1021-00006 · Client 1021 · Engagement & Administration

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ATTORNEY-CLIENT PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7200 Facsimile: (954) 555-7201

March 7, 2022

VIA EMAIL AND HAND DELIVERY

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: LITIGATION HOLD NOTICE — *Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al.*, Case No. 1021-00006 (Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida)

cc: Martin Holcomb, Executive Vice President & Chief Financial Officer, Verimark Hospitality Group Inc. Deidre Langston, Senior Vice President, Franchise Operations, Verimark Hospitality Group Inc.

Dear Renata:

This letter constitutes a formal Litigation Hold Notice issued by Calderwood & Harkness LLP on behalf of our client, Verimark Hospitality Group Inc. ("Verimark" or the "Company"), in connection with the above-captioned litigation. This notice is privileged and confidential and is intended solely for the use of the individuals and departments identified herein. Please treat it accordingly and do not distribute it outside of Verimark without the prior written consent of Calderwood & Harkness LLP.

I. PURPOSE AND LEGAL OBLIGATION

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

Upon the filing of litigation — or, indeed, upon the reasonable anticipation of litigation — Verimark has a legal duty to preserve all documents, data, and other materials that may be relevant to the claims asserted in this action and to any defenses that may be raised by the opposing parties. This duty is immediate, affirmative, and ongoing. It attaches to every person within the Company who may possess, control, or have access to potentially relevant materials, and it extends to all forms in which such materials may exist, whether paper, electronic, or otherwise.

This preservation obligation arises under the Florida Rules of Civil Procedure, including but not limited to Rule 1.350 (Production of Documents) and Rule 1.380 (Failure to Make discovery; Sanctions), as well as under the inherent authority of the court and applicable Florida case law addressing spoliation of evidence. See, e.g., Martino v. Wal-Mart Stores, Inc., 908 So. 2d 342 (Fla. 2005); Golden Yachts, Inc. v. Hall, 920 So. 2d 777 (Fla. 4th DCA 2006). Failure to preserve relevant materials can result in severe sanctions, including adverse inference instructions (which permit the court or jury to presume that destroyed materials contained information unfavorable to the spoliating party), monetary penalties, preclusion of evidence or witnesses, striking of pleadings, and, in extreme cases, dismissal of claims or entry of default judgment.

This notice supersedes and formalizes any informal preservation instructions that may have been previously communicated in connection with the pre-litigation investigation of the Coastal Palms franchise relationship that commenced in or about November 2021, following receipt of the whistleblower report described below. While those informal instructions were appropriate at the time, the filing of the Complaint necessitates a comprehensive and documented litigation hold that encompasses the full scope of the claims and defenses now at issue.

This duty to preserve applies to all Verimark personnel, agents, and representatives who may possess, control, or have access to potentially relevant materials. It is not limited to officers or senior management. Rather, it extends to every individual within the organization — regardless of title, department, or location — who may have materials that fall within the scope of this hold. Renata, as General Counsel, we ask that you take primary responsibility for ensuring that this notice is distributed to all appropriate individuals within Verimark and that compliance is monitored on an ongoing basis. We are, of course, available to assist in any way necessary.

II. BACKGROUND OF THE LITIGATION

To provide context for the scope of this hold, we briefly summarize the nature and factual basis of the pending litigation.

A. Parties and Claims

Verimark has filed a breach-of-contract action against its largest single franchise operator, Coastal Palms Franchise Holdings LLC ("Coastal Palms"), and the following related defendants: Randall Brecker (individually), Suncoast Room Management Inc. ("Suncoast"), Gulf Breeze Hospitality LLC ("Gulf Breeze"), and Savannah Lodging Partners LLC ("Savannah Lodging") (collectively, the "Defendants"). The action arises from Coastal Palms' systematic underreporting of Gross Room Revenue ("GRR") over a nine-year period, from 2013 through 2021, across its portfolio of twenty-two (22) franchised hotel properties — consisting of eighteen (18) Verimark Suites properties and four (4) Verimark Select properties — comprising approximately 3,740 guest rooms located in the states of Florida and Georgia.

B. The Underreporting Scheme

As alleged in the Complaint, the underreporting was accomplished through the diversion of room revenue through off-platform booking channels, including an unbranded third-party website, gulfcoastrooms.com, and an affiliated management entity, Suncoast Room Management Inc. Suncoast retained a twelve percent (12%) management fee on diverted revenue before remitting remaining funds to property-level entities, thereby reducing the GRR figures reported to Verimark and, consequently, the royalties, marketing-fund contributions, and technology fees owed to the Company under the applicable Franchise License Agreements ("FLAs").

C. Damages

The Complaint alleges approximately $150 million in total damages, encompassing the following categories:

• Underpaid Royalties: calculated at five percent (5%) of GRR pursuant to FLA § 4.1;

• Underpaid Marketing-Fund Contributions: calculated at two and one-half percent (2.5%) of GRR pursuant to FLA § 4.2;

• Underpaid Technology Fees: calculated at $12.50 per room per month pursuant to FLA § 4.3;

• Contractual Late-Payment Interest: calculated at one and one-half percent (1.5%) per month, compounded monthly, pursuant to FLA § 4.6; and

• Liquidated Damages: calculated at three times (3×) the trailing-twelve-month royalties per property pursuant to FLA § 15.3.

D. Counts Alleged

The ten-count Complaint includes the following causes of action: (1) breach of contract (royalties); (2) breach of contract (marketing-fund contributions); (3) breach of contract (technology fees); (4) breach of the implied covenant of good faith and fair dealing; (5) fraudulent concealment; (6) negligent misrepresentation; (7) unjust enrichment; (8) declaratory judgment regarding Verimark's right to terminate the FLAs; (9) accounting; and (10) civil conspiracy.

E. Anticipated Counterclaims

We note that Coastal Palms is expected to file an answer and may assert counterclaims against Verimark, which could further expand the scope of relevant documents beyond those identified in this notice. We will supplement this hold as necessary in the event counterclaims are filed. For now, however, you should preserve all documents that could be relevant to any claim, defense, or counterclaim that may reasonably be anticipated in this litigation, including documents that may support Defendants' position or that may be unfavorable to Verimark.

III. SCOPE OF THE LITIGATION HOLD

The following sections define the subject matter, temporal scope, and custodians encompassed by this hold. Because the scope of discoverable information in litigation is broad — encompassing any matter that is relevant to any party's claim or defense or that appears reasonably calculated to lead to the discovery of admissible evidence — the parameters of this hold are necessarily expansive. When in doubt as to whether a particular document or category of information falls within the scope of this hold, err on the side of preservation and contact Calderwood & Harkness for guidance.

