1021-00007 · Verimark Hospitality Group · Engagement

conflict-check-memorandum.docx DOCUMENT Real Estate

14 / 43 ← → ✕

Contract analysis Extract to table

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

CALDERWOOD & HARKNESS LLP 100 Southeast Second Street, Suite 3800 Miami, Florida 33131

TO: Douglas Fairchild, Partner, Real Estate Practice Group

FROM: Angela Fontaine, Partner, Real Estate Practice Group Grace Nakamura, Associate, Real Estate Practice Group

DATE: October 19, 2022

RE: Conflict Check Results — Proposed Representation of Verimark Hospitality Group Inc. and Coral Palms Resort Holdings LLC in Connection with $160,000,000 Resort Refinancing

CLIENT MATTER NO.: 1021-00007

1. Purpose and Summary of Clearance

This memorandum documents the results of the conflicts of interest check performed by the undersigned in connection with the proposed new engagement of Verimark Hospitality Group Inc. and its subsidiary, Coral Palms Resort Holdings LLC, as described more fully herein. The conflicts check was conducted in accordance with the firm's established conflicts clearance policies and procedures, including a comprehensive search of the firm's electronic conflicts database (the "IntegriCheck System"), supplemented by direct inquiries to relevant practice group leaders and a review of the firm's current and historical client and matter listings.

The proposed representation involves the engagement of Calderwood & Harkness LLP ("C&H" or the "Firm") to serve as borrower's counsel to Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol VMRK, and its wholly owned indirect subsidiary, Coral Palms Resort Holdings LLC ("CPRH"), a Florida limited liability company, in connection with a proposed $160,000,000 first mortgage refinancing of the Coral Palms Grand Resort & Spa, a full-service luxury oceanfront resort hotel located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"). The refinancing will replace an existing first mortgage loan with an approximate outstanding principal balance of $118,500,000, currently held by Tidewater National Bank, N.A. ("Tidewater"). The prospective lender in the proposed refinancing is Pinnacle Atlantic Capital, LLC ("PAC"), an affiliate of Greystone Peak Asset Management LP ("Greystone Peak"), a diversified alternative asset management firm.

Conclusion: Based on the comprehensive search and analysis detailed in this memorandum, conflicts clearance is granted. No conflicts of interest have been identified that would preclude or restrict the Firm's representation of VHG and CPRH in connection with the proposed engagement. The Firm is authorized to proceed with the engagement, subject to the execution of an engagement letter by VHG.

2. Description of the Proposed Engagement

2.1 Client Information

Verimark Hospitality Group Inc. is a publicly traded hospitality and real estate company incorporated in the State of Delaware and headquartered at 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131. VHG's common shares are listed and traded on the Nasdaq Stock Market under the ticker symbol VMRK. VHG completed its initial public offering in 2017 and has since grown to own and operate fourteen luxury and upscale resort properties located across the Southeastern United States and the Caribbean. For the fiscal year ended December 31, 2021, VHG reported consolidated revenue of approximately $487 million. The company's total enterprise value is approximately $1.9 billion based on current market capitalization and outstanding indebtedness. The principal officers of VHG relevant to this engagement are:

• Conrad W. Elliston — Chairman of the Board and Chief Executive Officer

• Natasha Ricard — Chief Financial Officer

• Derek Huang — Senior Vice President, Capital Markets & Treasury

Mr. Huang is expected to serve as the primary day-to-day business contact for VHG with respect to the proposed refinancing transaction.

2.2 Borrower Entity

Coral Palms Resort Holdings LLC is a Florida limited liability company and a wholly owned indirect subsidiary of VHG. CPRH is the fee owner of the Property and will serve as the borrower under the proposed refinancing loan. CPRH holds title to the Property through VHG's tiered ownership structure, which includes one or more intermediate holding entities. The organizational structure of VHG and its subsidiaries will be reviewed and confirmed during the course of the engagement for purposes of entity authorization opinions and organizational document review.

2.3 Nature of the Matter

The Firm's proposed scope of engagement encompasses borrower-side representation in a commercial mortgage refinancing transaction. The anticipated scope of legal services includes, but is not limited to, the following:

(a) Review and negotiation of the commitment letter, term sheet, and related pre-closing documentation issued by the prospective lender;

(b) Review and negotiation of the definitive loan agreement, including all financial covenants, representations and warranties, events of default, and borrower reporting obligations;

(d) Review and negotiation of the promissory note;

(e) Review and negotiation of the guaranty agreement to be executed by VHG as guarantor of certain obligations of CPRH under the loan;

(f) Review and negotiation of the environmental indemnity agreement;

(g) Review and negotiation of the cash management agreement and lockbox arrangements;

(h) Review and negotiation of the reserve agreement, including reserves for taxes, insurance, furniture, fixtures and equipment replacement, and seasonality-related reserves;

(i) Review and negotiation of related ancillary loan documents, including subordination, non-disturbance, and attornment agreements, estoppel certificates, and management subordination agreements;

(j) Review of the existing title commitment, pro forma title policy, and survey for the Property, and coordination of resolution of any title or survey exceptions requiring cure or endorsement;

(k) Review of insurance coverages for compliance with lender requirements, and coordination with the borrower's insurance broker and carriers;

(l) Preparation and delivery of entity authorization documents, including resolutions, certificates, incumbency certificates, and organizational good standing certifications;

(m) Coordination with VHG and Tidewater regarding payoff of the existing mortgage loan, including review and negotiation of the payoff letter, satisfaction and discharge documentation, and UCC termination statements; and

(n) Such other matters as may reasonably arise in connection with the refinancing transaction.

2.4 Property Description

The Coral Palms Grand Resort & Spa is a full-service luxury oceanfront resort hotel situated on an approximately 22.4-acre waterfront site in Key Largo, Monroe County, Florida. The resort comprises approximately 342 guest rooms and suites within a gross building area of approximately 412,000 square feet. The Property includes multiple food and beverage outlets, a full-service spa and wellness center, conference and event facilities, multiple swimming pools, private beach access, a marina, and related resort amenities. The Property is subject to Monroe County land use and zoning regulations, Florida coastal construction control line requirements, and applicable environmental regulations related to its location in the Florida Keys.

2.5 Transaction Value

The proposed first mortgage loan amount is $160,000,000. The loan will be secured by a first priority mortgage lien and security interest in the Property, together with an assignment of leases and rents, a pledge of CPRH's personal property, and related collateral. VHG is expected to execute a non-recourse carve-out guaranty in connection with the loan.

2.6 Proposed Engagement Team

The following attorneys have been identified to staff the engagement, subject to adjustment based on workload and availability:

Each member of the proposed engagement team has been individually screened for personal conflicts and related-matter conflicts as described in Section 5 of this memorandum.

2.7 VHG Corporate Background

For contextual purposes, VHG is a well-established hospitality operator that completed its initial public offering on the Nasdaq Stock Market in 2017. Since its IPO, VHG has been an active participant in the commercial real estate capital markets, having closed multiple acquisition, refinancing, and construction financing transactions across its portfolio. VHG's 2022 consolidated revenue is approximately $487 million, and its total enterprise value, based on current trading levels of its common stock and outstanding consolidated indebtedness, is approximately $1.9 billion. VHG's portfolio of fourteen luxury and upscale resort properties is concentrated in the Southeastern United States and the Caribbean, with properties in Florida, Georgia, South Carolina, the U.S. Virgin Islands, and the Cayman Islands. VHG is not currently a client of C&H, and the Firm has not previously represented VHG or any of its subsidiaries in any matter.

