Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the incremental term loan provisions as currently drafted in the second Calderwood & Harkness revised draft of the Credit Agreement, dated June 8, 2022 (the "Credit Agreement" or the "Second Revised Draft"), among Verimark Hospitality Group Inc. (as Borrower), the Guarantors party thereto, Crescent Harbor Bank, N.A. (as Administrative Agent and Collateral Agent), and the

1. Incremental Capacity. The Credit Agreement permits VHG to incur incremental term loans after closing, subject to specified capacity baskets (a fixed dollar basket of $175,000,000 and a ratio-based basket requiring pro forma Total Net Leverage not to exceed 3.50x) and customary conditions precedent. These provisions afford VHG meaningful flexibility to fund its acquisition pipeline and general corporate purposes th

2. MFN Applicability and Sunset. The MFN clause applies to any Incremental Term Loans incurred under the Credit Agreement during the 18-month MFN sunset period running from the closing date (July 21, 2022) through January 21, 2024. The MFN is operative only during this window; after the sunset date, VHG may incur incremental term loans at any yield without triggering any adjustment to the Initial TLB margin.

3. MFN Threshold. The negotiated MFN Threshold is 50 basis points. If the "Effective Yield" of any Incremental Term Loan incurred during the sunset period exceeds the Effective Yield of the Initial TLB by more than 50 basis points, the Applicable Margin on the Initial TLB is automatically adjusted upward such that the Initial TLB's Effective Yield is within 50 basis points of the Effective Yield of the triggering Inc

4. Post-Sunset Flexibility. After the MFN sunset date of January 21, 2024, VHG may incur incremental term loans at any Effective Yield without consequence to the Initial TLB pricing. This provides VHG with unrestricted pricing flexibility for its medium-term capital structure planning.

5. Open Drafting Points. This memorandum identifies several open drafting points requiring discussion with Whitfield Gage & Partridge LLP ("WGP"), counsel to Crescent Harbor Bank, N.A., including (a) the treatment of the SOFR floor differential in the Effective Yield definition, (b) the standard of discretion afforded to the Administrative Agent in yield calculations, (c) the dollar threshold for the Acquisition MFN

II. BACKGROUND AND TRANSACTION OVERVIEW A. The Refinancing Transaction Verimark Hospitality Group Inc. is undertaking a refinancing of its existing $625,000,000 senior secured Term Loan B facility (the "Existing TLB"), which was originally closed on February 14, 2020 with Greystone Federal Credit Corp. as administrative agent (CUSIP 92347LAA0). The Existing TLB was arranged in connection with VHG's acquisition of the

III. INCREMENTAL FACILITY PROVISIONS — DETAILED ANALYSIS A. Overview of the Incremental Facility Framework

Section 2.14 of the Credit Agreement (entitled "Incremental Facilities") sets forth the framework pursuant to which VHG may incur additional term loan indebtedness ("Incremental Term Loans") and/or additional revolving credit commitments ("Incremental Revolving Commitments") after the closing date, in each case subject to the conditions and limitations described below. Collectively, Incremental Term Loans and Increme

1. Fixed Dollar Basket. Section 2.14(a)(i) permits VHG to incur Incremental Term Loans and/or Incremental Revolving Commitments in an aggregate principal amount not to exceed $175,000,000 (the "Fixed Dollar Basket"). This amount represents approximately 25% of closing date Adjusted EBITDA of $341,000,000, rounded to reflect the negotiated figure. The Fixed Dollar Basket may be utilized without any requirement that VH

2. Ratio-Based Basket (Incurrence Test). Section 2.14(a)(ii) permits VHG to incur an unlimited amount of Incremental Term Loans, provided that after giving pro forma effect to such incurrence (and the use of proceeds thereof, including any acquisitions or other permitted investments funded therefrom), the Total Net Leverage Ratio does not exceed 3.50x (the "Incurrence Test"). The 3.50x threshold represents a ratio th

3. Combined Use. Importantly, Section 2.14(a)(iii) provides that the Fixed Dollar Basket and the Ratio-Based Basket may be utilized simultaneously. That is, VHG may incur incremental facilities using both baskets in a single transaction or across multiple transactions, applying capacity from either or both baskets. The Fixed Dollar Basket may be accessed without satisfying the Incurrence Test, while any amounts incur

4. Classification Flexibility. Section 2.14(a)(iv) grants VHG the right to reclassify amounts between the Fixed Dollar Basket and the Ratio-Based Basket at the time of incurrence (and at any time thereafter upon notice to the Administrative Agent), subject to satisfaction of the applicable conditions at the time of reclassification. This "reclassification" mechanic provides VHG with flexibility to optimize its basket

Section 2.14(b) of the Credit Agreement sets forth the conditions precedent that must be satisfied (or waived by the Administrative Agent) in connection with each incurrence of Incremental Facilities. These conditions are summarized below:

1. No Default. No Event of Default or Default (each as defined in Article VIII of the Credit Agreement) shall have occurred and be continuing at the time of incurrence, or would result from such incurrence and the application of the proceeds thereof. This is a standard condition designed to ensure that the Borrower does not increase its indebtedness at a time when it is in breach of its existing obligations.

2. Pro Forma Financial Covenant Compliance. To the extent the springing financial covenant is then in effect (i.e., to the extent aggregate revolving credit exposure exceeds 35% of total revolving commitments, or $140,000,000), VHG shall be in pro forma compliance with the 4.5x maximum Total Net Leverage Ratio after giving effect to the incremental incurrence. We note that this condition tests compliance with the mai

3. Accuracy of Representations and Warranties. The representations and warranties of VHG and each Guarantor set forth in Article V of the Credit Agreement shall be true and correct in all material respects (or, in the case of any representation or warranty qualified by materiality or "Material Adverse Effect," in all respects) as of the date of such incurrence, except to the extent such representations and warranties

4. Execution and Delivery of Incremental Amendment. VHG shall have executed and delivered to the Administrative Agent an Incremental Amendment, duly executed by VHG, the Administrative Agent, and each Incremental Lender, specifying the terms of the Incremental Facility (including the principal amount, applicable margin, maturity date, amortization schedule, and any other terms that differ from those of the Initial TL

5. Legal Opinions and Officer's Certificates. VHG shall have delivered to the Administrative Agent (a) a customary legal opinion of borrower's counsel (Calderwood & Harkness LLP) addressing enforceability, due authorization, no conflict, and other customary matters, (b) an officer's certificate of VHG (signed by the Chief Financial Officer or Treasurer) certifying compliance with the conditions set forth in this Sect

6. Reaffirmation of Guarantees and Security Interests. Each Guarantor shall have executed and delivered a reaffirmation agreement confirming that its guaranty obligations and the security interests granted under the Security Agreement and related collateral documents extend to the Incremental Facility obligations.

7. Prior Written Notice. VHG shall have provided the Administrative Agent with at least three (3) business days' prior written notice of the proposed Incremental Facility incurrence, specifying the proposed principal amount, anticipated funding date, and identity of the Incremental Lenders (to the extent known).

8. Minimum Tranche Size. Each Incremental Facility shall have an aggregate principal amount of at least $25,000,000 (or such lesser amount as constitutes all remaining capacity under the applicable basket). This minimum threshold is intended to prevent a proliferation of small, administratively burdensome incremental tranches. D. Terms of Incremental Term Loans

Section 2.14(c) of the Credit Agreement sets forth the permitted terms for Incremental Term Loans. These provisions establish guardrails that protect the interests of the initial TLB lender syndicate while affording VHG flexibility to tailor incremental debt to market conditions and investor demand at the time of incurrence: Maturity. The final maturity date of any Incremental Term Loan must be no earlier than the ma

Section 2.14(d) of the Credit Agreement addresses Incremental Revolving Commitments, which are subject to the same capacity baskets described in Section III.B above but differ from Incremental Term Loans in several important respects. Most significantly for purposes of this memorandum, Incremental Revolving Commitments are not subject to the MFN clause. The MFN provision set forth in Section 2.14(c)(iv) applies exclu

Section 2.15 of the Credit Agreement separately permits VHG to incur "Incremental Equivalent Debt" — defined as pari passu or junior lien indebtedness incurred outside the Credit Agreement facility structure but subject to the same aggregate capacity baskets applicable to Incremental Facilities under Section 2.14. Incremental Equivalent Debt is typically structured as a standalone term loan agreement or a note issuan

IV. MOST FAVORED NATION PROVISION — MECHANICS AND INTERACTION WITH INCREMENTAL TERMS A. Overview of the MFN Clause

Section 2.14(c)(iv) of the Credit Agreement sets forth the MFN provision applicable to Incremental Term Loans. The MFN clause, as reflected in the Second Revised Draft (June 8, 2022), operates as follows: If at any time during the period beginning on the Closing Date (July 21, 2022) and ending on the date that is 18 months after the Closing Date (January 21, 2024) (the "MFN Sunset Period"), VHG incurs any Incremental

Section 2.14(c)(iv)(B) of the Credit Agreement establishes the following step-by-step process for the MFN Adjustment when the MFN Threshold is exceeded: Step 1: Notice of Proposed Incurrence. VHG delivers notice to the Administrative Agent (Crescent Harbor Bank, N.A.) of the proposed Incremental Term Loan incurrence, specifying the proposed principal amount, anticipated funding date, Applicable Margin, SOFR floor (if

Section 2.14(c)(iv)(C) of the Credit Agreement provides that the MFN clause does not apply to the following categories of incremental indebtedness:

1. Acquisition MFN Carve-Out. Incremental Term Loans incurred to finance a "Permitted Acquisition" (as defined in Section 1.01 of the Credit Agreement) are excluded from the MFN calculation, provided that the aggregate principal amount of such acquisition-related Incremental Term Loans does not exceed $100,000,000 (the "Acquisition MFN Carve-Out"). This carve-out permits VHG to incur acquisition financing at yields t

2. Post-Sunset Incurrences. Incremental Term Loans incurred after the MFN Sunset Date of January 21, 2024 are excluded from the MFN clause by operation of the sunset mechanism itself. This is not a "carve-out" in the traditional sense but rather a temporal limitation on the MFN's applicability.

3. Other Excluded Indebtedness. As noted in Section III.E and Section III.F above, the following categories of indebtedness are not subject to the MFN clause: • Incremental Revolving Commitments: Not subject to MFN (Section 2.14(d) expressly excludes revolving facilities from the yield protection mechanism). • Incremental Equivalent Debt: Pari passu or junior lien debt incurred outside the Credit Agreement facility s

V. ILLUSTRATIVE SCENARIOS — MFN INTERACTION WITH INCREMENTAL INCURRENCE To assist in understanding the practical operation of the MFN clause, we present below four illustrative scenarios involving Incremental Term Loan incurrences at various pricing levels and timeframes. These scenarios are intended to demonstrate the range of potential outcomes and to inform VHG's strategic planning regarding the timing and pricing

VI. INTERACTION WITH REPRICING PROTECTION (SOFT CALL)

Section 2.10(a)(v) of the Credit Agreement contains a repricing protection provision (commonly referred to as a "soft call") that imposes a 1.00% prepayment premium ($7,000,000 on the full $700,000,000 principal amount) if VHG reprices or refinances the Initial TLB at a lower effective yield during the six-month period following closing. The soft call period runs from the closing date of July 21, 2022 through January

VII. INTERACTION WITH FINANCIAL COVENANT AND LEVERAGE CALCULATIONS The Credit Agreement contains a single financial maintenance covenant: a maximum Total Net Leverage Ratio of 4.5x (Section 7.11), which is tested on a "springing" basis — meaning the covenant applies only when aggregate revolving credit exposure (drawn revolving loans plus outstanding letters of credit, less cash collateralized letters of credit and u

VIII. OPEN DRAFTING POINTS AND NEGOTIATION RECOMMENDATIONS Based on our review of the Second Revised Draft, we have identified the following open drafting points in the incremental facility and MFN provisions that warrant further negotiation with WGP. For each point, we set forth the current drafting position, the competing positions of the parties, and