1027-00003 · Calderwood & Harkness LLP · Arbitration/Discovery

first-set-document-requests-to-msh.docx DOCUMENT Litigation

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Contract analysis Extract to table

IN THE MATTER OF JAMS ARBITRATION

JAMS Ref. No. 1440032871

Before the Honorable Margaret Liu Chen (Ret.), Arbitrator

JAMS Jacksonville, FL Resolution Center 1 Independent Drive, Suite 1600 Jacksonville, FL 32202

MERIDIAN SHORES HOSPITALITY LLC,

Claimant,

PELLEGRINO CAPITAL GROUP LLC,

Respondent/Counter-Claimant.

RESPONDENT/COUNTER-CLAIMANT PELLEGRINO CAPITAL GROUP LLC'S FIRST SET OF DOCUMENT REQUESTS TO CLAIMANT MERIDIAN SHORES HOSPITALITY LLC

June 12, 2023

Respondent/Counter-Claimant Pellegrino Capital Group LLC ("PCG"), a Florida limited liability company with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606, by and through its counsel of record, Calderwood & Harkness LLP, 801 Brickell Avenue, Suite 2800, Miami, FL 33131, hereby propounds the following First Set of Document Requests upon Claimant Meridian Shores Hospitality LLC ("MSH"), a Delaware limited liability company with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480, through its counsel, Hargrove, Dunlap & Castillo LLP, 1395 Brickell Avenue, Suite 3100, Miami, FL 33131, Attention: Victoria Castillo, Esq. and Ryan Matsuda, Esq.

I. PRELIMINARY STATEMENT

These Document Requests (the "Requests") are propounded pursuant to the JAMS Comprehensive Arbitration Rules & Procedures (the "JAMS Rules") and the discovery schedule established by the Honorable Margaret Liu Chen (Ret.) at the preliminary conference held on May 15, 2023 (the "Discovery Order"). The discovery Order authorized each party to serve up to twenty (20) document requests and established a thirty-day response period following service.

The underlying dispute arises from MSH's challenge to PCG's exercise of its contractual call option under Section 12.4 of the Operating Agreement of Palmetto Grand Ventures LLC ("PGV"), dated June 15, 2017 (the "Operating Agreement" or "OA"). MSH filed its Demand for Arbitration with JAMS on March 20, 2023, alleging, among other things, that the buyout price of $41.3 million tendered by PCG on March 1, 2023, for MSH's 35% membership interest in PGV was determined in bad faith and materially understated the Fair Market Value ("FMV") of that interest. MSH has demanded a total buyout price of $70.0 million, representing what MSH contends is its share of FMV after accounting for an alleged deferred-maintenance shortfall, the value of the Aurelian Hotels & Resorts Inc. franchise agreement, and a purported bad-faith penalty under OA Section 12.7. PCG denies each of these allegations and contends that the $41.3 million tender was properly calculated and in strict compliance with OA Section 12.4.

On April 5, 2023, PCG filed its Answer, Affirmative Defenses, and Counterclaim for Declaratory Relief, seeking, among other things, a declaration that the Call-Option exercise was valid and that the $41.3 million tender represented MSH's pro rata share of FMV as determined by the Whitfield appraisal in accordance with OA Section 12.4(b).

PCG now seeks production of the documents described below, which are directly relevant to the claims and defenses at issue in this arbitration, including but not limited to: (1) MSH's Beacon Valuation Group appraisal and the underlying data and communications supporting it; (2) MSH's internal valuation analyses and financial models; (3) the factual and evidentiary basis for MSH's claim that PCG failed to fund approximately $8.2 million in deferred maintenance at The Palmetto Grand Resort & Spa; (4) the factual and evidentiary basis for MSH's bad-faith allegation and demand for a $16.975 million penalty; (5) MSH's financial condition and economic motives for rejecting the $41.3 million tender; and (6) documents bearing on the negotiation and agreed-upon meaning of the call-option provisions in the Operating Agreement.

Pursuant to the discovery Order, MSH's responses to these Requests are due within thirty (30) days of service.

II. DEFINITIONS

As used in these Requests, the following terms shall have the meanings set forth below:

1. "Appraisal" or "Beacon Appraisal" means the appraisal of the assets of Palmetto Grand Ventures LLC prepared by Beacon Valuation Group Inc. ("Beacon"), under the direction of Dr. Priya Ramanathan, CFA, ASA, Lead Appraiser, completed on or about April 14, 2023, concluding a Fair Market Value of $151.5 million for 100% of PGV's assets as of December 31, 2022, together with all appendices, exhibits, addenda, and supplements thereto.

2. "Call Option" means the contractual right granted to PCG under Section 12.4 of the Operating Agreement to purchase MSH's 35% membership interest in PGV at Fair Market Value, which right became exercisable after the fifth anniversary of the Effective Date of the Operating Agreement — that is, on or after June 15, 2022.

3. "Call-Option Notice" means PCG's written notice to MSH exercising the Call Option, dated January 9, 2023, delivered in accordance with OA Section 12.4(a) and OA Section 15.1 (Notices).

4. "Communication" means any exchange of information, whether oral, written, or electronic, including but not limited to letters, memoranda, emails, text messages, instant messages (including messages transmitted via platforms such as Meridian Services Inc., Signal, Meridian Solutions, Northgate Data Systems, or similar applications), voice messages, voicemails, notes, minutes of meetings, transcripts, and any other form of correspondence or dialogue, regardless of medium.

5. "Deferred Maintenance Claim" means MSH's claim, as set forth in paragraphs 42 through 57 of MSH's Demand for Arbitration, that PCG, in its capacity as Manager of PGV, failed to fund approximately $8.2 million in maintenance and capital expenditure items at The Palmetto Grand Resort & Spa, and that such failure constitutes a breach of OA Section 8.3 and a basis for an upward adjustment to the FMV determination. The Deferred Maintenance Claim is also reflected in the Beacon Appraisal.

6. "Document" means, as broadly defined under the JAMS Rules and consistent with Rule 34 of the Federal Rules of Civil Procedure, all writings, recordings, photographs, electronically stored information ("ESI"), and tangible items of any nature whatsoever, in any format, whether printed, handwritten, typed, recorded, filmed, or stored electronically, including but not limited to correspondence, memoranda, notes, diaries, calendars, appointment books, reports, analyses, studies, models, spreadsheets, databases, charts, graphs, presentations, recordings, transcripts, contracts, agreements, invoices, receipts, financial statements, tax returns, and metadata associated with any of the foregoing.

7. "Fair Market Value" or "FMV" means the term as defined in Section 12.4 of the Operating Agreement, which provides that Fair Market Value shall mean "the price at which a willing buyer would purchase, and a willing seller would sell, the assets of [PGV] in an arm's-length transaction, with both parties having reasonable knowledge of all relevant facts and neither being under any compulsion to buy or sell."

8. "Hotel" or "Property" means The Palmetto Grand Resort & Spa, located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767, a 312-room full-service luxury beach resort operated under a franchise agreement with Aurelian Hotels & Resorts Inc. The Hotel is the principal asset of PGV.

9. "JV" or "PGV" means Palmetto Grand Ventures LLC, a Florida limited liability company (Florida Department of State Filing No. L17000124583; Employer Identification Number 82-5063921), formed on June 15, 2017, and owned 65% by PCG and 35% by MSH. PGV is the joint venture vehicle through which the parties hold and operate the Hotel.

10. "MSH" means Meridian Shores Hospitality LLC, Claimant in this arbitration, a Delaware limited liability company with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480, and includes its members, managers, officers, employees, agents, representatives, and any persons acting on its behalf, except where context otherwise requires.

11. "Operating Agreement" or "OA" means the Operating Agreement of Palmetto Grand Ventures LLC, effective June 15, 2017, by and between PCG and MSH, together with all exhibits, schedules, amendments, and side letters thereto.

12. "PCG" means Pellegrino Capital Group LLC, Respondent/Counter-Claimant in this arbitration, a Florida limited liability company with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606.

13. "Person" means any natural person, corporation, partnership, limited liability company, association, joint venture, trust, estate, governmental entity (including any department, agency, or instrumentality thereof), or any other legal entity.

14. "Relate to" or "Relating to" means concerning, referring to, describing, evidencing, constituting, reflecting, mentioning, pertaining to, connected with, or having any logical relationship to the subject matter in question, whether directly or indirectly, in whole or in part.

15. "Valuation Date" means December 31, 2022, the date as of which all appraisals in this proceeding value the assets of PGV, as stipulated by the parties at the May 15, 2023 preliminary conference and memorialized in paragraph 7 of the discovery Order.

16. "You" or "Your" means Meridian Shores Hospitality LLC, its members (including, without limitation, Nathaniel Cordero and Elena Cordero), officers, directors, managers, employees, agents, representatives, attorneys (to the extent not subject to a valid claim of attorney-client privilege or work-product protection), consultants, accountants, and any other persons acting on MSH's behalf or at MSH's direction.

