1021-00001 · Verimark Hospitality Group · Term Sheet & Commitment Letter

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CONFIDENTIAL

CRESCENT HARBOR BANK, N.A. 600 Lexington Avenue, 34th Floor New York, New York 10022

May 27, 2022

CONFIDENTIAL

May 27, 2022

Verimark Hospitality Group Inc. 8200 West Palmetto Park Road, Suite 1500 Boca Raton, Florida 33433

Attention: Renata Haines, Chief Financial Officer

Priya Narayanan, General Counsel & Corporate Secretary

Re: Letter Agreement — Syndication Flex Provisions Senior Secured Term Loan B Facility — $700,000,000 Crescent Harbor Loan No. CHB-LF-2022-07814

Dear Ms. Haines and Ms. Narayanan:

Reference is made to that certain Commitment Letter, dated as of May 27, 2022 (as amended, modified, or supplemented from time to time, the "Commitment Letter"), by and between Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Borrower"), and Crescent Harbor Bank, National Association ("Crescent Harbor" or the "Lead Arranger"), pursuant to which Crescent Harbor has committed to arrange and underwrite a senior secured Term Loan B facility in an aggregate principal amount of Seven Hundred Million Dollars ($700,000,000) (the "Facility"). This Letter Agreement (this "Letter Agreement") supplements the Commitment Letter and the Fee Letter of even date herewith (the "Fee Letter"), each by and between VHG and Crescent Harbor.

The purpose of this Letter Agreement is to set forth certain market flex provisions that Crescent Harbor may exercise, in its sole discretion, to facilitate the successful syndication of the Facility to institutional lenders in the leveraged loan market. The parties acknowledge that Crescent Harbor, as sole lead arranger, sole bookrunner, and underwriter, bears the syndication risk associated with the Facility and that the flex provisions contained herein are customary and necessary to provide Crescent Harbor with the ability to adjust certain economic and structural terms of the Facility in response to then-prevailing market conditions during the syndication process.

As described more fully in the Commitment Letter and the term sheet attached thereto as Exhibit A (the "Term Sheet"), the Facility will be used to refinance in full the existing $625,000,000 Term Loan B facility (with Greystone Federal Credit Corp. serving as existing administrative agent; CUSIP 92347LAA0) and to provide $75,000,000 in incremental proceeds for permitted acquisitions and general corporate purposes. The Term Sheet sets forth the base economic and structural terms of the Facility, including, without limitation, the applicable margin, original issue discount, interest rate floor, amortization schedule, maturity date, collateral package, guarantor structure, financial covenants, most-favored-nation provisions, and repricing protection.

Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Commitment Letter or the Term Sheet, as applicable. In the event that a capitalized term is defined both in this Letter Agreement and in the Commitment Letter or the Term Sheet, the definition set forth in this Letter Agreement shall govern for purposes of this Letter Agreement.

In consideration of the foregoing and the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1: Definitions

For purposes of this Letter Agreement, the following terms shall have the meanings set forth below:

"Adjusted Term SOFR" means, for any interest period, the CME Term SOFR for such interest period plus the applicable credit spread adjustment, which shall be (a) 0.10% (10 basis points) for a one-month interest period, (b) 0.15% (15 basis points) for a three-month interest period, and (c) 0.25% (25 basis points) for a six-month interest period, in each case as more particularly described in the Term Sheet.

"Base Applicable Margin" means 375 basis points (3.75%) per annum over Adjusted Term SOFR, as set forth in the Term Sheet. The Base Applicable Margin represents the initial spread applicable to the Facility prior to any exercise of flex provisions hereunder.

"Base OID" means an original issue discount of 1.00% of the aggregate principal amount of the Facility, resulting in an issue price of 99.00% of par. Based on the aggregate principal amount of $700,000,000, the Base OID equals Seven Million Dollars ($7,000,000).

"Base SOFR Floor" means 0.50% (50 basis points). The Base SOFR Floor establishes the minimum level of Term SOFR used for purposes of calculating the interest rate on the Facility, regardless of the actual then-prevailing Term SOFR rate.

"Closing Date" means the date on which the simultaneous signing, closing, and funding of the Facility shall occur, which date is currently expected to be July 21, 2022, subject to the satisfaction or waiver of the conditions precedent set forth in the Commitment Letter and the Credit Agreement.

"Credit Agreement" means the credit agreement to be entered into among VHG (as Borrower), the Guarantors (as defined in the Term Sheet), Crescent Harbor Bank, N.A. (in its capacity as Administrative Agent and Collateral Agent), and the Lenders party thereto from time to time, governing the terms and conditions of the Facility.

"Flex Exercise Notice" means a written notice from Crescent Harbor to the Borrower, substantially in the form contemplated by Section 7 hereof, setting forth the specific flex adjustments that Crescent Harbor elects to implement pursuant to this Letter Agreement.

"Flex Period" means the period commencing on the date of this Letter Agreement and ending on the earlier of (i) the Syndication Date and (ii) the Closing Date.

"Syndication Date" means the date on which final allocations for the Facility are confirmed by Crescent Harbor and communicated to the Borrower and the syndicate lenders, which date is expected to be on or about June 30, 2022.

Section 2: Pricing Flex — Applicable Margin

(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the Base Applicable Margin by up to 50 basis points (0.50%) per annum, such that the maximum Applicable Margin following any such increase shall not exceed 425 basis points (4.25%) per annum over Adjusted Term SOFR. Crescent Harbor may exercise such right if, in Crescent Harbor's reasonable judgment, such increase is necessary or advisable to achieve the successful syndication of the Facility at levels and on terms acceptable to institutional investors in the leveraged loan market.

(b) Any increase to the Applicable Margin pursuant to this Section 2 may be exercised in increments of 12.5 basis points (0.125%) per annum. By way of illustration, Crescent Harbor may elect to increase the Applicable Margin from the Base Applicable Margin of 375 basis points to 387.5 basis points, 400 basis points, 412.5 basis points, or up to the maximum of 425 basis points, as market conditions may require.

(c) The parties acknowledge that the initial spread on the existing Term Loan B facility with Greystone Federal Credit Corp. was LIBOR plus 425 basis points per annum. The base economics of the Facility as reflected in the Term Sheet were designed to achieve an approximately 50 basis points spread reduction relative to the existing facility (after adjusting for the transition from LIBOR to SOFR and the applicable credit spread adjustment). Accordingly, any exercise of upward flex to the maximum Applicable Margin of 425 basis points over Adjusted Term SOFR would effectively eliminate the spread reduction benefit of the refinancing in its entirety. The Borrower acknowledges that such outcome is within the scope of the flex rights granted hereunder and that Crescent Harbor may exercise such rights without further consent of the Borrower, provided that the exercise is consistent with the terms and limitations of this Letter Agreement.

(d) For the avoidance of doubt, Crescent Harbor shall not have the right to decrease the Applicable Margin below the Base Applicable Margin of 375 basis points per annum without the prior written consent of the Borrower. Any downward adjustment to the Applicable Margin below the Base Applicable Margin (i.e., reverse flex for the Borrower's benefit) shall be subject to the mutual agreement of Crescent Harbor and the Borrower in accordance with Section 6 hereof.

Section 3: Pricing Flex — Original Issue discount

(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the original issue discount from the Base OID of 1.00% to a maximum of 2.00% of the aggregate principal amount of the Facility. Accordingly, the issue price of the Facility may decline from 99.00% of par (at the Base OID level) to a minimum of 98.00% of par (at the maximum OID flex level). Based on an aggregate principal amount of $700,000,000, the maximum dollar amount of the original issue discount following the full exercise of OID flex would be Fourteen Million Dollars ($14,000,000).

(b) Any increase to the original issue discount pursuant to this Section 3 may be exercised in increments of 0.25% of the aggregate principal amount of the Facility. By way of illustration, Crescent Harbor may elect to increase the OID from 1.00% to 1.25%, 1.50%, 1.75%, or up to the maximum of 2.00%, as market conditions may require.

(c) The parties acknowledge that any increase in the original issue discount will correspondingly reduce the net funding amount received by VHG on the Closing Date. At the Base OID level of 1.00%, the net funding amount (before deduction of fees and expenses) is $693,000,000 (being $700,000,000 minus $7,000,000). At the maximum OID flex level of 2.00%, the net funding amount (before deduction of fees and expenses) would be $686,000,000 (being $700,000,000 minus $14,000,000).