A. Subject Matter Scope

The following categories of documents and information fall within the scope of this litigation hold:

1. Franchise License Agreements. All documents and information relating to the franchise relationship between Verimark and Coastal Palms Franchise Holdings LLC, including all twenty-two (22) individual Franchise License Agreements ("FLAs"), together with all amendments, addenda, side letters, supplements, exhibits, and schedules thereto. The first FLA in the Coastal Palms portfolio was executed on June 15, 2007 (for the Naples, Florida property), and the most recent was executed on September 3, 2019. This includes any documents relating to the negotiation, execution, renewal, or proposed termination of any FLA.

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

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

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

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

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

7. Thornbury & Associates Compliance Audit. All documents relating to the pre-litigation compliance audit conducted by Thornbury & Associates CPAs LLP, including but not limited to engagement letters, audit plans, data requests, audit workpapers, interim and final findings, the preliminary findings report delivered on or about January 18, 2022, and all communications with Thornbury & Associates personnel, including Malcolm Thornbury, CPA. This also includes any internal Verimark analyses or memoranda prepared in response to or in connection with the Thornbury audit.

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

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

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

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

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

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

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

B. Temporal Scope

This litigation hold covers all documents and materials dated, created, modified, sent, or received from January 1, 2006 — which is one year prior to the execution date of the first Coastal Palms FLA on June 15, 2007 — through the present date and continuing forward for the duration of the litigation. Any documents created or received after the date of this notice that fall within the subject-matter categories described above must also be preserved.

Particular attention should be paid to documents from January 2013 forward, which encompasses the period of alleged systematic underreporting of Gross Room Revenue. However, documents from the earlier period (2006–2012) are also within the scope of the hold, as they may be relevant to the formation of the franchise relationship, the establishment of GRR reporting practices, and the baseline against which underreporting is measured.

C. Custodians

The following individuals and their respective departments are specifically identified as custodians likely to possess relevant materials. Each individual listed below must be notified of this litigation hold, must receive a copy of this notice (or a substantially similar internal version, as discussed below), and must comply with all preservation obligations described herein:

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

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

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

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

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

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

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

8. Additional custodians may be identified as the litigation progresses, including through the discovery process, deposition testimony, or further investigation; any updates to the custodian list will be communicated promptly by Calderwood & Harkness

We ask that Renata work with Deidre Langston and the relevant department heads to identify specific individuals within categories 4 through 7 above by name, and to provide that list to Calderwood & Harkness within ten (10) business days so that we can ensure comprehensive coverage.

IV. CATEGORIES OF MATERIALS TO BE PRESERVED

The duty to preserve extends to all forms of documents, data, and information, regardless of format or medium. For clarity, the following categories are specifically identified:

A. Electronically Stored Information (ESI)

Electronically stored information, or ESI, constitutes the largest and most complex category of materials subject to this hold. The term "ESI" is to be construed broadly and includes, without limitation, the following:

• Emails, including all attachments, in any email system or platform, whether corporate email (e.g., Hollowell Systems, Exchange, Ashbury Software) or personal email accounts used for any business-related purpose. This includes archived email, deleted email that has not been permanently purged, and email stored in backup or journaling systems.

• Text messages, instant messages, and chat communications, including communications on corporate messaging platforms (e.g., Northgate Data Systems, Meridian Solutions, or any other platform used by Verimark) and communications on personal devices to the extent they relate to the subject matter of this hold.

• Electronic documents, including word-processing files (e.g., Microsoft Word, Stonefield Health IT), spreadsheets (e.g., Microsoft Excel, Stonefield Services Inc.), presentations (e.g., Microsoft Northgate Services Inc.), and PDF files, wherever stored.

• Database records, including entries in franchise-management systems, property-management systems (PMS), revenue-management platforms, customer-relationship management (CRM) systems, accounting and financial software (e.g., Ridgeline Industries, Hollowell & Co., Drayton Health IT, or any other system used by Verimark), and any proprietary or third-party platforms used for franchise reporting and compliance tracking.

• Financial data and reports stored electronically, including GRR reports, royalty calculations, marketing-fund contribution records, technology-fee invoices, accounts-receivable records, and any reconciliation workbooks or dashboards.

• Calendar entries and meeting invitations related to Coastal Palms franchise operations, audits, compliance reviews, or the dispute.

• Voicemails, to the extent they are stored electronically or on voicemail servers.

• Data on shared network drives, cloud storage platforms (e.g., Aldermere Systems, Cobalt Ridge Systems, Hollowell Health IT, Larkspur Technologies, box), collaboration platforms, and document-management systems (e.g., Tidewater Systems, Vireo Data Systems, or any other DMS used by Verimark).

• Website content and analytics data, to the extent Verimark hosts, controls, or possesses data related to Coastal Palms booking channels, including web server logs, booking-engine data, and analytics dashboards.

• Backup tapes and archival storage media containing any of the above categories of information, including disaster-recovery backups, incremental backups, and any offline or near-line storage media.

• Metadata associated with all electronically stored information must be preserved intact. Documents must not be opened, modified, re-saved, printed to PDF, or otherwise processed in a manner that alters metadata (including but not limited to file-creation dates, modification dates, access dates, author fields, and revision histories). This is critical to ensuring the integrity of the ESI for purposes of authentication and forensic analysis.

B. Paper Documents

The following categories of paper documents must be preserved:

• Original, executed contracts, amendments, addenda, side letters, and related documents for all twenty-two (22) Franchise License Agreements with Coastal Palms.

• Correspondence (including letters, memoranda, and faxes) with Coastal Palms, its principals (including Randall Brecker, Theresa Brecker, and Nolan Prescott), its affiliated entities (including Suncoast, Gulf Breeze, and Savannah Lodging), and its counsel (Whitfield, Barrow & Crane LLP).

• Handwritten notes, including meeting notes, notes taken during telephone calls, margin notations on documents, and personal notebooks maintained by any custodian.

• Financial records and reports in paper form, including printed copies of GRR reports, royalty statements, and audit summaries.

• Audit workpapers and reports in paper form, including any materials received from or provided to Thornbury & Associates CPAs LLP.

• Any other paper documents received from Thornbury & Associates CPAs LLP, Janet Kerrigan, or any other third party in connection with the investigation or the dispute.

