Contract analysis

I. EXECUTIVE SUMMARY This memorandum outlines the recommended litigation strategy for the three-way status conference scheduled for Tuesday, March 22, 2022, at 2:00 p.m. before the Honorable Eleanor V. Cassin, Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida. The conference will be the first proceeding at which all three parties — Ridgemark Development Partners LLC ("Ridgemark" or

II. CURRENT POSTURE OF THE CASE A. Procedural History The procedural history of this action is set forth below in chronological order. As will be apparent, the case remains at a relatively early stage, with limited written discovery exchanged, no depositions taken, and no dispositive motions pending. The entry of Pinnacle Shores as an intervenor is the most significant recent development and has altered the trajector

III. IMPACT OF PINNACLE SHORES' INTERVENTION A. Pinnacle Shores' Financial Leverage Over Ridgemark The intervention of Pinnacle Shores Bank, N.A. has fundamentally altered the financial and strategic landscape of this litigation. To understand why, it is necessary to examine the structure of the Pinnacle Shores loan and the conditions under which draws may be made. Pinnacle Shores committed $14.6 million in a constru

IV. STRATEGIC ANALYSIS: RECOMMENDATION TO CONSENT TO INACTIVE STATUS A. Benefits of Dormancy to Fairwater For the reasons set forth below, we recommend that Fairwater consent to an agreed order placing the case in inactive status. The benefits of dormancy are substantial and align with Fairwater's long-term strategic interests.

1. Preservation of the Status Quo. The single most important benefit of dormancy is that it preserves the status quo — and the status quo favors Fairwater. As matters currently stand, no easement access exists across Fairwater's 42.7-acre Sanford Logistics Center property in favor of the Ridgemark southern parcel. Ridgemark's development is frozen. The Sanford Logistics Center operates without interference. Every day

2. Protection of Tenant Operations. Fairwater's Sanford Logistics Center property is improved with a 614,000-square-foot Class-A cross-dock distribution facility located at 4250 Commerce Park Boulevard, Sanford, Florida 32771. The facility is leased in its entirety to Condor Supply Chain Solutions, Inc. ("Condor") under a 12-year triple-net (NNN) lease with a term running from October 2016 through September 2028. The

3. Reduction of Defense Costs. Active litigation through the next twelve months would require substantial expenditures, including depositions of fact witnesses, engagement and preparation of expert witnesses, briefing of dispositive motions, and potentially trial preparation. Our original defense-budget estimate, provided in the engagement letter dated July 12, 2021, projected total defense costs of $350,000 to $475,

4. Possible Resolution Without Further Litigation. There are several plausible scenarios under which the case could resolve itself through external events during a period of dormancy, eliminating the need for further litigation entirely: (a) Pinnacle Shores Foreclosure. If Ridgemark defaults on the Pinnacle Shores construction loan — a realistic possibility given that the development is frozen, no revenue is being ge

1. Risk: Reactivation by Ridgemark. Under Florida practice, any party to an action that has been placed in inactive status may file a Notice of Activation and a proposed scheduling order to reactivate the case. Reactivation could occur if Ridgemark secures alternative financing — for example, by obtaining equity capital from a new investor, securing a replacement construction lender willing to advance funds notwithst

2. Risk: Pinnacle Shores Foreclosure and Successor Claims. As discussed above, Pinnacle Shores may foreclose on the 16.3-acre southern parcel if Ridgemark defaults on the construction loan. While foreclosure could eliminate Ridgemark as a plaintiff, the purchaser at the foreclosure sale — whether Pinnacle Shores itself or a third-party buyer — may inherit the easement claim and elect to pursue it. A new owner of the

3. Risk: Meridian Title Coverage Determination. Fairwater tendered the defense of this action to Meridian Title Underwriters, Inc. on August 6, 2021, under Owner's Policy of Title Insurance No. MTU-2016-FL-089312, which has a policy limit of $47,300,000. Meridian acknowledged receipt of the tender on August 19, 2021, and issued a Reservation of Rights letter on September 10, 2021. The Reservation of Rights letter ide

4. Risk: Kensington Capital Markets Notification. Fairwater's first-priority mortgage on the northern parcel (the Sanford Logistics Center property) is held by Kensington Capital Markets, LLC. The original principal amount of the Kensington loan was $28.4 million; the outstanding principal balance as of October 2021 was approximately $26.1 million. The loan bears a fixed interest rate of 4.25% and has a 10-year term

