Contract analysis

I. Purpose of This Notice This firm represents Verimark Hospitality Group Inc. ("VHG"), a corporation duly organized and existing under the laws of the State of Delaware (Nasdaq: VMRK), and its wholly owned indirect subsidiary, Coral Palms Resort Holdings LLC (the "Borrower"), a Florida limited liability company. We are authorized to deliver this notice on behalf of both VHG and the Borrower. This letter constitutes

II. Background and Recitals For purposes of clarity and to establish the factual predicate for this termination, we recite the following chronology and material facts: On November 14, 2022, Pinnacle Atlantic Capital, LLC issued a term sheet (the "Term Sheet") to the Borrower proposing a first mortgage loan in the principal amount of One Hundred Sixty Million Dollars ($160,000,000), to be secured by the Coral Palms Gr

III. Appraisal and Valuation Shortfall As a condition precedent to closing under the Commitment Letter, and in accordance with Sections 7(c) and 8(a)(ii) thereof, the Lender commissioned a full narrative appraisal of the Property from Hargrove & Whitley Valuation Services LLC. The appraisal was prepared by Scott Tremaine, MAI, MRICS, a state-certified general appraiser authorized to practice in the State of Florida,

IV. Material Modification — Repriced Terms On January 27, 2023, PAC delivered to the Borrower and our firm a written communication setting forth repriced and restructured terms (the "Repriced Terms") in response to the appraisal shortfall described above. The Repriced Terms, which PAC characterized as revised commitments necessary to proceed with the transaction, constituted, in the Borrower's and VHG's view, a mater

V. Borrower's Counter-Proposal and Lender's Rejection In a further good-faith effort to preserve the transaction and to avoid the costs, delays, and disruption associated with termination and the pursuit of alternative financing, VHG submitted a counter-proposal to PAC on February 3, 2023 (the "Counter-Proposal"). The Counter-Proposal sought to identify a commercially reasonable middle ground between the original Com

VI. Board Authorization and Election to Terminate In light of the foregoing, on February 10, 2023, the Board of Directors of Verimark Hospitality Group Inc., at a duly called and constituted meeting, determined — after careful deliberation and consultation with management, financial advisors, and legal counsel — that the Repriced Terms proposed by PAC are not commercially viable and are inconsistent with VHG's fiduci

VII. Deposit Refund Demand The Lender's delivery of the materially modified Repriced Terms, as described in Section IV above, constitutes a failure of the conditions upon which the Commitment Letter was predicated and a departure from the material terms to which the parties agreed. The Commitment Letter was premised upon, among other things, a loan amount of $160,000,000, a fixed interest rate of 5.35%, a limited rec

VIII. Reservation of Rights VHG and the Borrower expressly reserve all rights, claims, and remedies available to them at law or in equity, whether arising under the Commitment Letter, under applicable federal or state law, or otherwise, including without limitation any claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, negligent misrepresentation, o

IX. Return and Disposition of Loan Documents and Confidential Materials The Borrower hereby requests that PAC and its counsel, Whitford Baines & Driscoll LLP, promptly return or destroy all confidential documents, materials, financial statements, projections, operating data, personal financial information, environmental reports, engineering studies, and any and all other information and materials provided by or on be

X. Notices and Communications All further communications, correspondence, and inquiries regarding the termination of the Commitment Letter, the return of the Deposits, and any other matters arising out of or in connection with the proposed transaction should be directed exclusively to: Douglas Fairchild, Esq. Partner Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3800 Miami, FL 33131 Telephone: (305) 88

XI. Governing Law This notice and any disputes, claims, or controversies arising hereunder or in connection herewith shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to principles of conflicts of laws, consistent with the governing law provisions set forth in Section 16 of the Commitment Letter. We trust that the foregoing sets forth the Borrower's