Contract analysis

I. EXECUTIVE SUMMARY On March 25, 2024, Pellegrino Capital Group LLC ("PCG") and Meridian Shores Hospitality LLC ("MSH") participated in a second full-day mediation session in Miami, Florida, facilitated by mediator Raymond Alcazar of Alcazar Dispute Resolution LLC, located at 333 SE 2nd Avenue, Suite 2100, Miami, Florida 33131. The session was convened in connection with the pending arbitration before JAMS, Referenc

II. BACKGROUND AND PROCEDURAL POSTURE A. Dispute Overview The dispute at the center of this matter arises from PCG's exercise of its contractual call option under Section 12.4 of the Amended and Restated Operating Agreement of Palmetto Grand Ventures LLC, dated June 15, 2017 (the "Operating Agreement" or "OA"). PGV is a Delaware limited liability company formed in 2017 as a joint venture between PCG (65% membership i

III. SECOND MEDIATION SESSION — MARCH 25, 2024 A. Attendees and Logistics The second mediation session was held on March 25, 2024, at the offices of Alcazar Dispute Resolution LLC, 333 SE 2nd Avenue, Suite 2100, Miami, Florida 33131. The session was mediated by Raymond Alcazar, a certified Florida Supreme Court mediator. The following individuals attended on behalf of PCG: • Dominic R. Pellegrino, Managing Member, Pe

1. MSH's Revised Opening Position In the first caucus round, mediator Alcazar reported to the PCG team that MSH had reduced its demand from $70.0 million to $63.0 million. This represented a $7.0 million reduction from MSH's prior position, but MSH maintained the bad-faith penalty claim under OA Section 12.7, albeit at a reduced calculation. MSH's stated rationale for the reduction, as communicated by Alcazar, was as

2. PCG's Revised Opening Position In response, PCG offered $48.5 million. This represented a meaningful increase from the $45.0–$47.0 million range that PCG had offered at the first mediation session and approximately $1.6 million above the midpoint-derived figure of $46.9 million (calculated as follows: Linden Park midpoint of $134.0 million, less $48.6 million GANB debt, yielding $85.4 million in JV net equity, mul

3. Further Rounds — Morning Mediator Alcazar conducted two additional caucus rounds during the morning, shuttling between the parties' separate conference rooms. The parties' respective positions evolved as follows: • Second round: MSH reduced its demand to $60.0 million; PCG moved to $49.0 million. Gap: $11.0 million. • Third round (pre-lunch): MSH reduced its demand to $58.5 million; PCG moved to $49.5 million. Gap

1. The Bad-Faith Claim Withdrawal After lunch, mediation resumed at approximately 1:45 p.m. In the first post-lunch caucus, mediator Alcazar communicated a significant development: MSH was prepared to withdraw the bad-faith penalty claim under OA Section 12.7 entirely, provided that the negotiated redemption price reflected a meaningful premium above a simple midpoint analysis derived from the Linden Park preliminary

2. Negotiations Toward the $52–$54 Million Range With the bad-faith claim removed from the equation, the parties focused their negotiation purely on the proper redemption price, with the central question being the appropriate premium, if any, over the Linden Park midpoint-derived figure of $46.9 million. In the next round, MSH dropped its demand to $55.0 million. PCG moved its offer to $51.0 million. The gap between

3. Closing the Gap After several additional rounds of caucus discussion, mediator Alcazar elected to make a formal mediator's proposal in the late afternoon. At approximately 5:30 p.m., Alcazar presented the following proposal to each party separately: Mediator's Proposal: Redemption Price of $52,850,000 Alcazar communicated the rationale underlying the proposal to each side. As relayed to the PCG team, the proposed

IV. ECONOMIC ANALYSIS OF THE SETTLEMENT A. Comparison to PCG's Original Offer and MSH's Demand The following table summarizes the relationship between the settlement price, PCG's original tender, and MSH's original demand: As the table illustrates, PCG achieved a result that is approximately 60% closer to its original position than to MSH's demand. PCG conceded $11.55 million of the $28.7 million gap, while MSH conce

V. ASSESSMENT OF KEY NEGOTIATION DYNAMICS A. Impact of Linden Park Preliminary Indication The Linden Park preliminary indication of value, delivered on July 14, 2023, was the single most significant factor influencing both parties' willingness to settle. The Linden Park range of $130.0–$138.0 million served as an independent, neutral benchmark that effectively bracketed the negotiation. For PCG, the Linden Park range

VI. RECOMMENDATION AND NEXT STEPS A. Recommendation Based on the analysis set forth in this memorandum, we strongly recommend that PCG proceed promptly to execute a binding term sheet on the framework terms described in Section III.E above. The $52,850,000 Redemption Price falls within the authorized settlement range of $48.0–$54.0 million, eliminates the bad-faith penalty risk under OA Section 12.7, avoids substanti

1. Term Sheet Execution (Target: April 8, 2024). Calderwood & Harkness will prepare and circulate a binding term sheet to Hargrove, Dunlap & Castillo LLP (Victoria Castillo and Ryan Matsuda) for review, negotiation, and execution by PCG and MSH. The term sheet will incorporate the framework terms agreed at the March 25, 2024 mediation session as described in Section III.E above. We will aim to have a draft circulated

2. Lender Consent (April–May 2024). Calderwood & Harkness and PCG (through Marcus Thiel) will contact Christine Delacroix, SVP, Commercial Real Estate, at Gulf Atlantic National Bank to initiate the process of obtaining lender consent for the transfer of MSH's membership interest and approval of the $30.85 million incremental draw on PGV's revolving credit facility (Loan No. CRE-2017-06284). We anticipate that GANB w

3. Definitive Redemption Agreement (Target: May 2024). Calderwood & Harkness will prepare initial drafts of the following definitive documentation for negotiation with Hargrove, Dunlap & Castillo: (a) Redemption Agreement, incorporating the economic terms of the settlement, representations and warranties, closing conditions, and indemnification provisions; (b) Mutual Release and Settlement Agreement, providing for th

4. Closing (Target: June 2024). Upon satisfaction of all closing conditions — including execution of definitive documentation, receipt of GANB lender consent, and completion of any required regulatory filings — PCG will wire transfer $52,850,000 in immediately available funds to MSH (or to an account designated by MSH), and all closing documents will be executed and delivered.

5. Amended and Restated Operating Agreement (Post-Closing). Following closing, Calderwood & Harkness will prepare an Amended and Restated Operating Agreement of Palmetto Grand Ventures LLC reflecting PCG as the sole (100%) member and manager of PGV. This document will replace the existing Operating Agreement in its entirety and will establish the governance framework for PGV as a wholly owned subsidiary of PCG.

6. Dismissal of Arbitration (Post-Closing). Promptly following closing, Calderwood & Harkness and Hargrove, Dunlap & Castillo will prepare and file a Joint Stipulation of Dismissal with Prejudice in JAMS Ref. No. 1440032871, terminating the arbitration proceeding. Each party will bear its own costs of the arbitration.

7. Insurance Notification. Calderwood & Harkness will notify Atlantic Omnivrel Insurance Company of the settlement and its terms (subject to the confidentiality provisions of the settlement) and will seek a final accounting and reconciliation of defense-cost reimbursement under Policy No. AFML-2022-08745. To date, Atlantic Fidelity has reimbursed $625,000 toward PCG's defense costs. We will work with Atlantic Fidelit

8. Tax Coordination. Calderwood & Harkness will coordinate with Grantham, Pryce & Associates CPAs (Howard Grantham, CPA) regarding the tax treatment of the $52,850,000 redemption payment, including the allocation of the payment between the purchase of MSH's membership interest and the accrued preferred return, the capital gain implications for PGV and PCG, and the preparation of final Schedule K-1s for MSH for the ta