1021-00008 · Client 1021 · Investigation Planning

preservation-notice-vhg-company-wide.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law

200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6200 Facsimile: (305) 814-6201

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION

July 24, 2023

TO: All Officers, Directors, and Relevant Personnel of Verimark Hospitality Group Inc. and its Subsidiaries

FROM: Howard Quinn, Partner, Calderwood & Harkness LLP, on behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc.

RE: Mandatory Document Preservation Notice — Preservation of Documents and Electronically Stored Information Relating to Verimark Coastal Resorts LLC Revenue Recognition, Timeshare-Interest Sales, Expense Reimbursements, and Capital-Improvement Expenditures

DATE: July 24, 2023

DOCUMENT PRESERVATION NOTICE VERIMARK HOSPITALITY GROUP INC. — COMPANY-WIDE

This notice is issued at the direction of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. and is protected by the attorney-client privilege and the attorney work-product doctrine. This notice is confidential. Unauthorized disclosure, copying, or distribution of this notice or its contents is strictly prohibited.

I. PURPOSE AND AUTHORIZATION

Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") has been retained by the Audit Committee of the Board of Directors (the "Audit Committee") of Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation headquartered at 4100 Bayshore Boulevard, Suite 1200, Tampa, Florida 33611, and publicly traded on the Nasdaq Stock Market under the ticker symbol VMRK. The Firm's engagement was authorized by Audit Committee Chair Diane Kowalski pursuant to an engagement letter dated July 17, 2023. The Audit Committee is currently composed of Ms. Kowalski (Chair), Reginald Faulkner, and Sandra Yeung, each of whom is an independent director of VHG within the meaning of applicable Nasdaq listing standards and Securities and Exchange Commission rules.

Calderwood & Harkness is conducting an independent internal investigation (the "Investigation") into certain matters arising at VHG's wholly owned subsidiary, Verimark Coastal Resorts LLC ("VCR"), a Florida limited liability company with principal offices at 7820 Gulf Breeze Parkway, Suite 400, Destin, Florida 32541. Specifically, the Investigation concerns: (1) revenue-recognition practices relating to timeshare-interest sales at VCR properties, including the timing and manner in which revenue from timeshare-interest transactions has been recorded in VCR's books and records and subsequently reported in VHG's consolidated financial statements; and (2) expense-reimbursement and capital-improvement expenditure practices at VCR, including vendor relationships, procurement processes, and the authorization, documentation, and accounting treatment of capital-improvement expenditures at VCR properties.

This matter has been assigned Calderwood & Harkness matter number 1021-00008. All communications relating to this notice or the Investigation should reference this matter number.

This Document Preservation Notice (this "Notice") is effective immediately upon receipt and applies to all officers, directors, employees, consultants, contractors, and agents of VHG and each of its direct and indirect subsidiaries (collectively, the "Company") who may possess, control, or have access to documents and electronically stored information ("ESI") relevant to the matters described in this Notice. The purpose of this Notice is to ensure the complete preservation of all documents and ESI that may be relevant to the Investigation, and to inform each recipient of his or her individual obligations with respect to such preservation.

II. LEGAL OBLIGATION TO PRESERVE

VHG has an affirmative legal duty to preserve documents and ESI that may be relevant to the Investigation, potential regulatory inquiries by federal and state authorities (including, without limitation, the Securities and Exchange Commission and the Florida Division of Hotels and Restaurants), and any related administrative, civil, or criminal proceedings that may arise. This duty attaches to VHG as a corporate entity and extends to each individual officer, director, employee, and agent who possesses, controls, or has access to potentially relevant materials.

As a publicly traded company, VHG is subject to heightened obligations with respect to the accuracy and integrity of its financial records and internal controls. These obligations arise under, among other sources, the Sarbanes-Oxley Act of 2002 ("SOX"), including Section 302 (requiring executive certifications of the accuracy of financial reports and the effectiveness of internal controls and disclosure controls) and Section 404 (requiring management assessment and auditor attestation of internal controls over financial reporting). VHG is also subject to the anti-fraud, books-and-records, and internal-controls provisions of the federal securities laws, including Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

The urgency and importance of this Notice are underscored by the fact that VHG's independent registered public accounting firm, Hargrove, Steen & Aldrich LLP ("HSA"), identified a potential material weakness in VCR's internal controls over financial reporting during its interim review of VHG's financial statements for the quarter ending March 31, 2023 (Q1 2023). HSA communicated this finding to VHG management and the Audit Committee on June 19, 2023. The potential material weakness relates to the controls surrounding VCR's revenue-recognition processes for timeshare-interest sales and the authorization and documentation of capital-improvement expenditures. The Investigation has been initiated, in part, in response to HSA's communication and the Audit Committee's resulting concerns.

Each recipient of this Notice must understand that the failure to preserve relevant materials may constitute spoliation of evidence. Spoliation can result in severe adverse consequences for VHG and for the individuals responsible, including, without limitation:

• Court-imposed sanctions in litigation, including monetary penalties, evidentiary sanctions, and default judgments;

• Adverse inference instructions, whereby a court or regulatory body may instruct a fact-finder to presume that destroyed documents or ESI were unfavorable to VHG;

• Regulatory penalties, enforcement actions, and increased scrutiny by the Securities and Exchange Commission, the Department of Justice, or other governmental authorities;

• Criminal liability under federal statutes, including 18 U.S.C. § 1519 (destruction, alteration, or falsification of records in federal investigations and bankruptcy) and SOX Section 802 (criminal penalties for altering, destroying, or concealing documents); and

• Disciplinary action by VHG, up to and including termination of employment.

This Notice supersedes and supplements any prior document-retention policies, record-management policies, or routine-destruction schedules maintained by VHG or any of its subsidiaries, to the extent that such policies or schedules would permit the destruction, deletion, or alteration of documents or ESI that fall within the scope of this Notice. Any routine document destruction, purging, recycling, or deletion that would affect potentially relevant materials must cease immediately. No exception to this requirement will be recognized absent express, prior written authorization from Calderwood & Harkness LLP.

III. SCOPE OF PRESERVATION — SUBJECT MATTER

All documents and ESI relating to, referencing, or in any way concerning the following subject-matter categories must be preserved in their entirety, without alteration, deletion, or modification. The categories described below are intended to be broadly construed. If there is any question as to whether a particular document or item of ESI falls within the scope of this Notice, the recipient must err on the side of preservation and contact Calderwood & Harkness LLP for guidance.

A. Revenue Recognition — Timeshare-Interest Sales

All documents and ESI relating to the recognition of revenue from timeshare-interest sales at VCR properties must be preserved. This category includes, but is not limited to, the following:

1. All records relating to the recognition of revenue from timeshare-interest sales at VCR properties, including but not limited to the following specific properties:

• Coral Dune Resort & Residences, located at 14200 Emerald Coast Parkway, Destin, Florida 32541; and

• Palmetto Bluff Club, located at 3950 Longboat Key Drive, Sarasota, Florida 34228.

2. Timeshare-interest purchase agreements, sales contracts, reservation agreements, option agreements, deposit records, earnest-money documentation, rescission notices, cancellation notices, and rescission-period tracking documentation, including any logs, databases, or spreadsheets used to track the expiration of rescission periods.