III. INSTRUCTIONS

The following instructions apply to each of the Document Requests set forth below:

1. Scope of Production. These Requests require the production of all responsive Documents in MSH's possession, custody, or control. A Document is in MSH's "possession, custody, or control" if MSH has the legal right or practical ability to obtain it, including Documents held by MSH's agents, consultants, accountants, attorneys (to the extent not subject to a valid claim of privilege), financial advisors, appraisers, and any other representatives or third parties acting on MSH's behalf.

2. Privilege Log. If any Document is withheld in whole or in part on the basis of any claim of privilege, work-product protection, or any other immunity from disclosure, MSH shall provide a privilege log that identifies, for each withheld Document or portion thereof: (a) the date of the Document; (b) the author(s) and all recipient(s) (including persons copied); (c) the general subject matter of the Document, described with sufficient specificity to permit PCG to assess the propriety of the privilege claim without revealing the privileged content; (d) the specific privilege or protection claimed (e.g., attorney-client privilege, work-product doctrine, common interest privilege); and (e) the factual basis supporting the claim of privilege, including the identity of the attorney(s) whose involvement gives rise to the claim and the nature of the legal advice sought or provided.

3. Format of Production. Documents shall be produced in their native electronic format, preserving all metadata, or, for hard-copy originals without an electronic counterpart, as searchable PDF images at a resolution of no less than 300 DPI. All productions shall be organized by Request number. If Documents are produced from an email system, each email shall be produced together with all attachments, and the production shall preserve the email threading and folder structure.

4. Cross-Referencing. If a Document is responsive to more than one Request, it need be produced only once, but MSH shall identify, by Bates number or other unique identifier, each Request to which the Document is responsive.

5. Time Period. Unless a specific time period is stated in a particular Request, these Requests cover the period from January 1, 2017, through the date of production.

6. Continuing Obligation. These Requests are continuing in nature. MSH is obligated to supplement its responses promptly if additional responsive Documents come into its possession, custody, or control after the initial production, whether through the receipt of new Documents, the discovery of previously unlocated Documents, or otherwise, consistent with the JAMS Rules and the discovery Order.

IV. DOCUMENT REQUESTS

REQUEST NO. 1 — The Beacon Appraisal and Supporting Materials

All Documents constituting, relating to, or supporting the appraisal of PGV's assets prepared by Beacon Valuation Group Inc. (Dr. Priya Ramanathan, CFA, ASA, Lead Appraiser), completed on or about April 14, 2023 (the "Beacon Appraisal"), including but not limited to:

(a) All drafts of the Beacon Appraisal, including preliminary, interim, revised, and final versions, whether in hard copy or electronic format, and all redlined or tracked-changes versions thereof;

(b) All work papers, spreadsheets, financial models, calculations, and supporting documentation underlying the Beacon Appraisal's conclusion of a Fair Market Value of $151.5 million for 100% of PGV's assets as of the Valuation Date of December 31, 2022, including the discounted cash flow ("DCF") model, income capitalization analysis, sales comparison approach analysis, and any cost approach analysis;

(c) All comparable sale and comparable transaction data compiled, considered, analyzed, or relied upon by Beacon in preparing the Beacon Appraisal, including data sheets, broker opinions of value, closing statements, and any proprietary or third-party databases accessed by Beacon (e.g., Stonefield Technologies, Larkspur Enterprises, Thackeray Consulting Group, or CBRE data);

(d) All Documents reflecting, supporting, or explaining the discount rate of 8.5% and the terminal capitalization rate of 7.75% used by Beacon in the Beacon Appraisal's DCF analysis, including any market surveys, published data, investor surveys (such as Marlowe Crane CPAs LLP Real Estate Investor Survey, CBRE Investor Intentions Survey, or American Hotel & Lodging Association publications), or third-party sources relied upon in selecting those rates;

(e) All Documents relating to any adjustments made in the Beacon Appraisal for the Aurelian Hotels & Resorts Inc. franchise agreement, including the alleged "below-market" franchise agreement value, the franchise agreement's contribution to the Hotel's revenue and brand premium, and any analysis of the remaining term of the franchise agreement (approximately 14 years remaining as of the Valuation Date);

(f) All Documents relating to the $8.2 million deferred-maintenance adjustment included in the Beacon Appraisal, including the methodology used to quantify the adjustment, the specific line items comprising the $8.2 million figure, and any supporting inspection reports, contractor estimates, or engineering assessments relied upon by Beacon;

(g) The engagement letter, retention agreement, or other contractual arrangement between MSH (or any Person acting on MSH's behalf) and Beacon Valuation Group Inc. governing the scope, terms, and compensation for the Beacon Appraisal, including any amendments, modifications, or supplements thereto, and all invoices submitted by Beacon to MSH or any Person in connection with the engagement.

REQUEST NO. 2 — Communications with Beacon Valuation Group

All Communications between MSH (including, without limitation, Nathaniel Cordero, Elena Cordero, or any MSH member, agent, employee, representative, or consultant) and Beacon Valuation Group Inc. (including, without limitation, Dr. Priya Ramanathan, CFA, ASA, and any Beacon employee, contractor, or subcontractor), from January 1, 2023, to the present, relating to:

(a) The scope, methodology, assumptions, or conclusions of the Beacon Appraisal, including any discussions regarding the selection of valuation approaches, the weighting of those approaches, or the reconciliation of value indications derived from different methodologies;

(b) The valuation of PGV's assets, The Palmetto Grand Resort & Spa, or any component thereof, including the real property, personal property, intangible assets, franchise agreement, and going-concern value;

(c) Any instructions, guidance, directions, or parameters provided by MSH (or any Person acting on MSH's behalf) to Beacon regarding the conduct, scope, methodology, assumptions, target value, or conclusions of the appraisal;

(d) Any revisions to draft appraisals or to appraisal assumptions, inputs, comparable transactions, discount rates, capitalization rates, revenue projections, or expense estimates that were requested, suggested, or directed by MSH (or any Person acting on MSH's behalf), including the reasons given for any such requests, suggestions, or directions, and Beacon's response thereto.

REQUEST NO. 3 — MSH's Internal Valuation Analyses

All Documents constituting, reflecting, or relating to any internal valuation, financial analysis, assessment, or estimate of the value of PGV, PGV's assets, The Palmetto Grand Resort & Spa, or MSH's 35% membership interest in PGV, prepared by or on behalf of MSH, from January 1, 2020, to the present, including but not limited to:

(a) Any internal memoranda, models, spreadsheets, presentations, board materials, investment committee materials, or analyses prepared by or for MSH's members, managers, or advisors analyzing the value of MSH's 35% membership interest in PGV, whether for purposes of financial reporting, estate planning, tax compliance, investment analysis, or any other purpose;

(b) Any Documents prepared in connection with MSH's consideration of whether to accept or reject PCG's tender of $41.3 million on March 1, 2023, including any analyses comparing that tender price to MSH's own estimate of the value of its interest, any presentations or memoranda prepared for Nathaniel Cordero or Elena Cordero regarding the tender, and any documents reflecting the deliberative process that led to MSH's rejection of the tender on March 10, 2023;

(c) Any Documents analyzing or projecting the Hotel's future revenues, net operating income ("NOI"), earnings before interest, taxes, depreciation, and amortization ("EBITDA"), cash flows, occupancy rates, average daily rate ("ADR"), revenue per available room ("RevPAR"), or any other financial metric, whether prepared for internal decision-making, lender reporting, or any other purpose;

(d) Any Documents analyzing comparable hotel sale transactions, comparable operating performance data, or market conditions in the Gulf Coast, Florida luxury hospitality market, Tampa Bay metropolitan area, or Clearwater Beach submarket, prepared by or for MSH for any purpose, including any broker opinions of value, investment bank pitch books, or market studies.

REQUEST NO. 4 — Deferred Maintenance Claim Documentation

All Documents relating to MSH's claim that PCG, in its capacity as Manager of PGV, failed to fund approximately $8.2 million in deferred maintenance and capital expenditure items at The Palmetto Grand Resort & Spa (the "Deferred Maintenance Claim"), as alleged in paragraphs 42 through 57 of MSH's Demand for Arbitration, including but not limited to:

(a) All inspection reports, condition assessments, engineering studies, property-condition reports, facility audits, or reserve-for-replacement studies of the Hotel prepared by or on behalf of MSH, or obtained by MSH from any third party, from January 1, 2019, to the present;

(b) All itemized lists, budgets, estimates, schedules, or breakdowns of the alleged deferred-maintenance items, including a description of each item, the estimated cost to remedy, the basis for each cost estimate, and the date on which each item was first identified;

(c) All Communications between MSH (or any Person acting on MSH's behalf) and PCG, PGV, or any PGV personnel (including, without limitation, the Hotel's general manager, director of engineering, or facilities management staff) regarding capital expenditures, maintenance, repairs, renovations, or the physical condition of the Hotel, from January 1, 2019, to the present;

(d) All Documents reflecting MSH's knowledge of, review of, consent to, approval of, or objection to PGV's annual capital expenditure budgets and PGV's actual capital spending for each fiscal year from 2019 through 2022, including any Documents relating to the $24.3 million renovation completed during the 2017–2019 renovation period and any subsequent capital expenditure programs;

(e) All Communications between MSH (or any Person acting on MSH's behalf) and any third-party contractor, engineer, architect, consultant, or inspector retained by MSH to assess, evaluate, quantify, or opine on deferred-maintenance items at the Hotel, including any reports, proposals, work orders, or cost estimates provided by such third parties;

(f) All Documents relating to, referencing, or invoking OA Section 8.3 (Capital Expenditure Obligations), including any written notices, objections, or demands delivered by MSH to PCG under that section, and any Documents reflecting MSH's interpretation of the Manager's obligations under Section 8.3 with respect to annual capital expenditure budgets and reserve funding.

