Contract analysis

I. Purpose of This Letter This firm represents Verimark Hospitality Group Inc. ("Verimark" or "VHG"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol VHMK, with its principal executive offices located at 2400 East Las Olas Boulevard, Suite 3100, Fort Lauderdale, Florida 33301. We write to provide formal and timely notice to Pinnacle Indemnity Insurance Co. ("Pinnacle Indemnit

II. Identification of the Insured The Named Insured under the Policy is Verimark Hospitality Group Inc., a corporation organized and existing under the laws of the State of Delaware. Verimark's shares of common stock are publicly traded on the Nasdaq Stock Market under the ticker symbol VHMK. Verimark's principal business is the ownership, operation, and franchising of branded hotel properties across the southeastern

III. Description of the Litigation A. Case Identification On March 7, 2022, Verimark filed a ten-count Complaint in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida. The case has been assigned the following identifying information: Caption: Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC, Randall Brecker, and Suncoast Room Management Inc. Court: Circuit

1. Coastal Palms Franchise Holdings LLC ("Coastal Palms"). Coastal Palms is a Florida limited liability company with its principal office located at 9500 Gulf Shore Drive, Suite 450, Naples, Florida 34108. Coastal Palms is Verimark's single largest franchise operator, holding twenty-two (22) individual Franchise License Agreements covering branded hotel properties across the states of Florida and Georgia. These twent

2. Randall "Randy" Brecker, individually. Mr. Brecker is the Managing Member of Coastal Palms and holds a sixty percent (60%) equity interest in the entity. He exercises day-to-day operational control over Coastal Palms and its affiliated entities and is personally liable for certain obligations arising from his individual tortious conduct, as alleged in the Complaint.

3. Suncoast Room Management Inc. ("Suncoast"). Suncoast is a Florida corporation that serves as an affiliated management entity controlled by Mr. Brecker. As alleged in the Complaint, Suncoast was utilized as an instrumentality of the revenue-diversion scheme described below. In addition to the named defendants, the Complaint references certain related entities through which defendants conducted portions of the activ

IV. Identification of Outside Counsel Verimark retained Calderwood & Harkness LLP as outside litigation counsel for this matter in March 2022. The engagement letter, dated March 4, 2022, was addressed to Renata Solis-Vega, Senior Vice President and General Counsel of Verimark, and was executed on behalf of the firm by the undersigned. A copy of the engagement letter is enclosed as Enclosure 3. Calderwood & Harkness L

V. Anticipated Litigation Costs and Expenses Calderwood & Harkness LLP has prepared a preliminary litigation budget for this matter, as set forth in the Matter Budget Memorandum dated March 10, 2022, a copy of which is enclosed as Enclosure 4. The preliminary budget estimate for prosecution of this case through trial is $4.5 million to $7.5 million. This range reflects the complexity of the litigation, the volume of

VI. Reservation of Rights Verimark expressly reserves all rights under Policy No. PLI-VHG-2021-08874, including, but not limited to, the right to seek coverage for: (a) All fees and costs of outside counsel, including the fees and costs of Calderwood & Harkness LLP and any other counsel retained in connection with this matter; (b) All fees and costs of expert witnesses, including forensic accountants, damages experts

VII. Request for Acknowledgment and Response We respectfully request that Pinnacle Indemnity provide the following within thirty (30) days of receipt of this letter:

1. Written acknowledgment of receipt of this notice;

2. Confirmation of the applicable coverage terms under the Policy, including identification of any deductibles, self-insured retentions, sub-limits, aggregate limits, or conditions applicable to franchise-litigation coverage or the categories of costs and expenses described herein;

3. Designation of a claims adjuster or dedicated point of contact within Pinnacle Indemnity for ongoing communications regarding coverage, claims processing, and invoicing related to this matter; and

4. Copies of any coverage opinions, coverage determination letters, or reservation-of-rights letters that Pinnacle Indemnity intends to issue in response to this notice. We trust that Pinnacle Indemnity will give this matter its prompt and careful attention. Verimark is committed to cooperating fully with Pinnacle Indemnity in connection with the coverage determination process and welcomes the opportunity to discuss

VIII. Contact Information and Directions for Communication All correspondence, notices, and communications regarding this matter and this coverage claim should be directed to: Priya Anand, Partner Calderwood & Harkness LLP 110 SE 6th Street, Suite 2800 Fort Lauderdale, Florida 33301 Telephone: (954) 761-8244 Email: panand@calderwoodharkness.com Please copy the following individuals on all such correspondence: Renata

IX. Closing Verimark looks forward to Pinnacle Indemnity's prompt acknowledgment of this notice and its cooperation in resolving coverage questions in an efficient and collaborative manner. As noted above, this notice is provided without waiver of any rights, remedies, or defenses available to Verimark under the Policy, at law, or in equity, all of which are expressly reserved. Should you have any questions regarding

1. Copy of Filed Complaint, Verimark Hospitality Group Inc. v. Coastal Palms Franchise Holdings LLC, Randall Brecker, and Suncoast Room Management Inc., Case No. 1021-00006 (filed March 7, 2022)

3. Copy of Engagement Letter between Calderwood & Harkness LLP and Verimark Hospitality Group Inc. (dated March 4, 2022)

4. Copy of Matter Budget Memorandum (dated March 10, 2022) cc (via email and U.S. Mail): Renata Solis-Vega, Senior Vice President & General Counsel, Verimark Hospitality Group Inc. Martin Holcomb, Executive Vice President & Chief Financial Officer, Verimark Hospitality Group Inc. Douglas Carmichael, Partner, Calderwood & Harkness LLP This letter and the enclosures hereto contain information that is privileged, confid