1021-00006 · Client 1021 · Engagement & Administration

conflict-check-memorandum.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301

INTERNAL MEMORANDUM — PRIVILEGED & CONFIDENTIAL

DATE: March 3, 2022

TO: Priya Anand, Partner, Litigation (General)

FROM: Douglas Carmichael, Partner, Litigation (General)

RE: Conflict Check Results — Proposed Engagement: Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al.

MATTER NO.: [To be assigned upon matter opening]

CONFIDENTIALITY NOTICE: This memorandum is prepared for internal use only and is subject to attorney-client privilege and work-product protection. It contains confidential information related to the firm's conflict-of-interest analysis and should not be disseminated outside of Calderwood & Harkness LLP without the express written authorization of the undersigned or the firm's General Counsel. Unauthorized disclosure may result in waiver of applicable privileges.

1. Purpose of Memorandum

This memorandum confirms the completion of a comprehensive conflicts-of-interest check conducted in connection with the proposed retention of Calderwood & Harkness LLP ("the Firm") by Verimark Hospitality Group Inc. (Nasdaq: VHMK), a Delaware corporation with its principal executive offices located at 2400 East Las Olas Boulevard, Suite 3100, Fort Lauderdale, Florida 33301 (the "Prospective Client" or "Verimark"). The purpose of this conflicts analysis is to determine whether any current or former client relationship, adverse representation, financial interest, or personal relationship involving any attorney or professional of the Firm would preclude or complicate the Firm's acceptance of the proposed engagement, and to document the results for the Firm's permanent conflicts file.

The proposed engagement arises from Verimark's intention to prosecute a breach-of-contract action against its franchisee, Coastal Palms Franchise Holdings LLC ("Coastal Palms"), a Florida limited liability company, and related parties, including certain affiliated entities and individual principals of Coastal Palms. The substantive allegations underlying the proposed litigation concern the systematic underreporting of gross room revenues by Coastal Palms and its affiliated management entities across a portfolio of twenty-two (22) franchised hotel properties over an approximately nine-year period spanning 2013 through 2021. As a direct result of this alleged underreporting, Verimark contends that it has been underpaid royalties, marketing-fund contributions, and technology fees in an aggregate amount anticipated to reach approximately $150 million in damages. Venue for the contemplated litigation is expected to be the Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida.

The request to initiate this conflicts check was received by the undersigned on March 1, 2022, from Priya Anand, Partner, Litigation (General), who has been designated as the Responsible Partner for this proposed engagement. The request followed preliminary discussions between Ms. Anand and Renata Solis-Vega, Senior Vice President and General Counsel of Verimark Hospitality Group Inc. Ms. Solis-Vega indicated that Verimark had selected Calderwood & Harkness as its preferred outside counsel for this matter based on the Firm's recognized expertise in complex commercial and franchise litigation in the southeastern United States.

This memorandum sets forth in detail: (i) the process by which the conflicts check was conducted; (ii) the complete list of entities and individuals against whom searches were run; (iii) the results of those searches; (iv) the individual clearance status of each proposed engagement team member; and (v) the Firm's conclusion and recommendation regarding the acceptance of the proposed engagement.

2. Conflict Check Process

The conflicts check was conducted over a two-day period, commencing on March 2, 2022, and concluding on March 3, 2022. The following procedures were employed to ensure a thorough and reliable analysis:

2.1 Database Searches. All searches were conducted through the Firm's proprietary firm-wide conflicts database ("C&H Conflicts System"), which is maintained by the Office of the General Counsel and updated on a continuous basis. The C&H Conflicts System contains records spanning the full operational history of Calderwood & Harkness LLP and covers the following categories of information across all domestic and international offices of the Firm:

(a) All current clients and the matters in which they are represented;

(b) All former clients and the matters in which they were represented, including matters closed within the applicable lookback period and those retained permanently in the database;

(d) All related, affiliated, parent, and subsidiary entities associated with current and former clients and adverse parties, to the extent such information was recorded at the time of matter intake;

(e) Individual principals, officers, directors, and key contacts associated with entity clients and adverse parties;

(f) Opposing counsel of record in current and former matters;

(g) Known third-party service providers, expert witnesses, and consultants retained or engaged in connection with current and former matters; and

(h) Business and financial relationships of the Firm and its partners, including equity investments, board memberships, and outside counsel arrangements.

2.2 Search Parameters. Searches were run against the following categories of names and entities relevant to the proposed engagement:

(a) The Prospective Client and all known corporate affiliates, trade names, and ticker symbols;

(b) All known adverse parties, including the primary defendant entity, its individual principals and equity holders, and affiliated and subsidiary entities identified through preliminary due diligence;

(d) Known third-party service providers, auditors, insurers, and financial institutions likely to be involved in or affected by the proposed litigation; and

(e) Key individual witnesses identified during preliminary discussions with the Prospective Client's General Counsel.

2.3 Supplemental Manual Review. In addition to the automated database queries, the undersigned caused a manual review to be conducted of the following supplemental records:

(a) Partner declarations submitted in connection with the Firm's most recent annual conflicts certification (January 2022), which require each equity and non-equity partner to disclose outside business interests, board memberships, financial relationships, and personal relationships that could give rise to conflicts of interest;

(b) Lateral-hire intake records for all attorneys who joined the Firm within the preceding twenty-four (24) months, including conflicts data imported from prior firm affiliations; and

(c) Business development and pitch records maintained by the Firm's Marketing and Client Development Department to identify any recent or pending engagement proposals involving any of the searched entities.

2.4 Conflicts Team Consultation. The conflicts analysis was supervised by the Firm's conflicts team within the Office of the General Counsel. The conflicts team lead was consulted regarding the scope and methodology of the search, confirmed the completeness of the search parameters, and reviewed the preliminary results before they were transmitted to the undersigned for final evaluation and documentation.

2.5 Applicable Standards. The conflicts analysis was conducted in accordance with the requirements of Rules 4-1.7 (Conflict of Interest; Current Clients) and 4-1.9 (Duties to Former Clients) of the Rules Regulating The Florida Bar, as well as the Firm's internal Conflicts of Interest Policy (revised effective January 1, 2022). Where applicable, reference was also made to Rule 4-1.10 (Imputation of Conflicts of Interest) and Rule 4-1.18 (Duties to Prospective Clients).

3. Entities and Individuals Searched

The following is a comprehensive list of all entities and individuals against whom conflicts searches were conducted. For each entry, the memorandum provides the name (including all variations and aliases searched), entity type, address, and other identifying information sufficient to ensure the accuracy of the search results.

3.1 Prospective Client

Verimark Hospitality Group Inc.

Searched under: "Verimark Hospitality Group Inc.," "Verimark Hospitality Group," "Verimark Hospitality," "VHG," "Verimark," "VHMK"

Entity Type: Corporation organized under the laws of the State of Delaware; publicly traded on the Nasdaq Stock Market under the ticker symbol VHMK.

Principal Executive Offices: 2400 East Las Olas Boulevard, Suite 3100, Fort Lauderdale, Florida 33301.

Industry: Hospitality and real estate. Verimark operates and franchises approximately 340 branded hotel properties across the southeastern United States under three distinct brand flags: "Verimark Suites" (extended-stay and select-service properties), "Verimark Select" (upper-midscale select-service properties), and "Verimark Grand" (Upscale full-service properties). The company's operations encompass both company-owned and franchised properties, with the franchise segment representing a significant and growing portion of overall revenues.

Financial Information (as publicly reported): For the fiscal year ended December 31, 2021, Verimark reported consolidated revenues of approximately $1.42 billion. The franchise segment contributed approximately $218 million in franchise fees, royalties, marketing-fund contributions, and technology fees during the same period.

