Contract analysis

I. Executive Summary This memorandum analyzes whether the $15,000,000 named-windstorm sub-limit contained in the prior-year Ironclad Indemnity Corporation ("Ironclad" or "IIC") primary property and business-interruption policy was effectively deleted at the July 1, 2022 renewal. The question has become outcome-determinative in the adjustment of Verimark Hospitality Group Inc.'s ("VHG" or the "Company") Hurricane Call

II. Background A. The Insured and the Loss Verimark Hospitality Group Inc. (Nasdaq: VMRK) is a Delaware corporation headquartered at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. VHG is a publicly traded hospitality and real-estate company that owns and operates luxury resort properties concentrated along the Florida Gulf Coast and the Florida Keys. The Company's senior management team includes Marcus Ellsw

III. The Named Windstorm Sub-Limit in the Prior-Year Policy A. The 2021–2022 Policy Year During the prior policy year (July 1, 2021 through July 1, 2022), the Ironclad primary policy contained an endorsement — specifically, Endorsement No. 7, titled "Named Windstorm Sub-Limit Endorsement" — that imposed a $15,000,000 aggregate sub-limit on all business-interruption and extra-expense losses arising from a "named winds

IV. The July 2022 Renewal Negotiations — Documentary Evidence The documentary evidence bearing on the sub-limit deletion issue consists of four categories of materials: (1) email correspondence between Franklin Orde (Tidewater) and Ironclad's underwriting department; (2) the July 2022 binder; (3) the issued policy and endorsement schedule; and (4) premium records. Each is discussed below. A. Tidewater Correspondence

V. Legal Analysis A. Florida Law on Policy Interpretation Under Florida law, insurance policies are contracts and are subject to the general rules of contract interpretation. The Florida Supreme Court has consistently held that where the language of an insurance policy is clear and unambiguous, the court will enforce the policy according to its plain terms, without resort to rules of construction or extrinsic evidenc

VI. Impact on the Insurance Tower and Excess Layers The sub-limit dispute in the Ironclad primary layer has significant implications for the entire insurance tower. The analysis differs depending on whether the sub-limit is found to apply. A. If the Sub-Limit Does Not Apply (Our Position) Under VHG's position — which is that the named-windstorm sub-limit was deleted and the full $25,000,000 primary layer limit applie

VII. Outstanding Issues and Recommended Next Steps A. Obtain Ironclad's Internal Underwriting Notes Ironclad's reservation of rights letter references an internal underwriting note that allegedly states the named-windstorm sub-limit was "intended to be maintained" in the 2022–2023 policy year despite the premium adjustment. This internal note — if it exists — is the primary documentary basis cited by Ironclad for its

1. Demand that Ironclad confirm that the named-windstorm sub-limit was deleted at the 2022 renewal, consistent with the June 14, 2022 underwriting confirmation.

2. Reference the Orde correspondence (May 15, June 8, and June 14, 2022 emails) and the binder (June 28, 2022) as evidence of the agreement to delete the sub-limit.

3. Note that the issued policy does not contain a named-windstorm sub-limit endorsement and that the declarations page lists the full $25,000,000 business-interruption limit without sub-limitation.

4. Identify the $110,000 premium increase as additional consideration paid for the coverage enhancement.

5. Put Ironclad on notice that assertion of a non-existent sub-limit, in the face of clear documentary evidence of its deletion, may constitute bad faith under Florida law, exposing Ironclad to extracontractual liability, including statutory penalties and attorneys' fees under Fla. Stat. § 624.155.

6. Request production of the internal underwriting note referenced in the reservation of rights letter. E. Preserve All Renewal-Related Documents We must ensure that the litigation hold notice issued by VHG on September 19, 2022 — two days after Hurricane Callista's anticipated impact and one day after landfall — is sufficiently broad to cover all VHG documents related to the July 2022 renewal. Specifically, the hold

VIII. Conclusion The documentary evidence strongly supports VHG's position that the $15,000,000 named-windstorm sub-limit was deleted at the July 2022 renewal. The evidence forms a coherent and internally consistent chain of documentation that leaves no reasonable doubt as to the parties' agreement: • The email correspondence between Franklin Orde (Tidewater) and Ironclad's underwriting department expressly confirms