1021-00006 · Client 1021 · Engagement & Administration

engagement-letter-verimark.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law

110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7200 Facsimile: (954) 555-7201 www.calderwoodharkness.com

March 4, 2022

Renata Solis-Vega, Esq. Senior Vice President & General Counsel Verimark Hospitality Group Inc. 2400 East Las Olas Boulevard, Suite 3100 Fort Lauderdale, Florida 33301

Re: Retention of Calderwood & Harkness LLP — Breach-of-Contract Litigation Against Coastal Palms Franchise Holdings LLC et al.

Dear Ms. Solis-Vega:

1. Purpose and Confirmation of Engagement

Calderwood & Harkness LLP (the "Firm") is pleased to confirm its retention by Verimark Hospitality Group Inc. ("Verimark" or the "Client") to represent Verimark in connection with the prosecution of breach-of-contract and related claims against Coastal Palms Franchise Holdings LLC ("Coastal Palms"), its affiliated entities (including Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc.), and its principals (Randall Brecker, individually and sometimes referred to herein as "Randy" Brecker; Theresa Brecker; and Nolan Prescott) (collectively, the "Adverse Parties"). This engagement letter (this "Letter") sets forth the terms and conditions under which the Firm will provide legal services to the Client in connection with the above-referenced matter and, once countersigned, shall constitute a binding agreement between the parties. This Letter supersedes any prior oral understandings, discussions, or preliminary agreements relating to the subject matter hereof.

We note that the Firm previously performed pre-engagement advisory work on behalf of Verimark under a separate letter agreement dated November 12, 2021, regarding the preliminary analysis of whistleblower allegations received by Verimark's compliance department and the coordination of certain investigatory activities relating to Coastal Palms' franchise reporting practices. That prior engagement was limited in scope and has been concluded as of the date hereof. The present Letter governs the Firm's representation of the Client going forward with respect to the active litigation matter described in Section 2 below, and the terms of this Letter shall control in the event of any inconsistency with the terms of the November 2021 letter agreement.

We appreciate the trust and confidence that Verimark has placed in our Firm, and we are committed to providing the highest quality legal representation throughout the course of this matter.

2. Scope of Engagement

2.1 Description of the Matter

The Firm is engaged to represent Verimark in the prosecution of claims arising from Coastal Palms' systematic underreporting of Gross Room Revenue ("GRR") under twenty-two (22) Franchise License Agreements ("FLAs") executed between June 15, 2007 and September 3, 2019. As a result of such underreporting, Coastal Palms and its affiliated entities underpaid royalties, marketing-fund contributions, and technology fees owed to Verimark over a nine-year period spanning calendar years 2013 through 2021, inclusive. The claims are expected to include, without limitation, breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent concealment, unjust enrichment, and civil conspiracy, together with claims for declaratory relief, an accounting, and such other causes of action as may be appropriate based upon the facts developed in the course of the litigation.

2.2 Estimated Claim Value

Based upon the Firm's preliminary review of the documentary record, including the forensic audit workpapers prepared by Thornbury & Associates CPAs LLP and the data analysis performed during the pre-engagement advisory phase, the estimated aggregate claim value is approximately One Hundred Fifty Million Dollars ($150,000,000), comprising the following principal categories of damages:

These figures are preliminary in nature and are subject to refinement as the Firm, in consultation with retained forensic accounting experts, completes its analysis of the underlying financial data. The actual damages sought in the complaint may differ from the estimates set forth above.

2.3 Scope Includes

The scope of this engagement includes, without limitation, all of the following activities:

(a) All pre-litigation demand and cure-period activities, including the preparation, issuance, and administration of the Notice of Material Breach dated February 4, 2022, and management of the thirty-day contractual cure period provided for under FLA § 14.2;

(b) Preparation, filing, and prosecution of the complaint in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida, Case No. (to be assigned upon filing);

(c) All discovery proceedings, including propounding and responding to written discovery, taking and defending depositions of fact and expert witnesses, and managing electronic discovery processes;

(d) All motion practice, including dispositive motions, motions in limine, and any interlocutory proceedings;

(e) Preparation for and participation in any court-ordered or voluntary mediation proceedings;

(f) Trial preparation and trial proceedings, including jury selection, the presentation of evidence, examination and cross-examination of witnesses, opening statements, and closing arguments;

(g) Post-trial motions, if necessary; and

(h) Post-judgment enforcement proceedings, including the domestication of any judgment in jurisdictions outside of Florida, the examination of judgment debtors, and proceedings supplementary, as may be required to collect on any judgment obtained.

2.4 Scope Excludes

The following matters are expressly excluded from the scope of this engagement and will not be undertaken by the Firm unless separately agreed to in writing:

(a) Regulatory filings with any federal or state regulatory body, including without limitation the U.S. Securities and Exchange Commission, the Florida Department of Business and Professional Regulation, or the Federal Trade Commission, and any SEC disclosure advice related to the litigation or its potential impact on Verimark's public filings;

(b) Insurance coverage disputes with Pinnacle Indemnity Insurance Co. under Policy No. PLI-VHG-2021-08874, or any other insurance policy, including but not limited to the prosecution of any claim for coverage, the defense of any coverage denial, or any declaratory judgment action relating to coverage, unless the Client and the Firm enter into a separate written agreement regarding such representation;

(d) Any legal matters unrelated to the Coastal Palms franchise dispute described herein, including but not limited to labor and employment matters, real estate transactions, intellectual property matters, or other franchise relationship disputes involving parties other than the Adverse Parties.

2.5 Adverse Parties

For purposes of this engagement, the identified Adverse Parties are as follows:

• Coastal Palms Franchise Holdings LLC, a Florida limited liability company

• Randall "Randy" Brecker, individually

• Theresa Brecker, individually

• Nolan Prescott, individually

• Suncoast Room Management Inc., a Florida corporation

• Gulf Breeze Hospitality LLC, a Georgia limited liability company

• Savannah Lodging Partners LLC, a Georgia limited liability company

2.6 Opposing Counsel

The Firm has been informed that the Adverse Parties have retained Whitfield, Barrow & Crane LLP, with offices in Miami, Florida, as defense counsel. The primary contact at opposing counsel's firm is Nathan Whitfield III, Senior Partner. The Firm will direct all communications with the Adverse Parties through their counsel, in accordance with the Florida Rules of Professional Conduct.

3. Staffing

The following attorneys and professionals have been assigned to this matter. Each has been selected for his or her particular expertise and experience in complex commercial litigation, franchise disputes, and damages analysis.

Priya Anand, Partner — Responsible Partner. Ms. Anand is a partner in the Firm's Litigation (General) practice group and has twenty-two (22) years of experience in the prosecution and defense of complex commercial and franchise litigation matters in state and federal courts throughout the southeastern United States. Ms. Anand is admitted to the Florida Bar (Bar No. 0087451), the Georgia Bar, and the bars of the United States District Courts for the Southern and Middle Districts of Florida and the Northern District of Georgia. Ms. Anand will serve as the Responsible Partner on this matter and will have primary responsibility for overall strategic direction, key court appearances, lead examination of witnesses at deposition and trial, and direct communication with senior Client personnel regarding case strategy and settlement authority.

