Contract analysis

I. PURPOSE AND LEGAL OBLIGATION The purpose of this letter is to notify Verimark that, as of March 7, 2022, a Complaint has been filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Case No. 1021-00006, captioned Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC, et al. Calderwood & Harkness LLP filed the Complaint on Verimark's behalf, and service of proce

II. BACKGROUND OF THE LITIGATION To provide context for the scope of this hold, we briefly summarize the nature and factual basis of the pending litigation. A. Parties and Claims Verimark has filed a breach-of-contract action against its largest single franchise operator, Coastal Palms Franchise Holdings LLC ("Coastal Palms"), and the following related defendants: Randall Brecker (individually), Suncoast Room Managem

III. SCOPE OF THE LITIGATION HOLD The following sections define the subject matter, temporal scope, and custodians encompassed by this hold. Because the scope of discoverable information in litigation is broad — encompassing any matter that is relevant to any party's claim or defense or that appears reasonably calculated to lead to the discovery of admissible evidence — the parameters of this hold are necessarily exp

1. Franchise License Agreements. All documents and information relating to the franchise relationship between Verimark and Coastal Palms Franchise Holdings LLC, including all twenty-two (22) individual Franchise License Agreements ("FLAs"), together with all amendments, addenda, side letters, supplements, exhibits, and schedules thereto. The first FLA in the Coastal Palms portfolio was executed on June 15, 2007 (for

2. Gross Room Revenue. All documents relating to Gross Room Revenue definitions, reporting, auditing, verification, and calculations for any Coastal Palms property or any property operated or managed by any Coastal Palms affiliate. This includes, without limitation, monthly and annual GRR reports submitted by Coastal Palms to Verimark, any supporting worksheets or calculations, and any communications between Verimark

3. Royalties, Marketing Funds, and Technology Fees. All documents relating to royalty payments, marketing-fund contributions, and technology fees paid or owed by Coastal Palms or any affiliated entity, including invoices, payment records, remittance advices, account statements, ledger entries, and correspondence regarding the same.

4. Suncoast Room Management Inc. All documents relating to Suncoast Room Management Inc., including but not limited to its formation, corporate organization, operations, management-fee arrangements with Coastal Palms or any Coastal Palms property, booking activities, and the website gulfcoastrooms.com. This includes any documents reflecting Verimark's awareness of, inquiry into, or investigation of Suncoast's role in

5. Gulf Breeze Hospitality LLC and Savannah Lodging Partners LLC. All documents relating to Gulf Breeze Hospitality LLC and Savannah Lodging Partners LLC, including their formation, operations, relationship to Coastal Palms, and any financial transactions with Coastal Palms properties.

6. Individual Defendants and Principals. All documents relating to Randall Brecker, Theresa Brecker, and Nolan Prescott in their capacities as members, principals, officers, managers, or agents of Coastal Palms and its affiliated entities. This includes any personal guarantee agreements, management agreements, or compensation arrangements.

7. Thornbury & Associates Compliance Audit. All documents relating to the pre-litigation compliance audit conducted by Thornbury & Associates CPAs LLP, including but not limited to engagement letters, audit plans, data requests, audit workpapers, interim and final findings, the preliminary findings report delivered on or about January 18, 2022, and all communications with Thornbury & Associates personnel, including M

8. Whistleblower Report. All documents relating to the whistleblower report submitted by Janet Kerrigan, identified as a former Regional Controller of Coastal Palms Franchise Holdings LLC, received by Verimark on November 8, 2021 through Verimark's compliance hotline (or by any other means). This includes the report itself, any intake records, all communications with Ms. Kerrigan, any investigation conducted followin

9. Notice of Material Breach and Pre-Suit Communications. All documents relating to the Notice of Material Breach issued by Verimark to Coastal Palms on or about February 4, 2022, including all drafts thereof and all responsive communications. This includes the February 28, 2022 letter from Whitfield, Barrow & Crane LLP (counsel for Coastal Palms) denying the existence of any breach, and all correspondence, emails, o

10. Franchise Operations and Brand Standards. All documents relating to Verimark's franchise operations, brand standards (including standards specific to the Verimark Suites and Verimark Select brands), reservation systems, franchise compliance programs, and audit programs, to the extent they concern, reference, or are applicable to Coastal Palms properties. This includes brand-standards manuals, operations manuals,

11. Booking-Channel and Revenue-Management Data. All OTA (online travel agency) agreements, booking-channel data, property-management system ("PMS") data, and revenue-management records for Coastal Palms properties, including data from any central reservation system maintained by Verimark or its affiliates. This includes records from third-party OTA platforms (e.g., Aldermere Technologies, Bramwell Holdings, Drayton

12. Financial Reporting. All documents relating to financial reporting by or about Coastal Palms, including but not limited to monthly GRR reports, annual financial statements, revenue reconciliations, bank statements, merchant-processing records, and tax-related documents (including Forms 1099, K-1, and other tax reporting documents) in Verimark's possession or control.

13. Ironclad National Bank. All documents relating to Ironclad National Bank's lending relationship with Coastal Palms, to the extent Verimark possesses such documents, including loan documents, financial covenants, financial statements provided in connection with lending, and any correspondence with Ironclad National Bank.

