ESCROW AGREEMENT
dated as of
June 18, 2024
among
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation, as Issuer,
KENSINGTON BARROW & CO., as Representative of the Initial Purchasers,
and
FIDELITAS TRUST COMPANY, N.A., a national banking association, as Escrow Agent
In connection with the offering of $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031
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ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of June 18, 2024, is entered into among VERIMARK HOSPITALITY GROUP INC., a corporation organized and existing under the laws of the State of Delaware (the "Issuer"), KENSINGTON BARROW & CO., a Delaware limited partnership, acting as representative of the Initial Purchasers (as defined herein) (in such capacity, the "Representative"), and FIDELITAS TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States (the "Escrow Agent").
RECITALS
WHEREAS, the Issuer proposes to issue and sell $500,000,000 in aggregate principal amount of its 8.250% Senior Notes due 2031 (the "Notes") pursuant to a Purchase Agreement dated as of June 18, 2024 (the "Purchase Agreement") among the Issuer, the Guarantors named therein, and the Initial Purchasers named therein, for which Kensington Barrow & Co. acts as Representative;
WHEREAS, the Notes are to be offered and sold in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), in reliance on Rule 144A promulgated thereunder and Regulation S promulgated thereunder, to qualified institutional buyers within the meaning of Rule 144A and to persons outside the United States in offshore transactions in compliance with Regulation S;
WHEREAS, the Notes will be issued pursuant to an Indenture to be dated as of June 25, 2024 (the "Indenture") among the Issuer, the Guarantors party thereto, and Fidelitas Trust Company, N.A., as Trustee (in such capacity, the "Trustee"), and will be guaranteed on a senior unsecured basis by certain subsidiaries of the Issuer as set forth in the Indenture;
WHEREAS, the Notes are being offered at an issue price of 98.500% of par, yielding gross proceeds of $492,500,000 (the "Gross Proceeds");
WHEREAS, the Initial Purchasers' discount in connection with the offering is 1.750% of the aggregate principal amount of the Notes, equal to $8,750,000 (the "Initial Purchasers' discount"), resulting in net proceeds to the Issuer of $483,750,000 (the "Net Proceeds");
WHEREAS, the parties desire to establish an escrow arrangement providing for the deposit and custody of the Gross Proceeds of the offering in a segregated escrow account pending the settlement and satisfaction (or waiver) of all conditions to closing under the Purchase Agreement, with such closing anticipated to occur on June 25, 2024 (the fifth Business Day following the date of pricing, or "T+5");
WHEREAS, the Issuer intends to use the Net Proceeds to (a) repay all outstanding indebtedness under the Amended and Restated Credit Agreement dated March 15, 2021, among the Issuer, certain of its subsidiaries, and Greystone National Bank, N.A., as administrative agent and collateral agent, including accrued interest and applicable prepayment premiums, (b) pay transaction fees and expenses incurred in connection with the offering, and (c) fund general corporate purposes;
WHEREAS, Fidelitas Trust Company, N.A. has agreed to act as Escrow Agent upon the terms and conditions set forth herein and to hold the Gross Proceeds in escrow pending the Closing or, if the Closing does not occur, to return such proceeds to the Initial Purchasers in accordance with this Agreement; and
WHEREAS, Fidelitas Trust Company, N.A. is also acting as Trustee, Registrar, Paying Agent, and Transfer Agent under the Indenture, and the parties acknowledge that the duties, obligations, and rights of Fidelitas Trust Company, N.A. in each such capacity are separate and independent from its duties, obligations, and rights as Escrow Agent hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
As used in this Agreement, the following terms have the meanings set forth below:
"Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in New York, New York are authorized or required by law, regulation, or executive order to close or remain closed. For the avoidance of doubt, banking institutions shall not be deemed authorized or required to close due to a "shelter in place," "non-essential employee," or any similar order or restriction or the closure of any physical branch or office if such banking institutions' electronic funds transfer systems (including wire transfer systems) are open for use by customers on such day.
"Closing" means the closing of the sale and purchase of the Notes pursuant to Article II of the Purchase Agreement, at which time the Issuer shall deliver the Notes to the Initial Purchasers and the Initial Purchasers shall pay the purchase price therefor, all as more fully described in the Purchase Agreement. The Closing is anticipated to occur on June 25, 2024.
"Closing Date" means June 25, 2024, or such other date as the Issuer and the Representative may mutually agree in writing.
"Escrow Account" means Account No. 7841-0293-551 established and maintained at Fidelitas Trust Company, N.A. in the name of the Escrow Agent for the benefit of the parties hereto, as more fully described in Section 2.01.
"Escrow Agent" means Fidelitas Trust Company, N.A., a national banking association duly organized and validly existing under the laws of the United States, in its capacity as escrow agent hereunder, and its successors and permitted assigns in such capacity.
"Escrow Funds" means the aggregate amount deposited into the Escrow Account pursuant to Section 2.02, equal to the Gross Proceeds ($492,500,000), together with any interest, earnings, or other income thereon, less any fees, expenses, or taxes properly deducted in accordance with the terms of this Agreement.
"Gross Proceeds" means $492,500,000, being $500,000,000 aggregate principal amount of the Notes multiplied by the issue price of 98.500% of par.
"Guarantors" means those subsidiaries of the Issuer that will guarantee the Notes on a senior unsecured basis as set forth in the Indenture and the Purchase Agreement.