REQUEST NO. 5 — MSH's Understanding of the Call Option and OA Section 12.4

All Documents relating to MSH's understanding of, expectations regarding, or interpretation of the Call Option under OA Section 12.4, including but not limited to:

(a) All Communications between MSH (including its members, managers, and authorized representatives) and its legal counsel regarding the Call Option, the appraisal process, the valuation methodology required under OA Section 12.4, or the exercise of the Call Option by PCG, to the extent not protected by a valid and properly asserted claim of attorney-client privilege or work-product protection. To the extent any such Communications are withheld on privilege grounds, MSH shall provide a privilege log in accordance with Instruction No. 2;

(b) All Documents relating to the negotiation of OA Sections 12.4 (Call Option), 12.4(c) (Third Appraiser and 10% Divergence Threshold), 12.5 (Closing Mechanics), and 12.7 (Bad Faith Penalty Provision) during the formation of PGV in 2017, including marked-up drafts, comparison blacklines, negotiation memoranda, comments exchanged between counsel, and any internal MSH communications reflecting MSH's negotiating positions or objectives with respect to those provisions;

(c) All Documents reflecting MSH's understanding of the term "Fair Market Value" as used in the Operating Agreement, including any Documents in which MSH or its representatives discussed, analyzed, or interpreted the definition of FMV, the methodology for determining FMV, or the relationship between FMV of PGV's assets and the equity value of MSH's 35% membership interest;

(d) All Documents reflecting MSH's awareness, prior to the date of the Call-Option Notice (January 9, 2023), that PCG might exercise the Call Option after the fifth anniversary of the Effective Date (June 15, 2022), including any Communications in which MSH's members or advisors discussed the likelihood, timing, or implications of a potential Call-Option exercise by PCG.

REQUEST NO. 6 — Bad-Faith Allegation Under OA Section 12.7

All Documents relating to MSH's allegation, as set forth in paragraphs 58 through 74 of MSH's Demand for Arbitration, that PCG exercised the Call Option "in bad faith or with the intent to materially understate Fair Market Value" within the meaning of OA Section 12.7, including but not limited to:

(a) All Documents supporting MSH's claim for a bad-faith penalty of $16.975 million (or any other amount) under OA Section 12.7, including any analyses, calculations, or methodologies used to arrive at the claimed penalty amount;

(b) All Documents reflecting the factual basis for MSH's allegation that PCG acted in bad faith or with the intent to understate FMV, including any specific facts, circumstances, acts, omissions, statements, or conduct by PCG (or any PCG representative) that MSH contends constitute evidence of bad faith or intentional understatement;

(c) All Communications in which MSH or its members, agents, advisors, or representatives discussed, analyzed, or assessed PCG's alleged bad faith, PCG's alleged intent to understate value, or the basis for invoking the penalty provision of OA Section 12.7;

(d) All Documents reflecting MSH's calculation or derivation of the $16.975 million penalty amount, including any analysis of the 25% cap provision under OA Section 12.7, the formula or methodology applied, and the base value to which the 25% penalty was applied;

(e) Any expert reports, analyses, opinions, or memoranda obtained by MSH from any expert, consultant, financial advisor, or other third party concerning PCG's alleged bad faith, the reasonableness of the Whitfield appraisal, or the applicability of the OA Section 12.7 penalty provision.

REQUEST NO. 7 — MSH's Financial Condition and Motives

All Documents relating to MSH's financial condition from January 1, 2022, to the present, to the extent relevant to MSH's motives for challenging the buyout price of $41.3 million and demanding a total payment of $70.0 million, including but not limited to:

(a) MSH's financial statements (including balance sheets, income statements, and statements of cash flows), audited or unaudited, for each of the fiscal years ended December 31, 2021, and December 31, 2022, as well as any interim financial statements prepared for the period from January 1, 2023, to the date of production. In addition, MSH's federal and state income tax returns (including all schedules, attachments, and K-1s) for tax years 2021 and 2022;

(b) All Documents reflecting MSH's outstanding liabilities, obligations, debts, guarantees, or financial commitments as of December 31, 2022, and as of March 10, 2023 (the date of MSH's rejection of the $41.3 million tender), including loan agreements, promissory notes, guaranty agreements, lease obligations, and any Documents reflecting amounts owed by MSH to any Person;

(c) All Documents reflecting any discussions by MSH or its members (including Nathaniel Cordero and Elena Cordero) regarding the intended use, allocation, or deployment of proceeds from the redemption of MSH's 35% membership interest in PGV, including any investment plans, business plans, acquisition targets, debt repayment schedules, or personal financial planning documents;

(d) All Documents relating to any third-party offers, solicitations, expressions of interest, or indications of interest to purchase MSH's membership interest in PGV, or to invest in, acquire, or recapitalize The Palmetto Grand Resort & Spa, including any term sheets, letters of intent, confidentiality agreements, offering memoranda, or broker engagement letters.

REQUEST NO. 8 — Communications with Third Parties Regarding Value of PGV or the Hotel

All Communications between MSH (including its members, agents, employees, and representatives) and any third party — other than MSH's counsel of record, Hargrove, Dunlap & Castillo LLP, to the extent protected by a valid claim of attorney-client privilege — regarding the value of PGV, PGV's assets, The Palmetto Grand Resort & Spa, or MSH's 35% membership interest in PGV, from January 1, 2022, to the present, including but not limited to Communications with:

(a) Any potential purchasers, investors, co-investors, joint venture partners, or other parties who expressed an interest in acquiring or investing in MSH's interest in PGV or the Hotel;

(b) Any brokers, investment bankers, financial advisors, or intermediaries retained by or in contact with MSH regarding the value, marketability, or potential sale of MSH's interest in PGV or the Hotel, including any pitch books, valuation presentations, or indicative value ranges provided by such parties;

(c) Any lenders, financing sources, debt funds, or capital providers with whom MSH discussed the value of PGV, the Hotel, or MSH's membership interest, including in connection with any financing, refinancing, or collateral valuation;

(d) Any representatives of Aurelian Hotels & Resorts Inc. or its affiliates regarding the franchise agreement (dated July 15, 2017; 20-year term expiring July 14, 2037; 5% of gross room revenue royalty + 2% marketing fund contribution), including any discussions regarding the franchise agreement's value, the Hotel's performance relative to brand standards, or the impact of the Call-Option exercise on the franchise relationship;

(e) Any hotel industry consultants, market analysts, appraisers, or advisory firms (other than Beacon Valuation Group Inc., which is covered by Request Nos. 1 and 2) who provided opinions, analyses, or data regarding the value of the Hotel, comparable hotel transactions, or market conditions.

REQUEST NO. 9 — Distributions, Preferred Return, and Capital Account Records

All Documents relating to distributions received by MSH from PGV, and to MSH's capital account and preferred return, from August 1, 2017 (the date of PGV's acquisition of the Hotel), to the present, including but not limited to:

(a) All distribution notices, distribution checks or wire confirmations, Schedule K-1s issued to MSH by PGV, and capital account statements or ledgers, for each fiscal year from 2017 through 2022, and for any period in 2023 through the date of production;

(b) All Documents reflecting MSH's calculation, tracking, or understanding of its accrued preferred return under OA Section 5.2, including the 8% per annum cumulative preferred return, compounding annually, on MSH's unreturned capital contributions of $18,505,000 — comprising $10,000,000 contributed at the time of the Hotel acquisition pursuant to OA Section 4.1, and $8,505,000 in renovation capital contributions made during the 2017–2019 renovation period pursuant to OA Section 4.2;

(c) All Communications between MSH (or any Person acting on MSH's behalf) and Grantham, Pryce & Associates CPAs (including Howard Grantham, CPA, or any other partner, employee, or representative of that firm) or any other accountant, tax preparer, or financial professional regarding MSH's capital account, preferred return, accrued but unpaid distributions, or PGV's financial statements, tax returns, or allocation of income and loss;

(d) All Documents relating to the stipulated accrued preferred return of $17,010,000 through December 31, 2022, including any analysis, calculation, or reconciliation of that amount, and any Documents reflecting MSH's analysis of the distribution-reduction mechanics set forth in OA Section 5.2, including the waterfall provisions governing the priority and order of distributions.