Key Client Contacts:

• Renata Solis-Vega — Senior Vice President and General Counsel, Verimark Hospitality Group Inc. Ms. Solis-Vega serves as the primary point of contact for the proposed engagement and has authority to execute the engagement letter on behalf of Verimark.

• Martin Holcomb — Executive Vice President and Chief Financial Officer, Verimark Hospitality Group Inc. Mr. Holcomb oversees the company's financial reporting and has been involved in quantifying the alleged revenue underreporting and associated damages.

• Deidre Langston — Senior Vice President, Franchise Operations, Verimark Hospitality Group Inc. Ms. Langston is responsible for franchise compliance monitoring and was instrumental in identifying the discrepancies that gave rise to the underlying claims.

3.2 Adverse Parties — Primary

Coastal Palms Franchise Holdings LLC

Searched under: "Coastal Palms Franchise Holdings LLC," "Coastal Palms Franchise Holdings," "Coastal Palms," "CPFH"

Entity Type: Limited liability company organized under the laws of the State of Florida.

Principal Office: 9500 Gulf Shore Drive, Suite 450, Naples, Florida 34108.

Registered Agent: Garrison Registered Agents LLC, 100 S. Ashley Drive, Suite 600, Tampa, Florida 33602.

Business Description: Coastal Palms is the principal franchisee entity through which the adverse parties operate a portfolio of twenty-two (22) franchised hotel properties branded under the Verimark system. The portfolio consists of eighteen (18) Verimark Suites properties and four (4) Verimark Select properties, located across the State of Florida and the State of Georgia, comprising approximately 3,740 total guest rooms. Coastal Palms holds the franchise agreements with Verimark for each of these properties and is the entity primarily responsible for royalty and fee remittances to the franchisor.

3.3 Adverse Parties — Individuals (Principals of Coastal Palms)

The following individuals were identified as the equity holders and key principals of Coastal Palms Franchise Holdings LLC. Each was searched individually against the Firm's conflicts database.

• Randall "Randy" Brecker — Managing Member of Coastal Palms Franchise Holdings LLC, holding a sixty percent (60%) equity interest in the entity. Mr. Brecker also serves as President of Suncoast Room Management Inc. (see Section 3.4 below), the affiliated management company that collected direct-booking revenues for the Coastal Palms portfolio and retained a twelve percent (12%) management fee on such revenues. Mr. Brecker is approximately 58 years of age and resides in the Naples, Florida metropolitan area. Searched under: "Randall Brecker," "Randy Brecker," "R. Brecker."

• Theresa Brecker — Member of Coastal Palms Franchise Holdings LLC, holding a fifteen percent (15%) equity interest. Ms. Brecker is the spouse of Randall Brecker and is understood to manage payroll and human resources functions for the Coastal Palms portfolio. Searched under: "Theresa Brecker," "T. Brecker."

• Nolan Prescott — Member of Coastal Palms Franchise Holdings LLC, holding a twenty-five percent (25%) equity interest. Mr. Prescott is described as a passive investor in the enterprise and is a retired commercial real estate developer. He is approximately 67 years of age. Searched under: "Nolan Prescott," "N. Prescott."

3.4 Adverse Parties — Affiliated Entities

The following entities were identified as affiliates of Coastal Palms Franchise Holdings LLC, each controlled by or associated with Randall Brecker. These entities may be named as defendants or otherwise implicated in the proposed litigation, and were therefore included in the conflicts search.

• Gulf Breeze Hospitality LLC — A limited liability company organized under the laws of the State of Florida. Gulf Breeze owns and/or operates six (6) Verimark Suites properties located in Southwest Florida. The Managing Member of Gulf Breeze Hospitality LLC is Randall Brecker. Searched under: "Gulf Breeze Hospitality LLC," "Gulf Breeze Hospitality," "Gulf Breeze."

• Savannah Lodging Partners LLC — A limited liability company organized under the laws of the State of Georgia. Savannah Lodging Partners owns and/or operates four (4) Verimark Suites properties in coastal Georgia. The Managing Member of Savannah Lodging Partners LLC is Randall Brecker. Searched under: "Savannah Lodging Partners LLC," "Savannah Lodging Partners," "Savannah Lodging."

• Suncoast Room Management Inc. — A corporation organized under the laws of the State of Florida. Suncoast Room Management is an affiliated management company that collected direct-booking revenues on behalf of the Coastal Palms hotel portfolio and retained a twelve percent (12%) management fee on such revenues. The President of Suncoast Room Management Inc. is Randall Brecker. The routing of direct-booking revenues through Suncoast is central to Verimark's allegations that gross room revenues were systematically underreported to the franchisor. Searched under: "Suncoast Room Management Inc.," "Suncoast Room Management," "Suncoast Room Mgmt," "Suncoast."

3.5 Known Opposing Counsel

Whitfield, Barrow & Crane LLP

Searched under: "Whitfield, Barrow & Crane LLP," "Whitfield Barrow & Crane," "Whitfield Barrow Crane," "WBC," "WB&C"

Entity Type: Limited liability partnership organized under the laws of the State of Florida.

Description: Whitfield, Barrow & Crane LLP is an approximately 200-lawyer litigation-focused law firm headquartered in Miami, Florida, with additional offices in Tampa, Orlando, and Jacksonville. The firm is recognized as one of the leading commercial litigation practices in the State of Florida.

Address: 1221 Brickell Avenue, Suite 3000, Miami, Florida 33131.

Attorneys Identified as Likely to Appear on Behalf of Coastal Palms:

• Nathan Whitfield III — Senior Partner; anticipated to serve as lead trial attorney for Coastal Palms. Mr. Whitfield is approximately 62 years of age and has extensive experience in franchise and commercial disputes. Searched under: "Nathan Whitfield III," "Nathan Whitfield," "N. Whitfield."

• Gabriela Montes — Partner; anticipated to handle discovery and motion practice. Ms. Montes is approximately 44 years of age. Searched under: "Gabriela Montes," "G. Montes."

• Ethan Doyle — Associate; anticipated to coordinate deposition logistics and document review. Mr. Doyle is approximately 31 years of age. Searched under: "Ethan Doyle," "E. Doyle."

3.6 Other Entities and Individuals Searched

The following additional entities and individuals were included in the conflicts search based on their anticipated involvement in, or relevance to, the proposed litigation:

• Garrison Registered Agents LLC — Registered agent for Coastal Palms Franchise Holdings LLC. Address: 100 S. Ashley Drive, Suite 600, Tampa, Florida 33602. Searched under: "Garrison Registered Agents LLC," "Garrison Registered Agents," "Garrison RA."

• Ironclad National Bank — A national banking association serving as the commercial lender holding first-lien mortgage loans on eighteen (18) of the twenty-two (22) hotel properties in the Coastal Palms portfolio. The aggregate outstanding principal balance on these mortgage facilities is approximately $94 million. Ironclad National Bank is headquartered at 225 Peachtree Street NE, Suite 2600, Atlanta, Georgia 30303. The designated Relationship Manager for the Coastal Palms account is Devon Schultz, Senior Vice President. Ironclad is not anticipated to be a party to the proposed litigation but may have interests affected by the outcome. Searched under: "Ironclad National Bank," "Ironclad Bank," "Ironclad," "Devon Schultz."