Douglas Carmichael, Partner — Billing Partner. Mr. Carmichael is a partner in the Firm's Litigation (General) practice group and has nineteen (19) years of experience in complex commercial disputes, with particular emphasis on franchise, distribution, and dealer network litigation. Mr. Carmichael is admitted to the Florida Bar (Bar No. 0093217) and the bars of the United States District Courts for the Southern and Middle Districts of Florida. Mr. Carmichael will serve as the Billing Partner on this matter and will oversee all budget management, billing processes, and periodic client reporting. Mr. Carmichael will also participate in the formulation of litigation strategy, co-chair key depositions, and serve as second chair at trial.

Yuki Nakamura, Associate — Lead Associate. Ms. Nakamura is a senior associate in the Firm's Litigation (General) practice group and has seven (7) years of experience in complex civil litigation, including substantial experience with large-scale electronic discovery management, briefing of dispositive and procedural motions, and coordination with testifying and consulting expert witnesses. Ms. Nakamura is admitted to the Florida Bar (Bar No. 0119644) and the bar of the United States District Court for the Southern District of Florida. Ms. Nakamura will manage day-to-day discovery activities, including the supervision of document review teams, the preparation of written discovery, coordination with e-discovery vendors and forensic experts, and the drafting of briefs and memoranda.

Carlos Espinoza, Associate — Working Associate. Mr. Espinoza is an associate in the Firm's Litigation (General) practice group and has four (4) years of experience in commercial litigation, with a focus on damages analysis, legal research, and deposition preparation. Mr. Espinoza is admitted to the Florida Bar (Bar No. 0128903). Mr. Espinoza will support the engagement team in deposition preparation, legal research and memoranda, damages analysis coordination, and trial preparation activities.

Additional Personnel. Paralegals and, as necessary, contract attorneys will be utilized in connection with this matter, particularly during periods of intensive document review. The Firm may also engage additional associates or of-counsel attorneys to assist with specific aspects of the litigation. The Firm will obtain the Client's prior approval before adding any additional timekeeper whose involvement is expected to result in material additional fees. The Client will be promptly informed of the identity and billing rate of any such additional timekeeper.

The Firm reserves the right to adjust staffing as the needs of the matter evolve throughout the course of the litigation. The Client will be informed of any material changes in the composition of the engagement team, including the departure of any assigned attorney from the Firm or the reassignment of any attorney's responsibilities.

4. Fee Arrangement — Hourly Rates

This engagement shall be performed on an hourly-fee basis. The Client will be charged for the time expended by each timekeeper assigned to the matter at his or her applicable hourly rate. The current standard rates for the assigned timekeepers are as follows:

Time will be recorded and billed in increments of one-tenth (0.1) of an hour. The rates set forth above are the Firm's current standard rates for the timekeepers assigned to this matter and reflect a discount from the Firm's published rack rates in recognition of the long-standing relationship between the Firm and Verimark.

Hourly rates are subject to annual adjustment, typically effective as of January 1 of each calendar year. The Firm will provide the Client with at least thirty (30) days' written notice of any rate increase before the new rates become effective. In no event will rate increases be applied retroactively to services already rendered.

The Firm will exercise professional judgment in the staffing and delegation of tasks to ensure that work is performed at the most efficient level consistent with the delivery of high-quality legal representation. To that end, the Firm will endeavor to assign tasks to the lowest-cost timekeeper whose experience and qualifications are adequate to perform the work competently and effectively.

5. Expenses and Costs

In addition to professional fees for legal services, the Client will be responsible for the reimbursement of all reasonable out-of-pocket expenses and costs incurred by the Firm in connection with this matter. Such expenses include, but are not limited to, the following:

(a) Court filing fees and service-of-process costs. All fees required to be paid to the Clerk of Court in connection with the filing of the complaint, motions, and other pleadings, and all costs associated with service of process on the Adverse Parties, including fees of private process servers.

(b) E-discovery hosting, processing, and analytics costs. The Firm anticipates retaining Nexagen Document Solutions LLC, based in Atlanta, Georgia, as the primary e-discovery vendor for this matter. Nexagen will provide services including the collection, processing, hosting, and production of electronically stored information, as well as technology-assisted review ("TAR") analytics. Nexagen's fees will be billed to the Client at Nexagen's standard rates, without markup.

(c) Expert witness fees and expenses. The Firm anticipates the retention of Ridgeline Forensic Advisory LLC for forensic accounting and damages quantification services. The lead expert is anticipated to be Dr. Sharon Kettlewell, CPA/CFF, CFE, who will serve as the testifying expert on damages. Ridgeline's standard billing rates are $475.00 per hour for principal-level professionals and $325.00 per hour for staff-level professionals. Expert witness fees are in addition to the Firm's professional fees and are not included in the budget estimate set forth in Section 7 below. Additional experts (e.g., hospitality industry experts, data analytics specialists) may be retained as the case develops, subject to Client approval.

(d) Court reporter and deposition transcript costs. All charges associated with the retention of court reporters for depositions, the preparation of deposition transcripts, and the production of real-time or expedited transcripts.

(e) Mediation fees. If the parties agree to or the Court orders mediation, all mediator's fees and related costs, including facility rental charges and preparation of mediation materials.

(f) Travel, lodging, and meal expenses. Reasonable travel costs incurred for out-of-town depositions, court appearances, or other litigation-related activities, including airfare (coach class for domestic travel), hotel accommodations, ground transportation, and meals.

(g) Photocopying, printing, and delivery charges. In-house copying and printing at the Firm's standard rate of $0.15 per page for black-and-white and $0.50 per page for color, as well as messenger, courier, and overnight delivery charges.

(h) Online legal research charges. Charges for computerized legal research services, including Westlaw and Sundial Solutions, billed at cost.

The Firm will endeavor to discuss significant anticipated individual expenses — defined as any single expense or related series of expenses expected to exceed Twenty-Five Thousand Dollars ($25,000) — with the Client in advance when practicable. The Client's approval will be sought before the Firm commits to any individual expense exceeding $25,000, except in circumstances where the delay required to obtain such approval would materially prejudice the Client's interests.

6. Billing and Payment Terms

Invoices for professional fees and reimbursable expenses will be rendered monthly, typically within the first fifteen (15) days of the month following the month in which the services were performed and the expenses were incurred. Payment is due within thirty (30) calendar days of the date of the invoice.

Each invoice will include a detailed description of the services performed during the billing period, including the identity of the timekeeper who performed each task, the date on which the work was performed, a narrative description of the services rendered, and the time expended on each task. Invoices will also include a separate itemization of all out-of-pocket costs and disbursements incurred during the billing period, together with supporting documentation where appropriate.

