Contract analysis

ARTICLE I — DEFINITIONS As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement. 1.1 "Agreement" means this Settlement Agreement and Mutual Release, together with all Exhibits and Schedules attached hereto, which are incorporated herein by reference and made a p

ARTICLE II — SETTLEMENT PAYMENT

Section 2.1 — Total Settlement Amount. In full and final settlement of all claims, counterclaims, causes of action, and disputes among the Parties, whether asserted or unasserted, known or unknown, arising from or relating to the Existing FLAs, the Litigation, or the subject matter thereof, the Coastal Palms Parties shall pay to Verimark a total Settlement Amount of Eighty-Seven Million Five Hundred Thousand Dollars

Section 2.2 — Initial Payment. On the Closing Date, Coastal Palms shall pay to Verimark the Initial Payment of Twenty-Five Million Dollars ($25,000,000) by wire transfer of immediately available funds from the escrow account established at Ironclad National Bank for the purposes of this settlement to Verimark's designated account. Verimark shall provide Coastal Palms with complete wire-transfer instructions for the d

Section 2.3 — Structured Payments. Following the payment of the Initial Payment, Coastal Palms shall pay to Verimark the remaining Sixty-Two Million Five Hundred Thousand Dollars ($62,500,000) in eight (8) equal semi-annual installments of Seven Million Eight Hundred Twelve Thousand Five Hundred Dollars ($7,812,500) each, on the following schedule: (a) The first installment shall be due and payable on October 22, 202

Section 2.4 — Interest on Structured Payments. Interest shall accrue on the outstanding principal balance of the Structured Payments at a rate of six and one-half percent (6.5%) per annum, simple interest, calculated on the basis of a 365-day year and the actual number of days elapsed. Interest shall begin to accrue on the Closing Date and shall be calculated on the then-outstanding principal balance of the Structure

Section 2.5 — Late Payments. Any Structured Payment (including any concurrent interest payment) not received by Verimark within ten (10) business days of its scheduled due date shall bear additional default interest at the rate of one and one-half percent (1.5%) per month on the overdue amount, calculated from the original due date until the date on which such overdue amount is received by Verimark in full. This defa

Section 2.6 — Prepayment. Coastal Palms may, at its option, prepay all or any portion of the Structured Payments at any time without premium, penalty, or additional charge of any kind. Any partial prepayment shall be applied first to any accrued and unpaid interest on the outstanding principal balance of the Structured Payments, and second to the scheduled installments in inverse order of maturity (i.e., applied firs

Section 2.7 — Events of Default and Acceleration. An "Event of Default" shall be deemed to have occurred upon the happening of any of the following: (a) Payment Default. Failure by any Coastal Palms Party to make any payment of the Structured Payments, accrued interest, or any other monetary obligation under this Agreement within thirty (30) days of the date on which Verimark delivers written notice to Coastal Palms

Section 2.8 — Tax Treatment. Each Party shall be solely responsible for the payment of all federal, state, and local taxes, and for the filing of all tax returns and reports, arising from or attributable to the payments received or made by such Party under this Agreement. The Parties agree that, for federal and state income-tax purposes, the Settlement Amount shall be treated by all Parties as compensatory damages an

ARTICLE III — SECURITY FOR STRUCTURED PAYMENTS

Section 3.1 — Security Interest. To secure the prompt and full payment and performance of all obligations of the Coastal Palms Parties under this Agreement, including, without limitation, the payment of all Structured Payments, accrued interest thereon, default interest, and any indemnification obligations arising under Article X, Coastal Palms hereby grants to Verimark a first-priority security interest in the eight

Section 3.2 — UCC Filings. To perfect the security interest granted under Section 3.1, Coastal Palms hereby authorizes Verimark, and Verimark's counsel, Calderwood & Harkness LLP, to prepare, execute, and file on behalf of Coastal Palms UCC-1 Financing Statements with the Florida Secured Transaction Registry and with any other filing office in any jurisdiction where filing may be necessary or advisable to perfect or

Section 3.3 — Personal Guaranties. Concurrently with the execution of this Agreement, R. Brecker and Prescott shall each execute and deliver to Verimark a Personal Guaranty, substantially in the form attached hereto as Exhibit E, pursuant to which R. Brecker and Prescott shall jointly and severally, absolutely, unconditionally, and irrevocably guarantee the full and prompt payment and performance of all obligations o

