Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the prepayment, assignment, and repricing provisions of Verimark Hospitality Group Inc.'s ("VHG" or the "Company") existing $625,000,000 Term Loan B credit agreement (the "Existing TLB") in order to identify the constraints, costs, and strategic considerations relevant to the proposed refinancing of the Existing TLB with a new $700,000,000 Term Loan B

II. Background — The Existing TLB Facility A. Overview of the Existing Credit Agreement The Existing TLB is governed by that certain Credit Agreement dated as of February 14, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the "Existing Credit Agreement"), among Verimark Hospitality Group Inc., as Borrower, the Guarantors party thereto, the Lenders party thereto, and Greystone Feder

III. Prepayment Provisions A. Voluntary Prepayment — General

Article II, Section 2.05(a) of the Existing Credit Agreement governs voluntary prepayments of the term loans. Pursuant to this provision, VHG is permitted to prepay the term loans in whole or in part at any time, subject to the following conditions: Minimum Prepayment Amounts. Any partial voluntary prepayment of the term loans must be in a minimum principal amount of $1,000,000 and in integral multiples of $500,000 i

Section 2.06 of the Existing Credit Agreement sets forth customary mandatory prepayment provisions applicable to the term loans. These provisions are summarized below. Excess Cash Flow Sweep. VHG is required to prepay the term loans annually with a specified percentage of "Excess Cash Flow" (as defined in the Existing Credit Agreement) for each fiscal year, subject to the following step-downs based on the Company's n

IV. Assignment and Transfer Provisions A. Lender Assignments

Article X, Section 10.04 of the Existing Credit Agreement governs assignments of term loan interests by lenders. The relevant provisions are summarized below. General Right to Assign. Each lender under the Existing TLB is permitted to assign all or a portion of its rights and obligations under the Existing Credit Agreement (including its outstanding term loan principal) to one or more eligible assignees, subject to t

V. Repricing and Most Favored Nation (MFN) Provisions A. Existing Repricing Protection As discussed in detail in Section III.B above, the Existing Credit Agreement included a repricing protection provision (soft call) requiring VHG to pay a 1.00% premium on any Repricing Transaction occurring during the first twenty-four (24) months following the closing date — that is, from February 14, 2020 through February 14, 202

Section 2.14(d) of the Existing Credit Agreement contains a most favored nation ("MFN") provision applicable to incremental term loans incurred under the incremental facility (the "Incremental Term Loan Facility") established pursuant to Section 2.14 of the Existing Credit Agreement. The MFN provision is designed to protect existing term loan lenders from economic dilution in the event that VHG incurs additional incr

VI. Benchmark / LIBOR Considerations The Existing TLB is a LIBOR-based facility, bearing interest at LIBOR plus 425 basis points with a LIBOR floor of 1.00%. The Existing Credit Agreement contains fallback language for LIBOR cessation, providing for an amendment-based approach to transition to an alternative benchmark rate in the event that LIBOR becomes unavailable. Under this approach, VHG and Greystone (as Adminis

VII. Other Relevant Provisions A. Change of Control

Section 7.01(h) of the Existing Credit Agreement contains a customary change of control provision. Under this provision, a "Change of Control" constitutes an Event of Default and requires VHG to offer to prepay the term loans in full at 101% of the outstanding principal amount (plus accrued and unpaid interest). A "Change of Control" is defined to include, among other things: (a) the acquisition by any person or grou

Article VI of the Existing Credit Agreement contains customary negative covenants applicable to VHG and its restricted subsidiaries, including limitations on: (a) the incurrence of additional indebtedness; (b) the creation or existence of liens; (c) restricted payments (including dividends, distributions, and equity repurchases); (d) sales, transfers, and other dispositions of assets; (e) transactions with affiliates

VIII. Cost-Benefit Summary of Prepayment The following table summarizes the estimated costs and benefits of the proposed refinancing: Costs: Benefits: Payback Analysis. The simple payback period on the $3,125,000 prepayment premium is calculated as follows: $3,125,000 ÷ $3,500,000 = approximately 10.7 months This payback period is well within one year, meaning that the cumulative interest savings from the spread redu

IX. Recommended Next Steps Based on the foregoing analysis, we recommend the following next steps to advance the proposed refinancing:

1. Obtain Payoff Quote. Request and obtain a formal payoff letter and quote from Greystone Federal Credit Corp. (contact: Marion Stillwell, Vice President, Agency Services, 200 Park Avenue South, 22nd Floor, New York, NY 10003; telephone: (212) 555-4820). The payoff letter should specify the outstanding principal balance, accrued interest, prepayment premium, per diem interest, wire instructions, and lien release aut

2. Confirm Per Diem and Breakage Costs. Confirm the per diem interest rate and any applicable LIBOR breakage costs with Greystone's agency services desk. This information is necessary to optimize the selection of the closing date and to finalize the payoff amount.

3. Coordinate on Interest Period End Dates. Coordinate with VHG treasury (Glenn Fischbach, Vice President, Treasury) to identify the current and upcoming interest period end dates under the Existing TLB. The closing date for the refinancing should be scheduled to coincide with an interest period end date, if practicable, to minimize or eliminate LIBOR breakage costs.

4. Negotiate Borrower-Favorable Terms in the New Facility. Use the analysis of the existing MFN provision (75 bps threshold / 12-month sunset) and repricing protection (1.00% premium / 24-month soft call) provisions as a benchmark and negotiating lever for obtaining more borrower-favorable terms in the new facility. Specifically, VHG should target a 50 bps MFN threshold with an 18-month sunset, and a 1.00% soft call

5. Prepare Initial Term Sheet Markup. Begin preparation of the initial markup of the term sheet based on the Crescent Harbor proposal received on April 22, 2022. The markup should reflect the negotiating positions outlined in this memorandum, including the MFN, repricing protection, covenant, and benchmark provisions.

6. Coordinate with Financial Advisor. Discuss the effective yield definition methodology for MFN purposes with VHG's financial advisor, Meridian Strauss Advisory LLC (contact: Elise Cavanaugh, Managing Director), to ensure alignment on the economic analysis and to support the negotiation of favorable MFN terms.

7. SOFR Transition and Tax Memoranda. Coordinate with Daniel Obi on the preparation and circulation of the SOFR transition memorandum, which will address the detailed benchmark mechanics for the new facility. Additionally, coordinate with Leonard Cross (Tax Group) on the tax treatment of the prepayment premium and the unamortized original issue discount from the Existing TLB, including the timing and characterization