1021-00002 · Verimark Hospitality Group · Closing

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 455-7200 Facsimile: (212) 455-7201 www.calderwoodharkness.com

June 25, 2024

Verimark Hospitality Group Inc. 2400 Brickell Bay Drive, Suite 3100 Miami, FL 33129

Attention: David K. Moretti, Esq., General Counsel & Secretary

Patricia R. Henning, Chief Financial Officer

Re: U.S. Federal Income Tax Treatment of $500,000,000 Aggregate Principal Amount of 8.250% Senior Notes due 2031 (the "Notes") Issued by Verimark Hospitality Group Inc.

Ladies and Gentlemen:

I. Introduction and Scope

Calderwood & Harkness LLP ("Calderwood & Harkness," "we," or "our firm") has acted as counsel to Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware ("VHG," the "Issuer," or the "Company"), in connection with the issuance by VHG of $500,000,000 aggregate principal amount of its 8.250% Senior Notes due July 1, 2031 (the "Notes"). This opinion letter is delivered at the request of VHG in connection with the closing of the offering on June 25, 2024 (the "Closing Date").

The Notes have been issued pursuant to an Indenture dated as of June 25, 2024 (the "Indenture"), among VHG, the guarantors named therein (collectively, the "Guarantors"), and Fidelitas Trust Company, N.A., a national banking association organized under the laws of the United States, acting as trustee (the "Trustee"). The Indenture sets forth the terms and conditions governing the Notes, including the payment of principal, interest, and any redemption premiums, as well as the covenants, events of default, and other provisions customary for senior unsecured obligations of this nature.

The Notes were offered and sold pursuant to that certain Purchase Agreement dated June 18, 2024 (the "Purchase Agreement"), among VHG, the Guarantors, and Kensington Barrow & Co., acting as Representative of the several initial purchasers named therein (collectively, the "Initial Purchasers"), which Initial Purchasers include Ridgeline Capital Markets LLC and Stonebridge Marvelo Securities Inc. The offering was conducted as a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon Rule 144A and Regulation S promulgated thereunder.

The Notes were issued at an issue price of 98.500% of par, resulting in gross proceeds to VHG of $492,500,000. The difference between the aggregate stated principal amount of $500,000,000 and the issue price of $492,500,000 results in original issue discount of 1.500%, or $7,500,000 in the aggregate. In addition, the Initial Purchasers received a customary underwriting discount of 1.750% of the aggregate principal amount, equal to $8,750,000, resulting in net proceeds to the Issuer of approximately $483,750,000 (before expenses of the offering).

The Notes bear stated interest at a fixed rate of 8.250% per annum. Interest on the Notes is payable semi-annually in arrears on January 1 and July 1 of each year, with the first interest payment due on January 1, 2025. The Notes will mature on July 1, 2031, unless earlier redeemed or repurchased in accordance with the terms of the Indenture.

This opinion letter addresses certain material U.S. federal income tax consequences of the issuance of the Notes by VHG, including (a) the classification of the Notes as indebtedness for U.S. federal income tax purposes, (b) the treatment of original issue discount on the Notes, (c) the deductibility of interest on the Notes under Section 163(j) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), (d) whether the Notes constitute applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code, (e) the treatment of optional redemption premiums, and (f) the treatment of any additional interest that may become payable under the Registration Rights Agreement (as defined below). This opinion is rendered by Sylvia Hartwell, Specialist Partner in the Tax practice group of Calderwood & Harkness LLP.

This opinion letter is being delivered solely in connection with the closing of the offering of the Notes and for the benefit of VHG. Except as expressly stated herein, this opinion does not address the U.S. federal income tax consequences to holders of the Notes, which consequences are addressed in the section entitled "Certain U.S. Federal Income Tax Considerations" in the Final Offering Memorandum dated June 18, 2024 (the "Final Offering Memorandum").

II. Documents Reviewed and Assumptions

A. Documents Reviewed

In rendering the opinions set forth herein, we have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of the following documents:

1. The Indenture dated as of June 25, 2024, among VHG, the Guarantors, and Fidelitas Trust Company, N.A., as Trustee, together with all exhibits, schedules, and annexes thereto;

2. The Form of 144A Global Note attached as Exhibit A-1 to the Indenture, bearing CUSIP No. 923847 AA 5 and ISIN No. US923847AA52;

3. The Form of Regulation S Global Note attached as Exhibit A-2 to the Indenture, bearing CUSIP No. U92384 AA 8 and ISIN No. USU92384AA83;

4. The Purchase Agreement dated June 18, 2024, among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers;

5. The Final Offering Memorandum dated June 18, 2024, relating to the offering and sale of the Notes;

6. The Registration Rights Agreement dated as of June 25, 2024 (the "Registration Rights Agreement"), among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers;

7. The Officer's Certificate of VHG dated June 25, 2024, executed by Patricia R. Henning, Chief Financial Officer, delivered in connection with the closing of the offering;

8. The Secretary's Certificate of VHG dated June 25, 2024, executed by David K. Moretti, General Counsel & Secretary, attaching true and correct copies of (a) the Amended and Restated Certificate of Incorporation of VHG, as currently in effect, (b) the Amended and Restated Bylaws of VHG, as currently in effect, and (c) the resolutions of the Board of Directors of VHG authorizing the issuance of the Notes and the execution and delivery of the Transaction Documents (as defined in the Purchase Agreement);

9. The resolutions of the Board of Directors of VHG adopted on June 14, 2024, authorizing, among other things, the issuance and sale of the Notes and the execution, delivery, and performance of each of the Transaction Documents;

10. The Tax Structure Memorandum prepared by Calderwood & Harkness LLP dated May 1, 2024, analyzing the anticipated U.S. federal income tax consequences of the proposed issuance of the Notes (the "Tax Structure Memorandum");

11. The audited consolidated financial statements of VHG and its subsidiaries for the fiscal years ended December 31, 2023 and December 31, 2022, together with the independent auditors' reports thereon issued by Palladian & Howe LLP (Kenneth W. Sturgis, Engagement Partner), as included in the Final Offering Memorandum; and

12. Various representations and certifications provided to us by officers of VHG, including those provided by Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary, relating to the business, financial condition, and tax position of VHG and the terms and circumstances of the issuance of the Notes.

We have also reviewed such other documents, instruments, certificates, records, and matters of law as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein.

B. Assumptions. In rendering the opinions expressed in this letter, we have assumed the following, without independent investigation or verification:

1. All documents submitted to us as originals are authentic and complete, all documents submitted to us as copies conform to the originals thereof, and all signatures on documents reviewed by us are genuine.

2. The transactions contemplated by the Indenture, the Purchase Agreement, the Registration Rights Agreement, and the other Transaction Documents were consummated in accordance with the terms described therein and in the Final Offering Memorandum, and no party thereto has taken or will take any action inconsistent with the terms of such documents.

3. VHG is, and at all relevant times has been, classified as a corporation for U.S. federal income tax purposes within the meaning of Section 7701(a)(3) of the Code and the Treasury Regulations promulgated thereunder.

4. No party to the transactions described herein has taken or will take any action, or has failed or will fail to take any action, that is inconsistent with the treatment of the Notes as described in this opinion letter.

5. The stated redemption price at maturity of each Note equals $1,000 per $1,000 of principal amount, which amount represents the sum of all payments to be made under the Note other than payments of qualified stated interest (as defined in Treasury Regulation § 1.1273-1(c)).

6. The issue price of the Notes for U.S. federal income tax purposes is 98.500% of the principal amount thereof, i.e., $985 per $1,000 principal amount of Notes, as determined by reference to the first price at which a substantial amount of the Notes was sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers), within the meaning of Section 1273(b)(4) of the Code and Treasury Regulation § 1.1273-2.

7. The representations and certifications provided to us by officers of VHG, including those relating to VHG's financial condition, business operations, capitalization, debt levels, adjusted taxable income, and other matters, are true, complete, and correct in all material respects as of the date hereof and will remain so as of the dates relevant to the conclusions expressed herein.

8. There are no oral or written agreements, understandings, or arrangements among the parties or between any party and any third party that would modify, supplement, or otherwise affect the tax treatment of the Notes or the transactions described herein.

III. Opinion — Classification of the Notes as Debt

Based upon our review of the documents described in Section II above, and subject to the assumptions, limitations, and qualifications set forth herein, it is the opinion of Calderwood & Harkness LLP that, for U.S. federal income tax purposes, the Notes will be treated as indebtedness of VHG, and not as equity of VHG.

In reaching this conclusion, we have considered the relevant factors identified by the courts and the Internal Revenue Service (the "IRS") in analyzing whether an instrument should be treated as debt or equity for federal income tax purposes. As is well established, the determination of whether an instrument constitutes debt or equity is a question of fact that depends upon the totality of the circumstances, and no single factor is dispositive. See, e.g., Fin Hay Realty Co. v. United States, 398 F.2d 694 (3d Cir. 1968); Notice 94-47, 1994-1 C.B. 357. Among the factors we have considered, the following support treatment of the Notes as indebtedness:

Fixed Maturity Date. The Notes have a fixed maturity date of July 1, 2031, which is approximately seven (7) years from the date of issuance. The existence of a definite, unconditional obligation to repay principal on a date certain is a significant indicator that an instrument constitutes debt rather than equity. The maturity date is within a commercially reasonable time horizon, and the term of the Notes is consistent with typical maturities for senior unsecured corporate debt obligations in the high-yield market.

Fixed Rate of Stated Interest. The Notes bear a fixed rate of stated interest at 8.250% per annum, payable semi-annually in cash on January 1 and July 1 of each year. The obligation to pay interest is unconditional and does not depend upon the profitability or earnings of VHG. The interest rate is consistent with market rates for obligations of comparable credit quality and tenor at the time of issuance, and is not so high as to suggest an equity return.

Unconditional Obligation to Pay Principal. VHG has an unconditional obligation to pay the full principal amount of the Notes at maturity. The obligation to repay principal is not contingent upon the financial performance, earnings, or cash flow of VHG or any other variable. The Notes do not provide for forgiveness, reduction, or subordination of the principal amount based on future events.

