Contract analysis

I. Purpose and Introduction This firm represents Pellegrino Capital Group LLC ("PCG"), a Florida limited liability company (EIN 83-2147605), with its principal place of business at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606. PCG is the named insured under that certain Managers' Liability / Wrongful Acts Policy issued by Atlantic Omnivrel Insurance Company, bearing Policy No. AFML-2022-08745 (the "Polic

II. Description of the Insured and Its Role PCG is a Florida-based family office that manages and oversees a diversified portfolio of investments with approximately $1.2 billion in assets under management. PCG's investment strategies span the hospitality, multifamily residential, and alternative-asset sectors. Dominic R. Pellegrino serves as Managing Member of PCG and controls one hundred percent (100%) of PCG's memb

III. Description of the Underlying Claim A. Background — The Call-Option Exercise

Section 12.4 of the Operating Agreement grants PCG the right, exercisable at any time after the fifth anniversary of the Effective Date of the Operating Agreement (i.e., after June 15, 2022), to purchase all of MSH's thirty-five percent (35%) membership interest in PGV at "Fair Market Value" as determined by an independent MAI-certified appraiser selected by PCG, subject to certain procedural requirements set forth i

1. Bad-Faith Valuation (OA Section 12.7). MSH alleges that PCG exercised the call option "in bad faith or with the intent to materially understate Fair Market Value" within the meaning of Section 12.7 of the Operating Agreement. Section 12.7 provides that, in the event the Manager is found to have acted in bad faith in connection with the valuation process, the Manager may be required to pay a penalty of up to twenty

2. Breach of Capital Expenditure Obligations (OA Section 8.3). MSH further alleges that PCG, in its capacity as sole Manager of PGV, breached its obligations under Section 8.3 of the Operating Agreement by failing to maintain the Hotel property in first-class condition. Section 8.3 requires the Manager to cause PGV to maintain the property "in a condition consistent with a first-class full-service luxury resort hotel

3. Breach of Fiduciary Duty. MSH contends that PCG breached its duties of good faith and fair dealing owed to MSH as a minority member of PGV. Specifically, MSH alleges that PCG's course of conduct — including the alleged undervaluation of the Hotel, the timing of the call-option exercise, and the failure to maintain the property — constituted a pattern of self-dealing and oppression of MSH's minority interest, desig

IV. Policy Coverage and Basis for Tender PCG respectfully submits that the claims asserted by MSH in the underlying arbitration fall squarely within the scope of coverage afforded by the Policy, and Atlantic Fidelity is therefore obligated to provide both a defense and indemnity to PCG in connection with this matter. The claims asserted against PCG arise exclusively from PCG's acts, errors, and omissions in its capac

1. That Atlantic Fidelity provide full coverage for all defense costs incurred and to be incurred by PCG in connection with the arbitration proceeding styled Meridian Shores Hospitality LLC v. Pellegrino Capital Group LLC, JAMS Ref. No. 1440032871, including all attorneys' fees, expert fees, arbitration fees, and related litigation expenses;

2. That Atlantic Fidelity provide coverage for any settlement or arbitration award entered against PCG, up to the applicable Policy limits; and

3. That Atlantic Fidelity promptly acknowledge receipt of this tender, assign a claim number, and designate a claims adjuster to handle this matter.

V. Defense Counsel and Anticipated Costs PCG has retained this firm, Calderwood & Harkness LLP, with offices in Miami, Florida and Tampa, Florida, as its defense counsel in the underlying arbitration. The legal team assigned to this matter consists of the following attorneys: PCG respectfully requests that Atlantic Fidelity consent to the retention of Calderwood & Harkness LLP as defense counsel in this matter and ag

VI. Key Individuals and Entities Referenced For the convenience of the claims department, the following is a summary of the principal individuals and entities referenced in this notice of claim: Named Insured: Pellegrino Capital Group LLC 1900 Bayshore Boulevard, Suite 1400 Tampa, FL 33606 EIN: 83-2147605 Key Personnel of PCG: • Dominic R. Pellegrino, Managing Member • Adriana Pellegrino-Voss, Senior Vice President o

VII. Enclosed Documents The following documents are enclosed herewith for Atlantic Fidelity's review in connection with its evaluation of this claim:

1. Copy of Meridian Shores Hospitality LLC's Demand for Arbitration, dated March 20, 2023;

2. Copy of Pellegrino Capital Group LLC's Response and Counterclaim, dated April 5, 2023;

3. Copy of the Amended and Restated Operating Agreement of Palmetto Grand Ventures LLC, effective June 15, 2017, together with relevant excerpts of the following sections: Section 8.3 (Capital Expenditure Obligations), Section 12.4 (Call-Option Exercise), Section 12.5 (Valuation Procedures), Section 12.7 (Bad-Faith Penalty), and Section 15.2 (Dispute Resolution / Arbitration);

4. Copy of PCG's call-option exercise notice to MSH, dated January 9, 2023;

5. Executive summary of the appraisal prepared by Whitfield Realty Advisors LLC (Gerald K. Whitfield, MAI), concluding a Fair Market Value of $118,000,000 as of December 31, 2022, dated February 10, 2023;

6. Copy of the Calderwood & Harkness LLP engagement letter with Pellegrino Capital Group LLC, dated March 22, 2023; and

7. Copy of the Policy (No. AFML-2022-08745) declarations page, to the extent available from PCG's files. We note that certain of these documents, including the full Whitfield appraisal report and the complete Operating Agreement, are voluminous. We have enclosed the most relevant portions and summaries. Should Atlantic Fidelity require the full, unredacted versions of any of these documents, or any additional materia

VIII. Reservation of Rights and Cooperation PCG acknowledges and accepts its obligation under the Policy to cooperate fully with Atlantic Fidelity in the investigation, evaluation, and defense of this claim. PCG will make its officers, employees, and agents available for interviews and depositions as reasonably requested by the Insurer, and will provide access to relevant documents and records in a timely manner. PCG

IX. Contact Information All correspondence, coverage determinations, and other communications regarding this claim should be directed to: Francesca Morano, Partner Calderwood & Harkness LLP 801 Brickell Avenue, Suite 2800 Miami, FL 33131 Telephone: (305) 814-7238 Facsimile: (305) 814-7201 Email: fmorano@calderwoodharkness.com Reference: Calderwood & Harkness Matter No. 1027-00003 JAMS Ref. No. 1440032871 With a copy

1. Demand for Arbitration (March 20, 2023)

2. PCG's Response and Counterclaim (April 5, 2023)

3. Operating Agreement of Palmetto Grand Ventures LLC (June 15, 2017) — Relevant Excerpts (Sections 8.3, 12.4, 12.5, 12.7, and 15.2)

4. Call-Option Exercise Notice (January 9, 2023)

5. Whitfield Realty Advisors LLC Appraisal Summary ($118.0M; February 10, 2023)

6. Calderwood & Harkness LLP Engagement Letter (March 22, 2023)

7. Policy Declarations Page — Policy No. AFML-2022-08745 Component | Amount Gross Asset Value (100% of PGV) | $118,000,000 Less: Outstanding Debt (Gulf Atlantic National Bank, Loan No. CRE-2017-06284) | ($48,600,000) JV Net Equity | $69,400,000 MSH's 35% Share of Net Equity | $24,290,000 Plus: MSH's Accrued Preferred Return (8% cumulative compounding on $18,505,000 total capital contributions) | $17,010,000 Total Off