• Thornbury & Associates CPAs LLP — A regional certified public accounting firm retained by Verimark Hospitality Group Inc. to conduct a pre-litigation franchise-compliance audit of Coastal Palms' financial records and reported revenues. Address: 1551 N. Flagler Drive, Suite 800, West Palm Beach, Florida 33401. The lead audit partner is Malcolm Thornbury, CPA. Thornbury & Associates is expected to serve as a consulting and/or testifying expert in the proposed litigation. Searched under: "Thornbury & Associates CPAs LLP," "Thornbury & Associates," "Thornbury Associates," "Malcolm Thornbury."

• Pinnacle Indemnity Insurance Co. — A Connecticut-domiciled insurer providing litigation insurance coverage to Verimark Hospitality Group Inc. The applicable policy is Policy No. PLI-VHG-2021-08874. The designated Claims Counsel is Arthur Baines. Pinnacle may have an interest in the matter to the extent the proposed engagement triggers coverage obligations or reporting requirements under the policy. Searched under: "Pinnacle Indemnity Insurance Co.," "Pinnacle Indemnity Insurance," "Pinnacle Indemnity," "Pinnacle Insurance," "Arthur Baines."

• Janet Kerrigan — A former employee of Coastal Palms Franchise Holdings LLC who served as regional controller. Ms. Kerrigan is identified as the whistleblower who reported the revenue-diversion scheme to Verimark's Franchise Operations department on November 8, 2021. Ms. Kerrigan's employment with Coastal Palms was terminated in October 2021, approximately one month prior to her report to Verimark. Ms. Kerrigan is expected to be a key fact witness in the proposed litigation. Searched under: "Janet Kerrigan," "J. Kerrigan."

4. Search Results

The following section presents the results of the conflicts search for each entity and individual identified in Section 3 above. Results are presented in the same order and numbering as the search subjects.

4.1 Verimark Hospitality Group Inc.

A search of the Firm's conflicts database under all listed name variations for Verimark Hospitality Group Inc. returned no matches. Specifically:

(a) No current representation of Verimark in any matter has been identified. The Firm has not previously been retained by Verimark in any capacity, including transactional, regulatory, litigation, or advisory matters.

(b) No prior representation of Verimark in any matter has been identified. There is no record of any former engagement between Calderwood & Harkness LLP and Verimark or any predecessor entity.

(c) No adverse representation has been identified. The Firm has not represented any client in a matter adverse to Verimark at any time.

(d) No financial or business relationship between any Calderwood & Harkness partner, associate, or professional staff member and Verimark has been identified. No partner declarations or lateral-hire intake records disclosed any such relationship.

Conclusion: No conflict.

4.2 Coastal Palms Franchise Holdings LLC

A search of the Firm's conflicts database under all listed name variations for Coastal Palms Franchise Holdings LLC returned no matches. Specifically:

(a) No current or prior representation of Coastal Palms in any matter has been identified. The Firm has not been retained by Coastal Palms or any predecessor entity at any time.

(b) No prior adverse representation on behalf of any client against Coastal Palms has been identified. Coastal Palms does not appear as an adverse party in any current or former matter in the Firm's records.

Conclusion: No conflict.

4.3 Randall "Randy" Brecker

A search of the Firm's conflicts database under all listed name variations for Randall Brecker returned no matches. Specifically:

(a) No current or prior representation of Randall Brecker in any individual or professional capacity has been identified.

(b) No personal, financial, or professional relationship between Randall Brecker and any Calderwood & Harkness attorney or professional staff member has been identified. No partner declarations disclosed any such relationship.

Conclusion: No conflict.

4.4 Theresa Brecker

A search of the Firm's conflicts database under all listed name variations for Theresa Brecker returned no matches. Specifically:

(a) No current or prior representation of Theresa Brecker in any individual or professional capacity has been identified.

(b) No personal, financial, or professional relationship between Theresa Brecker and any Calderwood & Harkness attorney or professional staff member has been identified.

Conclusion: No conflict.

4.5 Nolan Prescott

A search of the Firm's conflicts database under all listed name variations for Nolan Prescott returned no matches. Specifically:

(a) No current or prior representation of Nolan Prescott in any individual or professional capacity has been identified.

(b) No personal, financial, or professional relationship between Nolan Prescott and any Calderwood & Harkness attorney or professional staff member has been identified.

Conclusion: No conflict.

4.6 Suncoast Room Management Inc.

A search of the Firm's conflicts database under all listed name variations for Suncoast Room Management Inc. returned no matches. Specifically:

(a) No current or prior representation of Suncoast Room Management Inc. in any matter has been identified.

(b) No adverse representation on behalf of any client against Suncoast Room Management Inc. has been identified.

Conclusion: No conflict.

4.7 Gulf Breeze Hospitality LLC

A search of the Firm's conflicts database under all listed name variations for Gulf Breeze Hospitality LLC returned no matches. Specifically:

(a) No current or prior representation of Gulf Breeze Hospitality LLC in any matter has been identified.

(b) No adverse representation on behalf of any client against Gulf Breeze Hospitality LLC has been identified.

Conclusion: No conflict.

4.8 Savannah Lodging Partners LLC

A search of the Firm's conflicts database under all listed name variations for Savannah Lodging Partners LLC returned no matches. Specifically:

(a) No current or prior representation of Savannah Lodging Partners LLC in any matter has been identified.

(b) No adverse representation on behalf of any client against Savannah Lodging Partners LLC has been identified.

Conclusion: No conflict.

4.9 Whitfield, Barrow & Crane LLP

A search of the Firm's conflicts database under all listed name variations for Whitfield, Barrow & Crane LLP returned results that were reviewed and determined not to give rise to a conflict of interest. The details are as follows:

(a) No current matters were identified in which Calderwood & Harkness LLP and Whitfield, Barrow & Crane LLP serve as co-counsel for the same client, or in which either firm represents a client adverse to the other firm's client in the same matter or a substantially related matter.

(b) Whitfield, Barrow & Crane LLP has appeared as opposing counsel in prior unrelated litigation matters involving clients of Calderwood & Harkness LLP. This type of adversity in unrelated proceedings is a routine occurrence among major Florida litigation firms and does not give rise to a conflict of interest under the Rules Regulating The Florida Bar or the Firm's internal policies. The prior matters in which Whitfield, Barrow & Crane appeared as opposing counsel are factually and legally unrelated to the proposed Verimark engagement.

(c) No personal, financial, or professional relationships between the three identified Whitfield, Barrow & Crane attorneys—Nathan Whitfield III, Gabriela Montes, and Ethan Doyle—and any Calderwood & Harkness attorney or professional staff member were identified that would impair the Firm's ability to represent the Prospective Client zealously and without divided loyalty. No partner declarations disclosed any such relationships, and no lateral-hire intake records revealed any prior professional affiliation with Whitfield, Barrow & Crane LLP by any current Calderwood & Harkness attorney.

Conclusion: No conflict.

4.10 Garrison Registered Agents LLC

A search of the Firm's conflicts database under all listed name variations for Garrison Registered Agents LLC returned no matches. No current or prior representation of Garrison Registered Agents LLC has been identified. Garrison serves solely as the statutory registered agent for Coastal Palms and has no substantive role in the proposed litigation.

Conclusion: No conflict.

4.11 Ironclad National Bank

A search of the Firm's conflicts database under all listed name variations for Ironclad National Bank returned no matches. Specifically:

(a) No current representation of Ironclad National Bank or representation adverse to Ironclad National Bank in any matter has been identified.

(b) Ironclad National Bank is identified in this matter solely in its capacity as the commercial lender holding first-lien mortgage loans on eighteen (18) of the twenty-two (22) Coastal Palms hotel properties. Ironclad is not anticipated to be a named party in the proposed litigation. Its status as a secured creditor of the adverse parties does not create a conflict of interest with respect to the Firm's proposed representation of Verimark.