3. Revenue booking entries, journal entries (whether recurring or non-recurring), general ledger entries, sub-ledger entries, and all supporting schedules, calculations, memoranda, and workpapers for timeshare-interest sales.

4. Records relating to the application of Florida Statute Section 721.10 and any other applicable provisions of the Florida Vacation Plan and Timesharing Act (Chapter 721, Florida Statutes), including records relating to the ten (10) day statutory rescission period for timeshare-interest purchases, the treatment of purchaser deposits during the rescission period, and the timing of revenue recognition relative to the expiration of the rescission period.

5. Correspondence and communications (whether internal or external, formal or informal) regarding timeshare-interest sales, revenue-recognition timing, deposit treatment, escrow arrangements, rescission-period accounting, or any questions, concerns, or discussions regarding the propriety or accuracy of VCR's revenue-recognition practices.

6. Financial reporting workpapers, consolidation schedules, intercompany elimination entries, and all supporting documentation for VCR revenue as reported in VHG's consolidated financial statements, including all Forms 10-Q, Forms 10-K, and related SEC filings.

7. Records relating to VCR quarterly and annual revenue figures for the following periods: the third quarter of 2022 (Q3 2022, quarter ending September 30, 2022), the fourth quarter of 2022 (Q4 2022, quarter ending December 31, 2022), the first quarter of 2023 (Q1 2023, quarter ending March 31, 2023), and the second quarter of 2023 (Q2 2023, quarter ending June 30, 2023), as well as all prior periods within the temporal scope defined in Section IV of this Notice.

B. Expense Reimbursements and Capital-Improvement Expenditures

All documents and ESI relating to expense reimbursements, vendor relationships, and capital-improvement expenditures at VCR properties must be preserved. This category includes, but is not limited to, the following:

1. All records relating to vendor relationships, vendor contracts, master service agreements, statements of work, purchase orders, change orders, invoices, payment applications, lien waivers, and any other documentation for capital-improvement work, renovation work, maintenance work, or construction work at VCR properties.

2. Records relating to any of the following entities, whether in the form of contracts, purchase orders, invoices, payment records, correspondence, or any other type of document or ESI:

• Gulf Standard Contracting LLC;

• Clearwater Design Collective Inc.; and

• Suncoast Property Services LLC.

3. Vendor approval documentation, new-vendor setup forms, vendor qualification records, IRS Forms W-9 (Request for Taxpayer Identification Number and Certification), certificates of insurance, vendor due diligence records, background checks, reference checks, and any internal approvals required for the onboarding of new vendors.

4. Purchase order authorizations, approval workflows (whether electronic or manual), delegation-of-authority matrices, spending-limit authorizations, and all supporting documentation for the approval of capital-improvement expenditures and vendor payments.

5. Accounts payable records, payment records, check registers, wire transfer confirmations, ACH payment records, check copies (front and back), remittance advices, and any other records of payments made to vendors or contractors in connection with capital-improvement expenditures at VCR properties.

6. Expense reports, expense reimbursement requests, corporate credit card statements, receipts, supporting documentation, and approval records submitted by or on behalf of VCR personnel, including without limitation any expense reports or reimbursement requests submitted by or approved by Garrett W. Daskine, Nicole Prescott, or Ryan Mateo Serrano.

7. Budget and actual reports, variance analyses, cost-tracking spreadsheets, project-management documentation, and capital-expenditure approval forms for capital-improvement projects at Coral Dune Resort & Residences and Palmetto Bluff Club, including all versions and drafts of such documents.

C. Internal Controls and Financial Reporting

All documents and ESI relating to internal controls over financial reporting at VCR and VHG must be preserved. This category includes, but is not limited to, the following:

1. Documentation of internal controls over financial reporting ("ICFR") at VCR and VHG, including process narratives, flowcharts, risk-and-control matrices, control descriptions, control testing plans, and remediation plans.

2. SOX Section 302 and Section 404 compliance documentation, management assessments of ICFRR, testing workpapers (whether prepared by internal audit, management, or external consultants), deficiency evaluations, and all communications relating to the identification, classification, and remediation of control deficiencies, significant deficiencies, and material weaknesses.

3. Communications with HSA, including but not limited to management-representation letters, audit-inquiry letters, engagement letters, audit-planning memoranda, interim-review communications, management letters, reports on internal controls, and any written or oral communications between VHG or VCR personnel and HSA regarding VCR's revenue-recognition practices, internal controls, capital-improvement expenditures, or any of the other subject matters addressed in this Notice.

4. Audit Committee presentations, Board of Directors presentations, and management reports relating to VCR financial performance, including but not limited to quarterly financial reviews, budget reviews, forecasts, operating reports, and any presentations or reports addressing the potential material weakness identified by HSA.

D. Communications with Relevant Individuals

All communications, in any form and by any medium, to, from, copying, or referencing any of the following individuals concerning any of the subject matters described in Sections III.A, III.B, and III.C above must be preserved:

• Garrett W. Daskine, Division President, Verimark Coastal Resorts LLC;

• Nicole Prescott, Vice President of Finance, Verimark Coastal Resorts LLC; and

• Ryan Mateo Serrano, Controller, Verimark Coastal Resorts LLC.

This preservation obligation extends to communications on all platforms and media, including but not limited to email, text messages, instant messages, collaboration platforms, telephone call logs, voicemails, handwritten notes, and any other form of communication.

IV. TEMPORAL SCOPE

The preservation obligation set forth in this Notice covers all documents and ESI dated, created, sent, received, modified, or last accessed from January 1, 2021 through the present date, and continuing until such time as the preservation obligation is expressly released in writing by Calderwood & Harkness LLP or the Audit Committee.

This date range has been established to encompass the full period under investigation, including the earliest identified potentially improper transactions, which date to approximately July 2021 based on information currently available to Calderwood & Harkness LLP and the Audit Committee. The temporal scope may be expanded if the Investigation reveals relevant transactions, events, or communications occurring prior to January 1, 2021, and Calderwood & Harkness LLP will issue supplemental guidance in that event.

No documents or ESI within the specified temporal scope and subject-matter categories may be destroyed, deleted, altered, modified, overwritten, or removed from their current storage location, regardless of when such documents or ESI were created, received, or last modified, and regardless of whether such documents or ESI are stored on Company systems, personal devices, third-party platforms, or any other storage medium.

V. TYPES OF MATERIALS TO BE PRESERVED

The following is a detailed, non-exhaustive list of the types of documents and ESI that are subject to the preservation obligations set forth in this Notice. This list is intended to be illustrative and should not be read to limit the scope of the preservation obligation in any way. If a recipient possesses, controls, or has access to materials that relate to the subject matters described in Section III, regardless of the form or format in which those materials exist, such materials must be preserved.

A. Electronic Communications

All email messages, including all attachments, whether sent, received, drafted, or deleted (and subsequently recoverable), stored in any email system or account, including Hollowell Systems, Strathmore Data Systems, web-based email platforms, and any other email systems used for Company business. All calendar entries, meeting invitations, and meeting notes. All instant messages and chat messages, including messages sent or received via Northgate Data Systems, Meridian Solutions, or any similar collaboration or messaging platform used by the Company. All text messages (SMS and MMS) sent or received on Company-issued or personal mobile devices relating to Company business. All voicemail messages stored digitally on Company systems, carrier systems, or personal devices.

