OFFICER'S CLOSING CERTIFICATE
Delivered pursuant to Section 4.01 of the Credit Agreement dated as of July 21, 2022
among
VERIMARK HOSPITALITY GROUP INC. a Delaware corporation, as Borrower,
The Guarantors Party Thereto,
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION as Administrative Agent and Collateral Agent,
and
The Lenders Party Thereto
$700,000,000 Senior Secured Term Loan B
Certificate Date: July 21, 2022 CUSIP (New TLB): 92347LAB8 Crescent Harbor Internal Loan Number: CHB-LF-2022-07814
OFFICER'S CLOSING CERTIFICATE
RECITALS
Reference is hereby made to that certain Credit Agreement, dated as of July 21, 2022 (as it may be amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Verimark Hospitality Group Inc., a Delaware corporation (the "Borrower" or "VHG"), the Guarantors party thereto (being Verimark Resort Properties LLC, a Delaware limited liability company, VHG Management Services Inc., a Delaware corporation, Verimark Convention Holdings LLC, a Delaware limited liability company, Palmetto Beachfront Hotels LLC, a Florida limited liability company, and Cascadia Hospitality Corp., a Delaware corporation, each a "Guarantor" and collectively, the "Guarantors"), Crescent Harbor Bank, National Association ("Crescent Harbor Bank, N.A."), in its capacity as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent"), and the several banks, financial institutions, and other entities from time to time party thereto as lenders (each, a "Lender" and collectively, the "Lenders").
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. All section references herein are to sections of the Credit Agreement unless otherwise indicated.
The undersigned, Renata Haines, in her capacity as Chief Financial Officer of the Borrower, and Priya Narayanan, in her capacity as General Counsel and Corporate Secretary of the Borrower, hereby certify that each is a duly authorized officer of the Borrower, duly elected, qualified, and acting in such capacity as of the date hereof, and that each is duly authorized to execute and deliver this Officer's Closing Certificate (this "Certificate") on behalf of the Borrower.
This Certificate is delivered in connection with the satisfaction of the conditions precedent to the initial borrowing under the Credit Agreement on the Closing Date, July 21, 2022, as required by Section 4.01 of the Credit Agreement. Each of the undersigned is delivering this Certificate solely in her capacity as an officer of the Borrower and not in any individual capacity, and no personal liability shall attach to the undersigned by reason of the certifications, representations, and statements made herein.
SECTION 1: REPRESENTATIONS AND WARRANTIES
Each of the undersigned hereby certifies, on behalf of the Borrower, that each of the representations and warranties of the Borrower and each Guarantor set forth in Article V of the Credit Agreement and in each other Loan Document is true and correct in all material respects on and as of the Closing Date, July 21, 2022, with the same effect as though made on and as of such date; provided, that in the case of any representation or warranty that is qualified by reference to "materiality" or "Material Adverse Effect," such representation or warranty is true and correct in all respects (without duplication of any materiality qualifier) on and as of the Closing Date; and provided, further, that to the extent any such representation or warranty expressly relates to an earlier date, such representation or warranty is true and correct in all material respects (or, in the case of any such representation or warranty qualified by materiality or Material Adverse Effect, true and correct in all respects) as of such earlier date.
Without limiting the generality of the foregoing, the undersigned specifically acknowledges and certifies that the following representations and warranties are true and correct in all material respects (or, where applicable, in all respects) as of the Closing Date:
(a) Due Organization and Good Standing. The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (Delaware Secretary of State File Number 7291843; Employer Identification Number 82-3741956). Each Guarantor is duly organized, validly existing, and in good standing under the laws of its respective jurisdiction of organization. The Borrower and each Guarantor is duly qualified and authorized to do business and is in good standing in every jurisdiction where the nature of its business or the ownership of its properties requires such qualification, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority. The Borrower has full corporate power and authority, and each Guarantor has full corporate or limited liability company power and authority, as applicable, to enter into, execute, and deliver the Credit Agreement and the related Loan Documents to which it is a party and to perform its obligations thereunder, including the borrowing of the $700,000,000 Senior Secured Term Loan B and the granting of the liens and security interests contemplated by the Pledge and Security Agreement and the Mortgages.
