1021-00002 · Verimark Hospitality Group · Closing

10b-5-negative-assurance-letter.docx DOCUMENT Capital Markets

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CONFIDENTIAL

CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

June 25, 2024

Kensington Barrow & Co. as Representative of the Initial Purchasers 399 Park Avenue, 22nd Floor New York, NY 10022

Ridgeline Capital Markets LLC 200 Vesey Street, 35th Floor New York, NY 10281

Stonebridge Marvelo Securities Inc. 600 Lexington Avenue, 18th Floor New York, NY 10022

Re: $500,000,000 Aggregate Principal Amount of 8.250% Senior Notes due 2031 (the "Notes") of Verimark Hospitality Group Inc. (the "Company" or the "Issuer")

Ladies and Gentlemen:

We have acted as counsel to Verimark Hospitality Group Inc., a Delaware corporation (the "Company" or the "Issuer"), in connection with the issuance and sale by the Company of $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031 (the "Notes"). The Notes are being offered and sold pursuant to that certain Purchase Agreement dated June 18, 2024 (the "Purchase Agreement") among the Company, the Guarantors party thereto (the "Guarantors"), and Kensington Barrow & Co. ("Kensington Barrow"), as Representative of the several Initial Purchasers named therein, including Ridgeline Capital Markets LLC and Stonebridge Marvelo Securities Inc. (collectively, the "Initial Purchasers"). The Notes are being issued under an Indenture dated as of June 25, 2024 (the "Indenture"), among the Company, the Guarantors, and Continental National Trust Company, as trustee (the "Trustee").

This letter is being delivered to you pursuant to Section 7(g) of the Purchase Agreement as a condition to the closing of the purchase and sale of the Notes thereunder, which closing is scheduled to occur on the date hereof. Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to them in the Purchase Agreement.

I. Documents Reviewed

In connection with the rendering of this letter, we have reviewed the following documents:

(a) The Final Offering Memorandum dated June 18, 2024, relating to the offer and sale of the Notes (together with all annexes and exhibits thereto, the "Offering Memorandum"), as used in connection with the offer and sale of the Notes in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof, and in accordance with Rule 144A ("Rule 144A") and Regulation S ("Regulation S") promulgated thereunder;

(b) The Preliminary Offering Memorandum dated June 3, 2024, relating to the offer and sale of the Notes (the "Preliminary Offering Memorandum");

(c) The Pricing Term Sheet dated June 17, 2024, setting forth certain final terms and conditions of the Notes (the "Pricing Term Sheet" and, together with the Preliminary Offering Memorandum, the "Pricing Disclosure Package");

(d) The Purchase Agreement;

(e) The Indenture, including the form of Notes attached as exhibits thereto;

(f) The Registration Rights Agreement dated as of June 25, 2024, among the Company, the Guarantors, and Kensington Barrow, as Representative of the Initial Purchasers;

(g) Certain corporate records, documents, and instruments of the Company and the Guarantors furnished to us by the Company, including certificates of incorporation, bylaws, certificates of good standing, resolutions of the board of directors and committees thereof, and officer certificates; and

(h) Such other documents, agreements, certificates, records, and instruments as we have deemed necessary or appropriate for purposes of this letter.

II. Participation in the Preparation of the Offering Memorandum

In our capacity as counsel to the Company, attorneys in this firm participated in the preparation of the Offering Memorandum. In that connection, our participation included, among other things:

(a) Drafting and reviewing the following sections of the Offering Memorandum: "Description of Notes," "Description of Other Indebtedness," "Certain U.S. Federal Income Tax Considerations," "Plan of Distribution," "Legal Matters," and "Notice to Investors";

(b) Reviewing and commenting upon drafts of other portions of the Offering Memorandum prepared by the Company, its other advisors, and counsel to the Initial Purchasers, as such drafts were circulated among the relevant parties during the preparation process;

(c) Participating in conferences and discussions with certain officers and representatives of the Company, including without limitation Marcus J. Delano, Chief Executive Officer, Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel and Secretary, concerning the business, financial condition, operations, and prospects of the Company and its subsidiaries, and the content and accuracy of the information set forth in the Offering Memorandum;

(d) Participating in conferences and discussions with representatives of Kensington Barrow & Co. and the other Initial Purchasers, and with counsel to the Initial Purchasers, Whitfield, Crane & Aldrich LLP, regarding the content, form, and substance of the Offering Memorandum, the structure of the offering, and matters related to due diligence;

(e) Participating in conferences and discussions with representatives of the Company's independent registered public accounting firm, Palladian & Howe LLP, regarding certain financial and accounting information contained in the Offering Memorandum; and

(f) Reviewing certain corporate records and documents furnished to us by the Company and its representatives, including material contracts, credit agreements, and regulatory filings.

We note, however, that we did not independently verify, and we are not passing upon and do not assume any responsibility for, the accuracy, completeness, or fairness of the statements contained in the Offering Memorandum, other than with respect to the sections specifically identified in clause (a) above as having been drafted by us (and then only as to legal matters addressed therein and not as to any factual statements or descriptions of business operations, financial performance, or other non-legal matters contained in such sections). Our participation in the preparation of the Offering Memorandum was not intended to constitute, and should not be construed as constituting, an independent verification of any of the information set forth therein.

III. Limitations and Qualifications

The statements set forth in this letter are subject to the following limitations, qualifications, and exclusions, each of which is material to the conclusions expressed herein:

(a) Financial Statements, Financial Data, and Accounting Matters. We are not expressing any belief, view, or opinion with respect to the financial statements (whether audited or unaudited), financial schedules, or other financial, statistical, or accounting data contained or referred to in the Offering Memorandum, including without limitation any pro forma financial information, ratios, or metrics derived from the foregoing. Such matters are within the professional expertise of accountants, and with respect thereto we refer you to the comfort letter of Palladian & Howe LLP dated the date hereof and delivered to the Initial Purchasers pursuant to the Purchase Agreement.

(b) Credit Ratings. We are not expressing any belief, view, or opinion with respect to information relating to ratings assigned to the Notes, the Company, or any of its subsidiaries by Crestline Ratings Group or Broadmark Rating Services Inc., or any statements in the Offering Memorandum regarding the significance, effect, or interpretation of such ratings. We have not participated in any discussions with such rating agencies in connection with the offering of the Notes.

(c) DTC and Book-Entry System. We are not expressing any belief, view, or opinion with respect to the Form of Global Notes (bearing CUSIP 923847 AA 5 for Notes sold in reliance on Rule 144A and CUSIP U92384 AA 8 for Notes sold in reliance on Regulation S) or any information set forth in the Offering Memorandum relating to The Depository Trust Company and its book-entry system, nominees, or procedures for transfers and exchanges of beneficial interests in the Global Notes.

(d) Incorporated and Referenced Documents. We are not expressing any belief, view, or opinion with respect to any information incorporated by reference into the Offering Memorandum or any information contained in any documents referenced in, but not forming a part of, the Offering Memorandum, including without limitation any exhibits, appendices, or schedules to contracts or agreements described in the Offering Memorandum that were not reproduced in or attached to the Offering Memorandum.

(e) No Independent Verification. We have not undertaken, and assume no obligation, to independently verify any of the factual matters set forth in the Offering Memorandum, including without limitation management's representations regarding the Company's business and operations (including that the Company owns, operates, or manages 47 full-service hotels and 12 resort properties located across 19 U.S. states and the U.S. Virgin Islands, comprising approximately 18,400 rooms), the Company's reported financial metrics (including last-twelve-months revenue of approximately $1,820,000,000 and last-twelve-months Adjusted EBITDA of approximately $412,000,000), any forward-looking statements, projections, forecasts, or estimates of future performance, industry data and market statistics, or any legal or regulatory matters outside the scope of our engagement as counsel to the Company in connection with the offering of the Notes.

(f) Nature and Scope of Review. Our review of the Offering Memorandum and the activities described herein were limited in nature and scope and did not constitute, and were not intended to constitute, an audit, investigation, or due diligence review of the type that would be conducted for the purpose of expressing an opinion on, or otherwise providing assurance as to, the accuracy, completeness, or fairness of the information set forth in the Offering Memorandum. The procedures we undertook were substantially less in scope than those that would be required in connection with an examination conducted in accordance with generally accepted auditing standards or the standards of the Public Company Accounting Oversight Board.

(g) Subsequent Events. We make no representation, and assume no obligation to advise any person, as to any facts, circumstances, events, changes, or developments that may occur or become known after the date of this letter that might affect or modify the statements and conclusions expressed herein. This letter speaks only as of the date hereof, and we disclaim any obligation to update or supplement this letter for any reason whatsoever.

IV. Negative Assurance Statement

Subject to, and based upon, the foregoing (including, without limitation, the limitations, qualifications, and exclusions set forth in Section III above), and in reliance upon the accuracy and completeness of the information furnished to us by the Company and its officers and representatives, and on the basis of our participation in the preparation of the Offering Memorandum, the conferences and discussions referred to in Section II above, and our review of the documents and records described in Section I above, we advise you that no facts have come to the attention of the attorneys in this firm who participated in the preparation of the Offering Memorandum that caused such attorneys to believe that:

(a) the Offering Memorandum, as of its date (June 18, 2024), contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or

(b) the Offering Memorandum, as of the date hereof (June 25, 2024), contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

The standard of materiality applied in the foregoing statement is the standard of materiality established under Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission.

We note that the negative assurance set forth in this Section IV is not a guarantee, warranty, or certification with respect to the accuracy or completeness of the Offering Memorandum, and it should not be construed or relied upon as such. The negative assurance set forth herein is inherently limited by the scope of the activities in which we participated and the nature and extent of the information that was made available to us.

V. Beneficiary and Reliance Limitations

This letter is furnished solely for the benefit of the Initial Purchasers, in their capacity as such, in connection with the offering of the Notes described herein. This letter may not be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, this letter may not be relied upon by any subsequent purchaser or holder of the Notes, and no person or entity other than the Initial Purchasers is entitled to rely on the statements and conclusions set forth herein.

This letter may not be quoted in whole or in part, summarized, referred to, or otherwise disclosed in any document, report, or filing, or furnished to any governmental agency, regulatory authority, or any other person or entity, without the prior written consent of Calderwood & Harkness LLP; provided, however, that this letter may be furnished to Whitfield, Crane & Aldrich LLP, in its capacity as counsel to the Initial Purchasers, without our prior written consent.

VI. Governing Law

This letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to the conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law).

We are pleased to have been of service to you in connection with this transaction and are available to discuss any questions you may have regarding this letter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Theodore Langston, Partner

One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 558-4000

cc: Verimark Hospitality Group Inc.

Attention: David K. Moretti, General Counsel & Secretary

Whitfield, Crane & Aldrich LLP Counsel to the Initial Purchasers

CONFIDENTIAL
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
June 25, 2024
Kensington Barrow & Co. as Representative of the Initial Purchasers 399 Park Avenue, 22nd Floor New York, NY 10022
Ridgeline Capital Markets LLC 200 Vesey Street, 35th Floor New York, NY 10281
Stonebridge Marvelo Securities Inc. 600 Lexington Avenue, 18th Floor New York, NY 10022
Re: $500,000,000 Aggregate Principal Amount of 8.250% Senior Notes due 2031 (the "Notes") of Verimark Hospitality Group Inc. (the "Company" or the "Issuer")
Ladies and Gentlemen:
We have acted as counsel to Verimark Hospitality Group Inc., a Delaware corporation (the "Company" or the "Issuer"), in connection with the issuance and sale by the Company of $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031 (the "Notes"). The Notes are being offered and sold pursuant to that certain Purchase Agreement dated June 18, 2024 (the "Purchase Agreement") among the Company, the Guarantors party thereto (the "Guarantors"), and Kensington Barrow & Co. ("Kensington Barrow"), as Representative of the several Initial Purchasers named therein, including Ridgeline Capital Markets LLC and Stonebridge Marvelo Securities Inc. (collectively, the "Initial Purchasers"). The Notes are being issued under an Indenture dated as of June 25, 2024 (the "Indenture"), among the Company, the Guarantors, and Continental National Trust Company, as trustee (the "Trustee").
This letter is being delivered to you pursuant to Section 7(g) of the Purchase Agreement as a condition to the closing of the purchase and sale of the Notes thereunder, which closing is scheduled to occur on the date hereof. Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to them in the Purchase Agreement.
I. Documents Reviewed
In connection with the rendering of this letter, we have reviewed the following documents:
(a) The Final Offering Memorandum dated June 18, 2024, relating to the offer and sale of the Notes (together with all annexes and exhibits thereto, the "Offering Memorandum"), as used in connection with the offer and sale of the Notes in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof, and in accordance with Rule 144A ("Rule 144A") and Regulation S ("Regulation S") promulgated thereunder;
(b) The Preliminary Offering Memorandum dated June 3, 2024, relating to the offer and sale of the Notes (the "Preliminary Offering Memorandum");
(c) The Pricing Term Sheet dated June 17, 2024, setting forth certain final terms and conditions of the Notes (the "Pricing Term Sheet" and, together with the Preliminary Offering Memorandum, the "Pricing Disclosure Package");
(d) The Purchase Agreement;
(e) The Indenture, including the form of Notes attached as exhibits thereto;
(f) The Registration Rights Agreement dated as of June 25, 2024, among the Company, the Guarantors, and Kensington Barrow, as Representative of the Initial Purchasers;
(g) Certain corporate records, documents, and instruments of the Company and the Guarantors furnished to us by the Company, including certificates of incorporation, bylaws, certificates of good standing, resolutions of the board of directors and committees thereof, and officer certificates; and
(h) Such other documents, agreements, certificates, records, and instruments as we have deemed necessary or appropriate for purposes of this letter.
II. Participation in the Preparation of the Offering Memorandum
In our capacity as counsel to the Company, attorneys in this firm participated in the preparation of the Offering Memorandum. In that connection, our participation included, among other things:
(a) Drafting and reviewing the following sections of the Offering Memorandum: "Description of Notes," "Description of Other Indebtedness," "Certain U.S. Federal Income Tax Considerations," "Plan of Distribution," "Legal Matters," and "Notice to Investors";
(b) Reviewing and commenting upon drafts of other portions of the Offering Memorandum prepared by the Company, its other advisors, and counsel to the Initial Purchasers, as such drafts were circulated among the relevant parties during the preparation process;
(c) Participating in conferences and discussions with certain officers and representatives of the Company, including without limitation Marcus J. Delano, Chief Executive Officer, Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel and Secretary, concerning the business, financial condition, operations, and prospects of the Company and its subsidiaries, and the content and accuracy of the information set forth in the Offering Memorandum;
(d) Participating in conferences and discussions with representatives of Kensington Barrow & Co. and the other Initial Purchasers, and with counsel to the Initial Purchasers, Whitfield, Crane & Aldrich LLP, regarding the content, form, and substance of the Offering Memorandum, the structure of the offering, and matters related to due diligence;
(e) Participating in conferences and discussions with representatives of the Company's independent registered public accounting firm, Palladian & Howe LLP, regarding certain financial and accounting information contained in the Offering Memorandum; and
(f) Reviewing certain corporate records and documents furnished to us by the Company and its representatives, including material contracts, credit agreements, and regulatory filings.
We note, however, that we did not independently verify, and we are not passing upon and do not assume any responsibility for, the accuracy, completeness, or fairness of the statements contained in the Offering Memorandum, other than with respect to the sections specifically identified in clause (a) above as having been drafted by us (and then only as to legal matters addressed therein and not as to any factual statements or descriptions of business operations, financial performance, or other non-legal matters contained in such sections). Our participation in the preparation of the Offering Memorandum was not intended to constitute, and should not be construed as constituting, an independent verification of any of the information set forth therein.
III. Limitations and Qualifications
The statements set forth in this letter are subject to the following limitations, qualifications, and exclusions, each of which is material to the conclusions expressed herein:
(a) Financial Statements, Financial Data, and Accounting Matters. We are not expressing any belief, view, or opinion with respect to the financial statements (whether audited or unaudited), financial schedules, or other financial, statistical, or accounting data contained or referred to in the Offering Memorandum, including without limitation any pro forma financial information, ratios, or metrics derived from the foregoing. Such matters are within the professional expertise of accountants, and with respect thereto we refer you to the comfort letter of Palladian & Howe LLP dated the date hereof and delivered to the Initial Purchasers pursuant to the Purchase Agreement.
(b) Credit Ratings. We are not expressing any belief, view, or opinion with respect to information relating to ratings assigned to the Notes, the Company, or any of its subsidiaries by Crestline Ratings Group or Broadmark Rating Services Inc., or any statements in the Offering Memorandum regarding the significance, effect, or interpretation of such ratings. We have not participated in any discussions with such rating agencies in connection with the offering of the Notes.
(c) DTC and Book-Entry System. We are not expressing any belief, view, or opinion with respect to the Form of Global Notes (bearing CUSIP 923847 AA 5 for Notes sold in reliance on Rule 144A and CUSIP U92384 AA 8 for Notes sold in reliance on Regulation S) or any information set forth in the Offering Memorandum relating to The Depository Trust Company and its book-entry system, nominees, or procedures for transfers and exchanges of beneficial interests in the Global Notes.
(d) Incorporated and Referenced Documents. We are not expressing any belief, view, or opinion with respect to any information incorporated by reference into the Offering Memorandum or any information contained in any documents referenced in, but not forming a part of, the Offering Memorandum, including without limitation any exhibits, appendices, or schedules to contracts or agreements described in the Offering Memorandum that were not reproduced in or attached to the Offering Memorandum.
(e) No Independent Verification. We have not undertaken, and assume no obligation, to independently verify any of the factual matters set forth in the Offering Memorandum, including without limitation management's representations regarding the Company's business and operations (including that the Company owns, operates, or manages 47 full-service hotels and 12 resort properties located across 19 U.S. states and the U.S. Virgin Islands, comprising approximately 18,400 rooms), the Company's reported financial metrics (including last-twelve-months revenue of approximately $1,820,000,000 and last-twelve-months Adjusted EBITDA of approximately $412,000,000), any forward-looking statements, projections, forecasts, or estimates of future performance, industry data and market statistics, or any legal or regulatory matters outside the scope of our engagement as counsel to the Company in connection with the offering of the Notes.
(f) Nature and Scope of Review. Our review of the Offering Memorandum and the activities described herein were limited in nature and scope and did not constitute, and were not intended to constitute, an audit, investigation, or due diligence review of the type that would be conducted for the purpose of expressing an opinion on, or otherwise providing assurance as to, the accuracy, completeness, or fairness of the information set forth in the Offering Memorandum. The procedures we undertook were substantially less in scope than those that would be required in connection with an examination conducted in accordance with generally accepted auditing standards or the standards of the Public Company Accounting Oversight Board.
(g) Subsequent Events. We make no representation, and assume no obligation to advise any person, as to any facts, circumstances, events, changes, or developments that may occur or become known after the date of this letter that might affect or modify the statements and conclusions expressed herein. This letter speaks only as of the date hereof, and we disclaim any obligation to update or supplement this letter for any reason whatsoever.
IV. Negative Assurance Statement
Subject to, and based upon, the foregoing (including, without limitation, the limitations, qualifications, and exclusions set forth in Section III above), and in reliance upon the accuracy and completeness of the information furnished to us by the Company and its officers and representatives, and on the basis of our participation in the preparation of the Offering Memorandum, the conferences and discussions referred to in Section II above, and our review of the documents and records described in Section I above, we advise you that no facts have come to the attention of the attorneys in this firm who participated in the preparation of the Offering Memorandum that caused such attorneys to believe that:
(a) the Offering Memorandum, as of its date (June 18, 2024), contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(b) the Offering Memorandum, as of the date hereof (June 25, 2024), contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The standard of materiality applied in the foregoing statement is the standard of materiality established under Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission.
We note that the negative assurance set forth in this Section IV is not a guarantee, warranty, or certification with respect to the accuracy or completeness of the Offering Memorandum, and it should not be construed or relied upon as such. The negative assurance set forth herein is inherently limited by the scope of the activities in which we participated and the nature and extent of the information that was made available to us.
V. Beneficiary and Reliance Limitations
This letter is furnished solely for the benefit of the Initial Purchasers, in their capacity as such, in connection with the offering of the Notes described herein. This letter may not be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, this letter may not be relied upon by any subsequent purchaser or holder of the Notes, and no person or entity other than the Initial Purchasers is entitled to rely on the statements and conclusions set forth herein.
This letter may not be quoted in whole or in part, summarized, referred to, or otherwise disclosed in any document, report, or filing, or furnished to any governmental agency, regulatory authority, or any other person or entity, without the prior written consent of Calderwood & Harkness LLP; provided, however, that this letter may be furnished to Whitfield, Crane & Aldrich LLP, in its capacity as counsel to the Initial Purchasers, without our prior written consent.
VI. Governing Law
This letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to the conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law).
We are pleased to have been of service to you in connection with this transaction and are available to discuss any questions you may have regarding this letter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Theodore Langston, Partner
One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 558-4000
cc: Verimark Hospitality Group Inc.
Attention: David K. Moretti, General Counsel & Secretary
Whitfield, Crane & Aldrich LLP Counsel to the Initial Purchasers

CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

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