Section 3.4 — Relationship with Ironclad National Bank. The Parties acknowledge and agree that Ironclad National Bank ("Ironclad") holds first-lien mortgage loans on eighteen (18) of the twenty-two (22) Properties, with an aggregate outstanding principal balance of approximately Ninety-Four Million Dollars ($94,000,000) as of the date hereof. The Parties further acknowledge that the eight (8) Collateral Properties id

Section 3.5 — Release of Security Interest. Upon the payment in full of all Structured Payments, accrued interest, default interest (if any), and all other obligations of the Coastal Palms Parties under this Agreement, Verimark shall, within thirty (30) days of such payment in full: (a) file UCC-3 Termination Statements with the Florida Secured Transaction Registry and all other applicable filing offices; and (b) exe

Section 4.1 — Release by Verimark. Effective upon the Closing Date and upon Verimark's receipt of the Initial Payment in accordance with Section 2.2, Verimark, on behalf of itself, its parent companies, subsidiaries, affiliates, successors, assigns, and each of their respective officers, directors, shareholders, employees, agents, representatives, attorneys, insurers, and any other persons or entities claiming by, th

Section 4.2 — Release by Coastal Palms Parties. Effective upon the Closing Date, the Coastal Palms Parties, jointly and severally, on behalf of themselves, their successors, assigns, affiliates, members, managers, officers, directors, shareholders, employees, agents, representatives, attorneys, insurers, heirs, and personal representatives, and any other persons or entities claiming by, through, or under the Coastal

Section 4.3 — Waiver of Unknown Claims. Each Party expressly acknowledges and agrees that this Agreement is intended to and does include a release of claims that are currently unknown to, unsuspected by, or unanticipated by such Party. Each Party expressly waives, to the fullest extent permitted by applicable law, any and all rights and benefits conferred by any statute, regulation, or common-law principle of any jur

Section 4.4 — No Admission. This Agreement, the releases set forth herein, and the payment of the Settlement Amount shall not be, and shall not be construed as, deemed, or treated as: (a) an admission or concession by any Party of the truth or validity of any claim, defense, or allegation asserted in the Litigation or otherwise; (b) an admission or concession by any Party of any liability, fault, wrongdoing, or viola

ARTICLE V — DISMISSAL OF LITIGATION

Section 5.1 — Counterclaim Dismissal. Within five (5) business days of the Closing Date, Coastal Palms, through its counsel of record, shall file with the Court a notice of voluntary dismissal with prejudice of all claims asserted in its Counterclaim in Case No. 1021-00006, with each party to bear its own attorneys' fees and costs. The dismissal shall be at no cost or expense to Verimark.

Section 5.2 — Joint Stipulation of Dismissal. Within five (5) business days of the Closing Date, counsel for the Parties — Priya Anand, Florida Bar No. 0087451, of Calderwood & Harkness LLP, on behalf of Verimark, and Nathan Whitfield III, of Whitfield, Barrow & Crane LLP, on behalf of the Coastal Palms Parties — shall jointly prepare, execute, and file a Joint Stipulation of Dismissal with Prejudice of all claims an

Section 5.3 — Court Retains Jurisdiction. The Parties shall include in the Joint Stipulation of Dismissal, or file separately, a stipulation providing that the Court shall retain jurisdiction over the Parties and the subject matter of the Litigation solely for the limited purpose of enforcing the terms and conditions of this Agreement upon motion by any Party. The Parties consent to the Court's continuing jurisdictio

ARTICLE VI — REPRESENTATIONS AND WARRANTIES

Section 6.1 — Representations and Warranties of All Parties. Each Party hereby represents and warrants to the other Parties as follows, as of the Effective Date: (a) Authority. Such Party has full corporate, entity, or individual power and authority to execute, deliver, and perform this Agreement and all ancillary documents required to be executed and delivered by such Party in connection herewith. (b) Due Authorizat

Section 6.2 — Additional Representations and Warranties of the Coastal Palms Parties. In addition to the representations and warranties set forth in Section 6.1, the Coastal Palms Parties, jointly and severally, hereby represent and warrant to Verimark as follows, as of the Effective Date: (a) Financial Information. The financial information provided by the Coastal Palms Parties to Verimark, Verimark's counsel, the m