REQUEST NO. 10 — Hotel Operating Performance and Financial Data

All Documents in MSH's possession, custody, or control relating to the operating performance of The Palmetto Grand Resort & Spa from January 1, 2020, to the present, including but not limited to:

(a) Revenue reports, STR (Penmark Enterprises) reports, competitive set analyses, STAR reports, or any other benchmarking data reflecting the Hotel's occupancy, ADR, RevPAR, and market share relative to its competitive set, for each month, quarter, and year from 2020 through 2022 and any period in 2023 through the date of production;

(b) Monthly or quarterly operating statements, profit and loss statements, budgets, forecasts, or operating projections for the Hotel, whether prepared by PGV's management, by a third-party hotel management company, or by MSH, for the period from January 1, 2020, to the present;

(c) Any analysis, summary, commentary, or memorandum regarding the Hotel's 2022 financial performance, including the reported hotel revenue of $62.8 million, RevPAR of $289, NOI of $18.4 million, or EBITDA of $19.7 million, whether prepared by MSH, MSH's advisors, or obtained from PGV;

(d) Any Documents reflecting MSH's views, opinions, assessments, or projections regarding the Hotel's future revenue, earnings potential, growth trajectory, or market positioning, including any projections used by MSH (or its advisors) to evaluate whether the Whitfield appraisal's conclusion of $118.0 million for 100% of PGV's assets understated FMV, and any projections used to support the Beacon Appraisal's alternative conclusion of $151.5 million.

REQUEST NO. 11 — Communications Relating to the Call-Option Exercise

All Communications between MSH (including its members, agents, employees, and representatives) and PCG (including, without limitation, Dominic R. Pellegrino, Adriana Pellegrino-Voss, Marcus Thiel, or any other PCG or PGV representative) from June 15, 2022 (the date the Call Option first became exercisable), to March 20, 2023 (the date MSH filed its Demand for Arbitration), relating to:

(a) The Call Option or any potential exercise thereof, including any discussions, negotiations, or correspondence regarding whether, when, or how PCG might exercise the Call Option;

(b) The valuation of PGV, PGV's assets, the Hotel, or MSH's 35% membership interest, including any discussions regarding valuation methodologies, comparable transactions, market conditions, or the parties' respective views on value;

(c) The Whitfield appraisal or Gerald K. Whitfield, MAI, including any Communications regarding the engagement, scope, methodology, assumptions, or conclusions of the appraisal prepared by Whitfield Realty Advisors LLC on behalf of PCG, which concluded a FMV of $118.0 million for 100% of PGV's assets as of December 31, 2022;

(d) The $41.3 million tender made by PCG on March 1, 2023, and MSH's rejection of that tender on March 10, 2023, including any Communications regarding the calculation of the tender amount, MSH's objections to the tender, and any counter-proposals or settlement discussions;

(e) Any negotiations, discussions, or correspondence between the parties regarding the buyout price, settlement of the valuation dispute, or any alternative transaction structure, prior to the filing of MSH's Demand for Arbitration.

REQUEST NO. 12 — Documents Relating to the PGV Operating Agreement

All Documents relating to the formation, negotiation, execution, and interpretation of the Operating Agreement of Palmetto Grand Ventures LLC (effective June 15, 2017), including but not limited to:

(a) All drafts of the Operating Agreement, including initial, interim, revised, and execution-version drafts, and all redlined, tracked-changes, or comparison versions thereof, reflecting the evolution of the agreement's terms from initial proposal through final execution;

(b) All Communications between MSH (or its members, agents, or counsel) and PCG (or its members, agents, or counsel) regarding the negotiation of the Operating Agreement, with particular emphasis on the negotiation of the following provisions: Section 12.4 (Call Option), Section 12.4(c) (Third Appraiser and 10% Divergence Threshold), Section 12.5 (Closing Mechanics), Section 12.7 (Bad Faith Penalty Provision), Section 8.3 (Capital Expenditure Obligations), and Section 15.2 (Arbitration);

(c) Any term sheets, letters of intent, confidential information memoranda, side letters, or ancillary agreements executed or exchanged in connection with the formation of PGV or the acquisition of The Palmetto Grand Resort & Spa on August 1, 2017, for a purchase price of $87.5 million, including any Documents reflecting the allocation of the purchase price among the Hotel's real property, personal property, and intangible assets;

(d) All Documents reflecting the agreed-upon ownership structure (PCG 65% / MSH 35%), the capital contribution obligations of each member, and the designation of PCG as the sole Manager of PGV, including any Documents reflecting MSH's understanding of or agreement to the governance, management, and decision-making framework established by the Operating Agreement.

REQUEST NO. 13 — Insurance and Indemnification

All Documents in MSH's possession, custody, or control relating to any insurance policies covering PGV, PCG, the Hotel, or the members or managers of PGV, including but not limited to:

(a) Any Communications between MSH (or any Person acting on MSH's behalf) and Atlantic Omnivrel Insurance Company or any other insurer, insurance broker, or insurance advisor relating to this arbitration, the claims and counterclaims asserted herein, or any potential coverage for the liabilities or damages alleged in this proceeding;

(b) All Documents reflecting MSH's knowledge of, receipt of, or communications regarding the managers' liability / directors' and officers' ("D&O") insurance policy issued by Atlantic Omnivrel Insurance Company (Policy No. AFML-2022-08745), including the policy declarations, coverage terms, policy limits, deductibles, and any notices of claim or reservation-of-rights letters issued in connection with this arbitration;

(c) All Documents relating to any indemnification obligations under the Operating Agreement (including OA Section 10.1, if applicable) or under any separate indemnification agreement, including any demands for indemnification, agreements to indemnify, or disputes regarding the scope of indemnification between MSH and PCG, or between either party and PGV.

REQUEST NO. 14 — Lending Relationship and GANB Loan

All Documents in MSH's possession, custody, or control relating to the loan from Gulf Atlantic National Bank ("GANB") to PGV (Loan No. CRE-2017-06284; original principal amount of $61,250,000; outstanding principal balance of approximately $48,600,000 as of December 31, 2022; interest rate of SOFR + 2.25%; maturity date of August 1, 2027), including but not limited to:

(a) All Communications between MSH (or any Person acting on MSH's behalf) and GANB (including, without limitation, Christine Delacroix, SVP, Commercial Real Estate Lending, or any other GANB officer, employee, or representative) regarding PGV's financial condition, the buyout of MSH's membership interest, the Call-Option exercise, the arbitration, or any impact of these events on the GANB loan;

(b) Any Documents relating to MSH's consent to (or withholding of consent to) any refinancing, modification, amendment, extension, or other restructuring of the GANB loan, including any Communications between MSH and PCG regarding proposed loan modifications and any Documents reflecting MSH's position on whether GANB's consent was required for the Call-Option exercise;

(c) All Documents reflecting MSH's understanding of, analysis of, or views regarding the impact of the $48,600,000 outstanding loan balance on the equity value of PGV in the buyout calculation, including any analysis of net asset value, loan-to-value ratios, or the relationship between enterprise value and equity value in determining the amount payable to MSH for its 35% interest.

REQUEST NO. 15 — Retention of Experts, Advisors, and Consultants

All Documents relating to MSH's retention of any expert, consultant, financial advisor, appraiser, or other professional in connection with this dispute, the valuation of PGV, the valuation of MSH's membership interest, or any claim or defense at issue in this arbitration, including but not limited to:

(a) All engagement letters, retention agreements, fee agreements, and invoices reflecting the terms and scope of each engagement, the fees charged, and the amounts paid or outstanding;

(b) All Documents identifying or describing the scope of work, engagement parameters, or assignment description for Beacon Valuation Group Inc. or any other retained expert, consultant, or advisor, including any Documents defining the questions to be addressed, the assumptions to be applied, or the deliverables expected;

(c) All Communications between MSH (or any Person acting on MSH's behalf) and any expert, consultant, financial advisor, appraiser, or other professional regarding the valuation of PGV, the Hotel, or MSH's 35% membership interest in PGV, from January 1, 2023, to the present, including any substantive discussions of valuation methodology, comparable transactions, financial projections, or conclusions of value, to the extent not protected by a valid claim of work-product protection or other applicable privilege.

V. CERTIFICATION OF SERVICE

I, Francesca Morano, counsel for Respondent/Counter-Claimant Pellegrino Capital Group LLC, hereby certify that on June 12, 2023, a true and correct copy of the foregoing Respondent/Counter-Claimant Pellegrino Capital Group LLC's First Set of Document Requests to Claimant Meridian Shores Hospitality LLC was served upon counsel for Claimant Meridian Shores Hospitality LLC by email and by overnight courier, addressed as follows:

Victoria Castillo, Esq. Ryan Matsuda, Esq. Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, FL 33131 vcastillo@hdclaw.com rmatsuda@hdclaw.com

A copy was also transmitted to the JAMS Case Manager assigned to JAMS Ref. No. 1440032871.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano, Esq. Partner Florida Bar No. 0987654

Simone Laroche, Esq. Lead Associate Florida Bar No. 1123456

Jeffrey Park, Esq. Associate Florida Bar No. 1198765

801 Brickell Avenue, Suite 2800 Miami, FL 33131 Telephone: (305) 555-4200 Facsimile: (305) 555-4201 fmorano@calderwoodharkness.com slaroche@calderwoodharkness.com jpark@calderwoodharkness.com