B. Electronic Documents

All word-processing documents (including Microsoft Word documents and Stonefield Health IT), spreadsheets (including Microsoft Excel workbooks and Stonefield Services Inc.), presentations (including Microsoft Northgate Services Inc. and Pemberton Services Inc.), PDF files, database records and extracts, and any other electronically stored files, regardless of the application used to create or store them. This includes all drafts, versions, and revisions of such documents.

C. Financial Records

General ledger data, sub-ledger data, journal entries (both manual and automated), trial balances, consolidation workpapers, bank statements, bank reconciliations, wire transfer records, ACH transaction records, accounts payable records, accounts receivable records, purchase orders, invoices, payment records, check registers, petty cash records, and any other financial records maintained in VHG's or VCR's enterprise resource planning ("ERP") system, accounting software, or any other financial system.

D. Contracts and Agreements

All vendor contracts, purchase agreements, master service agreements, statements of work, amendments, addenda, extensions, termination notices, and related correspondence. All timeshare-interest sale agreements, purchase contracts, reservation agreements, option agreements, and related documentation. All intercompany agreements between VHG and VCR or between VCR and any other VHG subsidiary.

E. Hard-Copy Documents

All paper files, handwritten notes, printed reports, printed emails, printed spreadsheets, ledger books, file folders, binders, and any other tangible documents stored in offices, file rooms, off-site storage facilities, home offices, or any other physical location.

F. Backup Media

All backup tapes, server images, archived data, disk images, cloud backups, disaster-recovery copies, and any other backup or archival storage media, whether stored on-site, off-site, or in cloud-based storage systems, that contain or may contain documents or ESI within the scope of this Notice.

G. Personal Devices and Accounts

All documents and ESI stored on personal devices, including personal laptops, desktop computers, smartphones, tablets, USB drives, external hard drives, and any other personal storage devices, to the extent such devices were used for VHG or VCR business purposes. All documents and ESI stored in personal email accounts (e.g., Northgate Software, Northpoint Solutions, or similar), personal cloud storage accounts (e.g., Larkspur Technologies, Hollowell Health IT, Meridian Systems, Cobalt Ridge Systems, or similar), or any other personal systems or platforms used for VHG or VCR business purposes.

H. Metadata. All metadata associated with the foregoing documents and ESI must be preserved in its original, unaltered state. Recipients must not open, re-save, modify, rename, move, copy, or otherwise alter documents or ESI in any way that would change the metadata (including but not limited to file creation dates, modification dates, access dates, author information, revision history, or any other metadata fields). If a recipient is uncertain whether a particular action would alter metadata, the recipient should refrain from taking that action and contact Calderwood & Harkness LLP for guidance.

VI. SUSPENSION OF ROUTINE DESTRUCTION

All auto-delete functions, document-retention schedules, routine destruction protocols, and any other automated or manual processes that would result in the destruction, deletion, overwriting, or alteration of potentially relevant documents and ESI are hereby suspended, effective immediately. This suspension applies to all Company systems, platforms, and storage media, and remains in effect until expressly lifted in writing by Calderwood & Harkness LLP or the Audit Committee.

Without limiting the generality of the foregoing, the Company's Information Technology department must take immediate steps to:

1. Suspend all automatic deletion of emails, including any auto-purge or auto-archive functions that would delete emails from mailboxes or servers after a specified period.

2. Suspend all server purges, disk-space reclamation processes, and any other automated processes that would delete or overwrite data on Company servers, file shares, or network-attached storage devices.

3. Suspend all backup-tape recycling, overwriting, or degaussing schedules, and ensure that existing backup tapes and backup media containing data within the temporal scope of this Notice are preserved and secured.

4. Suspend any scheduled or planned deletion, archiving, or purging of data in the Company's ERP system, accounting software, collaboration platforms, or any other enterprise applications.

5. Preserve all system logs, access logs, audit trails, and event logs for the period covered by this Notice.

VHG's General Counsel, Patricia Navarro, and VHG's IT department should coordinate directly with Calderwood & Harkness LLP to implement appropriate technical holds, including litigation holds on email systems, preservation orders on backup media, and any other technical measures necessary to ensure the complete and effective preservation of all potentially relevant documents and ESI.

Any ongoing or planned migrations, system upgrades, platform transitions, server decommissioning, or other changes to systems containing potentially relevant data must be reported to Calderwood & Harkness LLP before proceeding. No such migration, upgrade, transition, or decommissioning may proceed without the prior written approval of Calderwood & Harkness LLP, which will assess whether the proposed action poses any risk to the preservation of relevant documents or ESI and, if necessary, will direct the implementation of appropriate safeguards.

VII. CUSTODIANS AND PERSONNEL OBLIGATIONS

This Notice applies to all officers, directors, employees, consultants, contractors, and agents of VHG and its subsidiaries who may possess, control, or have access to documents and ESI relevant to the matters described in this Notice. Without limiting the generality of the foregoing, certain individuals have been identified as key custodians and will receive targeted, supplementary preservation instructions from Calderwood & Harkness LLP in addition to this Notice. Receipt of supplementary instructions does not relieve any other recipient of this Notice from his or her obligations hereunder.

Each recipient of this Notice is required to take the following affirmative steps immediately upon receipt:

1. Preserve All Relevant Materials. Immediately take all steps necessary to identify, locate, and preserve all documents and ESI within the scope described in Sections III, IV, and V of this Notice. This includes documents and ESI in the recipient's possession, custody, or control, wherever located, including on Company systems, personal devices, personal accounts, home offices, off-site storage, and any other location.

2. Refrain from Destruction or Alteration. Refrain from deleting, destroying, shredding, discarding, modifying, overwriting, re-saving, or otherwise altering any documents or ESI that may be potentially relevant to the matters described in this Notice. If the recipient is uncertain whether a particular document or item of ESI is within scope, the recipient must preserve it and contact Calderwood & Harkness LLP for guidance.

3. Secure Hard-Copy Files. Identify and physically secure any hard-copy files, paper documents, handwritten notes, or other tangible materials in the recipient's possession that relate to any of the subject matters described in this Notice. Such materials should be placed in a secure location and should not be removed, relocated, or discarded without prior authorization from Calderwood & Harkness LLP.

4. Report Destruction, Loss, or Alteration. Notify Calderwood & Harkness LLP promptly if the recipient becomes aware of any destruction, loss, alteration, or potential compromise of documents or ESI that may be relevant to the matters described in this Notice, whether such destruction, loss, or alteration occurred before or after the date of this Notice.

5. Report Additional Sources. Notify Calderwood & Harkness LLP if the recipient is aware of any relevant documents or ESI stored in locations not addressed by this Notice, including but not limited to third-party systems, cloud platforms, personal devices, home computers, off-site storage facilities, or any other location that may contain potentially relevant materials.

VIII. CONFIDENTIALITY

This Notice and the existence, scope, and subject matter of the Investigation are strictly confidential. The Investigation is being conducted at the direction of the Audit Committee under the protection of the attorney-client privilege and the attorney work-product doctrine, and the confidentiality of this Notice and the Investigation is essential to the preservation of those protections.