"Indenture" means the Indenture to be dated as of June 25, 2024, among the Issuer, the Guarantors party thereto, and the Trustee, as the same may be amended, supplemented, or modified from time to time in accordance with its terms, governing the terms and conditions of the Notes.
"Initial Purchasers" means, collectively, Kensington Barrow & Co., Ridgeline Capital Markets LLC, and Stonebridge Marvelo Securities Inc., each in its capacity as an initial purchaser of the Notes pursuant to the Purchase Agreement.
"Initial Purchasers' discount" means 1.750% of the aggregate principal amount of the Notes, equal to $8,750,000.
"Issuer" means Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware, with its principal executive offices located at 2400 Brickell Bay Drive, Suite 3100, Miami, FL 33129, Employer Identification Number 84-3291057, and its successors and permitted assigns.
"Joint Release Instructions" means written instructions substantially in the form of Exhibit B or Exhibit C attached hereto, as applicable, executed by an authorized representative of each of the Issuer and the Representative, directing the Escrow Agent to release, disburse, or distribute Escrow Funds in accordance with this Agreement.
"Net Proceeds" means $483,750,000, being the Gross Proceeds minus the Initial Purchasers' discount.
"Notes" means $500,000,000 aggregate principal amount of 8.250% Senior Notes due 2031 of the Issuer, to be issued under the Indenture, bearing CUSIP No. 923847 AA 5 (with respect to Notes offered and sold in reliance on Rule 144A) and CUSIP No. U92384 AA 8 (with respect to Notes offered and sold in reliance on Regulation S).
"Outside Date" means July 2, 2024, being five (5) Business Days following the anticipated Closing Date, or such later date as the Issuer and the Representative may agree in writing; provided that in no event shall the Outside Date be extended to a date later than July 18, 2024, unless the Escrow Agent shall have consented in writing to such extension.
"Permitted Investments" means (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within thirty (30) days of the date of investment; (b) shares of money market funds that are registered under the Investment Company Act of 1940, as amended, and that invest exclusively in obligations described in clause (a); and (c) overnight repurchase agreements with respect to any of the foregoing, provided that such repurchase agreements are fully collateralized by obligations described in clause (a) having a market value (as determined daily) equal to at least 102% of the amount subject to such repurchase agreement.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental authority, or any other entity.
"Purchase Agreement" means the Purchase Agreement dated as of June 18, 2024, among the Issuer, the Guarantors party thereto, and the Initial Purchasers, as the same may be amended, supplemented, or modified from time to time in accordance with its terms.
"Representative" means Kensington Barrow & Co., a Delaware limited partnership, acting as representative of the Initial Purchasers pursuant to the Purchase Agreement, with its principal offices at 399 Park Avenue, 22nd Floor, New York, NY 10022, and its successors and permitted assigns in such capacity.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Trustee" means Fidelitas Trust Company, N.A., acting in its separate capacity as indenture trustee under the Indenture, and not in its capacity as Escrow Agent hereunder.
Section 1.02 — Rules of Construction
(a) Unless the context otherwise requires, references in this Agreement to "Articles," "Sections," "Exhibits," and "Schedules" are to Articles, Sections, Exhibits, and Schedules of or to this Agreement, and references to "paragraphs" and "clauses" are to separate paragraphs and clauses of the Section in which the reference occurs.
(b) Unless the context otherwise requires, words importing the singular include the plural and vice versa, words importing a gender include each gender, and references to a "Person" include such Person's successors and permitted assigns.
(c) The headings and captions in this Agreement are inserted for convenience of reference only and shall not define, limit, or otherwise affect the meaning or interpretation of any provision of this Agreement.
(d) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" whether or not such phrase actually appears.
(e) References to any agreement, instrument, or document (including this Agreement) mean such agreement, instrument, or document as amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms, unless otherwise expressly stated.
(f) References to "herein," "hereof," "hereunder," and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, or other subdivision.
(g) References to any statute or regulation are to that statute or regulation as amended or supplemented from time to time and include any successor legislation or regulation.
(h) References to "dollars" or "$" mean lawful money of the United States of America.
(i) Each party acknowledges that it has been represented by counsel in connection with this Agreement and that, accordingly, no rule of construction shall apply to this Agreement requiring that ambiguities be resolved against the drafting party.
ARTICLE II — ESTABLISHMENT AND FUNDING OF ESCROW ACCOUNT
Section 2.01 — Establishment of Escrow Account
(a) The Escrow Agent hereby confirms that it has established and will maintain a segregated escrow account designated as Account No. 7841-0293-551 at Fidelitas Trust Company, N.A., 100 Wall Street, Suite 1500, New York, NY 10005 (the "Escrow Account"). The Escrow Account shall be titled: "Fidelitas Trust Company, N.A., as Escrow Agent — Verimark Hospitality Group Inc. Senior Notes Escrow."
(b) The Escrow Account shall be a segregated account and shall not be commingled with any other funds or accounts of the Escrow Agent or any other Person. The Escrow Account shall at all times be maintained separately and apart from any other account maintained by the Escrow Agent in any capacity, including its capacity as Trustee under the Indenture.
(c) Unless the Issuer and the Representative jointly direct investment in Permitted Investments in accordance with Section 2.04, the Escrow Account shall be maintained as a non-interest bearing demand deposit account. The Escrow Agent shall have no obligation to invest or reinvest the Escrow Funds in the absence of such joint direction.