A retainer deposit is not required at this time. However, the Firm reserves the right to request a retainer deposit in the event that invoices become materially past due, which for purposes of this Letter shall mean any invoice that remains unpaid for more than sixty (60) days after the date of the invoice without a good-faith dispute having been raised by the Client. Any retainer deposit, if requested, will be held in the Firm's client trust account (IOTA account) and will be applied against the final invoices rendered in connection with this engagement, or refunded to the Client upon the conclusion of the matter, as appropriate.

The Firm will provide quarterly budget updates and status reports to the Client's Chief Financial Officer, Martin Holcomb, and General Counsel, Renata Solis-Vega. Such reports will include a summary of fees and expenses incurred to date, a comparison of actual expenditures to the budget estimate, a forecast of anticipated fees and expenses for the upcoming quarter, and a narrative summary of significant case developments and upcoming milestones.

7. Preliminary Budget Estimate

Based on the Firm's initial assessment of the factual and legal complexity of this matter, the scope of anticipated discovery (including the review of electronically stored information from approximately twenty-two (22) franchised hotel properties and multiple corporate data sources maintained by the Adverse Parties), the number and geographic dispersion of anticipated depositions, and the likelihood of contested motion practice, the Firm estimates that the total cost of this engagement through trial will fall within the range of Four Million Five Hundred Thousand Dollars ($4,500,000) to Seven Million Five Hundred Thousand Dollars ($7,500,000) in legal fees. This estimate is exclusive of expert witness fees, e-discovery vendor costs, and other third-party expenses, which are expected to add an additional $1,500,000 to $3,000,000 to the total cost of the matter.

A detailed phase-by-phase budget memorandum, setting forth the Firm's estimated fees and expenses for each phase of the litigation (including pre-suit activities, pleadings, written discovery, depositions, expert discovery, motions for summary judgment, trial preparation, and trial), will be provided to the Client separately.

The budget set forth above is an estimate only and does not constitute a cap or a guarantee of the total cost of the engagement. The actual cost of the litigation may be higher or lower than the estimated range, depending on a number of factors that are not within the Firm's control, including the scope and complexity of discovery, the number and duration of depositions, the volume and nature of motion practice, the conduct of opposing counsel, the rulings of the Court, and whether and when meaningful settlement negotiations occur. The Firm will promptly advise the Client if, in the Firm's judgment, actual expenditures are likely to materially exceed the estimated budget range, and the Firm will work with the Client to develop strategies for managing costs while maintaining the quality and effectiveness of the representation.

8. Conflict Check

The Firm has conducted a thorough conflicts check in accordance with the Florida Rules of Professional Conduct (Rules 4-1.7 through 4-1.10) and the Firm's internal conflicts screening procedures. Based on that review, the Firm confirms that it has identified no conflicts of interest with respect to any of the following parties:

• Coastal Palms Franchise Holdings LLC

• Randall "Randy" Brecker (individually)

• Theresa Brecker (individually)

• Nolan Prescott (individually)

• Suncoast Room Management Inc.

• Gulf Breeze Hospitality LLC

• Savannah Lodging Partners LLC

• Garrison Registered Agents LLC (registered agent for Coastal Palms)

• Whitfield, Barrow & Crane LLP (defense counsel for the Adverse Parties)

• Nathan Whitfield III, Esq. (lead defense counsel)

The Firm has also confirmed that no current or former attorney or professional employee of the Firm has a personal, financial, or familial relationship with any of the identified Adverse Parties or their counsel that would give rise to a conflict of interest or the appearance of impropriety. A separate internal Conflict Check Memorandum dated March 3, 2022 has been prepared by the Firm's General Counsel and is maintained on file with the Firm's conflicts committee.

If, at any point during the course of this engagement, the Firm identifies a potential conflict of interest that was not apparent at the time of this Letter, the Firm will promptly notify the Client and, if necessary, seek the Client's informed written consent to continued representation or take such other steps as may be required under the applicable rules of professional conduct.

9. Client Responsibilities

The effective prosecution of this matter will require the active cooperation and engagement of Verimark's management, legal, and operational personnel. Accordingly, the Client agrees to cooperate fully with the Firm in the prosecution of this matter, including without limitation:

(a) Document Production. The Client will make available on a timely basis all documents, records, data, and information in its possession, custody, or control that are requested by the Firm in connection with the matter, including financial records, franchise agreements, correspondence, internal memoranda, audit reports, compliance files, and electronic communications.

(b) Witness Availability. The Client will make Verimark personnel available for witness preparation sessions and, when required, for testimony at depositions, hearings, mediation, and trial. Key witnesses anticipated to be called include, without limitation, Deidre Langston (Senior Vice President, Franchise Operations), Martin Holcomb (Executive Vice President & Chief Financial Officer), and such other corporate representatives as the Firm may identify in the course of its preparation of the case. The Client acknowledges that witness preparation may require significant time commitments from these individuals and agrees to ensure that such commitments can be accommodated within their schedules.

(c) Litigation Hold. The Client will issue and enforce a comprehensive litigation hold on all documents and electronically stored information ("ESI") related to the Coastal Palms franchise relationship, in accordance with the Litigation Hold Notice to be provided separately by the Firm. The Client acknowledges that the preservation of relevant evidence is a critical obligation and that the failure to preserve such evidence may result in adverse consequences, including the imposition of sanctions by the Court.

(d) Timely Decision-Making. The Client will provide timely decisions on matters requiring client direction, including case strategy, settlement authority and parameters, the scope of claims to be pursued, and the approval of significant expenditures. The Firm will endeavor to present such decisions to the Client with reasonable lead time, but the Client acknowledges that the pace of litigation may occasionally require expedited decision-making.

10. Document Preservation

The obligation to preserve potentially relevant evidence arises immediately upon the reasonable anticipation of litigation. Given that Verimark became aware of the allegations underlying this dispute no later than November 8, 2021, and issued the Notice of Material Breach on February 4, 2022, the duty to preserve has already been triggered.

The Firm will issue a formal Litigation Hold Notice to the Client promptly upon the filing of the Complaint, which is anticipated to occur on or about March 7, 2022, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida. The Litigation Hold Notice will identify the categories of documents and ESI to be preserved, the custodians to whom the hold applies, and the specific steps to be taken to ensure compliance with the preservation obligation.