(c) Due Authorization. The execution, delivery, and performance by the Borrower of the Credit Agreement and each other Loan Document to which it is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of the Borrower, including the resolutions of the Board of Directors of Verimark Hospitality Group Inc. duly adopted at a meeting held on May 12, 2022, at which a quorum was present and acting throughout. Similarly, the execution, delivery, and performance by each Guarantor of the Guarantee Agreement and each other Loan Document to which it is a party have been duly authorized by all necessary corporate or limited liability company action, as applicable, on the part of such Guarantor.
(d) No Conflict. The execution, delivery, and performance by the Borrower and each Guarantor of the Loan Documents to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation, bylaws, limited liability company agreement, or other organizational document of the Borrower or any Guarantor, (ii) contravene, conflict with, or result in a violation or breach of any applicable law, rule, regulation, order, writ, judgment, injunction, or decree of any governmental authority applicable to the Borrower or any Guarantor or any of their respective properties or assets, or (iii) conflict with, result in a breach of, constitute a default under, or give rise to any right of termination, cancellation, acceleration, or loss of any benefit under any material contractual obligation to which the Borrower or any Guarantor is a party or by which any of their respective properties or assets are bound. In particular, no conflict exists with respect to (x) the existing $400,000,000 revolving credit facility (the "Revolving Credit Facility"), with Crescent Harbor Bank, N.A. as administrative agent, or (y) the $245,000,000 aggregate principal amount of 6.750% Senior Unsecured Notes due 2028 (the "Senior Notes"), issued by the Borrower pursuant to that certain Indenture, dated as of March 15, 2021, with Atlantic Standard Trust Company, as indenture trustee.
(e) Financial Statements. The audited consolidated financial statements of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2021 ("FY2021"), which were prepared by Clearmont & Wharton LLP (Ronald Ashby, engagement partner), independent registered public accountants, in accordance with generally accepted accounting principles in the United States ("GAAP") applied on a consistent basis, and which have been delivered to the Administrative Agent, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows for the periods covered thereby. The Borrower's FY2021 consolidated revenue was $1,420,000,000, FY2021 consolidated EBITDA was $318,000,000, and FY2021 Adjusted EBITDA (calculated in accordance with the definition set forth in the Credit Agreement) was $341,000,000. Since December 31, 2021, there has been no material change in accounting policies or practices of the Borrower or any of its Subsidiaries, except as disclosed to the Administrative Agent in writing.
(f) Compliance with Laws. The Borrower and each of its Subsidiaries is in compliance in all material respects with all applicable laws, rules, regulations, orders, and decrees of any governmental authority applicable to it or its business, assets, or properties, including without limitation all environmental laws, anti-corruption laws (including the Foreign Corrupt Practices Act of 1977, as amended), anti-money laundering laws, and sanctions laws and regulations.
(g) Perfection Certificate. All information contained in the Perfection Certificate dated July 21, 2022, delivered to the Administrative Agent concurrently herewith is true, correct, and complete in all material respects as of the Closing Date.
(h) Security Interests. The Pledge and Security Agreement, together with the UCC-1 financing statements filed with the Delaware Secretary of State and the Florida Secured Transaction Registry, and the Mortgages (to the extent delivered on or prior to the Closing Date or to be delivered pursuant to the Post-Closing Letter Agreement dated July 21, 2022), create or will create, as applicable, valid and perfected first-priority security interests (subject only to Permitted Liens) in the Collateral described therein in favor of the Collateral Agent for the benefit of the Secured Parties.
(i) No Material Litigation. There is no action, suit, investigation, proceeding, or claim pending or, to the knowledge of the Borrower, threatened in writing against the Borrower or any of its Subsidiaries before any court, arbitrator, or governmental authority that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, or that seeks to enjoin or otherwise prevent the consummation of the transactions contemplated by the Credit Agreement and the other Loan Documents.
SECTION 2: NO DEFAULT
Each of the undersigned hereby certifies, on behalf of the Borrower, that as of the Closing Date, July 21, 2022:
(a) No Default or Event of Default (as each such term is defined in the Credit Agreement) has occurred and is continuing on the Closing Date, or would result from the initial borrowing under the Credit Agreement or from the application of the proceeds therefrom as contemplated hereby and by the Credit Agreement.