C. Other Tangible Materials

In addition to ESI and paper documents, the following tangible materials must be preserved:

• Any physical files maintained for the Coastal Palms franchise relationship, including files maintained by franchise-compliance officers, regional directors, or other operational personnel.

• Property-inspection reports, photographs, site-visit summaries, or brand-compliance documentation for any Coastal Palms property.

• Board presentations, committee minutes (including Audit Committee minutes), executive reports, or other corporate-governance materials that reference Coastal Palms, the Coastal Palms franchise relationship, GRR underreporting, or any of the defendants.

V. PRESERVATION INSTRUCTIONS

A. Affirmative Duties

The following affirmative steps must be taken immediately upon receipt of this notice:

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

2. Suspend IT Auto-Deletion and Retention Policies. Instruct Verimark's Information Technology department to immediately suspend any auto-delete, auto-archive, auto-purge, or data-retention policies that would result in the destruction, overwriting, or degradation of relevant ESI. Specific systems and processes to be addressed include, without limitation: (a) email servers and email-archiving systems; (b) network file shares and mapped drives; (c) backup-tape rotation schedules (backup media that may contain relevant data must be retained and not overwritten); (d) any SaaS or cloud-based platforms used for franchise operations, revenue management, or financial reporting; and (e) any data-lifecycle management or information-governance tools that automatically purge data based on age or other criteria.

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

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

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

B. Prohibitions

The following actions are strictly prohibited for the duration of this litigation hold:

• Do not delete, destroy, discard, shred, or otherwise dispose of any document, file, data, or information that falls within the scope of this hold, regardless of whether you believe the material to be duplicative, immaterial, or otherwise unnecessary.

• Do not alter, modify, edit, annotate, or redact any document or data that falls within the scope of this hold. If you need to work with a document for business purposes, create a clearly labeled working copy and preserve the original in its unaltered state.

• Do not remove or relocate documents or files from their current storage locations (whether physical or electronic) without prior written approval from counsel. This includes transferring files to different folders, drives, or storage media.

• Do not install software or take any action that overwrites, compresses, encrypts, or otherwise alters potentially relevant data in a manner that could impair its accessibility, integrity, or forensic recoverability. This includes disk-wiping tools, file-compression utilities (unless the data is already stored in compressed format), and encryption tools applied to previously unencrypted data.

C. Departing Employees

If any custodian or other employee who may possess relevant materials separates from Verimark during the pendency of this litigation hold — whether through resignation, termination, retirement, or any other form of separation — the following steps must be taken before the employee's departure or, at a minimum, before any account deactivation or device reassignment:

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

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

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

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

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

VI. COMPLIANCE AND ACKNOWLEDGMENT

Compliance with this litigation hold is mandatory for every individual who receives this notice and for every individual to whom this notice is distributed within Verimark.

Each person who receives this notice — whether directly from Calderwood & Harkness LLP or through internal distribution by Renata Solis-Vega or her designee — must confirm in writing that they have read this notice, that they understand the obligations it imposes, and that they will comply with all preservation requirements described herein. Written confirmation by email is acceptable and should be directed to Renata Solis-Vega at her Verimark email address.

All acknowledgments must be returned within five (5) business days of receipt of this notice. Failure to return an acknowledgment within the specified timeframe will be followed up by the Legal Department and, if necessary, by Calderwood & Harkness.

Renata Solis-Vega, or her designee within the Legal Department, should compile and retain all acknowledgment responses in a centralized file and provide copies of all acknowledgments to Calderwood & Harkness LLP for our records. Maintaining a clear record of acknowledgments is essential to demonstrating Verimark's good-faith compliance with its preservation obligations in the event the adequacy of the hold is challenged by opposing counsel or the court.

Calderwood & Harkness strongly recommends that Verimark issue periodic reminders of this litigation hold to all custodians and relevant personnel, no less frequently than quarterly. These reminders should reiterate the key obligations of the hold, confirm that the hold remains in effect, and ask custodians to confirm their continued compliance. Calderwood & Harkness will provide template reminder language upon request.

Any questions regarding the scope of this hold, whether specific documents or categories of information are covered, or how to handle particular preservation issues should be directed to:

Yuki Nakamura, Associate Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7218

Email: ynakamura@calderwoodharkness.com

A Form of Custodian Acknowledgment is enclosed with this notice for distribution to all identified custodians. We ask that Renata distribute this form, along with a copy of this notice (or an appropriate internal summary, as you deem appropriate), to each custodian identified in Section III.C above and to any additional custodians subsequently identified.

VII. DURATION OF THE HOLD

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

The hold applies equally to all existing materials (i.e., documents and data currently in existence as of the date of this notice) and to all new materials generated, created, or received after the date of this notice that fall within the subject-matter scope described in Section III.A above. The obligation to preserve is continuous and ongoing for the duration of the hold.

No individual within Verimark is authorized to lift, modify, or narrow this hold without written approval from Calderwood & Harkness LLP.

VIII. E-DISCOVERY COORDINATION

Calderwood & Harkness LLP has engaged Nexagen Document Solutions LLC ("Nexagen") as the e-discovery vendor for this matter. Nexagen will be responsible for the processing, hosting, review-platform management, and analytics associated with the collection and review of ESI in this litigation.

Verimark's Information Technology department should be prepared to coordinate with Nexagen and with Calderwood & Harkness on the collection and processing of ESI at the appropriate time. Collection activities will be scheduled and coordinated by Calderwood & Harkness in consultation with Verimark's IT team to minimize disruption to business operations while ensuring that collections are conducted in a forensically sound and defensible manner.

No collection of ESI should be undertaken by Verimark personnel independently or without prior coordination with Calderwood & Harkness LLP. Self-collection — while sometimes appropriate in limited circumstances — carries significant risks to the defensibility of the collection process and the integrity of the collected data. All collections must be planned, supervised, and documented in coordination with counsel and, where appropriate, with Nexagen.

We ask that Verimark identify a primary IT contact to serve as the liaison for e-discovery coordination in this matter. This individual should have sufficient technical knowledge of Verimark's IT infrastructure, data-storage systems, email platforms, backup procedures, and enterprise applications to assist counsel and Nexagen in understanding and navigating the Company's data landscape. The identity and contact information of this liaison should be communicated to Yuki Nakamura at Calderwood & Harkness LLP at the earliest opportunity.

IX. CONSEQUENCES OF NON-COMPLIANCE

We cannot overstate the importance of strict compliance with this litigation hold. Failure to comply with this hold could result in severe and potentially outcome-determinative consequences for Verimark, including but not limited to the following:

• Court-Imposed Sanctions: The court may impose sanctions against Verimark for spoliation of evidence, which can include monetary fines, fee-shifting (requiring Verimark to pay the opposing party's attorney's fees and costs), and other punitive measures.

