Contract analysis

I. Purpose and Background The purpose of this memorandum is to identify and analyze fourteen (14) open drafting issues that must be resolved in converting the executed Term Sheet dated March 22, 2024 into a definitive Settlement Agreement and Mutual Release (the "Settlement Agreement") in the above-referenced matter. This memorandum is intended to guide the drafting process, flag areas requiring partner-level decisio

II. Summary of Settlement Terms from Term Sheet Set forth below is a comprehensive summary of the material terms reflected in the executed Term Sheet. This summary provides the baseline from which the definitive Settlement Agreement will be drafted. A. Total Settlement Amount The total settlement amount is $87,500,000. B. Cash at Closing $25,000,000 is payable in cash at the closing of the Settlement Agreement, to be

I. Counterclaim Dismissal Coastal Palms will dismiss its $12 million counterclaim (Count I of the Counterclaim, alleging brand-standard violations; Count II of the Counterclaim, alleging over-billing of technology fees) with prejudice. J. Mutual Release The parties will exchange a broad mutual release of all claims arising from or related to the FLAs through the effective date of the Settlement Agreement, subject to

1. Verimark Hospitality Group Inc.

2. Coastal Palms Franchise Holdings LLC

6. Gulf Breeze Hospitality LLC

7. Savannah Lodging Partners LLC

8. Suncoast Room Management Inc. As discussed in Issue 1 below, although the Term Sheet was signed only by Verimark, Coastal Palms, Randall Brecker, and Nolan Prescott, the definitive Settlement Agreement must include all eight parties listed above.

III. Open Drafting Issues The following fourteen issues have been identified as requiring resolution before the definitive Settlement Agreement can be finalized. Each issue is discussed in detail below, together with a recommended approach and specific drafting actions. Issue 1: Parties to the Settlement Agreement The Problem. The Term Sheet was signed by only four parties: Verimark Hospitality Group Inc., Coastal Pa

1. Theresa Brecker — Theresa Brecker holds a 15% equity membership interest in Coastal Palms Franchise Holdings LLC. She is not a defendant in the underlying litigation, but her membership interest in the principal defendant entity, combined with her status as Randall Brecker's spouse, makes it essential that she be a party to the mutual release to foreclose any argument that she retains derivative or individual clai

2. Gulf Breeze Hospitality LLC — Gulf Breeze Hospitality LLC is a Florida limited liability company that owns and operates six (6) Verimark Suites properties in Southwest Florida. It is a property-level entity that is a party to individual FLAs with Verimark and that holds title to certain properties that may be among the surrendered or collateral properties. While Gulf Breeze was not named as a defendant in the Comp

3. Savannah Lodging Partners LLC — Savannah Lodging Partners LLC is a Georgia limited liability company that owns and operates four (4) Verimark Suites properties in coastal Georgia (three in Savannah and one in Brunswick, with one additional Brunswick property owned directly by Coastal Palms). Like Gulf Breeze, Savannah Lodging is a party to individual FLAs with Verimark and holds title to certain surrendered proper

4. Suncoast Room Management Inc. — Suncoast Room Management Inc. is the Florida corporation at the center of the revenue-diversion scheme that gave rise to this litigation. Suncoast is a named defendant in Count VII (Unjust Enrichment) and Count X (Civil Conspiracy) of the Complaint. The mutual release must bind Suncoast to preclude any future claims against it arising from its collection of off-platform guest-room r