3. Parties Checked

The following is a comprehensive itemized list of all parties and affiliated entities submitted to the Firm's conflicts database for screening in connection with the proposed engagement. The parties are organized by category according to their role in the proposed transaction.

3.1 Client-Side Parties

The following client-side parties and their key personnel were submitted for conflicts screening:

1. Verimark Hospitality Group Inc. — Delaware corporation; Nasdaq: VMRK; headquartered at 1400 Bayshore Boulevard, Suite 2200, Miami, FL 33131; proposed client

2. Coral Palms Resort Holdings LLC — Florida limited liability company; wholly owned indirect subsidiary of VHG; fee owner of the Property and proposed borrower entity; proposed client

3. Conrad W. Elliston — Chairman of the Board and Chief Executive Officer, VHG; individual screened as key officer of proposed client

4. Natasha Ricard — Chief Financial Officer, VHG; individual screened as key officer of proposed client

5. Derek Huang — Senior Vice President, Capital Markets & Treasury, VHG; individual screened as primary business contact for the engagement

3.2 Prospective Lender and Affiliates

The following prospective lender-side parties and their key personnel were submitted for conflicts screening:

1. Pinnacle Atlantic Capital, LLC — Delaware limited liability company; prospective lender; principal office at 200 Lexington Avenue, 38th Floor, New York, NY 10016; a real estate lending platform affiliated with Greystone Peak Asset Management LP

2. Greystone Peak Asset Management LP — Delaware limited partnership; parent and affiliate of PAC; a diversified alternative asset management firm with approximately $12 billion in assets under management; principal office in New York, NY

3. Martin Drubeck — Managing Director, Real Estate Lending, PAC; individual screened as key lender contact

4. Jennifer Kwon — Vice President, Originations, PAC; individual screened as lender origination contact

3.3 Existing Lender (Payoff Bank)

The following existing lender-side party and its key personnel were submitted for conflicts screening:

1. Tidewater National Bank, N.A. — A national banking association chartered by the Office of the Comptroller of the Currency; principal office at 600 Waterside Drive, Norfolk, VA 23510; approximately $38 billion in total assets; existing mortgage lender to CPRH with respect to the Property; holder of the existing first mortgage loan to be paid off in connection with the proposed refinancing

2. Alan Prescott — Senior Vice President, Commercial Real Estate, Tidewater National Bank, N.A.; individual screened as key contact at existing lender

3.4 Lender's Counsel (Adverse / Counterparty Counsel)

The following law firm and its relevant attorneys were submitted for conflicts screening in their capacity as counterparty counsel representing the prospective lender in the proposed transaction:

1. Whitford Baines & Driscoll LLP — New York limited liability partnership; principal office at 1221 Avenue of the Americas, Suite 4400, New York, NY 10020; engaged by PAC to serve as lender's counsel in connection with the proposed refinancing

2. Philip Tarrant Corporation — Partner, Real Estate Finance, Whitford Baines & Driscoll LLP; lead attorney for the prospective lender

3. Catherine Yee — Associate, Whitford Baines & Driscoll LLP; working attorney on the lender's counsel team

3.5 Other Anticipated Third Parties

The following third-party service providers anticipated to be involved in the proposed transaction were also submitted for conflicts screening:

1. Hargrove & Whitley Valuation Services LLC — Independent appraisal firm; located in Palm Beach Gardens, FL; retained to provide an appraisal of the Property in connection with the proposed refinancing

2. Meridian Title & Escrow, Inc. — Title insurance company and escrow agent; located in Miami, FL; anticipated to serve as the title company and escrow agent for the transaction

3. Oakridge Environmental Consulting Group, Inc. — Environmental consulting firm; located in Coral Gables, FL; retained to prepare Phase I and, if required, Phase II environmental site assessments of the Property

4. Castlegate Risk Advisors LLC — Insurance brokerage firm; located in Miami, FL; VHG's insurance broker, anticipated to coordinate insurance compliance with lender requirements

5. Southland Mutual Insurance Company — Property and casualty insurance carrier; located in Tampa, FL; anticipated to provide or continue property and casualty insurance coverage for the Property

6. Bayfront Specialty Insurance Corp. — Flood insurance carrier; a Florida-domiciled specialty insurer; anticipated to provide flood insurance coverage for the Property as required by the lender and applicable law given the Property's location in a flood zone

7. Keswick & Holt LLP — Certified public accounting firm; located in Miami, FL; VHG's independent auditor, which may be called upon to provide financial certifications, comfort letters, or other documentation in connection with the refinancing

8. Landis & Shaw Surveying, Inc. — Licensed land surveying firm; located in South Miami, FL; anticipated to prepare or update an ALTA/NSPS land title survey of the Property in connection with the refinancing

4. Conflicts Database Search Results

The Firm's IntegriCheck conflicts database was searched on October 17, 2022, and supplemental searches were conducted on October 18, 2022, using variations of each party name, including abbreviations, acronyms, trade names, and phonetic variations. The results of the conflicts database search for each category of party are set forth below.

4.1 Verimark Hospitality Group Inc. / Coral Palms Resort Holdings LLC

A comprehensive search of the Firm's conflicts database was conducted for Verimark Hospitality Group Inc. (including searches under "Verimark," "VHG," "VMRK," and related variations) and Coral Palms Resort Holdings LLC (including searches under "Coral Palms," "CPRH," and related variations).

Results: No prior representations of VHG or CPRH were identified in the Firm's conflicts database. No current or former adverse representations against VHG or CPRH were identified. Neither VHG nor CPRH, nor any entity bearing a substantially similar name, appears in the Firm's historical client roster or adverse party listings. VHG and CPRH are new clients to the Firm. Because C&H has never represented VHG or CPRH, and because no existing client relationships or adverse representations involving these entities were identified, there are no duty-of-loyalty issues or concerns regarding the Firm's ability to undertake this engagement.

Additionally, the individual names of Conrad W. Elliston, Natasha Ricard, and Derek Huang were searched in the conflicts database, and no prior representations or adverse relationships were identified with respect to any of these individuals.

Determination: No conflict identified.

4.2 Pinnacle Atlantic Capital, LLC

A comprehensive search of the Firm's conflicts database was conducted for Pinnacle Atlantic Capital, LLC (including searches under "Pinnacle Atlantic," "PAC," "Pinnacle Capital," and related variations).

Results: No current client relationship with PAC was identified. The Firm has not previously represented PAC as a client in any matter. A historical search revealed one closed matter — Matter No. 1021-00007 — in which the Firm represented an unrelated third-party borrower, Suncrest Development Partners LLC, in a 2019 construction financing transaction in which PAC served as a participant lender in a multi-lender syndicate. That matter was fully closed on March 14, 2020, and the Firm's representation of the borrower in that transaction was concluded. C&H did not represent PAC or any PAC affiliate in that transaction. The existence of a prior closed matter in which PAC appeared as a non-client counterparty does not give rise to a current conflict of interest, as the Firm owes no ongoing duty of loyalty to PAC, and the prior matter is unrelated in subject matter, parties, and facts to the proposed engagement.

PAC is on the opposite side of the proposed transaction as the prospective lender, and CPRH is the prospective borrower. A degree of inherent adversity exists in the borrower-lender negotiation context, as the parties will be negotiating the terms and conditions of the loan agreement and related documentation from differing economic perspectives. However, this adversity arises in the context of a commercial business transaction, not litigation or any proceeding in which the interests of the parties are fundamentally antagonistic. Under applicable professional responsibility rules, it is standard and permissible practice for a law firm to represent a borrower in a loan transaction where the lender is not a current client of the firm, even though the firm will negotiate loan terms on behalf of the borrower that the lender may not favor. No conflicting current client relationship with PAC has been identified that would require informed consent or preclude the representation.

Determination: No conflict identified.

4.3 Greystone Peak Asset Management LP

A comprehensive search of the Firm's conflicts database was conducted for Greystone Peak Asset Management LP (including searches under "Greystone Peak," "Greystone," "GPAM," and related variations).

Results: No current client relationship with Greystone Peak was identified. The Firm has not previously represented Greystone Peak or any entity bearing that name as a client in any matter. A review of the Firm's database identified no prior engagements, either as counsel to Greystone Peak or as adverse counsel against Greystone Peak, in any active or historical matter. Because there is no current representation of Greystone Peak by the Firm, there is no ongoing duty of loyalty owed to Greystone Peak, and the Firm's representation of VHG and CPRH in a transaction in which a Greystone Peak affiliate is the prospective lender does not give rise to any conflict of interest.

Determination: No conflict identified.

4.4 Tidewater National Bank, N.A.

A comprehensive search of the Firm's conflicts database was conducted for Tidewater National Bank, N.A. (including searches under "Tidewater National," "Tidewater Bank," "TNB," and related variations).

Results: The Firm's conflicts database identified two historical matters involving Tidewater National Bank, N.A.:

(a) Matter No. 1021-00007 — In 2017, the Firm represented Bellhaven Properties, Inc. as borrower's counsel in a $24,000,000 acquisition financing transaction in which Tidewater served as the lender. That matter was closed on September 8, 2017, and is unrelated to the proposed engagement.

(b) Matter No. 1021-00007 — In 2018, the Firm represented Palmetto Bay Capital Group LLC as borrower's counsel in a $41,500,000 refinancing transaction in which Tidewater participated as one of two lenders in a club deal. That matter was closed on February 22, 2019, and is unrelated to the proposed engagement.

In both identified historical matters, Tidewater served as the lender and the Firm represented the borrower on the opposite side of the transaction. The Firm did not represent Tidewater as a client in either matter. Both matters are fully closed, and no ongoing attorney-client relationship or duty of loyalty exists between the Firm and Tidewater.

As to the proposed engagement, Tidewater is the existing lender whose first mortgage loan on the Property will be paid off and satisfied in connection with the proposed refinancing. The refinancing is not adverse to Tidewater in any material sense, as Tidewater will receive a full payoff of the outstanding principal balance, accrued interest, and any applicable prepayment premium or exit fees pursuant to the terms of its existing loan documents. The Firm's role in coordinating the payoff of the existing Tidewater loan on behalf of the borrower does not constitute an adverse representation against Tidewater.

No current representation of Tidewater by the Firm was identified in the conflicts database. The Firm does not currently represent Tidewater in any matter, whether related or unrelated to the proposed engagement, and no positional or issue conflict exists.

Determination: No conflict identified.

4.5 Whitford Baines & Driscoll LLP

A comprehensive search of the Firm's conflicts database was conducted for Whitford Baines & Driscoll LLP (including searches under "Whitford Baines," "WBD," "Whitford," and related variations), as well as the individual attorneys Philip Tarrant Corporation and Catherine Yee.

Results: WBD is identified as lender's counsel in the proposed transaction and will serve as counterparty counsel to C&H in the negotiation and preparation of the loan documentation. The Firm's database identified multiple matters over the past several years in which C&H and WBD have been involved in the same transactions in various capacities:

(a) In at least three prior real estate finance transactions, C&H represented the borrower while WBD represented the lender (or vice versa), reflecting the ordinary course of commercial real estate practice in which major law firms regularly appear on opposite sides of transactional matters.

(b) In at least two prior matters, C&H and WBD served as co-counsel to the same client in unrelated litigation matters handled by the Firm's litigation department.

None of these prior matters are currently active, and none involve the same parties, properties, or subject matter as the proposed engagement. It is standard and well-accepted practice in the legal profession for law firms to serve on opposite sides of business transactions. The relationship between borrower's counsel and lender's counsel in a commercial mortgage refinancing is a routine counterparty relationship, not an adversarial one in the litigation sense. The fact that C&H and WBD have previously worked together in other capacities does not create any conflict or impairment of the Firm's ability to represent its clients zealously in this transaction.

No specific engagement-level conflict has been identified with respect to WBD or its individual attorneys. Philip Tarrant Corporation and Catherine Yee are not current or former clients of the Firm, and no personal conflict or relationship issue was identified.

Determination: No conflict identified. Standard counterparty relationship in the transactional context.

4.6 Other Third Parties

Conflicts searches were conducted for all third-party service providers listed in Section 3.5 above, specifically: Hargrove & Whitley Valuation Services LLC, Meridian Title & Escrow, Inc., Oakridge Environmental Consulting Group, Inc., Castlegate Risk Advisors LLC, Southland Mutual Insurance Company, Bayfront Specialty Insurance Corp., Keswick & Holt LLP, and Landis & Shaw Surveying, Inc.

Results: None of the identified third-party service providers occupy an adverse position in the proposed transaction. Each entity is a service provider retained by the borrower, the lender, or the title company to provide professional services in connection with the refinancing. Because these entities are not parties with adverse interests, a conflict of interest with any of them would be unusual and would arise only in limited circumstances (e.g., if the Firm were simultaneously representing a party in litigation against one of these service providers in a related matter).

The Firm's conflicts database search returned no results indicating any current or former representation of, or adverse engagement against, any of the third-party service providers listed above. The Firm does not currently represent any of these entities in any matter, and no historical engagements involving any of these entities were identified.

Determination: No conflicts identified with respect to any third-party service providers.

5. Screening for Related-Matter Conflicts

In addition to the database searches described in Section 4, the undersigned conducted the following supplemental screening procedures to identify any potential related-matter conflicts or personal conflicts:

Engagement Team Screening. Each member of the proposed engagement team — Douglas Fairchild (Partner), Angela Fontaine (Partner), Grace Nakamura (Associate), and Rafael Dominguez (Associate) — was individually asked to confirm whether he or she has any personal conflict, prior professional or personal relationship, financial interest, or other connection to any of the parties identified in Section 3 of this memorandum. Each team member confirmed in writing (via the Firm's standard Conflict Questionnaire form) that no such conflict, relationship, or interest exists. Specifically:

• Douglas Fairchild confirmed that he has no personal or financial interest in VHG, CPRH, PAC, Greystone Peak, Tidewater, or any other party to the proposed transaction, and that he has not previously represented any of the checked parties in any capacity.

• Angela Fontaine confirmed that she has no personal or financial interest in any of the checked parties, and that she has not previously represented any of the checked parties in any capacity.

• Grace Nakamura confirmed that she has no personal or financial interest in any of the checked parties, and that she has not previously represented any of the checked parties in any capacity.

• Rafael Dominguez confirmed that he has no personal or financial interest in any of the checked parties, and that he has not previously represented any of the checked parties in any capacity.

Firm-Wide Adverse Representation Screening. A review was conducted to confirm that no C&H attorney in any practice group or office currently represents any party in a pending matter that is adverse to VHG or CPRH, or that involves claims against, or disputes with, VHG, CPRH, or any VHG subsidiary. The review confirmed that no such adverse representation exists anywhere within the Firm.

Related-Matter Screening. Additional screening was performed to identify any active C&H engagements involving (a) real estate transactions in Monroe County, Florida, (b) hospitality-sector or hotel financing matters, or (c) any other transaction or matter involving the Coral Palms Grand Resort & Spa or any adjacent or nearby property. The screening confirmed that the Firm does not currently represent any party in any pending real estate transaction involving property in Monroe County, Florida, and the Firm has no active engagement involving hospitality-sector financing that would create an overlapping or conflicting representation with the proposed engagement.

Determination: No related-matter conflicts, personal conflicts, or engagement team conflicts were identified.

6. Ethical and Jurisdictional Considerations

6.1 Governing Professional Responsibility Rules

The proposed engagement is subject to the professional responsibility rules of the State of Florida, as Calderwood & Harkness LLP is registered with the Florida Bar and the engagement team members are admitted to practice in Florida. The primary rule governing concurrent conflicts of interest is Rule 4-1.7 of the Florida Rules of Professional Conduct, which provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if (a) the representation of one client will be directly adverse to another client, or (b) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.

Additionally, because Calderwood & Harkness LLP is organized as a New York limited liability partnership, certain administrative and registration requirements under the New York Rules of Professional Conduct may also be applicable to the Firm's operations. However, the substantive conflicts analysis for this engagement is governed by Florida rules, as the engagement involves Florida-situs real property, a Florida-organized borrower entity, and the Firm's Miami office.

6.2 Application to the Proposed Engagement

The proposed engagement involves the representation of VHG and CPRH — borrower and parent guarantor — in a commercial real estate refinancing transaction. The transaction is a business transaction, not litigation or any form of adversarial proceeding. While inherent adversity exists between a borrower and a lender in the negotiation of commercial loan documentation, this adversity is characteristic of arm's-length business negotiations and does not implicate the heightened conflict concerns associated with litigation or proceedings before a tribunal.

As confirmed by the conflicts search results detailed in Section 4, the Firm does not currently represent any party that is adverse to VHG or CPRH, and the Firm does not currently represent the prospective lender (PAC), the lender's parent (Greystone Peak), or the existing lender (Tidewater) in any matter. No concurrent conflict of interest exists under Rule 4-1.7(a) or Rule 4-1.7(b) of the Florida Rules of Professional Conduct.

6.3 Informed Consent

Because no concurrent conflict of interest has been identified, no informed consent is required from any party as a condition to the Firm's undertaking the proposed representation. In the event that a conflict were to arise during the course of the engagement — for example, if the Firm were asked to represent another client in a matter adverse to VHG — the engagement team would be obligated to promptly conduct a supplemental conflicts analysis and, if a concurrent conflict were found to exist, to determine whether the conflict is waivable under the applicable rules and, if so, to obtain informed consent confirmed in writing from each affected client.

6.4 Firm Internal Policies

The conflicts clearance process for this engagement has been conducted in compliance with the Firm's internal New Business Intake Policy (as amended, effective January 1, 2022) and the Firm's Conflicts of Interest Policy (as amended, effective January 1, 2022). Both the Firm's Conflicts Counsel and the New Business Intake Department have been consulted in connection with the preparation of this memorandum.

7. Clearance Determination

7.1 Result.

CLEARED — NO CONFLICTS OF INTEREST IDENTIFIED

Based on the comprehensive conflicts check documented in this memorandum, including the database searches, engagement team screening, related-matter screening, and ethical analysis described herein, the undersigned have determined that no conflicts of interest exist that would preclude, restrict, or condition the Firm's representation of Verimark Hospitality Group Inc. and Coral Palms Resort Holdings LLC in connection with the proposed $160,000,000 first mortgage refinancing of the Coral Palms Grand Resort & Spa.

7.2 Authorization to Proceed

The Firm is authorized to proceed with the engagement of VHG and CPRH in connection with the proposed refinancing transaction, subject to the following:

(a) An engagement letter shall be prepared by Angela Fontaine and circulated to VHG for review and execution by an authorized officer of VHG. The engagement letter shall set forth the scope of the representation, the fee arrangement, the identity of the engagement team, and the Firm's standard terms and conditions of engagement, including provisions addressing the Firm's ability to represent other clients in matters unrelated to the VHG engagement that may involve parties to this transaction.

(b) Upon execution of the engagement letter by VHG, the original executed engagement letter shall be transmitted to the New Business Intake Department for filing in the matter file.

(c) Client matter number 1021-00007 has been opened in the Firm's matter management system effective October 19, 2022, in anticipation of the commencement of the engagement.

7.3 Ongoing Obligations

The engagement team is reminded that the obligation to monitor for conflicts of interest is continuous throughout the duration of the engagement. If, at any point during the course of the representation, the engagement team becomes aware of facts or circumstances that could give rise to a conflict of interest — including the involvement of additional parties not previously screened — a supplemental conflicts check must be conducted and documented before the Firm continues its work on the affected matter.

8. Distribution and Record-Keeping

This memorandum, together with the underlying conflicts search reports and engagement team questionnaires, shall be distributed and retained as follows:

• Copy to: Margaret O'Sullivan, Esq., Firm Conflicts Counsel, Office of the General Counsel, Calderwood & Harkness LLP

• Copy to: New Business Intake Department, Calderwood & Harkness LLP

• Original retained in: Matter File No. 1021-00007, Calderwood & Harkness LLP document management system

• Electronic copy retained in: IntegriCheck conflicts database, linked to Matter No. 1021-00007

Important Note Regarding Supplemental Checks: If additional parties are identified during the course of the engagement that were not included in the initial conflicts screening — including, without limitation, additional lender participants, mezzanine lenders, preferred equity investors, co-borrowers, additional guarantors, management company counterparties, franchise entities, or additional consultants and service providers — supplemental conflicts checks must be run and documented prior to the Firm's engagement with such parties. Each supplemental conflicts check shall be documented in a memorandum substantially similar to this memorandum and shall be appended to the matter file. The engagement team shall promptly notify the Firm's Conflicts Counsel of any such supplemental screening and its results.

Signature / Approval Block

Prepared by:

________________________________________

Grace Nakamura Associate, Real Estate Practice Group Calderwood & Harkness LLP

Date: October 19, 2022

Reviewed and Approved by:

________________________________________

Angela Fontaine Partner, Real Estate Practice Group Calderwood & Harkness LLP

Date: October 19, 2022

Acknowledged by:

________________________________________

Douglas Fairchild Responsible Partner, Real Estate Practice Group Calderwood & Harkness LLP

Date: October 19, 2022

This memorandum is privileged and confidential attorney work product prepared in connection with the Firm's internal conflicts clearance procedures. This memorandum is not intended for distribution outside of Calderwood & Harkness LLP and is not intended to constitute legal advice to any client. This memorandum is subject to the attorney-client privilege and the work product doctrine.

Name	Role	Title
Douglas Fairchild	Responsible Partner	Partner, Real Estate Practice Group
Angela Fontaine	Billing Partner	Partner, Real Estate Practice Group
Grace Nakamura	Lead Associate	Associate, Real Estate Practice Group
Rafael Dominguez	Working Associate	Associate, Real Estate Practice Group

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
CALDERWOOD & HARKNESS LLP 100 Southeast Second Street, Suite 3800 Miami, Florida 33131
TO: Douglas Fairchild, Partner, Real Estate Practice Group
FROM: Angela Fontaine, Partner, Real Estate Practice Group Grace Nakamura, Associate, Real Estate Practice Group
DATE: October 19, 2022
RE: Conflict Check Results — Proposed Representation of Verimark Hospitality Group Inc. and Coral Palms Resort Holdings LLC in Connection with $160,000,000 Resort Refinancing
CLIENT MATTER NO.: 1021-00007
1. Purpose and Summary of Clearance
This memorandum documents the results of the conflicts of interest check performed by the undersigned in connection with the proposed new engagement of Verimark Hospitality Group Inc. and its subsidiary, Coral Palms Resort Holdings LLC, as described more fully herein. The conflicts check was conducted in accordance with the firm's established conflicts clearance policies and procedures, including a comprehensive search of the firm's electronic conflicts database (the "IntegriCheck System"), supplemented by direct inquiries to relevant practice group leaders and a review of the firm's current and historical client and matter listings.
The proposed representation involves the engagement of Calderwood & Harkness LLP ("C&H" or the "Firm") to serve as borrower's counsel to Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol VMRK, and its wholly owned indirect subsidiary, Coral Palms Resort Holdings LLC ("CPRH"), a Florida limited liability company, in connection with a proposed $160,000,000 first mortgage refinancing of the Coral Palms Grand Resort & Spa, a full-service luxury oceanfront resort hotel located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037 (the "Property"). The refinancing will replace an existing first mortgage loan with an approximate outstanding principal balance of $118,500,000, currently held by Tidewater National Bank, N.A. ("Tidewater"). The prospective lender in the proposed refinancing is Pinnacle Atlantic Capital, LLC ("PAC"), an affiliate of Greystone Peak Asset Management LP ("Greystone Peak"), a diversified alternative asset management firm.
Conclusion: Based on the comprehensive search and analysis detailed in this memorandum, conflicts clearance is granted. No conflicts of interest have been identified that would preclude or restrict the Firm's representation of VHG and CPRH in connection with the proposed engagement. The Firm is authorized to proceed with the engagement, subject to the execution of an engagement letter by VHG.
2. Description of the Proposed Engagement
2.1 Client Information
Verimark Hospitality Group Inc. is a publicly traded hospitality and real estate company incorporated in the State of Delaware and headquartered at 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131. VHG's common shares are listed and traded on the Nasdaq Stock Market under the ticker symbol VMRK. VHG completed its initial public offering in 2017 and has since grown to own and operate fourteen luxury and upscale resort properties located across the Southeastern United States and the Caribbean. For the fiscal year ended December 31, 2021, VHG reported consolidated revenue of approximately $487 million. The company's total enterprise value is approximately $1.9 billion based on current market capitalization and outstanding indebtedness. The principal officers of VHG relevant to this engagement are:
•  Conrad W. Elliston — Chairman of the Board and Chief Executive Officer
•  Natasha Ricard — Chief Financial Officer
•  Derek Huang — Senior Vice President, Capital Markets & Treasury
Mr. Huang is expected to serve as the primary day-to-day business contact for VHG with respect to the proposed refinancing transaction.
2.2 Borrower Entity
Coral Palms Resort Holdings LLC is a Florida limited liability company and a wholly owned indirect subsidiary of VHG. CPRH is the fee owner of the Property and will serve as the borrower under the proposed refinancing loan. CPRH holds title to the Property through VHG's tiered ownership structure, which includes one or more intermediate holding entities. The organizational structure of VHG and its subsidiaries will be reviewed and confirmed during the course of the engagement for purposes of entity authorization opinions and organizational document review.
2.3 Nature of the Matter
The Firm's proposed scope of engagement encompasses borrower-side representation in a commercial mortgage refinancing transaction. The anticipated scope of legal services includes, but is not limited to, the following:
(a) Review and negotiation of the commitment letter, term sheet, and related pre-closing documentation issued by the prospective lender;
(b) Review and negotiation of the definitive loan agreement, including all financial covenants, representations and warranties, events of default, and borrower reporting obligations;
(c) Review and negotiation of the mortgage, security agreement, fixture filing, and assignment of leases and rents;
(d) Review and negotiation of the promissory note;
(e) Review and negotiation of the guaranty agreement to be executed by VHG as guarantor of certain obligations of CPRH under the loan;
(f) Review and negotiation of the environmental indemnity agreement;
(g) Review and negotiation of the cash management agreement and lockbox arrangements;
(h) Review and negotiation of the reserve agreement, including reserves for taxes, insurance, furniture, fixtures and equipment replacement, and seasonality-related reserves;
(i) Review and negotiation of related ancillary loan documents, including subordination, non-disturbance, and attornment agreements, estoppel certificates, and management subordination agreements;
(j) Review of the existing title commitment, pro forma title policy, and survey for the Property, and coordination of resolution of any title or survey exceptions requiring cure or endorsement;
(k) Review of insurance coverages for compliance with lender requirements, and coordination with the borrower's insurance broker and carriers;
(l) Preparation and delivery of entity authorization documents, including resolutions, certificates, incumbency certificates, and organizational good standing certifications;
(m) Coordination with VHG and Tidewater regarding payoff of the existing mortgage loan, including review and negotiation of the payoff letter, satisfaction and discharge documentation, and UCC termination statements; and
(n) Such other matters as may reasonably arise in connection with the refinancing transaction.
2.4 Property Description
The Coral Palms Grand Resort & Spa is a full-service luxury oceanfront resort hotel situated on an approximately 22.4-acre waterfront site in Key Largo, Monroe County, Florida. The resort comprises approximately 342 guest rooms and suites within a gross building area of approximately 412,000 square feet. The Property includes multiple food and beverage outlets, a full-service spa and wellness center, conference and event facilities, multiple swimming pools, private beach access, a marina, and related resort amenities. The Property is subject to Monroe County land use and zoning regulations, Florida coastal construction control line requirements, and applicable environmental regulations related to its location in the Florida Keys.
2.5 Transaction Value
The proposed first mortgage loan amount is $160,000,000. The loan will be secured by a first priority mortgage lien and security interest in the Property, together with an assignment of leases and rents, a pledge of CPRH's personal property, and related collateral. VHG is expected to execute a non-recourse carve-out guaranty in connection with the loan.
2.6 Proposed Engagement Team
The following attorneys have been identified to staff the engagement, subject to adjustment based on workload and availability:
Each member of the proposed engagement team has been individually screened for personal conflicts and related-matter conflicts as described in Section 5 of this memorandum.
2.7 VHG Corporate Background
For contextual purposes, VHG is a well-established hospitality operator that completed its initial public offering on the Nasdaq Stock Market in 2017. Since its IPO, VHG has been an active participant in the commercial real estate capital markets, having closed multiple acquisition, refinancing, and construction financing transactions across its portfolio. VHG's 2022 consolidated revenue is approximately $487 million, and its total enterprise value, based on current trading levels of its common stock and outstanding consolidated indebtedness, is approximately $1.9 billion. VHG's portfolio of fourteen luxury and upscale resort properties is concentrated in the Southeastern United States and the Caribbean, with properties in Florida, Georgia, South Carolina, the U.S. Virgin Islands, and the Cayman Islands. VHG is not currently a client of C&H, and the Firm has not previously represented VHG or any of its subsidiaries in any matter.