(c) No personal or financial relationships between Devon Schultz, SVP, or any other Ironclad personnel and any Calderwood & Harkness attorney have been identified.

Conclusion: No conflict.

4.12 Thornbury & Associates CPAs LLP

A search of the Firm's conflicts database under all listed name variations for Thornbury & Associates CPAs LLP and Malcolm Thornbury, CPA, returned no matches. Specifically:

(a) No current or prior representation of Thornbury & Associates CPAs LLP or Malcolm Thornbury has been identified.

(b) Thornbury & Associates is a third-party accounting firm retained by Verimark to conduct the pre-litigation franchise-compliance audit. As a service provider to the Prospective Client, Thornbury & Associates' interests are aligned with those of Verimark, and no adverse interest exists.

Conclusion: No conflict.

4.13 Pinnacle Indemnity Insurance Co.

A search of the Firm's conflicts database under all listed name variations for Pinnacle Indemnity Insurance Co. and Arthur Baines returned no matches. Specifically:

(a) No current or prior representation of Pinnacle Indemnity Insurance Co. has been identified.

(b) No representation adverse to Pinnacle Indemnity Insurance Co. has been identified.

(c) Pinnacle is identified in this matter as Verimark's litigation insurer under Policy No. PLI-VHG-2021-08874. As an insurer of the Prospective Client, Pinnacle's interests are aligned with those of Verimark with respect to the proposed litigation, and no adverse interest exists.

Conclusion: No conflict.

4.14 Janet Kerrigan

A search of the Firm's conflicts database under all listed name variations for Janet Kerrigan returned no matches. Specifically:

(a) No current or prior representation of Janet Kerrigan in any capacity has been identified.

(b) No personal, financial, or professional relationship between Janet Kerrigan and any Calderwood & Harkness attorney or professional staff member has been identified.

Conclusion: No conflict.

5. Proposed Engagement Team

The following attorneys have been identified as the proposed Calderwood & Harkness LLP engagement team for the Verimark matter. Each team member has been individually cleared through the Firm's conflicts database and through a review of their individual partner or associate declarations, as applicable. The results of each individual clearance check are set forth below.

Each of the above-identified team members has been individually confirmed to have no prior personal, professional, or financial relationship with any adverse party identified in this memorandum, including Coastal Palms Franchise Holdings LLC, its individual principals (Randall Brecker, Theresa Brecker, and Nolan Prescott), its affiliated entities (Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc.), or any attorney of Whitfield, Barrow & Crane LLP, that would create a conflict of interest or an appearance of impropriety under the Rules Regulating The Florida Bar or the Firm's internal policies.

No team member has previously represented any entity or individual that is adverse to Verimark in any matter, nor has any team member had any involvement in any prior engagement that is substantially related to the subject matter of the proposed litigation. No team member holds any financial interest in any entity identified as an adverse party or in any entity whose interests may be materially affected by the outcome of the proposed litigation.

6. Conclusion and Clearance

Based on the comprehensive conflicts-of-interest check described in this memorandum, including automated database searches, manual review of partner declarations and lateral-hire intake records, and consultation with the Firm's conflicts team, it is the undersigned's determination that Calderwood & Harkness LLP is clear to proceed with the proposed engagement to represent Verimark Hospitality Group Inc. in connection with the contemplated breach-of-contract action against the following adverse parties:

• Coastal Palms Franchise Holdings LLC;

• Gulf Breeze Hospitality LLC;

• Savannah Lodging Partners LLC;

• Suncoast Room Management Inc.;

• Randall "Randy" Brecker, individually and in his capacity as Managing Member of Coastal Palms and President of Suncoast Room Management Inc.;

• Theresa Brecker, individually and in her capacity as Member of Coastal Palms; and

• Nolan Prescott, individually and in his capacity as Member of Coastal Palms.

No conflicts of interest have been identified under the applicable provisions of the Rules Regulating The Florida Bar, including but not limited to:

• Rule 4-1.7 (Conflict of Interest; Current Clients) — No current client of the Firm will be adversely affected by the proposed representation, and no concurrent conflict exists;

• Rule 4-1.9 (Duties to Former Clients) — No former client of the Firm has been identified whose interests are materially adverse to those of the Prospective Client in a matter that is the same as, or substantially related to, the proposed engagement; and

• Rule 4-1.10 (Imputation of Conflicts of Interest) — No individual attorney conflict has been identified that would require imputation analysis.

The conflicts clearance documented herein is likewise consistent with the Firm's internal Conflicts of Interest Policy (revised effective January 1, 2022).

This clearance is subject to the following conditions:

1. The matter must be opened promptly in the Firm's matter management system, and the Firm's conflicts database must be updated to reflect all parties, affiliated entities, and counsel identified in this memorandum.

2. Any new parties, affiliates, related entities, or counsel identified during the course of the engagement — whether through the addition of counterclaim defendants, third-party defendants, intervenors, or otherwise — must be submitted for supplemental conflict checks through the Office of the General Counsel before the Firm takes any action in relation to such newly identified parties.

3. If at any time during the course of the representation any attorney or professional staff member of the Firm becomes aware of a relationship, interest, or circumstance that may give rise to a conflict of interest or an appearance of impropriety, such information must be promptly reported to the undersigned or the Firm's General Counsel for evaluation.

7. Recommendation

Based on the foregoing analysis and the absence of any identified conflict of interest, the undersigned recommends that Calderwood & Harkness LLP proceed with the proposed engagement to represent Verimark Hospitality Group Inc. in the contemplated litigation against Coastal Palms Franchise Holdings LLC and related parties.

The following next steps are recommended:

1. Engagement Letter: An engagement letter should be prepared and transmitted to Renata Solis-Vega, Senior Vice President and General Counsel, Verimark Hospitality Group Inc., for review and execution. The engagement letter should address the scope of the proposed representation, fee arrangements, billing practices, and the identity of the responsible attorneys, consistent with the Firm's standard engagement letter template for complex commercial litigation matters.

2. Matter Opening: Upon execution of the engagement letter by the Prospective Client and return to the Firm, the matter should be opened in the Firm's matter management system, a matter number assigned, and the conflicts database updated with all parties and related entities identified herein.

3. Insurance Notification: Coordination with Pinnacle Indemnity Insurance Co. (Claims Counsel: Arthur Baines) regarding any applicable coverage obligations or reporting requirements should be initiated promptly following engagement.

8. Distribution and Approval

Reviewed and Approved by:

Douglas Carmichael Partner, Litigation (General) Calderwood & Harkness LLP FL Bar No. 0093217

Date of Clearance: March 3, 2022

Distribution:

• Original retained in the Firm's permanent conflicts file maintained by the Office of the General Counsel.

• Copy retained in the matter intake file (to be filed under the assigned matter number upon matter opening).

• Copy provided to Priya Anand, Responsible Partner.

CALDERWOOD & HARKNESS LLP — PRIVILEGED & CONFIDENTIAL — INTERNAL USE ONLY This memorandum and the information contained herein are subject to attorney-client privilege and work-product protection. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.