• Adverse Inference Instructions: The court may instruct the jury that it may — or, in egregious cases, must — presume that any documents or data that were destroyed or lost contained information unfavorable to Verimark. Such instructions can be devastating at trial.

• Monetary Penalties: In addition to sanctions, the court may award compensatory damages to the opposing party for the costs incurred as a result of spoliation, including the costs of additional discovery, forensic investigation, and motion practice.

• Preclusion of Evidence or Claims: The court may preclude Verimark from introducing evidence or pursuing claims that are related to the spoliated materials.

• Dismissal of Claims: In the most extreme cases, the court may dismiss Verimark's claims as a sanction for spoliation.

• Independent Spoliation Claims: Under Florida law, spoliation of evidence can give rise to independent tort claims or defenses by the opposing party, potentially exposing Verimark to additional liability.

Compliance with this litigation hold is mandatory for all Verimark employees, officers, directors, agents, contractors, and representatives. Non-compliance by any individual may be treated as a violation of Company policy and may result in disciplinary action, up to and including termination of employment, in addition to the legal consequences described above.

X. CONTACT INFORMATION

For questions regarding the litigation or any aspect of this litigation hold, please contact:

Priya Anand, Partner Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7205

Email: panand@calderwoodharkness.com

Yuki Nakamura, Associate Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7218

Email: ynakamura@calderwoodharkness.com

For internal Verimark questions regarding document identification, preservation logistics, and custodian coordination, please contact:

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

We appreciate Verimark's prompt attention to this matter and its commitment to full compliance with its preservation obligations. Proper and thorough implementation of this litigation hold is essential not only to Verimark's legal position but also to the Company's credibility before the court. We are available to meet with you and your team at any time to discuss the hold, answer questions, and assist with implementation.

Please do not hesitate to contact me or Yuki with any questions.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand, Partner Florida Bar No. 0087451 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7205

Email: panand@calderwoodharkness.com

Enclosure: Form of Custodian Acknowledgment (for distribution to identified custodians)

This communication is intended solely for the use of the individual(s) to whom it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If you are not the intended recipient, or the employee or agent responsible for delivering this communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies of the communication.