3. Parties Checked
The following is a comprehensive itemized list of all parties and affiliated entities submitted to the Firm's conflicts database for screening in connection with the proposed engagement. The parties are organized by category according to their role in the proposed transaction.
3.1 Client-Side Parties
The following client-side parties and their key personnel were submitted for conflicts screening:
1.  Verimark Hospitality Group Inc. — Delaware corporation; Nasdaq: VMRK; headquartered at 1400 Bayshore Boulevard, Suite 2200, Miami, FL 33131; proposed client
2.  Coral Palms Resort Holdings LLC — Florida limited liability company; wholly owned indirect subsidiary of VHG; fee owner of the Property and proposed borrower entity; proposed client
3.  Conrad W. Elliston — Chairman of the Board and Chief Executive Officer, VHG; individual screened as key officer of proposed client
4.  Natasha Ricard — Chief Financial Officer, VHG; individual screened as key officer of proposed client
5.  Derek Huang — Senior Vice President, Capital Markets & Treasury, VHG; individual screened as primary business contact for the engagement
3.2 Prospective Lender and Affiliates
The following prospective lender-side parties and their key personnel were submitted for conflicts screening:
1.  Pinnacle Atlantic Capital, LLC — Delaware limited liability company; prospective lender; principal office at 200 Lexington Avenue, 38th Floor, New York, NY 10016; a real estate lending platform affiliated with Greystone Peak Asset Management LP
2.  Greystone Peak Asset Management LP — Delaware limited partnership; parent and affiliate of PAC; a diversified alternative asset management firm with approximately $12 billion in assets under management; principal office in New York, NY
3.  Martin Drubeck — Managing Director, Real Estate Lending, PAC; individual screened as key lender contact
4.  Jennifer Kwon — Vice President, Originations, PAC; individual screened as lender origination contact
3.3 Existing Lender (Payoff Bank)
The following existing lender-side party and its key personnel were submitted for conflicts screening:
1.  Tidewater National Bank, N.A. — A national banking association chartered by the Office of the Comptroller of the Currency; principal office at 600 Waterside Drive, Norfolk, VA 23510; approximately $38 billion in total assets; existing mortgage lender to CPRH with respect to the Property; holder of the existing first mortgage loan to be paid off in connection with the proposed refinancing
2.  Alan Prescott — Senior Vice President, Commercial Real Estate, Tidewater National Bank, N.A.; individual screened as key contact at existing lender
3.4 Lender's Counsel (Adverse / Counterparty Counsel)
The following law firm and its relevant attorneys were submitted for conflicts screening in their capacity as counterparty counsel representing the prospective lender in the proposed transaction:
1.  Whitford Baines & Driscoll LLP — New York limited liability partnership; principal office at 1221 Avenue of the Americas, Suite 4400, New York, NY 10020; engaged by PAC to serve as lender's counsel in connection with the proposed refinancing
2.  Philip Tarrant Corporation — Partner, Real Estate Finance, Whitford Baines & Driscoll LLP; lead attorney for the prospective lender
3.  Catherine Yee — Associate, Whitford Baines & Driscoll LLP; working attorney on the lender's counsel team
3.5 Other Anticipated Third Parties
The following third-party service providers anticipated to be involved in the proposed transaction were also submitted for conflicts screening:
1.  Hargrove & Whitley Valuation Services LLC — Independent appraisal firm; located in Palm Beach Gardens, FL; retained to provide an appraisal of the Property in connection with the proposed refinancing
2.  Meridian Title & Escrow, Inc. — Title insurance company and escrow agent; located in Miami, FL; anticipated to serve as the title company and escrow agent for the transaction
3.  Oakridge Environmental Consulting Group, Inc. — Environmental consulting firm; located in Coral Gables, FL; retained to prepare Phase I and, if required, Phase II environmental site assessments of the Property
4.  Castlegate Risk Advisors LLC — Insurance brokerage firm; located in Miami, FL; VHG's insurance broker, anticipated to coordinate insurance compliance with lender requirements
5.  Southland Mutual Insurance Company — Property and casualty insurance carrier; located in Tampa, FL; anticipated to provide or continue property and casualty insurance coverage for the Property
6.  Bayfront Specialty Insurance Corp. — Flood insurance carrier; a Florida-domiciled specialty insurer; anticipated to provide flood insurance coverage for the Property as required by the lender and applicable law given the Property's location in a flood zone
7.  Keswick & Holt LLP — Certified public accounting firm; located in Miami, FL; VHG's independent auditor, which may be called upon to provide financial certifications, comfort letters, or other documentation in connection with the refinancing
8.  Landis & Shaw Surveying, Inc. — Licensed land surveying firm; located in South Miami, FL; anticipated to prepare or update an ALTA/NSPS land title survey of the Property in connection with the refinancing
4. Conflicts Database Search Results
The Firm's IntegriCheck conflicts database was searched on October 17, 2022, and supplemental searches were conducted on October 18, 2022, using variations of each party name, including abbreviations, acronyms, trade names, and phonetic variations. The results of the conflicts database search for each category of party are set forth below.
4.1 Verimark Hospitality Group Inc. / Coral Palms Resort Holdings LLC
A comprehensive search of the Firm's conflicts database was conducted for Verimark Hospitality Group Inc. (including searches under "Verimark," "VHG," "VMRK," and related variations) and Coral Palms Resort Holdings LLC (including searches under "Coral Palms," "CPRH," and related variations).
Results: No prior representations of VHG or CPRH were identified in the Firm's conflicts database. No current or former adverse representations against VHG or CPRH were identified. Neither VHG nor CPRH, nor any entity bearing a substantially similar name, appears in the Firm's historical client roster or adverse party listings. VHG and CPRH are new clients to the Firm. Because C&H has never represented VHG or CPRH, and because no existing client relationships or adverse representations involving these entities were identified, there are no duty-of-loyalty issues or concerns regarding the Firm's ability to undertake this engagement.
Additionally, the individual names of Conrad W. Elliston, Natasha Ricard, and Derek Huang were searched in the conflicts database, and no prior representations or adverse relationships were identified with respect to any of these individuals.
Determination: No conflict identified.
4.2 Pinnacle Atlantic Capital, LLC
A comprehensive search of the Firm's conflicts database was conducted for Pinnacle Atlantic Capital, LLC (including searches under "Pinnacle Atlantic," "PAC," "Pinnacle Capital," and related variations).
Results: No current client relationship with PAC was identified. The Firm has not previously represented PAC as a client in any matter. A historical search revealed one closed matter — Matter No. 1021-00007 — in which the Firm represented an unrelated third-party borrower, Suncrest Development Partners LLC, in a 2019 construction financing transaction in which PAC served as a participant lender in a multi-lender syndicate. That matter was fully closed on March 14, 2020, and the Firm's representation of the borrower in that transaction was concluded. C&H did not represent PAC or any PAC affiliate in that transaction. The existence of a prior closed matter in which PAC appeared as a non-client counterparty does not give rise to a current conflict of interest, as the Firm owes no ongoing duty of loyalty to PAC, and the prior matter is unrelated in subject matter, parties, and facts to the proposed engagement.
PAC is on the opposite side of the proposed transaction as the prospective lender, and CPRH is the prospective borrower. A degree of inherent adversity exists in the borrower-lender negotiation context, as the parties will be negotiating the terms and conditions of the loan agreement and related documentation from differing economic perspectives. However, this adversity arises in the context of a commercial business transaction, not litigation or any proceeding in which the interests of the parties are fundamentally antagonistic. Under applicable professional responsibility rules, it is standard and permissible practice for a law firm to represent a borrower in a loan transaction where the lender is not a current client of the firm, even though the firm will negotiate loan terms on behalf of the borrower that the lender may not favor. No conflicting current client relationship with PAC has been identified that would require informed consent or preclude the representation.
Determination: No conflict identified.
4.3 Greystone Peak Asset Management LP
A comprehensive search of the Firm's conflicts database was conducted for Greystone Peak Asset Management LP (including searches under "Greystone Peak," "Greystone," "GPAM," and related variations).
Results: No current client relationship with Greystone Peak was identified. The Firm has not previously represented Greystone Peak or any entity bearing that name as a client in any matter. A review of the Firm's database identified no prior engagements, either as counsel to Greystone Peak or as adverse counsel against Greystone Peak, in any active or historical matter. Because there is no current representation of Greystone Peak by the Firm, there is no ongoing duty of loyalty owed to Greystone Peak, and the Firm's representation of VHG and CPRH in a transaction in which a Greystone Peak affiliate is the prospective lender does not give rise to any conflict of interest.
Determination: No conflict identified.
4.4 Tidewater National Bank, N.A.
A comprehensive search of the Firm's conflicts database was conducted for Tidewater National Bank, N.A. (including searches under "Tidewater National," "Tidewater Bank," "TNB," and related variations).
Results: The Firm's conflicts database identified two historical matters involving Tidewater National Bank, N.A.:
(a) Matter No. 1021-00007 — In 2017, the Firm represented Bellhaven Properties, Inc. as borrower's counsel in a $24,000,000 acquisition financing transaction in which Tidewater served as the lender. That matter was closed on September 8, 2017, and is unrelated to the proposed engagement.
(b) Matter No. 1021-00007 — In 2018, the Firm represented Palmetto Bay Capital Group LLC as borrower's counsel in a $41,500,000 refinancing transaction in which Tidewater participated as one of two lenders in a club deal. That matter was closed on February 22, 2019, and is unrelated to the proposed engagement.
In both identified historical matters, Tidewater served as the lender and the Firm represented the borrower on the opposite side of the transaction. The Firm did not represent Tidewater as a client in either matter. Both matters are fully closed, and no ongoing attorney-client relationship or duty of loyalty exists between the Firm and Tidewater.
As to the proposed engagement, Tidewater is the existing lender whose first mortgage loan on the Property will be paid off and satisfied in connection with the proposed refinancing. The refinancing is not adverse to Tidewater in any material sense, as Tidewater will receive a full payoff of the outstanding principal balance, accrued interest, and any applicable prepayment premium or exit fees pursuant to the terms of its existing loan documents. The Firm's role in coordinating the payoff of the existing Tidewater loan on behalf of the borrower does not constitute an adverse representation against Tidewater.
No current representation of Tidewater by the Firm was identified in the conflicts database. The Firm does not currently represent Tidewater in any matter, whether related or unrelated to the proposed engagement, and no positional or issue conflict exists.
Determination: No conflict identified.
4.5 Whitford Baines & Driscoll LLP
A comprehensive search of the Firm's conflicts database was conducted for Whitford Baines & Driscoll LLP (including searches under "Whitford Baines," "WBD," "Whitford," and related variations), as well as the individual attorneys Philip Tarrant Corporation and Catherine Yee.
Results: WBD is identified as lender's counsel in the proposed transaction and will serve as counterparty counsel to C&H in the negotiation and preparation of the loan documentation. The Firm's database identified multiple matters over the past several years in which C&H and WBD have been involved in the same transactions in various capacities:
(a) In at least three prior real estate finance transactions, C&H represented the borrower while WBD represented the lender (or vice versa), reflecting the ordinary course of commercial real estate practice in which major law firms regularly appear on opposite sides of transactional matters.
(b) In at least two prior matters, C&H and WBD served as co-counsel to the same client in unrelated litigation matters handled by the Firm's litigation department.
None of these prior matters are currently active, and none involve the same parties, properties, or subject matter as the proposed engagement. It is standard and well-accepted practice in the legal profession for law firms to serve on opposite sides of business transactions. The relationship between borrower's counsel and lender's counsel in a commercial mortgage refinancing is a routine counterparty relationship, not an adversarial one in the litigation sense. The fact that C&H and WBD have previously worked together in other capacities does not create any conflict or impairment of the Firm's ability to represent its clients zealously in this transaction.
No specific engagement-level conflict has been identified with respect to WBD or its individual attorneys. Philip Tarrant Corporation and Catherine Yee are not current or former clients of the Firm, and no personal conflict or relationship issue was identified.
Determination: No conflict identified. Standard counterparty relationship in the transactional context.
4.6 Other Third Parties
Conflicts searches were conducted for all third-party service providers listed in Section 3.5 above, specifically: Hargrove & Whitley Valuation Services LLC, Meridian Title & Escrow, Inc., Oakridge Environmental Consulting Group, Inc., Castlegate Risk Advisors LLC, Southland Mutual Insurance Company, Bayfront Specialty Insurance Corp., Keswick & Holt LLP, and Landis & Shaw Surveying, Inc.
Results: None of the identified third-party service providers occupy an adverse position in the proposed transaction. Each entity is a service provider retained by the borrower, the lender, or the title company to provide professional services in connection with the refinancing. Because these entities are not parties with adverse interests, a conflict of interest with any of them would be unusual and would arise only in limited circumstances (e.g., if the Firm were simultaneously representing a party in litigation against one of these service providers in a related matter).
The Firm's conflicts database search returned no results indicating any current or former representation of, or adverse engagement against, any of the third-party service providers listed above. The Firm does not currently represent any of these entities in any matter, and no historical engagements involving any of these entities were identified.
Determination: No conflicts identified with respect to any third-party service providers.
5. Screening for Related-Matter Conflicts
In addition to the database searches described in Section 4, the undersigned conducted the following supplemental screening procedures to identify any potential related-matter conflicts or personal conflicts:
Engagement Team Screening. Each member of the proposed engagement team — Douglas Fairchild (Partner), Angela Fontaine (Partner), Grace Nakamura (Associate), and Rafael Dominguez (Associate) — was individually asked to confirm whether he or she has any personal conflict, prior professional or personal relationship, financial interest, or other connection to any of the parties identified in Section 3 of this memorandum. Each team member confirmed in writing (via the Firm's standard Conflict Questionnaire form) that no such conflict, relationship, or interest exists. Specifically:
•  Douglas Fairchild confirmed that he has no personal or financial interest in VHG, CPRH, PAC, Greystone Peak, Tidewater, or any other party to the proposed transaction, and that he has not previously represented any of the checked parties in any capacity.
•  Angela Fontaine confirmed that she has no personal or financial interest in any of the checked parties, and that she has not previously represented any of the checked parties in any capacity.
•  Grace Nakamura confirmed that she has no personal or financial interest in any of the checked parties, and that she has not previously represented any of the checked parties in any capacity.
•  Rafael Dominguez confirmed that he has no personal or financial interest in any of the checked parties, and that he has not previously represented any of the checked parties in any capacity.
Firm-Wide Adverse Representation Screening. A review was conducted to confirm that no C&H attorney in any practice group or office currently represents any party in a pending matter that is adverse to VHG or CPRH, or that involves claims against, or disputes with, VHG, CPRH, or any VHG subsidiary. The review confirmed that no such adverse representation exists anywhere within the Firm.
Related-Matter Screening. Additional screening was performed to identify any active C&H engagements involving (a) real estate transactions in Monroe County, Florida, (b) hospitality-sector or hotel financing matters, or (c) any other transaction or matter involving the Coral Palms Grand Resort & Spa or any adjacent or nearby property. The screening confirmed that the Firm does not currently represent any party in any pending real estate transaction involving property in Monroe County, Florida, and the Firm has no active engagement involving hospitality-sector financing that would create an overlapping or conflicting representation with the proposed engagement.
Determination: No related-matter conflicts, personal conflicts, or engagement team conflicts were identified.
6. Ethical and Jurisdictional Considerations
6.1 Governing Professional Responsibility Rules
The proposed engagement is subject to the professional responsibility rules of the State of Florida, as Calderwood & Harkness LLP is registered with the Florida Bar and the engagement team members are admitted to practice in Florida. The primary rule governing concurrent conflicts of interest is Rule 4-1.7 of the Florida Rules of Professional Conduct, which provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if (a) the representation of one client will be directly adverse to another client, or (b) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.
Additionally, because Calderwood & Harkness LLP is organized as a New York limited liability partnership, certain administrative and registration requirements under the New York Rules of Professional Conduct may also be applicable to the Firm's operations. However, the substantive conflicts analysis for this engagement is governed by Florida rules, as the engagement involves Florida-situs real property, a Florida-organized borrower entity, and the Firm's Miami office.
6.2 Application to the Proposed Engagement
The proposed engagement involves the representation of VHG and CPRH — borrower and parent guarantor — in a commercial real estate refinancing transaction. The transaction is a business transaction, not litigation or any form of adversarial proceeding. While inherent adversity exists between a borrower and a lender in the negotiation of commercial loan documentation, this adversity is characteristic of arm's-length business negotiations and does not implicate the heightened conflict concerns associated with litigation or proceedings before a tribunal.
As confirmed by the conflicts search results detailed in Section 4, the Firm does not currently represent any party that is adverse to VHG or CPRH, and the Firm does not currently represent the prospective lender (PAC), the lender's parent (Greystone Peak), or the existing lender (Tidewater) in any matter. No concurrent conflict of interest exists under Rule 4-1.7(a) or Rule 4-1.7(b) of the Florida Rules of Professional Conduct.
6.3 Informed Consent
Because no concurrent conflict of interest has been identified, no informed consent is required from any party as a condition to the Firm's undertaking the proposed representation. In the event that a conflict were to arise during the course of the engagement — for example, if the Firm were asked to represent another client in a matter adverse to VHG — the engagement team would be obligated to promptly conduct a supplemental conflicts analysis and, if a concurrent conflict were found to exist, to determine whether the conflict is waivable under the applicable rules and, if so, to obtain informed consent confirmed in writing from each affected client.
6.4 Firm Internal Policies
The conflicts clearance process for this engagement has been conducted in compliance with the Firm's internal New Business Intake Policy (as amended, effective January 1, 2022) and the Firm's Conflicts of Interest Policy (as amended, effective January 1, 2022). Both the Firm's Conflicts Counsel and the New Business Intake Department have been consulted in connection with the preparation of this memorandum.
7. Clearance Determination
7.1 Result.  
CLEARED — NO CONFLICTS OF INTEREST IDENTIFIED
Based on the comprehensive conflicts check documented in this memorandum, including the database searches, engagement team screening, related-matter screening, and ethical analysis described herein, the undersigned have determined that no conflicts of interest exist that would preclude, restrict, or condition the Firm's representation of Verimark Hospitality Group Inc. and Coral Palms Resort Holdings LLC in connection with the proposed $160,000,000 first mortgage refinancing of the Coral Palms Grand Resort & Spa.
7.2 Authorization to Proceed
The Firm is authorized to proceed with the engagement of VHG and CPRH in connection with the proposed refinancing transaction, subject to the following:
(a) An engagement letter shall be prepared by Angela Fontaine and circulated to VHG for review and execution by an authorized officer of VHG. The engagement letter shall set forth the scope of the representation, the fee arrangement, the identity of the engagement team, and the Firm's standard terms and conditions of engagement, including provisions addressing the Firm's ability to represent other clients in matters unrelated to the VHG engagement that may involve parties to this transaction.
(b) Upon execution of the engagement letter by VHG, the original executed engagement letter shall be transmitted to the New Business Intake Department for filing in the matter file.
(c) Client matter number 1021-00007 has been opened in the Firm's matter management system effective October 19, 2022, in anticipation of the commencement of the engagement.
7.3 Ongoing Obligations
The engagement team is reminded that the obligation to monitor for conflicts of interest is continuous throughout the duration of the engagement. If, at any point during the course of the representation, the engagement team becomes aware of facts or circumstances that could give rise to a conflict of interest — including the involvement of additional parties not previously screened — a supplemental conflicts check must be conducted and documented before the Firm continues its work on the affected matter.
8. Distribution and Record-Keeping
This memorandum, together with the underlying conflicts search reports and engagement team questionnaires, shall be distributed and retained as follows:
•  Copy to: Margaret O'Sullivan, Esq., Firm Conflicts Counsel, Office of the General Counsel, Calderwood & Harkness LLP
•  Copy to: New Business Intake Department, Calderwood & Harkness LLP
•  Original retained in: Matter File No. 1021-00007, Calderwood & Harkness LLP document management system
•  Electronic copy retained in: IntegriCheck conflicts database, linked to Matter No. 1021-00007
Important Note Regarding Supplemental Checks: If additional parties are identified during the course of the engagement that were not included in the initial conflicts screening — including, without limitation, additional lender participants, mezzanine lenders, preferred equity investors, co-borrowers, additional guarantors, management company counterparties, franchise entities, or additional consultants and service providers — supplemental conflicts checks must be run and documented prior to the Firm's engagement with such parties. Each supplemental conflicts check shall be documented in a memorandum substantially similar to this memorandum and shall be appended to the matter file. The engagement team shall promptly notify the Firm's Conflicts Counsel of any such supplemental screening and its results.
Signature / Approval Block
Prepared by:
________________________________________
Grace Nakamura Associate, Real Estate Practice Group Calderwood & Harkness LLP
Date: October 19, 2022
Reviewed and Approved by:
________________________________________
Angela Fontaine Partner, Real Estate Practice Group Calderwood & Harkness LLP
Date: October 19, 2022
Acknowledged by:
________________________________________
Douglas Fairchild Responsible Partner, Real Estate Practice Group Calderwood & Harkness LLP
Date: October 19, 2022
This memorandum is privileged and confidential attorney work product prepared in connection with the Firm's internal conflicts clearance procedures. This memorandum is not intended for distribution outside of Calderwood & Harkness LLP and is not intended to constitute legal advice to any client. This memorandum is subject to the attorney-client privilege and the work product doctrine.
Name | Role | Title
Douglas Fairchild | Responsible Partner | Partner, Real Estate Practice Group
Angela Fontaine | Billing Partner | Partner, Real Estate Practice Group
Grace Nakamura | Lead Associate | Associate, Real Estate Practice Group
Rafael Dominguez | Working Associate | Associate, Real Estate Practice Group

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

CLIENT MATTER NO.: 1021-00007

Record

Parties

Dates

Amounts