Counsel for Respondent/Counter-Claimant Pellegrino Capital Group LLC

Matter No. 1027-00003

IN THE MATTER OF JAMS ARBITRATION
JAMS Ref. No. 1440032871
Before the Honorable Margaret Liu Chen (Ret.), Arbitrator
JAMS Jacksonville, FL Resolution Center 1 Independent Drive, Suite 1600 Jacksonville, FL 32202
MERIDIAN SHORES HOSPITALITY LLC,
Claimant,
v.
PELLEGRINO CAPITAL GROUP LLC,
Respondent/Counter-Claimant.
RESPONDENT/COUNTER-CLAIMANT PELLEGRINO CAPITAL GROUP LLC'S FIRST SET OF DOCUMENT REQUESTS TO CLAIMANT MERIDIAN SHORES HOSPITALITY LLC
June 12, 2023
Respondent/Counter-Claimant Pellegrino Capital Group LLC ("PCG"), a Florida limited liability company with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606, by and through its counsel of record, Calderwood & Harkness LLP, 801 Brickell Avenue, Suite 2800, Miami, FL 33131, hereby propounds the following First Set of Document Requests upon Claimant Meridian Shores Hospitality LLC ("MSH"), a Delaware limited liability company with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480, through its counsel, Hargrove, Dunlap & Castillo LLP, 1395 Brickell Avenue, Suite 3100, Miami, FL 33131, Attention: Victoria Castillo, Esq. and Ryan Matsuda, Esq.
I. PRELIMINARY STATEMENT
These Document Requests (the "Requests") are propounded pursuant to the JAMS Comprehensive Arbitration Rules & Procedures (the "JAMS Rules") and the discovery schedule established by the Honorable Margaret Liu Chen (Ret.) at the preliminary conference held on May 15, 2023 (the "Discovery Order"). The discovery Order authorized each party to serve up to twenty (20) document requests and established a thirty-day response period following service.
The underlying dispute arises from MSH's challenge to PCG's exercise of its contractual call option under Section 12.4 of the Operating Agreement of Palmetto Grand Ventures LLC ("PGV"), dated June 15, 2017 (the "Operating Agreement" or "OA"). MSH filed its Demand for Arbitration with JAMS on March 20, 2023, alleging, among other things, that the buyout price of $41.3 million tendered by PCG on March 1, 2023, for MSH's 35% membership interest in PGV was determined in bad faith and materially understated the Fair Market Value ("FMV") of that interest. MSH has demanded a total buyout price of $70.0 million, representing what MSH contends is its share of FMV after accounting for an alleged deferred-maintenance shortfall, the value of the Aurelian Hotels & Resorts Inc. franchise agreement, and a purported bad-faith penalty under OA Section 12.7. PCG denies each of these allegations and contends that the $41.3 million tender was properly calculated and in strict compliance with OA Section 12.4.
On April 5, 2023, PCG filed its Answer, Affirmative Defenses, and Counterclaim for Declaratory Relief, seeking, among other things, a declaration that the Call-Option exercise was valid and that the $41.3 million tender represented MSH's pro rata share of FMV as determined by the Whitfield appraisal in accordance with OA Section 12.4(b).
PCG now seeks production of the documents described below, which are directly relevant to the claims and defenses at issue in this arbitration, including but not limited to: (1) MSH's Beacon Valuation Group appraisal and the underlying data and communications supporting it; (2) MSH's internal valuation analyses and financial models; (3) the factual and evidentiary basis for MSH's claim that PCG failed to fund approximately $8.2 million in deferred maintenance at The Palmetto Grand Resort & Spa; (4) the factual and evidentiary basis for MSH's bad-faith allegation and demand for a $16.975 million penalty; (5) MSH's financial condition and economic motives for rejecting the $41.3 million tender; and (6) documents bearing on the negotiation and agreed-upon meaning of the call-option provisions in the Operating Agreement.
Pursuant to the discovery Order, MSH's responses to these Requests are due within thirty (30) days of service.
II. DEFINITIONS
As used in these Requests, the following terms shall have the meanings set forth below:
1.  "Appraisal" or "Beacon Appraisal" means the appraisal of the assets of Palmetto Grand Ventures LLC prepared by Beacon Valuation Group Inc. ("Beacon"), under the direction of Dr. Priya Ramanathan, CFA, ASA, Lead Appraiser, completed on or about April 14, 2023, concluding a Fair Market Value of $151.5 million for 100% of PGV's assets as of December 31, 2022, together with all appendices, exhibits, addenda, and supplements thereto.
2.  "Call Option" means the contractual right granted to PCG under Section 12.4 of the Operating Agreement to purchase MSH's 35% membership interest in PGV at Fair Market Value, which right became exercisable after the fifth anniversary of the Effective Date of the Operating Agreement — that is, on or after June 15, 2022.
3.  "Call-Option Notice" means PCG's written notice to MSH exercising the Call Option, dated January 9, 2023, delivered in accordance with OA Section 12.4(a) and OA Section 15.1 (Notices).
4.  "Communication" means any exchange of information, whether oral, written, or electronic, including but not limited to letters, memoranda, emails, text messages, instant messages (including messages transmitted via platforms such as Meridian Services Inc., Signal, Meridian Solutions, Northgate Data Systems, or similar applications), voice messages, voicemails, notes, minutes of meetings, transcripts, and any other form of correspondence or dialogue, regardless of medium.
5.  "Deferred Maintenance Claim" means MSH's claim, as set forth in paragraphs 42 through 57 of MSH's Demand for Arbitration, that PCG, in its capacity as Manager of PGV, failed to fund approximately $8.2 million in maintenance and capital expenditure items at The Palmetto Grand Resort & Spa, and that such failure constitutes a breach of OA Section 8.3 and a basis for an upward adjustment to the FMV determination. The Deferred Maintenance Claim is also reflected in the Beacon Appraisal.
6.  "Document" means, as broadly defined under the JAMS Rules and consistent with Rule 34 of the Federal Rules of Civil Procedure, all writings, recordings, photographs, electronically stored information ("ESI"), and tangible items of any nature whatsoever, in any format, whether printed, handwritten, typed, recorded, filmed, or stored electronically, including but not limited to correspondence, memoranda, notes, diaries, calendars, appointment books, reports, analyses, studies, models, spreadsheets, databases, charts, graphs, presentations, recordings, transcripts, contracts, agreements, invoices, receipts, financial statements, tax returns, and metadata associated with any of the foregoing.
7.  "Fair Market Value" or "FMV" means the term as defined in Section 12.4 of the Operating Agreement, which provides that Fair Market Value shall mean "the price at which a willing buyer would purchase, and a willing seller would sell, the assets of [PGV] in an arm's-length transaction, with both parties having reasonable knowledge of all relevant facts and neither being under any compulsion to buy or sell."
8.  "Hotel" or "Property" means The Palmetto Grand Resort & Spa, located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767, a 312-room full-service luxury beach resort operated under a franchise agreement with Aurelian Hotels & Resorts Inc. The Hotel is the principal asset of PGV.
9.  "JV" or "PGV" means Palmetto Grand Ventures LLC, a Florida limited liability company (Florida Department of State Filing No. L17000124583; Employer Identification Number 82-5063921), formed on June 15, 2017, and owned 65% by PCG and 35% by MSH. PGV is the joint venture vehicle through which the parties hold and operate the Hotel.
10.  "MSH" means Meridian Shores Hospitality LLC, Claimant in this arbitration, a Delaware limited liability company with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480, and includes its members, managers, officers, employees, agents, representatives, and any persons acting on its behalf, except where context otherwise requires.
11.  "Operating Agreement" or "OA" means the Operating Agreement of Palmetto Grand Ventures LLC, effective June 15, 2017, by and between PCG and MSH, together with all exhibits, schedules, amendments, and side letters thereto.
12.  "PCG" means Pellegrino Capital Group LLC, Respondent/Counter-Claimant in this arbitration, a Florida limited liability company with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606.
13.  "Person" means any natural person, corporation, partnership, limited liability company, association, joint venture, trust, estate, governmental entity (including any department, agency, or instrumentality thereof), or any other legal entity.
14.  "Relate to" or "Relating to" means concerning, referring to, describing, evidencing, constituting, reflecting, mentioning, pertaining to, connected with, or having any logical relationship to the subject matter in question, whether directly or indirectly, in whole or in part.
15.  "Valuation Date" means December 31, 2022, the date as of which all appraisals in this proceeding value the assets of PGV, as stipulated by the parties at the May 15, 2023 preliminary conference and memorialized in paragraph 7 of the discovery Order.
16.  "You" or "Your" means Meridian Shores Hospitality LLC, its members (including, without limitation, Nathaniel Cordero and Elena Cordero), officers, directors, managers, employees, agents, representatives, attorneys (to the extent not subject to a valid claim of attorney-client privilege or work-product protection), consultants, accountants, and any other persons acting on MSH's behalf or at MSH's direction.
III. INSTRUCTIONS
The following instructions apply to each of the Document Requests set forth below:
1.  Scope of Production. These Requests require the production of all responsive Documents in MSH's possession, custody, or control. A Document is in MSH's "possession, custody, or control" if MSH has the legal right or practical ability to obtain it, including Documents held by MSH's agents, consultants, accountants, attorneys (to the extent not subject to a valid claim of privilege), financial advisors, appraisers, and any other representatives or third parties acting on MSH's behalf.