(d) The Borrower acknowledges the corresponding impact that any increase in OID will have on the net proceeds available to VHG after giving effect to the following anticipated uses of proceeds:

(i) payoff of the existing Greystone Term Loan B, estimated at approximately $627,916,667 (inclusive of accrued and unpaid interest through the expected Closing Date);

(ii) the arrangement fee payable to Crescent Harbor of $3,500,000 (as set forth in the Fee Letter);

(iii) the advisory fee payable to Meridian Strauss Advisory LLC of $1,400,000; and

(iv) estimated legal and closing costs of approximately $3,200,000.

At the Base OID level, estimated net proceeds available for permitted acquisitions and general corporate purposes would be approximately $57,000,000. At the maximum OID flex level, such estimated net proceeds would be reduced to approximately $50,000,000. The Borrower acknowledges that such reduction in net proceeds is within the scope of the flex rights granted hereunder.

(e) Any increase in the original issue discount effectuated pursuant to this Section 3 shall be taken into account for purposes of determining the "all-in yield" for the most-favored-nation provision and the repricing protection calculations in the Credit Agreement. The parties agree that the original issue discount (as flexed, if applicable) shall be amortized over the lesser of the stated maturity and a four-year assumed average life of the Facility for purposes of computing the yield component attributable to OID in the all-in yield calculation.

Section 4: Pricing Flex — SOFR Floor

(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the Base SOFR Floor from 0.50% (50 basis points) to a maximum of 0.75% (75 basis points) if, in Crescent Harbor's reasonable judgment, such increase is necessary or advisable to facilitate the successful syndication of the Facility.

(b) Any increase to the SOFR Floor pursuant to this Section 4 may be exercised in increments of 12.5 basis points (0.125%). By way of illustration, Crescent Harbor may elect to increase the SOFR Floor from 0.50% to 0.625%, or up to the maximum of 0.75%.

(c) The parties acknowledge that any SOFR floor increase would affect the all-in yield on the Facility in rate environments where the applicable Term SOFR falls below the floor, effectively establishing a minimum yield floor for the benefit of syndicate lenders. As of the date of this Letter Agreement, one-month Term SOFR is trending above 0.50% (at approximately 0.80% to 0.85%), and the Federal Open Market Committee has signaled continued rate increases through the remainder of 2022. Accordingly, the SOFR floor adjustment is primarily protective for syndicate lenders against the possibility of future rate decreases and is not expected to have an immediate impact on the Borrower's interest expense at current rate levels.

(d) For reference, the illustrative all-in interest rate on the Facility at the anticipated signing date, based on current market rates and the Base economic terms set forth in the Term Sheet, is expected to be approximately 6.14% per annum, calculated as follows:

(i) one-month Term SOFR: approximately 2.29%;

(ii) plus the applicable credit spread adjustment for a one-month interest period: 0.10%;

(iii) plus the Base Applicable Margin: 3.75%;

(iv) yielding an all-in cash coupon of approximately 6.14% per annum.

This illustrative calculation does not include the yield impact of the original issue discount. The SOFR Floor is not binding at the illustrative rate because one-month Term SOFR (2.29%) exceeds the Base SOFR Floor (0.50%) by a significant margin. Any increase to the SOFR Floor pursuant to this Section 4 would similarly not affect the current illustrative all-in rate but would provide additional downside protection for lenders in the event of future declines in Term SOFR.

Section 5: Structural Flex

5.1 Amortization Flex

(a) Crescent Harbor acknowledges and agrees that it shall not have the right, under the flex provisions of this Letter Agreement or otherwise, to increase the annual amortization rate above 1.00% per annum of the original aggregate principal amount of the Facility without the Borrower's prior written consent. For the avoidance of doubt, the scheduled quarterly amortization payment of $1,750,000 (being $700,000,000 multiplied by 1.00% divided by four) is not subject to upward flex pursuant to this Letter Agreement.

(b) The parties acknowledge that the 1.00% annual amortization rate is consistent with market practice for institutional Term Loan B facilities and was specifically negotiated as part of the base terms set forth in the Term Sheet. Any increase in the amortization rate would require a separate written agreement between Crescent Harbor and the Borrower and shall not be effectuated through a Flex Exercise Notice.

5.2 Financial Covenant Flex

(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to request an adjustment to the springing Total Net Leverage Ratio testing trigger from 35% of total revolving credit commitments drawn to as low as 30% of total revolving credit commitments drawn. Such adjustment would have the effect of causing the financial maintenance covenant to spring into effect at a lower threshold of revolver utilization, thereby providing syndicate lenders with earlier financial covenant protection in circumstances of increased revolver borrowings by the Borrower.

(b) Notwithstanding the foregoing, the maximum Total Net Leverage Ratio covenant level of 4.50 to 1.00 shall not be subject to tightening under the flex provisions of this Letter Agreement. Crescent Harbor shall not have the right to reduce the maximum permitted Total Net Leverage Ratio below 4.50x without the prior written consent of the Borrower.

(c) The parties note that, as of the anticipated Closing Date, VHG's pro forma Total Net Leverage Ratio is expected to be approximately 2.52x, calculated as follows:

(i) pro forma net debt of approximately $858,000,000 (consisting of $700,000,000 in respect of the Facility, plus other funded indebtedness, less unrestricted cash and cash equivalents); divided by

(ii) last twelve months ("LTM") Adjusted EBITDA of approximately $341,000,000 (as calculated in accordance with the definition of "Adjusted EBITDA" set forth in the Term Sheet).

The resulting pro forma Total Net Leverage Ratio of 2.52x provides substantial cushion of approximately 1.98x relative to the 4.50x covenant level, representing a covenant cushion of approximately 44%.

5.3 MFN and Repricing Protection — No Flex

(a) The most-favored-nation ("MFN") provision, as negotiated between VHG and Crescent Harbor and reflected in the Term Sheet, provides for a 50 basis point threshold applicable to incremental term loan facilities, with an 18-month sunset period expiring on January 21, 2024. Crescent Harbor acknowledges and agrees that the MFN provision shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Specifically, Crescent Harbor shall not have the right to (i) reduce the MFN threshold below 50 basis points, (ii) extend the MFN sunset period beyond 18 months, or (iii) otherwise modify the MFN provision in a manner adverse to the Borrower, in each case without such prior written consent.

(b) The repricing protection provision (also referred to as the "soft call" provision), as negotiated between VHG and Crescent Harbor and reflected in the Term Sheet, provides for a 1.00% prepayment premium applicable to any repricing transaction occurring within six months following the Closing Date (i.e., through January 21, 2023). Crescent Harbor acknowledges and agrees that the repricing protection provision shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Specifically, Crescent Harbor shall not have the right to (i) increase the prepayment premium above 1.00%, (ii) extend the repricing protection period beyond six months post-closing, or (iii) expand the scope of transactions constituting a "repricing transaction," in each case without such prior written consent.

(c) The parties acknowledge that the MFN provision and the repricing protection provision were specifically negotiated between VHG and Crescent Harbor as material economic terms of the Facility and were reflected in the Term Sheet as agreed terms. The exclusion of these provisions from the scope of Crescent Harbor's flex rights was a condition to VHG's agreement to grant the flex rights set forth in this Letter Agreement.

5.4 Collateral and Guarantor Flex

(a) Crescent Harbor acknowledges and agrees that it shall not have the right, under the flex provisions of this Letter Agreement or otherwise, to expand the collateral package or add guarantors beyond those contemplated in the Term Sheet. The guarantors of the Facility, as set forth in the Term Sheet, are:

(i) Verimark Resort Properties LLC, a Delaware limited liability company;

(ii) VHG Management Services Inc., a Delaware corporation;

(iii) Verimark Convention Holdings LLC, a Delaware limited liability company;

(iv) Palmetto Beachfront Hotels LLC, a Florida limited liability company; and

(v) Cascadia Hospitality Corp., a Washington corporation.