The Client is reminded of its ongoing obligation to preserve all documents, communications, and electronically stored information relating to the Coastal Palms franchise relationship, including but not limited to the following:

(a) All twenty-two (22) Franchise License Agreements and all amendments, addenda, exhibits, and schedules thereto;

(b) All financial reports, GRR calculations, royalty payment records, and supporting documentation submitted by Coastal Palms and its affiliated entities;

(c) All internal audit and compliance files relating to Coastal Palms, including the compliance audit performed by Thornbury & Associates CPAs LLP;

(d) All materials relating to the whistleblower complaint received on November 8, 2021, from Janet Kerrigan, former regional controller for Coastal Palms, including Ms. Kerrigan's written complaint, all documents and data provided by Ms. Kerrigan, and all internal communications regarding the investigation of Ms. Kerrigan's allegations;

(e) All correspondence and communications (including email, text messages, instant messages, voicemail, and other electronic communications) between Verimark personnel and representatives of Coastal Palms, its affiliated entities, or its principals; and

(f) All board of directors materials, management committee materials, and executive communications relating to the Coastal Palms franchise relationship or the decision to pursue litigation.

The Client should take immediate steps to ensure that no routine document destruction or records retention policies result in the deletion or destruction of any potentially relevant documents or ESI. Any questions regarding the scope of the preservation obligation should be directed to Yuki Nakamura at the Firm.

11. Confidentiality and Privilege

All communications between the Firm and the Client in connection with this engagement are protected by the attorney-client privilege and the work-product doctrine to the fullest extent permitted by applicable law. These protections are critical to the effective representation of the Client and must be carefully maintained throughout the course of the litigation.

The Client agrees not to disclose the substance of any privileged communications with the Firm to third parties — including other outside counsel, business partners, consultants, or advisors who are not subject to a common-interest or joint-defense agreement — without the Firm's prior written consent. Such disclosure, even if inadvertent, may result in a waiver of the attorney-client privilege, which could have significant adverse consequences for the Client's position in this litigation.

The Firm, for its part, will take all reasonable steps to maintain the confidentiality of all Client information received in connection with this engagement, in accordance with the Firm's obligations under the Florida Rules of Professional Conduct, Rule 4-1.6 (Confidentiality of Information), and the Firm's internal information security policies and procedures.

To the extent that the Firm engages third-party vendors (such as e-discovery providers, forensic accountants, or expert witnesses) who may have access to privileged or confidential information, the Firm will ensure that appropriate confidentiality agreements and protective measures are in place before any such information is disclosed.

12. Termination of Engagement

Either party may terminate this engagement at any time upon written notice delivered to the other party. The Client has an absolute right to discharge the Firm at any time, with or without cause, and the Firm retains the right to withdraw from the representation in accordance with the applicable rules of professional conduct.

In the event of termination by either party, the Client remains responsible for the payment of all professional fees earned and expenses incurred by the Firm through the date of termination, in accordance with the fee and billing terms set forth in this Letter.

Upon termination of this engagement, the Firm will take all reasonable steps to protect the Client's interests, including without limitation: (a) providing the Client with reasonable notice to enable the retention of successor counsel; (b) filing any necessary motions for withdrawal of counsel with the Court; (c) delivering to the Client or its successor counsel all documents and files belonging to the Client; and (d) cooperating with successor counsel to ensure an orderly transition of the representation.

The Firm's obligations of confidentiality under Section 11 of this Letter shall survive the termination of this engagement and shall continue indefinitely.

13. Limitation of Scope / No Guarantees

The Firm's representation of the Client under this Letter is limited strictly to the matter described in Section 2 above and does not extend to any other legal matters, disputes, transactions, or regulatory proceedings unless separately agreed to in writing by the Firm and the Client.

While the Firm will use its best professional efforts on behalf of the Client and will bring to bear the full measure of its experience, skill, and resources in the prosecution of this matter, no guarantees, warranties, or assurances are made or can be made regarding the outcome of the litigation. The outcome of any litigation is inherently uncertain and depends upon numerous factors that are beyond the control of the Firm, including the rulings of the Court, the credibility findings of the trier of fact, the conduct and strategies of opposing counsel, and the evidence developed in discovery.

The total claimed damages of approximately One Hundred Fifty Million Dollars ($150,000,000) represent the maximum theoretical recovery under the most favorable interpretation of the applicable Franchise License Agreements and the facts as presently understood. The Client acknowledges that actual recovery may be significantly different from the estimated claim value — and may be substantially less — depending on the Court's rulings on contested legal issues (including the enforceability of the liquidated damages provision under FLA § 15.3), the outcome of discovery, any defenses raised by the Adverse Parties, and the terms of any settlement negotiations.

14. Governing Law

This engagement letter and the relationship between the Firm and the Client in connection with this engagement shall be governed by and construed in accordance with the laws of the State of Florida, including the Florida Rules of Professional Conduct as adopted by the Supreme Court of Florida, without regard to principles of conflict of laws.

15. Acceptance and Countersignature

If the foregoing terms accurately reflect your understanding of the engagement, we respectfully request that you confirm your acceptance by signing this Letter in the space indicated below and returning an executed copy to the undersigned at the Firm's Fort Lauderdale office address set forth above, or via email to panand@calderwoodharkness.com. Please retain the other copy for your records. This Letter will not become effective until a countersigned copy has been received by the Firm.

We look forward to working with you and the entire Verimark team on this important matter. Please do not hesitate to contact me directly at (954) 555-7214 or panand@calderwoodharkness.com if you have any questions regarding this Letter or any aspect of the engagement.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Priya Anand

Title: Partner

Date: ________

110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Direct: (954) 555-7214

Email: panand@calderwoodharkness.com

ACCEPTANCE AND AGREEMENT

The undersigned, on behalf of Verimark Hospitality Group Inc., hereby accepts and agrees to the terms and conditions of this engagement letter as set forth above, and authorizes Calderwood & Harkness LLP to proceed with the representation described herein.

VERIMARK HOSPITALITY GROUP INC.

By: ________

Name: Renata Solis-Vega

Title: Senior Vice President & General Counsel

Date: ________

cc:

Douglas Carmichael, Partner, Calderwood & Harkness LLP Martin Holcomb, Executive Vice President & Chief Financial Officer, Verimark Hospitality Group Inc.

Enclosures: None. A detailed phase-by-phase budget memorandum and a Litigation Hold Notice will be provided separately.

Damages Category	Estimated Amount
Underpaid royalties (FLA §§ 5.1, 5.2)	$9,890,000
Underpaid marketing contributions (FLA § 5.3)	$4,945,000
Underpaid technology fees (FLA § 5.4)	$1,260,000
Contractual late-payment interest (FLA § 5.6)	$28,400,000
Liquidated damages (FLA § 15.3)	$105,500,000
Total Estimated Claim Value	$149,995,000
Timekeeper	Role	Hourly Rate
Priya Anand	Responsible Partner	$975.00
Douglas Carmichael	Billing Partner	$925.00
Yuki Nakamura	Lead Associate	$625.00
Carlos Espinoza	Working Associate	$495.00
Paralegals / Contract Attorneys	Support Staff	Blended rate of approximately $285.00

CALDERWOOD & HARKNESS LLP Attorneys at Law
110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7200 Facsimile: (954) 555-7201 www.calderwoodharkness.com
March 4, 2022
Renata Solis-Vega, Esq. Senior Vice President & General Counsel Verimark Hospitality Group Inc. 2400 East Las Olas Boulevard, Suite 3100 Fort Lauderdale, Florida 33301
Re: Retention of Calderwood & Harkness LLP — Breach-of-Contract Litigation Against Coastal Palms Franchise Holdings LLC et al.
Dear Ms. Solis-Vega:
1. Purpose and Confirmation of Engagement
Calderwood & Harkness LLP (the "Firm") is pleased to confirm its retention by Verimark Hospitality Group Inc. ("Verimark" or the "Client") to represent Verimark in connection with the prosecution of breach-of-contract and related claims against Coastal Palms Franchise Holdings LLC ("Coastal Palms"), its affiliated entities (including Gulf Breeze Hospitality LLC, Savannah Lodging Partners LLC, and Suncoast Room Management Inc.), and its principals (Randall Brecker, individually and sometimes referred to herein as "Randy" Brecker; Theresa Brecker; and Nolan Prescott) (collectively, the "Adverse Parties"). This engagement letter (this "Letter") sets forth the terms and conditions under which the Firm will provide legal services to the Client in connection with the above-referenced matter and, once countersigned, shall constitute a binding agreement between the parties. This Letter supersedes any prior oral understandings, discussions, or preliminary agreements relating to the subject matter hereof.
We note that the Firm previously performed pre-engagement advisory work on behalf of Verimark under a separate letter agreement dated November 12, 2021, regarding the preliminary analysis of whistleblower allegations received by Verimark's compliance department and the coordination of certain investigatory activities relating to Coastal Palms' franchise reporting practices. That prior engagement was limited in scope and has been concluded as of the date hereof. The present Letter governs the Firm's representation of the Client going forward with respect to the active litigation matter described in Section 2 below, and the terms of this Letter shall control in the event of any inconsistency with the terms of the November 2021 letter agreement.
We appreciate the trust and confidence that Verimark has placed in our Firm, and we are committed to providing the highest quality legal representation throughout the course of this matter.
2. Scope of Engagement
2.1 Description of the Matter
The Firm is engaged to represent Verimark in the prosecution of claims arising from Coastal Palms' systematic underreporting of Gross Room Revenue ("GRR") under twenty-two (22) Franchise License Agreements ("FLAs") executed between June 15, 2007 and September 3, 2019. As a result of such underreporting, Coastal Palms and its affiliated entities underpaid royalties, marketing-fund contributions, and technology fees owed to Verimark over a nine-year period spanning calendar years 2013 through 2021, inclusive. The claims are expected to include, without limitation, breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent concealment, unjust enrichment, and civil conspiracy, together with claims for declaratory relief, an accounting, and such other causes of action as may be appropriate based upon the facts developed in the course of the litigation.
2.2 Estimated Claim Value
Based upon the Firm's preliminary review of the documentary record, including the forensic audit workpapers prepared by Thornbury & Associates CPAs LLP and the data analysis performed during the pre-engagement advisory phase, the estimated aggregate claim value is approximately One Hundred Fifty Million Dollars ($150,000,000), comprising the following principal categories of damages:
These figures are preliminary in nature and are subject to refinement as the Firm, in consultation with retained forensic accounting experts, completes its analysis of the underlying financial data. The actual damages sought in the complaint may differ from the estimates set forth above.
2.3 Scope Includes
The scope of this engagement includes, without limitation, all of the following activities:
(a) All pre-litigation demand and cure-period activities, including the preparation, issuance, and administration of the Notice of Material Breach dated February 4, 2022, and management of the thirty-day contractual cure period provided for under FLA § 14.2;
(b) Preparation, filing, and prosecution of the complaint in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida, Case No. (to be assigned upon filing);
(c) All discovery proceedings, including propounding and responding to written discovery, taking and defending depositions of fact and expert witnesses, and managing electronic discovery processes;
(d) All motion practice, including dispositive motions, motions in limine, and any interlocutory proceedings;
(e) Preparation for and participation in any court-ordered or voluntary mediation proceedings;
(f) Trial preparation and trial proceedings, including jury selection, the presentation of evidence, examination and cross-examination of witnesses, opening statements, and closing arguments;
(g) Post-trial motions, if necessary; and
(h) Post-judgment enforcement proceedings, including the domestication of any judgment in jurisdictions outside of Florida, the examination of judgment debtors, and proceedings supplementary, as may be required to collect on any judgment obtained.
2.4 Scope Excludes
The following matters are expressly excluded from the scope of this engagement and will not be undertaken by the Firm unless separately agreed to in writing:
(a) Regulatory filings with any federal or state regulatory body, including without limitation the U.S. Securities and Exchange Commission, the Florida Department of Business and Professional Regulation, or the Federal Trade Commission, and any SEC disclosure advice related to the litigation or its potential impact on Verimark's public filings;
(b) Insurance coverage disputes with Pinnacle Indemnity Insurance Co. under Policy No. PLI-VHG-2021-08874, or any other insurance policy, including but not limited to the prosecution of any claim for coverage, the defense of any coverage denial, or any declaratory judgment action relating to coverage, unless the Client and the Firm enter into a separate written agreement regarding such representation;
(c) Any appeals from the trial court's final judgment or from any interlocutory order, unless separately agreed; and
(d) Any legal matters unrelated to the Coastal Palms franchise dispute described herein, including but not limited to labor and employment matters, real estate transactions, intellectual property matters, or other franchise relationship disputes involving parties other than the Adverse Parties.
2.5 Adverse Parties
For purposes of this engagement, the identified Adverse Parties are as follows:
•  Coastal Palms Franchise Holdings LLC, a Florida limited liability company
•  Randall "Randy" Brecker, individually
•  Theresa Brecker, individually
•  Nolan Prescott, individually
•  Suncoast Room Management Inc., a Florida corporation
•  Gulf Breeze Hospitality LLC, a Georgia limited liability company
•  Savannah Lodging Partners LLC, a Georgia limited liability company
2.6 Opposing Counsel
The Firm has been informed that the Adverse Parties have retained Whitfield, Barrow & Crane LLP, with offices in Miami, Florida, as defense counsel. The primary contact at opposing counsel's firm is Nathan Whitfield III, Senior Partner. The Firm will direct all communications with the Adverse Parties through their counsel, in accordance with the Florida Rules of Professional Conduct.
3. Staffing
The following attorneys and professionals have been assigned to this matter. Each has been selected for his or her particular expertise and experience in complex commercial litigation, franchise disputes, and damages analysis.
Priya Anand, Partner — Responsible Partner. Ms. Anand is a partner in the Firm's Litigation (General) practice group and has twenty-two (22) years of experience in the prosecution and defense of complex commercial and franchise litigation matters in state and federal courts throughout the southeastern United States. Ms. Anand is admitted to the Florida Bar (Bar No. 0087451), the Georgia Bar, and the bars of the United States District Courts for the Southern and Middle Districts of Florida and the Northern District of Georgia. Ms. Anand will serve as the Responsible Partner on this matter and will have primary responsibility for overall strategic direction, key court appearances, lead examination of witnesses at deposition and trial, and direct communication with senior Client personnel regarding case strategy and settlement authority.
Douglas Carmichael, Partner — Billing Partner. Mr. Carmichael is a partner in the Firm's Litigation (General) practice group and has nineteen (19) years of experience in complex commercial disputes, with particular emphasis on franchise, distribution, and dealer network litigation. Mr. Carmichael is admitted to the Florida Bar (Bar No. 0093217) and the bars of the United States District Courts for the Southern and Middle Districts of Florida. Mr. Carmichael will serve as the Billing Partner on this matter and will oversee all budget management, billing processes, and periodic client reporting. Mr. Carmichael will also participate in the formulation of litigation strategy, co-chair key depositions, and serve as second chair at trial.
Yuki Nakamura, Associate — Lead Associate. Ms. Nakamura is a senior associate in the Firm's Litigation (General) practice group and has seven (7) years of experience in complex civil litigation, including substantial experience with large-scale electronic discovery management, briefing of dispositive and procedural motions, and coordination with testifying and consulting expert witnesses. Ms. Nakamura is admitted to the Florida Bar (Bar No. 0119644) and the bar of the United States District Court for the Southern District of Florida. Ms. Nakamura will manage day-to-day discovery activities, including the supervision of document review teams, the preparation of written discovery, coordination with e-discovery vendors and forensic experts, and the drafting of briefs and memoranda.
Carlos Espinoza, Associate — Working Associate. Mr. Espinoza is an associate in the Firm's Litigation (General) practice group and has four (4) years of experience in commercial litigation, with a focus on damages analysis, legal research, and deposition preparation. Mr. Espinoza is admitted to the Florida Bar (Bar No. 0128903). Mr. Espinoza will support the engagement team in deposition preparation, legal research and memoranda, damages analysis coordination, and trial preparation activities.
Additional Personnel. Paralegals and, as necessary, contract attorneys will be utilized in connection with this matter, particularly during periods of intensive document review. The Firm may also engage additional associates or of-counsel attorneys to assist with specific aspects of the litigation. The Firm will obtain the Client's prior approval before adding any additional timekeeper whose involvement is expected to result in material additional fees. The Client will be promptly informed of the identity and billing rate of any such additional timekeeper.
The Firm reserves the right to adjust staffing as the needs of the matter evolve throughout the course of the litigation. The Client will be informed of any material changes in the composition of the engagement team, including the departure of any assigned attorney from the Firm or the reassignment of any attorney's responsibilities.
4. Fee Arrangement — Hourly Rates
This engagement shall be performed on an hourly-fee basis. The Client will be charged for the time expended by each timekeeper assigned to the matter at his or her applicable hourly rate. The current standard rates for the assigned timekeepers are as follows:
Time will be recorded and billed in increments of one-tenth (0.1) of an hour. The rates set forth above are the Firm's current standard rates for the timekeepers assigned to this matter and reflect a discount from the Firm's published rack rates in recognition of the long-standing relationship between the Firm and Verimark.
Hourly rates are subject to annual adjustment, typically effective as of January 1 of each calendar year. The Firm will provide the Client with at least thirty (30) days' written notice of any rate increase before the new rates become effective. In no event will rate increases be applied retroactively to services already rendered.
The Firm will exercise professional judgment in the staffing and delegation of tasks to ensure that work is performed at the most efficient level consistent with the delivery of high-quality legal representation. To that end, the Firm will endeavor to assign tasks to the lowest-cost timekeeper whose experience and qualifications are adequate to perform the work competently and effectively.
5. Expenses and Costs
In addition to professional fees for legal services, the Client will be responsible for the reimbursement of all reasonable out-of-pocket expenses and costs incurred by the Firm in connection with this matter. Such expenses include, but are not limited to, the following:
(a) Court filing fees and service-of-process costs. All fees required to be paid to the Clerk of Court in connection with the filing of the complaint, motions, and other pleadings, and all costs associated with service of process on the Adverse Parties, including fees of private process servers.
(b) E-discovery hosting, processing, and analytics costs. The Firm anticipates retaining Nexagen Document Solutions LLC, based in Atlanta, Georgia, as the primary e-discovery vendor for this matter. Nexagen will provide services including the collection, processing, hosting, and production of electronically stored information, as well as technology-assisted review ("TAR") analytics. Nexagen's fees will be billed to the Client at Nexagen's standard rates, without markup.
(c) Expert witness fees and expenses. The Firm anticipates the retention of Ridgeline Forensic Advisory LLC for forensic accounting and damages quantification services. The lead expert is anticipated to be Dr. Sharon Kettlewell, CPA/CFF, CFE, who will serve as the testifying expert on damages. Ridgeline's standard billing rates are $475.00 per hour for principal-level professionals and $325.00 per hour for staff-level professionals. Expert witness fees are in addition to the Firm's professional fees and are not included in the budget estimate set forth in Section 7 below. Additional experts (e.g., hospitality industry experts, data analytics specialists) may be retained as the case develops, subject to Client approval.
(d) Court reporter and deposition transcript costs. All charges associated with the retention of court reporters for depositions, the preparation of deposition transcripts, and the production of real-time or expedited transcripts.
(e) Mediation fees. If the parties agree to or the Court orders mediation, all mediator's fees and related costs, including facility rental charges and preparation of mediation materials.
(f) Travel, lodging, and meal expenses. Reasonable travel costs incurred for out-of-town depositions, court appearances, or other litigation-related activities, including airfare (coach class for domestic travel), hotel accommodations, ground transportation, and meals.
(g) Photocopying, printing, and delivery charges. In-house copying and printing at the Firm's standard rate of $0.15 per page for black-and-white and $0.50 per page for color, as well as messenger, courier, and overnight delivery charges.
(h) Online legal research charges. Charges for computerized legal research services, including Westlaw and Sundial Solutions, billed at cost.
The Firm will endeavor to discuss significant anticipated individual expenses — defined as any single expense or related series of expenses expected to exceed Twenty-Five Thousand Dollars ($25,000) — with the Client in advance when practicable. The Client's approval will be sought before the Firm commits to any individual expense exceeding $25,000, except in circumstances where the delay required to obtain such approval would materially prejudice the Client's interests.
6. Billing and Payment Terms
Invoices for professional fees and reimbursable expenses will be rendered monthly, typically within the first fifteen (15) days of the month following the month in which the services were performed and the expenses were incurred. Payment is due within thirty (30) calendar days of the date of the invoice.
