Contract analysis

I. INTRODUCTION AND PURPOSE OF MEMORANDUM Dear Dr. Vasquez: This memorandum is provided in connection with the engagement of Meridian Forensic Economics LLC ("Meridian") as forensic accounting and damages expert for Verimark Hospitality Group Inc. ("VHG" or the "Insured") in the above-captioned matter. As you know, by retention letter dated April 20, 2023, Calderwood & Harkness LLP ("C&H" or the "Firm") formally enga

II. BACKGROUND SUMMARY A. The Insured and Its Business 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 hotels and conference centers throughout the State of Florida. The company has established a strong market presence in th

III. SCOPE OF ENGAGEMENT — PROPERTY-BY-PROPERTY ANALYSIS This section describes the scope of your engagement with respect to each of the three affected VHG properties. For each property, we set forth the relevant location and profile information, pre-loss operating metrics, the closure period, the estimated BI loss, and the specific analytical requirements unique to that property. A. Verimark Grand Key Resort (Marath

IV. ANALYTICAL FRAMEWORK AND METHODOLOGY REQUIREMENTS This section sets forth the analytical framework and methodology that we expect you to employ in conducting your damages analysis. While we defer to your professional judgment regarding the specific techniques and procedures most appropriate for this engagement, the following guidance reflects both the requirements of the applicable insurance policy provisions and

V. DATA REQUIREMENTS AND DOCUMENT REQUESTS This section identifies the categories of data and documentation that C&H will be assembling and producing to Meridian for your analysis. The data will be produced in tranches as it becomes available, with the first tranche expected during the week of May 19, 2023. Please review the categories below and advise us if there are additional categories of data that you will requi

1. Audited financial statements for VHG's consolidated entity for FY 2019, FY 2020, FY 2021, and FY 2022 (year-to-date through September 2022, or full-year if the FY 2022 audit has been completed).

2. Monthly property-level profit and loss statements for each of the three properties (Grand Key Resort, Harborview Hotel & Conference Center, and Sunset Shores) for the 36 months preceding Hurricane Callista — that is, for the period from October 2019 through September 2022.

3. Monthly revenue breakdowns by category — including rooms, food and beverage, conference center (Harborview), marina (Grand Key), spa, and other ancillary revenue — for each property for the same 36-month period.

4. ADR and occupancy data, on a daily or weekly basis if available, for each property for the same 36-month period. If daily data is available from the properties' property management systems (e.g., Thackeray Solutions), daily data would be preferred.

5. Budget and forecast documents for FY 2022 and FY 2023 that were prepared prior to Hurricane Callista. These documents will provide evidence of VHG's own pre-loss expectations for each property's performance.

6. Capital expenditure records for each property for the preceding three fiscal years (FY 2019, FY 2020, FY 2021), including any planned capital improvements for FY 2022 and FY 2023. B. Booking and Reservation Data

7. Reservation system data showing bookings on the books as of September 16, 2022 (the date of the Monroe County evacuation order and the last pre-evacuation date) for each property for the period from Q4 2022 through Q2 2023. This data should include individual and group reservations, with detail regarding confirmation status, anticipated revenue, length of stay, and rate.

8. Conference center booking pipeline and executed event contracts for the Harborview Hotel & Conference Center for Q4 2022 and Q1 2023, including signed contracts, proposals, letters of intent, and internal pipeline reports. This data is essential to quantifying the lost conference and event revenue at Harborview.

9. Cancellation and rebooking records from the post-hurricane period, showing which reservations and group bookings were cancelled, which were rebooked at other VHG properties or at competing venues, and which were simply lost.

10. Group sales pipeline reports from VHG's sales and marketing department, reflecting the status of group business development efforts for each property as of the date of the hurricane. C. Expense Data

11. Detailed operating expense reports by category and by property for the 12 months preceding the loss (September 2021 through August 2022) and for the closure and partial-closure periods (September 2022 through the date of full reopening at each property). These reports will be essential for the saved-expenses and continuing-expenses analysis.

12. Payroll records showing staffing levels (headcount and payroll expense by department) at each property on a monthly basis for the pre-loss period, during the closure period, and post-reopening.

13. Invoices and records of extra expenses incurred to expedite restoration and reduce the interruption period, including invoices from emergency restoration contractors, temporary facility providers, and any other vendors engaged for purposes of mitigation.

14. Utility bills (electricity, water, gas, sewer, waste removal) for each property for both the pre-loss period and the closure period, to facilitate quantification of saved utility expenses.

15. Vendor contracts and supply agreements with force majeure or cancellation provisions, to the extent relevant to the expense analysis and the mitigation defense. D. Insurance and Claims Data

16. Complete copies of all four policies in the insurance tower, specifically: • Ironclad Indemnity Corporation, Policy No. IIC-PRP-2022-07541 • Pinnacle Surplus Lines Inc., Policy No. PSL-XS1-2022-3390 • Montclair Assurance Company, Policy No. MAC-XS2-2022-09817 • Sovereign Re Ltd., Policy No. SRL-XS3-2022-5102 Each policy must include all endorsements, amendments, schedules, and declarations pages. In particular, p

17. VHG's sworn statement in proof of loss ($60,000,000) submitted November 15, 2022, together with all supporting schedules, exhibits, and attachments.

18. Ironclad's reservation of rights letter dated October 12, 2022, and Ironclad's formal denial letter dated February 3, 2023, as well as Pinnacle's denial letter dated February 10, 2023, and any correspondence from Montclair Assurance Company and Sovereign Re Ltd.

19. Arbor Claims Services LLC — inspection reports, correspondence, and work papers of the independent adjuster, Denise Whitford, who was retained by Ironclad to investigate the claim. E. Property and Restoration Data

20. Property damage assessments and repair cost estimates for each of the three properties, including assessments prepared by VHG's own consultants and any assessments prepared by or on behalf of the insurers.

21. Contractor proposals, invoices, and construction schedules for the restoration work at each property, showing the scope of work, timeline, and actual costs.

22. Permitting applications and approvals from local building authorities (Monroe County, Lee County, and Pinellas County), including any documentation of delays in the permitting process.

23. Correspondence with contractors regarding availability, scheduling delays, supply-chain issues, and any force majeure notices related to the post-hurricane construction environment.

24. Property reopening reports and post-reopening operating data for each property through at least June 2023, to enable analysis of the post-reopening ramp-up period and to provide the most current available data on each property's recovery trajectory. F. Market and Comparable Data

25. STR (Penmark Enterprises) reports — or equivalent industry benchmarking reports — for the competitive sets for each property's sub-market: Marathon / Florida Keys (Grand Key Resort); Fort Myers Beach / Lee County (Harborview); and St. Pete Beach / Pinellas County (Sunset Shores). These reports should cover the 36 months preceding the hurricane and the post-hurricane period through the most recently available date

26. Tourism and visitor data from local convention and visitors bureaus, including the Monroe County Tourist Development Council, the Lee County Visitor & Convention Bureau, and Visit St. Pete/Clearwater, for the pre-loss and post-loss periods.

27. Reports on the area-wide impact of Hurricane Callista on the Florida hospitality market, including competitor closure and reopening timelines, industry publications, and any market assessments prepared by industry groups such as the American Hotel & Lodging Association or the Florida Restaurant & Lodging Association.

VI. COORDINATION WITH OTHER EXPERTS Your engagement will require coordination with other experts retained by C&H on behalf of VHG. The following information is provided to facilitate that coordination. Jeffrey Caldwell, PE — Caldwell Engineering Associates Inc. Mr. Caldwell's firm is located at 7900 NW 25th Street, Suite 210, Doral, Florida 33122. Mr. Caldwell has been retained to serve as VHG's engineering expert an

VII. TIMELINE AND DELIVERABLES The following schedule sets forth the key milestones and deliverables for your engagement. All dates are firm and are driven by the court's discovery schedule: All draft reports, working papers, and correspondence related to this engagement should be submitted to Tiffany Rosenthal and Andrew Fitzpatrick at Calderwood & Harkness LLP, at the Firm's Miami office: Calderwood & Harkness LLP

VIII. CONFIDENTIALITY AND PRIVILEGE REMINDERS The following confidentiality and privilege reminders are of critical importance and supplement the confidentiality provisions contained in the April 20, 2023, retention letter: Attorney-Client Privilege and Work-Product Doctrine. All materials provided to you by C&H in connection with this engagement are subject to the attorney-client privilege and/or the work-product do

IX. CONTACT INFORMATION The following contact information is provided for your reference: Calderwood & Harkness LLP — Miami Office 333 SE 2nd Avenue, Suite 4400 Miami, Florida 33131 Tiffany Rosenthal — Lead Associate Phone: (305) 555-7140 Email: trosenthal@calderwoodharkness.com Andrew Fitzpatrick — Working Associate Phone: (305) 555-7162 Email: afitzpatrick@calderwoodharkness.com Elaine Forsythe — Responsible Partne

X. CLOSING Dr. Vasquez, we ask that you confirm receipt of this memorandum at your earliest convenience. Additionally, to ensure that the data assembly process proceeds efficiently, we request that you provide us with a preliminary data request list — identifying any data or documentation beyond the categories described in Section V that you anticipate needing — by no later than May 15, 2023. C&H has already commence