Section 2.02 — Deposit of Escrow Funds
(a) On the date hereof, or as promptly as practicable following pricing of the Notes (but in no event later than 5:00 p.m. (New York City time) on June 19, 2024), the Representative, on behalf of the Initial Purchasers, shall cause the Gross Proceeds in the amount of Four Hundred Ninety-Two Million Five Hundred Thousand Dollars ($492,500,000) to be deposited into the Escrow Account by wire transfer of immediately available funds in accordance with the following wire instructions:
Bank: Fidelitas Trust Company, N.A. ABA Routing Number: 021-000-918 Account Number: 7841-0293-551 Account Name: Fidelitas Trust Company, N.A., as Escrow Agent — Verimark Hospitality Group Inc. Senior Notes Escrow Reference: VHG 8.250% Senior Notes due 2031
Attention: Rebecca A. Marsden, Vice President, Corporate Trust Administration
(b) Promptly upon receipt of the Gross Proceeds into the Escrow Account (and in any event within two (2) hours of receipt during normal business hours), the Escrow Agent shall confirm receipt in writing (which confirmation may be delivered by electronic mail) to each of the following:
(i) the Issuer, Attention: David K. Moretti, General Counsel & Secretary, at the notice address set forth in Section 8.01(a); and
(ii) the Representative, Attention: Jonathan M. Firth, Managing Director, Leveraged Finance, at the notice address set forth in Section 8.01(b).
(c) Such confirmation shall specify the date and time of receipt, the amount received, and the account balance of the Escrow Account following such receipt.
Section 2.03 — Holding of Escrow Funds
(a) The Escrow Agent shall hold the Escrow Funds in the Escrow Account and shall not disburse, release, transfer, or otherwise dispose of any portion of the Escrow Funds, or create or permit any lien, encumbrance, or security interest in or on the Escrow Funds, except as expressly provided in Article III of this Agreement or as otherwise directed by Joint Release Instructions or by order of a court of competent jurisdiction.
(b) The Escrow Funds shall not be subject to any lien, attachment, trustee process, garnishment, execution, or other claim, order, or process of any kind by any creditor of the Issuer, the Representative, any Initial Purchaser, or any other Person (other than as expressly set forth in Section 4.05 with respect to the Escrow Agent's lien for fees and expenses).
(c) The parties acknowledge and agree that the Escrow Agent holds the Escrow Funds as agent and bailee of the parties in accordance with the terms of this Agreement, and not as trustee. The Escrow Agent's holding of the Escrow Funds is in its separate capacity as Escrow Agent hereunder and is not in any way connected with, or related to, its capacity as Trustee under the Indenture. Nothing in this Agreement shall be construed as imposing fiduciary duties on the Escrow Agent beyond those expressly set forth herein.
(d) The Escrow Agent shall not be responsible for the sufficiency, accuracy, or validity of any amounts deposited into the Escrow Account and shall not be required to verify that the amounts so deposited equal the Gross Proceeds.
Section 2.04 — Investment of Escrow Funds
(a) Unless the Issuer and the Representative shall have delivered joint written instructions to the Escrow Agent directing that the Escrow Funds be invested in Permitted Investments, the Escrow Funds shall remain uninvested in the Escrow Account as a non-interest bearing demand deposit. The Escrow Agent shall have no duty to solicit, recommend, or advise with respect to any investment of the Escrow Funds and shall have no obligation to invest the Escrow Funds in the absence of such joint written instructions.
(b) Upon receipt of joint written instructions from the Issuer and the Representative specifying the type and amount of Permitted Investments, the Escrow Agent shall invest the Escrow Funds (or any portion thereof) in the specified Permitted Investments. Each such instruction must identify the specific Permitted Investment, the amount to be invested, and the maturity date (if applicable). The Escrow Agent may require that such instructions be received by 12:00 p.m. (New York City time) on a Business Day in order for such investment to be made on such Business Day.
(c) All interest, earnings, income, and other proceeds of any investment of the Escrow Funds in Permitted Investments shall constitute Escrow Funds and shall be held in the Escrow Account and disbursed in accordance with Article III.
(d) The Escrow Agent shall have no liability for any loss, depreciation, or diminution in value of any Permitted Investment, including any loss resulting from the liquidation of any Permitted Investment prior to its stated maturity in order to make a disbursement required by this Agreement, except to the extent that any such loss is directly caused by the Escrow Agent's gross negligence, willful misconduct, or bad faith. The Issuer acknowledges and agrees that the Escrow Agent is not acting as an investment adviser or fiduciary with respect to any investment of the Escrow Funds.
(e) The Escrow Agent shall liquidate any Permitted Investment as and when necessary to make disbursements in accordance with Article III, without regard to any loss or penalty that may result from such liquidation.
ARTICLE III — RELEASE AND DISBURSEMENT OF ESCROW FUNDS
Section 3.01 — Release Upon Closing
(a) Upon satisfaction or waiver of all conditions to closing under Article VII of the Purchase Agreement, and upon receipt by the Escrow Agent of Joint Release Instructions in the form attached hereto as Exhibit B (which Joint Release Instructions may be delivered to the Escrow Agent by electronic mail or facsimile transmission, with the originals to follow by overnight courier), executed by an authorized representative of each of the Issuer and the Representative, the Escrow Agent shall disburse the Escrow Funds on the Closing Date (anticipated to be June 25, 2024) as follows:
(i) Initial Purchasers' discount. The Escrow Agent shall disburse the amount of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000), constituting the Initial Purchasers' discount, to Kensington Barrow & Co. (as Representative), for the account of the Initial Purchasers, by wire transfer of immediately available funds to the account designated by the Representative in the Joint Release Instructions.
(ii) Net Proceeds to Issuer. The Escrow Agent shall disburse the amount of Four Hundred Eighty-Three Million Seven Hundred Fifty Thousand Dollars ($483,750,000), together with any investment earnings on the Escrow Funds, constituting the balance of the Escrow Funds, to Verimark Hospitality Group Inc. by wire transfer of immediately available funds to the account designated by the Issuer in the Joint Release Instructions.
(b) For informational purposes only, and without imposing any obligation on the Escrow Agent to monitor, verify, or ensure the application of proceeds (the Escrow Agent having no responsibility or liability with respect thereto), the Issuer has indicated that it intends to apply the Net Proceeds as follows:
(i) $467,342,819.16 — repayment of outstanding principal under the Amended and Restated Credit Agreement dated March 15, 2021 (Loan No. GNB-SYN-2021-04417), among the Issuer, certain of its subsidiaries, and Greystone National Bank, N.A., as administrative agent and collateral agent (the "Existing Credit Facility");
(ii) $4,207,180.84 — payment of accrued and unpaid interest on the Existing Credit Facility through the anticipated payoff date;
(iii) $2,336,714.10 — payment of the prepayment premium of 0.50% applicable to the prepayment of the Existing Credit Facility;
(iv) $6,863,285.90 — payment of transaction fees, expenses, commissions, and other costs incurred in connection with the offering of the Notes, the entry into the Indenture, and the repayment of the Existing Credit Facility; and
(v) $3,000,000.00 — general corporate purposes.
(c) All disbursements pursuant to this Section 3.01 shall be made by wire transfer of immediately available funds to the accounts specified in the Joint Release Instructions. The Escrow Agent shall initiate such wire transfers promptly upon receipt of the Joint Release Instructions and confirmation of the authenticity thereof (upon which the Escrow Agent shall be entitled to rely in accordance with Section 4.03) and shall use commercially reasonable efforts to complete all disbursements on the Closing Date.
(d) Promptly following the completion of all disbursements under this Section 3.01, the Escrow Agent shall deliver written confirmation (which may be by electronic mail) to each of the Issuer and the Representative specifying the date, time, and amount of each disbursement and the wire reference numbers associated therewith.
Section 3.02 — Release Upon Failure to Close / Termination
(a) In the event that:
(i) the Closing has not occurred on or before the Outside Date (initially July 2, 2024, as such date may be extended in accordance with the definition thereof);
(ii) the Purchase Agreement is terminated in accordance with its terms prior to the Closing for any reason; or
(iii) the Escrow Agent receives Joint Release Instructions executed by each of the Issuer and the Representative directing the return of the Escrow Funds to the Initial Purchasers;
then the Escrow Agent shall, promptly (and in any event within one (1) Business Day) upon receipt of written notice from the Representative (substantially in the form of Exhibit C attached hereto), with a copy to the Issuer, certifying that any of clauses (i), (ii), or (iii) above has occurred, return all Escrow Funds (including any investment earnings thereon, less any amounts payable to the Escrow Agent for fees and expenses in accordance with Section 4.05 to the extent then due and unpaid) to Kensington Barrow & Co. (as Representative), for the account of the Initial Purchasers, by wire transfer of immediately available funds to the account designated by the Representative in such notice.
(b) The Escrow Agent shall be entitled to rely conclusively on the certifications contained in any notice delivered by the Representative pursuant to this Section 3.02 and shall have no duty or obligation to investigate or verify whether the events described therein have actually occurred.
(c) Notwithstanding anything to the contrary in this Agreement, in the event that the Closing does not occur, no portion of the Escrow Funds shall be released, paid, or disbursed to the Issuer under any circumstance. The Issuer hereby irrevocably agrees that, in the event of a failure to close, the Issuer shall have no right, title, claim, or interest in or to the Escrow Funds, and the Issuer shall not take any action, or direct the Escrow Agent to take any action, that would delay, impede, or prevent the return of the Escrow Funds to the Initial Purchasers in accordance with this Section 3.02.
(d) Promptly following the completion of disbursement under this Section 3.02, the Escrow Agent shall deliver written confirmation (which may be by electronic mail) to each of the Issuer and the Representative specifying the date, time, and amount of the disbursement and the wire reference number associated therewith.
Section 3.03 — Partial Releases
No partial releases or partial disbursements of Escrow Funds shall be permitted except (a) pursuant to Sections 3.01 and 3.02, which contemplate the disbursement of the entire balance of the Escrow Funds (subject to the allocation provisions set forth therein), or (b) as the Issuer and the Representative may jointly direct in writing by delivery of Joint Release Instructions specifying the amount to be released, the payee, the wire instructions for such payee, and the reason for such partial release. The Escrow Agent shall have no obligation to disburse any amount in the absence of proper Joint Release Instructions or, in the case of Section 3.02, the written notice of the Representative as contemplated therein.
Section 3.04 — Tax Reporting
(a) For all United States federal, state, and local income tax purposes, the Issuer shall be treated as the owner of the Escrow Funds, and all interest, earnings, and income (if any) on the Escrow Funds shall be reported as income of the Issuer. The Escrow Agent shall associate Employer Identification Number 84-3291057 with the Escrow Account for all tax reporting purposes.
(b) The Escrow Agent shall report to the Internal Revenue Service (the "IRS") any interest, earnings, or income on the Escrow Funds on IRS Form 1099-INT (or such other form as may be required by applicable law) under the Issuer's name and Employer Identification Number. The Escrow Agent shall furnish to the Issuer a copy of any such form filed with the IRS.
(c) The Issuer shall deliver to the Escrow Agent, upon execution of this Agreement, a properly completed and executed IRS Form W-9, in the form attached hereto as Exhibit D, certifying the Issuer's taxpayer identification number and that the Issuer is not subject to backup withholding. The Issuer agrees to furnish a new or updated Form W-9 promptly upon request by the Escrow Agent or upon any change in the information set forth therein.
(d) The Escrow Agent shall have the right to deduct and withhold from any payment or disbursement under this Agreement any amounts required to be withheld under applicable federal, state, local, or foreign tax law. Amounts so withheld shall be treated as having been paid to the Person in respect of which such deduction and withholding was made for all purposes of this Agreement.
ARTICLE IV — ESCROW AGENT
Section 4.01 — Duties and Responsibilities
(a) The duties, responsibilities, and obligations of the Escrow Agent shall be limited to those expressly set forth in this Agreement, and the Escrow Agent shall have no implied duties or obligations whatsoever. The Escrow Agent shall not be subject to, and need not comply with, any other agreement to which any other party hereto may be a party or by which any other party hereto may be bound, even if reference thereto is made in this Agreement, including the Purchase Agreement and the Indenture.
(b) The Escrow Agent shall act in accordance with written instructions received from the parties hereto in the form and manner contemplated by this Agreement and shall have no duty to inquire into or investigate the terms, conditions, or provisions of the Purchase Agreement, the Indenture, or any other agreement, instrument, or document. Without limiting the foregoing, the Escrow Agent shall have no duty to interpret any provision of the Purchase Agreement, the Indenture, or any other agreement, or to determine whether any condition to closing under the Purchase Agreement has been satisfied or waived.
(c) The Escrow Agent shall not be required to determine whether conditions to closing under the Purchase Agreement have been satisfied or waived, and the Escrow Agent shall be fully entitled to rely upon, and shall be protected in relying upon, the Joint Release Instructions or, in the case of Section 3.02, the written notice of the Representative, as conclusive evidence that the conditions to disbursement have been met.
(d) The parties acknowledge and agree that the Escrow Agent acts solely in its capacity as escrow agent under this Agreement and not in its separate capacity as Trustee, Registrar, Paying Agent, or Transfer Agent under the Indenture. The duties, obligations, and rights of the Escrow Agent in its capacity as escrow agent hereunder are entirely independent from, and shall not be affected by, the duties, obligations, and rights of Fidelitas Trust Company, N.A. in any other capacity. The Escrow Agent shall have no duty to coordinate its actions under this Agreement with its actions under the Indenture.
(e) The Escrow Agent shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or obligations hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Section 4.02 — Standard of Care; Limitation of Liability
(a) The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within its rights or powers conferred upon it by this Agreement, except for its own gross negligence, willful misconduct, or bad faith (each as determined by a final, non-appealable judgment of a court of competent jurisdiction).
(b) The Escrow Agent shall have no liability for any losses, damages, costs, or expenses arising from or in connection with its compliance with any legal process, subpoena, court order, judgment, decree, or regulatory directive or request that the Escrow Agent reasonably believes to be valid and binding upon it. If the Escrow Agent is served with any legal process, court order, or other document purporting to require the delivery or production of the Escrow Funds or any records relating thereto, the Escrow Agent shall promptly notify the other parties hereto and shall be entitled to comply with such legal process, court order, or other document, without any liability to any party hereto, unless such compliance constitutes gross negligence, willful misconduct, or bad faith.
(c) The Escrow Agent shall have no responsibility or obligation to determine or verify the genuineness, authenticity, or correctness of any signature on any Joint Release Instructions, notice, certificate, or other document delivered to it pursuant to this Agreement, provided that the Escrow Agent acts in reasonable reliance thereon in accordance with Section 4.03. The Escrow Agent shall not be liable for acting upon any Joint Release Instructions, notice, certificate, or other document that the Escrow Agent in good faith believes to be genuine and to have been signed or presented by the proper Person.
(d) In no event shall the Escrow Agent be liable for any indirect, special, incidental, consequential, exemplary, or punitive damages of any kind whatsoever (including lost profits, lost revenues, loss of business opportunity, or diminution in value), regardless of the form of action (whether in contract, tort, strict liability, or otherwise) and regardless of whether the Escrow Agent has been advised of the possibility of such damages.
(e) The Escrow Agent shall have no responsibility for, and shall incur no liability with respect to, any investment losses, depreciation, or diminution in value of Permitted Investments, including any losses resulting from market fluctuations, the default of any issuer or obligor of a Permitted Investment, or the liquidation of any Permitted Investment prior to its stated maturity. The parties acknowledge that Permitted Investments are not guaranteed against loss of principal or interest by any governmental agency or instrumentality or by the Escrow Agent.
(f) The Escrow Agent shall not be liable for any delay or failure in the performance of its obligations hereunder due to causes beyond its reasonable control, including acts of God, fire, flood, earthquake, pandemic, epidemic, war, terrorism, civil unrest, power failure, internet or telecommunications outage, or failure or delay of any wire transfer system or clearinghouse.
