Contract analysis

I. DESCRIPTION OF THE INSURED The insured under the Policy is Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware, whose shares of common stock are listed and publicly traded on the Nasdaq Stock Market under the ticker symbol VMHG. VHG maintains its corporate headquarters and principal offices at 2400 Bayshore Boulevard, Suite 1100, Tampa, Florida 33629. VHG o

II. DESCRIPTION OF THE CLAIM / DEMAND A. The Demand Letter On or about January 14, 2026, VHG received a pre-litigation demand letter (the "Demand Letter") from the law firm of Garza, Linden & Okafor LLP ("GLO"), located at 600 Brickell Avenue, Suite 2200, Miami, Florida 33131. The Demand Letter was authored by Marco A. Garza, named partner at GLO, with associate Priya N. Chandrasekaran identified as co-counsel on the

1. Overtime Violations. The Demand Letter alleges that VHG has systematically failed to pay overtime compensation at a rate of one-and-one-half (1.5) times the regular rate of pay for all hours worked in excess of forty (40) hours per workweek, in violation of Section 207(a) of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207(a). According to the Demand Letter, VHG's timekeeping systems and payroll practices ha

2. Illegal Automatic Meal-Break Deductions. The Demand Letter alleges that VHG's payroll system automatically deducts thirty (30) minutes per shift for meal break periods regardless of whether employees actually received bona fide, uninterrupted, duty-free meal breaks. According to the allegations, employees—particularly front-desk associates, concierge staff, and certain food and beverage personnel—were routinely re

3. Uncompensated Pre-Shift and Post-Shift Work. The Demand Letter alleges that VHG fails to compensate hourly, non-exempt employees for pre-shift and post-shift activities that are integral and indispensable to their principal work activities. These activities are alleged to include, among other things, donning and doffing required uniforms, booting up and logging into computer and point-of-sale systems, attending sh

4. Tipped-Employee Minimum Wage Violations. The Demand Letter alleges that VHG has failed to pay the applicable Florida minimum wage for tipped employees in accordance with Article X, Section 24 of the Florida Constitution. This allegation pertains specifically to certain front-desk and concierge roles that participate in pooled tip arrangements. The Demand Letter asserts that the current Florida minimum wage is $14.

5. Willful Misclassification. The Demand Letter alleges that VHG has willfully misclassified certain "lead" and "senior" hourly positions as exempt from the FLSA's overtime requirements under the administrative exemption, 29 U.S.C. § 213(a)(1), and the corresponding regulations at 29 C.F.R. Part 541. According to the allegations, these positions do not satisfy the duties test or the salary-basis test required for app

1. Verimark Regency Tampa (Tampa, FL)

2. Verimark Grand Orlando (Orlando, FL)

3. Verimark Shores Clearwater (Clearwater, FL)

4. Verimark Bayfront St. Petersburg (St. Petersburg, FL)

5. Verimark Resort & Spa Boca Raton (Boca Raton, FL)

6. Verimark Oceanview Fort Lauderdale (Fort Lauderdale, FL)

7. Verimark Key West Collection (Key West, FL) D. Demand Amount The Demand Letter seeks total compensation of $18,500,000.00 (Eighteen Million Five Hundred Thousand Dollars), which GLO states is inclusive of back pay, liquidated damages under the FLSA, and attorneys' fees and costs. The Demand Letter indicates that GLO considers this figure to represent a "conservative pre-litigation resolution amount" and that the d

III. PRELIMINARY EXPOSURE ASSESSMENT VHG has engaged Calderwood & Harkness LLP (matter opened January 30, 2026, Matter No. 1021-00005) to conduct a pre-litigation wage-and-hour audit and to provide a preliminary assessment of VHG's potential financial exposure arising from the claims threatened in the Demand Letter. While this analysis is ongoing and necessarily preliminary in nature, we provide the following exposur

IV. POLICY TERMS AND COVERAGE REQUEST A. Policy Identification The following summarizes the key terms of the applicable insurance policy under which VHG tenders this claim: A copy of the declarations page of the Policy is enclosed herewith as Exhibit B. B. Tender of Defense and Indemnity VHG hereby formally tenders the defense and indemnity of the claims threatened in the Demand Letter to Pinnacle Indemnity Corp. pur

V. CURRENT STATUS OF THE MATTER VHG and Calderwood & Harkness wish to apprise Pinnacle of the following with respect to the current procedural and investigative status of this matter: Litigation Hold. VHG issued a comprehensive internal litigation-hold memorandum on January 17, 2026—one (1) day after General Counsel Devin K. Arroyo received the Demand Letter. A copy of the litigation-hold memorandum is enclosed herew

VI. RESERVATION OF RIGHTS VHG expressly reserves all of its rights under Policy No. PIN-EPL-2025-44781, including but not limited to the following: (a) The right to challenge any coverage denial, disclaimer, or reservation of rights issued by Pinnacle in connection with this claim, whether based on policy exclusions, conditions, definitions, or any other basis; (b) The right to seek reimbursement from Pinnacle for al

VII. REQUESTED ACTIONS FROM PINNACLE INDEMNITY CORP. In light of the foregoing, VHG respectfully requests that Pinnacle Indemnity Corp. take the following actions on an expedited basis:

1. Acknowledge Receipt. Acknowledge receipt of this Notice of Claim and Tender of Defense in writing, confirming the date on which this submission was received by Pinnacle.

2. Assign a Claim Number. Assign a formal claim number to this matter and provide VHG and Calderwood & Harkness with the name, direct telephone number, and email address of the assigned claims handler, if different from Lydia C. Bowman.

3. Confirm Coverage. Confirm coverage under Policy No. PIN-EPL-2025-44781 for the claims described herein, or, in the alternative, issue a written reservation of rights specifically identifying each and every coverage defense, exclusion, or condition that Pinnacle intends to assert in connection with this claim.

4. Confirm Defense Counsel. Confirm Pinnacle's acceptance of Calderwood & Harkness LLP as defense counsel for this matter, or, in the alternative, identify any panel-counsel requirements, billing rate guidelines, or litigation management protocols applicable to VHG's selection and retention of defense counsel.

5. Advise on Defense Costs. Advise on Pinnacle's position regarding the advancement of defense costs above the SIR, and specifically confirm whether defense costs erode the $10,000,000 per-occurrence limit or are paid in addition to the limit.

6. Provide Reporting Requirements. Provide VHG and Calderwood & Harkness with any reporting requirements, litigation guidelines, or claims-handling protocols that Pinnacle requires VHG to follow in connection with the defense of this matter, including the frequency and format of status reports, budget submissions, and pre-authorization requirements for significant defense expenditures. Given the February 28, 2026 res

VIII. ENCLOSURES The following documents are enclosed with this letter for Pinnacle's review and file: Exhibit A: Demand letter from Garza, Linden & Okafor LLP, dated January 14, 2026, including all attachments thereto (25 pages). Exhibit B: Copy of EPL Policy No. PIN-EPL-2025-44781, declarations page (4 pages). Exhibit C: VHG internal litigation-hold memorandum, dated January 17, 2026 (8 pages).

IX. CONTACT INFORMATION FOR ONGOING COMMUNICATIONS All communications from Pinnacle regarding this claim, including but not limited to coverage determinations, claim assignments, defense counsel approvals, and reporting requirements, should be directed to the following individuals: Primary Contact — Outside Counsel: Bernard Crawford, Partner Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3400 Miami, Flo