1021-00002 · Verimark Hospitality Group · Post-Closing

matter-closing-memo.docx DOCUMENT Capital Markets

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CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006

MEMORANDUM — CONFIDENTIAL / ATTORNEY WORK PRODUCT

July 8, 2024

TO: Theodore Langston, Responsible Partner, Capital Markets Vivienne St. Claire, Billing Partner, Capital Markets

FROM: Claire Dempsey, Lead Associate, Capital Markets

RE: Matter Closing Confirmation — Verimark Hospitality Group Inc. — $500,000,000 8.250% Senior Notes due 2031 (the "Notes")

MATTER NO.: SC-CM-2024-04891

This memorandum constitutes attorney work product and is protected from disclosure by the attorney work product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP personnel identified in the distribution list below. This memorandum is not intended to constitute legal advice to the client and should not be transmitted outside the firm without the prior written consent of the Responsible Partner.

I. Purpose and Summary

The purpose of this memorandum is to confirm that all closing and post-closing deliverables in connection with the offering by Verimark Hospitality Group Inc. ("VHG" or the "Issuer") of $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031 (the "Notes") have been received and completed, and to recommend that the matter be marked as closed and completed in Calderwood & Harkness's matter management system.

The offering of the Notes closed on June 25, 2024 (the "Closing Date"). The post-closing period, during which the engagement team tracked the completion of certain remaining deliverables, including lien release filings, closing binder assembly, and DTC eligibility confirmation, ran from the Closing Date through July 8, 2024. As detailed more fully below, all items tracked during the post-closing period have now been completed and confirmed.

Calderwood & Harkness LLP represented VHG as issuer's counsel throughout the engagement, which was formally opened on April 15, 2024, upon execution of the engagement letter between the firm and VHG. Our scope of engagement encompassed drafting and negotiation of the Indenture, the Purchase Agreement, the Registration Rights Agreement, and related transaction documents, as well as the delivery of customary legal opinions and negative assurance in connection with the offering.

All conditions to closing set forth in Article VII of the Purchase Agreement were satisfied as of the Closing Date. The Notes were issued and delivered to the Initial Purchasers through the facilities of The Depository Trust Company ("DTC") on June 25, 2024. Concurrently with the closing, net proceeds from the offering were applied to repay in full VHG's Existing Credit Facility (as defined below) with Greystone National Bank, N.A. ("Greystone"), as Administrative Agent, and the remaining proceeds were applied to transaction expenses and general corporate purposes, all as described in the Final Offering Memorandum dated June 18, 2024.

No issues arose during the closing or post-closing periods that required deviation from the anticipated transaction structure or timeline, and no waivers or amendments to any transaction document were required at or following closing. Accordingly, the matter is now appropriate for closure.

II. Transaction Summary

Set forth below is a summary of the key terms and participants in the transaction.

Issuer: Verimark Hospitality Group Inc., a Delaware corporation publicly traded on the Nasdaq Global Select Market under the ticker symbol "VMRK." VHG is headquartered at 2400 Brickell Bay Drive, Suite 3100, Miami, Florida 33129. The Issuer's Employer Identification Number is 84-3291057, and its SEC Central Index Key is CIK 0001847293.

Securities Offered: $500,000,000 aggregate principal amount of 8.250% Senior Notes due July 1, 2031. The Notes were offered in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers, and pursuant to Regulation S under the Securities Act to non-U.S. persons in offshore transactions.

CUSIP and ISIN Numbers:

Issue Price: 98.500% of par value, resulting in gross proceeds to the Issuer of $492,500,000. The original issue discount ("OID") was 1.500%, equating to $7,500,000 in aggregate.

Initial Purchasers' discount: 1.750% of the aggregate principal amount, equating to $8,750,000.

Net Proceeds to Issuer: $483,750,000 (gross proceeds of $492,500,000 less the Initial Purchasers' discount of $8,750,000).

Coupon and Interest Payment Dates: The Notes bear interest at a rate of 8.250% per annum, payable semi-annually in arrears on January 1 and July 1 of each year. Interest on the Notes began accruing on July 1, 2024 (the first interest accrual date). The first interest payment date is January 1, 2025.

Trustee / Registrar / Paying Agent / Transfer Agent: Fidelitas Trust Company, N.A., 100 Wall Street, Suite 1500, New York, New York 10005. The primary contact for purposes of trustee administration is Rebecca A. Marsden, Vice President, Corporate Trust Administration. The Trustee Account Number is 7841-0293-551.

Guarantors: The Notes are jointly and severally guaranteed on a senior unsecured basis by the following wholly-owned subsidiaries of VHG (collectively, the "Guarantors"):

1. Verimark Resort Holdings LLC, a Delaware limited liability company

2. VHG Properties Inc., a Delaware corporation

3. Bayshore Hotel Management LLC, a Florida limited liability company

4. Verimark Capital Holdings LLC, a Delaware limited liability company

5. Pinnacle Lodging Enterprises Inc., a Delaware corporation

Initial Purchasers:

• Kensington Barrow & Co. — Lead Left Bookrunner and Representative of the Initial Purchasers (the "Representative")

• Ridgeline Capital Markets LLC — Joint Bookrunner

• Stonebridge Marvelo Securities Inc. — Co-Manager

Initial Purchasers' Counsel: Whitfield, Crane & Aldrich LLP, represented by Nathaniel R. Bosch and Megan E. Hartsfield.

Use of Proceeds: The net proceeds of $483,750,000 were applied as follows:

Credit Ratings: The Notes received the following credit ratings, each with a stable outlook, on May 28, 2024:

• Crestline Ratings Group: B1 (stable outlook)

• Broadmark Rating Services Inc.: B+ (stable outlook)

Governing Law: The Indenture, the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement are each governed by the laws of the State of New York.

III. Key Transaction Timeline — Confirmed Dates

The following table sets forth the key milestones of the transaction and confirms the completion status of each. All dates and milestones were achieved in accordance with the originally anticipated timeline, and no material delays were encountered during the course of the engagement.

IV. Confirmation of Closing Deliverables

This Section IV provides a detailed confirmation that all closing deliverables required under the Purchase Agreement and customary market practice have been received, reviewed, and placed on file. Each category of deliverables is addressed separately below.

A. Issuer Deliverables — All Received and Confirmed

All deliverables required from the Issuer and the Guarantors under Article VII of the Purchase Agreement and the related closing checklist have been received in final, executed form and are on file with the firm.

1. Officer's Certificate. An Officer's Certificate dated June 25, 2024, was executed by Patricia R. Henning, Chief Financial Officer of VHG, and David K. Moretti, Senior Vice President, General Counsel and Secretary of VHG. The Officer's Certificate certifies, among other things, that (a) the representations and warranties of the Issuer and the Guarantors set forth in the Purchase Agreement are true and correct as of the Closing Date, (b) no Material Adverse Effect (as defined in the Purchase Agreement) has occurred since the date of the Final Offering Memorandum, and (c) all conditions to closing set forth in Article VII of the Purchase Agreement have been satisfied.

2. Secretary's Certificate. A Secretary's Certificate dated June 25, 2024, was executed by David K. Moretti in his capacity as Secretary of VHG. The Secretary's Certificate attaches certified copies of the following organizational documents and authorizations: (a) VHG's Amended and Restated Certificate of Incorporation (as most recently amended on November 12, 2022), (b) VHG's Amended and Restated Bylaws (as most recently amended on March 8, 2023), (c) resolutions of the Board of Directors of VHG adopted on June 14, 2024 authorizing the transaction, and (d) an incumbency certificate setting forth the names, titles, and specimen signatures of the officers of VHG authorized to execute and deliver the transaction documents.

3. Board Resolutions of VHG. Resolutions of the Board of Directors of VHG were adopted on June 14, 2024, at a meeting duly called and held, chaired by Eleanor M. Vasquez, Chairperson of the Board. The Board Resolutions authorize, among other things, the issuance and sale of the Notes, and the execution, delivery, and performance by VHG of the Indenture, the Purchase Agreement, the Registration Rights Agreement, the Escrow Agreement, and all related documents and instruments.

4. Good Standing Certificates. Good standing certificates (or certificates of status, as applicable) were received for VHG and each of the five Guarantors from the Delaware Secretary of State and, where applicable, the Florida Department of State, Division of Corporations. All certificates were dated June 20, 2024, confirming that each entity was in good standing in its jurisdiction of formation as of such date.

5. Board/Manager Resolutions of Each Guarantor Subsidiary. Resolutions of the board of directors or managing members, as applicable, of each of the five Guarantor subsidiaries were adopted on June 14, 2024, authorizing the execution and delivery of the Indenture (including the subsidiary guarantee provisions set forth in Article 10 thereof), the Purchase Agreement, the Registration Rights Agreement, and related transaction documents by such Guarantor. The following Guarantor entities adopted resolutions:

• Verimark Resort Holdings LLC (by action of its sole member, VHG)

• VHG Properties Inc. (by unanimous written consent of its board of directors)

• Bayshore Hotel Management LLC (by action of its sole member, Verimark Resort Holdings LLC)

• Verimark Capital Holdings LLC (by action of its sole member, VHG)

• Pinnacle Lodging Enterprises Inc. (by unanimous written consent of its board of directors)

6. Guarantor Joinder Agreements. Each of the five subsidiary Guarantors executed a Guarantor Joinder Agreement dated June 25, 2024, pursuant to which it formally joined as a party to the Indenture and assumed obligations under the subsidiary guarantee provisions of Article 10. Fully executed counterparts of each Guarantor Joinder Agreement are on file.