Attorney	Role	FL Bar No.	Experience	Individual Check
Priya Anand	Responsible Partner, Litigation (General)	0087451	22 years — complex commercial and franchise litigation	Clear
Douglas Carmichael	Billing Partner, Litigation (General)	0093217	19 years — complex commercial litigation	Clear
Yuki Nakamura	Lead Associate, Litigation (General)	0119644	7 years — to manage day-to-day discovery coordination and briefing	Clear
Carlos Espinoza	Working Associate, Litigation (General)	0128903	4 years — deposition preparation and damages analysis support	Clear

CALDERWOOD & HARKNESS LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301
INTERNAL MEMORANDUM — PRIVILEGED & CONFIDENTIAL
DATE: March 3, 2022
TO: Priya Anand, Partner, Litigation (General)
FROM: Douglas Carmichael, Partner, Litigation (General)
RE: Conflict Check Results — Proposed Engagement: Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al.
MATTER NO.: [To be assigned upon matter opening]
CONFIDENTIALITY NOTICE: This memorandum is prepared for internal use only and is subject to attorney-client privilege and work-product protection. It contains confidential information related to the firm's conflict-of-interest analysis and should not be disseminated outside of Calderwood & Harkness LLP without the express written authorization of the undersigned or the firm's General Counsel. Unauthorized disclosure may result in waiver of applicable privileges.
1. Purpose of Memorandum
This memorandum confirms the completion of a comprehensive conflicts-of-interest check conducted in connection with the proposed retention of Calderwood & Harkness LLP ("the Firm") by Verimark Hospitality Group Inc. (Nasdaq: VHMK), a Delaware corporation with its principal executive offices located at 2400 East Las Olas Boulevard, Suite 3100, Fort Lauderdale, Florida 33301 (the "Prospective Client" or "Verimark"). The purpose of this conflicts analysis is to determine whether any current or former client relationship, adverse representation, financial interest, or personal relationship involving any attorney or professional of the Firm would preclude or complicate the Firm's acceptance of the proposed engagement, and to document the results for the Firm's permanent conflicts file.
The proposed engagement arises from Verimark's intention to prosecute a breach-of-contract action against its franchisee, Coastal Palms Franchise Holdings LLC ("Coastal Palms"), a Florida limited liability company, and related parties, including certain affiliated entities and individual principals of Coastal Palms. The substantive allegations underlying the proposed litigation concern the systematic underreporting of gross room revenues by Coastal Palms and its affiliated management entities across a portfolio of twenty-two (22) franchised hotel properties over an approximately nine-year period spanning 2013 through 2021. As a direct result of this alleged underreporting, Verimark contends that it has been underpaid royalties, marketing-fund contributions, and technology fees in an aggregate amount anticipated to reach approximately $150 million in damages. Venue for the contemplated litigation is expected to be the Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida.
The request to initiate this conflicts check was received by the undersigned on March 1, 2022, from Priya Anand, Partner, Litigation (General), who has been designated as the Responsible Partner for this proposed engagement. The request followed preliminary discussions between Ms. Anand and Renata Solis-Vega, Senior Vice President and General Counsel of Verimark Hospitality Group Inc. Ms. Solis-Vega indicated that Verimark had selected Calderwood & Harkness as its preferred outside counsel for this matter based on the Firm's recognized expertise in complex commercial and franchise litigation in the southeastern United States.
This memorandum sets forth in detail: (i) the process by which the conflicts check was conducted; (ii) the complete list of entities and individuals against whom searches were run; (iii) the results of those searches; (iv) the individual clearance status of each proposed engagement team member; and (v) the Firm's conclusion and recommendation regarding the acceptance of the proposed engagement.
2. Conflict Check Process
The conflicts check was conducted over a two-day period, commencing on March 2, 2022, and concluding on March 3, 2022. The following procedures were employed to ensure a thorough and reliable analysis:
2.1 Database Searches. All searches were conducted through the Firm's proprietary firm-wide conflicts database ("C&H Conflicts System"), which is maintained by the Office of the General Counsel and updated on a continuous basis. The C&H Conflicts System contains records spanning the full operational history of Calderwood & Harkness LLP and covers the following categories of information across all domestic and international offices of the Firm:
(a) All current clients and the matters in which they are represented;
(b) All former clients and the matters in which they were represented, including matters closed within the applicable lookback period and those retained permanently in the database;
(c) All adverse parties identified in current and former matters;
(d) All related, affiliated, parent, and subsidiary entities associated with current and former clients and adverse parties, to the extent such information was recorded at the time of matter intake;
(e) Individual principals, officers, directors, and key contacts associated with entity clients and adverse parties;
(f) Opposing counsel of record in current and former matters;
(g) Known third-party service providers, expert witnesses, and consultants retained or engaged in connection with current and former matters; and
(h) Business and financial relationships of the Firm and its partners, including equity investments, board memberships, and outside counsel arrangements.
2.2 Search Parameters. Searches were run against the following categories of names and entities relevant to the proposed engagement:
(a) The Prospective Client and all known corporate affiliates, trade names, and ticker symbols;
(b) All known adverse parties, including the primary defendant entity, its individual principals and equity holders, and affiliated and subsidiary entities identified through preliminary due diligence;
(c) Known opposing counsel, including the law firm and individual attorneys expected to represent the adverse parties;
(d) Known third-party service providers, auditors, insurers, and financial institutions likely to be involved in or affected by the proposed litigation; and
(e) Key individual witnesses identified during preliminary discussions with the Prospective Client's General Counsel.
2.3 Supplemental Manual Review. In addition to the automated database queries, the undersigned caused a manual review to be conducted of the following supplemental records:
(a) Partner declarations submitted in connection with the Firm's most recent annual conflicts certification (January 2022), which require each equity and non-equity partner to disclose outside business interests, board memberships, financial relationships, and personal relationships that could give rise to conflicts of interest;
(b) Lateral-hire intake records for all attorneys who joined the Firm within the preceding twenty-four (24) months, including conflicts data imported from prior firm affiliations; and
(c) Business development and pitch records maintained by the Firm's Marketing and Client Development Department to identify any recent or pending engagement proposals involving any of the searched entities.
2.4 Conflicts Team Consultation. The conflicts analysis was supervised by the Firm's conflicts team within the Office of the General Counsel. The conflicts team lead was consulted regarding the scope and methodology of the search, confirmed the completeness of the search parameters, and reviewed the preliminary results before they were transmitted to the undersigned for final evaluation and documentation.
2.5 Applicable Standards. The conflicts analysis was conducted in accordance with the requirements of Rules 4-1.7 (Conflict of Interest; Current Clients) and 4-1.9 (Duties to Former Clients) of the Rules Regulating The Florida Bar, as well as the Firm's internal Conflicts of Interest Policy (revised effective January 1, 2022). Where applicable, reference was also made to Rule 4-1.10 (Imputation of Conflicts of Interest) and Rule 4-1.18 (Duties to Prospective Clients).
3. Entities and Individuals Searched
The following is a comprehensive list of all entities and individuals against whom conflicts searches were conducted. For each entry, the memorandum provides the name (including all variations and aliases searched), entity type, address, and other identifying information sufficient to ensure the accuracy of the search results.
3.1 Prospective Client
Verimark Hospitality Group Inc.
Searched under: "Verimark Hospitality Group Inc.," "Verimark Hospitality Group," "Verimark Hospitality," "VHG," "Verimark," "VHMK"
Entity Type: Corporation organized under the laws of the State of Delaware; publicly traded on the Nasdaq Stock Market under the ticker symbol VHMK.
Principal Executive Offices: 2400 East Las Olas Boulevard, Suite 3100, Fort Lauderdale, Florida 33301.
Industry: Hospitality and real estate. Verimark operates and franchises approximately 340 branded hotel properties across the southeastern United States under three distinct brand flags: "Verimark Suites" (extended-stay and select-service properties), "Verimark Select" (upper-midscale select-service properties), and "Verimark Grand" (Upscale full-service properties). The company's operations encompass both company-owned and franchised properties, with the franchise segment representing a significant and growing portion of overall revenues.
Financial Information (as publicly reported): For the fiscal year ended December 31, 2021, Verimark reported consolidated revenues of approximately $1.42 billion. The franchise segment contributed approximately $218 million in franchise fees, royalties, marketing-fund contributions, and technology fees during the same period.
Key Client Contacts:
• Renata Solis-Vega — Senior Vice President and General Counsel, Verimark Hospitality Group Inc. Ms. Solis-Vega serves as the primary point of contact for the proposed engagement and has authority to execute the engagement letter on behalf of Verimark.
• Martin Holcomb — Executive Vice President and Chief Financial Officer, Verimark Hospitality Group Inc. Mr. Holcomb oversees the company's financial reporting and has been involved in quantifying the alleged revenue underreporting and associated damages.
• Deidre Langston — Senior Vice President, Franchise Operations, Verimark Hospitality Group Inc. Ms. Langston is responsible for franchise compliance monitoring and was instrumental in identifying the discrepancies that gave rise to the underlying claims.
3.2 Adverse Parties — Primary
Coastal Palms Franchise Holdings LLC
Searched under: "Coastal Palms Franchise Holdings LLC," "Coastal Palms Franchise Holdings," "Coastal Palms," "CPFH"
Entity Type: Limited liability company organized under the laws of the State of Florida.
Principal Office: 9500 Gulf Shore Drive, Suite 450, Naples, Florida 34108.
Registered Agent: Garrison Registered Agents LLC, 100 S. Ashley Drive, Suite 600, Tampa, Florida 33602.
Business Description: Coastal Palms is the principal franchisee entity through which the adverse parties operate a portfolio of twenty-two (22) franchised hotel properties branded under the Verimark system. The portfolio consists of eighteen (18) Verimark Suites properties and four (4) Verimark Select properties, located across the State of Florida and the State of Georgia, comprising approximately 3,740 total guest rooms. Coastal Palms holds the franchise agreements with Verimark for each of these properties and is the entity primarily responsible for royalty and fee remittances to the franchisor.
3.3 Adverse Parties — Individuals (Principals of Coastal Palms)
The following individuals were identified as the equity holders and key principals of Coastal Palms Franchise Holdings LLC. Each was searched individually against the Firm's conflicts database.
• Randall "Randy" Brecker — Managing Member of Coastal Palms Franchise Holdings LLC, holding a sixty percent (60%) equity interest in the entity. Mr. Brecker also serves as President of Suncoast Room Management Inc. (see Section 3.4 below), the affiliated management company that collected direct-booking revenues for the Coastal Palms portfolio and retained a twelve percent (12%) management fee on such revenues. Mr. Brecker is approximately 58 years of age and resides in the Naples, Florida metropolitan area. Searched under: "Randall Brecker," "Randy Brecker," "R. Brecker."
• Theresa Brecker — Member of Coastal Palms Franchise Holdings LLC, holding a fifteen percent (15%) equity interest. Ms. Brecker is the spouse of Randall Brecker and is understood to manage payroll and human resources functions for the Coastal Palms portfolio. Searched under: "Theresa Brecker," "T. Brecker."
• Nolan Prescott — Member of Coastal Palms Franchise Holdings LLC, holding a twenty-five percent (25%) equity interest. Mr. Prescott is described as a passive investor in the enterprise and is a retired commercial real estate developer. He is approximately 67 years of age. Searched under: "Nolan Prescott," "N. Prescott."
3.4 Adverse Parties — Affiliated Entities
The following entities were identified as affiliates of Coastal Palms Franchise Holdings LLC, each controlled by or associated with Randall Brecker. These entities may be named as defendants or otherwise implicated in the proposed litigation, and were therefore included in the conflicts search.
• Gulf Breeze Hospitality LLC — A limited liability company organized under the laws of the State of Florida. Gulf Breeze owns and/or operates six (6) Verimark Suites properties located in Southwest Florida. The Managing Member of Gulf Breeze Hospitality LLC is Randall Brecker. Searched under: "Gulf Breeze Hospitality LLC," "Gulf Breeze Hospitality," "Gulf Breeze."
• Savannah Lodging Partners LLC — A limited liability company organized under the laws of the State of Georgia. Savannah Lodging Partners owns and/or operates four (4) Verimark Suites properties in coastal Georgia. The Managing Member of Savannah Lodging Partners LLC is Randall Brecker. Searched under: "Savannah Lodging Partners LLC," "Savannah Lodging Partners," "Savannah Lodging."
• Suncoast Room Management Inc. — A corporation organized under the laws of the State of Florida. Suncoast Room Management is an affiliated management company that collected direct-booking revenues on behalf of the Coastal Palms hotel portfolio and retained a twelve percent (12%) management fee on such revenues. The President of Suncoast Room Management Inc. is Randall Brecker. The routing of direct-booking revenues through Suncoast is central to Verimark's allegations that gross room revenues were systematically underreported to the franchisor. Searched under: "Suncoast Room Management Inc.," "Suncoast Room Management," "Suncoast Room Mgmt," "Suncoast."
3.5 Known Opposing Counsel
Whitfield, Barrow & Crane LLP
Searched under: "Whitfield, Barrow & Crane LLP," "Whitfield Barrow & Crane," "Whitfield Barrow Crane," "WBC," "WB&C"
Entity Type: Limited liability partnership organized under the laws of the State of Florida.
Description: Whitfield, Barrow & Crane LLP is an approximately 200-lawyer litigation-focused law firm headquartered in Miami, Florida, with additional offices in Tampa, Orlando, and Jacksonville. The firm is recognized as one of the leading commercial litigation practices in the State of Florida.
Address: 1221 Brickell Avenue, Suite 3000, Miami, Florida 33131.
Attorneys Identified as Likely to Appear on Behalf of Coastal Palms:
• Nathan Whitfield III — Senior Partner; anticipated to serve as lead trial attorney for Coastal Palms. Mr. Whitfield is approximately 62 years of age and has extensive experience in franchise and commercial disputes. Searched under: "Nathan Whitfield III," "Nathan Whitfield," "N. Whitfield."
• Gabriela Montes — Partner; anticipated to handle discovery and motion practice. Ms. Montes is approximately 44 years of age. Searched under: "Gabriela Montes," "G. Montes."
• Ethan Doyle — Associate; anticipated to coordinate deposition logistics and document review. Mr. Doyle is approximately 31 years of age. Searched under: "Ethan Doyle," "E. Doyle."
3.6 Other Entities and Individuals Searched
The following additional entities and individuals were included in the conflicts search based on their anticipated involvement in, or relevance to, the proposed litigation:
• Garrison Registered Agents LLC — Registered agent for Coastal Palms Franchise Holdings LLC. Address: 100 S. Ashley Drive, Suite 600, Tampa, Florida 33602. Searched under: "Garrison Registered Agents LLC," "Garrison Registered Agents," "Garrison RA."
• Ironclad National Bank — A national banking association serving as the commercial lender holding first-lien mortgage loans on eighteen (18) of the twenty-two (22) hotel properties in the Coastal Palms portfolio. The aggregate outstanding principal balance on these mortgage facilities is approximately $94 million. Ironclad National Bank is headquartered at 225 Peachtree Street NE, Suite 2600, Atlanta, Georgia 30303. The designated Relationship Manager for the Coastal Palms account is Devon Schultz, Senior Vice President. Ironclad is not anticipated to be a party to the proposed litigation but may have interests affected by the outcome. Searched under: "Ironclad National Bank," "Ironclad Bank," "Ironclad," "Devon Schultz."
• Thornbury & Associates CPAs LLP — A regional certified public accounting firm retained by Verimark Hospitality Group Inc. to conduct a pre-litigation franchise-compliance audit of Coastal Palms' financial records and reported revenues. Address: 1551 N. Flagler Drive, Suite 800, West Palm Beach, Florida 33401. The lead audit partner is Malcolm Thornbury, CPA. Thornbury & Associates is expected to serve as a consulting and/or testifying expert in the proposed litigation. Searched under: "Thornbury & Associates CPAs LLP," "Thornbury & Associates," "Thornbury Associates," "Malcolm Thornbury."
• Pinnacle Indemnity Insurance Co. — A Connecticut-domiciled insurer providing litigation insurance coverage to Verimark Hospitality Group Inc. The applicable policy is Policy No. PLI-VHG-2021-08874. The designated Claims Counsel is Arthur Baines. Pinnacle may have an interest in the matter to the extent the proposed engagement triggers coverage obligations or reporting requirements under the policy. Searched under: "Pinnacle Indemnity Insurance Co.," "Pinnacle Indemnity Insurance," "Pinnacle Indemnity," "Pinnacle Insurance," "Arthur Baines."
• Janet Kerrigan — A former employee of Coastal Palms Franchise Holdings LLC who served as regional controller. Ms. Kerrigan is identified as the whistleblower who reported the revenue-diversion scheme to Verimark's Franchise Operations department on November 8, 2021. Ms. Kerrigan's employment with Coastal Palms was terminated in October 2021, approximately one month prior to her report to Verimark. Ms. Kerrigan is expected to be a key fact witness in the proposed litigation. Searched under: "Janet Kerrigan," "J. Kerrigan."
4. Search Results
The following section presents the results of the conflicts search for each entity and individual identified in Section 3 above. Results are presented in the same order and numbering as the search subjects.
4.1 Verimark Hospitality Group Inc.
A search of the Firm's conflicts database under all listed name variations for Verimark Hospitality Group Inc. returned no matches. Specifically:
(a) No current representation of Verimark in any matter has been identified. The Firm has not previously been retained by Verimark in any capacity, including transactional, regulatory, litigation, or advisory matters.
(b) No prior representation of Verimark in any matter has been identified. There is no record of any former engagement between Calderwood & Harkness LLP and Verimark or any predecessor entity.
(c) No adverse representation has been identified. The Firm has not represented any client in a matter adverse to Verimark at any time.
(d) No financial or business relationship between any Calderwood & Harkness partner, associate, or professional staff member and Verimark has been identified. No partner declarations or lateral-hire intake records disclosed any such relationship.
Conclusion: No conflict.
4.2 Coastal Palms Franchise Holdings LLC
A search of the Firm's conflicts database under all listed name variations for Coastal Palms Franchise Holdings LLC returned no matches. Specifically:
(a) No current or prior representation of Coastal Palms in any matter has been identified. The Firm has not been retained by Coastal Palms or any predecessor entity at any time.
(b) No prior adverse representation on behalf of any client against Coastal Palms has been identified. Coastal Palms does not appear as an adverse party in any current or former matter in the Firm's records.
Conclusion: No conflict.
4.3 Randall "Randy" Brecker
A search of the Firm's conflicts database under all listed name variations for Randall Brecker returned no matches. Specifically:
(a) No current or prior representation of Randall Brecker in any individual or professional capacity has been identified.
(b) No personal, financial, or professional relationship between Randall Brecker and any Calderwood & Harkness attorney or professional staff member has been identified. No partner declarations disclosed any such relationship.
Conclusion: No conflict.
4.4 Theresa Brecker
A search of the Firm's conflicts database under all listed name variations for Theresa Brecker returned no matches. Specifically:
(a) No current or prior representation of Theresa Brecker in any individual or professional capacity has been identified.
(b) No personal, financial, or professional relationship between Theresa Brecker and any Calderwood & Harkness attorney or professional staff member has been identified.
Conclusion: No conflict.
4.5 Nolan Prescott
A search of the Firm's conflicts database under all listed name variations for Nolan Prescott returned no matches. Specifically:
(a) No current or prior representation of Nolan Prescott in any individual or professional capacity has been identified.
(b) No personal, financial, or professional relationship between Nolan Prescott and any Calderwood & Harkness attorney or professional staff member has been identified.
Conclusion: No conflict.
4.6 Suncoast Room Management Inc.
A search of the Firm's conflicts database under all listed name variations for Suncoast Room Management Inc. returned no matches. Specifically:
(a) No current or prior representation of Suncoast Room Management Inc. in any matter has been identified.
(b) No adverse representation on behalf of any client against Suncoast Room Management Inc. has been identified.
Conclusion: No conflict.
4.7 Gulf Breeze Hospitality LLC
A search of the Firm's conflicts database under all listed name variations for Gulf Breeze Hospitality LLC returned no matches. Specifically:
(a) No current or prior representation of Gulf Breeze Hospitality LLC in any matter has been identified.
(b) No adverse representation on behalf of any client against Gulf Breeze Hospitality LLC has been identified.
Conclusion: No conflict.
4.8 Savannah Lodging Partners LLC
A search of the Firm's conflicts database under all listed name variations for Savannah Lodging Partners LLC returned no matches. Specifically:
(a) No current or prior representation of Savannah Lodging Partners LLC in any matter has been identified.
(b) No adverse representation on behalf of any client against Savannah Lodging Partners LLC has been identified.
Conclusion: No conflict.
4.9 Whitfield, Barrow & Crane LLP
A search of the Firm's conflicts database under all listed name variations for Whitfield, Barrow & Crane LLP returned results that were reviewed and determined not to give rise to a conflict of interest. The details are as follows:
(a) No current matters were identified in which Calderwood & Harkness LLP and Whitfield, Barrow & Crane LLP serve as co-counsel for the same client, or in which either firm represents a client adverse to the other firm's client in the same matter or a substantially related matter.
(b) Whitfield, Barrow & Crane LLP has appeared as opposing counsel in prior unrelated litigation matters involving clients of Calderwood & Harkness LLP. This type of adversity in unrelated proceedings is a routine occurrence among major Florida litigation firms and does not give rise to a conflict of interest under the Rules Regulating The Florida Bar or the Firm's internal policies. The prior matters in which Whitfield, Barrow & Crane appeared as opposing counsel are factually and legally unrelated to the proposed Verimark engagement.
(c) No personal, financial, or professional relationships between the three identified Whitfield, Barrow & Crane attorneys—Nathan Whitfield III, Gabriela Montes, and Ethan Doyle—and any Calderwood & Harkness attorney or professional staff member were identified that would impair the Firm's ability to represent the Prospective Client zealously and without divided loyalty. No partner declarations disclosed any such relationships, and no lateral-hire intake records revealed any prior professional affiliation with Whitfield, Barrow & Crane LLP by any current Calderwood & Harkness attorney.
Conclusion: No conflict.
4.10 Garrison Registered Agents LLC
A search of the Firm's conflicts database under all listed name variations for Garrison Registered Agents LLC returned no matches. No current or prior representation of Garrison Registered Agents LLC has been identified. Garrison serves solely as the statutory registered agent for Coastal Palms and has no substantive role in the proposed litigation.
Conclusion: No conflict.
4.11 Ironclad National Bank
A search of the Firm's conflicts database under all listed name variations for Ironclad National Bank returned no matches. Specifically:
(a) No current representation of Ironclad National Bank or representation adverse to Ironclad National Bank in any matter has been identified.
(b) Ironclad National Bank is identified in this matter solely in its capacity as the commercial lender holding first-lien mortgage loans on eighteen (18) of the twenty-two (22) Coastal Palms hotel properties. Ironclad is not anticipated to be a named party in the proposed litigation. Its status as a secured creditor of the adverse parties does not create a conflict of interest with respect to the Firm's proposed representation of Verimark.
(c) No personal or financial relationships between Devon Schultz, SVP, or any other Ironclad personnel and any Calderwood & Harkness attorney have been identified.
Conclusion: No conflict.
4.12 Thornbury & Associates CPAs LLP
A search of the Firm's conflicts database under all listed name variations for Thornbury & Associates CPAs LLP and Malcolm Thornbury, CPA, returned no matches. Specifically:
(a) No current or prior representation of Thornbury & Associates CPAs LLP or Malcolm Thornbury has been identified.
(b) Thornbury & Associates is a third-party accounting firm retained by Verimark to conduct the pre-litigation franchise-compliance audit. As a service provider to the Prospective Client, Thornbury & Associates' interests are aligned with those of Verimark, and no adverse interest exists.
Conclusion: No conflict.
4.13 Pinnacle Indemnity Insurance Co.
A search of the Firm's conflicts database under all listed name variations for Pinnacle Indemnity Insurance Co. and Arthur Baines returned no matches. Specifically:
(a) No current or prior representation of Pinnacle Indemnity Insurance Co. has been identified.
(b) No representation adverse to Pinnacle Indemnity Insurance Co. has been identified.
(c) Pinnacle is identified in this matter as Verimark's litigation insurer under Policy No. PLI-VHG-2021-08874. As an insurer of the Prospective Client, Pinnacle's interests are aligned with those of Verimark with respect to the proposed litigation, and no adverse interest exists.
Conclusion: No conflict.
4.14 Janet Kerrigan
A search of the Firm's conflicts database under all listed name variations for Janet Kerrigan returned no matches. Specifically:
(a) No current or prior representation of Janet Kerrigan in any capacity has been identified.
(b) No personal, financial, or professional relationship between Janet Kerrigan and any Calderwood & Harkness attorney or professional staff member has been identified.
Conclusion: No conflict.
5. Proposed Engagement Team
The following attorneys have been identified as the proposed Calderwood & Harkness LLP engagement team for the Verimark matter. Each team member has been individually cleared through the Firm's conflicts database and through a review of their individual partner or associate declarations, as applicable. The results of each individual clearance check are set forth below.
Each of the above-identified team members has been individually confirmed to have no prior personal, professional, or financial relationship with any adverse party identified in this memorandum, including Coastal Palms Franchise Holdings LLC, its individual principals (Randall Brecker, Theresa Brecker, and Nolan Prescott), its affiliated entities (Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc.), or any attorney of Whitfield, Barrow & Crane LLP, that would create a conflict of interest or an appearance of impropriety under the Rules Regulating The Florida Bar or the Firm's internal policies.
No team member has previously represented any entity or individual that is adverse to Verimark in any matter, nor has any team member had any involvement in any prior engagement that is substantially related to the subject matter of the proposed litigation. No team member holds any financial interest in any entity identified as an adverse party or in any entity whose interests may be materially affected by the outcome of the proposed litigation.
6. Conclusion and Clearance
Based on the comprehensive conflicts-of-interest check described in this memorandum, including automated database searches, manual review of partner declarations and lateral-hire intake records, and consultation with the Firm's conflicts team, it is the undersigned's determination that Calderwood & Harkness LLP is clear to proceed with the proposed engagement to represent Verimark Hospitality Group Inc. in connection with the contemplated breach-of-contract action against the following adverse parties:
• Coastal Palms Franchise Holdings LLC;
• Gulf Breeze Hospitality LLC;
• Savannah Lodging Partners LLC;
• Suncoast Room Management Inc.;
• Randall "Randy" Brecker, individually and in his capacity as Managing Member of Coastal Palms and President of Suncoast Room Management Inc.;
• Theresa Brecker, individually and in her capacity as Member of Coastal Palms; and
• Nolan Prescott, individually and in his capacity as Member of Coastal Palms.
No conflicts of interest have been identified under the applicable provisions of the Rules Regulating The Florida Bar, including but not limited to:
• Rule 4-1.7 (Conflict of Interest; Current Clients) — No current client of the Firm will be adversely affected by the proposed representation, and no concurrent conflict exists;
• Rule 4-1.9 (Duties to Former Clients) — No former client of the Firm has been identified whose interests are materially adverse to those of the Prospective Client in a matter that is the same as, or substantially related to, the proposed engagement; and
• Rule 4-1.10 (Imputation of Conflicts of Interest) — No individual attorney conflict has been identified that would require imputation analysis.
The conflicts clearance documented herein is likewise consistent with the Firm's internal Conflicts of Interest Policy (revised effective January 1, 2022).
This clearance is subject to the following conditions:
1. The matter must be opened promptly in the Firm's matter management system, and the Firm's conflicts database must be updated to reflect all parties, affiliated entities, and counsel identified in this memorandum.
2. Any new parties, affiliates, related entities, or counsel identified during the course of the engagement — whether through the addition of counterclaim defendants, third-party defendants, intervenors, or otherwise — must be submitted for supplemental conflict checks through the Office of the General Counsel before the Firm takes any action in relation to such newly identified parties.
3. If at any time during the course of the representation any attorney or professional staff member of the Firm becomes aware of a relationship, interest, or circumstance that may give rise to a conflict of interest or an appearance of impropriety, such information must be promptly reported to the undersigned or the Firm's General Counsel for evaluation.
7. Recommendation
Based on the foregoing analysis and the absence of any identified conflict of interest, the undersigned recommends that Calderwood & Harkness LLP proceed with the proposed engagement to represent Verimark Hospitality Group Inc. in the contemplated litigation against Coastal Palms Franchise Holdings LLC and related parties.
The following next steps are recommended:
1. Engagement Letter: An engagement letter should be prepared and transmitted to Renata Solis-Vega, Senior Vice President and General Counsel, Verimark Hospitality Group Inc., for review and execution. The engagement letter should address the scope of the proposed representation, fee arrangements, billing practices, and the identity of the responsible attorneys, consistent with the Firm's standard engagement letter template for complex commercial litigation matters.
2. Matter Opening: Upon execution of the engagement letter by the Prospective Client and return to the Firm, the matter should be opened in the Firm's matter management system, a matter number assigned, and the conflicts database updated with all parties and related entities identified herein.
3. Insurance Notification: Coordination with Pinnacle Indemnity Insurance Co. (Claims Counsel: Arthur Baines) regarding any applicable coverage obligations or reporting requirements should be initiated promptly following engagement.
8. Distribution and Approval
Reviewed and Approved by:
Douglas Carmichael Partner, Litigation (General) Calderwood & Harkness LLP FL Bar No. 0093217
Date of Clearance: March 3, 2022
Distribution:
• Original retained in the Firm's permanent conflicts file maintained by the Office of the General Counsel.
• Copy retained in the matter intake file (to be filed under the assigned matter number upon matter opening).
• Copy provided to Priya Anand, Responsible Partner.
CALDERWOOD & HARKNESS LLP — PRIVILEGED & CONFIDENTIAL — INTERNAL USE ONLY This memorandum and the information contained herein are subject to attorney-client privilege and work-product protection. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
Attorney | Role | FL Bar No. | Experience | Individual Check
Priya Anand | Responsible Partner, Litigation (General) | 0087451 | 22 years — complex commercial and franchise litigation | Clear
Douglas Carmichael | Billing Partner, Litigation (General) | 0093217 | 19 years — complex commercial litigation | Clear
Yuki Nakamura | Lead Associate, Litigation (General) | 0119644 | 7 years — to manage day-to-day discovery coordination and briefing | Clear
Carlos Espinoza | Working Associate, Litigation (General) | 0128903 | 4 years — deposition preparation and damages analysis support | Clear

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