Recipients of this Notice must observe the following confidentiality obligations:

1. Recipients must not discuss the substance of this Notice, the existence of the Investigation, or any aspect of the Investigation with any person outside VHG, including but not limited to family members, friends, former colleagues, industry contacts, or any other person not authorized to receive such information, except as specifically directed by the Audit Committee, Calderwood & Harkness LLP, or VHG General Counsel Patricia Navarro.

2. Recipients must not discuss this Notice or any aspect of the Investigation with Garrett W. Daskine, Nicole Prescott, or Ryan Mateo Serrano except as expressly authorized in advance by Calderwood & Harkness LLP. Any communication with these individuals regarding the subject matters of the Investigation, beyond the ordinary course of business, should be cleared with Calderwood & Harkness LLP before it occurs.

3. Any inquiries from external parties regarding the Investigation — including inquiries from regulators (such as the Securities and Exchange Commission, the Financial Industry Regulatory Authority, or state regulatory authorities), auditors (including HSA), members of the media, shareholders, analysts, or any other external parties — must be directed immediately to Patricia Navarro, General Counsel, Verimark Hospitality Group Inc., at (813) 555-2400, or to Howard Quinn, Partner, Calderwood & Harkness LLP, at (305) 814-6210. Recipients must not respond to, acknowledge, or comment on any such inquiries without prior authorization.

4. Recipients must not make copies of this Notice or distribute it to any person not identified as a recipient, except as directed by Calderwood & Harkness LLP or Patricia Navarro.

IX. CONSEQUENCES OF NON-COMPLIANCE

Failure to comply with the preservation obligations set forth in this Notice is a serious matter that may result in significant consequences for both VHG and the individual who fails to comply. Such consequences may include, without limitation:

1. Sanctions in Litigation or Regulatory Proceedings. If documents or ESI within the scope of this Notice are destroyed, deleted, or altered, and such materials are later determined to be relevant to litigation or regulatory proceedings, VHG and the responsible individuals may be subject to sanctions imposed by a court or regulatory body, including monetary penalties, evidentiary sanctions, issue preclusion, or default judgments.

2. Adverse Inference Instructions. A court or fact-finder may be instructed to presume that destroyed, deleted, or altered documents or ESI were unfavorable to VHG, which could have a materially adverse impact on VHG's position in any related proceedings.

3. Disciplinary Action. VHG reserves the right to take disciplinary action against any employee or agent who fails to comply with this Notice, up to and including immediate termination of employment or engagement. Such disciplinary action may be taken regardless of whether the failure to comply results in actual prejudice to VHG or any other party.

4. Potential Personal Liability. Individuals who destroy, alter, or conceal documents or ESI in violation of preservation obligations may be subject to personal liability, including potential criminal liability under applicable federal and state laws.

The obligation to preserve documents and ESI as described in this Notice is ongoing and remains in effect until expressly released in writing by Calderwood & Harkness LLP or the Audit Committee. The passage of time does not diminish or eliminate the preservation obligation. If a recipient's employment with VHG or any subsidiary ends for any reason while this Notice remains in effect, the recipient must contact Calderwood & Harkness LLP before disposing of, returning, or transferring any documents or ESI that may be within the scope of this Notice, and must cooperate with any requests to preserve or produce such materials.

X. CONTACT INFORMATION AND ACKNOWLEDGMENT

Any questions regarding this Notice, the scope of the preservation obligation, or the application of this Notice to specific documents, ESI, or circumstances should be directed to the following individuals:

Howard Quinn, Partner Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6210

Email: hquinn@calderwoodharkness.com

Liam Donahue, Senior Associate Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6237

Email: ldonahue@calderwoodharkness.com

Patricia Navarro, General Counsel Verimark Hospitality Group Inc. 4100 Bayshore Boulevard, Suite 1200 Tampa, Florida 33611 Telephone: (813) 555-2400

Email: pnavarro@verimarkgroup.com

Each recipient of this Notice is required to acknowledge receipt and understanding of this Notice by signing and returning the attached Acknowledgment of Receipt Form (Attachment A) to Calderwood & Harkness LLP within three (3) business days of receipt. The signed Acknowledgment Form should be returned to Liam Donahue at Calderwood & Harkness LLP via email at ldonahue@calderwoodharkness.com or by hand delivery to the address set forth above.

Execution of the Acknowledgment Form constitutes the recipient's confirmation that he or she has read this Notice, understands the preservation obligations described herein, and will comply with those obligations in all respects. Execution of the Acknowledgment Form does not constitute an admission of any wrongdoing, an admission of knowledge of the matters under investigation, or a waiver of any rights.

Failure to return the signed Acknowledgment Form within the specified time period does not relieve the recipient of his or her preservation obligations under this Notice, which are effective immediately upon receipt.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Quinn, Partner 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131

On behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc.

Distribution:

• Diane Kowalski, Audit Committee Chair, Board of Directors, Verimark Hospitality Group Inc.

• Reginald Faulkner, Audit Committee Member, Board of Directors, Verimark Hospitality Group Inc.

• Sandra Yeung, Audit Committee Member, Board of Directors, Verimark Hospitality Group Inc.

• Patricia Navarro, General Counsel, Verimark Hospitality Group Inc.

• Thomas Rhett Griffith, Chief Financial Officer, Verimark Hospitality Group Inc.

• Margaret "Meg" Calder, Chief Executive Officer, Verimark Hospitality Group Inc.

ATTACHMENT A

ACKNOWLEDGMENT OF RECEIPT DOCUMENT PRESERVATION NOTICE VERIMARK HOSPITALITY GROUP INC.

Dated: July 24, 2023

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

I, the undersigned, hereby acknowledge that I have received and carefully read the Document Preservation Notice dated July 24, 2023 (the "Notice"), issued by Calderwood & Harkness LLP on behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. I understand the preservation obligations set forth in the Notice, including the obligation to preserve all documents and electronically stored information ("ESI") within the scope described in the Notice, and I agree to comply fully with those obligations.

I further confirm that I will take immediate steps to identify, locate, and preserve all documents and ESI in my possession, custody, or control that may be relevant to the matters described in the Notice, including documents and ESI stored on Company systems, personal devices, personal accounts, and any other location. I will refrain from deleting, destroying, modifying, discarding, or altering any potentially relevant documents or ESI.

I confirm that I will promptly notify Calderwood & Harkness LLP if I become aware of any destruction, loss, or alteration of potentially relevant documents or ESI, or if I become aware of any potentially relevant materials stored in locations not addressed by the Notice.

I understand that this Acknowledgment does not constitute an admission of any wrongdoing or knowledge of the matters under investigation.

Recipient Name (Printed): __________

Title / Position: __________

Department: __________

Date of Receipt of Notice: __________

Signature: __________

Date of Signature: __________

Return Instructions: Please return this signed Acknowledgment Form to Liam Donahue, Senior Associate, Calderwood & Harkness LLP, within three (3) business days of receipt of the Notice, by one of the following methods:

Email: ldonahue@calderwoodharkness.com

Hand Delivery: Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131

Attention: Liam Donahue

Calderwood & Harkness LLP

CALDERWOOD & HARKNESS LLP Attorneys at Law
200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6200 Facsimile: (305) 814-6201
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION
July 24, 2023
TO: All Officers, Directors, and Relevant Personnel of Verimark Hospitality Group Inc. and its Subsidiaries
FROM: Howard Quinn, Partner, Calderwood & Harkness LLP, on behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc.
RE: Mandatory Document Preservation Notice — Preservation of Documents and Electronically Stored Information Relating to Verimark Coastal Resorts LLC Revenue Recognition, Timeshare-Interest Sales, Expense Reimbursements, and Capital-Improvement Expenditures
DATE: July 24, 2023
DOCUMENT PRESERVATION NOTICE VERIMARK HOSPITALITY GROUP INC. — COMPANY-WIDE
This notice is issued at the direction of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. and is protected by the attorney-client privilege and the attorney work-product doctrine. This notice is confidential. Unauthorized disclosure, copying, or distribution of this notice or its contents is strictly prohibited.
I. PURPOSE AND AUTHORIZATION
Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") has been retained by the Audit Committee of the Board of Directors (the "Audit Committee") of Verimark Hospitality Group Inc. ("VHG"), a Delaware corporation headquartered at 4100 Bayshore Boulevard, Suite 1200, Tampa, Florida 33611, and publicly traded on the Nasdaq Stock Market under the ticker symbol VMRK. The Firm's engagement was authorized by Audit Committee Chair Diane Kowalski pursuant to an engagement letter dated July 17, 2023. The Audit Committee is currently composed of Ms. Kowalski (Chair), Reginald Faulkner, and Sandra Yeung, each of whom is an independent director of VHG within the meaning of applicable Nasdaq listing standards and Securities and Exchange Commission rules.
Calderwood & Harkness is conducting an independent internal investigation (the "Investigation") into certain matters arising at VHG's wholly owned subsidiary, Verimark Coastal Resorts LLC ("VCR"), a Florida limited liability company with principal offices at 7820 Gulf Breeze Parkway, Suite 400, Destin, Florida 32541. Specifically, the Investigation concerns: (1) revenue-recognition practices relating to timeshare-interest sales at VCR properties, including the timing and manner in which revenue from timeshare-interest transactions has been recorded in VCR's books and records and subsequently reported in VHG's consolidated financial statements; and (2) expense-reimbursement and capital-improvement expenditure practices at VCR, including vendor relationships, procurement processes, and the authorization, documentation, and accounting treatment of capital-improvement expenditures at VCR properties.
This matter has been assigned Calderwood & Harkness matter number 1021-00008. All communications relating to this notice or the Investigation should reference this matter number.
This Document Preservation Notice (this "Notice") is effective immediately upon receipt and applies to all officers, directors, employees, consultants, contractors, and agents of VHG and each of its direct and indirect subsidiaries (collectively, the "Company") who may possess, control, or have access to documents and electronically stored information ("ESI") relevant to the matters described in this Notice. The purpose of this Notice is to ensure the complete preservation of all documents and ESI that may be relevant to the Investigation, and to inform each recipient of his or her individual obligations with respect to such preservation.
II. LEGAL OBLIGATION TO PRESERVE
VHG has an affirmative legal duty to preserve documents and ESI that may be relevant to the Investigation, potential regulatory inquiries by federal and state authorities (including, without limitation, the Securities and Exchange Commission and the Florida Division of Hotels and Restaurants), and any related administrative, civil, or criminal proceedings that may arise. This duty attaches to VHG as a corporate entity and extends to each individual officer, director, employee, and agent who possesses, controls, or has access to potentially relevant materials.
As a publicly traded company, VHG is subject to heightened obligations with respect to the accuracy and integrity of its financial records and internal controls. These obligations arise under, among other sources, the Sarbanes-Oxley Act of 2002 ("SOX"), including Section 302 (requiring executive certifications of the accuracy of financial reports and the effectiveness of internal controls and disclosure controls) and Section 404 (requiring management assessment and auditor attestation of internal controls over financial reporting). VHG is also subject to the anti-fraud, books-and-records, and internal-controls provisions of the federal securities laws, including Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
The urgency and importance of this Notice are underscored by the fact that VHG's independent registered public accounting firm, Hargrove, Steen & Aldrich LLP ("HSA"), identified a potential material weakness in VCR's internal controls over financial reporting during its interim review of VHG's financial statements for the quarter ending March 31, 2023 (Q1 2023). HSA communicated this finding to VHG management and the Audit Committee on June 19, 2023. The potential material weakness relates to the controls surrounding VCR's revenue-recognition processes for timeshare-interest sales and the authorization and documentation of capital-improvement expenditures. The Investigation has been initiated, in part, in response to HSA's communication and the Audit Committee's resulting concerns.
Each recipient of this Notice must understand that the failure to preserve relevant materials may constitute spoliation of evidence. Spoliation can result in severe adverse consequences for VHG and for the individuals responsible, including, without limitation:
• Court-imposed sanctions in litigation, including monetary penalties, evidentiary sanctions, and default judgments;
• Adverse inference instructions, whereby a court or regulatory body may instruct a fact-finder to presume that destroyed documents or ESI were unfavorable to VHG;
• Regulatory penalties, enforcement actions, and increased scrutiny by the Securities and Exchange Commission, the Department of Justice, or other governmental authorities;
• Criminal liability under federal statutes, including 18 U.S.C. § 1519 (destruction, alteration, or falsification of records in federal investigations and bankruptcy) and SOX Section 802 (criminal penalties for altering, destroying, or concealing documents); and
• Disciplinary action by VHG, up to and including termination of employment.
This Notice supersedes and supplements any prior document-retention policies, record-management policies, or routine-destruction schedules maintained by VHG or any of its subsidiaries, to the extent that such policies or schedules would permit the destruction, deletion, or alteration of documents or ESI that fall within the scope of this Notice. Any routine document destruction, purging, recycling, or deletion that would affect potentially relevant materials must cease immediately. No exception to this requirement will be recognized absent express, prior written authorization from Calderwood & Harkness LLP.
III. SCOPE OF PRESERVATION — SUBJECT MATTER
All documents and ESI relating to, referencing, or in any way concerning the following subject-matter categories must be preserved in their entirety, without alteration, deletion, or modification. The categories described below are intended to be broadly construed. If there is any question as to whether a particular document or item of ESI falls within the scope of this Notice, the recipient must err on the side of preservation and contact Calderwood & Harkness LLP for guidance.
A. Revenue Recognition — Timeshare-Interest Sales
All documents and ESI relating to the recognition of revenue from timeshare-interest sales at VCR properties must be preserved. This category includes, but is not limited to, the following:
1. All records relating to the recognition of revenue from timeshare-interest sales at VCR properties, including but not limited to the following specific properties:
• Coral Dune Resort & Residences, located at 14200 Emerald Coast Parkway, Destin, Florida 32541; and
• Palmetto Bluff Club, located at 3950 Longboat Key Drive, Sarasota, Florida 34228.
2. Timeshare-interest purchase agreements, sales contracts, reservation agreements, option agreements, deposit records, earnest-money documentation, rescission notices, cancellation notices, and rescission-period tracking documentation, including any logs, databases, or spreadsheets used to track the expiration of rescission periods.
3. Revenue booking entries, journal entries (whether recurring or non-recurring), general ledger entries, sub-ledger entries, and all supporting schedules, calculations, memoranda, and workpapers for timeshare-interest sales.
4. Records relating to the application of Florida Statute Section 721.10 and any other applicable provisions of the Florida Vacation Plan and Timesharing Act (Chapter 721, Florida Statutes), including records relating to the ten (10) day statutory rescission period for timeshare-interest purchases, the treatment of purchaser deposits during the rescission period, and the timing of revenue recognition relative to the expiration of the rescission period.
5. Correspondence and communications (whether internal or external, formal or informal) regarding timeshare-interest sales, revenue-recognition timing, deposit treatment, escrow arrangements, rescission-period accounting, or any questions, concerns, or discussions regarding the propriety or accuracy of VCR's revenue-recognition practices.
6. Financial reporting workpapers, consolidation schedules, intercompany elimination entries, and all supporting documentation for VCR revenue as reported in VHG's consolidated financial statements, including all Forms 10-Q, Forms 10-K, and related SEC filings.
7. Records relating to VCR quarterly and annual revenue figures for the following periods: the third quarter of 2022 (Q3 2022, quarter ending September 30, 2022), the fourth quarter of 2022 (Q4 2022, quarter ending December 31, 2022), the first quarter of 2023 (Q1 2023, quarter ending March 31, 2023), and the second quarter of 2023 (Q2 2023, quarter ending June 30, 2023), as well as all prior periods within the temporal scope defined in Section IV of this Notice.
B. Expense Reimbursements and Capital-Improvement Expenditures
All documents and ESI relating to expense reimbursements, vendor relationships, and capital-improvement expenditures at VCR properties must be preserved. This category includes, but is not limited to, the following:
1. All records relating to vendor relationships, vendor contracts, master service agreements, statements of work, purchase orders, change orders, invoices, payment applications, lien waivers, and any other documentation for capital-improvement work, renovation work, maintenance work, or construction work at VCR properties.
2. Records relating to any of the following entities, whether in the form of contracts, purchase orders, invoices, payment records, correspondence, or any other type of document or ESI:
• Gulf Standard Contracting LLC;
• Clearwater Design Collective Inc.; and
• Suncoast Property Services LLC.
3. Vendor approval documentation, new-vendor setup forms, vendor qualification records, IRS Forms W-9 (Request for Taxpayer Identification Number and Certification), certificates of insurance, vendor due diligence records, background checks, reference checks, and any internal approvals required for the onboarding of new vendors.
4. Purchase order authorizations, approval workflows (whether electronic or manual), delegation-of-authority matrices, spending-limit authorizations, and all supporting documentation for the approval of capital-improvement expenditures and vendor payments.
5. Accounts payable records, payment records, check registers, wire transfer confirmations, ACH payment records, check copies (front and back), remittance advices, and any other records of payments made to vendors or contractors in connection with capital-improvement expenditures at VCR properties.
6. Expense reports, expense reimbursement requests, corporate credit card statements, receipts, supporting documentation, and approval records submitted by or on behalf of VCR personnel, including without limitation any expense reports or reimbursement requests submitted by or approved by Garrett W. Daskine, Nicole Prescott, or Ryan Mateo Serrano.
7. Budget and actual reports, variance analyses, cost-tracking spreadsheets, project-management documentation, and capital-expenditure approval forms for capital-improvement projects at Coral Dune Resort & Residences and Palmetto Bluff Club, including all versions and drafts of such documents.
C. Internal Controls and Financial Reporting
All documents and ESI relating to internal controls over financial reporting at VCR and VHG must be preserved. This category includes, but is not limited to, the following:
1. Documentation of internal controls over financial reporting ("ICFR") at VCR and VHG, including process narratives, flowcharts, risk-and-control matrices, control descriptions, control testing plans, and remediation plans.
2. SOX Section 302 and Section 404 compliance documentation, management assessments of ICFRR, testing workpapers (whether prepared by internal audit, management, or external consultants), deficiency evaluations, and all communications relating to the identification, classification, and remediation of control deficiencies, significant deficiencies, and material weaknesses.
3. Communications with HSA, including but not limited to management-representation letters, audit-inquiry letters, engagement letters, audit-planning memoranda, interim-review communications, management letters, reports on internal controls, and any written or oral communications between VHG or VCR personnel and HSA regarding VCR's revenue-recognition practices, internal controls, capital-improvement expenditures, or any of the other subject matters addressed in this Notice.
4. Audit Committee presentations, Board of Directors presentations, and management reports relating to VCR financial performance, including but not limited to quarterly financial reviews, budget reviews, forecasts, operating reports, and any presentations or reports addressing the potential material weakness identified by HSA.
D. Communications with Relevant Individuals
All communications, in any form and by any medium, to, from, copying, or referencing any of the following individuals concerning any of the subject matters described in Sections III.A, III.B, and III.C above must be preserved:
• Garrett W. Daskine, Division President, Verimark Coastal Resorts LLC;
• Nicole Prescott, Vice President of Finance, Verimark Coastal Resorts LLC; and
• Ryan Mateo Serrano, Controller, Verimark Coastal Resorts LLC.
This preservation obligation extends to communications on all platforms and media, including but not limited to email, text messages, instant messages, collaboration platforms, telephone call logs, voicemails, handwritten notes, and any other form of communication.
IV. TEMPORAL SCOPE
The preservation obligation set forth in this Notice covers all documents and ESI dated, created, sent, received, modified, or last accessed from January 1, 2021 through the present date, and continuing until such time as the preservation obligation is expressly released in writing by Calderwood & Harkness LLP or the Audit Committee.
This date range has been established to encompass the full period under investigation, including the earliest identified potentially improper transactions, which date to approximately July 2021 based on information currently available to Calderwood & Harkness LLP and the Audit Committee. The temporal scope may be expanded if the Investigation reveals relevant transactions, events, or communications occurring prior to January 1, 2021, and Calderwood & Harkness LLP will issue supplemental guidance in that event.
No documents or ESI within the specified temporal scope and subject-matter categories may be destroyed, deleted, altered, modified, overwritten, or removed from their current storage location, regardless of when such documents or ESI were created, received, or last modified, and regardless of whether such documents or ESI are stored on Company systems, personal devices, third-party platforms, or any other storage medium.
V. TYPES OF MATERIALS TO BE PRESERVED
The following is a detailed, non-exhaustive list of the types of documents and ESI that are subject to the preservation obligations set forth in this Notice. This list is intended to be illustrative and should not be read to limit the scope of the preservation obligation in any way. If a recipient possesses, controls, or has access to materials that relate to the subject matters described in Section III, regardless of the form or format in which those materials exist, such materials must be preserved.
A. Electronic Communications
All email messages, including all attachments, whether sent, received, drafted, or deleted (and subsequently recoverable), stored in any email system or account, including Hollowell Systems, Strathmore Data Systems, web-based email platforms, and any other email systems used for Company business. All calendar entries, meeting invitations, and meeting notes. All instant messages and chat messages, including messages sent or received via Northgate Data Systems, Meridian Solutions, or any similar collaboration or messaging platform used by the Company. All text messages (SMS and MMS) sent or received on Company-issued or personal mobile devices relating to Company business. All voicemail messages stored digitally on Company systems, carrier systems, or personal devices.
B. Electronic Documents
All word-processing documents (including Microsoft Word documents and Stonefield Health IT), spreadsheets (including Microsoft Excel workbooks and Stonefield Services Inc.), presentations (including Microsoft Northgate Services Inc. and Pemberton Services Inc.), PDF files, database records and extracts, and any other electronically stored files, regardless of the application used to create or store them. This includes all drafts, versions, and revisions of such documents.
C. Financial Records
General ledger data, sub-ledger data, journal entries (both manual and automated), trial balances, consolidation workpapers, bank statements, bank reconciliations, wire transfer records, ACH transaction records, accounts payable records, accounts receivable records, purchase orders, invoices, payment records, check registers, petty cash records, and any other financial records maintained in VHG's or VCR's enterprise resource planning ("ERP") system, accounting software, or any other financial system.
D. Contracts and Agreements
All vendor contracts, purchase agreements, master service agreements, statements of work, amendments, addenda, extensions, termination notices, and related correspondence. All timeshare-interest sale agreements, purchase contracts, reservation agreements, option agreements, and related documentation. All intercompany agreements between VHG and VCR or between VCR and any other VHG subsidiary.
E. Hard-Copy Documents
All paper files, handwritten notes, printed reports, printed emails, printed spreadsheets, ledger books, file folders, binders, and any other tangible documents stored in offices, file rooms, off-site storage facilities, home offices, or any other physical location.
F. Backup Media
All backup tapes, server images, archived data, disk images, cloud backups, disaster-recovery copies, and any other backup or archival storage media, whether stored on-site, off-site, or in cloud-based storage systems, that contain or may contain documents or ESI within the scope of this Notice.
G. Personal Devices and Accounts
All documents and ESI stored on personal devices, including personal laptops, desktop computers, smartphones, tablets, USB drives, external hard drives, and any other personal storage devices, to the extent such devices were used for VHG or VCR business purposes. All documents and ESI stored in personal email accounts (e.g., Northgate Software, Northpoint Solutions, or similar), personal cloud storage accounts (e.g., Larkspur Technologies, Hollowell Health IT, Meridian Systems, Cobalt Ridge Systems, or similar), or any other personal systems or platforms used for VHG or VCR business purposes.
H. Metadata. All metadata associated with the foregoing documents and ESI must be preserved in its original, unaltered state. Recipients must not open, re-save, modify, rename, move, copy, or otherwise alter documents or ESI in any way that would change the metadata (including but not limited to file creation dates, modification dates, access dates, author information, revision history, or any other metadata fields). If a recipient is uncertain whether a particular action would alter metadata, the recipient should refrain from taking that action and contact Calderwood & Harkness LLP for guidance.
VI. SUSPENSION OF ROUTINE DESTRUCTION
All auto-delete functions, document-retention schedules, routine destruction protocols, and any other automated or manual processes that would result in the destruction, deletion, overwriting, or alteration of potentially relevant documents and ESI are hereby suspended, effective immediately. This suspension applies to all Company systems, platforms, and storage media, and remains in effect until expressly lifted in writing by Calderwood & Harkness LLP or the Audit Committee.
Without limiting the generality of the foregoing, the Company's Information Technology department must take immediate steps to:
1. Suspend all automatic deletion of emails, including any auto-purge or auto-archive functions that would delete emails from mailboxes or servers after a specified period.
2. Suspend all server purges, disk-space reclamation processes, and any other automated processes that would delete or overwrite data on Company servers, file shares, or network-attached storage devices.
3. Suspend all backup-tape recycling, overwriting, or degaussing schedules, and ensure that existing backup tapes and backup media containing data within the temporal scope of this Notice are preserved and secured.
4. Suspend any scheduled or planned deletion, archiving, or purging of data in the Company's ERP system, accounting software, collaboration platforms, or any other enterprise applications.
5. Preserve all system logs, access logs, audit trails, and event logs for the period covered by this Notice.
VHG's General Counsel, Patricia Navarro, and VHG's IT department should coordinate directly with Calderwood & Harkness LLP to implement appropriate technical holds, including litigation holds on email systems, preservation orders on backup media, and any other technical measures necessary to ensure the complete and effective preservation of all potentially relevant documents and ESI.
Any ongoing or planned migrations, system upgrades, platform transitions, server decommissioning, or other changes to systems containing potentially relevant data must be reported to Calderwood & Harkness LLP before proceeding. No such migration, upgrade, transition, or decommissioning may proceed without the prior written approval of Calderwood & Harkness LLP, which will assess whether the proposed action poses any risk to the preservation of relevant documents or ESI and, if necessary, will direct the implementation of appropriate safeguards.
VII. CUSTODIANS AND PERSONNEL OBLIGATIONS
This Notice applies to all officers, directors, employees, consultants, contractors, and agents of VHG and its subsidiaries who may possess, control, or have access to documents and ESI relevant to the matters described in this Notice. Without limiting the generality of the foregoing, certain individuals have been identified as key custodians and will receive targeted, supplementary preservation instructions from Calderwood & Harkness LLP in addition to this Notice. Receipt of supplementary instructions does not relieve any other recipient of this Notice from his or her obligations hereunder.
Each recipient of this Notice is required to take the following affirmative steps immediately upon receipt:
1. Preserve All Relevant Materials. Immediately take all steps necessary to identify, locate, and preserve all documents and ESI within the scope described in Sections III, IV, and V of this Notice. This includes documents and ESI in the recipient's possession, custody, or control, wherever located, including on Company systems, personal devices, personal accounts, home offices, off-site storage, and any other location.
2. Refrain from Destruction or Alteration. Refrain from deleting, destroying, shredding, discarding, modifying, overwriting, re-saving, or otherwise altering any documents or ESI that may be potentially relevant to the matters described in this Notice. If the recipient is uncertain whether a particular document or item of ESI is within scope, the recipient must preserve it and contact Calderwood & Harkness LLP for guidance.
3. Secure Hard-Copy Files. Identify and physically secure any hard-copy files, paper documents, handwritten notes, or other tangible materials in the recipient's possession that relate to any of the subject matters described in this Notice. Such materials should be placed in a secure location and should not be removed, relocated, or discarded without prior authorization from Calderwood & Harkness LLP.
4. Report Destruction, Loss, or Alteration. Notify Calderwood & Harkness LLP promptly if the recipient becomes aware of any destruction, loss, alteration, or potential compromise of documents or ESI that may be relevant to the matters described in this Notice, whether such destruction, loss, or alteration occurred before or after the date of this Notice.
5. Report Additional Sources. Notify Calderwood & Harkness LLP if the recipient is aware of any relevant documents or ESI stored in locations not addressed by this Notice, including but not limited to third-party systems, cloud platforms, personal devices, home computers, off-site storage facilities, or any other location that may contain potentially relevant materials.
VIII. CONFIDENTIALITY
This Notice and the existence, scope, and subject matter of the Investigation are strictly confidential. The Investigation is being conducted at the direction of the Audit Committee under the protection of the attorney-client privilege and the attorney work-product doctrine, and the confidentiality of this Notice and the Investigation is essential to the preservation of those protections.
Recipients of this Notice must observe the following confidentiality obligations:
1. Recipients must not discuss the substance of this Notice, the existence of the Investigation, or any aspect of the Investigation with any person outside VHG, including but not limited to family members, friends, former colleagues, industry contacts, or any other person not authorized to receive such information, except as specifically directed by the Audit Committee, Calderwood & Harkness LLP, or VHG General Counsel Patricia Navarro.
2. Recipients must not discuss this Notice or any aspect of the Investigation with Garrett W. Daskine, Nicole Prescott, or Ryan Mateo Serrano except as expressly authorized in advance by Calderwood & Harkness LLP. Any communication with these individuals regarding the subject matters of the Investigation, beyond the ordinary course of business, should be cleared with Calderwood & Harkness LLP before it occurs.
3. Any inquiries from external parties regarding the Investigation — including inquiries from regulators (such as the Securities and Exchange Commission, the Financial Industry Regulatory Authority, or state regulatory authorities), auditors (including HSA), members of the media, shareholders, analysts, or any other external parties — must be directed immediately to Patricia Navarro, General Counsel, Verimark Hospitality Group Inc., at (813) 555-2400, or to Howard Quinn, Partner, Calderwood & Harkness LLP, at (305) 814-6210. Recipients must not respond to, acknowledge, or comment on any such inquiries without prior authorization.
4. Recipients must not make copies of this Notice or distribute it to any person not identified as a recipient, except as directed by Calderwood & Harkness LLP or Patricia Navarro.
IX. CONSEQUENCES OF NON-COMPLIANCE
Failure to comply with the preservation obligations set forth in this Notice is a serious matter that may result in significant consequences for both VHG and the individual who fails to comply. Such consequences may include, without limitation:
1. Sanctions in Litigation or Regulatory Proceedings. If documents or ESI within the scope of this Notice are destroyed, deleted, or altered, and such materials are later determined to be relevant to litigation or regulatory proceedings, VHG and the responsible individuals may be subject to sanctions imposed by a court or regulatory body, including monetary penalties, evidentiary sanctions, issue preclusion, or default judgments.
2. Adverse Inference Instructions. A court or fact-finder may be instructed to presume that destroyed, deleted, or altered documents or ESI were unfavorable to VHG, which could have a materially adverse impact on VHG's position in any related proceedings.
3. Disciplinary Action. VHG reserves the right to take disciplinary action against any employee or agent who fails to comply with this Notice, up to and including immediate termination of employment or engagement. Such disciplinary action may be taken regardless of whether the failure to comply results in actual prejudice to VHG or any other party.
4. Potential Personal Liability. Individuals who destroy, alter, or conceal documents or ESI in violation of preservation obligations may be subject to personal liability, including potential criminal liability under applicable federal and state laws.
The obligation to preserve documents and ESI as described in this Notice is ongoing and remains in effect until expressly released in writing by Calderwood & Harkness LLP or the Audit Committee. The passage of time does not diminish or eliminate the preservation obligation. If a recipient's employment with VHG or any subsidiary ends for any reason while this Notice remains in effect, the recipient must contact Calderwood & Harkness LLP before disposing of, returning, or transferring any documents or ESI that may be within the scope of this Notice, and must cooperate with any requests to preserve or produce such materials.
X. CONTACT INFORMATION AND ACKNOWLEDGMENT
Any questions regarding this Notice, the scope of the preservation obligation, or the application of this Notice to specific documents, ESI, or circumstances should be directed to the following individuals:
Howard Quinn, Partner Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6210
Email: hquinn@calderwoodharkness.com
Liam Donahue, Senior Associate Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131 Telephone: (305) 814-6237
Email: ldonahue@calderwoodharkness.com
Patricia Navarro, General Counsel Verimark Hospitality Group Inc. 4100 Bayshore Boulevard, Suite 1200 Tampa, Florida 33611 Telephone: (813) 555-2400
Email: pnavarro@verimarkgroup.com
Each recipient of this Notice is required to acknowledge receipt and understanding of this Notice by signing and returning the attached Acknowledgment of Receipt Form (Attachment A) to Calderwood & Harkness LLP within three (3) business days of receipt. The signed Acknowledgment Form should be returned to Liam Donahue at Calderwood & Harkness LLP via email at ldonahue@calderwoodharkness.com or by hand delivery to the address set forth above.
Execution of the Acknowledgment Form constitutes the recipient's confirmation that he or she has read this Notice, understands the preservation obligations described herein, and will comply with those obligations in all respects. Execution of the Acknowledgment Form does not constitute an admission of any wrongdoing, an admission of knowledge of the matters under investigation, or a waiver of any rights.
Failure to return the signed Acknowledgment Form within the specified time period does not relieve the recipient of his or her preservation obligations under this Notice, which are effective immediately upon receipt.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Quinn, Partner 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131
On behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc.
Distribution:
• Diane Kowalski, Audit Committee Chair, Board of Directors, Verimark Hospitality Group Inc.
• Reginald Faulkner, Audit Committee Member, Board of Directors, Verimark Hospitality Group Inc.
• Sandra Yeung, Audit Committee Member, Board of Directors, Verimark Hospitality Group Inc.
• Patricia Navarro, General Counsel, Verimark Hospitality Group Inc.
• Thomas Rhett Griffith, Chief Financial Officer, Verimark Hospitality Group Inc.
• Margaret "Meg" Calder, Chief Executive Officer, Verimark Hospitality Group Inc.
ATTACHMENT A
ACKNOWLEDGMENT OF RECEIPT DOCUMENT PRESERVATION NOTICE VERIMARK HOSPITALITY GROUP INC.
Dated: July 24, 2023
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
I, the undersigned, hereby acknowledge that I have received and carefully read the Document Preservation Notice dated July 24, 2023 (the "Notice"), issued by Calderwood & Harkness LLP on behalf of the Audit Committee of the Board of Directors of Verimark Hospitality Group Inc. I understand the preservation obligations set forth in the Notice, including the obligation to preserve all documents and electronically stored information ("ESI") within the scope described in the Notice, and I agree to comply fully with those obligations.
I further confirm that I will take immediate steps to identify, locate, and preserve all documents and ESI in my possession, custody, or control that may be relevant to the matters described in the Notice, including documents and ESI stored on Company systems, personal devices, personal accounts, and any other location. I will refrain from deleting, destroying, modifying, discarding, or altering any potentially relevant documents or ESI.
I confirm that I will promptly notify Calderwood & Harkness LLP if I become aware of any destruction, loss, or alteration of potentially relevant documents or ESI, or if I become aware of any potentially relevant materials stored in locations not addressed by the Notice.
I understand that this Acknowledgment does not constitute an admission of any wrongdoing or knowledge of the matters under investigation.
Recipient Name (Printed): __________
Title / Position: __________
Department: __________
Date of Receipt of Notice: __________
Signature: __________
Date of Signature: __________
Return Instructions: Please return this signed Acknowledgment Form to Liam Donahue, Senior Associate, Calderwood & Harkness LLP, within three (3) business days of receipt of the Notice, by one of the following methods:
Email: ldonahue@calderwoodharkness.com
Hand Delivery: Calderwood & Harkness LLP 200 South Biscayne Boulevard, Suite 4400 Miami, Florida 33131
Attention: Liam Donahue
Calderwood & Harkness LLP | 200 South Biscayne Boulevard, Suite 4400 | Miami, FL 33131 | Matter No. 1021-00008