Contract analysis

1. Personal Background and Qualifications My name is Dr. Helen Vasquez. I am a Certified Public Accountant ("CPA") licensed in the States of Georgia and Florida, and I hold the Certified in Financial Forensics ("CFF") credential issued by the American Institute of Certified Public Accountants. I currently serve as Managing Director and Lead Forensic Economist at Meridian Forensic Economics LLC, a forensic-accounting

2. Retention and Engagement I was retained by Calderwood & Harkness LLP, counsel for Plaintiff Verimark Hospitality Group Inc. ("VHG"), on or about April 20, 2023. A written engagement letter was executed between Calderwood & Harkness LLP and Meridian Forensic Economics LLC on that date, which set forth the scope of my retention and the terms of my compensation. The scope of my retention is to quantify VHG's business

3. Materials Reviewed In forming the opinions expressed in this declaration and in the Vasquez Report, I have reviewed and considered a substantial volume of documents, data, and information. The materials I reviewed and relied upon include, but are not limited to, the following: (a) VHG's audited consolidated financial statements and internal management reports for fiscal years 2019, 2020, 2021, and 2022 (partial ye

4. Authentication of Expert Report On September 15, 2023, I prepared and caused to be served on all parties my expert report in this matter (the "Vasquez Report"). A true and correct copy of the Vasquez Report, as served on that date, is attached hereto as Exhibit 1 and is incorporated by reference into this declaration. The Vasquez Report contains my opinions, the bases and reasons for each opinion, the data and inf

5. Summary of Hurricane Callista and VHG Property Impacts Hurricane Callista made landfall on September 18, 2022, as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale, with maximum sustained winds of approximately 145 miles per hour. The storm made initial landfall near Big Pine Key in the Lower Florida Keys at approximately 2:10 p.m. Eastern Daylight Time on September 18, 2022, and subsequently trac

6. Methodology In quantifying VHG's business-interruption losses at each of the three insured properties, I employed a standard forensic-accounting methodology for business-interruption loss quantification that is widely recognized and accepted in the forensic-accounting profession and in the insurance industry. This methodology is consistent with generally accepted forensic-accounting standards, including the standa

7. Business-Interruption Loss: Verimark Grand Key Resort The Verimark Grand Key Resort is VHG's flagship property and its highest revenue-generating asset. The property comprises 312 luxury guest rooms, a full-service marina with 96 boat slips, multiple dining venues, a full-service spa, retail outlets, and extensive recreational amenities. Based on my analysis of the property's historical financial performance, the

8. Business-Interruption Loss: Verimark Harborview Hotel & Conference Center The Verimark Harborview Hotel & Conference Center is a 224-room full-service hotel with a 40,000 square-foot conference and event facility located on Fort Myers Beach, Florida. The property generates revenue from both transient and group hotel room bookings and from its conference and event operations, which include corporate conferences, co

9. Business-Interruption Loss: Verimark Sunset Shores The Verimark Sunset Shores is a 186-room boutique resort property located on St. Pete Beach, Florida. The property features beachfront guest rooms, restaurant and pool-bar dining venues, a small spa, and beach and pool amenities. Based on my analysis of the property's historical financial performance, the Sunset Shores' pre-loss average daily rate was $342, and it

10. Aggregate Business-Interruption Loss My calculation of VHG's total aggregate business-interruption loss across all three insured properties resulting from Hurricane Callista is as follows: This total of $60,000,000 represents my opinion of VHG's actual business-interruption losses resulting from Hurricane Callista, calculated in accordance with the methodology described in this declaration and set forth in detail

11. VHG's Losses Exceed $60 Million Regardless of the Windstorm Sub-Limit I understand that a central coverage dispute in this litigation concerns whether a $15,000,000 named-windstorm sub-limit applies to the business-interruption coverage under the Ironclad Indemnity Corporation primary policy (Policy No. IIC-PRP-2022-07541). Specifically, I understand that VHG contends the named-windstorm sub-limit was deleted fro

12. Response to Defense Expert's Competing Analysis I have reviewed the expert report of Dr. Warren Birk of Graystone Consulting Group LLC, which was served on behalf of defendants on September 15, 2023, as well as Dr. Birk's rebuttal report, which was served on October 2, 2023. Dr. Birk's analysis applies alternative assumptions in several key areas that differ from mine, including: (a) the period of restoration, wh

13. Insurance Tower Structure Based on my review of the applicable insurance policies and the information provided to me in connection with this engagement, I understand the VHG insurance tower for the 2022-2023 policy period to be structured as follows: The total aggregate annual premium for the tower was approximately $1,840,000. VHG's business-interruption losses of at least $60,000,000 are sufficient to exhaust t

14. Basis for Period-of-Restoration Opinions My loss calculations for each of the three VHG properties are based on the actual period of business interruption experienced by VHG, which I have independently analyzed and determined to be reasonable under the circumstances. In evaluating the reasonableness of the restoration periods, I considered the following factors: (a) Severity of Hurricane Damage. Hurricane Callist

15. Mitigation Efforts by VHG In conducting my analysis, I carefully accounted for VHG's efforts to mitigate its business-interruption losses. Based on my review of the documentary evidence and deposition testimony, VHG undertook the following mitigation efforts, among others: (a) VHG immediately engaged emergency restoration contractors in the days following Hurricane Callista to begin water extraction, debris remov

16. Conclusion and Opinion Summary Based on the analysis set forth in the Vasquez Report, my rebuttal report, and this declaration, and for the reasons detailed therein and herein, it is my expert opinion, stated to a reasonable degree of professional certainty, that:

1. VHG's total business-interruption losses arising from Hurricane Callista are at least $60,000,000, comprising $31,400,000 at the Grand Key Resort, $18,700,000 at the Harborview Hotel & Conference Center, and $9,900,000 at Sunset Shores.

2. These losses exceed $60 million regardless of whether the $15 million named-windstorm sub-limit is determined to apply or not to apply under the Ironclad Indemnity Corporation primary policy (Policy No. IIC-PRP-2022-07541). The resolution of the windstorm sub-limit issue does not alter the quantum of VHG's actual economic losses.

3. The periods of restoration at all three properties were reasonable under the circumstances, considering the severity of Hurricane Callista, the scope of physical damage sustained, post-hurricane demand surge conditions, supply-chain disruptions, and local permitting delays.

4. VHG took reasonable steps to mitigate its business-interruption losses, and VHG did not unreasonably delay the restoration of any property.

5. VHG's losses exhaust the full $60 million insurance tower (above the $500,000 deductible) under any reasonable quantification methodology, including the most conservative reasonable assumptions and even under the alternative assumptions proposed by defendants' expert, Dr. Warren Birk.

17. Reservation of Rights to Supplement I reserve the right to supplement, amend, or update the opinions expressed in this declaration and in the Vasquez Report if additional information, documents, data, or analyses become available, if new issues arise in this litigation, or if the Court requests further analysis on any matter within the scope of my engagement. I also reserve the right to respond to any additional