ATTORNEY-CLIENT PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7200 Facsimile: (954) 555-7201
March 7, 2022
VIA EMAIL AND HAND DELIVERY
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: LITIGATION HOLD NOTICE — *Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC et al.*, Case No. 1021-00006 (Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida)
cc: Martin Holcomb, Executive Vice President & Chief Financial Officer, Verimark Hospitality Group Inc. Deidre Langston, Senior Vice President, Franchise Operations, Verimark Hospitality Group Inc.
Dear Renata:
This letter constitutes a formal Litigation Hold Notice issued by Calderwood & Harkness LLP on behalf of our client, Verimark Hospitality Group Inc. ("Verimark" or the "Company"), in connection with the above-captioned litigation. This notice is privileged and confidential and is intended solely for the use of the individuals and departments identified herein. Please treat it accordingly and do not distribute it outside of Verimark without the prior written consent of Calderwood & Harkness LLP.
I. PURPOSE AND LEGAL OBLIGATION
The purpose of this letter is to notify Verimark that, as of March 7, 2022, a Complaint has been filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Case No. 1021-00006, captioned Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC, et al. Calderwood & Harkness LLP filed the Complaint on Verimark's behalf, and service of process on the defendants is currently being effectuated.
Upon the filing of litigation — or, indeed, upon the reasonable anticipation of litigation — Verimark has a legal duty to preserve all documents, data, and other materials that may be relevant to the claims asserted in this action and to any defenses that may be raised by the opposing parties. This duty is immediate, affirmative, and ongoing. It attaches to every person within the Company who may possess, control, or have access to potentially relevant materials, and it extends to all forms in which such materials may exist, whether paper, electronic, or otherwise.
This preservation obligation arises under the Florida Rules of Civil Procedure, including but not limited to Rule 1.350 (Production of Documents) and Rule 1.380 (Failure to Make discovery; Sanctions), as well as under the inherent authority of the court and applicable Florida case law addressing spoliation of evidence. See, e.g., Martino v. Wal-Mart Stores, Inc., 908 So. 2d 342 (Fla. 2005); Golden Yachts, Inc. v. Hall, 920 So. 2d 777 (Fla. 4th DCA 2006). Failure to preserve relevant materials can result in severe sanctions, including adverse inference instructions (which permit the court or jury to presume that destroyed materials contained information unfavorable to the spoliating party), monetary penalties, preclusion of evidence or witnesses, striking of pleadings, and, in extreme cases, dismissal of claims or entry of default judgment.
This notice supersedes and formalizes any informal preservation instructions that may have been previously communicated in connection with the pre-litigation investigation of the Coastal Palms franchise relationship that commenced in or about November 2021, following receipt of the whistleblower report described below. While those informal instructions were appropriate at the time, the filing of the Complaint necessitates a comprehensive and documented litigation hold that encompasses the full scope of the claims and defenses now at issue.
This duty to preserve applies to all Verimark personnel, agents, and representatives who may possess, control, or have access to potentially relevant materials. It is not limited to officers or senior management. Rather, it extends to every individual within the organization — regardless of title, department, or location — who may have materials that fall within the scope of this hold. Renata, as General Counsel, we ask that you take primary responsibility for ensuring that this notice is distributed to all appropriate individuals within Verimark and that compliance is monitored on an ongoing basis. We are, of course, available to assist in any way necessary.
II. BACKGROUND OF THE LITIGATION
To provide context for the scope of this hold, we briefly summarize the nature and factual basis of the pending litigation.
A. Parties and Claims
Verimark has filed a breach-of-contract action against its largest single franchise operator, Coastal Palms Franchise Holdings LLC ("Coastal Palms"), and the following related defendants: Randall Brecker (individually), Suncoast Room Management Inc. ("Suncoast"), Gulf Breeze Hospitality LLC ("Gulf Breeze"), and Savannah Lodging Partners LLC ("Savannah Lodging") (collectively, the "Defendants"). The action arises from Coastal Palms' systematic underreporting of Gross Room Revenue ("GRR") over a nine-year period, from 2013 through 2021, across its portfolio of twenty-two (22) franchised hotel properties — consisting of eighteen (18) Verimark Suites properties and four (4) Verimark Select properties — comprising approximately 3,740 guest rooms located in the states of Florida and Georgia.
B. The Underreporting Scheme
As alleged in the Complaint, the underreporting was accomplished through the diversion of room revenue through off-platform booking channels, including an unbranded third-party website, gulfcoastrooms.com, and an affiliated management entity, Suncoast Room Management Inc. Suncoast retained a twelve percent (12%) management fee on diverted revenue before remitting remaining funds to property-level entities, thereby reducing the GRR figures reported to Verimark and, consequently, the royalties, marketing-fund contributions, and technology fees owed to the Company under the applicable Franchise License Agreements ("FLAs").
C. Damages
The Complaint alleges approximately $150 million in total damages, encompassing the following categories:
• Underpaid Royalties: calculated at five percent (5%) of GRR pursuant to FLA § 4.1;
• Underpaid Marketing-Fund Contributions: calculated at two and one-half percent (2.5%) of GRR pursuant to FLA § 4.2;
• Underpaid Technology Fees: calculated at $12.50 per room per month pursuant to FLA § 4.3;
• Contractual Late-Payment Interest: calculated at one and one-half percent (1.5%) per month, compounded monthly, pursuant to FLA § 4.6; and
• Liquidated Damages: calculated at three times (3×) the trailing-twelve-month royalties per property pursuant to FLA § 15.3.
D. Counts Alleged
The ten-count Complaint includes the following causes of action: (1) breach of contract (royalties); (2) breach of contract (marketing-fund contributions); (3) breach of contract (technology fees); (4) breach of the implied covenant of good faith and fair dealing; (5) fraudulent concealment; (6) negligent misrepresentation; (7) unjust enrichment; (8) declaratory judgment regarding Verimark's right to terminate the FLAs; (9) accounting; and (10) civil conspiracy.
E. Anticipated Counterclaims
We note that Coastal Palms is expected to file an answer and may assert counterclaims against Verimark, which could further expand the scope of relevant documents beyond those identified in this notice. We will supplement this hold as necessary in the event counterclaims are filed. For now, however, you should preserve all documents that could be relevant to any claim, defense, or counterclaim that may reasonably be anticipated in this litigation, including documents that may support Defendants' position or that may be unfavorable to Verimark.
III. SCOPE OF THE LITIGATION HOLD
The following sections define the subject matter, temporal scope, and custodians encompassed by this hold. Because the scope of discoverable information in litigation is broad — encompassing any matter that is relevant to any party's claim or defense or that appears reasonably calculated to lead to the discovery of admissible evidence — the parameters of this hold are necessarily expansive. When in doubt as to whether a particular document or category of information falls within the scope of this hold, err on the side of preservation and contact Calderwood & Harkness for guidance.
A. Subject Matter Scope
The following categories of documents and information fall within the scope of this litigation hold:
1. Franchise License Agreements. All documents and information relating to the franchise relationship between Verimark and Coastal Palms Franchise Holdings LLC, including all twenty-two (22) individual Franchise License Agreements ("FLAs"), together with all amendments, addenda, side letters, supplements, exhibits, and schedules thereto. The first FLA in the Coastal Palms portfolio was executed on June 15, 2007 (for the Naples, Florida property), and the most recent was executed on September 3, 2019. This includes any documents relating to the negotiation, execution, renewal, or proposed termination of any FLA.
2. Gross Room Revenue. All documents relating to Gross Room Revenue definitions, reporting, auditing, verification, and calculations for any Coastal Palms property or any property operated or managed by any Coastal Palms affiliate. This includes, without limitation, monthly and annual GRR reports submitted by Coastal Palms to Verimark, any supporting worksheets or calculations, and any communications between Verimark and Coastal Palms regarding GRR reporting.