V. FEES AND COSTS SUMMARY A. Calderwood & Harkness LLP Calderwood & Harkness LLP was retained pursuant to an engagement letter dated July 12, 2021 to serve as lead defense counsel for Fairwater in this matter. The applicable hourly rates under the engagement letter are as follows: • Partners: $895 per hour • Associates: $525 per hour • Paralegals: $295 per hour Total fees billed through the anticipated dormancy date

VI. RECOMMENDED MONITORING PROTOCOL To protect Fairwater's interests during the period of dormancy, we recommend the implementation of the following monitoring protocol:

1. Quarterly Docket Review. On a quarterly basis (beginning in June 2022), a member of the Calderwood & Harkness litigation team will review the Seminole County Circuit Court docket for Case No. 2021-CA-002748-18-W to identify any Notice of Activation, motion for reactivation, or other filing by any party. Any filing will be immediately communicated to Francesca Morano, Brenda Hargrove, and the Fairwater client team.

2. Quarterly Outreach to Gerald K. Sung. On a quarterly basis, we will contact Gerald K. Sung (SVP, Asset Management, Fairwater) to inquire whether the property management team at the Sanford Logistics Center has observed any activity on the adjacent Ridgemark southern parcel — including resumed construction activity, surveying, the presence of construction equipment, marketing signage, or any other indicia that Ridg

3. Semi-Annual Follow-Up with Meridian Title Underwriters. On a semi-annual basis, we will send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc. (4800 Semoran Boulevard, Suite 220, Orlando, FL 32822), pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy. We will continue to assert Fairwater's pos

4. Kensington Capital Markets Notification Confirmation. Promptly following the March 22 conference, we will confirm with Denise M. Whitford (General Counsel, Fairwater) that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and the dormancy order. We will review the relevant provisions of the Kensington loan documents to confirm that dormancy does not trigger any default, repo

5. Annual Failure-to-Prosecute Assessment. On an annual basis, we will assess whether Florida's procedural rules regarding dismissal for failure to prosecute could result in involuntary dismissal of the case. Florida Rule of Civil Procedure 1.420(e) permits the court, on its own motion or on the motion of any party, to dismiss an action for lack of record activity for a period of one year. However, an agreed order of

VII. CONCLUSION AND NEXT STEPS For the reasons set forth in this memorandum, we recommend that Fairwater consent to an agreed order placing the case in inactive status at the March 22, 2022 status conference. Dormancy preserves the status quo that Fairwater seeks to maintain, protects Condor's tenant operations, halts the accrual of defense costs, and creates a meaningful possibility that the case will resolve itself

1. Attend the March 22, 2022 Status Conference. Brenda Hargrove will appear in person before Judge Cassin on Fairwater's behalf. Francesca Morano will appear telephonically or by video if the court permits remote participation by out-of-state counsel. The conference is scheduled for 2:00 p.m. at the Seminole County Courthouse.

2. Obtain Client Approval. Prior to the conference, communicate this recommendation to Denise M. Whitford (General Counsel, Fairwater) and Gerald K. Sung (SVP, Asset Management, Fairwater) and obtain their authorization to consent to the agreed dormancy order.

3. Follow-Up with Meridian Title Underwriters. Promptly following the conference, send a follow-up letter to Owen R. Hatch, Senior Claims Counsel, Meridian Title Underwriters, Inc., pressing for a final coverage determination under Policy No. MTU-2016-FL-089312 and preserving Fairwater's rights under the policy.

4. Confirm Kensington Notification Status. Confirm with Denise M. Whitford that Kensington Capital Markets, LLC has been appropriately notified of the pending litigation and that the dormancy order does not trigger any adverse consequences under the Kensington loan documents.

5. Implement Quarterly Monitoring Protocol. Establish the quarterly docket-review and client-outreach schedule described in Section VI, with the first monitoring cycle to commence in June 2022.

6. Advise Condor Supply Chain Solutions. Through Gerald K. Sung, inform Condor Supply Chain Solutions (specifically Nathan H. Brierly, VP, Real Estate) of the dormancy order. Mr. Brierly should be informed that no immediate action is required on Condor's part but that the easement claim filed by Ridgemark remains pending and that Fairwater will continue to defend Condor's interests, including Condor's exclusive contr