Section 4.03 — Reliance
(a) The Escrow Agent may rely, and shall be fully protected in acting or refraining from acting, upon any notice, instruction, request, certificate, direction, statement, document, or other communication (including any transmitted by electronic mail or facsimile) believed by the Escrow Agent in good faith to be genuine and to have been signed, sent, or presented by the proper Person or Persons. The Escrow Agent shall have no duty or obligation to verify or authenticate the identity of any Person delivering any such notice, instruction, or other communication beyond confirmation that such notice, instruction, or other communication appears on its face to have been signed or sent by a Person authorized to deliver such notice, instruction, or communication.
(b) The Escrow Agent may consult with counsel of its own choosing (which may include Calderwood & Harkness LLP, Whitfield, Crane & Aldrich LLP, or any other legal counsel) with respect to any question arising under or in connection with this Agreement and shall not be liable for any action taken, suffered, or omitted in good faith in accordance with the advice or opinion of such counsel. The reasonable fees and expenses of such counsel shall be reimbursed by the Issuer in accordance with Section 4.05.
(c) The Escrow Agent may rely conclusively upon the accuracy and completeness of any certification, representation, or statement made by any party hereto in connection with this Agreement and shall have no duty to investigate, inquire into, or independently verify the truth or accuracy of any such certification, representation, or statement.
Section 4.04 — Indemnification
(a) The Issuer and the Representative (severally, not jointly, in proportion to their respective interests — the Issuer: fifty percent (50%); the Representative on behalf of the Initial Purchasers: fifty percent (50%)) shall indemnify, defend, and hold harmless the Escrow Agent and each of its officers, directors, employees, agents, and affiliates (each, an "Indemnified Party") from and against any and all claims, actions, suits, proceedings, investigations, losses, liabilities, damages, penalties, fines, judgments, costs, and expenses (including reasonable and documented attorneys' fees, court costs, and expenses of investigation, litigation, and appeal) (collectively, "Losses") arising out of, relating to, or in connection with this Agreement or the Escrow Agent's acceptance of appointment, establishment or maintenance of the Escrow Account, or performance of (or failure to perform) its duties and obligations hereunder, except to the extent that such Losses are finally determined by a court of competent jurisdiction (in a judgment that is not subject to further appeal) to have resulted directly from the Escrow Agent's gross negligence, willful misconduct, or bad faith.
(b) The indemnification obligations set forth in this Section 4.04 shall survive the resignation or removal of the Escrow Agent, the termination of this Agreement, and the disbursement or return of the Escrow Funds.
(c) In the event that any Indemnified Party becomes aware of any claim, action, suit, or proceeding with respect to which indemnification is or may be sought under this Section 4.04, such Indemnified Party shall promptly notify the Issuer and the Representative in writing; provided, however, that the failure to provide such notice shall not relieve the Issuer or the Representative of their indemnification obligations hereunder except to the extent that any of them is materially prejudiced by such failure.
Section 4.05 — Compensation and Expenses
(a) The Escrow Agent shall receive compensation for its services rendered under this Agreement as set forth in the fee schedule attached hereto as Exhibit A, which fee schedule is incorporated herein by reference. All fees set forth in Exhibit A are non-refundable.
(b) All fees, costs, and expenses of the Escrow Agent incurred in connection with the performance of its duties under this Agreement (including the fees and disbursements of counsel retained pursuant to Section 4.03(b), any taxes or governmental charges assessed against the Escrow Account, and any wire transfer fees or transaction fees) shall be paid by the Issuer. The Issuer acknowledges that such fees and expenses are included in the $6,863,285.90 estimated transaction expenses referenced in Section 3.01(b)(iv).
(c) The Escrow Agent shall have a first-priority lien on, and security interest in, the Escrow Funds for any unpaid fees and expenses due to it pursuant to this Section 4.05 and for any amounts due to it under the indemnification provisions of Section 4.04; provided, however, that such lien and security interest shall be subordinate to the disbursement obligations of the Escrow Agent in Sections 3.01 and 3.02, and the Escrow Agent shall not exercise such lien in a manner that would delay, impede, or prevent the timely disbursement of Escrow Funds in accordance with Sections 3.01 or 3.02.
Section 4.06 — Resignation and Removal
(a) The Escrow Agent may resign and be discharged from its duties and obligations hereunder at any time by giving not less than thirty (30) days' prior written notice of such resignation to each of the Issuer and the Representative, specifying the date upon which such resignation shall take effect. Such notice shall specify the proposed effective date of resignation, which shall be not earlier than the thirtieth (30th) day following the date of such notice.
(b) The Escrow Agent may be removed at any time by joint written instruction of the Issuer and the Representative, delivered to the Escrow Agent not less than thirty (30) days prior to the proposed effective date of removal.
(c) In the event of the Escrow Agent's resignation or removal, the Issuer and the Representative shall, within thirty (30) days following receipt of the Escrow Agent's notice of resignation or delivery of the joint instruction of removal, jointly designate a successor escrow agent that meets the requirements of Section 4.07. Upon the effective date of any resignation or removal, and upon appointment and acceptance by a successor escrow agent, the resigning or removed Escrow Agent shall deliver the Escrow Funds (together with all records, documents, and instruments relating to the Escrow Account) to such successor escrow agent in accordance with the joint written instructions of the Issuer and the Representative.
(d) If no successor escrow agent has been jointly designated by the Issuer and the Representative and has accepted such appointment within thirty (30) days after the Escrow Agent delivers its notice of resignation or the date of delivery of the joint instruction of removal, the Escrow Agent may, at its election, either (i) petition any court of competent jurisdiction sitting in the Borough of Manhattan, City of New York, for the appointment of a successor escrow agent, or (ii) deposit the Escrow Funds into the registry of such court and, upon so doing, shall be relieved of all further obligations and liabilities under this Agreement arising after the date of such deposit (other than obligations and liabilities arising prior to such date).
(e) The resignation or removal of the Escrow Agent shall not discharge the Escrow Agent from any liability for actions taken or omitted by it prior to the effective date of such resignation or removal, and the provisions of Sections 4.02, 4.04, and 4.05 shall survive any such resignation or removal.
Section 4.07 — Successor Escrow Agent
(a) Any successor escrow agent appointed pursuant to Section 4.06 shall be a bank or trust company organized and existing under the laws of the United States or any state thereof, having capital and surplus of not less than Five Hundred Million Dollars ($500,000,000), and shall be authorized under applicable law to act as an escrow agent. Such successor escrow agent shall execute and deliver an instrument accepting such appointment and agreeing to be bound by the terms and conditions of this Agreement, whereupon such successor escrow agent shall become the Escrow Agent for all purposes of this Agreement.
(b) Upon the appointment and acceptance by a successor escrow agent, the predecessor Escrow Agent shall be discharged from all further duties, obligations, and liabilities under this Agreement arising after the date of such appointment and acceptance (other than for acts or omissions of the predecessor Escrow Agent occurring prior to such date), and the successor escrow agent shall succeed to and become vested with all the rights, powers, privileges, duties, and obligations of the predecessor Escrow Agent under this Agreement with the same force and effect as if originally named as Escrow Agent herein.
(c) The Issuer and the Representative shall give notice of any change of Escrow Agent to each other and to such other Persons as they shall deem appropriate.
ARTICLE V — REPRESENTATIONS AND WARRANTIES
Section 5.01 — Representations and Warranties of the Issuer
The Issuer hereby represents and warrants to the Representative and the Escrow Agent as of the date hereof as follows:
(a) Organization and Good Standing. The Issuer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.
(b) Power and Authority. The Issuer has full corporate power and authority to execute, deliver, and perform its obligations under this Agreement.
(c) Authorization. The execution, delivery, and performance of this Agreement by the Issuer have been duly authorized by all necessary corporate action on the part of the Issuer, including approval by the Board of Directors of the Issuer at a duly convened meeting held on June 14, 2024, chaired by Eleanor M. Vasquez, as Chair of the Board of Directors. No further corporate action or approval is necessary for the execution, delivery, and performance of this Agreement by the Issuer.
(d) Enforceability. This Agreement has been duly executed and delivered by the Issuer and constitutes a legal, valid, and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar laws of general applicability relating to or affecting creditors' rights generally and to general equitable principles (whether considered in a proceeding in equity or at law).
(e) No Conflicts. The execution, delivery, and performance of this Agreement by the Issuer do not and will not (i) violate, conflict with, or result in a breach of any provision of the Issuer's Amended and Restated Certificate of Incorporation (as filed with the Secretary of State of the State of Delaware on September 12, 2019, as amended) or the Issuer's Amended and Restated Bylaws (as adopted on September 12, 2019, as amended), (ii) violate, conflict with, or result in a breach of, or constitute a default (or an event that, with the giving of notice or lapse of time or both, would constitute a default) under, any material agreement, instrument, or obligation to which the Issuer is a party or by which the Issuer or any of its properties or assets is bound, or (iii) violate any applicable law, statute, rule, regulation, order, judgment, or decree of any governmental authority applicable to the Issuer.
(f) Tax Information. The Employer Identification Number of the Issuer is 84-3291057, and the Issuer is not subject to backup withholding. The information set forth in the Issuer's Form W-9 to be delivered to the Escrow Agent pursuant to Section 3.04(c) is and will be true, correct, and complete.
Section 5.02 — Representations and Warranties of the Representative
The Representative hereby represents and warrants to the Issuer and the Escrow Agent as of the date hereof as follows:
(a) Organization and Existence. The Representative is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to carry on its business as presently conducted.
(b) Power and Authority. The Representative has full power and authority to execute, deliver, and perform its obligations under this Agreement on behalf of itself and in its capacity as Representative of the Initial Purchasers pursuant to the Purchase Agreement.
(c) Authorization. The execution, delivery, and performance of this Agreement by the Representative have been duly authorized by all necessary action on the part of the Representative, and no further action or approval is necessary.
(d) Enforceability. This Agreement has been duly executed and delivered by the Representative and constitutes a legal, valid, and binding obligation of the Representative, enforceable against the Representative in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and similar laws of general applicability relating to or affecting creditors' rights generally and to general equitable principles (whether considered in a proceeding in equity or at law).
(e) Authority to Act. The Representative has been duly authorized by each of the other Initial Purchasers (Ridgeline Capital Markets LLC and Stonebridge Marvelo Securities Inc.) to act as their representative in connection with this Agreement and has full power and authority to bind the Initial Purchasers with respect to the matters contemplated hereby.
Section 5.03 — Representations and Warranties of the Escrow Agent
The Escrow Agent hereby represents and warrants to the Issuer and the Representative as of the date hereof as follows:
(a) Organization and Existence. The Escrow Agent is a national banking association duly organized, validly existing, and in good standing under the laws of the United States and is authorized to exercise corporate trust powers.
(b) Power and Authority. The Escrow Agent has full corporate power and authority to act as escrow agent hereunder and to execute, deliver, and perform its obligations under this Agreement. The Escrow Agent has all licenses, permits, and authorizations necessary to perform the escrow services contemplated by this Agreement.