Each invoice will include a detailed description of the services performed during the billing period, including the identity of the timekeeper who performed each task, the date on which the work was performed, a narrative description of the services rendered, and the time expended on each task. Invoices will also include a separate itemization of all out-of-pocket costs and disbursements incurred during the billing period, together with supporting documentation where appropriate.
A retainer deposit is not required at this time. However, the Firm reserves the right to request a retainer deposit in the event that invoices become materially past due, which for purposes of this Letter shall mean any invoice that remains unpaid for more than sixty (60) days after the date of the invoice without a good-faith dispute having been raised by the Client. Any retainer deposit, if requested, will be held in the Firm's client trust account (IOTA account) and will be applied against the final invoices rendered in connection with this engagement, or refunded to the Client upon the conclusion of the matter, as appropriate.
The Firm will provide quarterly budget updates and status reports to the Client's Chief Financial Officer, Martin Holcomb, and General Counsel, Renata Solis-Vega. Such reports will include a summary of fees and expenses incurred to date, a comparison of actual expenditures to the budget estimate, a forecast of anticipated fees and expenses for the upcoming quarter, and a narrative summary of significant case developments and upcoming milestones.
7. Preliminary Budget Estimate
Based on the Firm's initial assessment of the factual and legal complexity of this matter, the scope of anticipated discovery (including the review of electronically stored information from approximately twenty-two (22) franchised hotel properties and multiple corporate data sources maintained by the Adverse Parties), the number and geographic dispersion of anticipated depositions, and the likelihood of contested motion practice, the Firm estimates that the total cost of this engagement through trial will fall within the range of Four Million Five Hundred Thousand Dollars ($4,500,000) to Seven Million Five Hundred Thousand Dollars ($7,500,000) in legal fees. This estimate is exclusive of expert witness fees, e-discovery vendor costs, and other third-party expenses, which are expected to add an additional $1,500,000 to $3,000,000 to the total cost of the matter.
A detailed phase-by-phase budget memorandum, setting forth the Firm's estimated fees and expenses for each phase of the litigation (including pre-suit activities, pleadings, written discovery, depositions, expert discovery, motions for summary judgment, trial preparation, and trial), will be provided to the Client separately.
The budget set forth above is an estimate only and does not constitute a cap or a guarantee of the total cost of the engagement. The actual cost of the litigation may be higher or lower than the estimated range, depending on a number of factors that are not within the Firm's control, including the scope and complexity of discovery, the number and duration of depositions, the volume and nature of motion practice, the conduct of opposing counsel, the rulings of the Court, and whether and when meaningful settlement negotiations occur. The Firm will promptly advise the Client if, in the Firm's judgment, actual expenditures are likely to materially exceed the estimated budget range, and the Firm will work with the Client to develop strategies for managing costs while maintaining the quality and effectiveness of the representation.
8. Conflict Check
The Firm has conducted a thorough conflicts check in accordance with the Florida Rules of Professional Conduct (Rules 4-1.7 through 4-1.10) and the Firm's internal conflicts screening procedures. Based on that review, the Firm confirms that it has identified no conflicts of interest with respect to any of the following parties:
•  Coastal Palms Franchise Holdings LLC
•  Randall "Randy" Brecker (individually)
•  Theresa Brecker (individually)
•  Nolan Prescott (individually)
•  Suncoast Room Management Inc.
•  Gulf Breeze Hospitality LLC
•  Savannah Lodging Partners LLC
•  Garrison Registered Agents LLC (registered agent for Coastal Palms)
•  Whitfield, Barrow & Crane LLP (defense counsel for the Adverse Parties)
•  Nathan Whitfield III, Esq. (lead defense counsel)
The Firm has also confirmed that no current or former attorney or professional employee of the Firm has a personal, financial, or familial relationship with any of the identified Adverse Parties or their counsel that would give rise to a conflict of interest or the appearance of impropriety. A separate internal Conflict Check Memorandum dated March 3, 2022 has been prepared by the Firm's General Counsel and is maintained on file with the Firm's conflicts committee.
If, at any point during the course of this engagement, the Firm identifies a potential conflict of interest that was not apparent at the time of this Letter, the Firm will promptly notify the Client and, if necessary, seek the Client's informed written consent to continued representation or take such other steps as may be required under the applicable rules of professional conduct.
9. Client Responsibilities
The effective prosecution of this matter will require the active cooperation and engagement of Verimark's management, legal, and operational personnel. Accordingly, the Client agrees to cooperate fully with the Firm in the prosecution of this matter, including without limitation:
(a) Document Production. The Client will make available on a timely basis all documents, records, data, and information in its possession, custody, or control that are requested by the Firm in connection with the matter, including financial records, franchise agreements, correspondence, internal memoranda, audit reports, compliance files, and electronic communications.
(b) Witness Availability. The Client will make Verimark personnel available for witness preparation sessions and, when required, for testimony at depositions, hearings, mediation, and trial. Key witnesses anticipated to be called include, without limitation, Deidre Langston (Senior Vice President, Franchise Operations), Martin Holcomb (Executive Vice President & Chief Financial Officer), and such other corporate representatives as the Firm may identify in the course of its preparation of the case. The Client acknowledges that witness preparation may require significant time commitments from these individuals and agrees to ensure that such commitments can be accommodated within their schedules.
(c) Litigation Hold. The Client will issue and enforce a comprehensive litigation hold on all documents and electronically stored information ("ESI") related to the Coastal Palms franchise relationship, in accordance with the Litigation Hold Notice to be provided separately by the Firm. The Client acknowledges that the preservation of relevant evidence is a critical obligation and that the failure to preserve such evidence may result in adverse consequences, including the imposition of sanctions by the Court.
(d) Timely Decision-Making. The Client will provide timely decisions on matters requiring client direction, including case strategy, settlement authority and parameters, the scope of claims to be pursued, and the approval of significant expenditures. The Firm will endeavor to present such decisions to the Client with reasonable lead time, but the Client acknowledges that the pace of litigation may occasionally require expedited decision-making.
10. Document Preservation
The obligation to preserve potentially relevant evidence arises immediately upon the reasonable anticipation of litigation. Given that Verimark became aware of the allegations underlying this dispute no later than November 8, 2021, and issued the Notice of Material Breach on February 4, 2022, the duty to preserve has already been triggered.
The Firm will issue a formal Litigation Hold Notice to the Client promptly upon the filing of the Complaint, which is anticipated to occur on or about March 7, 2022, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida. The Litigation Hold Notice will identify the categories of documents and ESI to be preserved, the custodians to whom the hold applies, and the specific steps to be taken to ensure compliance with the preservation obligation.
The Client is reminded of its ongoing obligation to preserve all documents, communications, and electronically stored information relating to the Coastal Palms franchise relationship, including but not limited to the following:
(a) All twenty-two (22) Franchise License Agreements and all amendments, addenda, exhibits, and schedules thereto;
(b) All financial reports, GRR calculations, royalty payment records, and supporting documentation submitted by Coastal Palms and its affiliated entities;
(c) All internal audit and compliance files relating to Coastal Palms, including the compliance audit performed by Thornbury & Associates CPAs LLP;
(d) All materials relating to the whistleblower complaint received on November 8, 2021, from Janet Kerrigan, former regional controller for Coastal Palms, including Ms. Kerrigan's written complaint, all documents and data provided by Ms. Kerrigan, and all internal communications regarding the investigation of Ms. Kerrigan's allegations;
(e) All correspondence and communications (including email, text messages, instant messages, voicemail, and other electronic communications) between Verimark personnel and representatives of Coastal Palms, its affiliated entities, or its principals; and
(f) All board of directors materials, management committee materials, and executive communications relating to the Coastal Palms franchise relationship or the decision to pursue litigation.
The Client should take immediate steps to ensure that no routine document destruction or records retention policies result in the deletion or destruction of any potentially relevant documents or ESI. Any questions regarding the scope of the preservation obligation should be directed to Yuki Nakamura at the Firm.
11. Confidentiality and Privilege
All communications between the Firm and the Client in connection with this engagement are protected by the attorney-client privilege and the work-product doctrine to the fullest extent permitted by applicable law. These protections are critical to the effective representation of the Client and must be carefully maintained throughout the course of the litigation.
The Client agrees not to disclose the substance of any privileged communications with the Firm to third parties — including other outside counsel, business partners, consultants, or advisors who are not subject to a common-interest or joint-defense agreement — without the Firm's prior written consent. Such disclosure, even if inadvertent, may result in a waiver of the attorney-client privilege, which could have significant adverse consequences for the Client's position in this litigation.
The Firm, for its part, will take all reasonable steps to maintain the confidentiality of all Client information received in connection with this engagement, in accordance with the Firm's obligations under the Florida Rules of Professional Conduct, Rule 4-1.6 (Confidentiality of Information), and the Firm's internal information security policies and procedures.
To the extent that the Firm engages third-party vendors (such as e-discovery providers, forensic accountants, or expert witnesses) who may have access to privileged or confidential information, the Firm will ensure that appropriate confidentiality agreements and protective measures are in place before any such information is disclosed.
12. Termination of Engagement
Either party may terminate this engagement at any time upon written notice delivered to the other party. The Client has an absolute right to discharge the Firm at any time, with or without cause, and the Firm retains the right to withdraw from the representation in accordance with the applicable rules of professional conduct.
In the event of termination by either party, the Client remains responsible for the payment of all professional fees earned and expenses incurred by the Firm through the date of termination, in accordance with the fee and billing terms set forth in this Letter.
Upon termination of this engagement, the Firm will take all reasonable steps to protect the Client's interests, including without limitation: (a) providing the Client with reasonable notice to enable the retention of successor counsel; (b) filing any necessary motions for withdrawal of counsel with the Court; (c) delivering to the Client or its successor counsel all documents and files belonging to the Client; and (d) cooperating with successor counsel to ensure an orderly transition of the representation.
The Firm's obligations of confidentiality under Section 11 of this Letter shall survive the termination of this engagement and shall continue indefinitely.
13. Limitation of Scope / No Guarantees
The Firm's representation of the Client under this Letter is limited strictly to the matter described in Section 2 above and does not extend to any other legal matters, disputes, transactions, or regulatory proceedings unless separately agreed to in writing by the Firm and the Client.
While the Firm will use its best professional efforts on behalf of the Client and will bring to bear the full measure of its experience, skill, and resources in the prosecution of this matter, no guarantees, warranties, or assurances are made or can be made regarding the outcome of the litigation. The outcome of any litigation is inherently uncertain and depends upon numerous factors that are beyond the control of the Firm, including the rulings of the Court, the credibility findings of the trier of fact, the conduct and strategies of opposing counsel, and the evidence developed in discovery.
The total claimed damages of approximately One Hundred Fifty Million Dollars ($150,000,000) represent the maximum theoretical recovery under the most favorable interpretation of the applicable Franchise License Agreements and the facts as presently understood. The Client acknowledges that actual recovery may be significantly different from the estimated claim value — and may be substantially less — depending on the Court's rulings on contested legal issues (including the enforceability of the liquidated damages provision under FLA § 15.3), the outcome of discovery, any defenses raised by the Adverse Parties, and the terms of any settlement negotiations.
14. Governing Law
This engagement letter and the relationship between the Firm and the Client in connection with this engagement shall be governed by and construed in accordance with the laws of the State of Florida, including the Florida Rules of Professional Conduct as adopted by the Supreme Court of Florida, without regard to principles of conflict of laws.
15. Acceptance and Countersignature
If the foregoing terms accurately reflect your understanding of the engagement, we respectfully request that you confirm your acceptance by signing this Letter in the space indicated below and returning an executed copy to the undersigned at the Firm's Fort Lauderdale office address set forth above, or via email to panand@calderwoodharkness.com. Please retain the other copy for your records. This Letter will not become effective until a countersigned copy has been received by the Firm.
We look forward to working with you and the entire Verimark team on this important matter. Please do not hesitate to contact me directly at (954) 555-7214 or panand@calderwoodharkness.com if you have any questions regarding this Letter or any aspect of the engagement.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Priya Anand
Title: Partner
Date: ________
110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Direct: (954) 555-7214
Email: panand@calderwoodharkness.com
ACCEPTANCE AND AGREEMENT
The undersigned, on behalf of Verimark Hospitality Group Inc., hereby accepts and agrees to the terms and conditions of this engagement letter as set forth above, and authorizes Calderwood & Harkness LLP to proceed with the representation described herein.
VERIMARK HOSPITALITY GROUP INC.
By: ________
Name: Renata Solis-Vega
Title: Senior Vice President & General Counsel
Date: ________
cc:
Douglas Carmichael, Partner, Calderwood & Harkness LLP Martin Holcomb, Executive Vice President & Chief Financial Officer, Verimark Hospitality Group Inc.
Enclosures: None. A detailed phase-by-phase budget memorandum and a Litigation Hold Notice will be provided separately.
Damages Category | Estimated Amount
Underpaid royalties (FLA §§ 5.1, 5.2) | $9,890,000
Underpaid marketing contributions (FLA § 5.3) | $4,945,000
Underpaid technology fees (FLA § 5.4) | $1,260,000
Contractual late-payment interest (FLA § 5.6) | $28,400,000
Liquidated damages (FLA § 15.3) | $105,500,000
Total Estimated Claim Value | $149,995,000
Timekeeper | Role | Hourly Rate
Priya Anand | Responsible Partner | $975.00
Douglas Carmichael | Billing Partner | $925.00
Yuki Nakamura | Lead Associate | $625.00
Carlos Espinoza | Working Associate | $495.00
Paralegals / Contract Attorneys | Support Staff | Blended rate of approximately $285.00

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

ACCEPTANCE AND AGREEMENT

VERIMARK HOSPITALITY GROUP INC.

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