(b) The proceeds of the $700,000,000 Senior Secured Term Loan B (CUSIP 92347LAB8) are being applied on the Closing Date as follows:
(i) Approximately $627,916,667 to repay in full the existing $625,000,000 Senior Secured Term Loan B (CUSIP 92347LAA0) with Greystone Federal Credit Corp. as administrative agent (the "Existing Term Loan B"), such amount comprising (A) $621,875,000 in outstanding principal (reflecting prior amortization payments), (B) approximately $2,916,667 in accrued and unpaid interest thereon through and including the Closing Date, and (C) a prepayment premium of $3,125,000 (calculated as 0.50% of the $625,000,000 original principal amount of the Existing Term Loan B, in accordance with the terms thereof);
(ii) $3,500,000 to Crescent Harbor Bank, N.A. in respect of the arrangement fee payable pursuant to the Fee Letter dated June 8, 2022;
(iii) $1,400,000 to Meridian Strauss Advisory LLC in respect of the advisory fee payable pursuant to the Advisory Engagement Letter dated April 22, 2022;
(iv) Approximately $3,200,000 in estimated legal fees and other closing costs, including fees payable to Calderwood & Harkness LLP (borrower's counsel), Whitfield Gage & Partridge LLP (agent's counsel), title insurance premiums, recording fees, and related charges; and
(v) Approximately $60,483,333 in net proceeds to be retained by the Borrower for permitted acquisitions and general corporate purposes in accordance with the terms of the Credit Agreement.
For the avoidance of doubt, the gross principal amount of the Term Loan B is $700,000,000; however, the Term Loan B is being funded net of an original issue discount ("OID") of $7,000,000 (equal to 1.00% of the aggregate principal amount of the Term Loan B), resulting in net funding proceeds to the Borrower of $693,000,000 on the Closing Date.
(c) No Default or Event of Default exists under any other material agreement or instrument to which the Borrower or any Guarantor is a party or by which any of their respective properties or assets is bound, including without limitation (i) the $400,000,000 Revolving Credit Facility (Crescent Harbor Bank, N.A. as administrative agent thereunder), which remains undrawn as of the Closing Date, and (ii) the $245,000,000 aggregate principal amount of 6.750% Senior Unsecured Notes due 2028 (Atlantic Standard Trust Company, as indenture trustee), with respect to which the Borrower is current on all interest payments and in compliance with all covenants thereunder.
SECTION 3: NO MATERIAL ADVERSE CHANGE
Each of the undersigned hereby certifies, on behalf of the Borrower, that since December 31, 2021 (being the date of the most recent audited consolidated financial statements of the Borrower and its Subsidiaries delivered to the Administrative Agent), there has been no change, effect, event, occurrence, state of facts, or development that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect on:
(a) the business, assets, operations, properties, or financial condition of the Borrower and its Subsidiaries, taken as a whole;
(b) the ability of the Borrower or any Guarantor to perform its payment and other material obligations under the Credit Agreement, the Guarantee Agreement, or any other Loan Document; or
(c) the validity or enforceability of any Loan Document, or the rights and remedies of the Administrative Agent, the Collateral Agent, and the Lenders under the Loan Documents.
As of the Closing Date, the Borrower's hotel portfolio consists of 74 full-service and select-service hotel properties located across 18 states, with an aggregate appraised value of approximately $3.1 billion (based on appraisals delivered to the Administrative Agent in connection with the transactions contemplated by the Credit Agreement). There has been no material deterioration in the operations or value of such hotel properties since December 31, 2021, and the occupancy rates, average daily rates, and revenue per available room metrics for such properties have remained consistent with or improved upon the levels reflected in the Borrower's FY2021 audited financial statements.
SECTION 4: FINANCIAL COVENANT COMPLIANCE
Each of the undersigned hereby certifies, on behalf of the Borrower, that after giving pro forma effect to the incurrence of the $700,000,000 Senior Secured Term Loan B, the repayment in full of the Existing Term Loan B, and the other transactions contemplated to occur on the Closing Date, the Borrower is in pro forma compliance with the financial covenant set forth in Section 7.11 of the Credit Agreement, as more fully described below.
The Credit Agreement requires the Borrower to maintain a Maximum Total Net Leverage Ratio of no greater than 4.50 to 1.00, tested on a quarterly basis on a trailing four-quarter (last twelve months) basis; provided, that such financial covenant is a springing covenant that is tested only when the aggregate revolving credit exposure under the Revolving Credit Facility exceeds 35% of the total revolving commitments ($140,000,000) at the end of any fiscal quarter.