7. DTC Letter of Representations. A Letter of Representations dated June 25, 2024, was executed by VHG and Fidelitas Trust Company, N.A. (as Trustee) and delivered to The Depository Trust Company in connection with the eligibility of the Notes for book-entry settlement through DTC's facilities. The executed letter is on file.

B. Transaction Documents — All Executed and Delivered

Each of the principal transaction documents was executed and delivered by the applicable parties on the dates indicated below. Fully executed counterparts of each document have been received and are on file with the firm.

1. Indenture. The Indenture, dated as of June 25, 2024, was entered into among VHG, as Issuer, the Guarantors party thereto, and Fidelitas Trust Company, N.A., as Trustee. The Indenture governs the terms of the 8.250% Senior Notes due 2031. Key terms of the Indenture include the following:

• Incurrence-Based Covenants: The Indenture contains incurrence-based financial covenants, including (a) a Fixed Charge Coverage Ratio ("FCCR") test requiring a minimum ratio of 2.00 to 1.00 as a condition to incurrence of additional indebtedness, (b) a restricted payments basket permitting aggregate restricted payments equal to $50,000,000 plus 50% of Consolidated Net Income ("CNI") from the issue date, (c) a permitted indebtedness basket of $75,000,000, and (d) a permitted liens basket of $50,000,000.

• Asset Sale Covenant: Proceeds from asset sales are subject to a 365-day reinvestment period, failing which the Issuer is required to make an offer to repurchase Notes at 100% of par plus accrued interest.

• Optional Redemption Schedule: The Notes are redeemable at the option of the Issuer at the following redemption prices (expressed as a percentage of principal amount, plus accrued and unpaid interest): (i) on or after July 1, 2027 — 104.125%; (ii) on or after July 1, 2028 — 102.063%; (iii) on or after July 1, 2029 — 100.000%.

• Equity Clawback: Prior to July 1, 2027, the Issuer may redeem up to 40% of the aggregate principal amount of the Notes with the net cash proceeds of one or more equity offerings at a redemption price of 108.250% of par plus accrued and unpaid interest, subject to not less than 60% of the original aggregate principal amount remaining outstanding after such redemption.

• Change of Control: Upon the occurrence of a Change of Control (as defined in the Indenture), the Issuer is required to offer to repurchase the Notes at 101.000% of par plus accrued and unpaid interest.

2. Form of Global Note (144A). The Form of 144A Global Note, constituting Exhibit A-1 to the Indenture, bears CUSIP 923847 AA 5 and is registered in the name of Cede & Co. as nominee of DTC. The 144A Global Note was authenticated by the Trustee and delivered to DTC on the Closing Date.

3. Form of Global Note (Regulation S). The Form of Regulation S Global Note, constituting Exhibit A-2 to the Indenture, bears CUSIP U92384 AA 8 and is registered in the name of Cede & Co. as nominee of DTC. The Regulation S Global Note was authenticated by the Trustee and delivered to DTC on the Closing Date.

4. Purchase Agreement. The Purchase Agreement, dated as of June 18, 2024, was executed among VHG, the Guarantors, and Kensington Barrow & Co. (acting as Representative of the Initial Purchasers). The execution version of the Purchase Agreement reflects the final negotiated changes from the near-final draft circulated on June 14, 2024. The Purchase Agreement sets forth the terms and conditions of the purchase of the Notes by the Initial Purchasers, including representations and warranties of the Issuer and the Guarantors, conditions to closing, indemnification provisions, and the obligation of the Initial Purchasers to purchase the Notes at the issue price of 98.500% of par.

5. Registration Rights Agreement. The Registration Rights Agreement, dated as of June 25, 2024, was entered into among VHG, the Guarantors, and the Initial Purchasers. The Registration Rights Agreement obligates VHG to undertake the following:

• Registration Statement Filing Deadline: File a registration statement on Form S-4 with the SEC covering an offer to exchange the Notes for a new series of registered notes having substantially identical terms within 180 days following the Closing Date (i.e., by January 4, 2025).

• Exchange Offer Effectiveness Deadline: Cause the registration statement to be declared effective and consummate the exchange offer within 365 days following the Closing Date (i.e., by July 8, 2025).

• Additional Interest: If VHG fails to comply with either deadline, additional interest accrues on the Notes at the rate of 0.25% per annum for the first 90 days of non-compliance, increasing to 0.50% per annum thereafter, up to a maximum aggregate additional interest rate of 1.00% per annum.

6. Escrow Agreement. The Escrow Agreement, dated as of June 18, 2024, was entered into among VHG, Kensington Barrow & Co. (as Representative of the Initial Purchasers), and Fidelitas Trust Company, N.A. (as Escrow Agent). The Escrow Account established pursuant to the Escrow Agreement is identified as Escrow Account No. 7841-0293-551 at Fidelitas Trust. The gross proceeds of $492,500,000 were deposited into the Escrow Account and released upon satisfaction of all closing conditions on June 25, 2024.

7. Subsidiary Guarantee. The subsidiary guarantee obligations of the Guarantors are incorporated in Article 10 of the Indenture and were effective as of the Closing Date. Each of the five Guarantors has jointly and severally guaranteed, on a senior unsecured basis, the full and prompt payment and performance by VHG of all of its obligations under the Notes and the Indenture. The Guarantor Joinder Agreements described in Section IV.A.6 above confirmed each Guarantor's accession to these obligations.

C. Opinions and Negative Assurance — All Delivered

All legal opinions and the negative assurance letter required under the Purchase Agreement and customary market practice were timely delivered at closing and are on file.

1. Legal Opinion of Calderwood & Harkness LLP (Issuer's Counsel). A legal opinion dated June 25, 2024, was delivered by Calderwood & Harkness LLP and addressed to the Initial Purchasers and Fidelitas Trust Company, N.A. (as Trustee). The opinion covers, among other matters, the following:

(a) due organization, valid existence, and good standing of VHG and each of the Guarantors in their respective jurisdictions of formation;

(b) due authorization of the offering of the Notes and the execution, delivery, and performance of the Indenture, the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement by VHG and the Guarantors;

(c) enforceability of the Indenture, the Notes, and the subsidiary guarantees against VHG and the Guarantors, respectively, in accordance with their terms, subject to customary bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity;

(d) the execution and delivery of the transaction documents, and the issuance of the Notes and the subsidiary guarantees, do not conflict with or result in a violation of VHG's or any Guarantor's organizational documents, applicable law, or certain specified agreements;

(e) no registration of the Notes under the Securities Act is required for the offer and sale of the Notes in the manner described in the Final Offering Memorandum, assuming the accuracy of the Initial Purchasers' representations set forth in the Purchase Agreement; and

(f) VHG is not, and after giving effect to the offering and the application of the net proceeds therefrom will not be, required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

2. Tax Opinion of Calderwood & Harkness LLP. A tax opinion dated June 25, 2024, was prepared by Sylvia Hartwell of Calderwood & Harkness LLP and addressed to VHG. The tax opinion covers, among other matters, the U.S. federal income tax treatment of the Notes, including the following:

(a) the characterization of the Notes as debt instruments for U.S. federal income tax purposes;

(b) the treatment of the OID of $7,500,000 (1.500% of par) under Sections 1271 through 1275 of the Internal Revenue Code of 1986, as amended (the "Code"), including the accrual and inclusion of OID in holders' gross income;

(d) confirmation that the Notes do not constitute "applicable high yield discount obligations" (AHYDOs) within the meaning of Section 163(e)(5) of the Code, and accordingly the deductibility of interest and OID on the Notes is not limited by the AHYDO provisions.

3. 10b-5 Negative Assurance Letter. A 10b-5 negative assurance letter dated June 25, 2024, was delivered by Calderwood & Harkness LLP and addressed to Kensington Barrow & Co. (as Representative of the Initial Purchasers). The letter relates to the Final Offering Memorandum dated June 18, 2024, and provides that, based on our participation in the preparation of the Offering Memorandum and our participation in conferences with officers and other representatives of the Issuer, counsel for the Issuer, representatives of the Independent Registered Public Accounting Firm, and counsel for the Initial Purchasers, nothing came to our attention that caused us to believe that the Final Offering Memorandum (other than the financial statements and other financial and statistical data contained therein, as to which we express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

D. Initial Purchaser Deliverables

1. Closing Certificate of the Initial Purchasers. A Closing Certificate dated June 25, 2024, was executed by Kensington Barrow & Co. in its capacity as Representative of the Initial Purchasers. The Closing Certificate confirms, among other things, that the Initial Purchasers have duly performed all of their obligations under the Purchase Agreement required to be performed on or prior to the Closing Date. The executed certificate has been received and is on file.