3. Royalties, Marketing Funds, and Technology Fees. All documents relating to royalty payments, marketing-fund contributions, and technology fees paid or owed by Coastal Palms or any affiliated entity, including invoices, payment records, remittance advices, account statements, ledger entries, and correspondence regarding the same.
4. Suncoast Room Management Inc. All documents relating to Suncoast Room Management Inc., including but not limited to its formation, corporate organization, operations, management-fee arrangements with Coastal Palms or any Coastal Palms property, booking activities, and the website gulfcoastrooms.com. This includes any documents reflecting Verimark's awareness of, inquiry into, or investigation of Suncoast's role in the Coastal Palms franchise operations.
5. Gulf Breeze Hospitality LLC and Savannah Lodging Partners LLC. All documents relating to Gulf Breeze Hospitality LLC and Savannah Lodging Partners LLC, including their formation, operations, relationship to Coastal Palms, and any financial transactions with Coastal Palms properties.
6. Individual Defendants and Principals. All documents relating to Randall Brecker, Theresa Brecker, and Nolan Prescott in their capacities as members, principals, officers, managers, or agents of Coastal Palms and its affiliated entities. This includes any personal guarantee agreements, management agreements, or compensation arrangements.
7. Thornbury & Associates Compliance Audit. All documents relating to the pre-litigation compliance audit conducted by Thornbury & Associates CPAs LLP, including but not limited to engagement letters, audit plans, data requests, audit workpapers, interim and final findings, the preliminary findings report delivered on or about January 18, 2022, and all communications with Thornbury & Associates personnel, including Malcolm Thornbury, CPA. This also includes any internal Verimark analyses or memoranda prepared in response to or in connection with the Thornbury audit.
8. Whistleblower Report. All documents relating to the whistleblower report submitted by Janet Kerrigan, identified as a former Regional Controller of Coastal Palms Franchise Holdings LLC, received by Verimark on November 8, 2021 through Verimark's compliance hotline (or by any other means). This includes the report itself, any intake records, all communications with Ms. Kerrigan, any investigation conducted following receipt of the report, investigative notes and memoranda, and any reports or recommendations generated as a result of the investigation.
9. Notice of Material Breach and Pre-Suit Communications. All documents relating to the Notice of Material Breach issued by Verimark to Coastal Palms on or about February 4, 2022, including all drafts thereof and all responsive communications. This includes the February 28, 2022 letter from Whitfield, Barrow & Crane LLP (counsel for Coastal Palms) denying the existence of any breach, and all correspondence, emails, or other communications between the parties or their respective counsel regarding the dispute, whether before or after issuance of the Notice of Material Breach.
10. Franchise Operations and Brand Standards. All documents relating to Verimark's franchise operations, brand standards (including standards specific to the Verimark Suites and Verimark Select brands), reservation systems, franchise compliance programs, and audit programs, to the extent they concern, reference, or are applicable to Coastal Palms properties. This includes brand-standards manuals, operations manuals, franchise-compliance handbooks, and any amendments or updates thereto.
11. Booking-Channel and Revenue-Management Data. All OTA (online travel agency) agreements, booking-channel data, property-management system ("PMS") data, and revenue-management records for Coastal Palms properties, including data from any central reservation system maintained by Verimark or its affiliates. This includes records from third-party OTA platforms (e.g., Aldermere Technologies, Bramwell Holdings, Drayton Software) to the extent such records are in Verimark's possession or control.
12. Financial Reporting. All documents relating to financial reporting by or about Coastal Palms, including but not limited to monthly GRR reports, annual financial statements, revenue reconciliations, bank statements, merchant-processing records, and tax-related documents (including Forms 1099, K-1, and other tax reporting documents) in Verimark's possession or control.
13. Ironclad National Bank. All documents relating to Ironclad National Bank's lending relationship with Coastal Palms, to the extent Verimark possesses such documents, including loan documents, financial covenants, financial statements provided in connection with lending, and any correspondence with Ironclad National Bank.
14. Internal Analyses and Reports. All internal analyses, memoranda, reports, presentations, or other work product concerning the suspected or confirmed underreporting of GRR by Coastal Palms, including any documents prepared for or presented to Verimark's Board of Directors, Audit Committee, executive management, or any other internal body.
B. Temporal Scope
This litigation hold covers all documents and materials dated, created, modified, sent, or received from January 1, 2006 — which is one year prior to the execution date of the first Coastal Palms FLA on June 15, 2007 — through the present date and continuing forward for the duration of the litigation. Any documents created or received after the date of this notice that fall within the subject-matter categories described above must also be preserved.
Particular attention should be paid to documents from January 2013 forward, which encompasses the period of alleged systematic underreporting of Gross Room Revenue. However, documents from the earlier period (2006–2012) are also within the scope of the hold, as they may be relevant to the formation of the franchise relationship, the establishment of GRR reporting practices, and the baseline against which underreporting is measured.
C. Custodians
The following individuals and their respective departments are specifically identified as custodians likely to possess relevant materials. Each individual listed below must be notified of this litigation hold, must receive a copy of this notice (or a substantially similar internal version, as discussed below), and must comply with all preservation obligations described herein:
1. Renata Solis-Vega, Senior Vice President & General Counsel (Legal Department)
2. Martin Holcomb, Executive Vice President & Chief Financial Officer (Finance Department)
3. Deidre Langston, Senior Vice President, Franchise Operations (Franchise Operations Department)
4. Any current or former Verimark employee who had direct responsibility for managing or overseeing the Coastal Palms franchise relationship, including but not limited to franchise-compliance officers, regional franchise directors, revenue-audit personnel, and field operations managers
5. Any Verimark employee who participated in or has knowledge of the compliance hotline report received from Janet Kerrigan on November 8, 2021, including personnel in the compliance, legal, internal audit, or human resources departments who may have been involved in the intake, investigation, or escalation of the report
6. Any Verimark employee who participated in or has knowledge of the Thornbury & Associates compliance audit, including individuals who assisted with data collection, responded to audit inquiries, or reviewed preliminary or final audit findings
7. Information Technology department personnel responsible for maintaining Verimark's reservation systems, property-management system platforms, revenue-management databases, email servers, backup systems, and other IT infrastructure as they relate to Coastal Palms properties or the data categories described above
8. Additional custodians may be identified as the litigation progresses, including through the discovery process, deposition testimony, or further investigation; any updates to the custodian list will be communicated promptly by Calderwood & Harkness
We ask that Renata work with Deidre Langston and the relevant department heads to identify specific individuals within categories 4 through 7 above by name, and to provide that list to Calderwood & Harkness within ten (10) business days so that we can ensure comprehensive coverage.
IV. CATEGORIES OF MATERIALS TO BE PRESERVED
The duty to preserve extends to all forms of documents, data, and information, regardless of format or medium. For clarity, the following categories are specifically identified:
A. Electronically Stored Information (ESI)
Electronically stored information, or ESI, constitutes the largest and most complex category of materials subject to this hold. The term "ESI" is to be construed broadly and includes, without limitation, the following:
• Emails, including all attachments, in any email system or platform, whether corporate email (e.g., Hollowell Systems, Exchange, Ashbury Software) or personal email accounts used for any business-related purpose. This includes archived email, deleted email that has not been permanently purged, and email stored in backup or journaling systems.