Notwithstanding that the springing financial covenant is not required to be tested as of the Closing Date (given that no amounts are drawn under the Revolving Credit Facility), the Borrower hereby certifies, for informational purposes and as a condition precedent to the initial borrowing, that the Pro Forma Total Net Leverage Ratio at Closing is 2.52 to 1.00, calculated as follows:
The Pro Forma Total Net Leverage Ratio of 2.52x is within the permitted maximum of 4.50x, representing headroom of approximately 1.98x (or approximately $675,000,000 in incremental net debt capacity, based on LTM Adjusted EBITDA of $341,000,000). A detailed calculation is set forth on Schedule A attached hereto.
SECTION 5: SOLVENCY
The undersigned hereby confirms that a separate Solvency Certificate dated July 21, 2022, has been delivered by Renata Haines, in her capacity as Chief Financial Officer of the Borrower, concurrently with the delivery of this Certificate, certifying the solvency of VHG and its Subsidiaries on a consolidated basis after giving effect to the transactions contemplated by the Credit Agreement, including the incurrence of the $700,000,000 Senior Secured Term Loan B, the repayment in full of the Existing Term Loan B with Greystone Federal Credit Corp., and the payment of all fees and expenses in connection therewith. The Solvency Certificate is delivered in satisfaction of the condition precedent set forth in Section 4.01(h) of the Credit Agreement and certifies, among other things, that after giving effect to such transactions, (a) the fair value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, exceeds their debts and liabilities (subordinated, contingent, or otherwise), (b) the present fair salable value of the property of the Borrower and its Subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability of their debts and other liabilities (subordinated, contingent, or otherwise) as they become absolute and matured, (c) the Borrower and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities (subordinated, contingent, or otherwise) as they become absolute and matured, and (d) the Borrower and its Subsidiaries, on a consolidated basis, do not have unreasonably small capital with which to conduct the business in which they are engaged as such business is currently conducted and is proposed to be conducted following the Closing Date.
SECTION 6: INSURANCE
Each of the undersigned hereby certifies, on behalf of the Borrower, that all insurance required to be maintained by the Borrower and its Subsidiaries pursuant to Section 6.07 of the Credit Agreement and any other applicable provisions of the Loan Documents is in full force and effect as of the Closing Date. Certificates of insurance and, where applicable, endorsements evidencing such insurance have been delivered to the Administrative Agent naming Crescent Harbor Bank, N.A. (in its capacity as Collateral Agent for the benefit of the Secured Parties) as additional insured and/or loss payee, as applicable, in accordance with the requirements of the Credit Agreement. Such insurance policies cover, without limitation, all 74 hotel properties owned or operated by the Borrower and its Subsidiaries, and include property and casualty coverage, commercial general liability coverage, business interruption coverage, flood insurance (where required), and such other coverages as are required by the Credit Agreement, in each case with insurers of recognized financial responsibility and in amounts and with deductibles consistent with the requirements set forth in the Credit Agreement and customary for companies of similar size engaged in similar lines of business.
SECTION 7: ORGANIZATIONAL DOCUMENTS AND CORPORATE AUTHORITY
Each of the undersigned hereby certifies, on behalf of the Borrower, the following:
(a) The organizational documents of the Borrower (including its Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws) and each Guarantor (including the respective certificates of incorporation or formation, bylaws, and limited liability company agreements, as applicable) that were delivered to the Administrative Agent as part of the Omnibus Secretary's Certificate dated July 21, 2022, are true, complete, and correct copies of such organizational documents as in effect on the Closing Date. Such organizational documents have not been amended, modified, supplemented, or restated since the date of their delivery to the Administrative Agent.
(b) The resolutions of the Board of Directors of Verimark Hospitality Group Inc. duly adopted on May 12, 2022 (copies of which are included in the Omnibus Secretary's Certificate dated July 21, 2022), authorizing (i) the execution, delivery, and performance of the Credit Agreement and each other Loan Document to which the Borrower is a party, (ii) the borrowing of the $700,000,000 Senior Secured Term Loan B, (iii) the repayment in full of the Existing Term Loan B, and (iv) all related transactions, remain in full force and effect as of the Closing Date and have not been amended, modified, rescinded, or revoked, and no other resolutions have been adopted by the Board of Directors or the stockholders of the Borrower that would conflict with or limit the authority granted pursuant to such resolutions.
(c) The Borrower and each Guarantor are in good standing in their respective jurisdictions of organization, being the State of Delaware (with respect to the Borrower, Verimark Resort Properties LLC, VHG Management Services Inc., Verimark Convention Holdings LLC, and Cascadia Hospitality Corp.) and the State of Florida (with respect to Palmetto Beachfront Hotels LLC), and certificates of good standing from the applicable Secretaries of State have been delivered to the Administrative Agent.
SECTION 8: CONDITIONS PRECEDENT — SATISFACTION CONFIRMATION
Each of the undersigned hereby certifies, on behalf of the Borrower, that to the knowledge of the undersigned officers (after due inquiry), all conditions precedent set forth in Article IV of the Credit Agreement to the making of the initial Term Loans on the Closing Date have been satisfied (or, where expressly permitted, waived in writing by the Administrative Agent in its sole discretion), including, without limitation, the following:
(a) The Credit Agreement, the Guarantee Agreement, the Pledge and Security Agreement, the Amended and Restated Intercreditor Agreement (among the Administrative Agent, the collateral agent under the Revolving Credit Facility, and the indenture trustee under the Senior Notes indenture), and all other Loan Documents required to be executed and delivered on or prior to the Closing Date have been duly executed and delivered by all parties thereto.
(b) The Omnibus Secretary's Certificate dated July 21, 2022, the Incumbency Certificate dated July 21, 2022, and certificates of good standing from the Secretary of State of the State of Delaware and the Secretary of State of the State of Florida, in each case with respect to the Borrower and each Guarantor, have been delivered to the Administrative Agent.
(c) The Solvency Certificate dated July 21, 2022, executed by Renata Haines, Chief Financial Officer of the Borrower, has been delivered to the Administrative Agent (as further described in Section 5 above).
(d) Legal opinions from Calderwood & Harkness LLP, counsel to the Borrower and the Guarantors, have been delivered to the Administrative Agent in form and substance reasonably satisfactory to the Administrative Agent, including (i) a corporate authorization and enforceability opinion and (ii) a New York law opinion addressing the enforceability of the Credit Agreement and the other Loan Documents governed by New York law.
(e) The Perfection Certificate dated July 21, 2022, has been delivered to the Administrative Agent, and UCC-1 financing statements naming VHG and each applicable Guarantor as debtor and the Collateral Agent as secured party have been filed with the Delaware Secretary of State (Division of Corporations, UCC Filing Section) and the Florida Secured Transaction Registry, as applicable, and evidence of such filings has been delivered to the Administrative Agent.
(f) The Payoff Letter from Greystone Federal Credit Corp. (finalized July 19, 2022, and signed by Marion Stillwell, Vice President, Agency Services), confirming the aggregate payoff amount of the Existing Term Loan B of approximately $627,916,667 (inclusive of outstanding principal, accrued and unpaid interest, and the prepayment premium), together with instructions for wire transfer of payoff funds and authorization for the release and termination of all liens securing the Existing Term Loan B, has been received by the Administrative Agent.
(g) Lien searches (including UCC, federal and state tax lien, and judgment lien searches) conducted in the relevant filing jurisdictions have been received and reviewed, and such searches confirm no adverse liens on the assets of the Borrower or any Guarantor other than (i) the existing liens in favor of Greystone Federal Credit Corp. (which are to be released and terminated upon receipt of the payoff amount on the Closing Date) and (ii) Permitted Liens (as defined in the Credit Agreement).
(h) Certificates of insurance and endorsements evidencing all insurance required under the Credit Agreement have been delivered to the Administrative Agent, with Crescent Harbor Bank, N.A. (as Collateral Agent) named as additional insured and/or loss payee, as applicable (as further described in Section 6 above).
(i) The Borrowing Request for the initial drawdown of the full $700,000,000 aggregate principal amount of the Term Loan B on the Closing Date has been received by the Administrative Agent in accordance with Section 2.03 of the Credit Agreement, specifying a 1-month Adjusted Term SOFR interest period commencing on the Closing Date.
(j) The initial Compliance Certificate dated July 21, 2022, certifying pro forma financial covenant compliance as of the Closing Date (and containing the calculations set forth in Section 4 above and on Schedule A hereto), has been delivered to the Administrative Agent.
(k) Confirmation has been received that the following credit ratings are in effect as of the Closing Date: (i) BB- corporate family rating assigned by Kellaway Ratings Group and Ba3 corporate family rating assigned by Pinnacle Credit Services, in each case to the Borrower, and (ii) B+ (Kellaway Ratings Group) and B1 (Pinnacle Credit Services) instrument ratings assigned to the $700,000,000 Senior Secured Term Loan B.
(l) All "know your customer," anti-money laundering, and beneficial ownership requirements applicable to the Borrower and its Subsidiaries have been completed to the satisfaction of the Administrative Agent and the Lenders, including without limitation delivery of the VHG KYC Package dated April 15, 2022, containing a Beneficial Ownership Certification under 31 C.F.R. § 1010.230, together with all supporting documentation reasonably requested by the Administrative Agent.
(m) All fees and expenses due and payable on the Closing Date have been paid (or will be paid from the proceeds of the Term Loan B on the Closing Date), including (i) the arrangement fee of $3,500,000 payable to Crescent Harbor Bank, N.A., (ii) the original issue discount of $7,000,000 (netted from funding), (iii) the advisory fee of $1,400,000 payable to Meridian Strauss Advisory LLC, and (iv) legal fees and closing costs of approximately $3,200,000.
(n) With respect to post-closing items, the Borrower and the Administrative Agent have entered into the Post-Closing Letter Agreement dated July 21, 2022, pursuant to which the Borrower has agreed to deliver, no later than August 5, 2022 (the "Post-Closing Deadline"), (i) fully executed and recorded mortgage instruments (or deeds of trust, as applicable), (ii) mortgagee title insurance policies, (iii) ALTA/NSPS surveys, and (iv) flood certifications and, where applicable, evidence of flood insurance, in each case with respect to 42 hotel properties located across 12 states. Failure to deliver such post-closing items by the Post-Closing Deadline shall constitute an Event of Default under Section 8.01 of the Credit Agreement (subject to any cure period set forth in the Post-Closing Letter Agreement).
SECTION 9: AUTHORIZED SIGNATORIES
Each of the undersigned hereby certifies that each person listed on the Incumbency Certificate dated July 21, 2022 (a copy of which was delivered to the Administrative Agent as part of the closing deliverables), as being authorized to execute the Loan Documents on behalf of the Borrower, continues to hold the office set forth therein as of the Closing Date and is duly authorized to act in such capacity. As of the date hereof, such authorized signatories are as follows:
Each such person's specimen signature is set forth on the Incumbency Certificate delivered to the Administrative Agent. The undersigned further certify that the signatures of the foregoing persons appearing on the Credit Agreement and each other Loan Document executed on or prior to the Closing Date are the genuine signatures of such persons.
SECTION 10: GOVERNING LAW
This Certificate shall be governed by, and construed in accordance with, the laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York), without regard to conflicts of law principles that would require the application of the laws of any other jurisdiction.
IN WITNESS WHEREOF, each of the undersigned has executed this Officer's Closing Certificate as of the date first written above, in her capacity as an officer of the Borrower and not individually.
VERIMARK HOSPITALITY GROUP INC.
By: ________
Name: Renata Haines
Title: Chief Financial Officer
Date: July 21, 2022
VERIMARK HOSPITALITY GROUP INC.
By: ________
Name: Priya Narayanan
Title: General Counsel and Corporate Secretary
Date: July 21, 2022
ADDRESSEE AND DELIVERY INFORMATION
This Certificate is addressed and delivered to:
Crescent Harbor Bank, National Association as Administrative Agent
600 Lexington Avenue, 34th Floor New York, NY 10022
Attention: Theodore "Ted" Marchetti, Managing Director, Leveraged Finance
Attention: Anika Holm, Director, Loan Syndications
With a copy to:
Whitfield Gage & Partridge LLP (Agent's Counsel)
383 Madison Avenue, 28th Floor New York, NY 10179
Attention: Harrison Whitfield III
SCHEDULE A
PRO FORMA TOTAL NET LEVERAGE RATIO CALCULATION As of the Closing Date — July 21, 2022
The following sets forth the calculation of the Pro Forma Total Net Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis, after giving pro forma effect to the transactions occurring on the Closing Date, including the incurrence of the $700,000,000 Senior Secured Term Loan B and the repayment in full of the Existing Term Loan B:
I. Total Funded Debt
II. Net Debt
III. Adjusted EBITDA (LTM ended December 31, 2021)
IV. Pro Forma Total Net Leverage Ratio
SCHEDULE B
LIST OF GUARANTORS
The following sets forth the full legal name, entity type, jurisdiction of organization, and organizational identification number of each Guarantor party to the Guarantee Agreement dated as of July 21, 2022:
Each Guarantor listed above has unconditionally guaranteed all obligations of the Borrower under the Credit Agreement and the other Loan Documents pursuant to the Guarantee Agreement dated as of July 21, 2022.
This Officer's Closing Certificate, including all schedules hereto, is delivered pursuant to the Credit Agreement and is subject to the terms and conditions thereof. This Certificate does not constitute a waiver, modification, or amendment of any provision of the Credit Agreement or any other Loan Document.
| Component | Amount |
| New Senior Secured Term Loan B | $700,000,000 |
| Senior Unsecured Notes due 2028 | $245,000,000 |
| Total Funded Debt | $945,000,000 |
| Less: Revolving Credit Facility (undrawn at Closing) | $0 |
| Less: Existing Term Loan B (repaid in full at Closing) | $0 |
| Gross Funded Debt | $945,000,000 |
| Less: Unrestricted Cash and Cash Equivalents | ($87,000,000) |
| Total Net Debt | $858,000,000 |
| LTM Adjusted EBITDA (twelve months ended December 31, 2021) | $341,000,000 |
| Pro Forma Total Net Leverage Ratio | $858,000,000 ÷ $341,000,000 = 2.52x |
| Name | Title |
| Marcus Delvecchio | Chief Executive Officer |
| Renata Haines | Chief Financial Officer |
| Priya Narayanan | General Counsel and Corporate Secretary |
| Glenn Fischbach | Treasurer |
| Debt Instrument | Outstanding Principal |
| Senior Secured Term Loan B (New — CUSIP 92347LAB8) | $700,000,000 |
| Revolving Credit Facility ($400,000,000 commitment — undrawn at Closing) | $0 |
| Senior Unsecured Notes due 2028 (6.750%) | $245,000,000 |
| Existing Term Loan B (CUSIP 92347LAA0 — repaid in full at Closing) | $0 |
| Other Funded Debt | $0 |
| Total Funded Debt | $945,000,000 |
| Component | Amount |
| Total Funded Debt | $945,000,000 |
| Less: Unrestricted Cash and Cash Equivalents (as of Closing Date) | ($87,000,000) | |||
| Total Net Debt | $858,000,000 | |||
| Component | Amount | |||
| Net Income | $142,000,000 | |||
| Plus: Interest Expense | $68,000,000 | |||
| Plus: Income Tax Expense | $47,000,000 | |||
| Plus: Depreciation and Amortization | $61,000,000 | |||
| EBITDA | $318,000,000 | |||
| Plus: Non-Cash Stock-Based Compensation | $8,000,000 | |||
| Plus: Transaction Fees and Expenses (pro forma add-back) | $8,100,000 | |||
| Plus: Other Permitted Adjustments | $6,900,000 | |||
| Adjusted EBITDA | $341,000,000 | |||
| Total Net Debt | $858,000,000 | |||
| Adjusted EBITDA (LTM) | $341,000,000 | |||
| Pro Forma Total Net Leverage Ratio | 2.52x | |||
| Maximum Permitted Total Net Leverage Ratio | 4.50x | |||
| Compliance | Yes | |||
| No. | Legal Name | Entity Type | Jurisdiction of Organization | Organizational ID |
| 1. | Verimark Resort Properties LLC | Limited Liability Company | Delaware | DE File No. 7304218 |
| 2. | VHG Management Services Inc. | Corporation | Delaware | DE File No. 7319456 |
| 3. | Verimark Convention Holdings LLC | Limited Liability Company | Delaware | DE File No. 7328104 |
| 4. | Palmetto Beachfront Hotels LLC | Limited Liability Company | Florida | FL Doc. No. L22000041873 |
| 5. | Cascadia Hospitality Corp. | Corporation | Delaware | DE File No. 7341592 |