(b) The collateral for the Facility, as set forth in the Term Sheet, consists of a first-priority perfected security interest (subject to customary permitted liens) in substantially all assets of the Borrower and each Guarantor, including without limitation:

(i) the forty-two (42) hotel properties owned or leased by VHG and its subsidiaries (appraised aggregate value of approximately $2.18 billion, based on independent appraisals commissioned by Crescent Harbor);

(ii) 100% of the equity interests in each domestic subsidiary of VHG;

(iii) 65% of the equity interests in each first-tier foreign subsidiary of VHG;

(iv) accounts, inventory, equipment, investment property, intellectual property, and other personal property of the Borrower and each Guarantor; and

(v) all proceeds and products of the foregoing.

The collateral package described above shall not be subject to expansion or modification pursuant to the flex provisions of this Letter Agreement without the prior written consent of the Borrower.

5.5 Maturity — No Flex

The maturity date of the Facility is July 21, 2029, representing a seven-year tenor from the expected Closing Date. Crescent Harbor acknowledges and agrees that the maturity date shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Crescent Harbor shall not have the right to shorten the maturity date or otherwise reduce the tenor of the Facility pursuant to this Letter Agreement.

Section 6: Reverse Flex (Borrower-Favorable Adjustments)

(a) If the syndication of the Facility is oversubscribed or if prevailing market conditions at the time of syndication are more favorable than anticipated, Crescent Harbor shall use commercially reasonable efforts to reduce the Applicable Margin, increase the issue price (thereby reducing the original issue discount), reduce the SOFR Floor, or implement such other adjustments to the economic terms of the Facility as may be favorable to the Borrower (each, a "Reverse Flex Adjustment"), in each case in consultation with the Borrower.

(b) Any Reverse Flex Adjustment shall be for the benefit of the Borrower and shall require the Borrower's prior written consent. No Reverse Flex Adjustment shall be implemented without the Borrower's express approval of the specific terms thereof.

(c) Crescent Harbor agrees to discuss with the Borrower and the Borrower's financial advisor, Meridian Strauss Advisory LLC (Attention: Elise Cavanaugh, Managing Director), the status of the syndication process on at least a weekly basis during the Flex Period. Such discussions shall include, at a minimum, a summary of investor feedback, the status of commitments received, the anticipated timeline for final allocations, and any market developments that may affect the pricing or structure of the Facility. Crescent Harbor shall promptly notify the Borrower and Meridian Strauss Advisory LLC if reverse flex opportunities arise during the syndication process and shall work cooperatively with the Borrower and its advisors to maximize the benefit to the Borrower of any favorable market conditions.

(d) For the avoidance of doubt, the obligation of Crescent Harbor under this Section 6 to use commercially reasonable efforts to implement Reverse Flex Adjustments is a binding obligation and not merely precatory in nature. However, the parties acknowledge that the ultimate determination of whether a Reverse Flex Adjustment is achievable without jeopardizing the successful completion of the syndication shall be made by Crescent Harbor in its reasonable judgment, after consultation with the Borrower and Meridian Strauss Advisory LLC.

Section 7: Exercise of Flex

(a) Crescent Harbor shall deliver a Flex Exercise Notice to the Borrower at least three (3) business days prior to the proposed effective date of any flex adjustment. A copy of each Flex Exercise Notice shall be simultaneously delivered to the Borrower's outside counsel:

Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, New York 10006

Attention: Ian Blackwood, Partner, and Sophie Tremblay, Counsel

(b) Each Flex Exercise Notice shall specify in reasonable detail:

(i) the specific flex adjustments to be made (e.g., the amount of any increase to the Applicable Margin, OID, or SOFR Floor, or any adjustment to the springing leverage test trigger);

(ii) the reasons for such adjustments, including a summary of the market conditions, investor feedback, or other factors that, in Crescent Harbor's reasonable judgment, necessitate the flex exercise;

(iii) the anticipated impact of such adjustments on the syndication process, including any expected changes to the composition or size of the lender syndicate; and

(iv) any other information reasonably necessary for the Borrower and its advisors to evaluate the proposed flex adjustments.

(c) Crescent Harbor may exercise the flex provisions set forth in this Letter Agreement in whole or in part and on one or more occasions during the Flex Period. Crescent Harbor may exercise different flex provisions at different times and is not required to exercise all available flex simultaneously. By way of illustration, Crescent Harbor may initially exercise margin flex in a partial amount and subsequently exercise additional margin flex or OID flex on a subsequent date, provided that the aggregate exercise does not exceed the maximum flex amounts set forth herein and each exercise is made during the Flex Period.

(d) All flex adjustments exercised pursuant to this Letter Agreement shall be reflected in the Credit Agreement and all related documentation (including, without limitation, the promissory notes, the security agreement, and any related disclosure documents) prior to execution thereof. Crescent Harbor shall coordinate with Calderwood & Harkness LLP and its own outside counsel, Whitfield Gage & Partridge LLP, to ensure that any flex adjustments are accurately and completely reflected in the definitive documentation.

(e) The Borrower shall not unreasonably delay or impede the implementation of flex adjustments that are properly exercised in accordance with this Letter Agreement. Upon receipt of a Flex Exercise Notice, the Borrower shall cooperate in good faith with Crescent Harbor and its counsel to effect the necessary modifications to the Credit Agreement and related documentation.

Section 8: Interaction with Fee Letter

(a) Reference is made to the Fee Letter, dated as of May 27, 2022, by and between VHG and Crescent Harbor (the "Fee Letter"), which sets forth the fees and compensation payable by VHG to Crescent Harbor in connection with the Facility.

(b) The arrangement fee of 0.50% of the aggregate principal amount of the Facility (being $3,500,000 based on a $700,000,000 facility) and the annual administrative agent fee of $150,000 are not subject to flex adjustment under this Letter Agreement. Crescent Harbor shall not have the right to increase (and the Borrower shall not have the right to decrease) such fees by exercise of any flex provision hereunder.

(c) Any adjustments to the original issue discount under the flex provisions of Section 3 hereof shall be in addition to, and shall not reduce, the arrangement fee or any other fee payable under the Fee Letter. The arrangement fee and the original issue discount are separate and independent components of the Borrower's cost of obtaining the Facility, and an increase in OID shall not entitle the Borrower to a corresponding offset or reduction in the arrangement fee.

(d) Upfront fees payable to syndicate lenders (which are currently set at 0.25% of each lender's funded commitment, embedded in the original issue discount) shall be subject to adjustment consistent with the OID flex provisions of Section 3 hereof. To the extent that Crescent Harbor exercises OID flex, the allocation of the increased OID between the upfront fee payable to syndicate lenders and the retained OID shall be determined by Crescent Harbor in its sole discretion, in consultation with the Borrower, provided that the aggregate OID shall not exceed the maximum amount set forth in Section 3.

Section 9: Interaction with Commitment Letter

(a) This Letter Agreement is supplemental to and forms an integral part of the Commitment Letter dated as of May 27, 2022. The terms and provisions of the Commitment Letter remain in full force and effect except as expressly modified or supplemented by this Letter Agreement.

(b) In the event of any conflict or inconsistency between the terms of this Letter Agreement and the terms of the Commitment Letter (including the Term Sheet attached thereto), the terms of this Letter Agreement shall control and govern with respect to the flex provisions set forth herein. In all other respects, the terms of the Commitment Letter shall continue to apply.

(c) The conditions precedent to funding set forth in the Commitment Letter, including without limitation those relating to the accuracy of representations and warranties, the absence of a material adverse effect, the delivery of definitive documentation, and the consummation of the refinancing of the existing Greystone Term Loan B, remain in full force and effect and are not modified, waived, or otherwise affected by this Letter Agreement.

(d) Crescent Harbor's exercise of flex rights pursuant to this Letter Agreement shall not constitute a failure of any condition precedent to funding set forth in the Commitment Letter. The Borrower acknowledges and agrees that the economic and structural terms of the Facility, as adjusted by any properly exercised flex provisions, shall be deemed to satisfy the applicable conditions precedent relating to the execution and delivery of definitive documentation on terms consistent with the Commitment Letter and the Term Sheet.

Section 10: Confidentiality

(a) This Letter Agreement and the terms and provisions hereof (including, without limitation, the specific flex ranges, increments, structural flex terms, and all pricing information set forth herein) are strictly confidential and shall not be disclosed by either party to any person other than the following (in each case, on a need-to-know basis and subject to such person's agreement to maintain the confidentiality of the information disclosed):

(i) the Borrower's officers: Marcus Delvecchio (Chief Executive Officer), Renata Haines (Chief Financial Officer), Priya Narayanan (General Counsel & Corporate Secretary), and Glenn Fischbach (Senior Vice President, Treasury & Capital Markets);

(ii) the Borrower's outside counsel: Calderwood & Harkness LLP (Attention: Ian Blackwood, Partner, and Sophie Tremblay, Counsel);

(iii) the Borrower's financial advisor: Meridian Strauss Advisory LLC (Attention: Elise Cavanaugh, Managing Director);

(iv) Crescent Harbor's internal deal team: Theodore "Ted" Marchetti (Managing Director, Leveraged Finance) and Anika Holm (Director, Loan Syndications); and

(v) Crescent Harbor's outside counsel: Whitfield Gage & Partridge LLP (Attention: Harrison Whitfield III, Partner, and Megan Yeung, Partner).

(b) Without limiting the generality of Section 10(a), the specific flex ranges, increments, and structural flex terms set forth in this Letter Agreement shall not be disclosed to any prospective syndicate lender, including without limitation the following institutions that have been identified as potential participants in the syndication:

(i) Ridgeline Capital Partners, LP;

(ii) Beacon Atlantic Credit Fund III;

(iii) Tidewater Institutional Investors, Inc.;

(iv) Ironbridge Loan Management LLC;

(v) Northway Savings Bank;

(vi) Copperleaf Asset Management, LP; and

(vii) Harborview Mutual Life Insurance Company.

(c) The confidentiality obligations set forth in this Section 10 shall survive the termination or expiration of this Letter Agreement and shall remain in full force and effect regardless of whether the transactions contemplated by the Commitment Letter are consummated. Notwithstanding the foregoing, the confidentiality obligations under this Section 10 shall not restrict disclosures required by applicable law, regulation, or legal process, provided that the disclosing party shall, to the extent legally permitted, provide the other party with prompt written notice of any such required disclosure and cooperate in seeking a protective order or other appropriate remedy.

Section 11: Termination

(a) This Letter Agreement shall automatically terminate, without the necessity of any further action by either party, upon the earliest to occur of:

(i) the Closing Date (expected to be July 21, 2022), at which time the flex provisions contained herein shall be of no further force or effect;

(ii) the termination of the Commitment Letter in accordance with its terms, for any reason; or

(iii) the date of a mutual written agreement of the parties hereto to terminate this Letter Agreement.

(b) Upon termination of this Letter Agreement following the Closing Date, any flex adjustments that have been properly exercised by Crescent Harbor during the Flex Period in accordance with the terms hereof and that have been reflected in the executed Credit Agreement and related definitive documentation shall remain in full force and effect as permanent terms of the Credit Agreement. No further flex adjustments shall be made following such termination.

(c) For the avoidance of doubt, the termination of this Letter Agreement shall not affect the survival of the confidentiality obligations set forth in Section 10, which shall survive in accordance with their terms.

Section 12: Governing Law; Jurisdiction

(a) This Letter Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts of law principles thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply).

(b) Each party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, County of New York, and (ii) the United States District Court for the Southern District of New York, for the purposes of any action, suit, or proceeding arising out of or relating to this Letter Agreement. Each party waives any objection it may have to the laying of venue of any such action, suit, or proceeding in any such court and any claim that any such action, suit, or proceeding has been brought in an inconvenient forum.

(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY'S AGREEMENT TO ENTER INTO THIS LETTER AGREEMENT.

Section 13: Miscellaneous

(a) Amendment; Waiver. This Letter Agreement may not be amended, modified, or supplemented, and no provision hereof may be waived, except by an instrument in writing signed by both Crescent Harbor and the Borrower. No failure or delay by either party in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

(b) Counterparts. This Letter Agreement may be executed in any number of counterparts (including by facsimile or electronic transmission in portable document format (.pdf)), each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

(c) Internal Reference. For internal tracking and reference purposes, this Letter Agreement shall be identified under Crescent Harbor loan number CHB-LF-2022-07814.

(d) Notices. All notices, requests, demands, and other communications required or permitted to be given under this Letter Agreement shall be in writing and shall be delivered to the parties at the addresses set forth in the Commitment Letter, or to such other address as either party may designate by written notice to the other party:

If to Crescent Harbor:

Crescent Harbor Bank, National Association 600 Lexington Avenue, 34th Floor New York, New York 10022

Attention: Theodore Marchetti, Managing Director, Leveraged Finance

Email: t.marchetti@crescentharbor.com

If to the Borrower:

Verimark Hospitality Group Inc. 8200 West Palmetto Park Road, Suite 1500 Boca Raton, Florida 33433

Attention: Renata Haines, Chief Financial Officer

Email: r.haines@verimarkhospitality.com

with a copy to:

Priya Narayanan, General Counsel & Corporate Secretary

Email: p.narayanan@verimarkhospitality.com

(e) Entire Agreement. This Letter Agreement, together with the Commitment Letter, the Term Sheet, and the Fee Letter, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations, discussions, and understandings, whether oral or written, relating to such subject matter.

(f) Severability. If any provision of this Letter Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Letter Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

(g) Headings. The section headings in this Letter Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Letter Agreement.

If the foregoing accurately reflects our mutual understanding and agreement, please indicate your acceptance by signing in the space provided below and returning a fully executed copy of this Letter Agreement to the undersigned.

[Remainder of this page intentionally left blank; signature pages follow.]

SIGNATURE PAGE TO LETTER AGREEMENT — SYNDICATION FLEX PROVISIONS

Very truly yours,

CRESCENT HARBOR BANK, NATIONAL ASSOCIATION

By: ________

Name: Theodore "Ted" Marchetti

Title: Managing Director, Leveraged Finance

Date: May 27, 2022

SIGNATURE PAGE TO LETTER AGREEMENT — SYNDICATION FLEX PROVISIONS

ACKNOWLEDGED AND AGREED:

VERIMARK HOSPITALITY GROUP INC.

By: ________

Name: Renata Haines

Title: Chief Financial Officer

Date: May 27, 2022

By: ________

Name: Priya Narayanan

Title: General Counsel & Corporate Secretary

Date: May 27, 2022

EXHIBIT A

SUMMARY OF FLEX RANGES

The following table summarizes the flex provisions set forth in this Letter Agreement. This Exhibit A is provided for convenience of reference only and is qualified in its entirety by the terms and conditions of this Letter Agreement. In the event of any conflict between this Exhibit A and the body of this Letter Agreement, the body of this Letter Agreement shall control.

Crescent Harbor Loan No. CHB-LF-2022-07814 — CONFIDENTIAL

Term	Base Level	Maximum Flex (Upward)	Increment	Subject to Borrower Consent?
Applicable Margin	SOFR + 375 bps	SOFR + 425 bps (+50 bps)	12.5 bps	No
Original Issue discount	1.00% ($7,000,000)	2.00% ($14,000,000)	0.25%	No
SOFR Floor	0.50%	0.75%	12.5 bps	No
Amortization	1.00% p.a.	No upward flex	N/A	Yes (required)
Springing Leverage Test Trigger	35% of RCF commitments	30% of RCF commitments	5%	No
Max Total Net Leverage Ratio	4.50x	No tightening	N/A	Yes (required)
MFN Threshold	50 bps	No flex	N/A	Yes (required)
MFN Sunset Period	18 months (through 1/21/2024)	No flex	N/A	Yes (required)
Repricing Protection	1.00% / 6 months (through 1/21/2023)	No flex	N/A	Yes (required)
Maturity	July 21, 2029	No flex	N/A	Yes (required)
Collateral / Guarantors	Per Term Sheet	No expansion	N/A	Yes (required)