Section 6.3 — Additional Representations and Warranties of Verimark. In addition to the representations and warranties set forth in Section 6.1, Verimark hereby represents and warrants to the Coastal Palms Parties as follows, as of the Effective Date: (a) SEC Disclosure. Verimark will comply with all applicable disclosure obligations imposed by the Securities and Exchange Commission ("SEC") and the securities laws wi

ARTICLE VII — FRANCHISE SURRENDER AND DE-IDENTIFICATION

Section 7.1 — Surrendered Properties. Effective as of the Closing Date, Coastal Palms hereby surrenders and relinquishes all franchise rights under the Existing FLAs with respect to the fourteen (14) Surrendered Properties identified in Exhibit B attached hereto. The Surrendered Properties, grouped by geographic location, are as follows: (a) Sarasota, Florida — three (3) properties; (b) Fort Myers, Florida — four (4)

Section 7.2 — De-Identification Requirements. Within one hundred twenty (120) days of the Closing Date (i.e., no later than August 20, 2024, the De-Identification Deadline), the Coastal Palms Parties shall, at their sole cost and expense, complete the following de-identification actions with respect to each of the fourteen (14) Surrendered Properties: (a) Remove all Verimark signage, logos, trade dress, branded mater

Section 7.3 — Consequences of Non-Compliance. Failure by any Coastal Palms Party to complete the de-identification requirements set forth in Section 7.2 with respect to any Surrendered Property by the De-Identification Deadline shall constitute an Event of Default under Section 2.7(e) of this Agreement. In addition to, and without limiting, any other remedies available to Verimark under this Agreement or at law or in

Section 7.4 — Termination of Existing FLAs for Surrendered Properties. The Existing FLAs applicable to each of the fourteen (14) Surrendered Properties are hereby terminated effective as of the Closing Date. Such termination shall be without further payment of liquidated damages, early-termination fees, or any other charges or penalties beyond the Settlement Amount payable under this Agreement. The Coastal Palms Part

ARTICLE VIII — RETAINED PROPERTIES AND ENHANCED AUDIT PROTOCOL

Section 8.1 — Retained Properties. Eight (8) Properties shall continue to be franchised under the Verimark Brands pursuant to new ten (10)-year Franchise License Agreements. The Retained Properties are located as follows: (a) Naples, Florida — four (4) properties; (b) Marco Island, Florida — two (2) properties; and (c) Tampa, Florida — two (2) properties. The New FLAs for the Retained Properties shall be substantiall

Section 8.2 — Enhanced Audit Protocol. For a period of five (5) years from the Closing Date (i.e., through April 22, 2029), the following enhanced audit and reporting requirements shall apply to each of the Retained Properties, in addition to the standard audit and compliance provisions of the New FLAs: (a) Quarterly Audits. In lieu of the annual audits provided for under the standard FLA provisions, audits of all GR

Section 8.3 — Audit Costs. All costs associated with the quarterly audits and all other audit activities conducted pursuant to the Enhanced Audit Protocol during the five (5)-year period from the Closing Date through April 22, 2029, shall be borne solely by Coastal Palms, regardless of whether the audits reveal any underpayment, discrepancy, or non-compliance. After the expiration of the five (5)-year Enhanced Audit

Section 8.4 — Suncoast Room Management. The Coastal Palms Parties covenant and agree that neither Suncoast Room Management Inc. nor any successor, affiliate, or related entity of Suncoast shall be used, engaged, or permitted to collect, process, manage, or otherwise handle guest-room revenue, room bookings, or any related operational activities for any Retained Property, at any time. This prohibition is absolute and

Section 9.1 — Cooperation. The Parties shall cooperate with each other in good faith to implement all terms, conditions, and provisions of this Agreement, including, without limitation, the execution and delivery of all ancillary documents, instruments, and agreements, the making of all governmental and regulatory filings, and the provision of all notices and consents required to effectuate the transactions contempla

Section 9.2 — No Assignment. No Party may assign, transfer, delegate, or otherwise convey any of its rights or obligations under this Agreement to any third party without the prior written consent of all other Parties; provided, however, that Verimark may, without the consent of the Coastal Palms Parties, assign its rights to receive payments under Article II and its rights to enforce the Security Agreement and the P