Senior Unsecured Ranking. The Notes rank as senior unsecured obligations of VHG, pari passu in right of payment with all existing and future senior indebtedness of VHG. The Notes are structurally senior to any subordinated indebtedness that may be incurred by VHG in the future. The senior ranking of the Notes is consistent with treatment as indebtedness rather than equity, which would typically be subordinate to all debt obligations.

No Conversion or Equity Participation Features. The Notes do not contain any provision permitting or requiring conversion of the Notes into equity securities of VHG or any affiliate thereof. The Notes do not entitle the holders to participate in the profits, growth, or appreciation in value of VHG's equity. The return to holders is limited to the stated interest and the repayment of principal, which is a hallmark of debt rather than equity.

Reasonable Debt-to-Equity Ratio. Based upon the representations and financial information provided by VHG and its officers, VHG's pro forma net leverage ratio following the issuance of the Notes is approximately 1.21x, calculated as $500,000,000 of total funded debt divided by last twelve months ("LTM") Adjusted EBITDA of approximately $412,000,000. This leverage level is well within the range typically associated with investment-grade or near-investment-grade issuers in the hospitality industry and does not suggest that the Notes represent a disguised equity contribution to a thinly capitalized entity.

Considering the totality of these factors, we are of the opinion that the Notes will be respected as indebtedness of VHG for U.S. federal income tax purposes. We note that while the IRS has not published explicit safe-harbor guidelines for debt-equity classification (and Section 385 of the Code grants the Treasury broad regulatory authority in this area), the characteristics of the Notes are consistent with the treatment of the Notes as debt under existing case law, administrative guidance, and market practice.

IV. Opinion — Original Issue discount Treatment

A. Existence and Amount of Original Issue discount

As described in Section I above, the Notes were issued at a price of 98.500% of their stated principal amount, resulting in original issue discount ("OID") of 1.500% of the principal amount, or $7,500,000 in the aggregate ($15.00 per $1,000 principal amount of Notes).

Under Section 1273(a)(1) of the Code, the OID on a debt instrument is the excess, if any, of the "stated redemption price at maturity" of such instrument over its "issue price." Each of these terms is defined in the Code and the Treasury Regulations.

Stated Redemption Price at Maturity. Under Section 1273(a)(2) of the Code and Treasury Regulation § 1.1273-1(b), the stated redemption price at maturity of a debt instrument is the sum of all payments provided by the debt instrument other than payments of "qualified stated interest." As discussed below, the semi-annual interest payments at the rate of 8.250% per annum on the Notes constitute qualified stated interest and are therefore excluded from the stated redemption price at maturity. Accordingly, the stated redemption price at maturity of each Note is $1,000 per $1,000 of principal amount, which equals the face amount payable at maturity on July 1, 2031.

Qualified Stated Interest. Under Treasury Regulation § 1.1273-1(c)(1)(i), "qualified stated interest" is stated interest that is unconditionally payable in cash, or that is constructively received under Section 451 of the Code, at fixed periodic intervals of one year or less during the entire term of the debt instrument, and the amount and rate of which is either a single fixed rate or a qualified floating rate (within the meaning of Treasury Regulation § 1.1275-5(b)). The stated interest on the Notes at the rate of 8.250% per annum is unconditionally payable in cash on a semi-annual basis (i.e., at fixed periodic intervals of six months, which is less than one year) during the entire term of the Notes, from the issue date through and including the maturity date. The interest rate is a single fixed rate. Accordingly, all of the stated interest on the Notes constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c), and is properly excluded from the computation of the stated redemption price at maturity.

Issue Price. Under Section 1273(b)(4) of the Code, the issue price of a debt instrument issued for money is the first price at which a substantial amount of the debt instruments included in the same issue is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). Based upon the representations of VHG and the terms of the Purchase Agreement, the issue price of the Notes is 98.500% of the principal amount, or $985 per $1,000 principal amount of Notes.

Computation of OID. The OID on the Notes is therefore equal to the stated redemption price at maturity ($1,000) minus the issue price ($985), which equals $15.00 per $1,000 principal amount of Notes, or $7,500,000 in the aggregate.

De Minimis OID. Under Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d), if the OID on a debt instrument is less than the "de minimis amount," the OID is treated as zero and no holder is required to include such discount in income on a current basis under the OID provisions of Sections 1271 through 1275 of the Code. The de minimis amount is defined as the product of 0.25% (i.e., one-quarter of one percent, or 25 basis points) multiplied by the number of complete years from the issue date to the maturity date, multiplied by the stated redemption price at maturity. For the Notes:

De minimis threshold = 0.25% × 7 (complete years from June 25, 2024 to July 1, 2031) × $1,000 = $17.50 per $1,000 principal amount of Notes.

The OID on the Notes of $15.00 per $1,000 principal amount does not exceed the de minimis threshold of $17.50 per $1,000 principal amount. Accordingly, the OID on the Notes is "de minimis OID" within the meaning of Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d).

Tax Consequences of De Minimis OID. Because the OID on the Notes is de minimis, holders of the Notes are not required to include such discount in gross income on a current basis under the constant-yield method prescribed by Section 1272(a) of the Code. Instead, pursuant to Treasury Regulation § 1.1273-1(d)(4), de minimis OID is includible in income as stated principal is paid. In the case of the Notes, because the entire principal amount is due at maturity, the de minimis OID of $15.00 per $1,000 principal amount would be includible in the income of a holder upon the receipt of the principal payment at maturity, or upon an earlier sale, exchange, retirement, or other taxable disposition of the Note. Any such income would be treated as capital gain (and not as ordinary income), subject to the rules of Section 1271 of the Code.

B. Treatment of Qualified Stated Interest

As set forth above, the stated interest on the Notes at the rate of 8.250% per annum constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c). In the aggregate, the annual stated interest on the Notes is $41,250,000 (i.e., 8.250% × $500,000,000), or $20,625,000 per semi-annual interest period.

Income Inclusion by Holders. Holders of the Notes will be required to include the qualified stated interest in their gross income for U.S. federal income tax purposes in accordance with their regular method of accounting for tax purposes. Holders that use the cash method of accounting will include stated interest in income when received (or constructively received). Holders that use the accrual method of accounting will include stated interest in income as it accrues, regardless of when payment is actually received.

Deduction by VHG. VHG, as the issuer, will be entitled to deduct the qualified stated interest on the Notes as it accrues for U.S. federal income tax purposes, in accordance with VHG's method of accounting and subject to the limitations on the deductibility of business interest expense under Section 163(j) of the Code, as discussed more fully in Section V below, and subject to such other limitations on deductibility as may be applicable under the Code. The timing of VHG's deduction for stated interest will be determined under the rules of Section 163(a) of the Code and the regulations thereunder, and in the case of an accrual-method taxpayer such as VHG, will generally correspond to the accrual periods under the Indenture.

V. Opinion — Deductibility of Interest Under IRC § 163(j)

A. General Rule

Section 163(j) of the Code, as amended by the Tax Cuts and Jobs Act of 2017 (P.L. 115-97) and further modified by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") (P.L. 116-136), imposes a limitation on the deduction of "business interest expense" by a taxpayer in any taxable year. Specifically, under Section 163(j)(1) of the Code, the deduction allowed under Chapter 1 of the Code for business interest expense paid or accrued during the taxable year shall not exceed the sum of:

(i) the taxpayer's "business interest income" for such taxable year;

(ii) 30% of the taxpayer's "adjusted taxable income" ("ATI") for such taxable year; and

(iii) the taxpayer's "floor plan financing interest" for such taxable year.

For purposes of this limitation, "business interest expense" means any interest paid or accrued on indebtedness properly allocable to a trade or business, as defined in Section 163(j)(5) of the Code. The stated interest on the Notes constitutes business interest expense of VHG.

It is important to note that for taxable years beginning after December 31, 2021, the computation of ATI no longer permits the add-back of deductions for depreciation, amortization, or depletion. Prior to January 1, 2022, as a temporary measure enacted by the Tax Cuts and Jobs Act and extended by the CARES Act, ATI was computed by adding back such deductions, effectively approximating an EBITDA-based measure. For taxable years beginning after December 31, 2021, ATI is computed without such add-backs, resulting in an EBIT-based computation that generally yields a lower ATI figure and, consequently, a potentially more restrictive limitation on the deductibility of business interest expense.

B. Application to VHG

The annual stated interest expense on the Notes is $41,250,000 (8.250% × $500,000,000). This figure represents the entirety of VHG's anticipated business interest expense with respect to the Notes; VHG has represented that it does not currently have any other material outstanding funded indebtedness.

Based upon the representations and financial information provided to us by VHG's management, including Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary, the following financial metrics are relevant to the Section 163(j) analysis:

• LTM Adjusted EBITDA (as of December 31, 2023): approximately $412,000,000

• LTM Revenue (as of December 31, 2023): approximately $1,820,000,000

• Pro forma interest coverage ratio: approximately 9.99x ($412,000,000 ÷ $41,250,000)

We acknowledge that ATI, as computed for purposes of Section 163(j), differs from Adjusted EBITDA as reported by VHG for financial reporting and covenant compliance purposes. Specifically, ATI is determined by reference to VHG's tentative taxable income (computed without regard to any business interest expense or business interest income and, for taxable years beginning after December 31, 2021, without adding back depreciation, amortization, or depletion), and is subject to certain adjustments prescribed by Section 163(j)(8) of the Code and the Treasury Regulations thereunder (including Treas. Reg. § 1.163(j)-1(b)(1)). Nevertheless, based upon the representations provided by VHG's management regarding VHG's expected taxable income, depreciation, amortization, and other relevant items, VHG expects that 30% of its ATI will substantially exceed its annual business interest expense of $41,250,000 for each taxable year during the term of the Notes. The pro forma interest coverage ratio of approximately 9.99x provides substantial headroom above the Section 163(j) limitation, even after accounting for the difference between Adjusted EBITDA and ATI.

To the extent that VHG's business interest expense for any taxable year were to exceed the limitation imposed by Section 163(j), the disallowed interest would be carried forward to the succeeding taxable year and treated as business interest expense paid or accrued in such succeeding taxable year, pursuant to Section 163(j)(2) of the Code. Such carryforward is available indefinitely and is not subject to any expiration period.

Opinion. Based on the foregoing analysis and subject to the continued accuracy of the representations provided by VHG's management and VHG's continued compliance with Section 163(j) of the Code in each relevant taxable year, it is our opinion that VHG should be entitled to deduct the stated interest on the Notes as it accrues for U.S. federal income tax purposes. We note, however, that the Section 163(j) limitation is applied on a taxable-year-by-taxable-year basis, and VHG's ability to fully deduct its business interest expense in any given year will depend on the actual amount of its ATI for that year.

VI. Opinion — Applicable High Yield discount Obligation (AHYDO) Analysis

A. AHYDO Definition — IRC § 163(e)(5) and IRC § 163(i)

Sections 163(e)(5) and 163(i) of the Code set forth special rules that limit the deductibility of OID and, in certain cases, recharacterize a portion of the OID as a dividend, with respect to debt instruments that constitute "applicable high yield discount obligations" ("AHYDOs"). If an obligation is classified as an AHYDO, two adverse consequences may result:

(a) Under Section 163(e)(5)(A) of the Code, no deduction is allowed to the issuer for the "disqualified portion" of the OID on such obligation (generally, the portion of OID attributable to the yield that exceeds the AFR plus 6 percentage points); and

(b) Under Section 163(e)(5)(B) of the Code, the remainder of the OID that would otherwise be deductible (but for the AHYDO rules) is treated as a dividend paid by the issuer, to the extent of the issuer's current and accumulated earnings and profits, and is deductible only when paid in cash.

Under Section 163(i)(1) of the Code, an obligation constitutes an AHYDO if, and only if, all three of the following conditions are satisfied:

Condition 1 — Maturity in Excess of 5 Years. The obligation has a term of more than five (5) years.

Condition 2 — Yield to Maturity Equals or Exceeds AFR Plus 5 Percentage Points. The yield to maturity on the obligation equals or exceeds the sum of (x) the "applicable federal rate" (the "AFR") determined under Section 1274(d) of the Code for the calendar month in which the obligation is issued, plus (y) five (5) percentage points.

Condition 3 — Significant Original Issue discount. The obligation has "significant original issue discount," within the meaning of Section 163(i)(2) of the Code. An obligation has significant OID if the aggregate amount that would be includible in gross income with respect to such obligation for periods before the close of any accrual period ending after the date that is five (5) years after the date of issue exceeds the sum of (a) the aggregate amount of interest to be paid under the obligation before the close of such accrual period, and (b) the product of the issue price of such obligation and its yield to maturity.

All three conditions must be satisfied for an obligation to be classified as an AHYDO. If any one of the three conditions is not met, the obligation is not an AHYDO and the special rules of Section 163(e)(5) do not apply.

B. Application of the Three-Prong Test

Prong 1 — Maturity in Excess of 5 Years. The Notes were issued on June 25, 2024 and mature on July 1, 2031. The term of the Notes is therefore approximately seven (7) years and six (6) days. Because the term of the Notes exceeds five (5) years, the first prong of the AHYDO test is satisfied.

Prong 2 — Yield to Maturity Equals or Exceeds AFR Plus 5 Percentage Points. Yield to Maturity of the Notes. The yield to maturity of the Notes is determined by reference to all payments to be made on the Notes (including both principal and stated interest) and the issue price of the Notes. Taking into account the issue price of 98.500% of the principal amount and the stated coupon rate of 8.250% per annum with semi-annual compounding, the yield to maturity of the Notes is approximately 8.52% per annum (computed on a semi-annual bond-equivalent basis).

Applicable Federal Rate. Under Section 1274(d) of the Code, the AFR is determined on a monthly basis by the IRS and published in the Internal Revenue Bulletin. For debt instruments with a term in excess of nine (9) years, the relevant rate is the "long-term AFR." For debt instruments with a term greater than three (3) years but not more than nine (9) years, the relevant rate is the "mid-term AFR." The Notes have a term of approximately seven (7) years, and accordingly the mid-term AFR is the applicable rate. However, Section 163(i)(1)(B) of the Code refers specifically to "the applicable Federal rate in effect under section 1274(d) for the calendar month in which the obligation is issued," and the determination of whether the long-term or mid-term rate applies is governed by the term of the instrument. For the Notes, with a term of approximately 7 years, the relevant AFR is the long-term AFR. Based upon the AFR tables published by the IRS for June 2024 (Rev. Rul. 2024-11), and confirmed by the representations of VHG, the long-term AFR for June 2024, assuming semi-annual compounding, is approximately 4.60% per annum.

AFR Plus 5 Percentage Points. The sum of the long-term AFR plus five (5) percentage points is:

4.60% + 5.00% = 9.60%

Comparison. The yield to maturity of the Notes of approximately 8.52% per annum is less than 9.60%. Accordingly, the second prong of the AHYDO test is not satisfied.

Prong 3 — Significant Original Issue discount. Because the second prong of the AHYDO test is not satisfied, the Notes cannot constitute AHYDOs, and it is not strictly necessary to analyze the third prong. An obligation must satisfy all three conditions to be classified as an AHYDO, and the failure of any one condition is dispositive.

Nevertheless, for completeness and to provide VHG with a comprehensive analysis, we note that the third prong would also not be satisfied with respect to the Notes. As described in Section IV above, the OID on the Notes is de minimis — $15.00 per $1,000 principal amount — and accordingly is treated as zero for purposes of the OID accrual rules. Furthermore, all interest on the Notes is qualified stated interest that is payable currently in cash on a semi-annual basis. There is no accrual of unpaid OID during the first five years of the Notes that would exceed the sum of (a) interest paid in cash during such period plus (b) the product of the issue price and the yield to maturity. Accordingly, the "significant OID" condition of Section 163(i)(2) would not be met.

C. Conclusion. Based upon the foregoing analysis, it is our opinion that the Notes are not applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code. The Notes fail the second prong of the AHYDO test because the yield to maturity of approximately 8.52% does not equal or exceed the AFR plus 5 percentage points (approximately 9.60%). Accordingly:

(a) No portion of the OID or interest on the Notes is disallowed under Section 163(e)(5)(A) of the Code; and

(b) No portion of the OID on the Notes is recharacterized as a dividend under Section 163(e)(5)(B) of the Code.

VII. Opinion — Treatment of Optional Redemption Premiums

The Indenture provides VHG with certain optional redemption rights with respect to the Notes, which are summarized as follows:

Optional Redemption at Fixed Prices. On or after July 1, 2027, VHG may redeem all or any portion of the Notes at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest, if any, to the applicable redemption date:

• On or after July 1, 2027 and prior to July 1, 2028: 104.125% of principal amount

• On or after July 1, 2028 and prior to July 1, 2029: 102.063% of principal amount

• On or after July 1, 2029 and thereafter: 100.000% of principal amount

Equity Clawback. At any time prior to July 1, 2027, VHG may, on one or more occasions, redeem up to 40% of the original aggregate principal amount of the Notes (i.e., up to $200,000,000) at a redemption price equal to 108.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the applicable redemption date, with the net cash proceeds of one or more qualifying equity offerings (as defined in the Indenture), provided that at least 60% of the original aggregate principal amount of the Notes remains outstanding immediately after any such redemption.

Change of Control Put. Upon the occurrence of a "change of control" (as defined in the Indenture), each holder of the Notes has the right to require VHG to repurchase all or any portion of such holder's Notes at a purchase price equal to 101.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.

Analysis. Under Treasury Regulation § 1.1272-1(c)(1), if a debt instrument provides for one or more alternative payment schedules applicable upon the occurrence of a contingency or contingencies, the yield and maturity of the debt instrument are determined by assuming that the payments will be made according to the payment schedule most likely to occur. Under Treasury Regulation § 1.1275-4, special rules apply to "contingent payment debt instruments" — i.e., instruments that provide for one or more contingent payments. However, an instrument is not a contingent payment debt instrument solely because the instrument is subject to optional call provisions at the discretion of the issuer.

Because the optional redemption provisions in the Indenture are exercisable solely at the discretion of VHG as issuer (or, in the case of the change of control put, solely at the discretion of the holders), and are not mandatory in nature, these provisions do not give rise to additional OID under Section 1272 or 1273 of the Code. The optional call premiums are not treated as part of the stated redemption price at maturity of the Notes because there is no unconditional obligation to pay such premiums; they are payable only if and when VHG elects (or a change of control occurs and the holders elect) to exercise the applicable option.

For purposes of computing OID, the Treasury Regulations generally assume that the debt instrument will not be redeemed prior to maturity. Specifically, Treasury Regulation § 1.1272-1(c)(3) provides that, in the case of a debt instrument with an option to call or put the instrument at a premium, the option is presumed not to be exercised if exercising the option would decrease the yield of the instrument. Because the optional redemption prices generally exceed the adjusted issue price of the Notes, the exercise of such options would decrease the yield on the Notes from the perspective of the holder, and accordingly the options are presumed not to be exercised for purposes of computing OID.

Upon Actual Redemption. In the event that VHG actually exercises any optional redemption right and pays a premium to the holder in excess of the adjusted issue price of the Notes (i.e., the issue price of the Notes as adjusted for any previously accrued OID), the premium paid to the redeeming holder would generally be treated as additional consideration received by such holder upon the retirement of the Notes. Depending on the circumstances of the particular holder (including whether the holder is a United States person, the holder's adjusted tax basis in the Notes, and the character of the holder's gain or loss), such premium may give rise to capital gain or, in certain cases, ordinary income to the holder.

From VHG's perspective as the issuer, any premium paid upon the redemption of the Notes in excess of the adjusted issue price may be deductible by VHG as a repurchase premium under applicable Treasury Regulations, including Treasury Regulation § 1.163-7(c), which provides that a repurchase premium (the excess of the amount paid to reacquire a debt instrument over its adjusted issue price) is generally deductible as additional interest expense in the taxable year in which the repurchase occurs, subject to the limitations of Section 163(j) and other applicable provisions of the Code.

VIII. Opinion — Additional Interest Under Registration Rights Agreement

The Registration Rights Agreement dated June 25, 2024, among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers, provides that VHG will use commercially reasonable efforts to:

(a) file a registration statement with respect to an offer to exchange the Notes for new notes that are registered under the Securities Act and have terms substantially identical to the Notes (an "Exchange Offer Registration Statement") no later than January 4, 2025 (which is 180 calendar days after the Closing Date); and

(b) cause such Exchange Offer Registration Statement to become effective under the Securities Act no later than July 8, 2025 (which is 365 calendar days after the Closing Date).

In the event that VHG fails to comply with the foregoing obligations within the specified time periods (each such failure, a "Registration Default"), the Registration Rights Agreement provides that "additional interest" will accrue on the Notes as follows:

• For the first ninety (90) days following the occurrence of a Registration Default: 0.25% per annum on the principal amount of the Notes;

• After the first ninety (90) days: the rate increases to 0.50% per annum on the principal amount of the Notes; and

• The maximum rate of additional interest shall not exceed 1.00% per annum under any circumstances.

Additional interest, if triggered, would be payable on the same dates and in the same manner as the stated interest on the Notes (i.e., semi-annually on January 1 and July 1). Additional interest would cease to accrue upon the curing of all Registration Defaults.

Treatment as Qualified Stated Interest. Any additional interest payable under the Registration Rights Agreement would constitute "qualified stated interest" within the meaning of Treasury Regulation § 1.1273-1(c) because it would be payable in cash at the same fixed periodic intervals as the stated interest on the Notes (i.e., semi-annually). Accordingly, such additional interest would be includible in the gross income of holders as ordinary interest income in the period to which it relates, and would be deductible by VHG as interest expense under Section 163(a) of the Code as it accrues (subject to the limitations of Section 163(j) discussed in Section V above).

Contingent Payment Debt Instrument Analysis. The contingent nature of the additional interest does not cause the Notes to be treated as "contingent payment debt instruments" ("CPDIs") within the meaning of Treasury Regulation § 1.1275-4. Under Treasury Regulation § 1.1275-4(a)(2)(ii), a debt instrument does not provide for contingent payments merely because it provides for a contingency that, as of the issue date, is either "remote" or "incidental." The obligation to pay additional interest arises only upon the occurrence of a Registration Default, which is a contingency that VHG has represented is not expected to occur based upon its current plans and intentions to comply with its registration obligations in a timely manner. Even if the remote/incidental exception were not applicable, the additional interest provision would not cause the Notes to be CPDIs because the additional interest is based upon the passage of time and the occurrence of an objectively determinable event (i.e., failure to file or cause effectiveness of a registration statement by a date certain), which constitutes one or more "objective indices" within the meaning of Treasury Regulation § 1.1275-4(a)(2)(ii) and the principles set forth in Treasury Regulation § 1.1275-5 (relating to variable rate debt instruments).

Accordingly, the existence of the additional interest provision in the Registration Rights Agreement does not alter the characterization of the Notes as fixed-rate debt instruments for U.S. federal income tax purposes, and does not require the application of the CPDI rules of Treasury Regulation § 1.1275-4.

IX. Limitations and Qualifications

The opinions expressed in this letter are subject to the following limitations and qualifications:

1. This opinion is limited to matters of U.S. federal income tax law as in effect on the date hereof, including the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder (including proposed and temporary regulations), published rulings, revenue procedures, and administrative pronouncements of the IRS, and judicial decisions of courts of competent jurisdiction, all as in effect and available on the date hereof. All of the foregoing authorities are subject to change at any time, possibly with retroactive effect, and any such change could affect the conclusions expressed herein. We undertake no obligation to update this opinion to reflect any changes in law or fact occurring after the date hereof.

2. This opinion does not address any state, local, or non-U.S. (including foreign, provincial, or municipal) tax consequences of the issuance, ownership, or disposition of the Notes, or any aspect of the transactions described herein. The tax consequences of the Notes under the laws of jurisdictions other than the United States may differ materially from the U.S. federal income tax consequences described herein, and VHG and the holders of the Notes should consult their own tax advisors with respect to such matters.

3. Except to the extent expressly stated herein, this opinion does not address the U.S. federal income tax consequences to holders of the Notes, including without limitation consequences relating to the purchase, ownership, or disposition of the Notes by any particular holder. The U.S. federal income tax consequences to holders are addressed in the section of the Final Offering Memorandum dated June 18, 2024 entitled "Certain U.S. Federal Income Tax Considerations," which section was prepared with the assistance of this firm. Nothing in this opinion is intended to supplement, modify, or supersede the discussion set forth in the Final Offering Memorandum.

4. This opinion does not address the U.S. federal income tax treatment of any person other than VHG, except as expressly stated herein. Without limiting the generality of the foregoing, this opinion does not address the tax consequences of the transactions described herein to the Guarantors, the Trustee, the Initial Purchasers, or any other person.

5. This opinion is based entirely on the facts and representations set forth in the documents reviewed by us and listed in Section II.A above, and on the representations and certifications provided to us by VHG's officers, including Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary. We have not independently verified any of such facts or representations, and if any such facts or representations are or become inaccurate or incomplete in any material respect, the conclusions expressed herein may be adversely affected or rendered inapplicable. We have assumed for purposes of this opinion that all such facts and representations are and will remain true, complete, and correct in all material respects.

6. This opinion is rendered solely for the benefit of VHG and may not be relied upon, quoted, cited, or otherwise referred to by any other person or entity (including, without limitation, any holder or prospective holder of the Notes, any Initial Purchaser, the Trustee, or any governmental authority) without the prior written consent of Calderwood & Harkness LLP. This opinion may not be filed with or furnished to any governmental authority, including the IRS, without our prior written consent, except to the extent required by applicable law.

7. No opinion is expressed herein on any matter not specifically addressed in this letter. Without limiting the foregoing, we express no opinion with respect to (a) the applicability of any alternative minimum tax provisions, (b) the applicability of any information reporting or backup withholding provisions, (c) the applicability of any provisions of the Code relating to real estate investment trusts, regulated investment companies, tax-exempt organizations, foreign persons, or other special categories of taxpayers, (d) the consequences of any future amendment, modification, or reissuance of the Notes, or (e) the tax consequences of the guarantees provided by the Guarantors.

8. This opinion represents our best professional judgment as to the U.S. federal income tax consequences of the transactions described herein based on the authorities cited above. This opinion is not a guarantee of any particular tax result, and there can be no assurance that the IRS will not take a position contrary to the opinions expressed herein or that any such contrary position would not be sustained by a court of competent jurisdiction.

X. Conclusions Summary

Based upon and subject to the foregoing analysis, assumptions, limitations, and qualifications, it is the opinion of Calderwood & Harkness LLP that:

1. Classification as Indebtedness. The Notes will be treated as indebtedness of VHG, and not as equity of VHG, for U.S. federal income tax purposes.

2. De Minimis Original Issue discount. The OID on the Notes of $7,500,000 in the aggregate (1.500% of the aggregate principal amount, or $15.00 per $1,000 principal amount) constitutes de minimis OID within the meaning of Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d). Accordingly, holders of the Notes are not required to include de minimis OID in gross income on a constant-yield basis under Section 1272(a) of the Code. De minimis OID will instead be included in income as capital gain upon payment of principal or upon a sale, exchange, or other taxable disposition of the Notes.

3. Qualified Stated Interest. The stated interest on the Notes at the rate of 8.250% per annum constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c). Such interest is includible in the gross income of holders in accordance with their regular method of accounting and is deductible by VHG as it accrues, subject to the limitations of Section 163(j) of the Code and the other limitations described herein.

4. Not an Applicable High Yield discount Obligation. The Notes do not constitute applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code because the yield to maturity of the Notes (approximately 8.52%) does not equal or exceed the sum of the applicable federal rate plus five (5) percentage points (approximately 9.60%). Accordingly, the special rules of Section 163(e)(5) limiting the deductibility of OID and recharacterizing OID as dividends do not apply to the Notes.

5. Optional Redemption Premiums. The optional redemption premiums provided for in the Indenture do not give rise to additional OID on the Notes. The optional redemption prices are not included in the stated redemption price at maturity for purposes of computing OID because the redemption is at the discretion of VHG (or, in the case of the change of control put, at the discretion of the holders) and is not mandatory.

6. Additional Interest Under Registration Rights Agreement. Any additional interest that may become payable under the Registration Rights Agreement in the event of a Registration Default would constitute qualified stated interest that is deductible by VHG and includible in income by holders as ordinary interest income in the period to which it relates. The contingent nature of the additional interest does not cause the Notes to be treated as contingent payment debt instruments.

•

We trust that the foregoing is responsive to your request. Please do not hesitate to contact the undersigned or any member of our tax group should you have any questions regarding this opinion or require any further assistance.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Sylvia Hartwell

Title: Partner, Tax

One Liberty Plaza, 45th Floor New York, NY 10006

Date: June 25, 2024

Enclosures: As referenced herein

cc:

Theodore Langston, Esq., Calderwood & Harkness LLP Vivienne St. Claire, Esq., Calderwood & Harkness LLP Claire Dempsey, Esq., Calderwood & Harkness LLP Patricia R. Henning, Chief Financial Officer, Verimark Hospitality Group Inc. Marcus J. Delano, Chief Executive Officer, Verimark Hospitality Group Inc.

This opinion letter is furnished pursuant to the terms of the engagement letter between Calderwood & Harkness LLP and Verimark Hospitality Group Inc. and is subject to the terms and conditions thereof, including limitations on liability.

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law
One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: (212) 455-7200 Facsimile: (212) 455-7201 www.calderwoodharkness.com
June 25, 2024
Verimark Hospitality Group Inc. 2400 Brickell Bay Drive, Suite 3100 Miami, FL 33129
Attention: David K. Moretti, Esq., General Counsel & Secretary
Patricia R. Henning, Chief Financial Officer
Re: U.S. Federal Income Tax Treatment of $500,000,000 Aggregate Principal Amount of 8.250% Senior Notes due 2031 (the "Notes") Issued by Verimark Hospitality Group Inc.
Ladies and Gentlemen:
I. Introduction and Scope
Calderwood & Harkness LLP ("Calderwood & Harkness," "we," or "our firm") has acted as counsel to Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware ("VHG," the "Issuer," or the "Company"), in connection with the issuance by VHG of $500,000,000 aggregate principal amount of its 8.250% Senior Notes due July 1, 2031 (the "Notes"). This opinion letter is delivered at the request of VHG in connection with the closing of the offering on June 25, 2024 (the "Closing Date").
The Notes have been issued pursuant to an Indenture dated as of June 25, 2024 (the "Indenture"), among VHG, the guarantors named therein (collectively, the "Guarantors"), and Fidelitas Trust Company, N.A., a national banking association organized under the laws of the United States, acting as trustee (the "Trustee"). The Indenture sets forth the terms and conditions governing the Notes, including the payment of principal, interest, and any redemption premiums, as well as the covenants, events of default, and other provisions customary for senior unsecured obligations of this nature.
The Notes were offered and sold pursuant to that certain Purchase Agreement dated June 18, 2024 (the "Purchase Agreement"), among VHG, the Guarantors, and Kensington Barrow & Co., acting as Representative of the several initial purchasers named therein (collectively, the "Initial Purchasers"), which Initial Purchasers include Ridgeline Capital Markets LLC and Stonebridge Marvelo Securities Inc. The offering was conducted as a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon Rule 144A and Regulation S promulgated thereunder.
The Notes were issued at an issue price of 98.500% of par, resulting in gross proceeds to VHG of $492,500,000. The difference between the aggregate stated principal amount of $500,000,000 and the issue price of $492,500,000 results in original issue discount of 1.500%, or $7,500,000 in the aggregate. In addition, the Initial Purchasers received a customary underwriting discount of 1.750% of the aggregate principal amount, equal to $8,750,000, resulting in net proceeds to the Issuer of approximately $483,750,000 (before expenses of the offering).
The Notes bear stated interest at a fixed rate of 8.250% per annum. Interest on the Notes is payable semi-annually in arrears on January 1 and July 1 of each year, with the first interest payment due on January 1, 2025. The Notes will mature on July 1, 2031, unless earlier redeemed or repurchased in accordance with the terms of the Indenture.
This opinion letter addresses certain material U.S. federal income tax consequences of the issuance of the Notes by VHG, including (a) the classification of the Notes as indebtedness for U.S. federal income tax purposes, (b) the treatment of original issue discount on the Notes, (c) the deductibility of interest on the Notes under Section 163(j) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), (d) whether the Notes constitute applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code, (e) the treatment of optional redemption premiums, and (f) the treatment of any additional interest that may become payable under the Registration Rights Agreement (as defined below). This opinion is rendered by Sylvia Hartwell, Specialist Partner in the Tax practice group of Calderwood & Harkness LLP.
This opinion letter is being delivered solely in connection with the closing of the offering of the Notes and for the benefit of VHG. Except as expressly stated herein, this opinion does not address the U.S. federal income tax consequences to holders of the Notes, which consequences are addressed in the section entitled "Certain U.S. Federal Income Tax Considerations" in the Final Offering Memorandum dated June 18, 2024 (the "Final Offering Memorandum").
II. Documents Reviewed and Assumptions
A. Documents Reviewed
In rendering the opinions set forth herein, we have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of the following documents:
1.  The Indenture dated as of June 25, 2024, among VHG, the Guarantors, and Fidelitas Trust Company, N.A., as Trustee, together with all exhibits, schedules, and annexes thereto;
2.  The Form of 144A Global Note attached as Exhibit A-1 to the Indenture, bearing CUSIP No. 923847 AA 5 and ISIN No. US923847AA52;
3.  The Form of Regulation S Global Note attached as Exhibit A-2 to the Indenture, bearing CUSIP No. U92384 AA 8 and ISIN No. USU92384AA83;
4.  The Purchase Agreement dated June 18, 2024, among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers;
5.  The Final Offering Memorandum dated June 18, 2024, relating to the offering and sale of the Notes;
6.  The Registration Rights Agreement dated as of June 25, 2024 (the "Registration Rights Agreement"), among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers;
7.  The Officer's Certificate of VHG dated June 25, 2024, executed by Patricia R. Henning, Chief Financial Officer, delivered in connection with the closing of the offering;
8.  The Secretary's Certificate of VHG dated June 25, 2024, executed by David K. Moretti, General Counsel & Secretary, attaching true and correct copies of (a) the Amended and Restated Certificate of Incorporation of VHG, as currently in effect, (b) the Amended and Restated Bylaws of VHG, as currently in effect, and (c) the resolutions of the Board of Directors of VHG authorizing the issuance of the Notes and the execution and delivery of the Transaction Documents (as defined in the Purchase Agreement);
9.  The resolutions of the Board of Directors of VHG adopted on June 14, 2024, authorizing, among other things, the issuance and sale of the Notes and the execution, delivery, and performance of each of the Transaction Documents;
10.  The Tax Structure Memorandum prepared by Calderwood & Harkness LLP dated May 1, 2024, analyzing the anticipated U.S. federal income tax consequences of the proposed issuance of the Notes (the "Tax Structure Memorandum");
11.  The audited consolidated financial statements of VHG and its subsidiaries for the fiscal years ended December 31, 2023 and December 31, 2022, together with the independent auditors' reports thereon issued by Palladian & Howe LLP (Kenneth W. Sturgis, Engagement Partner), as included in the Final Offering Memorandum; and
12.  Various representations and certifications provided to us by officers of VHG, including those provided by Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary, relating to the business, financial condition, and tax position of VHG and the terms and circumstances of the issuance of the Notes.
We have also reviewed such other documents, instruments, certificates, records, and matters of law as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein.
B. Assumptions.  In rendering the opinions expressed in this letter, we have assumed the following, without independent investigation or verification:
1.  All documents submitted to us as originals are authentic and complete, all documents submitted to us as copies conform to the originals thereof, and all signatures on documents reviewed by us are genuine.
2.  The transactions contemplated by the Indenture, the Purchase Agreement, the Registration Rights Agreement, and the other Transaction Documents were consummated in accordance with the terms described therein and in the Final Offering Memorandum, and no party thereto has taken or will take any action inconsistent with the terms of such documents.
3.  VHG is, and at all relevant times has been, classified as a corporation for U.S. federal income tax purposes within the meaning of Section 7701(a)(3) of the Code and the Treasury Regulations promulgated thereunder.
4.  No party to the transactions described herein has taken or will take any action, or has failed or will fail to take any action, that is inconsistent with the treatment of the Notes as described in this opinion letter.
5.  The stated redemption price at maturity of each Note equals $1,000 per $1,000 of principal amount, which amount represents the sum of all payments to be made under the Note other than payments of qualified stated interest (as defined in Treasury Regulation § 1.1273-1(c)).
6.  The issue price of the Notes for U.S. federal income tax purposes is 98.500% of the principal amount thereof, i.e., $985 per $1,000 principal amount of Notes, as determined by reference to the first price at which a substantial amount of the Notes was sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers), within the meaning of Section 1273(b)(4) of the Code and Treasury Regulation § 1.1273-2.
7.  The representations and certifications provided to us by officers of VHG, including those relating to VHG's financial condition, business operations, capitalization, debt levels, adjusted taxable income, and other matters, are true, complete, and correct in all material respects as of the date hereof and will remain so as of the dates relevant to the conclusions expressed herein.
8.  There are no oral or written agreements, understandings, or arrangements among the parties or between any party and any third party that would modify, supplement, or otherwise affect the tax treatment of the Notes or the transactions described herein.
III. Opinion — Classification of the Notes as Debt
Based upon our review of the documents described in Section II above, and subject to the assumptions, limitations, and qualifications set forth herein, it is the opinion of Calderwood & Harkness LLP that, for U.S. federal income tax purposes, the Notes will be treated as indebtedness of VHG, and not as equity of VHG.
In reaching this conclusion, we have considered the relevant factors identified by the courts and the Internal Revenue Service (the "IRS") in analyzing whether an instrument should be treated as debt or equity for federal income tax purposes. As is well established, the determination of whether an instrument constitutes debt or equity is a question of fact that depends upon the totality of the circumstances, and no single factor is dispositive. See, e.g., Fin Hay Realty Co. v. United States, 398 F.2d 694 (3d Cir. 1968); Notice 94-47, 1994-1 C.B. 357. Among the factors we have considered, the following support treatment of the Notes as indebtedness:
Fixed Maturity Date. The Notes have a fixed maturity date of July 1, 2031, which is approximately seven (7) years from the date of issuance. The existence of a definite, unconditional obligation to repay principal on a date certain is a significant indicator that an instrument constitutes debt rather than equity. The maturity date is within a commercially reasonable time horizon, and the term of the Notes is consistent with typical maturities for senior unsecured corporate debt obligations in the high-yield market.
Fixed Rate of Stated Interest. The Notes bear a fixed rate of stated interest at 8.250% per annum, payable semi-annually in cash on January 1 and July 1 of each year. The obligation to pay interest is unconditional and does not depend upon the profitability or earnings of VHG. The interest rate is consistent with market rates for obligations of comparable credit quality and tenor at the time of issuance, and is not so high as to suggest an equity return.
Unconditional Obligation to Pay Principal. VHG has an unconditional obligation to pay the full principal amount of the Notes at maturity. The obligation to repay principal is not contingent upon the financial performance, earnings, or cash flow of VHG or any other variable. The Notes do not provide for forgiveness, reduction, or subordination of the principal amount based on future events.
Senior Unsecured Ranking. The Notes rank as senior unsecured obligations of VHG, pari passu in right of payment with all existing and future senior indebtedness of VHG. The Notes are structurally senior to any subordinated indebtedness that may be incurred by VHG in the future. The senior ranking of the Notes is consistent with treatment as indebtedness rather than equity, which would typically be subordinate to all debt obligations.
No Conversion or Equity Participation Features. The Notes do not contain any provision permitting or requiring conversion of the Notes into equity securities of VHG or any affiliate thereof. The Notes do not entitle the holders to participate in the profits, growth, or appreciation in value of VHG's equity. The return to holders is limited to the stated interest and the repayment of principal, which is a hallmark of debt rather than equity.
Reasonable Debt-to-Equity Ratio. Based upon the representations and financial information provided by VHG and its officers, VHG's pro forma net leverage ratio following the issuance of the Notes is approximately 1.21x, calculated as $500,000,000 of total funded debt divided by last twelve months ("LTM") Adjusted EBITDA of approximately $412,000,000. This leverage level is well within the range typically associated with investment-grade or near-investment-grade issuers in the hospitality industry and does not suggest that the Notes represent a disguised equity contribution to a thinly capitalized entity.
Considering the totality of these factors, we are of the opinion that the Notes will be respected as indebtedness of VHG for U.S. federal income tax purposes. We note that while the IRS has not published explicit safe-harbor guidelines for debt-equity classification (and Section 385 of the Code grants the Treasury broad regulatory authority in this area), the characteristics of the Notes are consistent with the treatment of the Notes as debt under existing case law, administrative guidance, and market practice.
IV. Opinion — Original Issue discount Treatment
A. Existence and Amount of Original Issue discount
As described in Section I above, the Notes were issued at a price of 98.500% of their stated principal amount, resulting in original issue discount ("OID") of 1.500% of the principal amount, or $7,500,000 in the aggregate ($15.00 per $1,000 principal amount of Notes).
Under Section 1273(a)(1) of the Code, the OID on a debt instrument is the excess, if any, of the "stated redemption price at maturity" of such instrument over its "issue price." Each of these terms is defined in the Code and the Treasury Regulations.
Stated Redemption Price at Maturity. Under Section 1273(a)(2) of the Code and Treasury Regulation § 1.1273-1(b), the stated redemption price at maturity of a debt instrument is the sum of all payments provided by the debt instrument other than payments of "qualified stated interest." As discussed below, the semi-annual interest payments at the rate of 8.250% per annum on the Notes constitute qualified stated interest and are therefore excluded from the stated redemption price at maturity. Accordingly, the stated redemption price at maturity of each Note is $1,000 per $1,000 of principal amount, which equals the face amount payable at maturity on July 1, 2031.
Qualified Stated Interest. Under Treasury Regulation § 1.1273-1(c)(1)(i), "qualified stated interest" is stated interest that is unconditionally payable in cash, or that is constructively received under Section 451 of the Code, at fixed periodic intervals of one year or less during the entire term of the debt instrument, and the amount and rate of which is either a single fixed rate or a qualified floating rate (within the meaning of Treasury Regulation § 1.1275-5(b)). The stated interest on the Notes at the rate of 8.250% per annum is unconditionally payable in cash on a semi-annual basis (i.e., at fixed periodic intervals of six months, which is less than one year) during the entire term of the Notes, from the issue date through and including the maturity date. The interest rate is a single fixed rate. Accordingly, all of the stated interest on the Notes constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c), and is properly excluded from the computation of the stated redemption price at maturity.
Issue Price. Under Section 1273(b)(4) of the Code, the issue price of a debt instrument issued for money is the first price at which a substantial amount of the debt instruments included in the same issue is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). Based upon the representations of VHG and the terms of the Purchase Agreement, the issue price of the Notes is 98.500% of the principal amount, or $985 per $1,000 principal amount of Notes.
Computation of OID. The OID on the Notes is therefore equal to the stated redemption price at maturity ($1,000) minus the issue price ($985), which equals $15.00 per $1,000 principal amount of Notes, or $7,500,000 in the aggregate.
De Minimis OID. Under Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d), if the OID on a debt instrument is less than the "de minimis amount," the OID is treated as zero and no holder is required to include such discount in income on a current basis under the OID provisions of Sections 1271 through 1275 of the Code. The de minimis amount is defined as the product of 0.25% (i.e., one-quarter of one percent, or 25 basis points) multiplied by the number of complete years from the issue date to the maturity date, multiplied by the stated redemption price at maturity. For the Notes:
De minimis threshold = 0.25% × 7 (complete years from June 25, 2024 to July 1, 2031) × $1,000 = $17.50 per $1,000 principal amount of Notes.
The OID on the Notes of $15.00 per $1,000 principal amount does not exceed the de minimis threshold of $17.50 per $1,000 principal amount. Accordingly, the OID on the Notes is "de minimis OID" within the meaning of Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d).
Tax Consequences of De Minimis OID. Because the OID on the Notes is de minimis, holders of the Notes are not required to include such discount in gross income on a current basis under the constant-yield method prescribed by Section 1272(a) of the Code. Instead, pursuant to Treasury Regulation § 1.1273-1(d)(4), de minimis OID is includible in income as stated principal is paid. In the case of the Notes, because the entire principal amount is due at maturity, the de minimis OID of $15.00 per $1,000 principal amount would be includible in the income of a holder upon the receipt of the principal payment at maturity, or upon an earlier sale, exchange, retirement, or other taxable disposition of the Note. Any such income would be treated as capital gain (and not as ordinary income), subject to the rules of Section 1271 of the Code.
B. Treatment of Qualified Stated Interest
As set forth above, the stated interest on the Notes at the rate of 8.250% per annum constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c). In the aggregate, the annual stated interest on the Notes is $41,250,000 (i.e., 8.250% × $500,000,000), or $20,625,000 per semi-annual interest period.
Income Inclusion by Holders. Holders of the Notes will be required to include the qualified stated interest in their gross income for U.S. federal income tax purposes in accordance with their regular method of accounting for tax purposes. Holders that use the cash method of accounting will include stated interest in income when received (or constructively received). Holders that use the accrual method of accounting will include stated interest in income as it accrues, regardless of when payment is actually received.
Deduction by VHG. VHG, as the issuer, will be entitled to deduct the qualified stated interest on the Notes as it accrues for U.S. federal income tax purposes, in accordance with VHG's method of accounting and subject to the limitations on the deductibility of business interest expense under Section 163(j) of the Code, as discussed more fully in Section V below, and subject to such other limitations on deductibility as may be applicable under the Code. The timing of VHG's deduction for stated interest will be determined under the rules of Section 163(a) of the Code and the regulations thereunder, and in the case of an accrual-method taxpayer such as VHG, will generally correspond to the accrual periods under the Indenture.
V. Opinion — Deductibility of Interest Under IRC § 163(j)
A. General Rule
Section 163(j) of the Code, as amended by the Tax Cuts and Jobs Act of 2017 (P.L. 115-97) and further modified by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") (P.L. 116-136), imposes a limitation on the deduction of "business interest expense" by a taxpayer in any taxable year. Specifically, under Section 163(j)(1) of the Code, the deduction allowed under Chapter 1 of the Code for business interest expense paid or accrued during the taxable year shall not exceed the sum of:
(i) the taxpayer's "business interest income" for such taxable year;
(ii) 30% of the taxpayer's "adjusted taxable income" ("ATI") for such taxable year; and
(iii) the taxpayer's "floor plan financing interest" for such taxable year.
For purposes of this limitation, "business interest expense" means any interest paid or accrued on indebtedness properly allocable to a trade or business, as defined in Section 163(j)(5) of the Code. The stated interest on the Notes constitutes business interest expense of VHG.
It is important to note that for taxable years beginning after December 31, 2021, the computation of ATI no longer permits the add-back of deductions for depreciation, amortization, or depletion. Prior to January 1, 2022, as a temporary measure enacted by the Tax Cuts and Jobs Act and extended by the CARES Act, ATI was computed by adding back such deductions, effectively approximating an EBITDA-based measure. For taxable years beginning after December 31, 2021, ATI is computed without such add-backs, resulting in an EBIT-based computation that generally yields a lower ATI figure and, consequently, a potentially more restrictive limitation on the deductibility of business interest expense.
B. Application to VHG
The annual stated interest expense on the Notes is $41,250,000 (8.250% × $500,000,000). This figure represents the entirety of VHG's anticipated business interest expense with respect to the Notes; VHG has represented that it does not currently have any other material outstanding funded indebtedness.
Based upon the representations and financial information provided to us by VHG's management, including Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary, the following financial metrics are relevant to the Section 163(j) analysis:
•  LTM Adjusted EBITDA (as of December 31, 2023): approximately $412,000,000
•  LTM Revenue (as of December 31, 2023): approximately $1,820,000,000
•  Pro forma interest coverage ratio: approximately 9.99x ($412,000,000 ÷ $41,250,000)
We acknowledge that ATI, as computed for purposes of Section 163(j), differs from Adjusted EBITDA as reported by VHG for financial reporting and covenant compliance purposes. Specifically, ATI is determined by reference to VHG's tentative taxable income (computed without regard to any business interest expense or business interest income and, for taxable years beginning after December 31, 2021, without adding back depreciation, amortization, or depletion), and is subject to certain adjustments prescribed by Section 163(j)(8) of the Code and the Treasury Regulations thereunder (including Treas. Reg. § 1.163(j)-1(b)(1)). Nevertheless, based upon the representations provided by VHG's management regarding VHG's expected taxable income, depreciation, amortization, and other relevant items, VHG expects that 30% of its ATI will substantially exceed its annual business interest expense of $41,250,000 for each taxable year during the term of the Notes. The pro forma interest coverage ratio of approximately 9.99x provides substantial headroom above the Section 163(j) limitation, even after accounting for the difference between Adjusted EBITDA and ATI.
To the extent that VHG's business interest expense for any taxable year were to exceed the limitation imposed by Section 163(j), the disallowed interest would be carried forward to the succeeding taxable year and treated as business interest expense paid or accrued in such succeeding taxable year, pursuant to Section 163(j)(2) of the Code. Such carryforward is available indefinitely and is not subject to any expiration period.
Opinion. Based on the foregoing analysis and subject to the continued accuracy of the representations provided by VHG's management and VHG's continued compliance with Section 163(j) of the Code in each relevant taxable year, it is our opinion that VHG should be entitled to deduct the stated interest on the Notes as it accrues for U.S. federal income tax purposes. We note, however, that the Section 163(j) limitation is applied on a taxable-year-by-taxable-year basis, and VHG's ability to fully deduct its business interest expense in any given year will depend on the actual amount of its ATI for that year.
VI. Opinion — Applicable High Yield discount Obligation (AHYDO) Analysis
A. AHYDO Definition — IRC § 163(e)(5) and IRC § 163(i)
Sections 163(e)(5) and 163(i) of the Code set forth special rules that limit the deductibility of OID and, in certain cases, recharacterize a portion of the OID as a dividend, with respect to debt instruments that constitute "applicable high yield discount obligations" ("AHYDOs"). If an obligation is classified as an AHYDO, two adverse consequences may result:
(a) Under Section 163(e)(5)(A) of the Code, no deduction is allowed to the issuer for the "disqualified portion" of the OID on such obligation (generally, the portion of OID attributable to the yield that exceeds the AFR plus 6 percentage points); and
(b) Under Section 163(e)(5)(B) of the Code, the remainder of the OID that would otherwise be deductible (but for the AHYDO rules) is treated as a dividend paid by the issuer, to the extent of the issuer's current and accumulated earnings and profits, and is deductible only when paid in cash.
Under Section 163(i)(1) of the Code, an obligation constitutes an AHYDO if, and only if, all three of the following conditions are satisfied:
Condition 1 — Maturity in Excess of 5 Years. The obligation has a term of more than five (5) years.
Condition 2 — Yield to Maturity Equals or Exceeds AFR Plus 5 Percentage Points. The yield to maturity on the obligation equals or exceeds the sum of (x) the "applicable federal rate" (the "AFR") determined under Section 1274(d) of the Code for the calendar month in which the obligation is issued, plus (y) five (5) percentage points.
Condition 3 — Significant Original Issue discount. The obligation has "significant original issue discount," within the meaning of Section 163(i)(2) of the Code. An obligation has significant OID if the aggregate amount that would be includible in gross income with respect to such obligation for periods before the close of any accrual period ending after the date that is five (5) years after the date of issue exceeds the sum of (a) the aggregate amount of interest to be paid under the obligation before the close of such accrual period, and (b) the product of the issue price of such obligation and its yield to maturity.
All three conditions must be satisfied for an obligation to be classified as an AHYDO. If any one of the three conditions is not met, the obligation is not an AHYDO and the special rules of Section 163(e)(5) do not apply.
B. Application of the Three-Prong Test
Prong 1 — Maturity in Excess of 5 Years.  The Notes were issued on June 25, 2024 and mature on July 1, 2031. The term of the Notes is therefore approximately seven (7) years and six (6) days. Because the term of the Notes exceeds five (5) years, the first prong of the AHYDO test is satisfied.
Prong 2 — Yield to Maturity Equals or Exceeds AFR Plus 5 Percentage Points.  Yield to Maturity of the Notes. The yield to maturity of the Notes is determined by reference to all payments to be made on the Notes (including both principal and stated interest) and the issue price of the Notes. Taking into account the issue price of 98.500% of the principal amount and the stated coupon rate of 8.250% per annum with semi-annual compounding, the yield to maturity of the Notes is approximately 8.52% per annum (computed on a semi-annual bond-equivalent basis).
Applicable Federal Rate. Under Section 1274(d) of the Code, the AFR is determined on a monthly basis by the IRS and published in the Internal Revenue Bulletin. For debt instruments with a term in excess of nine (9) years, the relevant rate is the "long-term AFR." For debt instruments with a term greater than three (3) years but not more than nine (9) years, the relevant rate is the "mid-term AFR." The Notes have a term of approximately seven (7) years, and accordingly the mid-term AFR is the applicable rate. However, Section 163(i)(1)(B) of the Code refers specifically to "the applicable Federal rate in effect under section 1274(d) for the calendar month in which the obligation is issued," and the determination of whether the long-term or mid-term rate applies is governed by the term of the instrument. For the Notes, with a term of approximately 7 years, the relevant AFR is the long-term AFR. Based upon the AFR tables published by the IRS for June 2024 (Rev. Rul. 2024-11), and confirmed by the representations of VHG, the long-term AFR for June 2024, assuming semi-annual compounding, is approximately 4.60% per annum.
AFR Plus 5 Percentage Points. The sum of the long-term AFR plus five (5) percentage points is:
4.60% + 5.00% = 9.60%
Comparison. The yield to maturity of the Notes of approximately 8.52% per annum is less than 9.60%. Accordingly, the second prong of the AHYDO test is not satisfied.
Prong 3 — Significant Original Issue discount.  Because the second prong of the AHYDO test is not satisfied, the Notes cannot constitute AHYDOs, and it is not strictly necessary to analyze the third prong. An obligation must satisfy all three conditions to be classified as an AHYDO, and the failure of any one condition is dispositive.
Nevertheless, for completeness and to provide VHG with a comprehensive analysis, we note that the third prong would also not be satisfied with respect to the Notes. As described in Section IV above, the OID on the Notes is de minimis — $15.00 per $1,000 principal amount — and accordingly is treated as zero for purposes of the OID accrual rules. Furthermore, all interest on the Notes is qualified stated interest that is payable currently in cash on a semi-annual basis. There is no accrual of unpaid OID during the first five years of the Notes that would exceed the sum of (a) interest paid in cash during such period plus (b) the product of the issue price and the yield to maturity. Accordingly, the "significant OID" condition of Section 163(i)(2) would not be met.
C. Conclusion.  Based upon the foregoing analysis, it is our opinion that the Notes are not applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code. The Notes fail the second prong of the AHYDO test because the yield to maturity of approximately 8.52% does not equal or exceed the AFR plus 5 percentage points (approximately 9.60%). Accordingly:
(a) No portion of the OID or interest on the Notes is disallowed under Section 163(e)(5)(A) of the Code; and
(b) No portion of the OID on the Notes is recharacterized as a dividend under Section 163(e)(5)(B) of the Code.
VII. Opinion — Treatment of Optional Redemption Premiums
The Indenture provides VHG with certain optional redemption rights with respect to the Notes, which are summarized as follows:
Optional Redemption at Fixed Prices. On or after July 1, 2027, VHG may redeem all or any portion of the Notes at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest, if any, to the applicable redemption date:
•  On or after July 1, 2027 and prior to July 1, 2028: 104.125% of principal amount
•  On or after July 1, 2028 and prior to July 1, 2029: 102.063% of principal amount
•  On or after July 1, 2029 and thereafter: 100.000% of principal amount
Equity Clawback. At any time prior to July 1, 2027, VHG may, on one or more occasions, redeem up to 40% of the original aggregate principal amount of the Notes (i.e., up to $200,000,000) at a redemption price equal to 108.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the applicable redemption date, with the net cash proceeds of one or more qualifying equity offerings (as defined in the Indenture), provided that at least 60% of the original aggregate principal amount of the Notes remains outstanding immediately after any such redemption.
Change of Control Put. Upon the occurrence of a "change of control" (as defined in the Indenture), each holder of the Notes has the right to require VHG to repurchase all or any portion of such holder's Notes at a purchase price equal to 101.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
Analysis. Under Treasury Regulation § 1.1272-1(c)(1), if a debt instrument provides for one or more alternative payment schedules applicable upon the occurrence of a contingency or contingencies, the yield and maturity of the debt instrument are determined by assuming that the payments will be made according to the payment schedule most likely to occur. Under Treasury Regulation § 1.1275-4, special rules apply to "contingent payment debt instruments" — i.e., instruments that provide for one or more contingent payments. However, an instrument is not a contingent payment debt instrument solely because the instrument is subject to optional call provisions at the discretion of the issuer.
Because the optional redemption provisions in the Indenture are exercisable solely at the discretion of VHG as issuer (or, in the case of the change of control put, solely at the discretion of the holders), and are not mandatory in nature, these provisions do not give rise to additional OID under Section 1272 or 1273 of the Code. The optional call premiums are not treated as part of the stated redemption price at maturity of the Notes because there is no unconditional obligation to pay such premiums; they are payable only if and when VHG elects (or a change of control occurs and the holders elect) to exercise the applicable option.
For purposes of computing OID, the Treasury Regulations generally assume that the debt instrument will not be redeemed prior to maturity. Specifically, Treasury Regulation § 1.1272-1(c)(3) provides that, in the case of a debt instrument with an option to call or put the instrument at a premium, the option is presumed not to be exercised if exercising the option would decrease the yield of the instrument. Because the optional redemption prices generally exceed the adjusted issue price of the Notes, the exercise of such options would decrease the yield on the Notes from the perspective of the holder, and accordingly the options are presumed not to be exercised for purposes of computing OID.
Upon Actual Redemption. In the event that VHG actually exercises any optional redemption right and pays a premium to the holder in excess of the adjusted issue price of the Notes (i.e., the issue price of the Notes as adjusted for any previously accrued OID), the premium paid to the redeeming holder would generally be treated as additional consideration received by such holder upon the retirement of the Notes. Depending on the circumstances of the particular holder (including whether the holder is a United States person, the holder's adjusted tax basis in the Notes, and the character of the holder's gain or loss), such premium may give rise to capital gain or, in certain cases, ordinary income to the holder.
From VHG's perspective as the issuer, any premium paid upon the redemption of the Notes in excess of the adjusted issue price may be deductible by VHG as a repurchase premium under applicable Treasury Regulations, including Treasury Regulation § 1.163-7(c), which provides that a repurchase premium (the excess of the amount paid to reacquire a debt instrument over its adjusted issue price) is generally deductible as additional interest expense in the taxable year in which the repurchase occurs, subject to the limitations of Section 163(j) and other applicable provisions of the Code.
VIII. Opinion — Additional Interest Under Registration Rights Agreement
The Registration Rights Agreement dated June 25, 2024, among VHG, the Guarantors, and Kensington Barrow & Co., as Representative of the Initial Purchasers, provides that VHG will use commercially reasonable efforts to:
(a) file a registration statement with respect to an offer to exchange the Notes for new notes that are registered under the Securities Act and have terms substantially identical to the Notes (an "Exchange Offer Registration Statement") no later than January 4, 2025 (which is 180 calendar days after the Closing Date); and
(b) cause such Exchange Offer Registration Statement to become effective under the Securities Act no later than July 8, 2025 (which is 365 calendar days after the Closing Date).
In the event that VHG fails to comply with the foregoing obligations within the specified time periods (each such failure, a "Registration Default"), the Registration Rights Agreement provides that "additional interest" will accrue on the Notes as follows:
•  For the first ninety (90) days following the occurrence of a Registration Default: 0.25% per annum on the principal amount of the Notes;
•  After the first ninety (90) days: the rate increases to 0.50% per annum on the principal amount of the Notes; and
•  The maximum rate of additional interest shall not exceed 1.00% per annum under any circumstances.
Additional interest, if triggered, would be payable on the same dates and in the same manner as the stated interest on the Notes (i.e., semi-annually on January 1 and July 1). Additional interest would cease to accrue upon the curing of all Registration Defaults.
Treatment as Qualified Stated Interest. Any additional interest payable under the Registration Rights Agreement would constitute "qualified stated interest" within the meaning of Treasury Regulation § 1.1273-1(c) because it would be payable in cash at the same fixed periodic intervals as the stated interest on the Notes (i.e., semi-annually). Accordingly, such additional interest would be includible in the gross income of holders as ordinary interest income in the period to which it relates, and would be deductible by VHG as interest expense under Section 163(a) of the Code as it accrues (subject to the limitations of Section 163(j) discussed in Section V above).
Contingent Payment Debt Instrument Analysis. The contingent nature of the additional interest does not cause the Notes to be treated as "contingent payment debt instruments" ("CPDIs") within the meaning of Treasury Regulation § 1.1275-4. Under Treasury Regulation § 1.1275-4(a)(2)(ii), a debt instrument does not provide for contingent payments merely because it provides for a contingency that, as of the issue date, is either "remote" or "incidental." The obligation to pay additional interest arises only upon the occurrence of a Registration Default, which is a contingency that VHG has represented is not expected to occur based upon its current plans and intentions to comply with its registration obligations in a timely manner. Even if the remote/incidental exception were not applicable, the additional interest provision would not cause the Notes to be CPDIs because the additional interest is based upon the passage of time and the occurrence of an objectively determinable event (i.e., failure to file or cause effectiveness of a registration statement by a date certain), which constitutes one or more "objective indices" within the meaning of Treasury Regulation § 1.1275-4(a)(2)(ii) and the principles set forth in Treasury Regulation § 1.1275-5 (relating to variable rate debt instruments).
Accordingly, the existence of the additional interest provision in the Registration Rights Agreement does not alter the characterization of the Notes as fixed-rate debt instruments for U.S. federal income tax purposes, and does not require the application of the CPDI rules of Treasury Regulation § 1.1275-4.
IX. Limitations and Qualifications
The opinions expressed in this letter are subject to the following limitations and qualifications:
1.  This opinion is limited to matters of U.S. federal income tax law as in effect on the date hereof, including the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder (including proposed and temporary regulations), published rulings, revenue procedures, and administrative pronouncements of the IRS, and judicial decisions of courts of competent jurisdiction, all as in effect and available on the date hereof. All of the foregoing authorities are subject to change at any time, possibly with retroactive effect, and any such change could affect the conclusions expressed herein. We undertake no obligation to update this opinion to reflect any changes in law or fact occurring after the date hereof.
2.  This opinion does not address any state, local, or non-U.S. (including foreign, provincial, or municipal) tax consequences of the issuance, ownership, or disposition of the Notes, or any aspect of the transactions described herein. The tax consequences of the Notes under the laws of jurisdictions other than the United States may differ materially from the U.S. federal income tax consequences described herein, and VHG and the holders of the Notes should consult their own tax advisors with respect to such matters.
3.  Except to the extent expressly stated herein, this opinion does not address the U.S. federal income tax consequences to holders of the Notes, including without limitation consequences relating to the purchase, ownership, or disposition of the Notes by any particular holder. The U.S. federal income tax consequences to holders are addressed in the section of the Final Offering Memorandum dated June 18, 2024 entitled "Certain U.S. Federal Income Tax Considerations," which section was prepared with the assistance of this firm. Nothing in this opinion is intended to supplement, modify, or supersede the discussion set forth in the Final Offering Memorandum.
4.  This opinion does not address the U.S. federal income tax treatment of any person other than VHG, except as expressly stated herein. Without limiting the generality of the foregoing, this opinion does not address the tax consequences of the transactions described herein to the Guarantors, the Trustee, the Initial Purchasers, or any other person.
5.  This opinion is based entirely on the facts and representations set forth in the documents reviewed by us and listed in Section II.A above, and on the representations and certifications provided to us by VHG's officers, including Patricia R. Henning, Chief Financial Officer, and David K. Moretti, General Counsel & Secretary. We have not independently verified any of such facts or representations, and if any such facts or representations are or become inaccurate or incomplete in any material respect, the conclusions expressed herein may be adversely affected or rendered inapplicable. We have assumed for purposes of this opinion that all such facts and representations are and will remain true, complete, and correct in all material respects.
6.  This opinion is rendered solely for the benefit of VHG and may not be relied upon, quoted, cited, or otherwise referred to by any other person or entity (including, without limitation, any holder or prospective holder of the Notes, any Initial Purchaser, the Trustee, or any governmental authority) without the prior written consent of Calderwood & Harkness LLP. This opinion may not be filed with or furnished to any governmental authority, including the IRS, without our prior written consent, except to the extent required by applicable law.
7.  No opinion is expressed herein on any matter not specifically addressed in this letter. Without limiting the foregoing, we express no opinion with respect to (a) the applicability of any alternative minimum tax provisions, (b) the applicability of any information reporting or backup withholding provisions, (c) the applicability of any provisions of the Code relating to real estate investment trusts, regulated investment companies, tax-exempt organizations, foreign persons, or other special categories of taxpayers, (d) the consequences of any future amendment, modification, or reissuance of the Notes, or (e) the tax consequences of the guarantees provided by the Guarantors.
8.  This opinion represents our best professional judgment as to the U.S. federal income tax consequences of the transactions described herein based on the authorities cited above. This opinion is not a guarantee of any particular tax result, and there can be no assurance that the IRS will not take a position contrary to the opinions expressed herein or that any such contrary position would not be sustained by a court of competent jurisdiction.
X. Conclusions Summary
Based upon and subject to the foregoing analysis, assumptions, limitations, and qualifications, it is the opinion of Calderwood & Harkness LLP that:
1.  Classification as Indebtedness. The Notes will be treated as indebtedness of VHG, and not as equity of VHG, for U.S. federal income tax purposes.
2.  De Minimis Original Issue discount. The OID on the Notes of $7,500,000 in the aggregate (1.500% of the aggregate principal amount, or $15.00 per $1,000 principal amount) constitutes de minimis OID within the meaning of Section 1273(a)(3) of the Code and Treasury Regulation § 1.1273-1(d). Accordingly, holders of the Notes are not required to include de minimis OID in gross income on a constant-yield basis under Section 1272(a) of the Code. De minimis OID will instead be included in income as capital gain upon payment of principal or upon a sale, exchange, or other taxable disposition of the Notes.
3.  Qualified Stated Interest. The stated interest on the Notes at the rate of 8.250% per annum constitutes qualified stated interest within the meaning of Treasury Regulation § 1.1273-1(c). Such interest is includible in the gross income of holders in accordance with their regular method of accounting and is deductible by VHG as it accrues, subject to the limitations of Section 163(j) of the Code and the other limitations described herein.
4.  Not an Applicable High Yield discount Obligation. The Notes do not constitute applicable high yield discount obligations within the meaning of Section 163(e)(5) of the Code because the yield to maturity of the Notes (approximately 8.52%) does not equal or exceed the sum of the applicable federal rate plus five (5) percentage points (approximately 9.60%). Accordingly, the special rules of Section 163(e)(5) limiting the deductibility of OID and recharacterizing OID as dividends do not apply to the Notes.
5.  Optional Redemption Premiums. The optional redemption premiums provided for in the Indenture do not give rise to additional OID on the Notes. The optional redemption prices are not included in the stated redemption price at maturity for purposes of computing OID because the redemption is at the discretion of VHG (or, in the case of the change of control put, at the discretion of the holders) and is not mandatory.
6.  Additional Interest Under Registration Rights Agreement. Any additional interest that may become payable under the Registration Rights Agreement in the event of a Registration Default would constitute qualified stated interest that is deductible by VHG and includible in income by holders as ordinary interest income in the period to which it relates. The contingent nature of the additional interest does not cause the Notes to be treated as contingent payment debt instruments.
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We trust that the foregoing is responsive to your request. Please do not hesitate to contact the undersigned or any member of our tax group should you have any questions regarding this opinion or require any further assistance.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Sylvia Hartwell
Title: Partner, Tax
One Liberty Plaza, 45th Floor New York, NY 10006
Date: June 25, 2024
Enclosures: As referenced herein
cc:
Theodore Langston, Esq., Calderwood & Harkness LLP Vivienne St. Claire, Esq., Calderwood & Harkness LLP Claire Dempsey, Esq., Calderwood & Harkness LLP Patricia R. Henning, Chief Financial Officer, Verimark Hospitality Group Inc. Marcus J. Delano, Chief Executive Officer, Verimark Hospitality Group Inc.
This opinion letter is furnished pursuant to the terms of the engagement letter between Calderwood & Harkness LLP and Verimark Hospitality Group Inc. and is subject to the terms and conditions thereof, including limitations on liability.

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