Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H") has been engaged to represent Verimark Hospitality Group Inc. ("VHG" or the "Company") as borrower in a proposed $700,000,000 senior secured Term Loan B refinancing (the "Proposed Refinancing" or the "Transaction"). The engagement letter was executed on April 8, 2022, and the matter was formally opened on April 4, 2022, under Engagement No. 1016-00009. VHG is a D

II. Overview of Verimark Hospitality Group Inc. A. Business Description VHG is one of the larger publicly traded owner-operators of hotels in the United States. As of the date of this memorandum, VHG owns and operates a portfolio of 74 full-service and select-service hotels located across 18 states, encompassing a diverse geographic footprint that includes major metropolitan markets, resort destinations, and conventi

III. VHG's Existing Capital Structure A thorough understanding of VHG's existing capital structure is essential for structuring the Proposed Refinancing, analyzing the payoff mechanics for the Existing TLB, and ensuring that the documentation for the New TLB properly accommodates VHG's outstanding indebtedness. This section provides a detailed summary of each component of VHG's existing debt facilities, followed by a

IV. Proposed Transaction Structure A. Facility Terms The principal terms of the New TLB, as currently proposed, are summarized below. These terms are based on preliminary discussions between VHG, Meridian Strauss Advisory LLC, and Crescent Harbor, and are subject to the receipt and review of Crescent Harbor's formal term sheet, which is expected to be delivered on or about April 22, 2022. The principal contacts at Cr

I. Guarantors The obligations of VHG under the New TLB will be unconditionally guaranteed by each of VHG's material domestic subsidiaries. Based on our preliminary review of VHG's corporate structure, the following entities are expected to serve as Guarantors: (a) Verimark Resort Properties LLC — a Delaware limited liability company that owns 42 of VHG's 74 hotel properties. As the primary property-owning subsidiary,

V. LIBOR-to-SOFR Transition A. Background The Existing TLB under the Greystone Facility utilizes LIBOR as its benchmark interest rate, with an applicable margin of 425 basis points. As a consequence of the well-documented cessation of LIBOR, the regulatory directive from the Financial Stability Oversight Council, and the guidance issued by the Federal Reserve Board, the Commodity Futures Trading Commission, and other

VI. Key Negotiation Points This section identifies and analyzes the principal negotiation issues that we anticipate will arise during the documentation process for the Proposed Refinancing. For each issue, we summarize the relevant background, describe the expected position of Crescent Harbor and the lender syndicate, articulate VHG's negotiation objectives, and provide our preliminary recommendations. These recommen