1021-00003 · Verimark Hospitality Group · Mediation & Settlement

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

Effective Date: December 19, 2023

This Settlement Agreement and Mutual Release (this "Agreement") is entered into as of December 19, 2023 (the "Effective Date"), by and among the following parties:

VERIMARK HOSPITALITY GROUP INC., a Delaware corporation ("VHG" or "Plaintiff"), with its principal offices at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129;

IRONCLAD INDEMNITY CORPORATION, a Connecticut-domiciled stock insurance company ("Ironclad"), with its principal offices at 55 Constitution Boulevard, Hartford, Connecticut 06103;

PINNACLE SURPLUS LINES INC., a Texas-domiciled surplus-lines insurer ("Pinnacle"), with its principal offices at 200 Congress Avenue, Suite 1400, Austin, Texas 78701;

MONTCLAIR ASSURANCE COMPANY, a New York-domiciled admitted insurance carrier ("Montclair"), with its principal offices at 1 Liberty Plaza, 38th Floor, New York, New York 10006; and

SOVEREIGN RE LTD., a Bermuda-domiciled excess carrier ("Sovereign Re"), with its principal offices at 14 Front Street, Hamilton HM 11, Bermuda.

VHG, Ironclad, Pinnacle, Montclair, and Sovereign Re are referred to herein individually as a "Party" and collectively as the "Parties."

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RECITALS

WHEREAS:

A. VHG is a corporation duly organized and existing under the laws of the State of Delaware, whose common stock is publicly traded on the Nasdaq Stock Market under the ticker symbol "VMRK," and which maintains its principal executive offices at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. VHG is engaged in the business of owning, operating, and managing luxury resort hotel properties in the State of Florida. As of the Effective Date, VHG's portfolio of properties includes, among others, the following three resort hotel properties (collectively, the "Insured Properties"):

(i) the Verimark Grand Key Resort, located at Mile Marker 48, Marathon, Florida 33050, a 287-room full-service luxury resort and marina situated in the Florida Keys;

(ii) the Verimark Harborview Hotel & Conference Center, located at 1400 Estero Boulevard, Fort Myers Beach, Florida 33931, a 412-room beachfront hotel and conference center situated on the Gulf Coast of Florida; and

(iii) the Verimark Sunset Shores, located at 7200 Gulf Boulevard, St. Pete Beach, Florida 33706, a 194-room boutique luxury hotel and spa situated on the barrier island of St. Pete Beach on the Gulf of Mexico.

B. In connection with VHG's ownership and operation of the Insured Properties, VHG procured and maintained a layered insurance program consisting of property and business-interruption coverage as follows:

(i) Ironclad is a stock insurance company domiciled in the State of Connecticut and licensed to transact insurance business in the State of Florida. Ironclad issued to VHG an all-risk property and business-interruption insurance policy, bearing Policy Number IIC-PRP-2022-07541, for the policy period commencing July 1, 2022 and ending July 1, 2023, providing primary coverage with a per-occurrence limit of Twenty-Five Million Dollars ($25,000,000) for property damage and business-interruption losses, subject to a deductible of Five Hundred Thousand Dollars ($500,000) per occurrence (the "Primary Policy").

(ii) Pinnacle is a surplus-lines insurer domiciled in the State of Texas and authorized to transact surplus-lines insurance business in the State of Florida. Pinnacle issued to VHG a first excess layer property and business-interruption insurance policy, bearing Policy Number PSL-XS1-2022-3390, for the same policy period of July 1, 2022 through July 1, 2023, providing Fifteen Million Dollars ($15,000,000) in coverage in excess of Twenty-Five Million Dollars ($25,000,000), i.e., attaching at the exhaustion of the Primary Policy (the "First Excess Policy").

(iii) Montclair is an admitted insurance carrier domiciled in the State of New York and licensed to transact insurance business in the State of Florida. Montclair issued to VHG a second excess layer property and business-interruption insurance policy, bearing Policy Number MAC-XS2-2022-09817, for the same policy period of July 1, 2022 through July 1, 2023, providing Ten Million Dollars ($10,000,000) in coverage in excess of Forty Million Dollars ($40,000,000), i.e., attaching at the exhaustion of the combined limits of the Primary Policy and the First Excess Policy (the "Second Excess Policy").

(iv) Sovereign Re is an excess carrier domiciled in Bermuda and authorized to transact excess insurance business relating to risks situated in the State of Florida. Sovereign Re issued to VHG a third excess layer property and business-interruption insurance policy, bearing Policy Number SRL-XS3-2022-5102, for the same policy period of July 1, 2022 through July 1, 2023, providing Ten Million Dollars ($10,000,000) in coverage in excess of Fifty Million Dollars ($50,000,000), i.e., attaching at the exhaustion of the combined limits of the Primary Policy, the First Excess Policy, and the Second Excess Policy (the "Third Excess Policy").

The Primary Policy, the First Excess Policy, the Second Excess Policy, and the Third Excess Policy are referred to herein collectively as the "Policies." The Policies provide aggregate tower limits of Sixty Million Dollars ($60,000,000) above the Five Hundred Thousand Dollar ($500,000) deductible applicable under the Primary Policy.

C. On September 18, 2022, Hurricane Callista, classified by the National Hurricane Center as a Category 4 hurricane on the Saffir-Veltason Hurricane Wind Scale, made landfall in the Lower Florida Keys with maximum sustained winds of approximately 145 miles per hour and produced storm surge inundation of approximately eight (8) to fourteen (14) feet above normal tide levels in Monroe County and approximately six (6) to ten (10) feet above normal tide levels in Lee County. Hurricane Callista caused catastrophic and widespread damage throughout southern Florida, including significant damage to coastal structures, resort properties, marinas, and critical infrastructure along the Florida Keys and the Gulf Coast of southwestern Florida. As a direct and proximate result of Hurricane Callista, the Insured Properties sustained catastrophic property damage and experienced prolonged and severe business interruption, including complete closure of the Grand Key Resort and the Harborview Hotel & Conference Center for extended periods, and partial closure of Sunset Shores (collectively, the "Hurricane Callista Losses"). VHG submitted an initial notice of loss to Ironclad, as primary carrier, on September 22, 2022, four days following the landfall of Hurricane Callista. Thereafter, VHG submitted a sworn statement in proof of loss to Ironclad on November 15, 2022, pursuant to the requirements of the Primary Policy, asserting total business-interruption losses of approximately Sixty Million Dollars ($60,000,000) across the Insured Properties.

D. On October 12, 2022, Ironclad, through its designated third-party claims administrator, Arbor Claims Services LLC, and its coverage counsel, Fendowell Rourke & Stanton LLP, issued a reservation of rights letter to VHG with respect to VHG's claim for business-interruption losses. On February 3, 2023, Ironclad issued a formal denial of coverage for VHG's business-interruption claim, asserting, among other grounds, that: (i) the Primary Policy contained a named-windstorm sub-limit that capped business-interruption recovery at an amount substantially below VHG's claimed losses; (ii) the period of restoration was subject to dispute, and VHG had failed to establish the proper period of restoration for business-interruption coverage; (iii) certain claimed losses were attributable to flood and storm surge, which were subject to a concurrent causation analysis and the flood exclusion in the Primary Policy; and (iv) VHG had failed to adequately mitigate its losses in breach of its duties under the Primary Policy. On February 10, 2023, Pinnacle, through its coverage counsel, Fendowell Rourke & Stanton LLP, followed Ironclad's denial on a follow-form basis and denied coverage for VHG's business-interruption claim to the extent it fell within Pinnacle's layer. Montclair and Sovereign Re, through their joint coverage counsel, Delvecchio & Kraus LLP, did not issue formal denials of coverage but reserved all rights under their respective policies, asserting that their excess layers would not be reached based on the application of the named-windstorm sub-limit asserted by Ironclad and Pinnacle.

E. On March 1, 2023, VHG filed a multi-count complaint in the Eleventh Judicial Circuit of Florida, in and for Miami-Dade County, captioned Verimark Hospitality Group Inc. v. Ironclad Indemnity Corp., Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd., Case No. 2022-CA-031547, assigned to the Honorable Catherine Embry, Circuit Judge (the "Litigation"). In the Litigation, VHG asserted claims for: (i) breach of contract against all four Insurer Parties; (ii) declaratory judgment seeking a judicial determination of coverage rights under the Policies; and (iii) bad faith, including both statutory bad faith under Section 624.155 of the Florida Statutes and common-law bad faith, against all four Insurer Parties. VHG's complaint alleged total business-interruption losses of approximately Sixty Million Dollars ($60,000,000), comprised of approximately Thirty-One Million Four Hundred Thousand Dollars ($31,400,000) attributable to the Verimark Grand Key Resort, approximately Eighteen Million Seven Hundred Thousand Dollars ($18,700,000) attributable to the Verimark Harborview Hotel & Conference Center, and approximately Nine Million Nine Hundred Thousand Dollars ($9,900,000) attributable to the Verimark Sunset Shores. On April 15, 2023, Ironclad, Pinnacle, Montclair, and Sovereign Re, through their respective counsel, filed answers and affirmative defenses denying liability and raising numerous defenses to VHG's claims. Thereafter, the Parties conducted extensive fact discovery, including the exchange of voluminous documents, written discovery, and depositions of party representatives, including depositions of VHG's Chief Executive Officer Marcus Ellsworth, VHG's Chief Financial Officer Diane Calder, VHG's General Counsel Nathaniel Driscoll, Ironclad's Senior Vice President of Claims Victor Haddon, and Arbor Claims Services LLC's lead adjuster Denise Whitford. The Parties also conducted expert discovery, including the retention and deposition of forensic accountants, property damage engineers, meteorological experts, and hospitality industry consultants. On November 1, 2023, VHG filed a motion for partial summary judgment on the issue of whether the named-windstorm sub-limit in the Primary Policy applied to business-interruption losses as opposed to property-damage losses only. On November 15, 2023, Ironclad, Pinnacle, Montclair, and Sovereign Re filed a cross-motion for partial summary judgment on the same issue, arguing that the named-windstorm sub-limit applied to both property-damage and business-interruption losses. On November 20, 2023, the Court entered an order referring the Parties to mediation and staying briefing on the cross-motions for partial summary judgment pending the outcome of the mediation.

F. On December 4 and December 5, 2023, the Parties participated in a two-day mediation session before the Honorable Richard Mendelson (Ret.) of Keystone Dispute Resolution Inc. in Miami, Florida. All Parties appeared through their respective counsel and authorized corporate representatives with full settlement authority. At the conclusion of the mediation on December 5, 2023, the Parties reached an agreement in principle to resolve all disputes and claims among them, which agreement in principle was memorialized in a binding term sheet executed by all Parties on that date. The Parties subsequently negotiated the terms of this Agreement to memorialize the final and comprehensive terms of their settlement.

G. The Parties desire to fully and finally resolve any and all claims, counterclaims, cross-claims, disputes, and controversies between and among them arising out of or relating to the Hurricane Callista Losses and/or the Policies, without any admission of liability, fault, or wrongdoing by any Party, and on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.

(a) "Agreement" means this Settlement Agreement and Mutual Release, together with all Exhibits attached hereto, as the same may be amended or modified from time to time in accordance with Section 9.4.

(b) "Claim" or "Claims" means any and all claims, demands, actions, causes of action, suits, damages, losses, liabilities, costs, expenses (including, without limitation, attorneys' fees and costs of litigation), obligations, judgments, liens, debts, and rights of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, matured or unmatured, accrued or not yet accrued, liquidated or unliquidated, arising out of or relating to the Hurricane Callista Losses and/or the Policies.

(c) "Effective Date" means the date on which this Agreement is fully executed by all Parties, which the Parties agree is December 19, 2023.

(d) "Hurricane Callista Losses" means any and all property damage, business-interruption losses, loss of rents, extra expenses, debris removal costs, increased cost of construction, loss of business income, and all related losses, costs, and expenses sustained or incurred by VHG at or in connection with the Insured Properties arising out of or relating to Hurricane Callista, which made landfall on September 18, 2022, and the aftermath thereof.

(e) "Insured Properties" has the meaning set forth in Recital A of this Agreement.

(f) "Insurer Parties" means Ironclad, Pinnacle, Montclair, and Sovereign Re, together with their respective parents, subsidiaries, affiliates, officers, directors, employees, agents, underwriters, reinsurers, predecessors, successors, and assigns.

(g) "Litigation" means the action captioned Verimark Hospitality Group Inc. v. Ironclad Indemnity Corp., Pinnacle Surplus Lines Inc., Montclair Assurance Company, and Sovereign Re Ltd., Case No. 2022-CA-031547, pending in the Eleventh Judicial Circuit of Florida, in and for Miami-Dade County, before the Honorable Catherine Embry, Circuit Judge.

(h) "Parties" means VHG and the Insurer Parties, collectively. "Party" means any one of them individually.

(i) "Payment Allocation Schedule" means the schedule setting forth each Insurer Party's respective share of the Settlement Amount, attached hereto as Exhibit A and incorporated herein by reference.

(j) "Policies" has the meaning set forth in Recital B of this Agreement, and includes the Primary Policy, the First Excess Policy, the Second Excess Policy, and the Third Excess Policy, as each such term is defined in Recital B.

(k) "Released Claims" has the meaning set forth in Article IV of this Agreement.

(l) "Settlement Amount" means the aggregate sum of Forty-Seven Million Three Hundred Thousand Dollars ($47,300,000.00), payable to VHG by the Insurer Parties in accordance with Article II of this Agreement.

(m) "VHG Parties" means VHG, together with its parents, subsidiaries, affiliates, officers, directors, employees, agents, representatives, predecessors, successors, and assigns.

ARTICLE II — SETTLEMENT PAYMENT

Section 2.1 Total Settlement Amount. In consideration of the mutual covenants, promises, releases, and obligations set forth in this Agreement, and in full and final settlement and resolution of all Claims among the Parties arising out of or relating to the Hurricane Callista Losses and/or the Policies, the Insurer Parties shall pay to VHG the aggregate sum of Forty-Seven Million Three Hundred Thousand Dollars ($47,300,000.00) (the "Settlement Amount"). The Parties acknowledge that the Settlement Amount represents approximately 78.83% of VHG's total claimed business-interruption losses of Sixty Million Dollars ($60,000,000) and reflects a negotiated compromise of disputed claims among all Parties. The Settlement Amount shall be allocated among the Insurer Parties as set forth in the Payment Allocation Schedule attached hereto as Exhibit A and in accordance with Section 2.2 of this Agreement.

Section 2.2 Allocation of Settlement Amount. The Settlement Amount shall be allocated among the Insurer Parties as follows:

(a) Ironclad Indemnity Corporation shall pay Twenty-Four Million Five Hundred Thousand Dollars ($24,500,000.00);

(b) Pinnacle Surplus Lines Inc. shall pay Twelve Million Two Hundred Thousand Dollars ($12,200,000.00);

(d) Sovereign Re Ltd. shall pay Three Million Eight Hundred Thousand Dollars ($3,800,000.00).

The sum of the individual allocations set forth in subsections (a) through (d) above equals the total Settlement Amount of Forty-Seven Million Three Hundred Thousand Dollars ($47,300,000.00). The foregoing allocation represents the Parties' agreed-upon allocation and shall not be construed as a determination or admission of the amount of coverage owed by any individual Insurer Party under its respective Policy.

Section 2.3 Payment Terms. Each Insurer Party's share of the Settlement Amount, as set forth in Section 2.2, shall be paid in a single lump-sum payment by wire transfer of immediately available funds in United States Dollars within forty-five (45) calendar days of the Effective Date. Given that the Effective Date is December 19, 2023, the payment deadline shall be February 2, 2024 (the "Payment Deadline"). All payments shall be made to the Interest on Lawyers' Trust Account (IOLTA) of Calderwood & Harkness LLP, counsel for VHG, in accordance with wire transfer instructions to be provided separately and in writing by Calderwood & Harkness LLP to counsel for each respective Insurer Party within five (5) business days of the Effective Date. Each Insurer Party shall provide written confirmation to Calderwood & Harkness LLP of the initiation of its wire transfer no later than two (2) business days prior to the Payment Deadline. Each Insurer Party shall be severally, and not jointly, liable for its respective share of the Settlement Amount as set forth in Section 2.2. No Insurer Party shall be liable, in whole or in part, for the payment obligation of any other Insurer Party. The payment by each Insurer Party of its respective share shall fully discharge that Insurer Party's financial obligations under this Agreement regardless of whether any other Insurer Party pays or fails to pay its respective share.

Section 2.4 Late Payment. In the event that any Insurer Party fails to remit its respective share of the Settlement Amount on or before the Payment Deadline, the unpaid amount shall bear interest at the rate of twelve percent (12%) per annum, or the maximum rate permitted under applicable Florida law, whichever is less, computed from the day immediately following the Payment Deadline until the date upon which such payment is received in full. The accrual of interest under this Section 2.4 shall not constitute a waiver of any other rights or remedies available to VHG at law or in equity for any Insurer Party's failure to timely make payment, including the right to seek specific performance or other equitable relief.

Section 2.5 Tax Treatment. Each Party shall be solely responsible for its own tax obligations, if any, arising from the settlement or the payments made pursuant to this Agreement. No Party makes any representation or warranty to any other Party regarding the tax treatment or tax consequences of the Settlement Amount or any portion thereof. VHG acknowledges and agrees that no Insurer Party, nor any agent, employee, or counsel of any Insurer Party, has provided or is providing any tax advice to VHG with respect to the Settlement Amount or any portion thereof. The Parties agree that VHG will report the Settlement Amount as proceeds from an insurance recovery for business-interruption losses for applicable tax purposes. Nothing in this Section 2.5 shall be construed as tax advice, and each Party is encouraged to consult with its own qualified tax advisors regarding the tax treatment of the Settlement Amount.

ARTICLE III — DISMISSAL OF LITIGATION

Section 3.1 Stipulation of Dismissal. Within ten (10) business days following receipt by VHG (through the trust account of Calderwood & Harkness LLP) of the full Settlement Amount from all Insurer Parties, the Parties shall jointly execute and file a Joint Stipulation of Dismissal with Prejudice of all claims, counterclaims, cross-claims, and affirmative defenses in the Litigation, Case No. 2022-CA-031547, in the Eleventh Judicial Circuit of Florida, in and for Miami-Dade County, before the Honorable Catherine Embry, Circuit Judge. The Joint Stipulation of Dismissal with Prejudice shall provide for the dismissal of all claims and counterclaims asserted by any Party in the Litigation with prejudice to their re-filing and shall be in substantially the form attached hereto as Exhibit B, or in such other form as shall be mutually agreed upon by the Parties through their respective counsel.

Section 3.2 Costs and Fees. Except as otherwise expressly provided in this Agreement, each Party shall bear its own costs, expenses, and attorneys' fees incurred in connection with the Litigation and the negotiation, preparation, and execution of this Agreement. Without limiting the generality of the foregoing, VHG's engagement of Calderwood & Harkness LLP as its litigation counsel and the fees, costs, and expenses incurred by VHG in connection therewith are solely VHG's responsibility, and no Insurer Party shall bear any liability for any portion of such fees, costs, or expenses.

Section 3.3 Withdrawal of Pending Motions. Upon the filing of the Joint Stipulation of Dismissal with Prejudice in the Litigation, all pending motions in the Litigation shall be deemed withdrawn and rendered moot, including without limitation: (a) VHG's Motion for Partial Summary Judgment Regarding the Applicability of the Named-Windstorm Sub-Limit to Business-Interruption Losses, filed on November 1, 2023; and (b) the Cross-Motion for Partial Summary Judgment filed by Ironclad, Pinnacle, Montclair, and Sovereign Re on November 15, 2023. The Parties agree to cooperate in informing the Court that such motions are withdrawn and need not be adjudicated.

ARTICLE IV — MUTUAL RELEASE

Section 4.1 Release by VHG. Effective upon VHG's receipt of the full Settlement Amount from all Insurer Parties, VHG, on behalf of itself and all VHG Parties, hereby irrevocably and unconditionally releases, acquits, and forever discharges each and every Insurer Party, and each of their respective parents, subsidiaries, affiliates, officers, directors, employees, agents (including, without limitation, Arbor Claims Services LLC and its employees, agents, and representatives, including specifically Denise Whitford), underwriters, reinsurers, predecessors, successors, assigns, and legal counsel (including, without limitation, Fendowell Rourke & Stanton LLP and its attorneys Gregory Stanton, Meredith Liang, and Colin Ashford; and Delvecchio & Kraus LLP and its attorneys Patricia Kraus and Raymond Cho), from any and all Claims of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, matured or unmatured, accrued or not yet accrued, arising out of or relating to the Hurricane Callista Losses and/or the Policies (collectively, the "Released Claims"). This release includes, without limitation, all claims for breach of contract, breach of the implied covenant of good faith and fair dealing, statutory bad faith under Section 624.155 of the Florida Statutes, common-law bad faith, declaratory judgment, extra-contractual damages, consequential damages, statutory penalties, punitive damages, attorneys' fees, pre-judgment and post-judgment interest, costs of litigation, and any and all other relief of any kind or nature whatsoever that was or could have been asserted in the Litigation or in any other action or proceeding.

Section 4.2 Release by Insurer Parties. Effective upon payment of the full Settlement Amount by all Insurer Parties to VHG, each Insurer Party, on behalf of itself and its respective parents, subsidiaries, affiliates, officers, directors, employees, agents, underwriters, reinsurers, predecessors, successors, and assigns, hereby irrevocably and unconditionally releases, acquits, and forever discharges VHG and all VHG Parties, including, without limitation, VHG's officers (specifically Marcus Ellsworth, Diane Calder, Nathaniel Driscoll, and Sandra Pellegrini), directors, employees, agents, representatives, and legal counsel (including, without limitation, Calderwood & Harkness LLP and its attorneys Elaine Forsythe, Howard Bellamy, Tiffany Rosenthal, and Andrew Fitzpatrick), from any and all Claims of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, matured or unmatured, accrued or not yet accrued, arising out of or relating to the Hurricane Callista Losses and/or the Policies. This release includes, without limitation, any and all claims, counterclaims, or defenses that were or could have been asserted by any Insurer Party in the Litigation or in any other action or proceeding relating to the Hurricane Callista Losses and/or the Policies.

Section 4.3 Scope of Release. The releases set forth in Sections 4.1 and 4.2 of this Agreement are intended to be as broad and comprehensive as permitted by law and extend to all Claims, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, matured or unmatured, accrued or not yet accrued, that exist as of the Effective Date and that arise from, relate to, or are in any way connected with the Hurricane Callista Losses and/or the Policies. Each Party expressly, knowingly, and voluntarily waives any and all rights it may have under any statute, regulation, or common-law principle of any jurisdiction—including, but not limited to, Section 1542 of the California Civil Code and any analogous provision of Florida law or the law of any other jurisdiction—that would otherwise limit the scope of this release to claims known or suspected at the time of execution of this Agreement. Each Party acknowledges and understands that it may discover facts different from or in addition to those it now knows or believes to be true with respect to the Released Claims, and that the releases set forth herein shall remain in full force and effect notwithstanding such discovery.

Section 4.4 Carve-Out — Enforcement of This Agreement. Notwithstanding anything to the contrary in this Article IV, nothing in this Agreement shall release any Party from its obligations, covenants, representations, or warranties set forth in this Agreement. Each Party expressly retains the right to enforce the terms and conditions of this Agreement, to seek specific performance of any obligation hereunder, and to pursue any available remedies for breach of this Agreement.

Section 4.5 No Release of Third-Party Claims. The releases set forth in this Article IV do not extend to, and shall not be construed to release or affect, any claims VHG may have against third parties that are not signatories to this Agreement, including but not limited to Tidewater Risk Advisors LLC, or any other broker, agent, or consultant. Similarly, the releases set forth in this Article IV do not extend to, and shall not be construed to release or affect, any claims by any Insurer Party against third parties that are not signatories to this Agreement, including but not limited to any claims for contribution, indemnification, or subrogation against non-party third parties.

ARTICLE V — NO ADMISSION OF LIABILITY

Section 5.1 No Admission. This Agreement and the settlement reflected herein are the result of a compromise of disputed claims and shall not be construed as an admission of liability, fault, wrongdoing, or the validity or invalidity of any claim or defense by any Party. Without limiting the generality of the foregoing:

(a) No Insurer Party admits or concedes that any coverage was owed to VHG under any of the Policies with respect to the Hurricane Callista Losses, that any denial or reservation of rights was improper, unfounded, or made in bad faith, or that any Policy provision, including the named-windstorm sub-limit, the flood exclusion, the concurrent-causation provision, or any other provision, was inapplicable to VHG's claim.

(b) VHG does not admit or concede that its claim for business-interruption losses was overstated, exaggerated, or otherwise unsupported, that it failed to mitigate its losses, or that any amount less than its full claimed losses was the proper measure of recovery under the Policies.

(c) This Agreement, and any of its terms, provisions, or the fact of settlement, may not be offered, received, or admitted in evidence in any action, suit, or other proceeding of any kind or nature as an admission, concession, or evidence of liability, fault, wrongdoing, or the invalidity of any claim or defense by any Party, except in an action to enforce the terms of this Agreement.

ARTICLE VI — CONFIDENTIALITY

Section 6.1 Confidential Settlement Amount. The Parties agree that the specific dollar amount of the Settlement Amount and the allocation of the Settlement Amount among the Insurer Parties as set forth in Section 2.2 and Exhibit A hereto shall be treated as strictly confidential information. No Party shall disclose the Settlement Amount, the individual allocation amounts, or any other financial terms of this Agreement to any third party without the prior written consent of all Parties, except as expressly permitted under Sections 6.2 and 6.3 of this Agreement, or as required by applicable law, regulation, or legal process.

Section 6.2 Existence of Settlement. Notwithstanding Section 6.1, the Parties agree that the existence of this settlement and the fact that the Litigation has been resolved may be publicly disclosed by any Party. The Parties may state publicly that the Litigation has been settled on terms agreeable to all Parties without disclosing the specific financial terms of the settlement.

Section 6.3 Permitted Disclosures. Notwithstanding Section 6.1, the Parties may disclose the financial terms and other confidential provisions of this Agreement:

(a) To their respective legal counsel, accountants, auditors, and tax advisors, on a need-to-know basis, as reasonably necessary for the purpose of obtaining legal, accounting, auditing, or tax advice, provided that such recipients are advised of the confidential nature of the information and are bound by obligations of confidentiality at least as restrictive as those set forth herein;

(b) To any court of competent jurisdiction in any action or proceeding to enforce the terms of this Agreement, subject to the entry of a protective order or other appropriate confidentiality protections;

(c) As required by applicable federal or state law, rule, or regulation, or by any regulatory body having jurisdiction over any Party, including, without limitation, any disclosures that VHG may be required to make under the Securities Exchange Act of 1934, as amended, including its periodic reporting obligations under Regulation S-K promulgated by the United States Securities and Exchange Commission, or any other SEC reporting obligations applicable to VHG as a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "VMRK";

(d) As required by any reinsurance agreement, treaty, or regulatory filing obligation of any Insurer Party, including any mandatory disclosures to reinsurers, retrocessionaires, or state departments of insurance; and

(e) In response to a valid subpoena, civil investigative demand, or court order issued by a court of competent jurisdiction, provided that the disclosing Party shall provide prompt written notice to all other Parties of the receipt of such subpoena or order (to the extent not prohibited by law) and shall cooperate reasonably with any Party seeking to obtain a protective order or other appropriate relief to limit or prevent such disclosure.

Section 6.4 Public Statements. No Party shall issue any press release, public statement, or public filing regarding the specific terms of this settlement, including the Settlement Amount or the allocation thereof, without the prior written consent of all other Parties, except as expressly permitted under Sections 6.2 and 6.3 of this Agreement. Any press release or public statement regarding the existence of the settlement shall be factual, non-disparaging, and shall not characterize the settlement as an admission or concession by any Party.

ARTICLE VII — REPRESENTATIONS AND WARRANTIES

Section 7.1 Authority. Each Party represents and warrants to the other Parties that: (a) it has full corporate or organizational power and authority to enter into this Agreement and to perform all of its obligations hereunder; (b) the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate or organizational action on the part of such Party; (c) this Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity; and (d) the person or persons executing this Agreement on behalf of such Party have been duly authorized to do so and have full authority to bind such Party.

Section 7.2 No Assignment. Each Party represents and warrants that it has not assigned, transferred, conveyed, pledged, encumbered, or otherwise disposed of any of the Claims released herein, or any portion thereof, to any other person or entity, and that no other person or entity has any interest in any of the Claims released herein.

Section 7.3 Voluntary Execution. Each Party represents and warrants that it has carefully read this Agreement, fully understands each of its terms and provisions, and executes this Agreement voluntarily, knowingly, and without duress, coercion, undue influence, or misrepresentation by any other Party or any other person. Each Party acknowledges that it has been represented by legal counsel of its own choosing throughout the negotiation, preparation, and execution of this Agreement, and that it has had the opportunity to consult with such counsel regarding the meaning and effect of each provision of this Agreement. Without limiting the foregoing, the Parties acknowledge that:

(a) VHG has been represented by Calderwood & Harkness LLP, with Elaine Forsythe serving as the Responsible Partner and Howard Bellamy serving as the Billing Partner, in connection with the negotiation and execution of this Agreement;

(b) Ironclad and Pinnacle have been represented by Fendowell Rourke & Stanton LLP, with Gregory Stanton serving as the Lead Partner, in connection with the negotiation and execution of this Agreement; and

(c) Montclair and Sovereign Re have been represented by Delvecchio & Kraus LLP, with Patricia Kraus serving as the Lead Partner, in connection with the negotiation and execution of this Agreement.

Section 7.4 Good Standing. Each Party represents and warrants that it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, and that it has all requisite corporate or organizational power and authority to own its properties and conduct its business as currently conducted.

ARTICLE VIII — INDEMNIFICATION

Section 8.1 VHG Indemnification. VHG shall indemnify, defend, and hold harmless each Insurer Party and each of their respective officers, directors, employees, agents, predecessors, successors, and assigns from and against any and all claims, demands, actions, causes of action, suits, losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees and costs of defense) arising out of or resulting from: (a) any breach by VHG of any representation, warranty, covenant, or obligation contained in this Agreement; or (b) any lien, claim, encumbrance, or demand asserted by any third party (including, without limitation, any attorney, contractor, subcontractor, vendor, or lienholder) against the Settlement Amount or any portion thereof, to the extent such lien, claim, encumbrance, or demand arises from the acts or omissions of VHG or VHG's failure to satisfy its obligations to such third party.

Section 8.2 Insurer Party Indemnification. Each Insurer Party shall indemnify, defend, and hold harmless VHG and each of its officers, directors, employees, agents, predecessors, successors, and assigns from and against any and all claims, demands, actions, causes of action, suits, losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees and costs of defense) arising out of or resulting from any breach by such Insurer Party of any representation, warranty, covenant, or obligation contained in this Agreement. Each Insurer Party's indemnification obligation under this Section 8.2 shall be several and not joint, and no Insurer Party shall be liable for any breach by any other Insurer Party.

ARTICLE IX — MISCELLANEOUS PROVISIONS

Section 9.1 Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Florida, without regard to any conflict-of-laws principles that would require the application of the laws of any other jurisdiction.

Section 9.2 Jurisdiction and Venue. Any action, suit, or proceeding arising out of or relating to this Agreement, including any action to enforce the terms hereof, shall be subject to the exclusive jurisdiction of the courts of the State of Florida located in Miami-Dade County, including the Eleventh Judicial Circuit of Florida. Each Party hereby irrevocably consents and submits to the personal jurisdiction of such courts for the purposes of any such action, suit, or proceeding, and waives any objection it may have to the laying of venue in such courts, including any objection based on the doctrine of forum non conveniens.

Section 9.3 Entire Agreement. This Agreement, together with Exhibit A (Payment Allocation Schedule) and Exhibit B (Form of Joint Stipulation of Dismissal with Prejudice) attached hereto and incorporated herein by reference, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and agreements of the Parties, whether written or oral, with respect to the subject matter hereof, including, without limitation, the term sheet executed by the Parties on December 5, 2023 at the conclusion of the mediation before Hon. Richard Mendelson (Ret.). No Party has relied on any representation, promise, or inducement not expressly set forth in this Agreement.

Section 9.4 Amendments. This Agreement may not be amended, modified, supplemented, or waived except by a written instrument duly executed by all Parties. No oral modification of this Agreement shall be effective for any purpose.

Section 9.5 Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall continue in full force and effect and shall be enforceable in accordance with their terms. In the event of any such determination, the Parties shall negotiate in good faith to replace the invalid, illegal, or unenforceable provision with a valid and enforceable provision that, to the greatest extent possible, achieves the economic, business, and other purposes of the invalid, illegal, or unenforceable provision.

Section 9.6 Waiver. No waiver of any provision of this Agreement, or of any right or remedy hereunder, shall be effective unless set forth in a written instrument signed by the Party to be bound thereby. No single or partial exercise of any right or remedy shall preclude any other or further exercise thereof, or the exercise of any other right or remedy. No waiver of any breach or default shall constitute a waiver of any subsequent or continuing breach or default or a waiver of any other provision of this Agreement.

Section 9.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators, and personal representatives. No Party may assign or transfer this Agreement or any right or obligation hereunder without the prior written consent of all other Parties, except that any Party may assign this Agreement to a successor entity in connection with a merger, consolidation, or sale of all or substantially all of such Party's assets, provided that such successor entity assumes all obligations of such Party under this Agreement.

Section 9.8 No Third-Party Beneficiaries. This Agreement is not intended to, and shall not, confer any rights, benefits, or remedies upon any person or entity other than the Parties hereto and their respective released parties as specifically identified in Article IV. Nothing in this Agreement, express or implied, is intended to or shall create any third-party beneficiary rights in any person or entity that is not a signatory to this Agreement.

Section 9.9 Notices. All notices, requests, demands, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when: (a) delivered personally; (b) sent by registered or certified mail, return receipt requested, postage prepaid; (c) sent by nationally recognized overnight courier service; or (d) sent by electronic mail (with confirmation of receipt), in each case to the addresses set forth below, or to such other address as any Party may designate by written notice to all other Parties:

If to VHG:

Nathaniel Driscoll, General Counsel Verimark Hospitality Group Inc. 1900 Brickell Avenue, Suite 3200 Miami, Florida 33129