2.  Privilege Log. If any Document is withheld in whole or in part on the basis of any claim of privilege, work-product protection, or any other immunity from disclosure, MSH shall provide a privilege log that identifies, for each withheld Document or portion thereof: (a) the date of the Document; (b) the author(s) and all recipient(s) (including persons copied); (c) the general subject matter of the Document, described with sufficient specificity to permit PCG to assess the propriety of the privilege claim without revealing the privileged content; (d) the specific privilege or protection claimed (e.g., attorney-client privilege, work-product doctrine, common interest privilege); and (e) the factual basis supporting the claim of privilege, including the identity of the attorney(s) whose involvement gives rise to the claim and the nature of the legal advice sought or provided.
3.  Format of Production. Documents shall be produced in their native electronic format, preserving all metadata, or, for hard-copy originals without an electronic counterpart, as searchable PDF images at a resolution of no less than 300 DPI. All productions shall be organized by Request number. If Documents are produced from an email system, each email shall be produced together with all attachments, and the production shall preserve the email threading and folder structure.
4.  Cross-Referencing. If a Document is responsive to more than one Request, it need be produced only once, but MSH shall identify, by Bates number or other unique identifier, each Request to which the Document is responsive.
5.  Time Period. Unless a specific time period is stated in a particular Request, these Requests cover the period from January 1, 2017, through the date of production.
6.  Continuing Obligation. These Requests are continuing in nature. MSH is obligated to supplement its responses promptly if additional responsive Documents come into its possession, custody, or control after the initial production, whether through the receipt of new Documents, the discovery of previously unlocated Documents, or otherwise, consistent with the JAMS Rules and the discovery Order.
IV. DOCUMENT REQUESTS
REQUEST NO. 1 — The Beacon Appraisal and Supporting Materials
All Documents constituting, relating to, or supporting the appraisal of PGV's assets prepared by Beacon Valuation Group Inc. (Dr. Priya Ramanathan, CFA, ASA, Lead Appraiser), completed on or about April 14, 2023 (the "Beacon Appraisal"), including but not limited to:
(a) All drafts of the Beacon Appraisal, including preliminary, interim, revised, and final versions, whether in hard copy or electronic format, and all redlined or tracked-changes versions thereof;
(b) All work papers, spreadsheets, financial models, calculations, and supporting documentation underlying the Beacon Appraisal's conclusion of a Fair Market Value of $151.5 million for 100% of PGV's assets as of the Valuation Date of December 31, 2022, including the discounted cash flow ("DCF") model, income capitalization analysis, sales comparison approach analysis, and any cost approach analysis;
(c) All comparable sale and comparable transaction data compiled, considered, analyzed, or relied upon by Beacon in preparing the Beacon Appraisal, including data sheets, broker opinions of value, closing statements, and any proprietary or third-party databases accessed by Beacon (e.g., Stonefield Technologies, Larkspur Enterprises, Thackeray Consulting Group, or CBRE data);
(d) All Documents reflecting, supporting, or explaining the discount rate of 8.5% and the terminal capitalization rate of 7.75% used by Beacon in the Beacon Appraisal's DCF analysis, including any market surveys, published data, investor surveys (such as Marlowe Crane CPAs LLP Real Estate Investor Survey, CBRE Investor Intentions Survey, or American Hotel & Lodging Association publications), or third-party sources relied upon in selecting those rates;
(e) All Documents relating to any adjustments made in the Beacon Appraisal for the Aurelian Hotels & Resorts Inc. franchise agreement, including the alleged "below-market" franchise agreement value, the franchise agreement's contribution to the Hotel's revenue and brand premium, and any analysis of the remaining term of the franchise agreement (approximately 14 years remaining as of the Valuation Date);
(f) All Documents relating to the $8.2 million deferred-maintenance adjustment included in the Beacon Appraisal, including the methodology used to quantify the adjustment, the specific line items comprising the $8.2 million figure, and any supporting inspection reports, contractor estimates, or engineering assessments relied upon by Beacon;
(g) The engagement letter, retention agreement, or other contractual arrangement between MSH (or any Person acting on MSH's behalf) and Beacon Valuation Group Inc. governing the scope, terms, and compensation for the Beacon Appraisal, including any amendments, modifications, or supplements thereto, and all invoices submitted by Beacon to MSH or any Person in connection with the engagement.
REQUEST NO. 2 — Communications with Beacon Valuation Group
All Communications between MSH (including, without limitation, Nathaniel Cordero, Elena Cordero, or any MSH member, agent, employee, representative, or consultant) and Beacon Valuation Group Inc. (including, without limitation, Dr. Priya Ramanathan, CFA, ASA, and any Beacon employee, contractor, or subcontractor), from January 1, 2023, to the present, relating to:
(a) The scope, methodology, assumptions, or conclusions of the Beacon Appraisal, including any discussions regarding the selection of valuation approaches, the weighting of those approaches, or the reconciliation of value indications derived from different methodologies;
(b) The valuation of PGV's assets, The Palmetto Grand Resort & Spa, or any component thereof, including the real property, personal property, intangible assets, franchise agreement, and going-concern value;
(c) Any instructions, guidance, directions, or parameters provided by MSH (or any Person acting on MSH's behalf) to Beacon regarding the conduct, scope, methodology, assumptions, target value, or conclusions of the appraisal;
(d) Any revisions to draft appraisals or to appraisal assumptions, inputs, comparable transactions, discount rates, capitalization rates, revenue projections, or expense estimates that were requested, suggested, or directed by MSH (or any Person acting on MSH's behalf), including the reasons given for any such requests, suggestions, or directions, and Beacon's response thereto.
REQUEST NO. 3 — MSH's Internal Valuation Analyses
All Documents constituting, reflecting, or relating to any internal valuation, financial analysis, assessment, or estimate of the value of PGV, PGV's assets, The Palmetto Grand Resort & Spa, or MSH's 35% membership interest in PGV, prepared by or on behalf of MSH, from January 1, 2020, to the present, including but not limited to:
(a) Any internal memoranda, models, spreadsheets, presentations, board materials, investment committee materials, or analyses prepared by or for MSH's members, managers, or advisors analyzing the value of MSH's 35% membership interest in PGV, whether for purposes of financial reporting, estate planning, tax compliance, investment analysis, or any other purpose;
(b) Any Documents prepared in connection with MSH's consideration of whether to accept or reject PCG's tender of $41.3 million on March 1, 2023, including any analyses comparing that tender price to MSH's own estimate of the value of its interest, any presentations or memoranda prepared for Nathaniel Cordero or Elena Cordero regarding the tender, and any documents reflecting the deliberative process that led to MSH's rejection of the tender on March 10, 2023;
(c) Any Documents analyzing or projecting the Hotel's future revenues, net operating income ("NOI"), earnings before interest, taxes, depreciation, and amortization ("EBITDA"), cash flows, occupancy rates, average daily rate ("ADR"), revenue per available room ("RevPAR"), or any other financial metric, whether prepared for internal decision-making, lender reporting, or any other purpose;
(d) Any Documents analyzing comparable hotel sale transactions, comparable operating performance data, or market conditions in the Gulf Coast, Florida luxury hospitality market, Tampa Bay metropolitan area, or Clearwater Beach submarket, prepared by or for MSH for any purpose, including any broker opinions of value, investment bank pitch books, or market studies.
REQUEST NO. 4 — Deferred Maintenance Claim Documentation
All Documents relating to MSH's claim that PCG, in its capacity as Manager of PGV, failed to fund approximately $8.2 million in deferred maintenance and capital expenditure items at The Palmetto Grand Resort & Spa (the "Deferred Maintenance Claim"), as alleged in paragraphs 42 through 57 of MSH's Demand for Arbitration, including but not limited to:
(a) All inspection reports, condition assessments, engineering studies, property-condition reports, facility audits, or reserve-for-replacement studies of the Hotel prepared by or on behalf of MSH, or obtained by MSH from any third party, from January 1, 2019, to the present;
(b) All itemized lists, budgets, estimates, schedules, or breakdowns of the alleged deferred-maintenance items, including a description of each item, the estimated cost to remedy, the basis for each cost estimate, and the date on which each item was first identified;
(c) All Communications between MSH (or any Person acting on MSH's behalf) and PCG, PGV, or any PGV personnel (including, without limitation, the Hotel's general manager, director of engineering, or facilities management staff) regarding capital expenditures, maintenance, repairs, renovations, or the physical condition of the Hotel, from January 1, 2019, to the present;
(d) All Documents reflecting MSH's knowledge of, review of, consent to, approval of, or objection to PGV's annual capital expenditure budgets and PGV's actual capital spending for each fiscal year from 2019 through 2022, including any Documents relating to the $24.3 million renovation completed during the 2017–2019 renovation period and any subsequent capital expenditure programs;
(e) All Communications between MSH (or any Person acting on MSH's behalf) and any third-party contractor, engineer, architect, consultant, or inspector retained by MSH to assess, evaluate, quantify, or opine on deferred-maintenance items at the Hotel, including any reports, proposals, work orders, or cost estimates provided by such third parties;
(f) All Documents relating to, referencing, or invoking OA Section 8.3 (Capital Expenditure Obligations), including any written notices, objections, or demands delivered by MSH to PCG under that section, and any Documents reflecting MSH's interpretation of the Manager's obligations under Section 8.3 with respect to annual capital expenditure budgets and reserve funding.
REQUEST NO. 5 — MSH's Understanding of the Call Option and OA Section 12.4
All Documents relating to MSH's understanding of, expectations regarding, or interpretation of the Call Option under OA Section 12.4, including but not limited to:
(a) All Communications between MSH (including its members, managers, and authorized representatives) and its legal counsel regarding the Call Option, the appraisal process, the valuation methodology required under OA Section 12.4, or the exercise of the Call Option by PCG, to the extent not protected by a valid and properly asserted claim of attorney-client privilege or work-product protection. To the extent any such Communications are withheld on privilege grounds, MSH shall provide a privilege log in accordance with Instruction No. 2;
(b) All Documents relating to the negotiation of OA Sections 12.4 (Call Option), 12.4(c) (Third Appraiser and 10% Divergence Threshold), 12.5 (Closing Mechanics), and 12.7 (Bad Faith Penalty Provision) during the formation of PGV in 2017, including marked-up drafts, comparison blacklines, negotiation memoranda, comments exchanged between counsel, and any internal MSH communications reflecting MSH's negotiating positions or objectives with respect to those provisions;
(c) All Documents reflecting MSH's understanding of the term "Fair Market Value" as used in the Operating Agreement, including any Documents in which MSH or its representatives discussed, analyzed, or interpreted the definition of FMV, the methodology for determining FMV, or the relationship between FMV of PGV's assets and the equity value of MSH's 35% membership interest;
(d) All Documents reflecting MSH's awareness, prior to the date of the Call-Option Notice (January 9, 2023), that PCG might exercise the Call Option after the fifth anniversary of the Effective Date (June 15, 2022), including any Communications in which MSH's members or advisors discussed the likelihood, timing, or implications of a potential Call-Option exercise by PCG.
REQUEST NO. 6 — Bad-Faith Allegation Under OA Section 12.7
All Documents relating to MSH's allegation, as set forth in paragraphs 58 through 74 of MSH's Demand for Arbitration, that PCG exercised the Call Option "in bad faith or with the intent to materially understate Fair Market Value" within the meaning of OA Section 12.7, including but not limited to:
(a) All Documents supporting MSH's claim for a bad-faith penalty of $16.975 million (or any other amount) under OA Section 12.7, including any analyses, calculations, or methodologies used to arrive at the claimed penalty amount;
(b) All Documents reflecting the factual basis for MSH's allegation that PCG acted in bad faith or with the intent to understate FMV, including any specific facts, circumstances, acts, omissions, statements, or conduct by PCG (or any PCG representative) that MSH contends constitute evidence of bad faith or intentional understatement;
(c) All Communications in which MSH or its members, agents, advisors, or representatives discussed, analyzed, or assessed PCG's alleged bad faith, PCG's alleged intent to understate value, or the basis for invoking the penalty provision of OA Section 12.7;
(d) All Documents reflecting MSH's calculation or derivation of the $16.975 million penalty amount, including any analysis of the 25% cap provision under OA Section 12.7, the formula or methodology applied, and the base value to which the 25% penalty was applied;
(e) Any expert reports, analyses, opinions, or memoranda obtained by MSH from any expert, consultant, financial advisor, or other third party concerning PCG's alleged bad faith, the reasonableness of the Whitfield appraisal, or the applicability of the OA Section 12.7 penalty provision.
REQUEST NO. 7 — MSH's Financial Condition and Motives
All Documents relating to MSH's financial condition from January 1, 2022, to the present, to the extent relevant to MSH's motives for challenging the buyout price of $41.3 million and demanding a total payment of $70.0 million, including but not limited to:
(a) MSH's financial statements (including balance sheets, income statements, and statements of cash flows), audited or unaudited, for each of the fiscal years ended December 31, 2021, and December 31, 2022, as well as any interim financial statements prepared for the period from January 1, 2023, to the date of production. In addition, MSH's federal and state income tax returns (including all schedules, attachments, and K-1s) for tax years 2021 and 2022;
(b) All Documents reflecting MSH's outstanding liabilities, obligations, debts, guarantees, or financial commitments as of December 31, 2022, and as of March 10, 2023 (the date of MSH's rejection of the $41.3 million tender), including loan agreements, promissory notes, guaranty agreements, lease obligations, and any Documents reflecting amounts owed by MSH to any Person;
(c) All Documents reflecting any discussions by MSH or its members (including Nathaniel Cordero and Elena Cordero) regarding the intended use, allocation, or deployment of proceeds from the redemption of MSH's 35% membership interest in PGV, including any investment plans, business plans, acquisition targets, debt repayment schedules, or personal financial planning documents;
(d) All Documents relating to any third-party offers, solicitations, expressions of interest, or indications of interest to purchase MSH's membership interest in PGV, or to invest in, acquire, or recapitalize The Palmetto Grand Resort & Spa, including any term sheets, letters of intent, confidentiality agreements, offering memoranda, or broker engagement letters.
REQUEST NO. 8 — Communications with Third Parties Regarding Value of PGV or the Hotel
All Communications between MSH (including its members, agents, employees, and representatives) and any third party — other than MSH's counsel of record, Hargrove, Dunlap & Castillo LLP, to the extent protected by a valid claim of attorney-client privilege — regarding the value of PGV, PGV's assets, The Palmetto Grand Resort & Spa, or MSH's 35% membership interest in PGV, from January 1, 2022, to the present, including but not limited to Communications with:
(a) Any potential purchasers, investors, co-investors, joint venture partners, or other parties who expressed an interest in acquiring or investing in MSH's interest in PGV or the Hotel;
(b) Any brokers, investment bankers, financial advisors, or intermediaries retained by or in contact with MSH regarding the value, marketability, or potential sale of MSH's interest in PGV or the Hotel, including any pitch books, valuation presentations, or indicative value ranges provided by such parties;
(c) Any lenders, financing sources, debt funds, or capital providers with whom MSH discussed the value of PGV, the Hotel, or MSH's membership interest, including in connection with any financing, refinancing, or collateral valuation;
(d) Any representatives of Aurelian Hotels & Resorts Inc. or its affiliates regarding the franchise agreement (dated July 15, 2017; 20-year term expiring July 14, 2037; 5% of gross room revenue royalty + 2% marketing fund contribution), including any discussions regarding the franchise agreement's value, the Hotel's performance relative to brand standards, or the impact of the Call-Option exercise on the franchise relationship;
(e) Any hotel industry consultants, market analysts, appraisers, or advisory firms (other than Beacon Valuation Group Inc., which is covered by Request Nos. 1 and 2) who provided opinions, analyses, or data regarding the value of the Hotel, comparable hotel transactions, or market conditions.
REQUEST NO. 9 — Distributions, Preferred Return, and Capital Account Records
All Documents relating to distributions received by MSH from PGV, and to MSH's capital account and preferred return, from August 1, 2017 (the date of PGV's acquisition of the Hotel), to the present, including but not limited to:
(a) All distribution notices, distribution checks or wire confirmations, Schedule K-1s issued to MSH by PGV, and capital account statements or ledgers, for each fiscal year from 2017 through 2022, and for any period in 2023 through the date of production;
(b) All Documents reflecting MSH's calculation, tracking, or understanding of its accrued preferred return under OA Section 5.2, including the 8% per annum cumulative preferred return, compounding annually, on MSH's unreturned capital contributions of $18,505,000 — comprising $10,000,000 contributed at the time of the Hotel acquisition pursuant to OA Section 4.1, and $8,505,000 in renovation capital contributions made during the 2017–2019 renovation period pursuant to OA Section 4.2;
(c) All Communications between MSH (or any Person acting on MSH's behalf) and Grantham, Pryce & Associates CPAs (including Howard Grantham, CPA, or any other partner, employee, or representative of that firm) or any other accountant, tax preparer, or financial professional regarding MSH's capital account, preferred return, accrued but unpaid distributions, or PGV's financial statements, tax returns, or allocation of income and loss;
(d) All Documents relating to the stipulated accrued preferred return of $17,010,000 through December 31, 2022, including any analysis, calculation, or reconciliation of that amount, and any Documents reflecting MSH's analysis of the distribution-reduction mechanics set forth in OA Section 5.2, including the waterfall provisions governing the priority and order of distributions.
REQUEST NO. 10 — Hotel Operating Performance and Financial Data
All Documents in MSH's possession, custody, or control relating to the operating performance of The Palmetto Grand Resort & Spa from January 1, 2020, to the present, including but not limited to:
(a) Revenue reports, STR (Penmark Enterprises) reports, competitive set analyses, STAR reports, or any other benchmarking data reflecting the Hotel's occupancy, ADR, RevPAR, and market share relative to its competitive set, for each month, quarter, and year from 2020 through 2022 and any period in 2023 through the date of production;