E. Third-Party Deliverables

1. Comfort Letter from Palladian & Howe LLP. A comfort letter dated June 25, 2024, was issued by Palladian & Howe LLP, VHG's independent registered public accounting firm, to the Initial Purchasers. The comfort letter was prepared by Kenneth W. Sturgis, Engagement Partner, and delivered in final form at closing. As the comfort letter was addressed to the Initial Purchasers and relates to work performed by Palladian & Howe LLP in its capacity as the Issuer's independent auditors, the substance of the comfort letter is out of scope for our work product. However, we confirm that receipt of the comfort letter in final form was verified at closing, consistent with the requirements of the Purchase Agreement, and a copy is on file for reference purposes.

2. Rating Agency Letters. Confirmation letters from each of the rating agencies were received and placed on file:

• Crestline Ratings Group — confirming the assignment of a B1 rating with a stable outlook to the Notes; and

• Broadmark Rating Services Inc. — confirming the assignment of a B+ rating with a stable outlook to the Notes.

Both rating agency letters are dated on or about the date of the respective rating decisions (May 28, 2024) and were delivered to the Initial Purchasers and the Issuer in accordance with the requirements of the Purchase Agreement.

V. Confirmation of Payoff and Lien Release — Existing Credit Facility

As described in the Final Offering Memorandum and the Purchase Agreement, a primary use of proceeds from the offering was the full repayment and termination of VHG's existing senior secured credit facility with Greystone National Bank, N.A. This Section V confirms that all payoff, lien release, and termination actions have been completed and documented.

Facility Refinanced: Amended and Restated Credit Agreement, dated as of March 15, 2021 (as amended from time to time prior to its termination), among VHG, as Borrower, the lenders party thereto from time to time, and Greystone National Bank, N.A., as Administrative Agent and Collateral Agent (the "Existing Credit Facility"). The Existing Credit Facility bore the internal loan number GNB-SYN-2021-04417 at Greystone.

Original Principal Commitments under the Existing Credit Facility:

• Term Loan A: $300,000,000

• Term Loan B: $200,000,000

• Revolving Credit Facility: $150,000,000 (commitment only; no amounts were drawn and outstanding at the time of refinancing)

Outstanding Principal as of April 1, 2024:

• Term Loan A: $280,142,819.16

• Term Loan B: $187,200,000.00

• Total outstanding principal: $467,342,819.16

Payoff Executed on June 25, 2024: The following amounts were paid to Greystone National Bank, N.A. on the Closing Date in accordance with the Payoff Letter:

Payoff Letter: The payoff letter was finalized on June 21, 2024, and was issued by Greystone National Bank, N.A. (Thomas P. Quirk, Senior Vice President, Syndicated Lending) to VHG, setting forth the aggregate amounts necessary to repay the Existing Credit Facility in full and confirming Greystone's commitment to release all liens upon receipt of such amounts. Wire transfer of the total payoff amount was initiated by VHG on the Closing Date and was confirmed received by Greystone on June 25, 2024. Wire confirmation has been received and is on file.

Lien Release and Termination Request Letter: A formal Lien Release and Termination Request Letter was sent by VHG (David K. Moretti, General Counsel and Secretary) to Greystone National Bank, N.A. (Thomas P. Quirk, SVP) on June 24, 2024, requesting that Greystone execute and deliver all UCC-3 termination statements, mortgage releases, and other documents necessary to release all liens securing the Existing Credit Facility.

Notice of Termination of Existing Credit Agreement: A Notice of Termination was sent by VHG to Greystone National Bank, N.A. on June 25, 2024, formally terminating the Existing Credit Agreement and all commitments thereunder.

UCC-3 Termination Statements: UCC-3 financing statement amendments (termination statements) were filed in all applicable jurisdictions to terminate all UCC-1 financing statements covering security interests granted by VHG, the Guarantors, and their subsidiaries in favor of Greystone National Bank, N.A. (as Collateral Agent) and the syndicate lenders. The syndicate lenders under the Existing Credit Facility included: (i) Greystone National Bank, N.A., (ii) Harborview Lending Group, (iii) Cascade Federal Bank, and (iv) Meriden Commercial Finance LLC. Stamped filed copies of all UCC-3 termination statements were received as of July 8, 2024 and are on file.

Mortgage and Deed of Trust Releases: Release documents for all hotel properties held by VHG Properties Inc. (a total of 32 fee-simple interests across multiple states) were prepared, executed by Greystone National Bank, N.A. (as Collateral Agent), and submitted for recording in the applicable county recording offices. As of July 8, 2024, all mortgage and deed of trust release documents have been confirmed as recorded, and recorded copies have been received and placed on file. The engagement team reviewed each recorded release to confirm that it accurately identifies the applicable mortgage or deed of trust being released, the correct property description, and the recording information.

Existing Revolving Facility: The existing revolving credit facility under the Existing Credit Agreement, with a commitment of $150,000,000, was previously undrawn. No amounts were outstanding under the revolving facility at the time of refinancing. The revolving facility commitment was terminated concurrently with the repayment of the term loans on June 25, 2024.

VI. Funds Flow — Confirmed Execution

The flow of funds on the Closing Date was governed by the Funds Flow Memorandum prepared by Calderwood & Harkness LLP and dated June 24, 2024, which was circulated to VHG, the Initial Purchasers, Greystone, and the Trustee in advance of closing. All wire transfers were executed on June 25, 2024 in accordance with the Funds Flow Memorandum, and wire confirmations for each transfer have been received and are on file.

The following table sets forth the sequential flow of funds on the Closing Date:

The total gross proceeds of $492,500,000 were equal to the sum of the Initial Purchasers' discount ($8,750,000) and the net proceeds deployed ($483,750,000). All amounts were confirmed to have been received by the intended recipients on the Closing Date. No discrepancies or errors were identified in the funds flow process.

All wire transfer confirmations have been collected and are maintained in the firm's files for this matter.

VII. Post-Closing Items — Status

A. Items Tracked Per Post-Closing Checklist Memorandum (dated July 1, 2024)

Following the Closing Date, certain post-closing items remained outstanding and were tracked by the engagement team pursuant to the Post-Closing Checklist Memorandum prepared by Claire Dempsey and dated July 1, 2024. The status of each item as of July 8, 2024 is set forth below:

All items on the Post-Closing Checklist Memorandum have been completed. No items remain outstanding.

B. Post-Closing Letter to Client

A post-closing letter dated July 5, 2024 was sent from Theodore Langston, Responsible Partner, to David K. Moretti, Senior Vice President, General Counsel and Secretary of VHG, confirming the successful closing of the offering and summarizing VHG's ongoing obligations under the transaction documents. The post-closing letter addressed the following topics:

• Indenture Covenants: A summary of VHG's ongoing obligations under the Indenture, including incurrence-based financial tests, restricted payment limitations, limitations on additional indebtedness and liens, asset sale covenant, and periodic financial reporting obligations to the Trustee.

• Registration Rights Agreement Deadlines: A reminder that VHG is required to file a registration statement on Form S-4 with the SEC by January 4, 2025 (180 days post-closing) and to cause such registration statement to be declared effective and consummate the exchange offer by July 8, 2025 (365 days post-closing), and that failure to comply with either deadline will result in additional interest accruing on the Notes.

• Interest Payment Schedule: Confirmation that the first semi-annual interest payment of $20,625,000 is due on January 1, 2025, and that subsequent interest payments will be due on July 1 and January 1 of each year during the term of the Notes.

The physical closing binder was enclosed with the post-closing letter and delivered to VHG via courier. Receipt by VHG has been confirmed.

VIII. Closing Binder Assembly

The master closing binder was assembled by Audrey Zhou, Working Associate, under the supervision of Claire Dempsey, Lead Associate. The Closing Index, dated July 2, 2024, lists all executed transaction documents and ancillary materials organized by tab number. The closing binder contains fully executed counterpart signature pages for the following documents:

• Indenture (including exhibits)

• Purchase Agreement

• Registration Rights Agreement

• Escrow Agreement

• Guarantor Joinder Agreements (five separate agreements, one for each Guarantor)

• Officer's Certificate

• Secretary's Certificate (including attachments)

• All ancillary certificates, opinions, letters, and documents delivered at closing

Distribution of the closing binder was as follows:

1. One original set was delivered to VHG (attention: David K. Moretti, Senior Vice President, General Counsel and Secretary) via the post-closing letter dated July 5, 2024 described in Section VII.B above. Delivery has been confirmed.

2. One original set has been retained in the Calderwood & Harkness LLP physical files for Matter No. SC-CM-2024-04891.

3. Electronic copies of all closing binder materials, including PDF scans of all executed documents and signature pages, have been uploaded to the firm's document management system and are accessible under the matter number referenced above.

IX. Outstanding / Forward-Looking Obligations (For Client Awareness; Not C&H Action Items)

The following items represent VHG's ongoing obligations under the transaction documents. These items are noted here for completeness and for reference in the event that VHG contacts the firm regarding any of these matters in the future. No further Calderwood & Harkness action is required with respect to any of these items unless VHG separately engages the firm for additional services.

