Contract analysis

Section 1: Identity of the Insured Full Legal Name: Verimark Hospitality Group Inc. Entity Type: Corporation organized and existing under the laws of the State of Delaware. VHG is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "VMRK." Principal Place of Business: 1900 Brickell Avenue, Suite 3200 Miami, FL 33129 Nature of Business: VHG is engaged in the hospitality and real estate

Section 2: Description of the Occurrence / Cause of Loss Date of Loss: September 18, 2022 Cause of Loss: Hurricane Callista — a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale at the time of landfall in the State of Florida. Hurricane Callista was designated as a named tropical storm by the National Hurricane Center of the National Oceanic and Atmospheric Administration ("NOAA") on September 12, 2022

Section 3: Description of Insured Properties 3.1 Verimark Grand Key Resort Location: Mile Marker 48, Marathon, FL 33050 Description: The Verimark Grand Key Resort is a 312-room luxury resort and full-service marina located in Marathon, Florida, in the Middle Florida Keys. The property encompasses approximately 22 acres of oceanfront land and includes guest room buildings, a main lodge and lobby structure, two restaur

Section 4: Period of Business Interruption 4.1 Verimark Grand Key Resort Date of Closure: September 18, 2022. The property ceased all guest operations prior to landfall in compliance with the Monroe County mandatory evacuation order issued September 16, 2022. Anticipated Reopening Date: On or about March 15, 2023 (estimated as of the date of this proof of loss). VHG notes that this reopening date is an estimate based

Section 5: Claimed Business-Interruption Losses 5.1 Methodology. VHG's claimed business-interruption losses have been calculated in accordance with the coverage provided under Policy No. IIC-PRP-2022-07541, which provides coverage for net lost business income during the period of restoration, plus extra expenses reasonably and necessarily incurred to minimize the duration and extent of the business interruption. The

Section 6: Insurance Coverage The following sets forth the material terms of VHG's property and business-interruption insurance program applicable to the losses described in this proof of loss: Primary Policy: Carrier: Ironclad Indemnity Corporation Policy Number: IIC-PRP-2022-07541 Policy Period: July 1, 2022 – July 1, 2023 Coverage: All risks of physical loss or damage to insured property, including business interr

Section 7: Prior Notice of Loss VHG submitted its initial notice of loss to Ironclad Indemnity Corporation on September 22, 2022, four days after Hurricane Callista's landfall. The notice of loss identified all three subject properties, described the nature of the hurricane event and the resulting physical damage and business interruption, and requested that Ironclad promptly commence its investigation and adjustment

Section 8: Other Insurance VHG states that the insurance policies identified in Section 6 above constitute VHG's complete property and business-interruption insurance program for the three subject properties described in this proof of loss. The primary policy issued by Ironclad Indemnity Corporation and the three excess policies issued by Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd.

Section 9: Supporting Documentation The following documents accompany this Sworn Statement in Proof of Loss or will be provided to Ironclad Indemnity Corporation as supplemental documentation in support of VHG's claim. Certain documents listed below have been previously produced to Ironclad and/or Arbor Claims Services LLC during the claims investigation process; such documents are referenced here for completeness.

1. Financial Statements and Property-Level Profit & Loss Data — Audited consolidated financial statements of Verimark Hospitality Group Inc. for fiscal years 2019, 2020, and 2021, and unaudited interim financial statements for the year-to-date period ending August 31, 2022. Property-level profit and loss statements for the Verimark Grand Key Resort, Verimark Harborview Hotel & Conference Center, and Verimark Sunset S

2. Monthly Revenue Reports by Property — Monthly revenue reports for each subject property, broken down by revenue category (rooms, food and beverage, conference and event, marina, spa and wellness, and other ancillary revenue streams), for fiscal years 2019, 2020, 2021, and year-to-date 2022.

3. Occupancy and ADR Data — Monthly occupancy rates and Average Daily Rate data for each subject property for fiscal years 2019, 2020, 2021, and year-to-date 2022, including daily data for the three months preceding the date of loss.

4. Forward Booking Reports — Forward reservation and booking reports for each subject property as of September 17, 2022, the last business day prior to Hurricane Callista's landfall, including individual reservation data, group booking contracts, and conference and event booking confirmations.

5. Damage Assessment Reports and Photographs — Property condition assessments, damage inspection reports, and photographic documentation for each subject property, prepared by VHG's engineering and facilities teams, independent structural engineers, and Arbor Claims Services LLC following Hurricane Callista.

6. Contractor Estimates and Repair Timelines — Bid proposals, cost estimates, and projected repair timelines submitted by general contractors, specialty subcontractors, and marine construction firms retained or solicited by VHG for the restoration of each subject property.

7. Extra Expense Documentation — Invoices, purchase orders, contracts, and receipts documenting extra expenses incurred by VHG in connection with emergency remediation, temporary facilities, expedited procurement, and other mitigation efforts at each subject property.

8. Payroll Records — Pre-loss and post-loss payroll records for each subject property, documenting staffing levels, compensation, and the calculation of saved expenses attributable to furloughed or reassigned personnel during the periods of closure and reduced-capacity operations.

9. Correspondence with Ironclad Indemnity Corporation and Arbor Claims Services LLC — Copies of all written correspondence, including emails, letters, and claim forms, exchanged between VHG and Ironclad Indemnity Corporation and/or Arbor Claims Services LLC in connection with VHG's claim, including the initial notice of loss dated September 22, 2022, and the Reservation of Rights letter dated October 12, 2022.

10. Evacuation Orders — Copies of the mandatory evacuation orders issued by Monroe County, Florida, on September 16, 2022, and Lee County, Florida, on September 17, 2022. VHG reserves the right to supplement this Sworn Statement in Proof of Loss and the supporting documentation listed above as additional information becomes available during the ongoing restoration process, including updated repair cost estimates, rev

Section 10: Demand for Payment VHG hereby demands payment of business-interruption losses totaling $60,000,000 under Policy No. IIC-PRP-2022-07541 and the excess policies identified in Section 6 of this Sworn Statement in Proof of Loss, less the applicable per-occurrence deductible of $500,000. Net Amount Demanded: $59,500,000 (after application of the $500,000 deductible). Specifically, VHG demands: (a) That Ironcla

Section 11: Reservation of Rights by Insured VHG expressly reserves all rights, claims, demands, and remedies available to it under the Policy, the excess policies, at law, and in equity, including but not limited to the following: (a) All claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory bad faith under applicable Florida law, including Section 624.155, Flori