14. Internal Analyses and Reports. All internal analyses, memoranda, reports, presentations, or other work product concerning the suspected or confirmed underreporting of GRR by Coastal Palms, including any documents prepared for or presented to Verimark's Board of Directors, Audit Committee, executive management, or any other internal body. B. Temporal Scope This litigation hold covers all documents and materials da

1. Renata Solis-Vega, Senior Vice President & General Counsel (Legal Department)

2. Martin Holcomb, Executive Vice President & Chief Financial Officer (Finance Department)

3. Deidre Langston, Senior Vice President, Franchise Operations (Franchise Operations Department)

4. Any current or former Verimark employee who had direct responsibility for managing or overseeing the Coastal Palms franchise relationship, including but not limited to franchise-compliance officers, regional franchise directors, revenue-audit personnel, and field operations managers

5. Any Verimark employee who participated in or has knowledge of the compliance hotline report received from Janet Kerrigan on November 8, 2021, including personnel in the compliance, legal, internal audit, or human resources departments who may have been involved in the intake, investigation, or escalation of the report

6. Any Verimark employee who participated in or has knowledge of the Thornbury & Associates compliance audit, including individuals who assisted with data collection, responded to audit inquiries, or reviewed preliminary or final audit findings

7. Information Technology department personnel responsible for maintaining Verimark's reservation systems, property-management system platforms, revenue-management databases, email servers, backup systems, and other IT infrastructure as they relate to Coastal Palms properties or the data categories described above

8. Additional custodians may be identified as the litigation progresses, including through the discovery process, deposition testimony, or further investigation; any updates to the custodian list will be communicated promptly by Calderwood & Harkness We ask that Renata work with Deidre Langston and the relevant department heads to identify specific individuals within categories 4 through 7 above by name, and to provi

IV. CATEGORIES OF MATERIALS TO BE PRESERVED The duty to preserve extends to all forms of documents, data, and information, regardless of format or medium. For clarity, the following categories are specifically identified: A. Electronically Stored Information (ESI) Electronically stored information, or ESI, constitutes the largest and most complex category of materials subject to this hold. The term "ESI" is to be con

V. PRESERVATION INSTRUCTIONS A. Affirmative Duties The following affirmative steps must be taken immediately upon receipt of this notice:

1. Suspend Routine Destruction. Immediately cease any routine document-destruction, recycling, purging, or disposal that would affect potentially relevant materials. This includes the suspension of any automatic deletion policies for email, voicemail, or other ESI that falls within the categories described in this notice. Any scheduled shredding or off-site destruction of paper records must be halted pending review f

2. Suspend IT Auto-Deletion and Retention Policies. Instruct Verimark's Information Technology department to immediately suspend any auto-delete, auto-archive, auto-purge, or data-retention policies that would result in the destruction, overwriting, or degradation of relevant ESI. Specific systems and processes to be addressed include, without limitation: (a) email servers and email-archiving systems; (b) network fil

3. Custodian Search and Identification. Each identified custodian must affirmatively search for and identify all responsive materials within their possession, custody, or control. This includes a diligent review of email folders, personal files, shared drives, physical file cabinets, and any other location where relevant materials may reside. Custodians should document the locations and types of relevant materials id

4. Maintain Materials In Place. All potentially relevant materials must be maintained in their current location and format. Do not move, reorganize, rename, copy, or convert files unless specifically directed to do so by counsel. The goal is to preserve the materials — and their associated metadata — in their native state.

5. Report Additional Sources. If any custodian becomes aware of additional locations where relevant materials may be stored — including but not limited to personal devices (laptops, tablets, smartphones), home computers, personal cloud-storage accounts, off-site storage facilities, or third-party platforms — that custodian must immediately notify Renata Solis-Vega or contact Calderwood & Harkness LLP directly. These

1. All of the departing employee's files, documents, and data (both electronic and paper) must be preserved in their entirety.

2. The departing employee's email account must not be deactivated, deleted, or purged. If the account must be deactivated for security purposes, all email and associated data must first be exported and preserved in a forensically sound manner.

3. All company-issued devices (laptops, tablets, smartphones) must be collected, imaged or backed up, and preserved.

4. Access credentials (passwords, security tokens, etc.) must be documented and retained to ensure continued access to preserved data.

5. Calderwood & Harkness LLP must be notified immediately if any such separation occurs or is reasonably anticipated, so that appropriate preservation measures can be coordinated.

VI. COMPLIANCE AND ACKNOWLEDGMENT Compliance with this litigation hold is mandatory for every individual who receives this notice and for every individual to whom this notice is distributed within Verimark. Each person who receives this notice — whether directly from Calderwood & Harkness LLP or through internal distribution by Renata Solis-Vega or her designee — must confirm in writing that they have read this notic

VII. DURATION OF THE HOLD This litigation hold will remain in effect until further written notice from Calderwood & Harkness LLP. The hold will not be lifted, modified, or narrowed until the litigation — including any post-trial motions, appeals, or enforcement proceedings — is fully and finally resolved, and Calderwood & Harkness provides express written authorization to resume normal document-retention and destruct

VIII. E-DISCOVERY COORDINATION Calderwood & Harkness LLP has engaged Nexagen Document Solutions LLC ("Nexagen") as the e-discovery vendor for this matter. Nexagen will be responsible for the processing, hosting, review-platform management, and analytics associated with the collection and review of ESI in this litigation. Verimark's Information Technology department should be prepared to coordinate with Nexagen and wi

IX. CONSEQUENCES OF NON-COMPLIANCE We cannot overstate the importance of strict compliance with this litigation hold. Failure to comply with this hold could result in severe and potentially outcome-determinative consequences for Verimark, including but not limited to the following: • Court-Imposed Sanctions: The court may impose sanctions against Verimark for spoliation of evidence, which can include monetary fines,

X. CONTACT INFORMATION For questions regarding the litigation or any aspect of this litigation hold, please contact: Priya Anand, Partner Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7205 Email: panand@calderwoodharkness.com Yuki Nakamura, Associate Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555