Registration Rights Agreement Compliance. VHG is obligated to file a registration statement on Form S-4 with the SEC by January 4, 2025 (180 days following the Closing Date). VHG must cause such registration statement to be declared effective and consummate the exchange offer by July 8, 2025 (365 days following the Closing Date). Failure to comply with either deadline triggers additional interest on the Notes at the rate of 0.25% per annum for the first 90 days of non-compliance, increasing to 0.50% per annum thereafter, subject to a maximum aggregate additional interest rate of 1.00% per annum. VHG's in-house legal team and its securities counsel should calendar these deadlines and begin preparation of the exchange offer registration statement well in advance of the filing deadline.

Semi-Annual Interest Payments. Interest on the Notes accrues at 8.250% per annum and is payable semi-annually on January 1 and July 1 of each year. The semi-annual interest payment amount is $20,625,000 (calculated as $500,000,000 × 8.250% ÷ 2). The first interest payment is due on January 1, 2025 and will cover the period from July 1, 2024 (the first interest accrual date) through December 31, 2024. Interest payments are to be made through the Trustee in accordance with the procedures set forth in the Indenture.

Indenture Reporting and Covenant Compliance. VHG is required to furnish quarterly and annual financial reports to the Trustee in accordance with the reporting covenants of the Indenture. Additionally, VHG must comply with the incurrence-based covenants of the Indenture, including the FCCR test, restricted payments limitations, permitted indebtedness and permitted liens baskets, and asset sale provisions, each time it proposes to incur additional indebtedness, make restricted payments, or consummate asset dispositions.

Optional Redemption Windows. The Notes are not callable prior to July 1, 2027, except pursuant to the equity clawback provision (up to 40% of the original aggregate principal amount at 108.250% with net cash proceeds of equity offerings). Beginning July 1, 2027, VHG may redeem the Notes at the following redemption prices: 104.125% on or after July 1, 2027; 102.063% on or after July 1, 2028; and 100.000% on or after July 1, 2029. VHG should be aware of these windows in connection with any future refinancing or capital structure optimization initiatives.

X. Engagement Team and Billing

The Calderwood & Harkness LLP engagement team for this matter was as follows:

Final billing for this matter should be coordinated with Vivienne St. Claire. All time entries for work performed through July 8, 2024 should be submitted promptly so that a final invoice can be prepared and delivered to the client. All engagement team members are reminded to finalize their time entries and submit any outstanding expense reports for the matter without delay.

The following third-party service providers were retained by VHG or the Initial Purchasers in connection with the transaction and are noted here for reference purposes:

• Independent Registered Public Accounting Firm: Palladian & Howe LLP (Kenneth W. Sturgis, Engagement Partner), 200 South Biscayne Boulevard, Suite 2600, Miami, Florida 33131.

• Printing / EDGAR Filing Agent: Meridian Document Services Inc., 44 Wall Street, 12th Floor, New York, New York 10005.

• D&O Insurance Carrier for VHG: Atlantic Indemnity Insurance Co., Policy No. DOP-2024-881437.

XI. Recommendation

Based on the foregoing, I confirm the following:

1. All closing deliverables required under the Purchase Agreement and customary market practice have been received, reviewed, and are complete. Each item identified in the closing checklist has been accounted for and placed on file.

2. All post-closing items, including UCC-3 termination statement filings and receipt of stamped copies, mortgage and deed of trust release recordings and receipt of recorded copies, DTC FAST eligibility confirmation for both the 144A and Regulation S global notes, and closing binder assembly and delivery, have been completed and confirmed as of July 8, 2024.

3. No outstanding Calderwood & Harkness LLP action items remain with respect to this engagement. All work contemplated under the engagement letter has been completed.

Recommendation: This matter (Matter No. SC-CM-2024-04891) should be marked as closed and completed in Calderwood & Harkness LLP's matter management system, effective as of July 8, 2024.

XII. Prepared By

CALDERWOOD & HARKNESS LLP

By: ________

Name: Claire Dempsey

Title: Lead Associate, Capital Markets

Date: July 8, 2024

Calderwood & Harkness LLP One Liberty Plaza, 45th Floor New York, NY 10006

XIII. Distribution List

CONFIDENTIAL — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP	One Liberty Plaza, 45th Floor	New York, NY 10006 This document is intended solely for internal use and is protected by the attorney work product doctrine.
CUSIP	ISIN
144A Global Note	923847 AA 5	US923847AA52
Regulation S Global Note	U92384 AA 8	USU92384AA83
Use	Amount
Repayment of Existing Credit Facility — principal	$467,342,819.16
Repayment of Existing Credit Facility — accrued interest	$4,207,180.84
Prepayment premium on Existing Credit Facility	$2,336,714.10
Transaction fees and expenses (legal, trustee, rating agencies, printing, and miscellaneous)	$6,863,285.90
General corporate purposes	$3,000,000.00
Total	$483,750,000.00
Date	Milestone	Status
April 15, 2024	Engagement of Calderwood & Harkness LLP as Issuer's counsel; execution of engagement letter	Completed
May 3, 2024	Initial drafts of Purchase Agreement and Indenture circulated to Initial Purchasers' counsel and VHG management	Completed
May 14–15, 2024	Rating agency presentations to Crestline Ratings Group and Broadmark Rating Services Inc. conducted by VHG management team	Completed
May 28, 2024	Credit ratings received from Crestline (B1, stable) and Broadmark (B+, stable)	Completed
June 3, 2024	Preliminary Offering Memorandum distributed to prospective investors via the Initial Purchasers	Completed
June 10–14, 2024	Investor roadshow conducted in New York, Boston, Chicago, San Francisco, and London	Completed
June 17, 2024	Pricing of the Notes; Pricing Term Sheet distributed to prospective investors	Completed
June 18, 2024	Purchase Agreement executed (Signing Date); Final Offering Memorandum dated and distributed	Completed
June 25, 2024	Closing — Notes issued and delivered via DTC; Existing Credit Facility repaid in full; proceeds disbursed per Funds Flow Memorandum	Completed
July 1, 2024	First interest accrual date under the Indenture	N/A (automatic)
July 2, 2024	Closing index and signature pages compiled by engagement team	Completed
July 8, 2024	All post-closing items confirmed completed; matter recommended for closure	Completed
Component	Amount

Principal	$467,342,819.16
Accrued interest (estimated through closing date)	$4,207,180.84
Prepayment premium (0.50% of outstanding principal)	$2,336,714.10
Total payoff amount	$473,886,714.10
Step	Description	Amount	Recipient
1	Initial Purchasers fund Escrow Account at Fidelitas Trust Company, N.A. with gross proceeds	$492,500,000.00	Fidelitas Trust Company, N.A. (Escrow Acct No. 7841-0293-551)
2	Release from escrow upon satisfaction of all closing conditions under the Purchase Agreement and the Escrow Agreement	$492,500,000.00	Released per Escrow Agreement
3	Initial Purchasers' discount retained by Initial Purchasers	$8,750,000.00	Kensington Barrow & Co. / Initial Purchasers
4	Existing Credit Facility — principal payoff	$467,342,819.16	Greystone National Bank, N.A.
5	Existing Credit Facility — accrued interest	$4,207,180.84	Greystone National Bank, N.A.
6	Prepayment premium on Existing Credit Facility	$2,336,714.10	Greystone National Bank, N.A.
7	Transaction expenses (legal fees, trustee acceptance fees, rating agency fees, printing costs, and miscellaneous)	$6,863,285.90	Various payees per expense schedule
8	General corporate purposes	$3,000,000.00	VHG operating account
Total net proceeds deployed	$483,750,000.00
Item	Status as of July 8, 2024
UCC-3 termination statements filed in all applicable jurisdictions covering security interests of Greystone and syndicate lenders	Completed — stamped filed copies received for all filings
Mortgage and deed of trust releases recorded in applicable county recording offices for all 32 VHG Properties Inc. hotel assets	Completed — recorded copies received and confirmed
DTC FAST eligibility confirmed for both 144A and Regulation S global notes	Completed — eligibility confirmed by DTC
Compilation and binding of closing binder (physical and electronic)	Completed — physical closing binder delivered to client on July 5, 2024
Closing index and signature pages compilation	Completed — closing index dated July 2, 2024; all signature pages compiled
Role	Name
Responsible Partner	Theodore Langston
Billing Partner	Vivienne St. Claire
Lead Associate	Claire Dempsey
Working Associate	Audrey Zhou

Tax Specialist	Sylvia Hartwell
Recipient	Role	Distribution
Theodore Langston	Responsible Partner, Capital Markets	TO
Vivienne St. Claire	Billing Partner, Capital Markets	TO
Audrey Zhou	Working Associate, Capital Markets	cc
Sylvia Hartwell	Tax Specialist	cc
C&H Matter Files	Matter No. SC-CM-2024-04891	File copy

CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006
MEMORANDUM — CONFIDENTIAL / ATTORNEY WORK PRODUCT
July 8, 2024
TO: Theodore Langston, Responsible Partner, Capital Markets Vivienne St. Claire, Billing Partner, Capital Markets
FROM: Claire Dempsey, Lead Associate, Capital Markets
RE: Matter Closing Confirmation — Verimark Hospitality Group Inc. — $500,000,000 8.250% Senior Notes due 2031 (the "Notes")
MATTER NO.: SC-CM-2024-04891
This memorandum constitutes attorney work product and is protected from disclosure by the attorney work product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP personnel identified in the distribution list below. This memorandum is not intended to constitute legal advice to the client and should not be transmitted outside the firm without the prior written consent of the Responsible Partner.
I. Purpose and Summary
The purpose of this memorandum is to confirm that all closing and post-closing deliverables in connection with the offering by Verimark Hospitality Group Inc. ("VHG" or the "Issuer") of $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031 (the "Notes") have been received and completed, and to recommend that the matter be marked as closed and completed in Calderwood & Harkness's matter management system.
The offering of the Notes closed on June 25, 2024 (the "Closing Date"). The post-closing period, during which the engagement team tracked the completion of certain remaining deliverables, including lien release filings, closing binder assembly, and DTC eligibility confirmation, ran from the Closing Date through July 8, 2024. As detailed more fully below, all items tracked during the post-closing period have now been completed and confirmed.
Calderwood & Harkness LLP represented VHG as issuer's counsel throughout the engagement, which was formally opened on April 15, 2024, upon execution of the engagement letter between the firm and VHG. Our scope of engagement encompassed drafting and negotiation of the Indenture, the Purchase Agreement, the Registration Rights Agreement, and related transaction documents, as well as the delivery of customary legal opinions and negative assurance in connection with the offering.
All conditions to closing set forth in Article VII of the Purchase Agreement were satisfied as of the Closing Date. The Notes were issued and delivered to the Initial Purchasers through the facilities of The Depository Trust Company ("DTC") on June 25, 2024. Concurrently with the closing, net proceeds from the offering were applied to repay in full VHG's Existing Credit Facility (as defined below) with Greystone National Bank, N.A. ("Greystone"), as Administrative Agent, and the remaining proceeds were applied to transaction expenses and general corporate purposes, all as described in the Final Offering Memorandum dated June 18, 2024.
No issues arose during the closing or post-closing periods that required deviation from the anticipated transaction structure or timeline, and no waivers or amendments to any transaction document were required at or following closing. Accordingly, the matter is now appropriate for closure.
II. Transaction Summary
Set forth below is a summary of the key terms and participants in the transaction.
Issuer: Verimark Hospitality Group Inc., a Delaware corporation publicly traded on the Nasdaq Global Select Market under the ticker symbol "VMRK." VHG is headquartered at 2400 Brickell Bay Drive, Suite 3100, Miami, Florida 33129. The Issuer's Employer Identification Number is 84-3291057, and its SEC Central Index Key is CIK 0001847293.
Securities Offered: $500,000,000 aggregate principal amount of 8.250% Senior Notes due July 1, 2031. The Notes were offered in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers, and pursuant to Regulation S under the Securities Act to non-U.S. persons in offshore transactions.
CUSIP and ISIN Numbers:
Issue Price: 98.500% of par value, resulting in gross proceeds to the Issuer of $492,500,000. The original issue discount ("OID") was 1.500%, equating to $7,500,000 in aggregate.
Initial Purchasers' discount: 1.750% of the aggregate principal amount, equating to $8,750,000.
Net Proceeds to Issuer: $483,750,000 (gross proceeds of $492,500,000 less the Initial Purchasers' discount of $8,750,000).
Coupon and Interest Payment Dates: The Notes bear interest at a rate of 8.250% per annum, payable semi-annually in arrears on January 1 and July 1 of each year. Interest on the Notes began accruing on July 1, 2024 (the first interest accrual date). The first interest payment date is January 1, 2025.
Trustee / Registrar / Paying Agent / Transfer Agent: Fidelitas Trust Company, N.A., 100 Wall Street, Suite 1500, New York, New York 10005. The primary contact for purposes of trustee administration is Rebecca A. Marsden, Vice President, Corporate Trust Administration. The Trustee Account Number is 7841-0293-551.
Guarantors: The Notes are jointly and severally guaranteed on a senior unsecured basis by the following wholly-owned subsidiaries of VHG (collectively, the "Guarantors"):
1.  Verimark Resort Holdings LLC, a Delaware limited liability company
2.  VHG Properties Inc., a Delaware corporation
3.  Bayshore Hotel Management LLC, a Florida limited liability company
4.  Verimark Capital Holdings LLC, a Delaware limited liability company
5.  Pinnacle Lodging Enterprises Inc., a Delaware corporation
Initial Purchasers:
•  Kensington Barrow & Co. — Lead Left Bookrunner and Representative of the Initial Purchasers (the "Representative")
•  Ridgeline Capital Markets LLC — Joint Bookrunner
•  Stonebridge Marvelo Securities Inc. — Co-Manager
Initial Purchasers' Counsel: Whitfield, Crane & Aldrich LLP, represented by Nathaniel R. Bosch and Megan E. Hartsfield.
Use of Proceeds: The net proceeds of $483,750,000 were applied as follows:
Credit Ratings: The Notes received the following credit ratings, each with a stable outlook, on May 28, 2024:
•  Crestline Ratings Group: B1 (stable outlook)
•  Broadmark Rating Services Inc.: B+ (stable outlook)
Governing Law: The Indenture, the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement are each governed by the laws of the State of New York.
III. Key Transaction Timeline — Confirmed Dates
The following table sets forth the key milestones of the transaction and confirms the completion status of each. All dates and milestones were achieved in accordance with the originally anticipated timeline, and no material delays were encountered during the course of the engagement.
IV. Confirmation of Closing Deliverables
This Section IV provides a detailed confirmation that all closing deliverables required under the Purchase Agreement and customary market practice have been received, reviewed, and placed on file. Each category of deliverables is addressed separately below.
A. Issuer Deliverables — All Received and Confirmed
All deliverables required from the Issuer and the Guarantors under Article VII of the Purchase Agreement and the related closing checklist have been received in final, executed form and are on file with the firm.
1. Officer's Certificate. An Officer's Certificate dated June 25, 2024, was executed by Patricia R. Henning, Chief Financial Officer of VHG, and David K. Moretti, Senior Vice President, General Counsel and Secretary of VHG. The Officer's Certificate certifies, among other things, that (a) the representations and warranties of the Issuer and the Guarantors set forth in the Purchase Agreement are true and correct as of the Closing Date, (b) no Material Adverse Effect (as defined in the Purchase Agreement) has occurred since the date of the Final Offering Memorandum, and (c) all conditions to closing set forth in Article VII of the Purchase Agreement have been satisfied.
2. Secretary's Certificate. A Secretary's Certificate dated June 25, 2024, was executed by David K. Moretti in his capacity as Secretary of VHG. The Secretary's Certificate attaches certified copies of the following organizational documents and authorizations: (a) VHG's Amended and Restated Certificate of Incorporation (as most recently amended on November 12, 2022), (b) VHG's Amended and Restated Bylaws (as most recently amended on March 8, 2023), (c) resolutions of the Board of Directors of VHG adopted on June 14, 2024 authorizing the transaction, and (d) an incumbency certificate setting forth the names, titles, and specimen signatures of the officers of VHG authorized to execute and deliver the transaction documents.
3. Board Resolutions of VHG. Resolutions of the Board of Directors of VHG were adopted on June 14, 2024, at a meeting duly called and held, chaired by Eleanor M. Vasquez, Chairperson of the Board. The Board Resolutions authorize, among other things, the issuance and sale of the Notes, and the execution, delivery, and performance by VHG of the Indenture, the Purchase Agreement, the Registration Rights Agreement, the Escrow Agreement, and all related documents and instruments.
4. Good Standing Certificates. Good standing certificates (or certificates of status, as applicable) were received for VHG and each of the five Guarantors from the Delaware Secretary of State and, where applicable, the Florida Department of State, Division of Corporations. All certificates were dated June 20, 2024, confirming that each entity was in good standing in its jurisdiction of formation as of such date.
5. Board/Manager Resolutions of Each Guarantor Subsidiary. Resolutions of the board of directors or managing members, as applicable, of each of the five Guarantor subsidiaries were adopted on June 14, 2024, authorizing the execution and delivery of the Indenture (including the subsidiary guarantee provisions set forth in Article 10 thereof), the Purchase Agreement, the Registration Rights Agreement, and related transaction documents by such Guarantor. The following Guarantor entities adopted resolutions:
•  Verimark Resort Holdings LLC (by action of its sole member, VHG)
•  VHG Properties Inc. (by unanimous written consent of its board of directors)
•  Bayshore Hotel Management LLC (by action of its sole member, Verimark Resort Holdings LLC)
•  Verimark Capital Holdings LLC (by action of its sole member, VHG)