(c) Authorization. The execution, delivery, and performance of this Agreement by the Escrow Agent have been duly authorized by all necessary corporate action on the part of the Escrow Agent.
(d) Escrow Account. The Escrow Agent has established the Escrow Account (Account No. 7841-0293-551) as described in Section 2.01 and is prepared to receive deposits therein in accordance with Section 2.02.
(e) No Conflicts. The execution, delivery, and performance of this Agreement by the Escrow Agent do not and will not violate any applicable law, regulation, or order, or any provision of the Escrow Agent's articles of association or bylaws, or any material agreement to which the Escrow Agent is a party.
ARTICLE VI — DISPUTE RESOLUTION
Section 6.01 — Conflicting Instructions
(a) If at any time the Escrow Agent shall receive or become aware of conflicting instructions, claims, demands, or notices from the Issuer and the Representative (or from any other Person claiming an interest in the Escrow Funds) with respect to the Escrow Funds or any portion thereof, the Escrow Agent shall be entitled, in its sole and absolute discretion, to refrain from taking any action (other than to continue to hold the Escrow Funds in the Escrow Account) until such conflict is resolved to the Escrow Agent's reasonable satisfaction by one of the following:
(i) joint written instructions executed by the Issuer and the Representative, directing the Escrow Agent with respect to the disposition of the Escrow Funds;
(ii) a final, non-appealable order, judgment, or decree of a court of competent jurisdiction directing the disposition of the Escrow Funds; or
(iii) such other mutual agreement or resolution as the parties may reach and communicate to the Escrow Agent in writing.
(b) The Escrow Agent shall not be liable to any party for any delay or failure to act resulting from the receipt of conflicting instructions, and no party shall have any claim against the Escrow Agent for any interest, earnings, or income that might have been earned on the Escrow Funds during any period of inaction resulting from such conflict.
(c) In the event of conflicting instructions, the Escrow Agent may, at its option and in its sole discretion, deposit the Escrow Funds into the registry of any court of competent jurisdiction sitting in the Borough of Manhattan, City of New York, and upon so doing, shall be relieved and discharged of all further obligations and liabilities under this Agreement with respect to the Escrow Funds so deposited (other than obligations and liabilities arising prior to the date of such deposit, and obligations under Sections 4.02, 4.04, and 4.05 that survive termination). The costs and expenses of any such deposit (including reasonable attorneys' fees) shall be borne by the Issuer and the Representative equally, to the extent not paid from the Escrow Funds.
Section 6.02 — Interpleader
(a) In the event of any dispute, uncertainty, or disagreement between any of the parties hereto or between any party hereto and any other Person with respect to the Escrow Funds or the Escrow Agent's duties or obligations under this Agreement, the Escrow Agent shall have the right (but not the obligation) to commence an interpleader action or similar proceeding in any court of competent jurisdiction in the Borough of Manhattan, City of New York, for the purpose of having such dispute, uncertainty, or disagreement adjudicated.
(b) Upon the commencement of any such interpleader action, the Escrow Agent shall be entitled to deposit the Escrow Funds (or any disputed portion thereof) into the registry of such court and shall thereupon be relieved of all further obligations and liabilities under this Agreement with respect to the Escrow Funds so deposited (other than obligations and liabilities arising prior to the date of such deposit).
(c) The Escrow Agent shall be entitled to recover its reasonable costs, fees, and expenses (including reasonable attorneys' fees and court costs) incurred in connection with any interpleader action from the Escrow Funds (to the extent permitted by the court) or, if insufficient Escrow Funds are available, from the Issuer and the Representative in equal shares, and such costs, fees, and expenses shall be included in the Losses for which indemnification is available under Section 4.04.
ARTICLE VII — TERMINATION
Section 7.01 — Termination
(a) This Agreement shall terminate automatically, without any further action by the parties, upon the earliest to occur of:
(i) the disbursement of all Escrow Funds in accordance with Section 3.01 (release upon closing);
(ii) the return of all Escrow Funds in accordance with Section 3.02 (release upon failure to close or termination);
(iii) the deposit of the Escrow Funds into the registry of a court of competent jurisdiction pursuant to Section 6.01(c) or Section 6.02(b); or
(iv) the mutual written agreement of all three parties hereto.
(b) Notwithstanding the termination of this Agreement, the provisions of Article IV (Escrow Agent — including Sections 4.01 through 4.07), Article VI (Dispute Resolution), and Article VIII (Miscellaneous) shall survive such termination and shall remain in full force and effect until all obligations and liabilities of the parties thereunder have been satisfied in full. Without limiting the foregoing, the indemnification obligations set forth in Section 4.04 and the compensation and expense provisions set forth in Section 4.05 shall survive any termination of this Agreement and shall remain enforceable in accordance with their terms.
(c) Upon termination of this Agreement, the Escrow Agent shall have no further obligations hereunder, except as expressly set forth in subsection (b) above and except for any obligation that, by its nature, is intended to survive termination.
ARTICLE VIII — MISCELLANEOUS
Section 8.01 — Notices
(a) All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered to the parties at the following addresses (or such other address as a party may designate by notice given to the other parties in accordance with this Section):
(i) If to the Issuer:
Verimark Hospitality Group Inc. 2400 Brickell Bay Drive, Suite 3100 Miami, FL 33129
Attention: David K. Moretti, General Counsel & Secretary
Email: d.moretti@verimarkgroup.com
Telephone: (305) 555-4100
with a copy (which shall not constitute notice) to: