1021-00008 · Client 1021 · Engagement

engagement-letter-audit-committee-to-sc.docx DOCUMENT Litigation

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AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC. 4100 Bayshore Boulevard, Suite 1200 Tampa, FL 33611

July 17, 2023

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE

Howard Quinn, Esq. Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, FL 33131

Re: Engagement of Calderwood & Harkness LLP as Independent Investigation Counsel to the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. C&H Matter No. 1021-00008

Dear Mr. Quinn:

1. Purpose and Background of Engagement

The Audit Committee of the Board of Directors (the "Audit Committee") of Verimark Hospitality Group Inc. ("VHG" or the "Company"), a Delaware corporation publicly traded on the Nasdaq Stock Market LLC under the ticker symbol VMRK, with principal offices at 4100 Bayshore Boulevard, Suite 1200, Tampa, FL 33611, hereby retains Calderwood & Harkness LLP ("C&H" or the "Firm") to serve as independent legal counsel to the Audit Committee in connection with an internal investigation (the "Investigation"). The purpose of this letter is to set forth the terms and conditions governing the Firm's engagement by the Audit Committee, including the scope of the Investigation, the identity of the client, staffing arrangements, fee arrangements, privilege protocols, and other matters material to the engagement.

The circumstances giving rise to this engagement are as follows. On June 19, 2023, the Company's independent registered public accounting firm, Hargrove, Steen & Aldrich LLP ("HSA"), communicated to VHG's Chief Financial Officer, Thomas Rhett Griffith, and to the undersigned, in her capacity as Chair of the Audit Committee, that HSA had identified a potential material weakness relating to internal controls over financial reporting at Verimark Coastal Resorts LLC ("VCR"), a wholly owned subsidiary of VHG organized under the laws of the State of Florida, with its principal office at 7820 Gulf Breeze Parkway, Suite 400, Destin, FL 32541. HSA's communication arose during the course of its interim review of VHG's consolidated financial statements for the fiscal quarter ended March 31, 2023.

Specifically, HSA noted that approximately $9.8 million in timeshare-interest deposits had been recorded as completed-sale revenue in the first quarter of 2023, despite the fact that the applicable statutory rescission periods under Florida Statute § 721.10 — which provides purchasers of timeshare interests with a ten (10) calendar-day rescission period following execution of a purchase agreement — had not expired before the close of the quarter. HSA expressed concern that such revenue recognition may have been premature and may not conform with generally accepted accounting principles ("GAAP"), including the requirements of ASC 606 (Revenue from Contracts with Customers), and that the resulting overstatement of revenue could be material to VHG's consolidated financial statements.

In addition to the revenue-recognition concerns communicated by HSA, VHG's internal audit function subsequently identified certain anomalies in VCR's capital-improvement expenditure records that suggested the possible submission of fictitious vendor invoices and the potential concealment of personal expenditures within capital-improvement budgets. These matters were reported to the Audit Committee on July 3, 2023.

In light of the foregoing, the Audit Committee convened a special meeting in executive session on July 10, 2023, at which the three independent directors constituting the Audit Committee — Diane Kowalski (Chair), Reginald Faulkner, and Sandra Yeung — were present. After due consideration, the Audit Committee unanimously resolved to retain independent outside counsel to conduct the Investigation, separate and apart from VHG's regular outside counsel, in order to ensure the independence and integrity of the inquiry. The Audit Committee selected Calderwood & Harkness LLP on the basis of the Firm's recognized expertise in internal investigations, securities enforcement matters, and corporate governance.

2. Identity of the Client

The Firm's client for purposes of this engagement is the Audit Committee of the Board of Directors of VHG, acting in its oversight and investigative capacity under the Company's Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws of VHG, the Audit Committee Charter, and applicable provisions of the Delaware General Corporation Law.

It is expressly understood and agreed that the Firm does not represent, and shall not be deemed to represent, VHG management, any individual officer, director, or employee of VHG or any of its subsidiaries (including, without limitation, VCR), in connection with this engagement. No attorney-client relationship exists or shall be created between the Firm and any such individual by virtue of this engagement, notwithstanding any interviews, communications, or interactions that may occur during the course of the Investigation.

The Firm does not represent VHG's Board of Directors as a whole in connection with this engagement, although the Audit Committee may, in the exercise of its sole discretion, share the Firm's work product, findings, conclusions, and recommendations with the full Board of Directors at such times and in such manner as the Audit Committee deems appropriate.

3. Scope of the Investigation

The Investigation shall encompass the following primary areas of inquiry, each of which relates to the operations, accounting practices, and financial reporting of VCR, as well as the impact of such matters on VHG's consolidated financial statements and public disclosures.

3(a). Revenue-Recognition Irregularities

The Firm shall conduct a thorough examination of whether VCR prematurely recognized revenue from timeshare-interest sales by recording purchaser deposits as completed-sale revenue upon the execution of purchase agreements, rather than deferring recognition until the expiration of the statutory ten (10) calendar-day rescission period afforded to purchasers under Florida Statute § 721.10. This inquiry shall include, but not be limited to, the following:

(i) A review of VCR's revenue-recognition policies and practices, including any written policies, procedures, memoranda, or guidance documents relating to the timing and manner of recognizing revenue from timeshare-interest sales;

(ii) A review of revenue-recognition practices at VCR properties, including but not limited to Coral Dune Resort & Residences (located at 14200 Emerald Coast Parkway, Destin, FL 32541) and Palmetto Bluff Club (located at 3950 Longboat Key Drive, Sarasota, FL 34228), as well as any other VCR properties at which similar practices may have occurred;

(iii) An assessment of whether any such revenue-recognition practices resulted in material misstatements in VHG's consolidated financial statements for the fiscal quarter ended March 31, 2023, or for any prior reporting period;

(iv) An assessment of the magnitude and duration of any identified misstatements, including the number of transactions, the aggregate dollar amount of prematurely recognized revenue, and the periods affected;

(v) An evaluation of whether any individuals — including officers, managers, employees, or agents of VHG or VCR — directed, implemented, approved, or knowingly participated in such revenue-recognition practices, and the circumstances surrounding their involvement; and

(vi) An evaluation of any communications between VCR personnel and HSA or VHG's internal audit function regarding revenue-recognition policies and the treatment of timeshare-interest deposits.

3(b). Expense-Reporting Irregularities

The Firm shall conduct an examination of whether VCR personnel submitted fictitious vendor invoices or otherwise improperly concealed personal expenditures within capital-improvement budgets or other corporate accounts. This inquiry shall include, but not be limited to, the following:

(i) Identification and analysis of any vendors, entities, accounts, or payment channels through which improper payments may have been directed, including any entities owned, controlled, or affiliated with VCR personnel or their family members;

(ii) Examination of VCR's vendor approval, invoice processing, and payment authorization procedures and controls, and the extent to which such controls were circumvented or overridden;

(iii) A review of capital-improvement budgets, purchase orders, invoices, payment records, and supporting documentation at relevant VCR properties;

(iv) An assessment of the aggregate financial impact of any identified expense-reporting irregularities, including the total dollar amount of fictitious or improper charges; and

3(c). Related Matters

In addition to the foregoing, the Investigation shall encompass the following related matters:

(i) An assessment of the adequacy and effectiveness of VHG's internal controls over financial reporting, including management's disclosure controls and procedures and the Company's internal control structure, as they relate to the foregoing areas of inquiry and as relevant to VHG's obligations under Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 ("SOX") and the rules and regulations promulgated thereunder;

(ii) An assessment of the Company's obligations under the federal securities laws, including the Securities Exchange Act of 1934, as amended, and the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), with respect to potential disclosure requirements arising from the matters under investigation, including any obligations to file amended periodic reports (Form 10-K, Form 10-Q), current reports (Form 8-K), or to make other public disclosures; and

(iii) Such other matters as the Audit Committee may identify and refer to the Firm during the course of the Investigation.

The Audit Committee reserves the right to expand or narrow the scope of the Investigation at any time upon written notice to C&H. Any material modification to the scope of the Investigation shall be documented in writing by the Audit Committee and acknowledged by the Firm.

4. Staffing

The Firm's professional team for the Investigation shall include the following attorneys and such additional personnel as may be reasonably necessary to conduct the Investigation in a thorough and timely manner:

(i) Howard Quinn, Partner — Responsible Partner. Mr. Quinn shall serve as the lead partner on the engagement, with overall responsibility for the direction, strategy, and conduct of the Investigation, and shall serve as the Firm's primary point of contact with the Audit Committee.

(ii) Conrad Ashby, Partner — Billing Partner. Mr. Ashby shall serve as the billing partner for the engagement and shall assist Mr. Quinn in the supervision and direction of the Investigation.

(iii) Liam Donahue, Senior Associate — Lead Associate. Mr. Donahue shall serve as the lead associate on the engagement and shall be responsible for the day-to-day management of the Investigation, including the coordination of document review, witness interviews, and the preparation of interim and final reports.

(iv) Steven Hollander, Associate — Working Associate. Mr. Hollander shall provide substantive support in connection with document review, legal research, witness interview preparation, and the analysis of financial records and data.

(v) Such additional associates, paralegals, law clerks, and support staff as may be reasonably necessary to ensure the efficient and effective conduct of the Investigation.

Any material changes to the staffing of the engagement — including the replacement or reassignment of Mr. Quinn as Responsible Partner or Mr. Donahue as Lead Associate — shall be communicated to the Audit Committee Chair in advance and shall be subject to the Audit Committee's approval.

5. Engagement of Advisors and Vendors

The Firm is authorized, at the direction of the Audit Committee, to retain forensic accounting advisors, e-discovery vendors, and other consultants as may be necessary or appropriate to support the Investigation. Such engagements shall be made subject to the following terms:

(a) Forensic Accounting Advisors. Any forensic accounting advisor retained by the Firm in connection with the Investigation shall be engaged under the doctrine established in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961) (the "Kovel doctrine"), and shall function as an agent of counsel. All communications between the Firm and such forensic accounting advisor, and all work product generated by such advisor at the direction of the Firm, shall be subject to the protections of the attorney-client privilege and the attorney work-product doctrine to the fullest extent permitted by law. The Firm shall execute appropriate engagement letters and Kovel agreements with any such advisor, copies of which shall be provided to the Audit Committee upon request.

(b) E-discovery Vendors. The Firm is authorized to retain e-discovery vendors for document hosting, processing, de-duplication, predictive coding, technology-assisted review, and production services in connection with the Investigation. The Firm shall select e-discovery vendors with appropriate data-security protocols and shall ensure that all data entrusted to such vendors is maintained in a secure and confidential manner.

(c) Other Consultants. The Firm may retain such other consultants and experts — including, without limitation, industry experts, data analytics specialists, and regulatory advisors — as the Firm, in consultation with the Audit Committee, deems necessary or appropriate.

Fees and expenses for all advisors and vendors retained pursuant to this Section 5 shall be billed to the Company as set forth in Section 7 below and are separate from and in addition to the Firm's professional fees.

6. Privilege and Confidentiality

6(a). Attorney-Client Privilege and Work-Product Doctrine

All communications between the Firm and the Audit Committee, and between the Firm and any agents or advisors retained pursuant to Section 5 above, and all work product generated by the Firm (or at its direction) in connection with the Investigation — including memoranda, reports, notes, analyses, interview summaries, chronologies, and correspondence — are intended to be, and shall be treated as, protected by the attorney-client privilege and the attorney work-product doctrine. The Firm and the Audit Committee shall take all reasonable steps to preserve and maintain the confidentiality of such communications and work product.

The attorney-client privilege with respect to the Investigation belongs to VHG, acting through the Audit Committee. The privilege may be waived only by the Audit Committee or, if the Audit Committee has delegated such authority, by the full Board of Directors of VHG. No individual officer, director, or employee of VHG or VCR, including without limitation the Chief Executive Officer, the Chief Financial Officer, the General Counsel, or any other member of management, has authority to waive the privilege or to authorize the disclosure of privileged communications or work product in connection with the Investigation.

6(b). Upjohn Protocols

In conducting witness interviews, the Firm shall administer corporate-representation warnings consistent with the principles set forth in Upjohn Co. v. United States, 449 U.S. 383 (1981) ("Upjohn warnings"). Specifically, at the outset of each interview, the Firm shall advise the witness of the following:

(i) The Firm represents the Audit Committee of the Board of Directors of VHG, and through the Audit Committee, the Company. The Firm does not represent the individual witness, and no attorney-client relationship exists between the Firm and the witness;

(ii) The attorney-client privilege with respect to the interview and any communications arising therefrom belongs to VHG, not to the individual witness;

(iii) VHG, acting through the Audit Committee, may choose to waive the privilege at any time and may disclose the substance of the interview, or any portion thereof, to third parties, including governmental or regulatory authorities, without the consent of the witness;

(iv) The interview is confidential, and the witness should not discuss the substance of the interview, or the questions asked during the interview, with any third parties, including co-workers, supervisors, subordinates, or personal acquaintances, other than the witness's own personal counsel (if any); and

(v) The witness is encouraged to consult with his or her own personal attorney if the witness has any questions about his or her rights or if the witness believes that his or her personal interests may differ from those of the Company.

The Firm shall document the administration of Upjohn warnings in its interview records.

6(c). Coordination with Other Counsel

The Firm may coordinate, as appropriate and as directed by the Audit Committee, with VHG's General Counsel, Patricia Navarro, and with VHG's outside securities counsel, Westlake Burris & Holt LLP (contact: Irene Castellanos), regarding the Company's disclosure obligations under the federal securities laws, potential interactions with governmental and regulatory authorities, and other related matters. Any such coordination shall be conducted in a manner that maintains the integrity of the Investigation and the confidentiality of its findings, and shall be subject to appropriate common-interest or joint-defense arrangements as the Audit Committee may direct.

The Firm shall have no obligation to share investigation findings, work product, interview summaries, or other privileged materials with counsel for any individual who is a subject of the Investigation. The Firm shall exercise its professional judgment, in consultation with the Audit Committee, regarding the appropriate scope and timing of any disclosures to VHG management or other Company personnel.

6(d). Individual Subjects' Counsel

The Firm acknowledges that individual officers, directors, employees, or agents of VHG or VCR who are subjects of the Investigation may retain separate personal counsel at their own expense (or, if applicable, at the expense of the Company to the extent required by VHG's bylaws, certificate of incorporation, or applicable indemnification agreements). To the extent that individual counsel has been identified and has communicated such representation to the Firm, the Firm shall direct its communications with such individuals through their respective counsel, as appropriate and consistent with applicable rules of professional conduct.

7. Fees and Billing Arrangements

7(a). Hourly Rates

The Firm shall bill for professional services rendered in connection with the Investigation on an hourly basis at the following standard rates, which are effective as of the date of this engagement:

The foregoing rates are subject to the Firm's standard annual rate adjustments, which typically take effect on January 1 of each calendar year. Any such adjustments shall be communicated in writing to the Audit Committee Chair prior to implementation and shall apply only to services rendered on or after the effective date of the adjustment.

7(b). No Contingency

This engagement is on a strictly hourly-fee basis. There is no contingency, success fee, bonus, completion fee, or other results-based compensation component to this engagement. The Firm's compensation is not conditioned upon or related to the outcome of the Investigation or any findings, conclusions, or recommendations arising therefrom.

7(c). Invoicing and Payment

The Firm shall submit monthly invoices to the Audit Committee Chair, Diane Kowalski. Copies of such invoices shall also be provided to VHG's General Counsel, Patricia Navarro, unless the Audit Committee directs otherwise. Invoices shall contain reasonable detail regarding the nature of the professional services performed, the timekeeper performing such services, and the time expended, consistent with the maintenance of the attorney-client privilege and the work-product doctrine.

All invoices shall be payable within thirty (30) days of receipt. In the event of a dispute regarding any invoice or any portion thereof, the Audit Committee shall notify the Firm in writing within fifteen (15) days of receipt, and the undisputed portion of the invoice shall remain due and payable within the original thirty (30) day period.

Expenses reasonably incurred in connection with the Investigation — including, without limitation, travel expenses (airfare, lodging, ground transportation, and meals), photocopying and printing, overnight courier and delivery services, long-distance telecommunications, court-reporting fees (if any), and other out-of-pocket costs — shall be billed at cost, without markup, and shall be itemized on the Firm's monthly invoices.

7(d). Third-Party Advisors and Vendors

Fees and expenses for forensic accounting advisors, e-discovery vendors, and other third-party consultants engaged at the direction of the Audit Committee pursuant to Section 5 above shall be billed directly to VHG by such advisors and vendors, or, at the election of the Audit Committee, passed through the Firm's monthly invoicing as a separate line item. The specific billing arrangement for each advisor or vendor shall be agreed upon by the parties at the time of engagement. The Firm's professional fees do not include and are not intended to cover the fees and expenses of any such third-party advisors or vendors.

8. Reporting Obligations

The Firm shall report its findings, progress, and recommendations directly and exclusively to the Audit Committee. The Firm's reporting obligation runs to the Audit Committee and not to VHG management, the full Board of Directors, or any other person or entity.

The Firm shall provide periodic interim status reports to the Audit Committee at such intervals as the Audit Committee may request, but in no event less frequently than monthly during the active phase of the Investigation. Such interim reports may be delivered orally at meetings or teleconferences of the Audit Committee, supplemented by written memoranda as the Audit Committee may direct. The Firm shall promptly notify the Audit Committee of any material developments in the Investigation, including the discovery of evidence suggesting potential violations of law or regulatory requirements that may require immediate attention or disclosure.

Upon conclusion of the Investigation, the Firm shall deliver a final written report to the Audit Committee summarizing its findings, conclusions, and recommendations (the "Final Report"). The Final Report shall address each of the areas of inquiry set forth in Section 3 above and shall include such factual detail, analysis, and supporting documentation as the Audit Committee may reasonably request.

The Audit Committee shall determine, in its sole discretion, what information, findings, conclusions, or recommendations, if any, to share with VHG management, the full Board of Directors, the Company's independent auditor (HSA), or any governmental or regulatory authority, including the SEC and the U.S. Department of Justice. The Firm shall assist the Audit Committee in making such determinations as requested.

9. Document Preservation

Promptly upon the commencement of the Investigation, the Firm shall, in coordination with VHG's General Counsel and information-technology personnel, issue document-preservation notices (commonly referred to as "litigation hold" or "legal hold" notices) to appropriate personnel of VHG and VCR. Such notices shall direct the identified custodians and departments to preserve all documents and electronically stored information ("ESI") potentially relevant to the matters under investigation, including but not limited to emails, text messages, instant messages, voicemails, memoranda, reports, spreadsheets, financial records, accounting entries, contracts, invoices, purchase orders, payment records, personnel files, and any other records, in whatever format, that relate to the subject matter of the Investigation.

The Company, through the Audit Committee and the General Counsel, shall ensure compliance with all document-preservation obligations and shall take all reasonable steps to prevent the destruction, alteration, concealment, or spoliation of potentially relevant documents and ESI. The Firm shall monitor compliance with preservation obligations on an ongoing basis and shall promptly report any concerns regarding non-compliance to the Audit Committee.

10. Cooperation

The Company, through the Audit Committee, shall direct VHG management and all personnel of VHG and VCR to cooperate fully with the Investigation. Such cooperation shall include, without limitation:

(a) Making themselves available for interviews at times and locations reasonably designated by the Firm, subject to reasonable accommodation of business needs and scheduling constraints;

(b) Producing, on a timely basis, all documents, records, and data responsive to requests issued by the Firm, whether in hard-copy or electronic form;

(c) Preserving all documents and ESI in accordance with the document-preservation notices issued pursuant to Section 9 above;

(d) Providing the Firm with access to all books, records, accounting systems, information-technology systems, databases, correspondence files, and physical facilities of VHG and VCR as may be reasonably necessary to conduct the Investigation; and

(e) Refraining from taking any action to impede, obstruct, or interfere with the Investigation.

The Audit Committee shall use its authority to ensure that VHG management facilitates the Firm's access to all information and resources necessary for the Investigation, and the Firm shall promptly notify the Audit Committee of any instance in which cooperation is not forthcoming or in which the Firm encounters resistance or obstruction from any individual.

11. Duration and Termination

This engagement shall continue until the Investigation is completed and the Final Report has been delivered to the Audit Committee, unless earlier terminated as provided herein.

The Audit Committee may terminate this engagement at any time, with or without cause, upon written notice to the Firm. In the event of termination, the Firm shall be entitled to payment for all professional services rendered and expenses incurred through the effective date of termination, and shall cooperate in the orderly transition of the engagement to successor counsel, if any, designated by the Audit Committee.

The Firm may withdraw from the engagement in accordance with applicable rules of professional conduct, including Rule 4-1.16 of the Rules Regulating The Florida Bar and any other applicable jurisdictional rules, upon reasonable written notice to the Audit Committee. In the event of withdrawal, the Firm shall take all reasonable steps to protect the Audit Committee's interests and shall cooperate in the orderly transition of the engagement.

12. Limitations

This engagement letter sets forth the terms under which the Firm has been retained to conduct the Investigation. The following limitations apply:

(a) This engagement does not constitute an audit of VHG's financial statements, and the Firm's work should not be construed as providing any form of assurance, opinion, or certification regarding the accuracy, completeness, or reliability of the Company's financial reporting or internal controls.

(b) The Firm's findings and conclusions will be based on the information, documents, data, and testimony made available to the Firm during the course of the Investigation. The Firm does not guarantee or warrant the completeness of the information provided, and its conclusions are subject to the inherent limitations of any internal investigation, including the possibility that relevant information may not have been identified or made available.

(c) The Firm's engagement does not include the provision of tax advice. To the extent that tax-related issues arise during the Investigation, the Audit Committee should consult with qualified tax advisors.

(d) Nothing in this engagement letter shall be construed to limit the Audit Committee's independent authority or responsibilities under applicable law, the Company's charter documents, or the Audit Committee Charter.

13. Conflicts

The Firm has conducted a conflicts check in accordance with its standard procedures and the applicable rules of professional conduct and confirms that, based on information presently known to the Firm, no conflict of interest exists that would prevent the Firm from undertaking this engagement. The Firm has not previously represented VHG, VCR, or any individual officer, director, or employee of VHG or VCR in any matter related to the subject matter of this Investigation.

The Firm shall promptly notify the Audit Committee if any actual or potential conflict of interest arises during the course of the engagement, including but not limited to circumstances in which the Firm is asked to represent, or is currently representing, any person or entity whose interests are or may become adverse to those of the Audit Committee or VHG in connection with the matters under investigation.

14. Governing Law

This engagement letter shall be governed by, and construed in accordance with, the laws of the State of Florida, without regard to conflict-of-laws principles. Any dispute arising out of or relating to this engagement shall be subject to the exclusive jurisdiction of the state and federal courts located in Hillsborough County, Florida.

15. Acceptance and Execution

This letter, when executed by both parties below, shall constitute the binding agreement between the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. and Calderwood & Harkness LLP with respect to the engagement described herein. This letter supersedes all prior discussions, negotiations, and understandings between the parties with respect to the subject matter hereof. No modification, amendment, or waiver of any provision of this engagement letter shall be effective unless set forth in a writing signed by both parties.

If the foregoing terms are acceptable, please countersign this letter in the space provided below and return a fully executed copy to the undersigned.

We look forward to working with you and your colleagues on this important matter.

Sincerely,

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC.

By: ________

Name: Diane Kowalski

Title: Chair, Audit Committee of the Board of Directors

Date: ________

ACCEPTED AND AGREED:

CALDERWOOD & HARKNESS LLP

By: ________

Name: Howard Quinn

Title: Partner

Date: ________

cc: Reginald Faulkner, Member, Audit Committee of the Board of Directors, Verimark Hospitality Group Inc.

cc: Sandra Yeung, Member, Audit Committee of the Board of Directors, Verimark Hospitality Group Inc.

cc: Patricia Navarro, General Counsel, Verimark Hospitality Group Inc. (at the direction of the Audit Committee)

Timekeeper	Position	Hourly Rate
Howard Quinn	Partner	$1,350.00
Conrad Ashby	Partner	$1,275.00
Liam Donahue	Senior Associate	$895.00
Steven Hollander	Associate	$725.00
Paralegals	—	$395.00

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC. 4100 Bayshore Boulevard, Suite 1200 Tampa, FL 33611
July 17, 2023
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE
Howard Quinn, Esq. Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, FL 33131
Re: Engagement of Calderwood & Harkness LLP as Independent Investigation Counsel to the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. C&H Matter No. 1021-00008
Dear Mr. Quinn:
1. Purpose and Background of Engagement
The Audit Committee of the Board of Directors (the "Audit Committee") of Verimark Hospitality Group Inc. ("VHG" or the "Company"), a Delaware corporation publicly traded on the Nasdaq Stock Market LLC under the ticker symbol VMRK, with principal offices at 4100 Bayshore Boulevard, Suite 1200, Tampa, FL 33611, hereby retains Calderwood & Harkness LLP ("C&H" or the "Firm") to serve as independent legal counsel to the Audit Committee in connection with an internal investigation (the "Investigation"). The purpose of this letter is to set forth the terms and conditions governing the Firm's engagement by the Audit Committee, including the scope of the Investigation, the identity of the client, staffing arrangements, fee arrangements, privilege protocols, and other matters material to the engagement.
The circumstances giving rise to this engagement are as follows. On June 19, 2023, the Company's independent registered public accounting firm, Hargrove, Steen & Aldrich LLP ("HSA"), communicated to VHG's Chief Financial Officer, Thomas Rhett Griffith, and to the undersigned, in her capacity as Chair of the Audit Committee, that HSA had identified a potential material weakness relating to internal controls over financial reporting at Verimark Coastal Resorts LLC ("VCR"), a wholly owned subsidiary of VHG organized under the laws of the State of Florida, with its principal office at 7820 Gulf Breeze Parkway, Suite 400, Destin, FL 32541. HSA's communication arose during the course of its interim review of VHG's consolidated financial statements for the fiscal quarter ended March 31, 2023.
Specifically, HSA noted that approximately $9.8 million in timeshare-interest deposits had been recorded as completed-sale revenue in the first quarter of 2023, despite the fact that the applicable statutory rescission periods under Florida Statute § 721.10 — which provides purchasers of timeshare interests with a ten (10) calendar-day rescission period following execution of a purchase agreement — had not expired before the close of the quarter. HSA expressed concern that such revenue recognition may have been premature and may not conform with generally accepted accounting principles ("GAAP"), including the requirements of ASC 606 (Revenue from Contracts with Customers), and that the resulting overstatement of revenue could be material to VHG's consolidated financial statements.
In addition to the revenue-recognition concerns communicated by HSA, VHG's internal audit function subsequently identified certain anomalies in VCR's capital-improvement expenditure records that suggested the possible submission of fictitious vendor invoices and the potential concealment of personal expenditures within capital-improvement budgets. These matters were reported to the Audit Committee on July 3, 2023.
In light of the foregoing, the Audit Committee convened a special meeting in executive session on July 10, 2023, at which the three independent directors constituting the Audit Committee — Diane Kowalski (Chair), Reginald Faulkner, and Sandra Yeung — were present. After due consideration, the Audit Committee unanimously resolved to retain independent outside counsel to conduct the Investigation, separate and apart from VHG's regular outside counsel, in order to ensure the independence and integrity of the inquiry. The Audit Committee selected Calderwood & Harkness LLP on the basis of the Firm's recognized expertise in internal investigations, securities enforcement matters, and corporate governance.
2. Identity of the Client
The Firm's client for purposes of this engagement is the Audit Committee of the Board of Directors of VHG, acting in its oversight and investigative capacity under the Company's Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws of VHG, the Audit Committee Charter, and applicable provisions of the Delaware General Corporation Law.
It is expressly understood and agreed that the Firm does not represent, and shall not be deemed to represent, VHG management, any individual officer, director, or employee of VHG or any of its subsidiaries (including, without limitation, VCR), in connection with this engagement. No attorney-client relationship exists or shall be created between the Firm and any such individual by virtue of this engagement, notwithstanding any interviews, communications, or interactions that may occur during the course of the Investigation.
The Firm does not represent VHG's Board of Directors as a whole in connection with this engagement, although the Audit Committee may, in the exercise of its sole discretion, share the Firm's work product, findings, conclusions, and recommendations with the full Board of Directors at such times and in such manner as the Audit Committee deems appropriate.
3. Scope of the Investigation
The Investigation shall encompass the following primary areas of inquiry, each of which relates to the operations, accounting practices, and financial reporting of VCR, as well as the impact of such matters on VHG's consolidated financial statements and public disclosures.
3(a). Revenue-Recognition Irregularities
The Firm shall conduct a thorough examination of whether VCR prematurely recognized revenue from timeshare-interest sales by recording purchaser deposits as completed-sale revenue upon the execution of purchase agreements, rather than deferring recognition until the expiration of the statutory ten (10) calendar-day rescission period afforded to purchasers under Florida Statute § 721.10. This inquiry shall include, but not be limited to, the following:
(i) A review of VCR's revenue-recognition policies and practices, including any written policies, procedures, memoranda, or guidance documents relating to the timing and manner of recognizing revenue from timeshare-interest sales;
(ii) A review of revenue-recognition practices at VCR properties, including but not limited to Coral Dune Resort & Residences (located at 14200 Emerald Coast Parkway, Destin, FL 32541) and Palmetto Bluff Club (located at 3950 Longboat Key Drive, Sarasota, FL 34228), as well as any other VCR properties at which similar practices may have occurred;
(iii) An assessment of whether any such revenue-recognition practices resulted in material misstatements in VHG's consolidated financial statements for the fiscal quarter ended March 31, 2023, or for any prior reporting period;
(iv) An assessment of the magnitude and duration of any identified misstatements, including the number of transactions, the aggregate dollar amount of prematurely recognized revenue, and the periods affected;
(v) An evaluation of whether any individuals — including officers, managers, employees, or agents of VHG or VCR — directed, implemented, approved, or knowingly participated in such revenue-recognition practices, and the circumstances surrounding their involvement; and
(vi) An evaluation of any communications between VCR personnel and HSA or VHG's internal audit function regarding revenue-recognition policies and the treatment of timeshare-interest deposits.
3(b). Expense-Reporting Irregularities
The Firm shall conduct an examination of whether VCR personnel submitted fictitious vendor invoices or otherwise improperly concealed personal expenditures within capital-improvement budgets or other corporate accounts. This inquiry shall include, but not be limited to, the following:
(i) Identification and analysis of any vendors, entities, accounts, or payment channels through which improper payments may have been directed, including any entities owned, controlled, or affiliated with VCR personnel or their family members;
(ii) Examination of VCR's vendor approval, invoice processing, and payment authorization procedures and controls, and the extent to which such controls were circumvented or overridden;
(iii) A review of capital-improvement budgets, purchase orders, invoices, payment records, and supporting documentation at relevant VCR properties;
(iv) An assessment of the aggregate financial impact of any identified expense-reporting irregularities, including the total dollar amount of fictitious or improper charges; and
(v) An evaluation of whether any individuals — including officers, managers, employees, or agents of VHG or VCR — directed, implemented, approved, or knowingly participated in such expense-reporting practices.
3(c). Related Matters
In addition to the foregoing, the Investigation shall encompass the following related matters:
(i) An assessment of the adequacy and effectiveness of VHG's internal controls over financial reporting, including management's disclosure controls and procedures and the Company's internal control structure, as they relate to the foregoing areas of inquiry and as relevant to VHG's obligations under Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 ("SOX") and the rules and regulations promulgated thereunder;
(ii) An assessment of the Company's obligations under the federal securities laws, including the Securities Exchange Act of 1934, as amended, and the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), with respect to potential disclosure requirements arising from the matters under investigation, including any obligations to file amended periodic reports (Form 10-K, Form 10-Q), current reports (Form 8-K), or to make other public disclosures; and
(iii) Such other matters as the Audit Committee may identify and refer to the Firm during the course of the Investigation.
The Audit Committee reserves the right to expand or narrow the scope of the Investigation at any time upon written notice to C&H. Any material modification to the scope of the Investigation shall be documented in writing by the Audit Committee and acknowledged by the Firm.
4. Staffing
The Firm's professional team for the Investigation shall include the following attorneys and such additional personnel as may be reasonably necessary to conduct the Investigation in a thorough and timely manner:
(i) Howard Quinn, Partner — Responsible Partner. Mr. Quinn shall serve as the lead partner on the engagement, with overall responsibility for the direction, strategy, and conduct of the Investigation, and shall serve as the Firm's primary point of contact with the Audit Committee.
(ii) Conrad Ashby, Partner — Billing Partner. Mr. Ashby shall serve as the billing partner for the engagement and shall assist Mr. Quinn in the supervision and direction of the Investigation.
(iii) Liam Donahue, Senior Associate — Lead Associate. Mr. Donahue shall serve as the lead associate on the engagement and shall be responsible for the day-to-day management of the Investigation, including the coordination of document review, witness interviews, and the preparation of interim and final reports.
(iv) Steven Hollander, Associate — Working Associate. Mr. Hollander shall provide substantive support in connection with document review, legal research, witness interview preparation, and the analysis of financial records and data.
(v) Such additional associates, paralegals, law clerks, and support staff as may be reasonably necessary to ensure the efficient and effective conduct of the Investigation.
Any material changes to the staffing of the engagement — including the replacement or reassignment of Mr. Quinn as Responsible Partner or Mr. Donahue as Lead Associate — shall be communicated to the Audit Committee Chair in advance and shall be subject to the Audit Committee's approval.
5. Engagement of Advisors and Vendors
The Firm is authorized, at the direction of the Audit Committee, to retain forensic accounting advisors, e-discovery vendors, and other consultants as may be necessary or appropriate to support the Investigation. Such engagements shall be made subject to the following terms:
(a) Forensic Accounting Advisors. Any forensic accounting advisor retained by the Firm in connection with the Investigation shall be engaged under the doctrine established in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961) (the "Kovel doctrine"), and shall function as an agent of counsel. All communications between the Firm and such forensic accounting advisor, and all work product generated by such advisor at the direction of the Firm, shall be subject to the protections of the attorney-client privilege and the attorney work-product doctrine to the fullest extent permitted by law. The Firm shall execute appropriate engagement letters and Kovel agreements with any such advisor, copies of which shall be provided to the Audit Committee upon request.
(b) E-discovery Vendors. The Firm is authorized to retain e-discovery vendors for document hosting, processing, de-duplication, predictive coding, technology-assisted review, and production services in connection with the Investigation. The Firm shall select e-discovery vendors with appropriate data-security protocols and shall ensure that all data entrusted to such vendors is maintained in a secure and confidential manner.
(c) Other Consultants. The Firm may retain such other consultants and experts — including, without limitation, industry experts, data analytics specialists, and regulatory advisors — as the Firm, in consultation with the Audit Committee, deems necessary or appropriate.
Fees and expenses for all advisors and vendors retained pursuant to this Section 5 shall be billed to the Company as set forth in Section 7 below and are separate from and in addition to the Firm's professional fees.
6. Privilege and Confidentiality
6(a). Attorney-Client Privilege and Work-Product Doctrine
All communications between the Firm and the Audit Committee, and between the Firm and any agents or advisors retained pursuant to Section 5 above, and all work product generated by the Firm (or at its direction) in connection with the Investigation — including memoranda, reports, notes, analyses, interview summaries, chronologies, and correspondence — are intended to be, and shall be treated as, protected by the attorney-client privilege and the attorney work-product doctrine. The Firm and the Audit Committee shall take all reasonable steps to preserve and maintain the confidentiality of such communications and work product.
The attorney-client privilege with respect to the Investigation belongs to VHG, acting through the Audit Committee. The privilege may be waived only by the Audit Committee or, if the Audit Committee has delegated such authority, by the full Board of Directors of VHG. No individual officer, director, or employee of VHG or VCR, including without limitation the Chief Executive Officer, the Chief Financial Officer, the General Counsel, or any other member of management, has authority to waive the privilege or to authorize the disclosure of privileged communications or work product in connection with the Investigation.
6(b). Upjohn Protocols
In conducting witness interviews, the Firm shall administer corporate-representation warnings consistent with the principles set forth in Upjohn Co. v. United States, 449 U.S. 383 (1981) ("Upjohn warnings"). Specifically, at the outset of each interview, the Firm shall advise the witness of the following:
(i) The Firm represents the Audit Committee of the Board of Directors of VHG, and through the Audit Committee, the Company. The Firm does not represent the individual witness, and no attorney-client relationship exists between the Firm and the witness;
(ii) The attorney-client privilege with respect to the interview and any communications arising therefrom belongs to VHG, not to the individual witness;
(iii) VHG, acting through the Audit Committee, may choose to waive the privilege at any time and may disclose the substance of the interview, or any portion thereof, to third parties, including governmental or regulatory authorities, without the consent of the witness;
(iv) The interview is confidential, and the witness should not discuss the substance of the interview, or the questions asked during the interview, with any third parties, including co-workers, supervisors, subordinates, or personal acquaintances, other than the witness's own personal counsel (if any); and
(v) The witness is encouraged to consult with his or her own personal attorney if the witness has any questions about his or her rights or if the witness believes that his or her personal interests may differ from those of the Company.
The Firm shall document the administration of Upjohn warnings in its interview records.
6(c). Coordination with Other Counsel
The Firm may coordinate, as appropriate and as directed by the Audit Committee, with VHG's General Counsel, Patricia Navarro, and with VHG's outside securities counsel, Westlake Burris & Holt LLP (contact: Irene Castellanos), regarding the Company's disclosure obligations under the federal securities laws, potential interactions with governmental and regulatory authorities, and other related matters. Any such coordination shall be conducted in a manner that maintains the integrity of the Investigation and the confidentiality of its findings, and shall be subject to appropriate common-interest or joint-defense arrangements as the Audit Committee may direct.
The Firm shall have no obligation to share investigation findings, work product, interview summaries, or other privileged materials with counsel for any individual who is a subject of the Investigation. The Firm shall exercise its professional judgment, in consultation with the Audit Committee, regarding the appropriate scope and timing of any disclosures to VHG management or other Company personnel.
6(d). Individual Subjects' Counsel
The Firm acknowledges that individual officers, directors, employees, or agents of VHG or VCR who are subjects of the Investigation may retain separate personal counsel at their own expense (or, if applicable, at the expense of the Company to the extent required by VHG's bylaws, certificate of incorporation, or applicable indemnification agreements). To the extent that individual counsel has been identified and has communicated such representation to the Firm, the Firm shall direct its communications with such individuals through their respective counsel, as appropriate and consistent with applicable rules of professional conduct.
7. Fees and Billing Arrangements
7(a). Hourly Rates
The Firm shall bill for professional services rendered in connection with the Investigation on an hourly basis at the following standard rates, which are effective as of the date of this engagement:
The foregoing rates are subject to the Firm's standard annual rate adjustments, which typically take effect on January 1 of each calendar year. Any such adjustments shall be communicated in writing to the Audit Committee Chair prior to implementation and shall apply only to services rendered on or after the effective date of the adjustment.
7(b). No Contingency
This engagement is on a strictly hourly-fee basis. There is no contingency, success fee, bonus, completion fee, or other results-based compensation component to this engagement. The Firm's compensation is not conditioned upon or related to the outcome of the Investigation or any findings, conclusions, or recommendations arising therefrom.
7(c). Invoicing and Payment
The Firm shall submit monthly invoices to the Audit Committee Chair, Diane Kowalski. Copies of such invoices shall also be provided to VHG's General Counsel, Patricia Navarro, unless the Audit Committee directs otherwise. Invoices shall contain reasonable detail regarding the nature of the professional services performed, the timekeeper performing such services, and the time expended, consistent with the maintenance of the attorney-client privilege and the work-product doctrine.
All invoices shall be payable within thirty (30) days of receipt. In the event of a dispute regarding any invoice or any portion thereof, the Audit Committee shall notify the Firm in writing within fifteen (15) days of receipt, and the undisputed portion of the invoice shall remain due and payable within the original thirty (30) day period.
Expenses reasonably incurred in connection with the Investigation — including, without limitation, travel expenses (airfare, lodging, ground transportation, and meals), photocopying and printing, overnight courier and delivery services, long-distance telecommunications, court-reporting fees (if any), and other out-of-pocket costs — shall be billed at cost, without markup, and shall be itemized on the Firm's monthly invoices.
7(d). Third-Party Advisors and Vendors
Fees and expenses for forensic accounting advisors, e-discovery vendors, and other third-party consultants engaged at the direction of the Audit Committee pursuant to Section 5 above shall be billed directly to VHG by such advisors and vendors, or, at the election of the Audit Committee, passed through the Firm's monthly invoicing as a separate line item. The specific billing arrangement for each advisor or vendor shall be agreed upon by the parties at the time of engagement. The Firm's professional fees do not include and are not intended to cover the fees and expenses of any such third-party advisors or vendors.
8. Reporting Obligations
The Firm shall report its findings, progress, and recommendations directly and exclusively to the Audit Committee. The Firm's reporting obligation runs to the Audit Committee and not to VHG management, the full Board of Directors, or any other person or entity.
The Firm shall provide periodic interim status reports to the Audit Committee at such intervals as the Audit Committee may request, but in no event less frequently than monthly during the active phase of the Investigation. Such interim reports may be delivered orally at meetings or teleconferences of the Audit Committee, supplemented by written memoranda as the Audit Committee may direct. The Firm shall promptly notify the Audit Committee of any material developments in the Investigation, including the discovery of evidence suggesting potential violations of law or regulatory requirements that may require immediate attention or disclosure.
Upon conclusion of the Investigation, the Firm shall deliver a final written report to the Audit Committee summarizing its findings, conclusions, and recommendations (the "Final Report"). The Final Report shall address each of the areas of inquiry set forth in Section 3 above and shall include such factual detail, analysis, and supporting documentation as the Audit Committee may reasonably request.
The Audit Committee shall determine, in its sole discretion, what information, findings, conclusions, or recommendations, if any, to share with VHG management, the full Board of Directors, the Company's independent auditor (HSA), or any governmental or regulatory authority, including the SEC and the U.S. Department of Justice. The Firm shall assist the Audit Committee in making such determinations as requested.
9. Document Preservation
Promptly upon the commencement of the Investigation, the Firm shall, in coordination with VHG's General Counsel and information-technology personnel, issue document-preservation notices (commonly referred to as "litigation hold" or "legal hold" notices) to appropriate personnel of VHG and VCR. Such notices shall direct the identified custodians and departments to preserve all documents and electronically stored information ("ESI") potentially relevant to the matters under investigation, including but not limited to emails, text messages, instant messages, voicemails, memoranda, reports, spreadsheets, financial records, accounting entries, contracts, invoices, purchase orders, payment records, personnel files, and any other records, in whatever format, that relate to the subject matter of the Investigation.
The Company, through the Audit Committee and the General Counsel, shall ensure compliance with all document-preservation obligations and shall take all reasonable steps to prevent the destruction, alteration, concealment, or spoliation of potentially relevant documents and ESI. The Firm shall monitor compliance with preservation obligations on an ongoing basis and shall promptly report any concerns regarding non-compliance to the Audit Committee.
10. Cooperation
The Company, through the Audit Committee, shall direct VHG management and all personnel of VHG and VCR to cooperate fully with the Investigation. Such cooperation shall include, without limitation:
(a) Making themselves available for interviews at times and locations reasonably designated by the Firm, subject to reasonable accommodation of business needs and scheduling constraints;
(b) Producing, on a timely basis, all documents, records, and data responsive to requests issued by the Firm, whether in hard-copy or electronic form;
(c) Preserving all documents and ESI in accordance with the document-preservation notices issued pursuant to Section 9 above;
(d) Providing the Firm with access to all books, records, accounting systems, information-technology systems, databases, correspondence files, and physical facilities of VHG and VCR as may be reasonably necessary to conduct the Investigation; and
(e) Refraining from taking any action to impede, obstruct, or interfere with the Investigation.
The Audit Committee shall use its authority to ensure that VHG management facilitates the Firm's access to all information and resources necessary for the Investigation, and the Firm shall promptly notify the Audit Committee of any instance in which cooperation is not forthcoming or in which the Firm encounters resistance or obstruction from any individual.
11. Duration and Termination
This engagement shall continue until the Investigation is completed and the Final Report has been delivered to the Audit Committee, unless earlier terminated as provided herein.
The Audit Committee may terminate this engagement at any time, with or without cause, upon written notice to the Firm. In the event of termination, the Firm shall be entitled to payment for all professional services rendered and expenses incurred through the effective date of termination, and shall cooperate in the orderly transition of the engagement to successor counsel, if any, designated by the Audit Committee.
The Firm may withdraw from the engagement in accordance with applicable rules of professional conduct, including Rule 4-1.16 of the Rules Regulating The Florida Bar and any other applicable jurisdictional rules, upon reasonable written notice to the Audit Committee. In the event of withdrawal, the Firm shall take all reasonable steps to protect the Audit Committee's interests and shall cooperate in the orderly transition of the engagement.
12. Limitations
This engagement letter sets forth the terms under which the Firm has been retained to conduct the Investigation. The following limitations apply:
(a) This engagement does not constitute an audit of VHG's financial statements, and the Firm's work should not be construed as providing any form of assurance, opinion, or certification regarding the accuracy, completeness, or reliability of the Company's financial reporting or internal controls.
(b) The Firm's findings and conclusions will be based on the information, documents, data, and testimony made available to the Firm during the course of the Investigation. The Firm does not guarantee or warrant the completeness of the information provided, and its conclusions are subject to the inherent limitations of any internal investigation, including the possibility that relevant information may not have been identified or made available.
(c) The Firm's engagement does not include the provision of tax advice. To the extent that tax-related issues arise during the Investigation, the Audit Committee should consult with qualified tax advisors.
(d) Nothing in this engagement letter shall be construed to limit the Audit Committee's independent authority or responsibilities under applicable law, the Company's charter documents, or the Audit Committee Charter.
13. Conflicts
The Firm has conducted a conflicts check in accordance with its standard procedures and the applicable rules of professional conduct and confirms that, based on information presently known to the Firm, no conflict of interest exists that would prevent the Firm from undertaking this engagement. The Firm has not previously represented VHG, VCR, or any individual officer, director, or employee of VHG or VCR in any matter related to the subject matter of this Investigation.
The Firm shall promptly notify the Audit Committee if any actual or potential conflict of interest arises during the course of the engagement, including but not limited to circumstances in which the Firm is asked to represent, or is currently representing, any person or entity whose interests are or may become adverse to those of the Audit Committee or VHG in connection with the matters under investigation.
14. Governing Law
This engagement letter shall be governed by, and construed in accordance with, the laws of the State of Florida, without regard to conflict-of-laws principles. Any dispute arising out of or relating to this engagement shall be subject to the exclusive jurisdiction of the state and federal courts located in Hillsborough County, Florida.
15. Acceptance and Execution
This letter, when executed by both parties below, shall constitute the binding agreement between the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. and Calderwood & Harkness LLP with respect to the engagement described herein. This letter supersedes all prior discussions, negotiations, and understandings between the parties with respect to the subject matter hereof. No modification, amendment, or waiver of any provision of this engagement letter shall be effective unless set forth in a writing signed by both parties.
If the foregoing terms are acceptable, please countersign this letter in the space provided below and return a fully executed copy to the undersigned.
We look forward to working with you and your colleagues on this important matter.
Sincerely,
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC.
By: ________
Name: Diane Kowalski
Title: Chair, Audit Committee of the Board of Directors
Date: ________
ACCEPTED AND AGREED:
CALDERWOOD & HARKNESS LLP
By: ________
Name: Howard Quinn
Title: Partner
Date: ________
cc: Reginald Faulkner, Member, Audit Committee of the Board of Directors, Verimark Hospitality Group Inc.
cc: Sandra Yeung, Member, Audit Committee of the Board of Directors, Verimark Hospitality Group Inc.
cc: Patricia Navarro, General Counsel, Verimark Hospitality Group Inc. (at the direction of the Audit Committee)
Timekeeper | Position | Hourly Rate
Howard Quinn | Partner | $1,350.00
Conrad Ashby | Partner | $1,275.00
Liam Donahue | Senior Associate | $895.00
Steven Hollander | Associate | $725.00
Paralegals | — | $395.00

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC. 4100 Bayshore Boulevard, Suite 1200 Tampa, FL 33611

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS VERIMARK HOSPITALITY GROUP INC.

ACCEPTED AND AGREED:

CALDERWOOD & HARKNESS LLP

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