Contract analysis

I. THE INSURED AND THE INSURED PROPERTIES VHG is a leading publicly traded hospitality and real-estate company with an established portfolio of luxury resort and hotel properties concentrated along Florida's Gulf Coast and the Florida Keys. For the fiscal year ended December 31, 2021, VHG reported consolidated revenues of approximately $412 million and earnings before interest, taxes, depreciation, and amortization (

1. Verimark Grand Key Resort — Located at Mile Marker 48, Marathon, Florida 33050, the Grand Key Resort is VHG's premier Florida Keys property. The resort consists of 312 luxury guest rooms and suites, together with a full-service deep-water marina, multiple food and beverage outlets, a destination spa, and extensive pool and beach amenities. In the twelve months preceding the loss, the Grand Key Resort maintained a

2. Verimark Harborview Hotel & Conference Center — Located at 1400 Estero Boulevard, Fort Myers Beach, Florida 33931, the Harborview Hotel & Conference Center is a 224-room full-service hotel anchored by a 40,000-square-foot conference and event facility that serves as one of the largest dedicated meeting venues on the Southwest Florida coast. The property generates significant group and corporate meeting revenue in

3. Verimark Sunset Shores — Located at 7200 Gulf Boulevard, St. Pete Beach, Florida 33706, Sunset Shores is a 186-room boutique resort positioned as a lifestyle-oriented beachfront property. The resort features curated food and beverage concepts, a rooftop bar, and beachside amenities that have earned it recognition in multiple national hospitality industry publications. In the twelve months preceding the loss, Sunse

II. THE INSURANCE PROGRAM AND MONTCLAIR'S ROLE VHG maintains a comprehensive all-risk property and business-interruption insurance program designed to protect against precisely the type of catastrophic event that occurred here. The program was placed by Tidewater Risk Advisors LLC ("Tidewater"), VHG's broker of record, under the direction of account executive Franklin Orde. The program was structured as a four-layer

III. HURRICANE CALLISTA AND THE COVERED LOSS Hurricane Callista was designated a named tropical storm by the National Hurricane Center on September 12, 2022, and rapidly intensified as it tracked northward through the warm waters of the Caribbean Sea and the Straits of Florida. By the time Callista made landfall at approximately 1:30 PM Eastern Daylight Time on September 18, 2022, near Big Pine Key in the Lower Flori

IV. NOTICE AND PROOF OF LOSS VHG has fully complied with all notice and proof-of-loss requirements under the insurance program. Specifically: • On September 22, 2022—just four days after landfall—VHG submitted timely initial notice of loss to Ironclad Indemnity Corporation as lead carrier under the primary layer of the program. This notice identified the date and nature of the loss, the affected properties, and the a

V. VHG'S LOSSES EXCEED MONTCLAIR'S ATTACHMENT POINT VHG's total business-interruption losses of $60,000,000 far exceed the combined limits of the primary and first excess layers of the insurance program. The Ironclad primary policy provides $25,000,000 in coverage (above the $500,000 deductible), and the Pinnacle first excess policy provides an additional $15,000,000 in coverage. Together, these two underlying layers

VI. MONTCLAIR'S COVERAGE OBLIGATIONS Montclair's coverage obligations under the Policy are clear and unambiguous. The Policy is an "all-risk" property and business-interruption insurance policy, which means that it covers all risks of physical loss or damage to covered property, including the resulting loss of business income and necessary extra expenses, unless a specific exclusion applies. Hurricane Callista unques

VII. DEMAND FOR PAYMENT Based on the foregoing, Verimark Hospitality Group Inc. hereby makes formal demand upon Montclair Assurance Company for payment of the full Ten Million Dollars ($10,000,000) limit of liability under its second excess layer, Policy No. MAC-XS2-2022-09817. VHG's losses are clear, well-documented, and far in excess of Montclair's attachment point. There is no legitimate basis upon which Montclair

VIII. RESERVATION OF RIGHTS BY VHG VHG expressly reserves all rights, claims, and remedies available to it under the Policy, at law, and in equity, including but not limited to the following: • Breach of contract for failure to pay benefits due under the Policy; • Declaratory judgment as to the parties' respective rights and obligations under the Policy; • Bad faith, both statutory under Florida Statutes § 624.155 an

IX. REQUEST FOR RESPONSE AND CONTACT INFORMATION VHG respectfully requests that Montclair Assurance Company respond in writing within thirty (30) days of the date of this letter, acknowledging coverage under the Policy and confirming Montclair's intention to pay VHG's claim in full. In its response, VHG further requests that Montclair identify its designated claims handler for this matter, together with that individu

1. Copy of Sworn Statement in Proof of Loss (dated November 15, 2022)

2. Copy of Ironclad Indemnity Corporation Reservation of Rights Letter (dated October 12, 2022)

3. Copy of VHG's Response to Ironclad Reservation of Rights (dated October 25, 2022) Layer | Carrier | Limit | Attachment Point | Policy No. Primary | Ironclad Indemnity Corporation | $25,000,000 | $500,000 deductible | IIC-PRP-2022-07541 1st Excess | Pinnacle Surplus Lines Inc. | $15,000,000 | $25,000,000 | PSL-XS1-2022-3390 2nd Excess | Montclair Assurance Company | $10,000,000 | $40,000,000 | MAC-XS2-2022-09817 3r