Contract analysis

I. PURPOSE OF THIS MEMORANDUM Calderwood & Harkness LLP ("C&H") has received a formal engagement proposal from Ridgepoint Advisory Group LLC ("Ridgepoint"), a forensic accounting and data-analytics consultancy based in Fort Lauderdale, Florida, to perform forensic payroll analytics and damages modeling in connection with the pre-litigation wage-and-hour audit of Verimark Hospitality Group Inc. ("VHG" or "Verimark").

II. BACKGROUND ON THE ENGAGEMENT NEED A. Nature of the Claims and Data Challenges The GLO demand letter, which C&H has previously circulated and analyzed in its initial assessment memorandum dated January 22, 2026, asserts five categories of wage-and-hour violations affecting hourly employees across VHG's seven Florida-branded hospitality properties:

1. Unpaid Overtime. GLO alleges that VHG systematically failed to pay overtime compensation at one and one-half times the regular rate of pay for hours worked in excess of forty in a workweek, in violation of 29 U.S.C. § 207(a). The allegation is that VHG's timekeeping and payroll practices resulted in the systematic undercount of compensable hours, thereby reducing or eliminating overtime entitlements for affected e

2. Illegal Automatic Meal-Break Deductions. GLO alleges that VHG maintained and enforced an automatic payroll deduction rule — identified in the Luminos TimeTrack system as auto-deduction rule AR-MEAL-030 — that automatically deducted thirty (30) minutes from each employee's compensable time for any shift of six or more hours, irrespective of whether the employee actually received an uninterrupted, duty-free meal bre

3. Uncompensated Pre-Shift and Post-Shift Work. GLO alleges that VHG's hourly employees were required to arrive at their workstations and perform work-related tasks — including logging into systems, reviewing shift assignments, donning required uniforms or safety equipment, participating in pre-shift briefings, and performing other preparatory activities — for approximately fifteen to twenty-five minutes before the s

4. Failure to Pay Florida Tipped-Employee Minimum Wage. GLO alleges that certain tipped employees — including front-desk agents and concierge personnel who participate in VHG's tip-pooling arrangements — were not paid at least the applicable Florida tipped-employee minimum wage, as required by Article X, Section 24 of the Florida Constitution. GLO asserts that VHG improperly applied the tip credit to employees who di

5. Misclassification of "Lead" and "Senior" Hourly Roles. GLO alleges that VHG improperly classified certain hourly employees holding "lead" and "senior" designations — including Lead Housekeeper, Senior Front Desk Agent, Lead Banquet Server, and similar titles — as exempt from the FLSA's overtime requirements. GLO contends that these employees did not satisfy the duties tests for any recognized FLSA exemption and th

III. OVERVIEW OF RIDGEPOINT ADVISORY GROUP LLC A. Firm Profile Ridgepoint Advisory Group LLC ("Ridgepoint") is a Florida limited liability company organized and existing under the laws of the State of Florida. Its principal offices are located at 500 East Broward Boulevard, Suite 1050, Fort Lauderdale, Florida 33394. Ridgepoint is a boutique forensic accounting and data-analytics consultancy that specializes in emplo

IV. RIDGEPOINT'S PROPOSED SCOPE OF WORK Ridgepoint's engagement proposal describes a three-phase scope of work, as summarized below. C&H has reviewed the proposal in detail and considers the scope to be appropriately tailored to VHG's needs. A. Phase 1: Data Acquisition and Validation The first phase of the engagement involves the acquisition, ingestion, and validation of the raw data required for the forensic analys

1. Data Validation Report. A report documenting the results of the data-integrity validation performed during Phase 1, including the identification of any data gaps, anomalies, or inconsistencies and an assessment of their potential impact on the analysis.

2. Statistical Sampling Methodology Report. A report describing the sampling framework designed for Phase 2, including the stratification variables, sample sizes, confidence levels, and margins of error, along with the justification for the selected methodology.

3. Preliminary Findings Memorandum. A memorandum summarizing Ridgepoint's preliminary analytical findings for C&H and VHG review, to be produced at an interim stage before the completion of the full damages model. This memorandum will allow C&H and VHG to assess the emerging picture and provide feedback before Ridgepoint finalizes its analysis.

4. Detailed Damages Model Workbook. An Excel-based workbook containing the full damages model, with adjustable assumptions and scenario-modeling capabilities. This workbook will be designed to allow C&H and VHG to input different assumptions and generate corresponding damages estimates in real time.

5. Final Forensic Payroll Analysis Report. A comprehensive report setting forth Ridgepoint's findings, methodology, and conclusions, to be prepared as a privileged document at the direction of counsel. All deliverables will be addressed to C&H and produced under the protections of the attorney-client privilege and the work-product doctrine. No deliverables will be shared with any third party without the prior written

V. FEE ESTIMATE AND BUDGET ANALYSIS A. Ridgepoint's Fee Proposal Ridgepoint has proposed an estimated total fee in the range of $85,000 to $120,000 for the engagement, based on a blended hourly rate for Dr. Tran and her team. The fee estimate reflects Ridgepoint's assessment of the scope of data volume and complexity involved, recognizing that the actual fees will depend on factors including the volume and condition

VI. PRIVILEGE PROTECTION CONSIDERATIONS A. Retention Structure The preservation of attorney-client privilege and work-product protection over Ridgepoint's analysis and work product is a critical consideration in structuring this engagement. C&H recommends the following retention structure: • Ridgepoint will be engaged as a consulting expert retained by C&H, at the direction of counsel, in connection with C&H's legal

VII. COMPARISON TO ALTERNATIVE APPROACHES C&H has considered three alternatives to the Ridgepoint engagement and, for the reasons discussed below, concludes that none represents a preferable course of action. A. In-House Analysis by C&H C&H's legal team does not possess the forensic accounting, data-analytics, or statistical-sampling expertise required to perform the type of forensic payroll analysis contemplated her

VIII. COORDINATION WITH ONGOING SCOPING-PHASE WORKSTREAMS Ridgepoint's data-acquisition phase (Phase 1) will run in parallel with C&H's ongoing document and data collection efforts. C&H has already transmitted formal data and document collection requests to two key contacts: • Enrique J. Fuentes, Director, Payroll & Workforce Compliance, VHG — request transmitted February 3, 2026, covering payroll registers, wage sta

1. Verimark Regency Tampa — 295 hourly employees

2. Verimark Grand Orlando — 420 hourly employees

3. Verimark Shores Clearwater — 190 hourly employees (Palomar-owned)

4. Verimark Bayfront St. Petersburg — 245 hourly employees

5. Verimark Resort & Spa Boca Raton — 340 hourly employees

6. Verimark Oceanview Fort Lauderdale — 265 hourly employees

7. Verimark Key West Collection — 140 hourly employees Ridgepoint's damages model will incorporate data from all seven properties and will be structured to allow both property-level and aggregate analysis.

IX. DRAFT ENGAGEMENT LETTER A draft engagement letter for Ridgepoint has been prepared separately and is attached to this memorandum as Attachment B (file name: draft-ridgepoint-engagement-letter.docx). The draft engagement letter addresses the key terms of the engagement, which are summarized as follows: • Scope of Work. The scope is limited to forensic payroll analytics and damages modeling in connection with the p

X. RECOMMENDATION Based on the foregoing analysis, C&H recommends that VHG approve the engagement of Ridgepoint Advisory Group LLC at the proposed fee range of $85,000 to $120,000, subject to a negotiated fee cap of approximately $105,000, with a fifteen percent (15%) contingency buffer (approximately $15,750 above the cap) requiring prior written approval from both C&H and VHG before any expenditure exceeding the ca

1. Ridgepoint possesses the specialized forensic-accounting, data-analytics, and statistical-sampling expertise required for this engagement, and its hospitality-industry experience and familiarity with the Luminos TimeTrack platform make it particularly well-suited to VHG's needs.

2. Dr. Tran's professional credentials (CPA, CFF) and expert-witness track record provide confidence in the quality and defensibility of Ridgepoint's work product.

3. Ridgepoint's fee proposal is competitive and represents a prudent investment relative to the magnitude of VHG's potential exposure ($22–$38 million mid-range; $18.5 million demand amount; $202.4 million theoretical ceiling).

4. The proposed retention structure — with Ridgepoint engaged as a non-testifying consulting expert under C&H's direction — provides robust privilege and work-product protections while preserving VHG's optionality regarding future testifying-expert designation.

5. The combined budget for C&H and Ridgepoint falls within the $350,000 Audit Committee authorization, with the recommended fee cap providing a comfortable margin. The engagement should proceed promptly to align with the data-collection timeline and the demand-response schedule. VHG should execute the draft engagement letter (Attachment B) and authorize C&H to direct Ridgepoint to begin Phase 1 (Data Acquisition and

XI. REQUESTED ACTION ITEMS C&H respectfully requests that VHG take the following actions at the earliest practicable date:

1. VHG General Counsel (Devin K. Arroyo): Review and approve the draft Ridgepoint engagement letter (Attachment B). Please provide any comments or requested revisions to C&H by no later than February 12, 2026.

2. VHG Chief Financial Officer (Marguerite A. Dunning): Confirm budget allocation for the Ridgepoint engagement within the $350,000 Audit Committee authorization dated January 29, 2026, and coordinate with VHG's accounts payable function to establish the invoicing and payment process described in Section V.A above.

3. VHG: Execute the Ridgepoint engagement letter (two original counterparts) and return one fully executed counterpart to C&H for delivery to Ridgepoint.

4. C&H: Upon receipt of the executed engagement letter, transmit the executed counterpart to Dr. Alicia Tran at Ridgepoint and confirm the commencement date for Phase 1.

5. C&H: Coordinate with Enrique J. Fuentes (Director, Payroll & Workforce Compliance, VHG) and Shannon D. Prewitt (Senior Account Manager, Luminos Payroll Solutions Inc.) to arrange the transfer of data to Ridgepoint upon engagement, subject to the confidentiality and data-security protocols established in the engagement letter and the separate Confidentiality and Data-Protection Agreement.

6. Target Timeline: • Ridgepoint engagement letter executed: February 14, 2026 • Ridgepoint Phase 1 commences: February 17, 2026 • Phase 1 data acquisition and validation completed: target early March 2026 • Phase 2 statistical sampling and analysis initiated: target mid-March 2026 • Preliminary findings memorandum delivered: target mid-March 2026 • Phase 3 damages modeling and final report: target late March / early