•  Pinnacle Lodging Enterprises Inc. (by unanimous written consent of its board of directors)
6. Guarantor Joinder Agreements. Each of the five subsidiary Guarantors executed a Guarantor Joinder Agreement dated June 25, 2024, pursuant to which it formally joined as a party to the Indenture and assumed obligations under the subsidiary guarantee provisions of Article 10. Fully executed counterparts of each Guarantor Joinder Agreement are on file.
7. DTC Letter of Representations. A Letter of Representations dated June 25, 2024, was executed by VHG and Fidelitas Trust Company, N.A. (as Trustee) and delivered to The Depository Trust Company in connection with the eligibility of the Notes for book-entry settlement through DTC's facilities. The executed letter is on file.
B. Transaction Documents — All Executed and Delivered
Each of the principal transaction documents was executed and delivered by the applicable parties on the dates indicated below. Fully executed counterparts of each document have been received and are on file with the firm.
1. Indenture. The Indenture, dated as of June 25, 2024, was entered into among VHG, as Issuer, the Guarantors party thereto, and Fidelitas Trust Company, N.A., as Trustee. The Indenture governs the terms of the 8.250% Senior Notes due 2031. Key terms of the Indenture include the following:
•  Incurrence-Based Covenants: The Indenture contains incurrence-based financial covenants, including (a) a Fixed Charge Coverage Ratio ("FCCR") test requiring a minimum ratio of 2.00 to 1.00 as a condition to incurrence of additional indebtedness, (b) a restricted payments basket permitting aggregate restricted payments equal to $50,000,000 plus 50% of Consolidated Net Income ("CNI") from the issue date, (c) a permitted indebtedness basket of $75,000,000, and (d) a permitted liens basket of $50,000,000.
•  Asset Sale Covenant: Proceeds from asset sales are subject to a 365-day reinvestment period, failing which the Issuer is required to make an offer to repurchase Notes at 100% of par plus accrued interest.
•  Optional Redemption Schedule: The Notes are redeemable at the option of the Issuer at the following redemption prices (expressed as a percentage of principal amount, plus accrued and unpaid interest): (i) on or after July 1, 2027 — 104.125%; (ii) on or after July 1, 2028 — 102.063%; (iii) on or after July 1, 2029 — 100.000%.
•  Equity Clawback: Prior to July 1, 2027, the Issuer may redeem up to 40% of the aggregate principal amount of the Notes with the net cash proceeds of one or more equity offerings at a redemption price of 108.250% of par plus accrued and unpaid interest, subject to not less than 60% of the original aggregate principal amount remaining outstanding after such redemption.
•  Change of Control: Upon the occurrence of a Change of Control (as defined in the Indenture), the Issuer is required to offer to repurchase the Notes at 101.000% of par plus accrued and unpaid interest.
2. Form of Global Note (144A). The Form of 144A Global Note, constituting Exhibit A-1 to the Indenture, bears CUSIP 923847 AA 5 and is registered in the name of Cede & Co. as nominee of DTC. The 144A Global Note was authenticated by the Trustee and delivered to DTC on the Closing Date.
3. Form of Global Note (Regulation S). The Form of Regulation S Global Note, constituting Exhibit A-2 to the Indenture, bears CUSIP U92384 AA 8 and is registered in the name of Cede & Co. as nominee of DTC. The Regulation S Global Note was authenticated by the Trustee and delivered to DTC on the Closing Date.
4. Purchase Agreement. The Purchase Agreement, dated as of June 18, 2024, was executed among VHG, the Guarantors, and Kensington Barrow & Co. (acting as Representative of the Initial Purchasers). The execution version of the Purchase Agreement reflects the final negotiated changes from the near-final draft circulated on June 14, 2024. The Purchase Agreement sets forth the terms and conditions of the purchase of the Notes by the Initial Purchasers, including representations and warranties of the Issuer and the Guarantors, conditions to closing, indemnification provisions, and the obligation of the Initial Purchasers to purchase the Notes at the issue price of 98.500% of par.
5. Registration Rights Agreement. The Registration Rights Agreement, dated as of June 25, 2024, was entered into among VHG, the Guarantors, and the Initial Purchasers. The Registration Rights Agreement obligates VHG to undertake the following:
•  Registration Statement Filing Deadline: File a registration statement on Form S-4 with the SEC covering an offer to exchange the Notes for a new series of registered notes having substantially identical terms within 180 days following the Closing Date (i.e., by January 4, 2025).
•  Exchange Offer Effectiveness Deadline: Cause the registration statement to be declared effective and consummate the exchange offer within 365 days following the Closing Date (i.e., by July 8, 2025).
•  Additional Interest: If VHG fails to comply with either deadline, additional interest accrues on the Notes at the rate of 0.25% per annum for the first 90 days of non-compliance, increasing to 0.50% per annum thereafter, up to a maximum aggregate additional interest rate of 1.00% per annum.
6. Escrow Agreement. The Escrow Agreement, dated as of June 18, 2024, was entered into among VHG, Kensington Barrow & Co. (as Representative of the Initial Purchasers), and Fidelitas Trust Company, N.A. (as Escrow Agent). The Escrow Account established pursuant to the Escrow Agreement is identified as Escrow Account No. 7841-0293-551 at Fidelitas Trust. The gross proceeds of $492,500,000 were deposited into the Escrow Account and released upon satisfaction of all closing conditions on June 25, 2024.
7. Subsidiary Guarantee. The subsidiary guarantee obligations of the Guarantors are incorporated in Article 10 of the Indenture and were effective as of the Closing Date. Each of the five Guarantors has jointly and severally guaranteed, on a senior unsecured basis, the full and prompt payment and performance by VHG of all of its obligations under the Notes and the Indenture. The Guarantor Joinder Agreements described in Section IV.A.6 above confirmed each Guarantor's accession to these obligations.
C. Opinions and Negative Assurance — All Delivered
All legal opinions and the negative assurance letter required under the Purchase Agreement and customary market practice were timely delivered at closing and are on file.
1. Legal Opinion of Calderwood & Harkness LLP (Issuer's Counsel). A legal opinion dated June 25, 2024, was delivered by Calderwood & Harkness LLP and addressed to the Initial Purchasers and Fidelitas Trust Company, N.A. (as Trustee). The opinion covers, among other matters, the following:
(a) due organization, valid existence, and good standing of VHG and each of the Guarantors in their respective jurisdictions of formation;
(b) due authorization of the offering of the Notes and the execution, delivery, and performance of the Indenture, the Purchase Agreement, the Registration Rights Agreement, and the Escrow Agreement by VHG and the Guarantors;
(c) enforceability of the Indenture, the Notes, and the subsidiary guarantees against VHG and the Guarantors, respectively, in accordance with their terms, subject to customary bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity;
(d) the execution and delivery of the transaction documents, and the issuance of the Notes and the subsidiary guarantees, do not conflict with or result in a violation of VHG's or any Guarantor's organizational documents, applicable law, or certain specified agreements;
(e) no registration of the Notes under the Securities Act is required for the offer and sale of the Notes in the manner described in the Final Offering Memorandum, assuming the accuracy of the Initial Purchasers' representations set forth in the Purchase Agreement; and
(f) VHG is not, and after giving effect to the offering and the application of the net proceeds therefrom will not be, required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.
2. Tax Opinion of Calderwood & Harkness LLP. A tax opinion dated June 25, 2024, was prepared by Sylvia Hartwell of Calderwood & Harkness LLP and addressed to VHG. The tax opinion covers, among other matters, the U.S. federal income tax treatment of the Notes, including the following:
(a) the characterization of the Notes as debt instruments for U.S. federal income tax purposes;
(b) the treatment of the OID of $7,500,000 (1.500% of par) under Sections 1271 through 1275 of the Internal Revenue Code of 1986, as amended (the "Code"), including the accrual and inclusion of OID in holders' gross income;
(c) the deductibility by VHG of stated interest on the Notes; and
(d) confirmation that the Notes do not constitute "applicable high yield discount obligations" (AHYDOs) within the meaning of Section 163(e)(5) of the Code, and accordingly the deductibility of interest and OID on the Notes is not limited by the AHYDO provisions.
3. 10b-5 Negative Assurance Letter. A 10b-5 negative assurance letter dated June 25, 2024, was delivered by Calderwood & Harkness LLP and addressed to Kensington Barrow & Co. (as Representative of the Initial Purchasers). The letter relates to the Final Offering Memorandum dated June 18, 2024, and provides that, based on our participation in the preparation of the Offering Memorandum and our participation in conferences with officers and other representatives of the Issuer, counsel for the Issuer, representatives of the Independent Registered Public Accounting Firm, and counsel for the Initial Purchasers, nothing came to our attention that caused us to believe that the Final Offering Memorandum (other than the financial statements and other financial and statistical data contained therein, as to which we express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
D. Initial Purchaser Deliverables
1. Closing Certificate of the Initial Purchasers. A Closing Certificate dated June 25, 2024, was executed by Kensington Barrow & Co. in its capacity as Representative of the Initial Purchasers. The Closing Certificate confirms, among other things, that the Initial Purchasers have duly performed all of their obligations under the Purchase Agreement required to be performed on or prior to the Closing Date. The executed certificate has been received and is on file.
E. Third-Party Deliverables
1. Comfort Letter from Palladian & Howe LLP. A comfort letter dated June 25, 2024, was issued by Palladian & Howe LLP, VHG's independent registered public accounting firm, to the Initial Purchasers. The comfort letter was prepared by Kenneth W. Sturgis, Engagement Partner, and delivered in final form at closing. As the comfort letter was addressed to the Initial Purchasers and relates to work performed by Palladian & Howe LLP in its capacity as the Issuer's independent auditors, the substance of the comfort letter is out of scope for our work product. However, we confirm that receipt of the comfort letter in final form was verified at closing, consistent with the requirements of the Purchase Agreement, and a copy is on file for reference purposes.
2. Rating Agency Letters. Confirmation letters from each of the rating agencies were received and placed on file:
•  Crestline Ratings Group — confirming the assignment of a B1 rating with a stable outlook to the Notes; and
•  Broadmark Rating Services Inc. — confirming the assignment of a B+ rating with a stable outlook to the Notes.
Both rating agency letters are dated on or about the date of the respective rating decisions (May 28, 2024) and were delivered to the Initial Purchasers and the Issuer in accordance with the requirements of the Purchase Agreement.
V. Confirmation of Payoff and Lien Release — Existing Credit Facility
As described in the Final Offering Memorandum and the Purchase Agreement, a primary use of proceeds from the offering was the full repayment and termination of VHG's existing senior secured credit facility with Greystone National Bank, N.A. This Section V confirms that all payoff, lien release, and termination actions have been completed and documented.
Facility Refinanced: Amended and Restated Credit Agreement, dated as of March 15, 2021 (as amended from time to time prior to its termination), among VHG, as Borrower, the lenders party thereto from time to time, and Greystone National Bank, N.A., as Administrative Agent and Collateral Agent (the "Existing Credit Facility"). The Existing Credit Facility bore the internal loan number GNB-SYN-2021-04417 at Greystone.
Original Principal Commitments under the Existing Credit Facility:
•  Term Loan A: $300,000,000
•  Term Loan B: $200,000,000
•  Revolving Credit Facility: $150,000,000 (commitment only; no amounts were drawn and outstanding at the time of refinancing)
Outstanding Principal as of April 1, 2024:
•  Term Loan A: $280,142,819.16
•  Term Loan B: $187,200,000.00
•  Total outstanding principal: $467,342,819.16
Payoff Executed on June 25, 2024: The following amounts were paid to Greystone National Bank, N.A. on the Closing Date in accordance with the Payoff Letter:
Payoff Letter: The payoff letter was finalized on June 21, 2024, and was issued by Greystone National Bank, N.A. (Thomas P. Quirk, Senior Vice President, Syndicated Lending) to VHG, setting forth the aggregate amounts necessary to repay the Existing Credit Facility in full and confirming Greystone's commitment to release all liens upon receipt of such amounts. Wire transfer of the total payoff amount was initiated by VHG on the Closing Date and was confirmed received by Greystone on June 25, 2024. Wire confirmation has been received and is on file.
Lien Release and Termination Request Letter: A formal Lien Release and Termination Request Letter was sent by VHG (David K. Moretti, General Counsel and Secretary) to Greystone National Bank, N.A. (Thomas P. Quirk, SVP) on June 24, 2024, requesting that Greystone execute and deliver all UCC-3 termination statements, mortgage releases, and other documents necessary to release all liens securing the Existing Credit Facility.
Notice of Termination of Existing Credit Agreement: A Notice of Termination was sent by VHG to Greystone National Bank, N.A. on June 25, 2024, formally terminating the Existing Credit Agreement and all commitments thereunder.
UCC-3 Termination Statements: UCC-3 financing statement amendments (termination statements) were filed in all applicable jurisdictions to terminate all UCC-1 financing statements covering security interests granted by VHG, the Guarantors, and their subsidiaries in favor of Greystone National Bank, N.A. (as Collateral Agent) and the syndicate lenders. The syndicate lenders under the Existing Credit Facility included: (i) Greystone National Bank, N.A., (ii) Harborview Lending Group, (iii) Cascade Federal Bank, and (iv) Meriden Commercial Finance LLC. Stamped filed copies of all UCC-3 termination statements were received as of July 8, 2024 and are on file.
Mortgage and Deed of Trust Releases: Release documents for all hotel properties held by VHG Properties Inc. (a total of 32 fee-simple interests across multiple states) were prepared, executed by Greystone National Bank, N.A. (as Collateral Agent), and submitted for recording in the applicable county recording offices. As of July 8, 2024, all mortgage and deed of trust release documents have been confirmed as recorded, and recorded copies have been received and placed on file. The engagement team reviewed each recorded release to confirm that it accurately identifies the applicable mortgage or deed of trust being released, the correct property description, and the recording information.
Existing Revolving Facility: The existing revolving credit facility under the Existing Credit Agreement, with a commitment of $150,000,000, was previously undrawn. No amounts were outstanding under the revolving facility at the time of refinancing. The revolving facility commitment was terminated concurrently with the repayment of the term loans on June 25, 2024.
VI. Funds Flow — Confirmed Execution
The flow of funds on the Closing Date was governed by the Funds Flow Memorandum prepared by Calderwood & Harkness LLP and dated June 24, 2024, which was circulated to VHG, the Initial Purchasers, Greystone, and the Trustee in advance of closing. All wire transfers were executed on June 25, 2024 in accordance with the Funds Flow Memorandum, and wire confirmations for each transfer have been received and are on file.
The following table sets forth the sequential flow of funds on the Closing Date:
The total gross proceeds of $492,500,000 were equal to the sum of the Initial Purchasers' discount ($8,750,000) and the net proceeds deployed ($483,750,000). All amounts were confirmed to have been received by the intended recipients on the Closing Date. No discrepancies or errors were identified in the funds flow process.
All wire transfer confirmations have been collected and are maintained in the firm's files for this matter.
VII. Post-Closing Items — Status
A. Items Tracked Per Post-Closing Checklist Memorandum (dated July 1, 2024)
Following the Closing Date, certain post-closing items remained outstanding and were tracked by the engagement team pursuant to the Post-Closing Checklist Memorandum prepared by Claire Dempsey and dated July 1, 2024. The status of each item as of July 8, 2024 is set forth below:
All items on the Post-Closing Checklist Memorandum have been completed. No items remain outstanding.
B. Post-Closing Letter to Client
A post-closing letter dated July 5, 2024 was sent from Theodore Langston, Responsible Partner, to David K. Moretti, Senior Vice President, General Counsel and Secretary of VHG, confirming the successful closing of the offering and summarizing VHG's ongoing obligations under the transaction documents. The post-closing letter addressed the following topics:
•  Indenture Covenants: A summary of VHG's ongoing obligations under the Indenture, including incurrence-based financial tests, restricted payment limitations, limitations on additional indebtedness and liens, asset sale covenant, and periodic financial reporting obligations to the Trustee.
•  Registration Rights Agreement Deadlines: A reminder that VHG is required to file a registration statement on Form S-4 with the SEC by January 4, 2025 (180 days post-closing) and to cause such registration statement to be declared effective and consummate the exchange offer by July 8, 2025 (365 days post-closing), and that failure to comply with either deadline will result in additional interest accruing on the Notes.
•  Interest Payment Schedule: Confirmation that the first semi-annual interest payment of $20,625,000 is due on January 1, 2025, and that subsequent interest payments will be due on July 1 and January 1 of each year during the term of the Notes.
The physical closing binder was enclosed with the post-closing letter and delivered to VHG via courier. Receipt by VHG has been confirmed.
VIII. Closing Binder Assembly
The master closing binder was assembled by Audrey Zhou, Working Associate, under the supervision of Claire Dempsey, Lead Associate. The Closing Index, dated July 2, 2024, lists all executed transaction documents and ancillary materials organized by tab number. The closing binder contains fully executed counterpart signature pages for the following documents:
•  Indenture (including exhibits)
•  Purchase Agreement
•  Registration Rights Agreement
•  Escrow Agreement
•  Guarantor Joinder Agreements (five separate agreements, one for each Guarantor)
•  Officer's Certificate
•  Secretary's Certificate (including attachments)
•  All ancillary certificates, opinions, letters, and documents delivered at closing
Distribution of the closing binder was as follows:
1.  One original set was delivered to VHG (attention: David K. Moretti, Senior Vice President, General Counsel and Secretary) via the post-closing letter dated July 5, 2024 described in Section VII.B above. Delivery has been confirmed.
2.  One original set has been retained in the Calderwood & Harkness LLP physical files for Matter No. SC-CM-2024-04891.
3.  Electronic copies of all closing binder materials, including PDF scans of all executed documents and signature pages, have been uploaded to the firm's document management system and are accessible under the matter number referenced above.
IX. Outstanding / Forward-Looking Obligations (For Client Awareness; Not C&H Action Items)
The following items represent VHG's ongoing obligations under the transaction documents. These items are noted here for completeness and for reference in the event that VHG contacts the firm regarding any of these matters in the future. No further Calderwood & Harkness action is required with respect to any of these items unless VHG separately engages the firm for additional services.
Registration Rights Agreement Compliance. VHG is obligated to file a registration statement on Form S-4 with the SEC by January 4, 2025 (180 days following the Closing Date). VHG must cause such registration statement to be declared effective and consummate the exchange offer by July 8, 2025 (365 days following the Closing Date). Failure to comply with either deadline triggers additional interest on the Notes at the rate of 0.25% per annum for the first 90 days of non-compliance, increasing to 0.50% per annum thereafter, subject to a maximum aggregate additional interest rate of 1.00% per annum. VHG's in-house legal team and its securities counsel should calendar these deadlines and begin preparation of the exchange offer registration statement well in advance of the filing deadline.
Semi-Annual Interest Payments. Interest on the Notes accrues at 8.250% per annum and is payable semi-annually on January 1 and July 1 of each year. The semi-annual interest payment amount is $20,625,000 (calculated as $500,000,000 × 8.250% ÷ 2). The first interest payment is due on January 1, 2025 and will cover the period from July 1, 2024 (the first interest accrual date) through December 31, 2024. Interest payments are to be made through the Trustee in accordance with the procedures set forth in the Indenture.
Indenture Reporting and Covenant Compliance. VHG is required to furnish quarterly and annual financial reports to the Trustee in accordance with the reporting covenants of the Indenture. Additionally, VHG must comply with the incurrence-based covenants of the Indenture, including the FCCR test, restricted payments limitations, permitted indebtedness and permitted liens baskets, and asset sale provisions, each time it proposes to incur additional indebtedness, make restricted payments, or consummate asset dispositions.
Optional Redemption Windows. The Notes are not callable prior to July 1, 2027, except pursuant to the equity clawback provision (up to 40% of the original aggregate principal amount at 108.250% with net cash proceeds of equity offerings). Beginning July 1, 2027, VHG may redeem the Notes at the following redemption prices: 104.125% on or after July 1, 2027; 102.063% on or after July 1, 2028; and 100.000% on or after July 1, 2029. VHG should be aware of these windows in connection with any future refinancing or capital structure optimization initiatives.
X. Engagement Team and Billing
The Calderwood & Harkness LLP engagement team for this matter was as follows:
Final billing for this matter should be coordinated with Vivienne St. Claire. All time entries for work performed through July 8, 2024 should be submitted promptly so that a final invoice can be prepared and delivered to the client. All engagement team members are reminded to finalize their time entries and submit any outstanding expense reports for the matter without delay.
The following third-party service providers were retained by VHG or the Initial Purchasers in connection with the transaction and are noted here for reference purposes:
•  Independent Registered Public Accounting Firm: Palladian & Howe LLP (Kenneth W. Sturgis, Engagement Partner), 200 South Biscayne Boulevard, Suite 2600, Miami, Florida 33131.
•  Printing / EDGAR Filing Agent: Meridian Document Services Inc., 44 Wall Street, 12th Floor, New York, New York 10005.
•  D&O Insurance Carrier for VHG: Atlantic Indemnity Insurance Co., Policy No. DOP-2024-881437.
XI. Recommendation
Based on the foregoing, I confirm the following:
1.  All closing deliverables required under the Purchase Agreement and customary market practice have been received, reviewed, and are complete. Each item identified in the closing checklist has been accounted for and placed on file.
2.  All post-closing items, including UCC-3 termination statement filings and receipt of stamped copies, mortgage and deed of trust release recordings and receipt of recorded copies, DTC FAST eligibility confirmation for both the 144A and Regulation S global notes, and closing binder assembly and delivery, have been completed and confirmed as of July 8, 2024.
3.  No outstanding Calderwood & Harkness LLP action items remain with respect to this engagement. All work contemplated under the engagement letter has been completed.
Recommendation: This matter (Matter No. SC-CM-2024-04891) should be marked as closed and completed in Calderwood & Harkness LLP's matter management system, effective as of July 8, 2024.
XII. Prepared By
CALDERWOOD & HARKNESS LLP
By: ________
Name: Claire Dempsey
Title: Lead Associate, Capital Markets
Date: July 8, 2024
Calderwood & Harkness LLP One Liberty Plaza, 45th Floor New York, NY 10006
XIII. Distribution List
CONFIDENTIAL — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP | One Liberty Plaza, 45th Floor | New York, NY 10006 This document is intended solely for internal use and is protected by the attorney work product doctrine.
CUSIP | ISIN
144A Global Note | 923847 AA 5 | US923847AA52
Regulation S Global Note | U92384 AA 8 | USU92384AA83
Use | Amount
Repayment of Existing Credit Facility — principal | $467,342,819.16
Repayment of Existing Credit Facility — accrued interest | $4,207,180.84
Prepayment premium on Existing Credit Facility | $2,336,714.10
Transaction fees and expenses (legal, trustee, rating agencies, printing, and miscellaneous) | $6,863,285.90
General corporate purposes | $3,000,000.00
Total | $483,750,000.00
Date | Milestone | Status
April 15, 2024 | Engagement of Calderwood & Harkness LLP as Issuer's counsel; execution of engagement letter | Completed
May 3, 2024 | Initial drafts of Purchase Agreement and Indenture circulated to Initial Purchasers' counsel and VHG management | Completed
May 14–15, 2024 | Rating agency presentations to Crestline Ratings Group and Broadmark Rating Services Inc. conducted by VHG management team | Completed
May 28, 2024 | Credit ratings received from Crestline (B1, stable) and Broadmark (B+, stable) | Completed
June 3, 2024 | Preliminary Offering Memorandum distributed to prospective investors via the Initial Purchasers | Completed
June 10–14, 2024 | Investor roadshow conducted in New York, Boston, Chicago, San Francisco, and London | Completed
June 17, 2024 | Pricing of the Notes; Pricing Term Sheet distributed to prospective investors | Completed
June 18, 2024 | Purchase Agreement executed (Signing Date); Final Offering Memorandum dated and distributed | Completed
June 25, 2024 | Closing — Notes issued and delivered via DTC; Existing Credit Facility repaid in full; proceeds disbursed per Funds Flow Memorandum | Completed
July 1, 2024 | First interest accrual date under the Indenture | N/A (automatic)
July 2, 2024 | Closing index and signature pages compiled by engagement team | Completed
July 8, 2024 | All post-closing items confirmed completed; matter recommended for closure | Completed
Component | Amount
Principal | $467,342,819.16
Accrued interest (estimated through closing date) | $4,207,180.84
Prepayment premium (0.50% of outstanding principal) | $2,336,714.10
Total payoff amount | $473,886,714.10
Step | Description | Amount | Recipient
1 | Initial Purchasers fund Escrow Account at Fidelitas Trust Company, N.A. with gross proceeds | $492,500,000.00 | Fidelitas Trust Company, N.A. (Escrow Acct No. 7841-0293-551)
2 | Release from escrow upon satisfaction of all closing conditions under the Purchase Agreement and the Escrow Agreement | $492,500,000.00 | Released per Escrow Agreement
3 | Initial Purchasers' discount retained by Initial Purchasers | $8,750,000.00 | Kensington Barrow & Co. / Initial Purchasers
4 | Existing Credit Facility — principal payoff | $467,342,819.16 | Greystone National Bank, N.A.
5 | Existing Credit Facility — accrued interest | $4,207,180.84 | Greystone National Bank, N.A.
6 | Prepayment premium on Existing Credit Facility | $2,336,714.10 | Greystone National Bank, N.A.
7 | Transaction expenses (legal fees, trustee acceptance fees, rating agency fees, printing costs, and miscellaneous) | $6,863,285.90 | Various payees per expense schedule
8 | General corporate purposes | $3,000,000.00 | VHG operating account
Total net proceeds deployed | $483,750,000.00
Item | Status as of July 8, 2024
UCC-3 termination statements filed in all applicable jurisdictions covering security interests of Greystone and syndicate lenders | Completed — stamped filed copies received for all filings
Mortgage and deed of trust releases recorded in applicable county recording offices for all 32 VHG Properties Inc. hotel assets | Completed — recorded copies received and confirmed
DTC FAST eligibility confirmed for both 144A and Regulation S global notes | Completed — eligibility confirmed by DTC
Compilation and binding of closing binder (physical and electronic) | Completed — physical closing binder delivered to client on July 5, 2024
Closing index and signature pages compilation | Completed — closing index dated July 2, 2024; all signature pages compiled
Role | Name
Responsible Partner | Theodore Langston
Billing Partner | Vivienne St. Claire
Lead Associate | Claire Dempsey
Working Associate | Audrey Zhou
Tax Specialist | Sylvia Hartwell
Recipient | Role | Distribution
Theodore Langston | Responsible Partner, Capital Markets | TO
Vivienne St. Claire | Billing Partner, Capital Markets | TO
Audrey Zhou | Working Associate, Capital Markets | cc
Sylvia Hartwell | Tax Specialist | cc
C&H Matter Files | Matter No. SC-CM-2024-04891 | File copy

CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006

MATTER NO.: SC-CM-2024-04891

CALDERWOOD & HARKNESS LLP

Record

Parties

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