CONFIDENTIAL
CRESCENT HARBOR BANK, N.A. 600 Lexington Avenue, 34th Floor New York, New York 10022
May 27, 2022
CONFIDENTIAL
May 27, 2022
Verimark Hospitality Group Inc. 8200 West Palmetto Park Road, Suite 1500 Boca Raton, Florida 33433
Attention: Renata Haines, Chief Financial Officer
Priya Narayanan, General Counsel & Corporate Secretary
Re: Letter Agreement — Syndication Flex Provisions Senior Secured Term Loan B Facility — $700,000,000 Crescent Harbor Loan No. CHB-LF-2022-07814
Dear Ms. Haines and Ms. Narayanan:
Reference is made to that certain Commitment Letter, dated as of May 27, 2022 (as amended, modified, or supplemented from time to time, the "Commitment Letter"), by and between Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Borrower"), and Crescent Harbor Bank, National Association ("Crescent Harbor" or the "Lead Arranger"), pursuant to which Crescent Harbor has committed to arrange and underwrite a senior secured Term Loan B facility in an aggregate principal amount of Seven Hundred Million Dollars ($700,000,000) (the "Facility"). This Letter Agreement (this "Letter Agreement") supplements the Commitment Letter and the Fee Letter of even date herewith (the "Fee Letter"), each by and between VHG and Crescent Harbor.
The purpose of this Letter Agreement is to set forth certain market flex provisions that Crescent Harbor may exercise, in its sole discretion, to facilitate the successful syndication of the Facility to institutional lenders in the leveraged loan market. The parties acknowledge that Crescent Harbor, as sole lead arranger, sole bookrunner, and underwriter, bears the syndication risk associated with the Facility and that the flex provisions contained herein are customary and necessary to provide Crescent Harbor with the ability to adjust certain economic and structural terms of the Facility in response to then-prevailing market conditions during the syndication process.
As described more fully in the Commitment Letter and the term sheet attached thereto as Exhibit A (the "Term Sheet"), the Facility will be used to refinance in full the existing $625,000,000 Term Loan B facility (with Greystone Federal Credit Corp. serving as existing administrative agent; CUSIP 92347LAA0) and to provide $75,000,000 in incremental proceeds for permitted acquisitions and general corporate purposes. The Term Sheet sets forth the base economic and structural terms of the Facility, including, without limitation, the applicable margin, original issue discount, interest rate floor, amortization schedule, maturity date, collateral package, guarantor structure, financial covenants, most-favored-nation provisions, and repricing protection.
Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Commitment Letter or the Term Sheet, as applicable. In the event that a capitalized term is defined both in this Letter Agreement and in the Commitment Letter or the Term Sheet, the definition set forth in this Letter Agreement shall govern for purposes of this Letter Agreement.
In consideration of the foregoing and the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1: Definitions
For purposes of this Letter Agreement, the following terms shall have the meanings set forth below:
"Adjusted Term SOFR" means, for any interest period, the CME Term SOFR for such interest period plus the applicable credit spread adjustment, which shall be (a) 0.10% (10 basis points) for a one-month interest period, (b) 0.15% (15 basis points) for a three-month interest period, and (c) 0.25% (25 basis points) for a six-month interest period, in each case as more particularly described in the Term Sheet.
"Base Applicable Margin" means 375 basis points (3.75%) per annum over Adjusted Term SOFR, as set forth in the Term Sheet. The Base Applicable Margin represents the initial spread applicable to the Facility prior to any exercise of flex provisions hereunder.
"Base OID" means an original issue discount of 1.00% of the aggregate principal amount of the Facility, resulting in an issue price of 99.00% of par. Based on the aggregate principal amount of $700,000,000, the Base OID equals Seven Million Dollars ($7,000,000).
"Base SOFR Floor" means 0.50% (50 basis points). The Base SOFR Floor establishes the minimum level of Term SOFR used for purposes of calculating the interest rate on the Facility, regardless of the actual then-prevailing Term SOFR rate.
"Closing Date" means the date on which the simultaneous signing, closing, and funding of the Facility shall occur, which date is currently expected to be July 21, 2022, subject to the satisfaction or waiver of the conditions precedent set forth in the Commitment Letter and the Credit Agreement.
"Credit Agreement" means the credit agreement to be entered into among VHG (as Borrower), the Guarantors (as defined in the Term Sheet), Crescent Harbor Bank, N.A. (in its capacity as Administrative Agent and Collateral Agent), and the Lenders party thereto from time to time, governing the terms and conditions of the Facility.
"Flex Exercise Notice" means a written notice from Crescent Harbor to the Borrower, substantially in the form contemplated by Section 7 hereof, setting forth the specific flex adjustments that Crescent Harbor elects to implement pursuant to this Letter Agreement.
"Flex Period" means the period commencing on the date of this Letter Agreement and ending on the earlier of (i) the Syndication Date and (ii) the Closing Date.
"Syndication Date" means the date on which final allocations for the Facility are confirmed by Crescent Harbor and communicated to the Borrower and the syndicate lenders, which date is expected to be on or about June 30, 2022.
Section 2: Pricing Flex — Applicable Margin
(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the Base Applicable Margin by up to 50 basis points (0.50%) per annum, such that the maximum Applicable Margin following any such increase shall not exceed 425 basis points (4.25%) per annum over Adjusted Term SOFR. Crescent Harbor may exercise such right if, in Crescent Harbor's reasonable judgment, such increase is necessary or advisable to achieve the successful syndication of the Facility at levels and on terms acceptable to institutional investors in the leveraged loan market.
(b) Any increase to the Applicable Margin pursuant to this Section 2 may be exercised in increments of 12.5 basis points (0.125%) per annum. By way of illustration, Crescent Harbor may elect to increase the Applicable Margin from the Base Applicable Margin of 375 basis points to 387.5 basis points, 400 basis points, 412.5 basis points, or up to the maximum of 425 basis points, as market conditions may require.
(c) The parties acknowledge that the initial spread on the existing Term Loan B facility with Greystone Federal Credit Corp. was LIBOR plus 425 basis points per annum. The base economics of the Facility as reflected in the Term Sheet were designed to achieve an approximately 50 basis points spread reduction relative to the existing facility (after adjusting for the transition from LIBOR to SOFR and the applicable credit spread adjustment). Accordingly, any exercise of upward flex to the maximum Applicable Margin of 425 basis points over Adjusted Term SOFR would effectively eliminate the spread reduction benefit of the refinancing in its entirety. The Borrower acknowledges that such outcome is within the scope of the flex rights granted hereunder and that Crescent Harbor may exercise such rights without further consent of the Borrower, provided that the exercise is consistent with the terms and limitations of this Letter Agreement.
(d) For the avoidance of doubt, Crescent Harbor shall not have the right to decrease the Applicable Margin below the Base Applicable Margin of 375 basis points per annum without the prior written consent of the Borrower. Any downward adjustment to the Applicable Margin below the Base Applicable Margin (i.e., reverse flex for the Borrower's benefit) shall be subject to the mutual agreement of Crescent Harbor and the Borrower in accordance with Section 6 hereof.
Section 3: Pricing Flex — Original Issue discount
(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the original issue discount from the Base OID of 1.00% to a maximum of 2.00% of the aggregate principal amount of the Facility. Accordingly, the issue price of the Facility may decline from 99.00% of par (at the Base OID level) to a minimum of 98.00% of par (at the maximum OID flex level). Based on an aggregate principal amount of $700,000,000, the maximum dollar amount of the original issue discount following the full exercise of OID flex would be Fourteen Million Dollars ($14,000,000).
(b) Any increase to the original issue discount pursuant to this Section 3 may be exercised in increments of 0.25% of the aggregate principal amount of the Facility. By way of illustration, Crescent Harbor may elect to increase the OID from 1.00% to 1.25%, 1.50%, 1.75%, or up to the maximum of 2.00%, as market conditions may require.
(c) The parties acknowledge that any increase in the original issue discount will correspondingly reduce the net funding amount received by VHG on the Closing Date. At the Base OID level of 1.00%, the net funding amount (before deduction of fees and expenses) is $693,000,000 (being $700,000,000 minus $7,000,000). At the maximum OID flex level of 2.00%, the net funding amount (before deduction of fees and expenses) would be $686,000,000 (being $700,000,000 minus $14,000,000).
(d) The Borrower acknowledges the corresponding impact that any increase in OID will have on the net proceeds available to VHG after giving effect to the following anticipated uses of proceeds:
(i) payoff of the existing Greystone Term Loan B, estimated at approximately $627,916,667 (inclusive of accrued and unpaid interest through the expected Closing Date);
(ii) the arrangement fee payable to Crescent Harbor of $3,500,000 (as set forth in the Fee Letter);
(iii) the advisory fee payable to Meridian Strauss Advisory LLC of $1,400,000; and
(iv) estimated legal and closing costs of approximately $3,200,000.
At the Base OID level, estimated net proceeds available for permitted acquisitions and general corporate purposes would be approximately $57,000,000. At the maximum OID flex level, such estimated net proceeds would be reduced to approximately $50,000,000. The Borrower acknowledges that such reduction in net proceeds is within the scope of the flex rights granted hereunder.
(e) Any increase in the original issue discount effectuated pursuant to this Section 3 shall be taken into account for purposes of determining the "all-in yield" for the most-favored-nation provision and the repricing protection calculations in the Credit Agreement. The parties agree that the original issue discount (as flexed, if applicable) shall be amortized over the lesser of the stated maturity and a four-year assumed average life of the Facility for purposes of computing the yield component attributable to OID in the all-in yield calculation.
Section 4: Pricing Flex — SOFR Floor
(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to increase the Base SOFR Floor from 0.50% (50 basis points) to a maximum of 0.75% (75 basis points) if, in Crescent Harbor's reasonable judgment, such increase is necessary or advisable to facilitate the successful syndication of the Facility.
(b) Any increase to the SOFR Floor pursuant to this Section 4 may be exercised in increments of 12.5 basis points (0.125%). By way of illustration, Crescent Harbor may elect to increase the SOFR Floor from 0.50% to 0.625%, or up to the maximum of 0.75%.
(c) The parties acknowledge that any SOFR floor increase would affect the all-in yield on the Facility in rate environments where the applicable Term SOFR falls below the floor, effectively establishing a minimum yield floor for the benefit of syndicate lenders. As of the date of this Letter Agreement, one-month Term SOFR is trending above 0.50% (at approximately 0.80% to 0.85%), and the Federal Open Market Committee has signaled continued rate increases through the remainder of 2022. Accordingly, the SOFR floor adjustment is primarily protective for syndicate lenders against the possibility of future rate decreases and is not expected to have an immediate impact on the Borrower's interest expense at current rate levels.
(d) For reference, the illustrative all-in interest rate on the Facility at the anticipated signing date, based on current market rates and the Base economic terms set forth in the Term Sheet, is expected to be approximately 6.14% per annum, calculated as follows:
(i) one-month Term SOFR: approximately 2.29%;
(ii) plus the applicable credit spread adjustment for a one-month interest period: 0.10%;
(iii) plus the Base Applicable Margin: 3.75%;
(iv) yielding an all-in cash coupon of approximately 6.14% per annum.
This illustrative calculation does not include the yield impact of the original issue discount. The SOFR Floor is not binding at the illustrative rate because one-month Term SOFR (2.29%) exceeds the Base SOFR Floor (0.50%) by a significant margin. Any increase to the SOFR Floor pursuant to this Section 4 would similarly not affect the current illustrative all-in rate but would provide additional downside protection for lenders in the event of future declines in Term SOFR.
Section 5: Structural Flex
5.1 Amortization Flex
(a) Crescent Harbor acknowledges and agrees that it shall not have the right, under the flex provisions of this Letter Agreement or otherwise, to increase the annual amortization rate above 1.00% per annum of the original aggregate principal amount of the Facility without the Borrower's prior written consent. For the avoidance of doubt, the scheduled quarterly amortization payment of $1,750,000 (being $700,000,000 multiplied by 1.00% divided by four) is not subject to upward flex pursuant to this Letter Agreement.
(b) The parties acknowledge that the 1.00% annual amortization rate is consistent with market practice for institutional Term Loan B facilities and was specifically negotiated as part of the base terms set forth in the Term Sheet. Any increase in the amortization rate would require a separate written agreement between Crescent Harbor and the Borrower and shall not be effectuated through a Flex Exercise Notice.
5.2 Financial Covenant Flex
(a) Crescent Harbor shall have the right, exercisable during the Flex Period and in accordance with Section 7 hereof, to request an adjustment to the springing Total Net Leverage Ratio testing trigger from 35% of total revolving credit commitments drawn to as low as 30% of total revolving credit commitments drawn. Such adjustment would have the effect of causing the financial maintenance covenant to spring into effect at a lower threshold of revolver utilization, thereby providing syndicate lenders with earlier financial covenant protection in circumstances of increased revolver borrowings by the Borrower.
(b) Notwithstanding the foregoing, the maximum Total Net Leverage Ratio covenant level of 4.50 to 1.00 shall not be subject to tightening under the flex provisions of this Letter Agreement. Crescent Harbor shall not have the right to reduce the maximum permitted Total Net Leverage Ratio below 4.50x without the prior written consent of the Borrower.
(c) The parties note that, as of the anticipated Closing Date, VHG's pro forma Total Net Leverage Ratio is expected to be approximately 2.52x, calculated as follows:
(i) pro forma net debt of approximately $858,000,000 (consisting of $700,000,000 in respect of the Facility, plus other funded indebtedness, less unrestricted cash and cash equivalents); divided by
(ii) last twelve months ("LTM") Adjusted EBITDA of approximately $341,000,000 (as calculated in accordance with the definition of "Adjusted EBITDA" set forth in the Term Sheet).
The resulting pro forma Total Net Leverage Ratio of 2.52x provides substantial cushion of approximately 1.98x relative to the 4.50x covenant level, representing a covenant cushion of approximately 44%.
5.3 MFN and Repricing Protection — No Flex
(a) The most-favored-nation ("MFN") provision, as negotiated between VHG and Crescent Harbor and reflected in the Term Sheet, provides for a 50 basis point threshold applicable to incremental term loan facilities, with an 18-month sunset period expiring on January 21, 2024. Crescent Harbor acknowledges and agrees that the MFN provision shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Specifically, Crescent Harbor shall not have the right to (i) reduce the MFN threshold below 50 basis points, (ii) extend the MFN sunset period beyond 18 months, or (iii) otherwise modify the MFN provision in a manner adverse to the Borrower, in each case without such prior written consent.
(b) The repricing protection provision (also referred to as the "soft call" provision), as negotiated between VHG and Crescent Harbor and reflected in the Term Sheet, provides for a 1.00% prepayment premium applicable to any repricing transaction occurring within six months following the Closing Date (i.e., through January 21, 2023). Crescent Harbor acknowledges and agrees that the repricing protection provision shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Specifically, Crescent Harbor shall not have the right to (i) increase the prepayment premium above 1.00%, (ii) extend the repricing protection period beyond six months post-closing, or (iii) expand the scope of transactions constituting a "repricing transaction," in each case without such prior written consent.
(c) The parties acknowledge that the MFN provision and the repricing protection provision were specifically negotiated between VHG and Crescent Harbor as material economic terms of the Facility and were reflected in the Term Sheet as agreed terms. The exclusion of these provisions from the scope of Crescent Harbor's flex rights was a condition to VHG's agreement to grant the flex rights set forth in this Letter Agreement.
5.4 Collateral and Guarantor Flex
(a) Crescent Harbor acknowledges and agrees that it shall not have the right, under the flex provisions of this Letter Agreement or otherwise, to expand the collateral package or add guarantors beyond those contemplated in the Term Sheet. The guarantors of the Facility, as set forth in the Term Sheet, are:
(i) Verimark Resort Properties LLC, a Delaware limited liability company;
(ii) VHG Management Services Inc., a Delaware corporation;
(iii) Verimark Convention Holdings LLC, a Delaware limited liability company;
(iv) Palmetto Beachfront Hotels LLC, a Florida limited liability company; and
(v) Cascadia Hospitality Corp., a Washington corporation.
(b) The collateral for the Facility, as set forth in the Term Sheet, consists of a first-priority perfected security interest (subject to customary permitted liens) in substantially all assets of the Borrower and each Guarantor, including without limitation:
(i) the forty-two (42) hotel properties owned or leased by VHG and its subsidiaries (appraised aggregate value of approximately $2.18 billion, based on independent appraisals commissioned by Crescent Harbor);
(ii) 100% of the equity interests in each domestic subsidiary of VHG;
(iii) 65% of the equity interests in each first-tier foreign subsidiary of VHG;
(iv) accounts, inventory, equipment, investment property, intellectual property, and other personal property of the Borrower and each Guarantor; and
(v) all proceeds and products of the foregoing.
The collateral package described above shall not be subject to expansion or modification pursuant to the flex provisions of this Letter Agreement without the prior written consent of the Borrower.
5.5 Maturity — No Flex
The maturity date of the Facility is July 21, 2029, representing a seven-year tenor from the expected Closing Date. Crescent Harbor acknowledges and agrees that the maturity date shall not be subject to flex by Crescent Harbor without the prior written consent of the Borrower. Crescent Harbor shall not have the right to shorten the maturity date or otherwise reduce the tenor of the Facility pursuant to this Letter Agreement.
Section 6: Reverse Flex (Borrower-Favorable Adjustments)
(a) If the syndication of the Facility is oversubscribed or if prevailing market conditions at the time of syndication are more favorable than anticipated, Crescent Harbor shall use commercially reasonable efforts to reduce the Applicable Margin, increase the issue price (thereby reducing the original issue discount), reduce the SOFR Floor, or implement such other adjustments to the economic terms of the Facility as may be favorable to the Borrower (each, a "Reverse Flex Adjustment"), in each case in consultation with the Borrower.
(b) Any Reverse Flex Adjustment shall be for the benefit of the Borrower and shall require the Borrower's prior written consent. No Reverse Flex Adjustment shall be implemented without the Borrower's express approval of the specific terms thereof.
(c) Crescent Harbor agrees to discuss with the Borrower and the Borrower's financial advisor, Meridian Strauss Advisory LLC (Attention: Elise Cavanaugh, Managing Director), the status of the syndication process on at least a weekly basis during the Flex Period. Such discussions shall include, at a minimum, a summary of investor feedback, the status of commitments received, the anticipated timeline for final allocations, and any market developments that may affect the pricing or structure of the Facility. Crescent Harbor shall promptly notify the Borrower and Meridian Strauss Advisory LLC if reverse flex opportunities arise during the syndication process and shall work cooperatively with the Borrower and its advisors to maximize the benefit to the Borrower of any favorable market conditions.
(d) For the avoidance of doubt, the obligation of Crescent Harbor under this Section 6 to use commercially reasonable efforts to implement Reverse Flex Adjustments is a binding obligation and not merely precatory in nature. However, the parties acknowledge that the ultimate determination of whether a Reverse Flex Adjustment is achievable without jeopardizing the successful completion of the syndication shall be made by Crescent Harbor in its reasonable judgment, after consultation with the Borrower and Meridian Strauss Advisory LLC.
Section 7: Exercise of Flex
(a) Crescent Harbor shall deliver a Flex Exercise Notice to the Borrower at least three (3) business days prior to the proposed effective date of any flex adjustment. A copy of each Flex Exercise Notice shall be simultaneously delivered to the Borrower's outside counsel:
Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, New York 10006
Attention: Ian Blackwood, Partner, and Sophie Tremblay, Counsel
(b) Each Flex Exercise Notice shall specify in reasonable detail:
(i) the specific flex adjustments to be made (e.g., the amount of any increase to the Applicable Margin, OID, or SOFR Floor, or any adjustment to the springing leverage test trigger);
(ii) the reasons for such adjustments, including a summary of the market conditions, investor feedback, or other factors that, in Crescent Harbor's reasonable judgment, necessitate the flex exercise;
(iii) the anticipated impact of such adjustments on the syndication process, including any expected changes to the composition or size of the lender syndicate; and
(iv) any other information reasonably necessary for the Borrower and its advisors to evaluate the proposed flex adjustments.
(c) Crescent Harbor may exercise the flex provisions set forth in this Letter Agreement in whole or in part and on one or more occasions during the Flex Period. Crescent Harbor may exercise different flex provisions at different times and is not required to exercise all available flex simultaneously. By way of illustration, Crescent Harbor may initially exercise margin flex in a partial amount and subsequently exercise additional margin flex or OID flex on a subsequent date, provided that the aggregate exercise does not exceed the maximum flex amounts set forth herein and each exercise is made during the Flex Period.
(d) All flex adjustments exercised pursuant to this Letter Agreement shall be reflected in the Credit Agreement and all related documentation (including, without limitation, the promissory notes, the security agreement, and any related disclosure documents) prior to execution thereof. Crescent Harbor shall coordinate with Calderwood & Harkness LLP and its own outside counsel, Whitfield Gage & Partridge LLP, to ensure that any flex adjustments are accurately and completely reflected in the definitive documentation.
(e) The Borrower shall not unreasonably delay or impede the implementation of flex adjustments that are properly exercised in accordance with this Letter Agreement. Upon receipt of a Flex Exercise Notice, the Borrower shall cooperate in good faith with Crescent Harbor and its counsel to effect the necessary modifications to the Credit Agreement and related documentation.
Section 8: Interaction with Fee Letter
(a) Reference is made to the Fee Letter, dated as of May 27, 2022, by and between VHG and Crescent Harbor (the "Fee Letter"), which sets forth the fees and compensation payable by VHG to Crescent Harbor in connection with the Facility.
(b) The arrangement fee of 0.50% of the aggregate principal amount of the Facility (being $3,500,000 based on a $700,000,000 facility) and the annual administrative agent fee of $150,000 are not subject to flex adjustment under this Letter Agreement. Crescent Harbor shall not have the right to increase (and the Borrower shall not have the right to decrease) such fees by exercise of any flex provision hereunder.
(c) Any adjustments to the original issue discount under the flex provisions of Section 3 hereof shall be in addition to, and shall not reduce, the arrangement fee or any other fee payable under the Fee Letter. The arrangement fee and the original issue discount are separate and independent components of the Borrower's cost of obtaining the Facility, and an increase in OID shall not entitle the Borrower to a corresponding offset or reduction in the arrangement fee.
(d) Upfront fees payable to syndicate lenders (which are currently set at 0.25% of each lender's funded commitment, embedded in the original issue discount) shall be subject to adjustment consistent with the OID flex provisions of Section 3 hereof. To the extent that Crescent Harbor exercises OID flex, the allocation of the increased OID between the upfront fee payable to syndicate lenders and the retained OID shall be determined by Crescent Harbor in its sole discretion, in consultation with the Borrower, provided that the aggregate OID shall not exceed the maximum amount set forth in Section 3.
Section 9: Interaction with Commitment Letter
(a) This Letter Agreement is supplemental to and forms an integral part of the Commitment Letter dated as of May 27, 2022. The terms and provisions of the Commitment Letter remain in full force and effect except as expressly modified or supplemented by this Letter Agreement.
(b) In the event of any conflict or inconsistency between the terms of this Letter Agreement and the terms of the Commitment Letter (including the Term Sheet attached thereto), the terms of this Letter Agreement shall control and govern with respect to the flex provisions set forth herein. In all other respects, the terms of the Commitment Letter shall continue to apply.
(c) The conditions precedent to funding set forth in the Commitment Letter, including without limitation those relating to the accuracy of representations and warranties, the absence of a material adverse effect, the delivery of definitive documentation, and the consummation of the refinancing of the existing Greystone Term Loan B, remain in full force and effect and are not modified, waived, or otherwise affected by this Letter Agreement.
(d) Crescent Harbor's exercise of flex rights pursuant to this Letter Agreement shall not constitute a failure of any condition precedent to funding set forth in the Commitment Letter. The Borrower acknowledges and agrees that the economic and structural terms of the Facility, as adjusted by any properly exercised flex provisions, shall be deemed to satisfy the applicable conditions precedent relating to the execution and delivery of definitive documentation on terms consistent with the Commitment Letter and the Term Sheet.
Section 10: Confidentiality
(a) This Letter Agreement and the terms and provisions hereof (including, without limitation, the specific flex ranges, increments, structural flex terms, and all pricing information set forth herein) are strictly confidential and shall not be disclosed by either party to any person other than the following (in each case, on a need-to-know basis and subject to such person's agreement to maintain the confidentiality of the information disclosed):
(i) the Borrower's officers: Marcus Delvecchio (Chief Executive Officer), Renata Haines (Chief Financial Officer), Priya Narayanan (General Counsel & Corporate Secretary), and Glenn Fischbach (Senior Vice President, Treasury & Capital Markets);
(ii) the Borrower's outside counsel: Calderwood & Harkness LLP (Attention: Ian Blackwood, Partner, and Sophie Tremblay, Counsel);
(iii) the Borrower's financial advisor: Meridian Strauss Advisory LLC (Attention: Elise Cavanaugh, Managing Director);
(iv) Crescent Harbor's internal deal team: Theodore "Ted" Marchetti (Managing Director, Leveraged Finance) and Anika Holm (Director, Loan Syndications); and
(v) Crescent Harbor's outside counsel: Whitfield Gage & Partridge LLP (Attention: Harrison Whitfield III, Partner, and Megan Yeung, Partner).
(b) Without limiting the generality of Section 10(a), the specific flex ranges, increments, and structural flex terms set forth in this Letter Agreement shall not be disclosed to any prospective syndicate lender, including without limitation the following institutions that have been identified as potential participants in the syndication:
(i) Ridgeline Capital Partners, LP;
(ii) Beacon Atlantic Credit Fund III;
(iii) Tidewater Institutional Investors, Inc.;
(iv) Ironbridge Loan Management LLC;
(v) Northway Savings Bank;
(vi) Copperleaf Asset Management, LP; and
(vii) Harborview Mutual Life Insurance Company.
(c) The confidentiality obligations set forth in this Section 10 shall survive the termination or expiration of this Letter Agreement and shall remain in full force and effect regardless of whether the transactions contemplated by the Commitment Letter are consummated. Notwithstanding the foregoing, the confidentiality obligations under this Section 10 shall not restrict disclosures required by applicable law, regulation, or legal process, provided that the disclosing party shall, to the extent legally permitted, provide the other party with prompt written notice of any such required disclosure and cooperate in seeking a protective order or other appropriate remedy.
Section 11: Termination
(a) This Letter Agreement shall automatically terminate, without the necessity of any further action by either party, upon the earliest to occur of:
(i) the Closing Date (expected to be July 21, 2022), at which time the flex provisions contained herein shall be of no further force or effect;
(ii) the termination of the Commitment Letter in accordance with its terms, for any reason; or
(iii) the date of a mutual written agreement of the parties hereto to terminate this Letter Agreement.
(b) Upon termination of this Letter Agreement following the Closing Date, any flex adjustments that have been properly exercised by Crescent Harbor during the Flex Period in accordance with the terms hereof and that have been reflected in the executed Credit Agreement and related definitive documentation shall remain in full force and effect as permanent terms of the Credit Agreement. No further flex adjustments shall be made following such termination.
(c) For the avoidance of doubt, the termination of this Letter Agreement shall not affect the survival of the confidentiality obligations set forth in Section 10, which shall survive in accordance with their terms.
Section 12: Governing Law; Jurisdiction
(a) This Letter Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts of law principles thereof (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply).
(b) Each party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, County of New York, and (ii) the United States District Court for the Southern District of New York, for the purposes of any action, suit, or proceeding arising out of or relating to this Letter Agreement. Each party waives any objection it may have to the laying of venue of any such action, suit, or proceeding in any such court and any claim that any such action, suit, or proceeding has been brought in an inconvenient forum.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY'S AGREEMENT TO ENTER INTO THIS LETTER AGREEMENT.
Section 13: Miscellaneous
(a) Amendment; Waiver. This Letter Agreement may not be amended, modified, or supplemented, and no provision hereof may be waived, except by an instrument in writing signed by both Crescent Harbor and the Borrower. No failure or delay by either party in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
(b) Counterparts. This Letter Agreement may be executed in any number of counterparts (including by facsimile or electronic transmission in portable document format (.pdf)), each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
(c) Internal Reference. For internal tracking and reference purposes, this Letter Agreement shall be identified under Crescent Harbor loan number CHB-LF-2022-07814.
(d) Notices. All notices, requests, demands, and other communications required or permitted to be given under this Letter Agreement shall be in writing and shall be delivered to the parties at the addresses set forth in the Commitment Letter, or to such other address as either party may designate by written notice to the other party:
If to Crescent Harbor:
Crescent Harbor Bank, National Association 600 Lexington Avenue, 34th Floor New York, New York 10022
Attention: Theodore Marchetti, Managing Director, Leveraged Finance
Email: t.marchetti@crescentharbor.com
If to the Borrower:
Verimark Hospitality Group Inc. 8200 West Palmetto Park Road, Suite 1500 Boca Raton, Florida 33433
Attention: Renata Haines, Chief Financial Officer
Email: r.haines@verimarkhospitality.com
with a copy to:
Priya Narayanan, General Counsel & Corporate Secretary
Email: p.narayanan@verimarkhospitality.com
(e) Entire Agreement. This Letter Agreement, together with the Commitment Letter, the Term Sheet, and the Fee Letter, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations, discussions, and understandings, whether oral or written, relating to such subject matter.
(f) Severability. If any provision of this Letter Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Letter Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.
(g) Headings. The section headings in this Letter Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Letter Agreement.
If the foregoing accurately reflects our mutual understanding and agreement, please indicate your acceptance by signing in the space provided below and returning a fully executed copy of this Letter Agreement to the undersigned.
[Remainder of this page intentionally left blank; signature pages follow.]
SIGNATURE PAGE TO LETTER AGREEMENT — SYNDICATION FLEX PROVISIONS
Very truly yours,
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION
By: ________
Name: Theodore "Ted" Marchetti
Title: Managing Director, Leveraged Finance
Date: May 27, 2022
SIGNATURE PAGE TO LETTER AGREEMENT — SYNDICATION FLEX PROVISIONS
ACKNOWLEDGED AND AGREED:
VERIMARK HOSPITALITY GROUP INC.
VERIMARK HOSPITALITY GROUP INC.
By: ________
Name: Renata Haines
Title: Chief Financial Officer
Date: May 27, 2022
By: ________
Name: Priya Narayanan
Title: General Counsel & Corporate Secretary
Date: May 27, 2022
EXHIBIT A
SUMMARY OF FLEX RANGES
The following table summarizes the flex provisions set forth in this Letter Agreement. This Exhibit A is provided for convenience of reference only and is qualified in its entirety by the terms and conditions of this Letter Agreement. In the event of any conflict between this Exhibit A and the body of this Letter Agreement, the body of this Letter Agreement shall control.
Crescent Harbor Loan No. CHB-LF-2022-07814 — CONFIDENTIAL
Term | Base Level | Maximum Flex (Upward) | Increment | Subject to Borrower Consent?
Applicable Margin | SOFR + 375 bps | SOFR + 425 bps (+50 bps) | 12.5 bps | No
Original Issue discount | 1.00% ($7,000,000) | 2.00% ($14,000,000) | 0.25% | No
SOFR Floor | 0.50% | 0.75% | 12.5 bps | No
Amortization | 1.00% p.a. | No upward flex | N/A | Yes (required)
Springing Leverage Test Trigger | 35% of RCF commitments | 30% of RCF commitments | 5% | No
Max Total Net Leverage Ratio | 4.50x | No tightening | N/A | Yes (required)
MFN Threshold | 50 bps | No flex | N/A | Yes (required)
MFN Sunset Period | 18 months (through 1/21/2024) | No flex | N/A | Yes (required)
Repricing Protection | 1.00% / 6 months (through 1/21/2023) | No flex | N/A | Yes (required)
Maturity | July 21, 2029 | No flex | N/A | Yes (required)
Collateral / Guarantors | Per Term Sheet | No expansion | N/A | Yes (required)

CONFIDENTIAL

CONFIDENTIAL

CRESCENT HARBOR BANK, NATIONAL ASSOCIATION

CRESCENT HARBOR BANK, NATIONAL ASSOCIATION

ACKNOWLEDGED AND AGREED:

VERIMARK HOSPITALITY GROUP INC.

VERIMARK HOSPITALITY GROUP INC.

EXHIBIT A

SUMMARY OF FLEX RANGES

Record

Parties

Dates

Amounts