• Text messages, instant messages, and chat communications, including communications on corporate messaging platforms (e.g., Northgate Data Systems, Meridian Solutions, or any other platform used by Verimark) and communications on personal devices to the extent they relate to the subject matter of this hold.
• Electronic documents, including word-processing files (e.g., Microsoft Word, Stonefield Health IT), spreadsheets (e.g., Microsoft Excel, Stonefield Services Inc.), presentations (e.g., Microsoft Northgate Services Inc.), and PDF files, wherever stored.
• Database records, including entries in franchise-management systems, property-management systems (PMS), revenue-management platforms, customer-relationship management (CRM) systems, accounting and financial software (e.g., Ridgeline Industries, Hollowell & Co., Drayton Health IT, or any other system used by Verimark), and any proprietary or third-party platforms used for franchise reporting and compliance tracking.
• Financial data and reports stored electronically, including GRR reports, royalty calculations, marketing-fund contribution records, technology-fee invoices, accounts-receivable records, and any reconciliation workbooks or dashboards.
• Calendar entries and meeting invitations related to Coastal Palms franchise operations, audits, compliance reviews, or the dispute.
• Voicemails, to the extent they are stored electronically or on voicemail servers.
• Data on shared network drives, cloud storage platforms (e.g., Aldermere Systems, Cobalt Ridge Systems, Hollowell Health IT, Larkspur Technologies, box), collaboration platforms, and document-management systems (e.g., Tidewater Systems, Vireo Data Systems, or any other DMS used by Verimark).
• Website content and analytics data, to the extent Verimark hosts, controls, or possesses data related to Coastal Palms booking channels, including web server logs, booking-engine data, and analytics dashboards.
• Backup tapes and archival storage media containing any of the above categories of information, including disaster-recovery backups, incremental backups, and any offline or near-line storage media.
• Metadata associated with all electronically stored information must be preserved intact. Documents must not be opened, modified, re-saved, printed to PDF, or otherwise processed in a manner that alters metadata (including but not limited to file-creation dates, modification dates, access dates, author fields, and revision histories). This is critical to ensuring the integrity of the ESI for purposes of authentication and forensic analysis.
B. Paper Documents
The following categories of paper documents must be preserved:
• Original, executed contracts, amendments, addenda, side letters, and related documents for all twenty-two (22) Franchise License Agreements with Coastal Palms.
• Correspondence (including letters, memoranda, and faxes) with Coastal Palms, its principals (including Randall Brecker, Theresa Brecker, and Nolan Prescott), its affiliated entities (including Suncoast, Gulf Breeze, and Savannah Lodging), and its counsel (Whitfield, Barrow & Crane LLP).
• Handwritten notes, including meeting notes, notes taken during telephone calls, margin notations on documents, and personal notebooks maintained by any custodian.
• Financial records and reports in paper form, including printed copies of GRR reports, royalty statements, and audit summaries.
• Audit workpapers and reports in paper form, including any materials received from or provided to Thornbury & Associates CPAs LLP.
• Any other paper documents received from Thornbury & Associates CPAs LLP, Janet Kerrigan, or any other third party in connection with the investigation or the dispute.
C. Other Tangible Materials
In addition to ESI and paper documents, the following tangible materials must be preserved:
• Any physical files maintained for the Coastal Palms franchise relationship, including files maintained by franchise-compliance officers, regional directors, or other operational personnel.
• Property-inspection reports, photographs, site-visit summaries, or brand-compliance documentation for any Coastal Palms property.
• Board presentations, committee minutes (including Audit Committee minutes), executive reports, or other corporate-governance materials that reference Coastal Palms, the Coastal Palms franchise relationship, GRR underreporting, or any of the defendants.
V. PRESERVATION INSTRUCTIONS
A. Affirmative Duties
The following affirmative steps must be taken immediately upon receipt of this notice:
1. Suspend Routine Destruction. Immediately cease any routine document-destruction, recycling, purging, or disposal that would affect potentially relevant materials. This includes the suspension of any automatic deletion policies for email, voicemail, or other ESI that falls within the categories described in this notice. Any scheduled shredding or off-site destruction of paper records must be halted pending review for relevance to this hold.
2. Suspend IT Auto-Deletion and Retention Policies. Instruct Verimark's Information Technology department to immediately suspend any auto-delete, auto-archive, auto-purge, or data-retention policies that would result in the destruction, overwriting, or degradation of relevant ESI. Specific systems and processes to be addressed include, without limitation: (a) email servers and email-archiving systems; (b) network file shares and mapped drives; (c) backup-tape rotation schedules (backup media that may contain relevant data must be retained and not overwritten); (d) any SaaS or cloud-based platforms used for franchise operations, revenue management, or financial reporting; and (e) any data-lifecycle management or information-governance tools that automatically purge data based on age or other criteria.
3. Custodian Search and Identification. Each identified custodian must affirmatively search for and identify all responsive materials within their possession, custody, or control. This includes a diligent review of email folders, personal files, shared drives, physical file cabinets, and any other location where relevant materials may reside. Custodians should document the locations and types of relevant materials identified and report this information to Renata Solis-Vega.
4. Maintain Materials In Place. All potentially relevant materials must be maintained in their current location and format. Do not move, reorganize, rename, copy, or convert files unless specifically directed to do so by counsel. The goal is to preserve the materials — and their associated metadata — in their native state.
5. Report Additional Sources. If any custodian becomes aware of additional locations where relevant materials may be stored — including but not limited to personal devices (laptops, tablets, smartphones), home computers, personal cloud-storage accounts, off-site storage facilities, or third-party platforms — that custodian must immediately notify Renata Solis-Vega or contact Calderwood & Harkness LLP directly. These additional sources must also be preserved.
B. Prohibitions
The following actions are strictly prohibited for the duration of this litigation hold:
• Do not delete, destroy, discard, shred, or otherwise dispose of any document, file, data, or information that falls within the scope of this hold, regardless of whether you believe the material to be duplicative, immaterial, or otherwise unnecessary.
• Do not alter, modify, edit, annotate, or redact any document or data that falls within the scope of this hold. If you need to work with a document for business purposes, create a clearly labeled working copy and preserve the original in its unaltered state.
• Do not remove or relocate documents or files from their current storage locations (whether physical or electronic) without prior written approval from counsel. This includes transferring files to different folders, drives, or storage media.
• Do not install software or take any action that overwrites, compresses, encrypts, or otherwise alters potentially relevant data in a manner that could impair its accessibility, integrity, or forensic recoverability. This includes disk-wiping tools, file-compression utilities (unless the data is already stored in compressed format), and encryption tools applied to previously unencrypted data.
C. Departing Employees
If any custodian or other employee who may possess relevant materials separates from Verimark during the pendency of this litigation hold — whether through resignation, termination, retirement, or any other form of separation — the following steps must be taken before the employee's departure or, at a minimum, before any account deactivation or device reassignment:
1. All of the departing employee's files, documents, and data (both electronic and paper) must be preserved in their entirety.
2. The departing employee's email account must not be deactivated, deleted, or purged. If the account must be deactivated for security purposes, all email and associated data must first be exported and preserved in a forensically sound manner.
3. All company-issued devices (laptops, tablets, smartphones) must be collected, imaged or backed up, and preserved.
4. Access credentials (passwords, security tokens, etc.) must be documented and retained to ensure continued access to preserved data.
5. Calderwood & Harkness LLP must be notified immediately if any such separation occurs or is reasonably anticipated, so that appropriate preservation measures can be coordinated.
VI. COMPLIANCE AND ACKNOWLEDGMENT
Compliance with this litigation hold is mandatory for every individual who receives this notice and for every individual to whom this notice is distributed within Verimark.
Each person who receives this notice — whether directly from Calderwood & Harkness LLP or through internal distribution by Renata Solis-Vega or her designee — must confirm in writing that they have read this notice, that they understand the obligations it imposes, and that they will comply with all preservation requirements described herein. Written confirmation by email is acceptable and should be directed to Renata Solis-Vega at her Verimark email address.
All acknowledgments must be returned within five (5) business days of receipt of this notice. Failure to return an acknowledgment within the specified timeframe will be followed up by the Legal Department and, if necessary, by Calderwood & Harkness.
Renata Solis-Vega, or her designee within the Legal Department, should compile and retain all acknowledgment responses in a centralized file and provide copies of all acknowledgments to Calderwood & Harkness LLP for our records. Maintaining a clear record of acknowledgments is essential to demonstrating Verimark's good-faith compliance with its preservation obligations in the event the adequacy of the hold is challenged by opposing counsel or the court.
Calderwood & Harkness strongly recommends that Verimark issue periodic reminders of this litigation hold to all custodians and relevant personnel, no less frequently than quarterly. These reminders should reiterate the key obligations of the hold, confirm that the hold remains in effect, and ask custodians to confirm their continued compliance. Calderwood & Harkness will provide template reminder language upon request.
Any questions regarding the scope of this hold, whether specific documents or categories of information are covered, or how to handle particular preservation issues should be directed to:
Yuki Nakamura, Associate Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7218
Email: ynakamura@calderwoodharkness.com
A Form of Custodian Acknowledgment is enclosed with this notice for distribution to all identified custodians. We ask that Renata distribute this form, along with a copy of this notice (or an appropriate internal summary, as you deem appropriate), to each custodian identified in Section III.C above and to any additional custodians subsequently identified.
VII. DURATION OF THE HOLD
This litigation hold will remain in effect until further written notice from Calderwood & Harkness LLP. The hold will not be lifted, modified, or narrowed until the litigation — including any post-trial motions, appeals, or enforcement proceedings — is fully and finally resolved, and Calderwood & Harkness provides express written authorization to resume normal document-retention and destruction practices.
The hold applies equally to all existing materials (i.e., documents and data currently in existence as of the date of this notice) and to all new materials generated, created, or received after the date of this notice that fall within the subject-matter scope described in Section III.A above. The obligation to preserve is continuous and ongoing for the duration of the hold.
No individual within Verimark is authorized to lift, modify, or narrow this hold without written approval from Calderwood & Harkness LLP.
VIII. E-DISCOVERY COORDINATION
Calderwood & Harkness LLP has engaged Nexagen Document Solutions LLC ("Nexagen") as the e-discovery vendor for this matter. Nexagen will be responsible for the processing, hosting, review-platform management, and analytics associated with the collection and review of ESI in this litigation.
Verimark's Information Technology department should be prepared to coordinate with Nexagen and with Calderwood & Harkness on the collection and processing of ESI at the appropriate time. Collection activities will be scheduled and coordinated by Calderwood & Harkness in consultation with Verimark's IT team to minimize disruption to business operations while ensuring that collections are conducted in a forensically sound and defensible manner.
No collection of ESI should be undertaken by Verimark personnel independently or without prior coordination with Calderwood & Harkness LLP. Self-collection — while sometimes appropriate in limited circumstances — carries significant risks to the defensibility of the collection process and the integrity of the collected data. All collections must be planned, supervised, and documented in coordination with counsel and, where appropriate, with Nexagen.
We ask that Verimark identify a primary IT contact to serve as the liaison for e-discovery coordination in this matter. This individual should have sufficient technical knowledge of Verimark's IT infrastructure, data-storage systems, email platforms, backup procedures, and enterprise applications to assist counsel and Nexagen in understanding and navigating the Company's data landscape. The identity and contact information of this liaison should be communicated to Yuki Nakamura at Calderwood & Harkness LLP at the earliest opportunity.
IX. CONSEQUENCES OF NON-COMPLIANCE
We cannot overstate the importance of strict compliance with this litigation hold. Failure to comply with this hold could result in severe and potentially outcome-determinative consequences for Verimark, including but not limited to the following:
• Court-Imposed Sanctions: The court may impose sanctions against Verimark for spoliation of evidence, which can include monetary fines, fee-shifting (requiring Verimark to pay the opposing party's attorney's fees and costs), and other punitive measures.
• Adverse Inference Instructions: The court may instruct the jury that it may — or, in egregious cases, must — presume that any documents or data that were destroyed or lost contained information unfavorable to Verimark. Such instructions can be devastating at trial.
• Monetary Penalties: In addition to sanctions, the court may award compensatory damages to the opposing party for the costs incurred as a result of spoliation, including the costs of additional discovery, forensic investigation, and motion practice.
• Preclusion of Evidence or Claims: The court may preclude Verimark from introducing evidence or pursuing claims that are related to the spoliated materials.
• Dismissal of Claims: In the most extreme cases, the court may dismiss Verimark's claims as a sanction for spoliation.
• Independent Spoliation Claims: Under Florida law, spoliation of evidence can give rise to independent tort claims or defenses by the opposing party, potentially exposing Verimark to additional liability.
Compliance with this litigation hold is mandatory for all Verimark employees, officers, directors, agents, contractors, and representatives. Non-compliance by any individual may be treated as a violation of Company policy and may result in disciplinary action, up to and including termination of employment, in addition to the legal consequences described above.
X. CONTACT INFORMATION
For questions regarding the litigation or any aspect of this litigation hold, please contact:
Priya Anand, Partner Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7205
Email: panand@calderwoodharkness.com
Yuki Nakamura, Associate Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7218
Email: ynakamura@calderwoodharkness.com
For internal Verimark questions regarding document identification, preservation logistics, and custodian coordination, please contact:
Renata Solis-Vega, Senior Vice President & General Counsel Verimark Hospitality Group Inc. 2400 East Las Olas Boulevard, Suite 3100 Fort Lauderdale, Florida 33301
We appreciate Verimark's prompt attention to this matter and its commitment to full compliance with its preservation obligations. Proper and thorough implementation of this litigation hold is essential not only to Verimark's legal position but also to the Company's credibility before the court. We are available to meet with you and your team at any time to discuss the hold, answer questions, and assist with implementation.
Please do not hesitate to contact me or Yuki with any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand, Partner Florida Bar No. 0087451 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 555-7205
Email: panand@calderwoodharkness.com
Enclosure: Form of Custodian Acknowledgment (for distribution to identified custodians)
This communication is intended solely for the use of the individual(s) to whom it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If you are not the intended recipient, or the employee or agent responsible for delivering this communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies of the communication.

ATTORNEY-CLIENT PRIVILEGED & CONFIDENTIAL

VIA EMAIL AND HAND DELIVERY

I. PURPOSE AND LEGAL OBLIGATION

II. BACKGROUND OF THE LITIGATION

III. SCOPE OF THE LITIGATION HOLD

IV. CATEGORIES OF MATERIALS TO BE PRESERVED

V. PRESERVATION INSTRUCTIONS

VI. COMPLIANCE AND ACKNOWLEDGMENT

VII. DURATION OF THE HOLD

VIII. E-DISCOVERY COORDINATION

IX. CONSEQUENCES OF NON-COMPLIANCE

X. CONTACT INFORMATION

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts