Title Commitment, and to identify those exceptions that must be removed, cured, endorsed over, or affirmatively insured over as a condition precedent to the closing of the Loan. This letter also identifies the title insurance endorsements that will be required in connection with the lender's title insurance policy to be issued at closing.
This letter is delivered pursuant to the requirements of that certain Commitment Letter dated December 9, 2022, between the Borrower and the Lender (the "Commitment Letter"), and the initial draft Loan Agreement circulated by Whitford Baines & Driscoll LLP ("Lender's Counsel") on December 19, 2022 (the "Draft Loan Agreement"), both of which require delivery of a lender's title insurance policy free and clear of all liens, encumbrances, and exceptions other than those expressly approved by the Lender and its counsel. The Commitment Letter specifically requires that all title objections be raised and resolved prior to closing, and that the lender's title insurance policy reflect a first-priority lien in favor of the Lender, subject only to the Permitted Exceptions (as such term will be defined in the final Loan Agreement).
We respectfully request that a copy of this letter and any and all responses thereto be provided simultaneously to Lender's Counsel, Whitford Baines & Driscoll LLP, Attention: Philip Tarrant Corporation, Partner, and Catherine Yee, Associate, 1221 Avenue of the Americas, Suite 4400, New York, New York 10020 (email: pnordstrom@whitfordbaines.com; cyee@whitfordbaines.com).
2. Property Identification
The Property that is the subject of the Title Commitment is more fully described as follows:
A portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more particularly described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida.
The Monroe County Property Appraiser's Folio Number for the Property is 00460780-000100.
Schedule A of the Title Commitment identifies the fee simple owner of the Property as Coral Palms Resort Holdings LLC, a Florida limited liability company. We confirm that this vesting is consistent with the Borrower's organizational records, the current state of title as understood by the Borrower, and the proposed loan documents being negotiated in connection with the Loan.
For purposes of providing context to the title matters discussed in this letter, the Property consists of an approximately 22.4-acre waterfront site located on the oceanfront in Key Largo, Monroe County, Florida. The improvements situated on the Property include a 342-room full-service luxury oceanfront resort hotel with an integrated conference center encompassing approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, a 42-slip marina, three (3) food and beverage outlets, a 1,200-space parking structure, and related resort amenities and infrastructure. The gross building area of all improvements on the Property is approximately 412,000 square feet. The waterfront nature of the Property, its location in the Florida Keys, and the presence of the marina and related waterfront infrastructure give rise to certain title considerations that are specifically addressed in this letter, including matters relating to riparian and littoral rights, submerged lands, and flood zone designations.
3. Schedule B-I Requirements — Acknowledged
We have reviewed the Schedule B-I requirements set forth in the Title Commitment and acknowledge that certain conditions must be satisfied in order for the Title Company to issue the lender's title insurance policy. The Borrower is actively working to satisfy all Schedule B-I requirements, and we anticipate that all such requirements will be fulfilled at or prior to the closing of the Loan. Without limitation, we acknowledge and are addressing the following Schedule B-I requirements:
(a) Payment of all applicable title insurance premiums, including premiums for the lender's title insurance policy and all requested endorsements, in amounts to be confirmed by the Title Company;
(b) Recording of the new mortgage instrument (Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing) in favor of Pinnacle Atlantic Capital, LLC in the Public Records of Monroe County, Florida;
(c) Satisfaction and discharge of the existing mortgage held by Tidewater National Bank, N.A., as more particularly described in Section 4.1 below, including the recording of a satisfaction and discharge of mortgage in the Public Records of Monroe County, Florida and the filing of a UCC-3 Termination Statement with the Florida Secured Transaction Registry;
(d) Delivery of organizational documents and evidence of authorization for Coral Palms Resort Holdings LLC, including its Articles of Organization, current Operating Agreement, certificate of good standing from the Florida Division of Corporations, and resolutions or consents authorizing the execution and delivery of the Loan documents and the granting of the mortgage lien, together with similar organizational documents and evidence of authorization for Verimark Hospitality Group Inc. as the sole member of the Borrower and as Guarantor;
(e) Execution and delivery of a gap indemnity or similar undertaking by the Borrower and/or the Guarantor, in form and substance acceptable to the Title Company, to protect the Title Company against any liens, encumbrances, or adverse matters arising during the gap period between the effective date of the Title Commitment and the recording date of the new mortgage; and
(f) Delivery and certification of an ALTA/NSPS Land Title Survey of the Property prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS, Florida License No. LS-7284), meeting the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys. We note that this survey has been completed, delivered, and is being reviewed separately by this firm and by the Title Company. A copy of the survey is enclosed with this letter for the Title Company's reference in connection with the resolution of survey-related exceptions discussed herein.
We will coordinate with your office to ensure timely satisfaction of all Schedule B-I requirements in advance of the anticipated closing date. Should the Title Company identify any additional Schedule B-I requirements or conditions not already reflected in the Title Commitment, we ask that you notify us promptly so that we may address them without delay.
4. Schedule B-II Exceptions — Objections and Requests
Set forth below are the Borrower's specific objections and requests with respect to the Schedule B-II exceptions identified in the Title Commitment. Each exception is addressed individually. To the extent any Schedule B-II exception is not specifically discussed below, such exception is not accepted and is deemed objected to unless and until the Borrower and the Lender expressly agree to its inclusion as a Permitted Exception.
4.1 Exception No. 1 — Existing Mortgage in Favor of Tidewater National Bank, N.A.
Exception as Shown: Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing granted by Coral Palms Resort Holdings LLC to Tidewater National Bank, N.A., in the original principal amount of $125,000,000.00, dated June 1, 2019, and recorded on June 5, 2019, in Official Records Book 2892, Page 0445, of the Public Records of Monroe County, Florida (the "Existing Mortgage"), together with all amendments, modifications, supplements, and assignments thereof, if any.
We also note the associated UCC-1 Financing Statement filed with the Florida Secured Transaction Registry under File No. 202219087643 (the "Existing UCC Filing"), which secures the personal property, fixtures, and related collateral described in the Existing Mortgage.
Objection: This exception must be removed in its entirety from the final lender's title insurance policy as an absolute condition to the closing of the Loan. The Lender requires a first-priority mortgage lien on the Property, and the continued existence of the Existing Mortgage on the title is wholly incompatible with the Lender's requirements and the terms of the Commitment Letter and Draft Loan Agreement.
Basis and Cure: The Existing Mortgage is to be paid off and satisfied in full from the proceeds of the new $160,000,000 Loan at the closing. Based on the most recent information available to the Borrower, the outstanding principal balance under the Existing Mortgage is approximately $118,500,000.00 as of October 15, 2022, together with accrued and unpaid interest at a rate of SOFR plus 2.25% per annum. Additionally, if the payoff occurs prior to March 1, 2023, a prepayment premium of 1.0% of the then-outstanding principal balance will be due, which based on the foregoing balance would equal approximately $1,185,000.00. We anticipate receiving an updated payoff letter from Tidewater National Bank, N.A. reflecting the precise payoff amount as of the anticipated closing date, including all accrued interest, the prepayment premium, and any other fees, costs, or charges required for full satisfaction and discharge.
Request: We request that the Title Company confirm that it will issue the lender's title insurance policy in favor of Pinnacle Atlantic Capital, LLC without this exception upon receipt at closing of each of the following:
(a) A payoff letter from Tidewater National Bank, N.A. (to be addressed to the Title Company as closing agent), issued by its authorized representative, Alan Prescott, Senior Vice President — Commercial Real Estate, at 600 Waterside Drive, Norfolk, Virginia 23510, stating the full payoff amount required to satisfy and discharge the Existing Mortgage and confirming that upon receipt of the payoff amount, Tidewater will deliver a satisfaction and discharge of mortgage in recordable form;
(b) A Satisfaction and Discharge of Mortgage (or Release of Mortgage) executed by Tidewater National Bank, N.A. in recordable form, sufficient for recording in the Public Records of Monroe County, Florida, to release and discharge the lien of the Existing Mortgage from the Property;
(c) A UCC-3 Termination Statement with respect to the Existing UCC Filing (File No. 202219087643), executed by Tidewater National Bank, N.A. as secured party, in form sufficient for filing with the Florida Secured Transaction Registry; and
(d) Wire transfer of the full payoff amount from the closing escrow account held by the Title Company to Tidewater National Bank, N.A. in accordance with the wire instructions set forth in the payoff letter.
In the alternative, if the executed Satisfaction and Discharge of Mortgage cannot be obtained from Tidewater National Bank, N.A. prior to or simultaneously with the closing of the Loan, we request that the Title Company agree to issue the lender's title insurance policy with a pending disbursement clause or, alternatively, affirmatively insure over this exception pursuant to an appropriate indemnity arrangement, with the Title Company committing to record the Satisfaction and Discharge of Mortgage in the Public Records of Monroe County, Florida promptly upon receipt from Tidewater. In such event, we would expect the Title Company to issue a post-closing letter or undertaking confirming its obligation to record the satisfaction and to provide us and Lender's Counsel with evidence of such recording, including a certified copy of the recorded satisfaction instrument.
4.2 Exception No. 2 — Real Estate Taxes and Assessments
Exception as Shown: Real estate taxes and assessments for the year 2022 and subsequent years, not yet due and payable, and any special assessments or non-ad valorem assessments levied by Monroe County or any other taxing authority with jurisdiction over the Property.
Objection: While the exception for current and subsequent year taxes not yet due and payable is a standard exception that the Borrower anticipates will remain in the final policy, we object to the extent this exception is drafted in a manner that could encompass delinquent or prior-year taxes. The exception should be limited to taxes for the current tax year (2022, payable in 2023) and subsequent tax years that are not yet due and payable as of the date of the policy.
Request: We request the following confirmations and modifications:
(a) The Title Company shall confirm in writing that all real estate taxes on the Property (Monroe County Property Folio No. 00460780-000100) for all years prior to the current tax year have been paid in full and that no delinquent taxes, tax liens, or tax certificates exist with respect to the Property;
(b) The Title Company shall confirm that there are no pending or threatened tax sales, tax deed applications, or tax lien foreclosures affecting the Property;
(c) The exception shall be modified to read substantially as follows: "Real estate taxes and assessments for the year 2022 (payable in 2023) and subsequent years, not yet due and payable, which are not yet a lien"; and
(d) If any special assessments, non-ad valorem assessments, or improvement district assessments are shown as affecting the Property, the Title Company shall identify each such assessment by levying authority, amount, and current status (including whether any installments are delinquent or past due), and provide copies of the assessment lien or notice of assessment.
4.3 Exception No. 3 — Easements, Restrictions, and Encumbrances of Record
Exception as Shown: Easements, restrictions, and other encumbrances of record affecting the Property, including but not limited to utility easements, access easements, drainage easements, marina and dock easements, and coastal setback or conservation easements.
Objection: The Borrower objects to any blanket, general, or unspecified easement exception. The inclusion of a general reference to "easements, restrictions, and other encumbrances of record" without specific identification of each instrument by its recording reference is unacceptable in a commercial mortgage loan transaction of this size and nature. The Lender's Counsel has indicated that the Lender will not accept a title policy containing vague or unspecified easement exceptions.
Request: We request that each easement, restriction, and encumbrance of record be specifically identified in the Schedule B-II exceptions by its recording reference (Official Records Book and Page number or instrument number) and that the following actions be taken:
(a) The Title Company shall provide this firm and Lender's Counsel with copies of each recorded easement, restriction, and encumbrance instrument identified in the Title Commitment;
(b) The Title Company shall confirm that each easement of record has been plotted on the ALTA/NSPS Land Title Survey prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS), a copy of which is enclosed herewith, and that the location of each easement as shown on the survey is consistent with the recorded instrument;
(c) The Title Company shall confirm that none of the easements of record materially impair or interfere with the current use, operation, or enjoyment of the Property as a full-service luxury resort hotel, marina, spa, conference center, and related facilities, or with the Borrower's ability to continue such use and operation in the ordinary course;
(d) To the extent any recorded easement encroaches upon or overlaps with the footprint of existing improvements on the Property, including any building, the parking structure, marina infrastructure (docks, piers, seawalls, fueling stations), or other permanent structures, the Title Company shall identify such encroachment and either remove the exception, provide affirmative insurance against loss arising from the encroachment, or confirm that the easement does not prohibit or restrict the maintenance and use of the existing improvements within the easement area; and
(e) The Title Company shall issue an ALTA 9-06 endorsement (Restrictions, Encumbrances, Minerals) or its equivalent, providing affirmative coverage with respect to recorded covenants, conditions, and restrictions affecting the Property, including coverage confirming that the insured interest is not subject to forfeiture or reversion by reason of any violation of any recorded covenant, condition, or restriction.
We reserve the right to raise additional objections to specific easements or restrictions once copies of all recorded instruments have been reviewed by this firm and by Lender's Counsel.
4.4 Exception No. 4 — Survey Matters
Exception as Shown: Any matters that would be disclosed by an accurate and complete survey of the Property, including but not limited to encroachments, overlaps, boundary disputes, shortages in area, and any other matters not of record.
Objection: The Borrower objects to the inclusion of a general survey exception. A current ALTA/NSPS Land Title Survey of the Property has been prepared by Landis & Shaw Surveying, Inc. under the direction of Robert Tran, PLS (Florida License No. LS-7284), certified to the Title Company, the Borrower, the Lender, and their respective counsel. The survey meets the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, including Table A items as specified by the Lender. Accordingly, there is no basis for retention of the general survey exception, and its inclusion is inconsistent with standard commercial lending practice.
Request: We request the following:
(a) The general survey exception shall be deleted in its entirety from Schedule B-II;
(b) In lieu of the general survey exception, the Title Company may include specific survey-related exceptions based on matters actually disclosed by the ALTA/NSPS survey, provided that each such exception is described with particularity and referenced to the survey;
(c) The Title Company shall confirm that it has received, reviewed, and accepted the ALTA/NSPS survey prepared by Landis & Shaw Surveying, Inc. and that the survey is sufficient for the Title Company to delete the general survey exception and issue the endorsements described herein;
(d) The Title Company shall issue an ALTA 25-06 endorsement (Same as Survey) confirming that the legal description of the Property in the title policy is the same as the property depicted on the survey; and
(e) If any encroachments are shown on the survey — including but not limited to fences, signs, walls, structures, or improvements from or onto adjacent parcels — the Title Company shall identify each such encroachment and either provide affirmative insurance against any loss or damage arising therefrom or confirm that the encroachment has been resolved. We note that a preliminary review of the survey has disclosed what appears to be a minor encroachment of a perimeter landscape wall onto an adjacent parcel along the northern boundary; we request the Title Company's assessment and proposed treatment of this matter.
4.5 Exception No. 5 — Riparian/Littoral Rights and Submerged Lands
Exception as Shown: Rights of the State of Florida in and to any submerged lands, tidal lands, or lands below the mean high water line adjacent to or underlying the Property; and any limitation on, or absence of, riparian or littoral rights appurtenant to the Property.
Objection: Given the waterfront and oceanfront nature of the Property, and particularly the presence of the 42-slip marina and associated waterfront improvements (including seawalls, docks, piers, boat lifts, and fueling facilities), this exception is of material significance to the Borrower and the Lender. A broad and unqualified exception for riparian and littoral rights and submerged lands could potentially exclude from coverage significant portions of the marina infrastructure and waterfront improvements that are integral to the operation and value of the Property.
Request: We request the following clarifications and actions:
(a) The Title Company shall clarify the precise extent of this exception and identify, by reference to the survey and the legal description, the boundary between upland (insured) property and any state-owned submerged lands or sovereign lands;
(b) The Title Company shall confirm whether the Borrower's marina facilities (including the 42-slip marina, all docks, piers, seawalls, boat lifts, and fueling stations) and other waterfront improvements are located within the boundaries of the insured property or whether any portion of such facilities extends over or upon state-owned submerged lands or sovereign lands;
(c) To the extent insurable under Florida law and the Title Company's underwriting guidelines, the Title Company shall provide affirmative coverage or an endorsement addressing the Borrower's riparian and littoral rights appurtenant to the Property, including the right of access to navigable waters, the right of view, and the right to construct and maintain docks, piers, and marina facilities;
(d) If the Borrower's marina or waterfront improvements are situated in whole or in part upon state-owned submerged lands or sovereignty lands, the Title Company shall identify any applicable submerged land lease, consent of use, or similar authorization issued by the State of Florida (through the Board of Trustees of the Internal Improvement Trust Fund or the Florida Department of Environmental Protection), and shall provide copies of any such lease or consent currently in effect; and
(e) The Title Company shall confirm whether any portion of the Property is subject to a state sovereignty submerged lands lease and, if so, the term, renewal provisions, and current status of such lease.
4.6 Exception No. 6 — Zoning and Land Use Restrictions
Exception as Shown: Any existing or future zoning, land use, or building code violations, restrictions, or regulations imposed by any governmental authority having jurisdiction over the Property.
Objection: The Borrower objects to any general zoning or land use exception. The Property is currently improved and operating as a full-service luxury resort hotel with ancillary marina, spa, conference center, parking, and food and beverage facilities. The Lender requires confirmation through the title policy and endorsements that the Property's current use is lawful and permitted under applicable zoning and land use regulations.
Request: We request the following:
(a) The Title Company shall issue an ALTA 3.1-06 endorsement (Zoning — Completed Structure) confirming that the Property's current use as a full-service resort hotel with marina, spa, conference center, parking structure, and food and beverage outlets is a permitted use under the applicable Monroe County zoning and land use regulations, and that the existing improvements comply with applicable zoning requirements as to use, floor area ratio, building height, setbacks, parking, and density (or, to the extent any nonconformity exists, that such nonconformity is a lawful, grandfathered, or legally nonconforming use);
(b) If any special permits, special exceptions, variances, conditional use permits, or development orders have been issued with respect to the Property or any portion thereof, the Title Company shall identify each such permit, variance, or order by reference number, issuing authority, and date, and shall confirm that each remains in full force and effect and is not subject to any pending appeal, revocation proceeding, or expiration that would affect the current use of the Property; and
(c) The Title Company shall provide copies of any zoning compliance letters, certificates of occupancy, or other governmental determinations relied upon by the Title Company in issuing the ALTA 3.1-06 endorsement.
4.7 Exception No. 7 — Covenants, Conditions, and Restrictions (CC&Rs)
Exception as Shown: Covenants, conditions, restrictions, and declarations of record affecting the Property, including any deed restrictions or declarations of restrictive covenants imposed by prior owners or applicable governmental authorities.
Objection: The Borrower objects to any covenants, conditions, or restrictions ("CC&Rs") that restrict the use of the Property in a manner inconsistent with its current operation as a luxury resort hotel with marina, spa, conference center, and related hospitality facilities, or that could give rise to a right of forfeiture, reversion, or re-entry.
Request: We request the following:
(a) The Title Company shall provide copies of all recorded CC&Rs, declarations of restrictive covenants, and deed restrictions affecting the Property, identified by recording reference;
(b) The Title Company shall confirm that no existing violation of any recorded CC&R, declaration, or deed restriction exists that would give rise to a right of forfeiture, reversion, re-entry, or termination of the Borrower's estate in the Property;
(c) The Title Company shall issue an endorsement or provide affirmative coverage confirming that (i) no violation of any CC&R exists as of the date of the policy that would result in forfeiture or reversion of title, and (ii) the CC&Rs do not prohibit or restrict the use of the Property for its current purposes; and
(d) If any CC&R contains a right of first refusal, consent requirement, or approval right in favor of any third party that could be triggered by the granting of the mortgage or by a foreclosure or deed in lieu of foreclosure, the Title Company shall identify such provision and provide affirmative coverage or an endorsement addressing the Lender's interest in the event of such triggering.
4.8 Exception No. 8 — Mechanics' and Materialmen's Liens
Exception as Shown: Rights of parties claiming by, through, or under mechanics' liens, construction liens, or claims of lien for labor performed or materials furnished in connection with the construction, renovation, or improvement of the Property.
Objection: The Borrower objects to this exception. The most recent comprehensive renovation of the Property was completed in August 2021 at a total cost of approximately $47,000,000. Under Section 713.22, Florida Statutes, the one-year limitation period for recording a claim of lien following final furnishing of labor, services, or materials has long since expired. Accordingly, no basis exists for the retention of a mechanics' lien exception in the title policy.
Request: We request the following:
(a) The Title Company shall confirm that no mechanics' liens, construction liens, or claims of lien are currently of record or have been filed against the Property in the Public Records of Monroe County, Florida;
(b) The Title Company shall confirm that no notices of commencement are currently of record with respect to the Property that remain open or unexpired;
(c) If any such liens, claims of lien, or notices of commencement are of record, the Title Company shall immediately identify them and provide copies, and the Borrower shall take prompt action to cause the satisfaction, release, or bonding off of any such liens pursuant to Section 713.24, Florida Statutes;
(d) This exception shall be deleted from Schedule B-II in its entirety; and
(e) In the alternative, if the Title Company is unwilling to delete this exception entirely, the Title Company shall provide affirmative coverage confirming that the Title Company will insure the Lender against any loss or damage arising from mechanics' liens or construction liens relating to work performed or materials furnished prior to the date of the policy, and the Borrower will provide an owner's affidavit confirming the completion date of the renovation and the absence of any known unpaid claims.
4.9 Exception No. 9 — Environmental and Flood Zone Matters
Exception as Shown: Any lien or encumbrance arising from environmental contamination, hazardous substances, or environmental protection laws, and any matters relating to the location of the Property within a special flood hazard area.
Objection: The Borrower objects to any general environmental exception to the extent it purports to exclude from title insurance coverage any lien imposed by environmental protection laws or arising from the presence, release, or remediation of hazardous substances on the Property. Environmental contamination issues are being separately and thoroughly addressed through a Phase I Environmental Site Assessment (the "Phase I ESA") prepared by Oakridge Environmental Consulting Group, Inc., under the direction of Dr. James Whitmore, Lead Consultant, in accordance with ASTM Standard E 1527-21. The Phase I ESA is being delivered separately to the Lender and Lender's Counsel as a condition to closing.
With respect to flood zone matters, we note that the Property is located in Monroe County (Florida Keys) and portions of the Property may be situated within one or more designated Special Flood Hazard Areas as identified on the applicable FEMA Flood Insurance Rate Map. The applicable flood zone designations are reflected on the ALTA/NSPS survey prepared by Landis & Shaw Surveying, Inc.
Request: We request the following:
(a) The Title Company shall issue an environmental protection lien endorsement, providing affirmative coverage against loss arising from any environmental protection lien that attains priority over the insured mortgage lien;
(b) The Title Company shall identify the applicable FEMA flood zone designation(s) for the Property as shown on the most current Flood Insurance Rate Map (FIRM) and as depicted on the survey, for informational purposes;
(c) For the avoidance of doubt, the Borrower confirms that flood insurance coverage is separately being procured through Bayfront Specialty Insurance Corp. (surplus lines flood insurance) supplementing National Flood Insurance Program ("NFIP") coverage, with all insurance matters being coordinated by Castlegate Risk Advisors LLC (Monica Iglesias, Account Executive). Flood insurance is not a title insurance matter, but this information is provided for completeness; and
(d) The general environmental exception, to the extent it goes beyond environmental protection liens that attain priority over the insured mortgage, should be narrowed or deleted. The Title Company's coverage should not purport to exclude coverage for environmental protection liens that are otherwise insurable under the ALTA policy form and applicable endorsements.
4.10 Exception No. 10 — Gap Period / Intervening Liens
Exception as Shown: This objection relates to the gap period between the effective date of the Title Commitment (December 15, 2022) and the anticipated recording date of the new mortgage in favor of Pinnacle Atlantic Capital, LLC.
Objection and Request: The Borrower and the Lender require that no liens, encumbrances, conveyances, or other adverse matters arise or be recorded against the Property during the gap period that are not reflected in the Title Commitment. The Lender will not accept a title policy that does not provide gap coverage.
We request the following:
(a) The Title Company shall provide gap coverage from the effective date of the Title Commitment through the recording date of the new mortgage, ensuring that the lender's title insurance policy insures against any intervening liens, judgments, encumbrances, or adverse matters that may arise or be recorded during such gap period;
(b) The Title Company shall issue a bring-down or date-down endorsement at closing, confirming that no additional exceptions or adverse matters have appeared in the public records between the effective date of the Title Commitment and the closing and recording date;
(c) To the extent the Title Company requires a gap indemnity from the Borrower or the Guarantor as a condition to providing gap coverage, the Title Company shall provide its form of gap indemnity agreement for our review at the earliest practicable date; and
(d) If the effective date of the Title Commitment is more than thirty (30) days prior to the anticipated closing date, the Title Company shall issue an updated or continued Title Commitment (or a continuation or supplement thereto) extending the effective date to a date no earlier than thirty (30) days prior to closing, and shall conduct an additional search of the public records and applicable judgment, lien, and bankruptcy indices to confirm the absence of any intervening adverse matters.
4.11 Additional and Miscellaneous Exceptions
In addition to the foregoing specific objections, the Borrower objects to any and all standard printed exceptions that are customarily deleted or modified in connection with commercial mortgage loan transactions of this type. Without limiting the generality of the foregoing, the Borrower specifically objects to the following categories of standard exceptions:
(a) Parties in Possession. Any exception for rights or claims of parties in possession of the Property other than the Borrower. The ALTA/NSPS survey and the Borrower's owner's affidavit will confirm that the Property is in the sole possession of the Borrower (or its hotel manager, employees, and guests in the ordinary course of the resort hotel's operations), and that no adverse possessors, squatters, or parties claiming rights of possession inconsistent with the Borrower's fee ownership are in possession of the Property. We request that this exception be deleted upon receipt of the survey and a possession affidavit from the Borrower;
(b) Unrecorded Easements. Any exception for unrecorded easements, claims of easement, or implied easements not shown by the public records. This exception should be deleted. The survey and the Borrower's owner's affidavit will address any matters that might give rise to unrecorded easement claims;
(c) Water Rights and Mineral Rights. Any exception for water rights, mineral rights, or subsurface rights to the extent applicable. We request deletion of any such exception or, in the alternative, issuance of an ALTA 35-06 endorsement (Minerals and Other Subsurface Substances — Buildings) providing affirmative coverage against damage to existing improvements arising from the exercise of any mineral or subsurface rights;
(d) Matters Disclosed by Survey. As addressed in Section 4.4 above, any general exception for matters that would be disclosed by an accurate survey must be deleted and replaced, if at all, with specific survey-related exceptions based on the ALTA/NSPS survey actually prepared for this transaction; and
(e) Other Standard Exceptions. Any other standard or preprinted exceptions that are inconsistent with the extended coverage required by the Lender under the Commitment Letter and Draft Loan Agreement.
We request that the Title Company provide its standard form of lender's affidavit and/or owner's affidavit (or both, as applicable) to facilitate the deletion of standard exceptions. Upon receipt, we will arrange for the Borrower's execution and delivery of such affidavit(s) at or prior to closing.
5. Required Title Insurance Endorsements
The Commitment Letter and Draft Loan Agreement require that the lender's title insurance policy be issued with certain endorsements. Set forth below is the list of endorsements that will be required by Pinnacle Atlantic Capital, LLC at closing. We request the Title Company's confirmation that each of the following endorsements is available under the Title Company's underwriting guidelines and applicable Florida law, and that the Title Company will commit to issue each such endorsement at closing:
1.  ALTA 3.1-06 — Zoning (Completed Structure). Confirming that the Property's current use as a resort hotel with marina, spa, conference center, parking, and food and beverage operations is a permitted use under applicable zoning and land use regulations, and that the existing improvements comply with zoning requirements;
2.  ALTA 9-06 — Restrictions, Encumbrances, Minerals. Providing affirmative coverage with respect to recorded covenants, conditions, and restrictions, including coverage against forfeiture or reversion;
3.  ALTA 9.6-06 or ALTA 9.7-06 — Private Rights (if applicable). To the extent any CC&R or recorded instrument contains private transfer fee obligations or other private rights that could affect the insured mortgage;
4.  ALTA 17-06 — Access and Entry. Confirming that the Property has direct legal and physical access to and from a public roadway (Overseas Highway / U.S. Route 1);
5.  ALTA 17.1-06 — Indirect Access and Entry (if applicable). If access to the Property is provided through an intervening parcel or by means of an access easement rather than direct frontage on a public road;
6.  ALTA 18-06 — Single Tax Parcel. Confirming that the Property is assessed as a single tax parcel for real estate tax purposes under Monroe County Property Folio No. 00460780-000100;
7.  ALTA 18.1-06 — Multiple Tax Parcel (if applicable). If the Property is assessed as multiple tax parcels, confirming the identity of all such parcels and providing coverage accordingly;
8.  ALTA 19-06 — Contiguity (if applicable). If the Property is comprised of multiple parcels, confirming that such parcels are contiguous and together form a single integrated site;
9.  ALTA 22-06 — Location. Confirming the location of the insured land in relation to the improvements shown on the survey;
10.  ALTA 25-06 — Same as Survey. Confirming that the legal description of the insured land is the same as the land depicted on the ALTA/NSPS survey;
11.  ALTA 28-06 — Easement (Damage or Enforced Removal). Providing coverage against loss or damage arising from the enforced removal or alteration of existing improvements that encroach onto an easement area;
12.  ALTA 35-06 — Minerals and Other Subsurface Substances (Buildings). Providing coverage against damage to existing buildings resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or other subsurface substances;
13.  Usury Endorsement (Florida). As required under Florida law, confirming that the insured mortgage is not rendered unenforceable by reason of any usury defense;
14.  Doing Business Endorsement. Confirming that the enforceability of the insured mortgage is not affected by the failure of the Lender to be authorized to transact business in the State of Florida;
15.  Comprehensive Endorsement / Lender's Extended Coverage. Providing extended coverage over standard exceptions and comprehensive protections customary for commercial mortgage loan transactions;
16.  Environmental Protection Lien Endorsement. Providing coverage against loss arising from any environmental protection lien imposed under federal, state, or local law that attains priority over the insured mortgage;
17.  Variable Rate / Future Advance Endorsement (if applicable). If the Loan documents provide for a variable interest rate or future advances, confirming coverage with respect to such provisions; and
18.  Tie-In / Aggregation Endorsement (if applicable). If the Loan involves multiple parcels or policies, providing aggregation of coverage across policies.
We request that the Title Company provide written confirmation of the availability of each of the foregoing endorsements, together with the Title Company's premium schedule setting forth the premiums and fees for the lender's title insurance policy and each endorsement. Such information is required for inclusion in the closing cost estimates being prepared in connection with the Loan.
6. Title Policy Requirements
The lender's title insurance policy to be issued at closing must satisfy the following requirements:
(a) Policy Amount. The policy shall be issued in the amount of $160,000,000.00, equal to the principal amount of the Loan;
(b) Named Insured. The policy shall name Pinnacle Atlantic Capital, LLC as the insured lender, together with its successors and assigns;
(c) Policy Form. The policy shall be issued on the 2006 ALTA Loan Policy form (or the most current equivalent ALTA loan policy form then in effect and accepted by the Lender);
(d) First-Priority Lien. The policy must reflect and insure a valid first-priority mortgage lien in favor of Pinnacle Atlantic Capital, LLC on the Property, subject only to those Schedule B-II exceptions that the Lender has expressly approved in writing as Permitted Exceptions under the Loan Agreement;
(e) Endorsements. The policy shall include all endorsements listed in Section 5 above, together with any additional endorsements that the Lender or Lender's Counsel may reasonably require prior to closing; and
(f) Pro Forma Review. Lender's Counsel, Whitford Baines & Driscoll LLP (Attn: Philip Tarrant Corporation and Catherine Yee), must receive, review, and approve a pro forma copy of the lender's title insurance policy (including all Schedule B-II exceptions in their final form and all endorsements) in advance of the closing. We request that the pro forma title policy be delivered to Lender's Counsel no later than five (5) business days prior to the anticipated closing date.
7. Deadlines and Response Requested
Resolution of the title objections set forth in this letter is a condition precedent to the closing of the Loan. Unresolved title matters may delay or prevent closing, and any such delay may have material adverse consequences for all parties involved, including the potential expiration of the rate lock under the Commitment Letter.
We respectfully request that the Title Company respond to this letter in writing within ten (10) business days of receipt, confirming the following:
(a) Which of the objections set forth herein the Title Company can cure or remove from Schedule B-II;
(b) Which Schedule B-II exceptions the Title Company can insure over by means of endorsements, affirmative coverage, or other appropriate mechanisms;
(c) Which exceptions or objections require further documentation, action, or information from the Borrower, the Guarantor, or any third party in order to be resolved, together with a description of the specific documentation or action required;
(d) The availability and pricing of all endorsements listed in Section 5 above; and
(e) The Title Company's premium schedule for the lender's title insurance policy in the amount of $160,000,000.00, together with all endorsement premiums, search fees, and related charges.
We further reserve all rights to raise additional title objections if any updated title searches, continuations, supplements, or amendments to the Title Commitment reveal new or previously undisclosed matters affecting the Property. Similarly, the Borrower reserves the right to supplement this letter with additional objections based on the Lender's review and comments on the Title Commitment and pro forma title policy.
8. Copies and Distribution
A copy of this letter is being simultaneously delivered to the following parties:
(a) Whitford Baines & Driscoll LLP, Attention: Philip Tarrant Corporation, Partner, and Catherine Yee, Associate, 1221 Avenue of the Americas, Suite 4400, New York, New York 10020 (Lender's Counsel);
(b) Pinnacle Atlantic Capital, LLC, Attention: Martin Drubeck, Managing Director, and Jennifer Kwon, Vice President, 200 Lexington Avenue, 38th Floor, New York, New York 10016 (Lender — for informational purposes, delivered through Lender's Counsel); and
(c) Derek Huang, SVP — Capital Markets & Treasury, Verimark Hospitality Group Inc., 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131 (Client).
9. Reservation of Rights
The Borrower expressly reserves all rights to supplement, modify, amend, or withdraw any or all of the objections set forth in this letter at any time prior to the closing of the Loan. Nothing in this letter shall be deemed to constitute a waiver by the Borrower or the Lender of any objection to any Schedule B-II exception, whether or not specifically addressed herein. Any and all Schedule B-II exceptions not expressly accepted in this letter are deemed objected to and must be removed, cured, endorsed over, or affirmatively insured against as a condition to closing.
Furthermore, the acceptance of any Schedule B-II exception as a Permitted Exception is subject in all cases to the express written approval of Pinnacle Atlantic Capital, LLC (as Lender) and its counsel, Whitford Baines & Driscoll LLP. The Borrower does not have the unilateral authority to accept or waive any title exception on behalf of the Lender, and any indication by the Borrower that a particular exception is acceptable is subject to confirmation by the Lender.
This letter is not intended to, and shall not, create any attorney-client relationship between Calderwood & Harkness LLP and any party other than the Borrower and the Guarantor. This letter is provided for the sole purpose of communicating the Borrower's title objections and related requests to the Title Company and does not constitute a legal opinion or certification of any kind.
We appreciate the Title Company's prompt attention to the matters set forth in this letter and look forward to working with you to resolve all outstanding title issues in advance of the closing. Please do not hesitate to contact the undersigned or Douglas Fairchild at (305) 814-7215 if you have any questions or require additional information.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Grace Nakamura Senior Associate Direct: (305) 814-7238
Email: gnakamura@calderwoodharkness.com
Approved by:
________________________________________
Douglas Fairchild Partner Direct: (305) 814-7215
Email: dfairchild@calderwoodharkness.com
Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3800 Miami, Florida 33131
cc:
Douglas Fairchild, Calderwood & Harkness LLP Angela Fontaine, Calderwood & Harkness LLP Rafael Dominguez, Calderwood & Harkness LLP Philip Tarrant Corporation, Whitford Baines & Driscoll LLP Catherine Yee, Whitford Baines & Driscoll LLP Derek Huang, Verimark Hospitality Group Inc. Natasha Ricard, Verimark Hospitality Group Inc.
Encl.:
Copy of ALTA/NSPS Land Title Survey prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS, Florida License No. LS-7284) (for the Title Company's reference in resolving survey-related exceptions)

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