(b) Monthly or quarterly operating statements, profit and loss statements, budgets, forecasts, or operating projections for the Hotel, whether prepared by PGV's management, by a third-party hotel management company, or by MSH, for the period from January 1, 2020, to the present;
(c) Any analysis, summary, commentary, or memorandum regarding the Hotel's 2022 financial performance, including the reported hotel revenue of $62.8 million, RevPAR of $289, NOI of $18.4 million, or EBITDA of $19.7 million, whether prepared by MSH, MSH's advisors, or obtained from PGV;
(d) Any Documents reflecting MSH's views, opinions, assessments, or projections regarding the Hotel's future revenue, earnings potential, growth trajectory, or market positioning, including any projections used by MSH (or its advisors) to evaluate whether the Whitfield appraisal's conclusion of $118.0 million for 100% of PGV's assets understated FMV, and any projections used to support the Beacon Appraisal's alternative conclusion of $151.5 million.
REQUEST NO. 11 — Communications Relating to the Call-Option Exercise
All Communications between MSH (including its members, agents, employees, and representatives) and PCG (including, without limitation, Dominic R. Pellegrino, Adriana Pellegrino-Voss, Marcus Thiel, or any other PCG or PGV representative) from June 15, 2022 (the date the Call Option first became exercisable), to March 20, 2023 (the date MSH filed its Demand for Arbitration), relating to:
(a) The Call Option or any potential exercise thereof, including any discussions, negotiations, or correspondence regarding whether, when, or how PCG might exercise the Call Option;
(b) The valuation of PGV, PGV's assets, the Hotel, or MSH's 35% membership interest, including any discussions regarding valuation methodologies, comparable transactions, market conditions, or the parties' respective views on value;
(c) The Whitfield appraisal or Gerald K. Whitfield, MAI, including any Communications regarding the engagement, scope, methodology, assumptions, or conclusions of the appraisal prepared by Whitfield Realty Advisors LLC on behalf of PCG, which concluded a FMV of $118.0 million for 100% of PGV's assets as of December 31, 2022;
(d) The $41.3 million tender made by PCG on March 1, 2023, and MSH's rejection of that tender on March 10, 2023, including any Communications regarding the calculation of the tender amount, MSH's objections to the tender, and any counter-proposals or settlement discussions;
(e) Any negotiations, discussions, or correspondence between the parties regarding the buyout price, settlement of the valuation dispute, or any alternative transaction structure, prior to the filing of MSH's Demand for Arbitration.
REQUEST NO. 12 — Documents Relating to the PGV Operating Agreement
All Documents relating to the formation, negotiation, execution, and interpretation of the Operating Agreement of Palmetto Grand Ventures LLC (effective June 15, 2017), including but not limited to:
(a) All drafts of the Operating Agreement, including initial, interim, revised, and execution-version drafts, and all redlined, tracked-changes, or comparison versions thereof, reflecting the evolution of the agreement's terms from initial proposal through final execution;
(b) All Communications between MSH (or its members, agents, or counsel) and PCG (or its members, agents, or counsel) regarding the negotiation of the Operating Agreement, with particular emphasis on the negotiation of the following provisions: Section 12.4 (Call Option), Section 12.4(c) (Third Appraiser and 10% Divergence Threshold), Section 12.5 (Closing Mechanics), Section 12.7 (Bad Faith Penalty Provision), Section 8.3 (Capital Expenditure Obligations), and Section 15.2 (Arbitration);
(c) Any term sheets, letters of intent, confidential information memoranda, side letters, or ancillary agreements executed or exchanged in connection with the formation of PGV or the acquisition of The Palmetto Grand Resort & Spa on August 1, 2017, for a purchase price of $87.5 million, including any Documents reflecting the allocation of the purchase price among the Hotel's real property, personal property, and intangible assets;
(d) All Documents reflecting the agreed-upon ownership structure (PCG 65% / MSH 35%), the capital contribution obligations of each member, and the designation of PCG as the sole Manager of PGV, including any Documents reflecting MSH's understanding of or agreement to the governance, management, and decision-making framework established by the Operating Agreement.
REQUEST NO. 13 — Insurance and Indemnification
All Documents in MSH's possession, custody, or control relating to any insurance policies covering PGV, PCG, the Hotel, or the members or managers of PGV, including but not limited to:
(a) Any Communications between MSH (or any Person acting on MSH's behalf) and Atlantic Omnivrel Insurance Company or any other insurer, insurance broker, or insurance advisor relating to this arbitration, the claims and counterclaims asserted herein, or any potential coverage for the liabilities or damages alleged in this proceeding;
(b) All Documents reflecting MSH's knowledge of, receipt of, or communications regarding the managers' liability / directors' and officers' ("D&O") insurance policy issued by Atlantic Omnivrel Insurance Company (Policy No. AFML-2022-08745), including the policy declarations, coverage terms, policy limits, deductibles, and any notices of claim or reservation-of-rights letters issued in connection with this arbitration;
(c) All Documents relating to any indemnification obligations under the Operating Agreement (including OA Section 10.1, if applicable) or under any separate indemnification agreement, including any demands for indemnification, agreements to indemnify, or disputes regarding the scope of indemnification between MSH and PCG, or between either party and PGV.
REQUEST NO. 14 — Lending Relationship and GANB Loan
All Documents in MSH's possession, custody, or control relating to the loan from Gulf Atlantic National Bank ("GANB") to PGV (Loan No. CRE-2017-06284; original principal amount of $61,250,000; outstanding principal balance of approximately $48,600,000 as of December 31, 2022; interest rate of SOFR + 2.25%; maturity date of August 1, 2027), including but not limited to:
(a) All Communications between MSH (or any Person acting on MSH's behalf) and GANB (including, without limitation, Christine Delacroix, SVP, Commercial Real Estate Lending, or any other GANB officer, employee, or representative) regarding PGV's financial condition, the buyout of MSH's membership interest, the Call-Option exercise, the arbitration, or any impact of these events on the GANB loan;
(b) Any Documents relating to MSH's consent to (or withholding of consent to) any refinancing, modification, amendment, extension, or other restructuring of the GANB loan, including any Communications between MSH and PCG regarding proposed loan modifications and any Documents reflecting MSH's position on whether GANB's consent was required for the Call-Option exercise;
(c) All Documents reflecting MSH's understanding of, analysis of, or views regarding the impact of the $48,600,000 outstanding loan balance on the equity value of PGV in the buyout calculation, including any analysis of net asset value, loan-to-value ratios, or the relationship between enterprise value and equity value in determining the amount payable to MSH for its 35% interest.
REQUEST NO. 15 — Retention of Experts, Advisors, and Consultants
All Documents relating to MSH's retention of any expert, consultant, financial advisor, appraiser, or other professional in connection with this dispute, the valuation of PGV, the valuation of MSH's membership interest, or any claim or defense at issue in this arbitration, including but not limited to:
(a) All engagement letters, retention agreements, fee agreements, and invoices reflecting the terms and scope of each engagement, the fees charged, and the amounts paid or outstanding;
(b) All Documents identifying or describing the scope of work, engagement parameters, or assignment description for Beacon Valuation Group Inc. or any other retained expert, consultant, or advisor, including any Documents defining the questions to be addressed, the assumptions to be applied, or the deliverables expected;
(c) All Communications between MSH (or any Person acting on MSH's behalf) and any expert, consultant, financial advisor, appraiser, or other professional regarding the valuation of PGV, the Hotel, or MSH's 35% membership interest in PGV, from January 1, 2023, to the present, including any substantive discussions of valuation methodology, comparable transactions, financial projections, or conclusions of value, to the extent not protected by a valid claim of work-product protection or other applicable privilege.
V. CERTIFICATION OF SERVICE
I, Francesca Morano, counsel for Respondent/Counter-Claimant Pellegrino Capital Group LLC, hereby certify that on June 12, 2023, a true and correct copy of the foregoing Respondent/Counter-Claimant Pellegrino Capital Group LLC's First Set of Document Requests to Claimant Meridian Shores Hospitality LLC was served upon counsel for Claimant Meridian Shores Hospitality LLC by email and by overnight courier, addressed as follows:
Victoria Castillo, Esq. Ryan Matsuda, Esq. Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, FL 33131 vcastillo@hdclaw.com rmatsuda@hdclaw.com
A copy was also transmitted to the JAMS Case Manager assigned to JAMS Ref. No. 1440032871.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano, Esq. Partner Florida Bar No. 0987654
Simone Laroche, Esq. Lead Associate Florida Bar No. 1123456
Jeffrey Park, Esq. Associate Florida Bar No. 1198765
801 Brickell Avenue, Suite 2800 Miami, FL 33131 Telephone: (305) 555-4200 Facsimile: (305) 555-4201 fmorano@calderwoodharkness.com slaroche@calderwoodharkness.com jpark@calderwoodharkness.com
Counsel for Respondent/Counter-Claimant Pellegrino Capital Group LLC
Matter No. 1027-00003

IN THE MATTER OF JAMS ARBITRATION

MERIDIAN SHORES HOSPITALITY LLC,

PELLEGRINO CAPITAL GROUP LLC,

I. PRELIMINARY STATEMENT

II. DEFINITIONS

III. INSTRUCTIONS

IV. DOCUMENT REQUESTS

V. CERTIFICATION OF SERVICE

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts