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

joint-stipulation-neutral-appraiser.docx DOCUMENT Litigation

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JAMS ARBITRATION

JACKSONVILLE, FLORIDA RESOLUTION CENTER 1 Independent Drive, Suite 1600 Jacksonville, FL 32202

JAMS Ref. No. 1440032871

Before Hon. Margaret Liu Chen (Ret.), Arbitrator

JOINT STIPULATION AND AGREED ORDER RE: APPOINTMENT OF NEUTRAL THIRD APPRAISER PURSUANT TO SECTION 12.4(c) OF THE OPERATING AGREEMENT

Dated: May 30, 2023

Claimant Meridian Shores Hospitality LLC ("MSH"), a Delaware limited liability company with its principal office located at 220 Royal Palm Way, Suite 300, Palm Beach, Florida 33480, by and through its undersigned counsel, Hargrove, Dunlap & Castillo LLP (Victoria Castillo, Partner; Ryan Matsuda, Senior Associate), with offices at 1395 Brickell Avenue, Suite 3100, Miami, Florida 33131, and Respondent Pellegrino Capital Group LLC ("PCG"), a Florida limited liability company with its headquarters located at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606, by and through its undersigned counsel, Calderwood & Harkness LLP (Francesca Morano, Partner; Simone Laroche, Associate), with offices at 801 Brickell Avenue, Suite 2800, Miami, Florida 33131 (MSH and PCG, collectively, the "Parties," and each individually, a "Party"), hereby jointly submit this Joint Stipulation and Agreed Order Re: Appointment of Neutral Third Appraiser Pursuant to Section 12.4(c) of the Operating Agreement (this "Stipulation") to the Arbitrator, Hon. Margaret Liu Chen (Ret.), and respectfully state as follows:

RECITALS. A. PCG and MSH are the sole members of Palmetto Grand Ventures LLC ("PGV"), a Florida limited liability company organized under the Florida Revised Limited Liability Company Act, Florida Filing No. L17000124583, Employer Identification Number 82-5063921, with its registered office at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606.

B. PGV was formed on June 15, 2017, pursuant to the Operating Agreement of Palmetto Grand Ventures LLC, dated June 15, 2017 (as the same may have been amended, modified, or supplemented from time to time, the "Operating Agreement" or "OA"). The Operating Agreement governs the rights, obligations, and relationships of the members with respect to PGV and its assets and operations.

C. PCG holds a sixty-five percent (65%) membership interest in PGV and serves as the sole Manager of PGV, with the powers, duties, and responsibilities set forth in Article VII of the Operating Agreement. MSH holds the remaining thirty-five percent (35%) membership interest in PGV.

D. PGV owns and operates The Palmetto Grand Resort & Spa (the "Property"), a 312-room luxury beachfront hotel located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767. The Property is managed under a franchise agreement with Aurelian Hotels & Resorts Inc. ("Aurelian"), an internationally recognized luxury hospitality brand.

E. On January 9, 2023, PCG delivered written notice to MSH exercising its call option under Section 12.4 of the Operating Agreement (the "Call Notice") to purchase MSH's entire thirty-five percent (35%) membership interest in PGV at Fair Market Value, as defined in and determined pursuant to Section 12.4 of the Operating Agreement.

F. In accordance with the procedures set forth in Section 12.4(a) of the Operating Agreement, PCG retained Whitfield Realty Advisors LLC ("Whitfield"), led by Gerald K. Whitfield, MAI, to prepare an independent appraisal of PGV's real property and operating assets. Whitfield completed its appraisal on February 10, 2023, concluding that the Fair Market Value of one hundred percent (100%) of PGV's real property and operating assets was One Hundred Eighteen Million Dollars ($118,000,000) as of December 31, 2022 (the "Valuation Date") (the "Whitfield Appraisal").

G. Based on the Whitfield Appraisal, PCG calculated MSH's pro rata share of the Fair Market Value as Forty-One Million Three Hundred Thousand Dollars ($41,300,000), representing thirty-five percent (35%) of the appraised value, and tendered that amount to MSH on March 1, 2023, in accordance with the buyout mechanics set forth in Section 12.5 of the Operating Agreement. MSH rejected the tender on March 10, 2023, contending that the Whitfield Appraisal materially undervalued PGV's assets.

H. In accordance with the procedures set forth in Section 12.4(b) of the Operating Agreement, MSH retained Beacon Valuation Group Inc. ("Beacon"), led by Dr. Priya Ramanathan, CFA, ASA, to prepare an independent appraisal of PGV's real property and operating assets. Beacon completed its appraisal on April 14, 2023, concluding that the Fair Market Value of one hundred percent (100%) of PGV's real property and operating assets was One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) as of the Valuation Date (the "Beacon Appraisal").

I. The divergence between the Whitfield Appraisal ($118,000,000) and the Beacon Appraisal ($151,500,000) is Thirty-Three Million Five Hundred Thousand Dollars ($33,500,000), which represents approximately twenty-eight and four-tenths percent (28.4%) of the lower appraisal. This divergence exceeds the ten percent (10%) threshold set forth in Section 12.4(c) of the Operating Agreement.

J. Section 12.4(c) of the Operating Agreement provides, in pertinent part, that if the appraisals obtained by the respective Parties diverge by more than ten percent (10%), the Parties shall jointly select a third independent MAI-certified appraiser (the "Neutral Third Appraiser"), and the Fair Market Value shall be determined as the arithmetic average of the two appraisals (out of the three total appraisals) that are closest in value to each other.

K. MSH filed a Demand for Arbitration with JAMS on March 20, 2023, asserting claims arising out of PCG's exercise of the call option, including claims for breach of fiduciary duty and bad-faith conduct under Section 12.7 of the Operating Agreement. PCG filed its Response and Counterclaim on April 5, 2023, seeking declaratory relief confirming the validity of its exercise of the call option and the appropriateness of the Whitfield Appraisal. Hon. Margaret Liu Chen (Ret.) was appointed as Arbitrator on April 28, 2023.

L. At the preliminary conference held on May 15, 2023, the Arbitrator directed the Parties to confer in good faith regarding the joint selection of a Neutral Third Appraiser pursuant to Section 12.4(c) of the Operating Agreement and to submit an agreed stipulation memorializing the appointment and the terms under which the appraisal would be conducted.

M. The Parties have conferred and have reached agreement on the matters set forth herein.

NOW, THEREFORE, in consideration of the foregoing recitals (which are incorporated herein by reference) and the mutual agreements contained in this Stipulation, and intending to be bound hereby, the Parties jointly stipulate and agree as follows:

SECTION 1: APPOINTMENT OF NEUTRAL THIRD APPRAISER

1.1. Appointment. The Parties hereby jointly designate and appoint Linden Park Advisory LLC ("Linden Park") as the Neutral Third Appraiser pursuant to Section 12.4(c) of the Operating Agreement. Linden Park's principal office is located at 100 Southeast Second Street, Suite 3600, Miami, Florida 33131.

1.2. Lead Appraiser. The appraisal engagement shall be led by Thomas Carraway, MAI, FRICS, a principal of Linden Park. Mr. Carraway holds the MAI designation conferred by the Appraisal Institute, signifying his demonstrated competence in commercial real property valuation and adherence to the Uniform Standards of Professional Appraisal Practice ("USPAP"). Mr. Carraway is also a Fellow of the Royal Institution of Chartered Surveyors (FRICS), an internationally recognized credential in valuation and property advisory services. Mr. Carraway possesses extensive experience in the appraisal of luxury hospitality properties throughout the southeastern United States.

1.3. Independence and Neutrality. Linden Park and Thomas Carraway have each represented to the Parties, in writing, that they have no conflict of interest with respect to PCG, MSH, PGV, Whitfield Realty Advisors LLC, Beacon Valuation Group Inc., Aurelian Hotels & Resorts Inc., or any of their respective principals, officers, directors, members, managers, employees, or affiliates. Linden Park shall serve as an independent, neutral appraiser and shall not serve as an advocate for either Party. If at any time during the engagement Linden Park or Thomas Carraway becomes aware of any circumstance that could reasonably give rise to an actual or perceived conflict of interest, Linden Park shall promptly disclose such circumstance to both Parties and their counsel in writing.

1.4. Confirmation of Qualifications. The Parties acknowledge and agree that Linden Park and Thomas Carraway possess the qualifications, experience, and independence required by Section 12.4(c) of the Operating Agreement for appointment as the Neutral Third Appraiser.

SECTION 2: SCOPE OF APPRAISAL

2.1. Subject of Appraisal. Linden Park shall determine the Fair Market Value of one hundred percent (100%) of the real property and operating assets of Palmetto Grand Ventures LLC as of December 31, 2022 (the "Valuation Date"), consistent with the requirements of Section 12.4 of the Operating Agreement.

2.2. Assets Subject to Appraisal. The assets subject to appraisal include, without limitation, the following:

(a) Real Property. The Palmetto Grand Resort & Spa, a 312-room (including forty-two (42) suites) luxury beachfront hotel and resort located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767, together with all improvements, structures, and appurtenances thereto, and all land and land improvements comprising the Property;

(b) Hotel Amenities and Facilities. All hotel amenities and facilities, including two full-service restaurants, a rooftop bar, an approximately eighteen thousand (18,000) square foot spa and wellness center, approximately twenty-two thousand (22,000) square feet of meeting and event space, and beachfront cabana service;

(c) Tangible Personal Property. All tangible personal property, furniture, fixtures, and equipment ("FF&E") owned by PGV and located at the Property, including but not limited to guest room furnishings, kitchen and food service equipment, audio-visual equipment, laundry and housekeeping equipment, landscaping and grounds maintenance equipment, and all other personal property used in connection with the operation of the Property;

(d) Intangible Assets. All intangible assets of PGV, including but not limited to: (i) the franchise agreement with Aurelian Hotels & Resorts Inc. dated July 15, 2017, having a twenty (20)-year term expiring on July 14, 2037, and providing for a franchise fee of five percent (5%) of gross room revenue plus a two percent (2%) marketing fund contribution (the "Franchise Agreement"); (ii) all management contracts, service contracts, vendor agreements, and other contractual rights; (iii) all licenses, permits, certificates of occupancy, and governmental authorizations; (iv) all goodwill, trade names, customer lists, and booking histories; and (v) all other intangible assets owned by PGV and associated with the operation of the Property.

2.3. Definition of Fair Market Value. For purposes of this Stipulation and the appraisal to be conducted hereunder, "Fair Market Value" shall have the meaning ascribed to it in Section 12.4 of the Operating Agreement, which defines Fair Market Value as:

"[T]he price at which the assets would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of relevant facts."

2.4. Going-Concern Basis. The appraisal shall be conducted on a going-concern basis, reflecting the value of the Property as a fully operational luxury hotel and resort, inclusive of all real property, personal property, and intangible assets necessary for the continued operation of the business.

2.5. Gross Asset Value. The appraisal shall value the assets before deduction of any outstanding indebtedness of PGV (i.e., gross asset value, not net equity value). For the avoidance of doubt, the outstanding indebtedness owed by PGV to Gulf Atlantic National Bank ("GANB") pursuant to that certain Commercial Real Estate Loan Agreement dated August 1, 2017, Loan No. CRE-2017-06284, with an outstanding principal balance of approximately Forty-Eight Million Six Hundred Thousand Dollars ($48,600,000) as of December 31, 2022, shall not be deducted from the appraised value. Such deduction shall be made separately in calculating equity value pursuant to the buyout mechanics set forth in Sections 12.4 and 12.5 of the Operating Agreement.

2.6. Methodologies. Linden Park may employ such generally accepted appraisal methodologies as it deems appropriate in its professional judgment, including without limitation the income approach (whether by direct capitalization, discounted cash flow analysis, or both), the sales comparison approach, and the cost approach. Linden Park shall set forth in its report the methodologies employed, the weight assigned to each approach, and the rationale for its conclusions.

2.7. Compliance with Standards. The appraisal shall be conducted in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by The Appraisal Foundation, and shall comply with all applicable standards of the Appraisal Institute.

SECTION 3: INFORMATION AND ACCESS

3.1. Obligation to Provide Information. Each Party shall provide Linden Park with reasonable access to all non-privileged information and documents relevant to the appraisal. Without limiting the generality of the foregoing, such information and documents shall include:

(a) PGV's audited and unaudited financial statements, including balance sheets, income statements, and statements of cash flows, for fiscal years 2017 through 2022;

(b) Detailed operating data for the Property, including, with respect to fiscal year 2022: total hotel revenue of Sixty-Two Million Eight Hundred Thousand Dollars ($62,800,000); revenue per available room (RevPAR) of Two Hundred Eighty-Nine Dollars ($289); net operating income (NOI) of Eighteen Million Four Hundred Thousand Dollars ($18,400,000); and earnings before interest, taxes, depreciation, and amortization (EBITDA) of Nineteen Million Seven Hundred Thousand Dollars ($19,700,000), each as reported in PGV's financial statements;

(c) Capital expenditure records, including records relating to the Twenty-Four Million Three Hundred Thousand Dollar ($24,300,000) renovation of the Property completed during the period from 2017 through 2019, and any subsequent capital improvements;

(d) A complete copy of the Franchise Agreement with Aurelian Hotels & Resorts Inc., together with all amendments, supplements, and related correspondence;

(e) A complete copy of the GANB loan agreement dated August 1, 2017 (Loan No. CRE-2017-06284), together with all amendments, supplements, and related loan documents;

(f) Operating budgets, business plans, capital improvement plans, and property condition reports and assessments for the Property; and

(g) Such other documents and information as Linden Park may reasonably request in connection with the performance of its appraisal.

3.2. Physical Access. PCG, as Manager of PGV, shall facilitate reasonable physical access to The Palmetto Grand Resort & Spa for Linden Park and its representatives for purposes of conducting a site inspection of the Property. Such access shall be provided upon reasonable advance notice (not less than five (5) business days) and shall be coordinated so as to minimize disruption to hotel operations and guest services.

3.3. Prior Appraisals. Each Party shall provide Linden Park with a complete copy of the Whitfield Appraisal (dated February 10, 2023) and the Beacon Appraisal (dated April 14, 2023) for reference purposes; provided, however, that Linden Park shall conduct an independent appraisal and shall not be bound by the conclusions, assumptions, methodologies, or data of either the Whitfield Appraisal or the Beacon Appraisal. Linden Park shall exercise its own independent professional judgment in arriving at its determination of Fair Market Value.

3.4. Additional Information Requests. Linden Park may request additional information from the Parties and from PGV as Linden Park reasonably deems necessary for the performance of its appraisal. The Parties shall use good-faith efforts to respond to such requests promptly and completely. Any disputes regarding the provision of, or access to, information, including disputes concerning claims of privilege, confidentiality, or relevance, shall be submitted to the Arbitrator for resolution on an expedited basis.

SECTION 4: TIMELINE

4.1. Commencement. Linden Park shall commence its appraisal work promptly following execution of this Stipulation and the satisfaction of the conditions set forth herein, including receipt of the initial retainer deposits described in Section 5 below.

4.2. Preliminary Indication of Value. Linden Park shall deliver a preliminary indication of value (the "Preliminary Indication") to both Parties and their respective counsel within forty-five (45) calendar days of the date of this Stipulation (i.e., on or before July 14, 2023). The Preliminary Indication shall set forth Linden Park's initial range of value and a summary of the methodologies and key assumptions under consideration. The Preliminary Indication is intended to provide the Parties with an early indication of Linden Park's analysis and shall not constitute Linden Park's final opinion of value.

4.3. Final Report. Linden Park shall deliver its final written appraisal report (the "Final Report") to both Parties and their respective counsel within ninety (90) calendar days of the date of this Stipulation (i.e., on or before August 28, 2023). The Final Report shall constitute Linden Park's complete and final opinion of Fair Market Value as of the Valuation Date and shall include all data, analyses, assumptions, limiting conditions, and certifications required by USPAP and the standards of the Appraisal Institute.

4.4. Extensions. The Parties may jointly request a reasonable extension of the deadlines set forth in Sections 4.2 and 4.3 above, and Linden Park shall reasonably accommodate such extension. Any unilateral request by a Party for extension of any deadline under this Section 4 shall be submitted to the Arbitrator for determination.

4.5. Coordination with discovery Schedule. The deadlines established in this Section 4 are without prejudice to, and shall not modify or supersede, the discovery schedule established by the Arbitrator at the May 15, 2023 preliminary conference, unless the Arbitrator determines otherwise. The Parties acknowledge that the appraisal process and the arbitration discovery process are parallel proceedings and shall use good-faith efforts to coordinate timing and information exchanges to avoid unnecessary duplication or delay.

SECTION 5: COST SHARING

5.1. Equal Sharing of Fees and Expenses. The fees and expenses of Linden Park Advisory LLC in connection with the appraisal engagement described in this Stipulation shall be shared equally (fifty percent (50%) / fifty percent (50%)) by PCG and MSH.

5.2. Fee Estimate. Linden Park has provided the Parties with a fee estimate of One Hundred Fifty Thousand Dollars ($150,000) to One Hundred Eighty-Five Thousand Dollars ($185,000) for the complete appraisal engagement, inclusive of the Preliminary Indication and the Final Report, as well as reasonable expenses associated with travel, site inspection, data acquisition, and report preparation.

5.3. Initial Retainer. Each Party shall deposit Ninety-Two Thousand Five Hundred Dollars ($92,500) with Linden Park within ten (10) business days of execution of this Stipulation as an initial retainer (the "Retainer"), for an aggregate initial retainer of One Hundred Eighty-Five Thousand Dollars ($185,000). The Retainer shall be applied against Linden Park's fees and expenses as incurred.

5.4. Additional Fees and Expenses. In the event that Linden Park's total fees and expenses exceed the aggregate Retainer amount, any additional fees and expenses shall be billed monthly by Linden Park and shall be shared equally by the Parties. Each Party shall pay its one-half (1/2) share of any such additional billing within fifteen (15) business days of receipt of an invoice from Linden Park.

5.5. Surplus Retainer Funds. Any surplus Retainer funds remaining upon completion of the appraisal engagement and delivery of the Final Report shall be refunded to the Parties in equal shares.

5.6. Independence of Costs. Each Party's share of Linden Park's fees and expenses is independent of, and in addition to, the costs and fees of its own separately retained appraiser (Whitfield Realty Advisors LLC for PCG; Beacon Valuation Group Inc. for MSH). Nothing in this Stipulation shall affect either Party's obligation to pay the fees of its own retained appraiser.

5.7. Reallocation. The Parties reserve the right to seek reallocation of appraisal costs as part of any final award in this arbitration, to the extent permitted by the Operating Agreement, JAMS rules, or applicable law.

SECTION 6: DETERMINATION OF FAIR MARKET VALUE UNDER SECTION 12.4(c)

6.1. Determination Mechanism. Upon delivery of the Final Report by Linden Park, the Fair Market Value of PGV's real property and operating assets as of the Valuation Date for purposes of the call option under Section 12.4 of the Operating Agreement shall be determined in accordance with Section 12.4(c) of the Operating Agreement. Specifically, the Fair Market Value shall be the arithmetic average of the two appraisals (out of the Whitfield Appraisal, the Beacon Appraisal, and the Linden Park appraisal) that are closest in value to each other. The third appraisal (i.e., the outlier) shall be disregarded for purposes of this calculation.

6.2. Reservation of Rights to Challenge. Notwithstanding the foregoing, the Parties reserve all rights to challenge the admissibility, weight, reliability, or accuracy of any appraisal — whether the Whitfield Appraisal, the Beacon Appraisal, or the Linden Park appraisal — in the arbitration proceeding, subject to the Arbitrator's rulings on such challenges. The Parties acknowledge that the appointment of Linden Park and the application of the Section 12.4(c) mechanism do not foreclose any arguments regarding the propriety of the underlying appraisals or the assumptions, methodologies, or data employed therein.

6.3. No Waiver of Claims or Defenses. Nothing in this Stipulation shall be construed as a waiver of either Party's claims, counterclaims, or defenses in this arbitration. Without limiting the generality of the foregoing:

(a) MSH expressly reserves all rights under its Demand for Arbitration, including without limitation its claims under Section 12.7 of the Operating Agreement (relating to bad-faith penalties and remedies), its claims for breach of fiduciary duty, and its position that the Beacon Appraisal at $151,500,000 more accurately reflects the Fair Market Value of PGV's assets;

(b) PCG expressly reserves all rights under its Response and Counterclaim, including without limitation its counterclaim for declaratory relief confirming the validity of its exercise of the call option, its position that the Whitfield Appraisal at $118,000,000 reflects the proper Fair Market Value, and its defenses to MSH's claims.

SECTION 7: CONFIDENTIALITY

7.1. Confidential Treatment. The Preliminary Indication and the Final Report prepared by Linden Park, together with all drafts, work papers, correspondence, and other materials generated by Linden Park in connection with the appraisal engagement (collectively, the "Appraisal Materials"), shall be treated as confidential. The Appraisal Materials shall not be disclosed to any third party other than the Parties' respective counsel, retained experts and consultants, and the Arbitrator, except as may be required by applicable law, regulation, or court or arbitral order, or by order of the Arbitrator.

7.2. Confidentiality Agreement. Prior to commencing its appraisal work, Linden Park shall execute a confidentiality agreement in a form reasonably acceptable to both Parties, which shall govern Linden Park's obligations with respect to the confidential treatment of all information received from the Parties and from PGV in connection with the appraisal engagement. The confidentiality agreement shall survive the completion of the appraisal engagement and the termination of this arbitration.

7.3. Existing Obligations. The confidentiality obligations set forth in this Section 7 are in addition to, and not in lieu of, any confidentiality obligations arising under the JAMS Comprehensive Arbitration Rules and Procedures, any confidentiality order entered by the Arbitrator, or any confidentiality provisions of the Operating Agreement.

SECTION 8: COMMUNICATIONS PROTOCOL

8.1. Joint Substantive Communications. All substantive communications between the Parties (or their counsel) and Linden Park, including communications concerning valuation methodology, assumptions, data inputs, comparable transactions, market conditions, and any other matters bearing on Linden Park's analysis or conclusions, shall be conducted jointly — that is, with both Parties or their respective counsel present on any telephone call or videoconference, or copied on any written correspondence (including electronic mail). This requirement is intended to avoid any appearance of ex parte influence over the Neutral Third Appraiser and to ensure transparency in the appraisal process.

8.2. Logistical Communications. Logistical and scheduling communications with Linden Park (such as arranging site inspection dates, coordinating document deliveries, and confirming receipt of materials) may be conducted unilaterally by either Party or its counsel; provided, however, that the other Party's counsel shall be promptly informed of the substance and outcome of any such communication, and in no event later than one (1) business day thereafter.

8.3. Designated Recipients. Written communications pursuant to this Stipulation shall be directed to the following:

For Respondent Pellegrino Capital Group LLC: Francesca Morano, Partner Calderwood & Harkness LLP 801 Brickell Avenue, Suite 2800 Miami, Florida 33131

Email: fmorano@calderwoodharkness.com

For Claimant Meridian Shores Hospitality LLC: Victoria Castillo, Partner Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, Florida 33131

Email: vcastillo@hdclaw.com

For Linden Park Advisory LLC: Thomas Carraway, MAI, FRICS Linden Park Advisory LLC 100 Southeast Second Street, Suite 3600 Miami, Florida 33131

Email: tcarraway@lindenparkadvisory.com

8.4. Change of Contact Information. Any Party may change its designated contact information by providing written notice to the other Party and to Linden Park in accordance with this Section 8.

SECTION 9: RESERVATION OF RIGHTS

9.1. Limited Purpose. This Stipulation is entered into solely for the purpose of implementing the neutral-appraisal mechanism prescribed by Section 12.4(c) of the Operating Agreement and shall not constitute, and shall not be construed as, an admission by either Party regarding the proper Fair Market Value of PGV's real property and operating assets, the validity or accuracy of any appraisal, or any other issue in dispute in this arbitration.

9.2. PCG's Reservation. PCG reserves all rights, claims, counterclaims, and defenses asserted or available to it under its Response and Counterclaim filed on April 5, 2023, and otherwise in this arbitration. Without limiting the foregoing, PCG reserves its position that the Whitfield Appraisal at One Hundred Eighteen Million Dollars ($118,000,000) reflects the proper Fair Market Value of PGV's real property and operating assets as of the Valuation Date.

9.3. MSH's Reservation. MSH reserves all rights, claims, and defenses asserted or available to it under its Demand for Arbitration filed on March 20, 2023, and otherwise in this arbitration. Without limiting the foregoing, MSH reserves its claims under Section 12.7 of the Operating Agreement (including claims for bad-faith penalties) and its position that the Beacon Appraisal at One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) more accurately reflects the Fair Market Value of PGV's real property and operating assets as of the Valuation Date.

9.4. Expert Testimony and Evidentiary Rights. The Parties reserve all rights to present expert testimony (including testimony by their respective retained appraisers and any other experts), to challenge the admissibility, weight, or reliability of any appraisal (including the Linden Park appraisal), and to make any arguments at the arbitration hearing, in each case subject to the JAMS Comprehensive Arbitration Rules and Procedures and the Arbitrator's rulings.

9.5. No Precedent. Nothing in this Stipulation shall be deemed to establish a precedent or practice for purposes of any other proceeding, dispute, or transaction between the Parties.

SECTION 10: ARBITRATOR'S APPROVAL AND JURISDICTION

10.1. Entry as Agreed Order. The Parties jointly and respectfully request that the Arbitrator, Hon. Margaret Liu Chen (Ret.), enter this Stipulation as an Agreed Order of the Tribunal in the above-referenced arbitration proceeding (JAMS Ref. No. 1440032871).

10.2. Continuing Jurisdiction. The Arbitrator shall retain jurisdiction to resolve any disputes arising under or in connection with this Stipulation, including without limitation disputes regarding: (a) the provision of, or access to, information and documents by or to Linden Park; (b) extensions of the deadlines established in Section 4 hereof; (c) compliance by any Party with its obligations under this Stipulation; (d) the interpretation or application of any provision of this Stipulation; and (e) any other matters necessary to effectuate the purposes of this Stipulation and Section 12.4(c) of the Operating Agreement.

10.3. Governing Rules. This Stipulation shall be governed by and construed in accordance with the Operating Agreement, the JAMS Comprehensive Arbitration Rules and Procedures, and the laws of the State of Florida, without regard to conflict-of-laws principles.

IN WITNESS WHEREOF, the undersigned counsel, duly authorized to act on behalf of their respective clients, have executed this Joint Stipulation and Agreed Order as of the date first set forth above.

FOR CLAIMANT MERIDIAN SHORES HOSPITALITY LLC:

HARGROVE, DUNLAP & CASTILLO LLP

By: ________

Victoria Castillo, Partner 1395 Brickell Avenue, Suite 3100 Miami, Florida 33131

Attorneys for Claimant Meridian Shores Hospitality LLC

Date: May 30, 2023

FOR RESPONDENT PELLEGRINO CAPITAL GROUP LLC:

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano, Partner 801 Brickell Avenue, Suite 2800 Miami, Florida 33131

Attorneys for Respondent Pellegrino Capital Group LLC

Date: May 30, 2023

AGREED ORDER

The foregoing Joint Stipulation having been submitted to the undersigned Arbitrator by and with the consent of both Parties, and the Arbitrator having reviewed the Stipulation and finding it to be consistent with the Operating Agreement, the JAMS Comprehensive Arbitration Rules and Procedures, and the interests of a fair and efficient resolution of this dispute, it is hereby:

ORDERED that the Joint Stipulation and Agreed Order Re: Appointment of Neutral Third Appraiser Pursuant to Section 12.4(c) of the Operating Agreement is SO ORDERED and entered as an Agreed Order of this Tribunal, with full force and effect.

ORDERED that the Parties shall comply with each of their respective obligations set forth in the Stipulation in accordance with the terms and deadlines stated therein.

ORDERED that the Arbitrator retains jurisdiction to resolve any disputes arising under or in connection with the Stipulation, as set forth in Section 10.2 thereof.

SO ORDERED.

________________________________________

Hon. Margaret Liu Chen (Ret.) Arbitrator JAMS Ref. No. 1440032871

Date: ____, 2023

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

MERIDIAN SHORES HOSPITALITY LLC,

Claimant,

PELLEGRINO CAPITAL GROUP LLC,

Respondent.

JAMS ARBITRATION
JACKSONVILLE, FLORIDA RESOLUTION CENTER 1 Independent Drive, Suite 1600 Jacksonville, FL 32202
JAMS Ref. No. 1440032871
Before Hon. Margaret Liu Chen (Ret.), Arbitrator
JOINT STIPULATION AND AGREED ORDER RE: APPOINTMENT OF NEUTRAL THIRD APPRAISER PURSUANT TO SECTION 12.4(c) OF THE OPERATING AGREEMENT
Dated: May 30, 2023
Claimant Meridian Shores Hospitality LLC ("MSH"), a Delaware limited liability company with its principal office located at 220 Royal Palm Way, Suite 300, Palm Beach, Florida 33480, by and through its undersigned counsel, Hargrove, Dunlap & Castillo LLP (Victoria Castillo, Partner; Ryan Matsuda, Senior Associate), with offices at 1395 Brickell Avenue, Suite 3100, Miami, Florida 33131, and Respondent Pellegrino Capital Group LLC ("PCG"), a Florida limited liability company with its headquarters located at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606, by and through its undersigned counsel, Calderwood & Harkness LLP (Francesca Morano, Partner; Simone Laroche, Associate), with offices at 801 Brickell Avenue, Suite 2800, Miami, Florida 33131 (MSH and PCG, collectively, the "Parties," and each individually, a "Party"), hereby jointly submit this Joint Stipulation and Agreed Order Re: Appointment of Neutral Third Appraiser Pursuant to Section 12.4(c) of the Operating Agreement (this "Stipulation") to the Arbitrator, Hon. Margaret Liu Chen (Ret.), and respectfully state as follows:
RECITALS.  A. PCG and MSH are the sole members of Palmetto Grand Ventures LLC ("PGV"), a Florida limited liability company organized under the Florida Revised Limited Liability Company Act, Florida Filing No. L17000124583, Employer Identification Number 82-5063921, with its registered office at 1900 Bayshore Boulevard, Suite 1400, Tampa, Florida 33606.
B. PGV was formed on June 15, 2017, pursuant to the Operating Agreement of Palmetto Grand Ventures LLC, dated June 15, 2017 (as the same may have been amended, modified, or supplemented from time to time, the "Operating Agreement" or "OA"). The Operating Agreement governs the rights, obligations, and relationships of the members with respect to PGV and its assets and operations.
C. PCG holds a sixty-five percent (65%) membership interest in PGV and serves as the sole Manager of PGV, with the powers, duties, and responsibilities set forth in Article VII of the Operating Agreement. MSH holds the remaining thirty-five percent (35%) membership interest in PGV.
D. PGV owns and operates The Palmetto Grand Resort & Spa (the "Property"), a 312-room luxury beachfront hotel located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767. The Property is managed under a franchise agreement with Aurelian Hotels & Resorts Inc. ("Aurelian"), an internationally recognized luxury hospitality brand.
E. On January 9, 2023, PCG delivered written notice to MSH exercising its call option under Section 12.4 of the Operating Agreement (the "Call Notice") to purchase MSH's entire thirty-five percent (35%) membership interest in PGV at Fair Market Value, as defined in and determined pursuant to Section 12.4 of the Operating Agreement.
F. In accordance with the procedures set forth in Section 12.4(a) of the Operating Agreement, PCG retained Whitfield Realty Advisors LLC ("Whitfield"), led by Gerald K. Whitfield, MAI, to prepare an independent appraisal of PGV's real property and operating assets. Whitfield completed its appraisal on February 10, 2023, concluding that the Fair Market Value of one hundred percent (100%) of PGV's real property and operating assets was One Hundred Eighteen Million Dollars ($118,000,000) as of December 31, 2022 (the "Valuation Date") (the "Whitfield Appraisal").
G. Based on the Whitfield Appraisal, PCG calculated MSH's pro rata share of the Fair Market Value as Forty-One Million Three Hundred Thousand Dollars ($41,300,000), representing thirty-five percent (35%) of the appraised value, and tendered that amount to MSH on March 1, 2023, in accordance with the buyout mechanics set forth in Section 12.5 of the Operating Agreement. MSH rejected the tender on March 10, 2023, contending that the Whitfield Appraisal materially undervalued PGV's assets.
H. In accordance with the procedures set forth in Section 12.4(b) of the Operating Agreement, MSH retained Beacon Valuation Group Inc. ("Beacon"), led by Dr. Priya Ramanathan, CFA, ASA, to prepare an independent appraisal of PGV's real property and operating assets. Beacon completed its appraisal on April 14, 2023, concluding that the Fair Market Value of one hundred percent (100%) of PGV's real property and operating assets was One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) as of the Valuation Date (the "Beacon Appraisal").
I. The divergence between the Whitfield Appraisal ($118,000,000) and the Beacon Appraisal ($151,500,000) is Thirty-Three Million Five Hundred Thousand Dollars ($33,500,000), which represents approximately twenty-eight and four-tenths percent (28.4%) of the lower appraisal. This divergence exceeds the ten percent (10%) threshold set forth in Section 12.4(c) of the Operating Agreement.
J. Section 12.4(c) of the Operating Agreement provides, in pertinent part, that if the appraisals obtained by the respective Parties diverge by more than ten percent (10%), the Parties shall jointly select a third independent MAI-certified appraiser (the "Neutral Third Appraiser"), and the Fair Market Value shall be determined as the arithmetic average of the two appraisals (out of the three total appraisals) that are closest in value to each other.
K. MSH filed a Demand for Arbitration with JAMS on March 20, 2023, asserting claims arising out of PCG's exercise of the call option, including claims for breach of fiduciary duty and bad-faith conduct under Section 12.7 of the Operating Agreement. PCG filed its Response and Counterclaim on April 5, 2023, seeking declaratory relief confirming the validity of its exercise of the call option and the appropriateness of the Whitfield Appraisal. Hon. Margaret Liu Chen (Ret.) was appointed as Arbitrator on April 28, 2023.
L. At the preliminary conference held on May 15, 2023, the Arbitrator directed the Parties to confer in good faith regarding the joint selection of a Neutral Third Appraiser pursuant to Section 12.4(c) of the Operating Agreement and to submit an agreed stipulation memorializing the appointment and the terms under which the appraisal would be conducted.
M. The Parties have conferred and have reached agreement on the matters set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals (which are incorporated herein by reference) and the mutual agreements contained in this Stipulation, and intending to be bound hereby, the Parties jointly stipulate and agree as follows:
SECTION 1: APPOINTMENT OF NEUTRAL THIRD APPRAISER
1.1. Appointment. The Parties hereby jointly designate and appoint Linden Park Advisory LLC ("Linden Park") as the Neutral Third Appraiser pursuant to Section 12.4(c) of the Operating Agreement. Linden Park's principal office is located at 100 Southeast Second Street, Suite 3600, Miami, Florida 33131.
1.2. Lead Appraiser. The appraisal engagement shall be led by Thomas Carraway, MAI, FRICS, a principal of Linden Park. Mr. Carraway holds the MAI designation conferred by the Appraisal Institute, signifying his demonstrated competence in commercial real property valuation and adherence to the Uniform Standards of Professional Appraisal Practice ("USPAP"). Mr. Carraway is also a Fellow of the Royal Institution of Chartered Surveyors (FRICS), an internationally recognized credential in valuation and property advisory services. Mr. Carraway possesses extensive experience in the appraisal of luxury hospitality properties throughout the southeastern United States.
1.3. Independence and Neutrality. Linden Park and Thomas Carraway have each represented to the Parties, in writing, that they have no conflict of interest with respect to PCG, MSH, PGV, Whitfield Realty Advisors LLC, Beacon Valuation Group Inc., Aurelian Hotels & Resorts Inc., or any of their respective principals, officers, directors, members, managers, employees, or affiliates. Linden Park shall serve as an independent, neutral appraiser and shall not serve as an advocate for either Party. If at any time during the engagement Linden Park or Thomas Carraway becomes aware of any circumstance that could reasonably give rise to an actual or perceived conflict of interest, Linden Park shall promptly disclose such circumstance to both Parties and their counsel in writing.
1.4. Confirmation of Qualifications. The Parties acknowledge and agree that Linden Park and Thomas Carraway possess the qualifications, experience, and independence required by Section 12.4(c) of the Operating Agreement for appointment as the Neutral Third Appraiser.
SECTION 2: SCOPE OF APPRAISAL
2.1. Subject of Appraisal. Linden Park shall determine the Fair Market Value of one hundred percent (100%) of the real property and operating assets of Palmetto Grand Ventures LLC as of December 31, 2022 (the "Valuation Date"), consistent with the requirements of Section 12.4 of the Operating Agreement.
2.2. Assets Subject to Appraisal. The assets subject to appraisal include, without limitation, the following:
(a) Real Property. The Palmetto Grand Resort & Spa, a 312-room (including forty-two (42) suites) luxury beachfront hotel and resort located at 650 Mandalay Avenue, Clearwater Beach, Florida 33767, together with all improvements, structures, and appurtenances thereto, and all land and land improvements comprising the Property;
(b) Hotel Amenities and Facilities. All hotel amenities and facilities, including two full-service restaurants, a rooftop bar, an approximately eighteen thousand (18,000) square foot spa and wellness center, approximately twenty-two thousand (22,000) square feet of meeting and event space, and beachfront cabana service;
(c) Tangible Personal Property. All tangible personal property, furniture, fixtures, and equipment ("FF&E") owned by PGV and located at the Property, including but not limited to guest room furnishings, kitchen and food service equipment, audio-visual equipment, laundry and housekeeping equipment, landscaping and grounds maintenance equipment, and all other personal property used in connection with the operation of the Property;
(d) Intangible Assets. All intangible assets of PGV, including but not limited to: (i) the franchise agreement with Aurelian Hotels & Resorts Inc. dated July 15, 2017, having a twenty (20)-year term expiring on July 14, 2037, and providing for a franchise fee of five percent (5%) of gross room revenue plus a two percent (2%) marketing fund contribution (the "Franchise Agreement"); (ii) all management contracts, service contracts, vendor agreements, and other contractual rights; (iii) all licenses, permits, certificates of occupancy, and governmental authorizations; (iv) all goodwill, trade names, customer lists, and booking histories; and (v) all other intangible assets owned by PGV and associated with the operation of the Property.
2.3. Definition of Fair Market Value. For purposes of this Stipulation and the appraisal to be conducted hereunder, "Fair Market Value" shall have the meaning ascribed to it in Section 12.4 of the Operating Agreement, which defines Fair Market Value as:
"[T]he price at which the assets would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of relevant facts."
2.4. Going-Concern Basis. The appraisal shall be conducted on a going-concern basis, reflecting the value of the Property as a fully operational luxury hotel and resort, inclusive of all real property, personal property, and intangible assets necessary for the continued operation of the business.
2.5. Gross Asset Value. The appraisal shall value the assets before deduction of any outstanding indebtedness of PGV (i.e., gross asset value, not net equity value). For the avoidance of doubt, the outstanding indebtedness owed by PGV to Gulf Atlantic National Bank ("GANB") pursuant to that certain Commercial Real Estate Loan Agreement dated August 1, 2017, Loan No. CRE-2017-06284, with an outstanding principal balance of approximately Forty-Eight Million Six Hundred Thousand Dollars ($48,600,000) as of December 31, 2022, shall not be deducted from the appraised value. Such deduction shall be made separately in calculating equity value pursuant to the buyout mechanics set forth in Sections 12.4 and 12.5 of the Operating Agreement.
2.6. Methodologies. Linden Park may employ such generally accepted appraisal methodologies as it deems appropriate in its professional judgment, including without limitation the income approach (whether by direct capitalization, discounted cash flow analysis, or both), the sales comparison approach, and the cost approach. Linden Park shall set forth in its report the methodologies employed, the weight assigned to each approach, and the rationale for its conclusions.
2.7. Compliance with Standards. The appraisal shall be conducted in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by The Appraisal Foundation, and shall comply with all applicable standards of the Appraisal Institute.
SECTION 3: INFORMATION AND ACCESS
3.1. Obligation to Provide Information. Each Party shall provide Linden Park with reasonable access to all non-privileged information and documents relevant to the appraisal. Without limiting the generality of the foregoing, such information and documents shall include:
(a) PGV's audited and unaudited financial statements, including balance sheets, income statements, and statements of cash flows, for fiscal years 2017 through 2022;
(b) Detailed operating data for the Property, including, with respect to fiscal year 2022: total hotel revenue of Sixty-Two Million Eight Hundred Thousand Dollars ($62,800,000); revenue per available room (RevPAR) of Two Hundred Eighty-Nine Dollars ($289); net operating income (NOI) of Eighteen Million Four Hundred Thousand Dollars ($18,400,000); and earnings before interest, taxes, depreciation, and amortization (EBITDA) of Nineteen Million Seven Hundred Thousand Dollars ($19,700,000), each as reported in PGV's financial statements;
(c) Capital expenditure records, including records relating to the Twenty-Four Million Three Hundred Thousand Dollar ($24,300,000) renovation of the Property completed during the period from 2017 through 2019, and any subsequent capital improvements;
(d) A complete copy of the Franchise Agreement with Aurelian Hotels & Resorts Inc., together with all amendments, supplements, and related correspondence;
(e) A complete copy of the GANB loan agreement dated August 1, 2017 (Loan No. CRE-2017-06284), together with all amendments, supplements, and related loan documents;
(f) Operating budgets, business plans, capital improvement plans, and property condition reports and assessments for the Property; and
(g) Such other documents and information as Linden Park may reasonably request in connection with the performance of its appraisal.
3.2. Physical Access. PCG, as Manager of PGV, shall facilitate reasonable physical access to The Palmetto Grand Resort & Spa for Linden Park and its representatives for purposes of conducting a site inspection of the Property. Such access shall be provided upon reasonable advance notice (not less than five (5) business days) and shall be coordinated so as to minimize disruption to hotel operations and guest services.
3.3. Prior Appraisals. Each Party shall provide Linden Park with a complete copy of the Whitfield Appraisal (dated February 10, 2023) and the Beacon Appraisal (dated April 14, 2023) for reference purposes; provided, however, that Linden Park shall conduct an independent appraisal and shall not be bound by the conclusions, assumptions, methodologies, or data of either the Whitfield Appraisal or the Beacon Appraisal. Linden Park shall exercise its own independent professional judgment in arriving at its determination of Fair Market Value.
3.4. Additional Information Requests. Linden Park may request additional information from the Parties and from PGV as Linden Park reasonably deems necessary for the performance of its appraisal. The Parties shall use good-faith efforts to respond to such requests promptly and completely. Any disputes regarding the provision of, or access to, information, including disputes concerning claims of privilege, confidentiality, or relevance, shall be submitted to the Arbitrator for resolution on an expedited basis.
SECTION 4: TIMELINE
4.1. Commencement. Linden Park shall commence its appraisal work promptly following execution of this Stipulation and the satisfaction of the conditions set forth herein, including receipt of the initial retainer deposits described in Section 5 below.
4.2. Preliminary Indication of Value. Linden Park shall deliver a preliminary indication of value (the "Preliminary Indication") to both Parties and their respective counsel within forty-five (45) calendar days of the date of this Stipulation (i.e., on or before July 14, 2023). The Preliminary Indication shall set forth Linden Park's initial range of value and a summary of the methodologies and key assumptions under consideration. The Preliminary Indication is intended to provide the Parties with an early indication of Linden Park's analysis and shall not constitute Linden Park's final opinion of value.
4.3. Final Report. Linden Park shall deliver its final written appraisal report (the "Final Report") to both Parties and their respective counsel within ninety (90) calendar days of the date of this Stipulation (i.e., on or before August 28, 2023). The Final Report shall constitute Linden Park's complete and final opinion of Fair Market Value as of the Valuation Date and shall include all data, analyses, assumptions, limiting conditions, and certifications required by USPAP and the standards of the Appraisal Institute.
4.4. Extensions. The Parties may jointly request a reasonable extension of the deadlines set forth in Sections 4.2 and 4.3 above, and Linden Park shall reasonably accommodate such extension. Any unilateral request by a Party for extension of any deadline under this Section 4 shall be submitted to the Arbitrator for determination.
4.5. Coordination with discovery Schedule. The deadlines established in this Section 4 are without prejudice to, and shall not modify or supersede, the discovery schedule established by the Arbitrator at the May 15, 2023 preliminary conference, unless the Arbitrator determines otherwise. The Parties acknowledge that the appraisal process and the arbitration discovery process are parallel proceedings and shall use good-faith efforts to coordinate timing and information exchanges to avoid unnecessary duplication or delay.
SECTION 5: COST SHARING
5.1. Equal Sharing of Fees and Expenses. The fees and expenses of Linden Park Advisory LLC in connection with the appraisal engagement described in this Stipulation shall be shared equally (fifty percent (50%) / fifty percent (50%)) by PCG and MSH.
5.2. Fee Estimate. Linden Park has provided the Parties with a fee estimate of One Hundred Fifty Thousand Dollars ($150,000) to One Hundred Eighty-Five Thousand Dollars ($185,000) for the complete appraisal engagement, inclusive of the Preliminary Indication and the Final Report, as well as reasonable expenses associated with travel, site inspection, data acquisition, and report preparation.
5.3. Initial Retainer. Each Party shall deposit Ninety-Two Thousand Five Hundred Dollars ($92,500) with Linden Park within ten (10) business days of execution of this Stipulation as an initial retainer (the "Retainer"), for an aggregate initial retainer of One Hundred Eighty-Five Thousand Dollars ($185,000). The Retainer shall be applied against Linden Park's fees and expenses as incurred.
5.4. Additional Fees and Expenses. In the event that Linden Park's total fees and expenses exceed the aggregate Retainer amount, any additional fees and expenses shall be billed monthly by Linden Park and shall be shared equally by the Parties. Each Party shall pay its one-half (1/2) share of any such additional billing within fifteen (15) business days of receipt of an invoice from Linden Park.
5.5. Surplus Retainer Funds. Any surplus Retainer funds remaining upon completion of the appraisal engagement and delivery of the Final Report shall be refunded to the Parties in equal shares.
5.6. Independence of Costs. Each Party's share of Linden Park's fees and expenses is independent of, and in addition to, the costs and fees of its own separately retained appraiser (Whitfield Realty Advisors LLC for PCG; Beacon Valuation Group Inc. for MSH). Nothing in this Stipulation shall affect either Party's obligation to pay the fees of its own retained appraiser.
5.7. Reallocation. The Parties reserve the right to seek reallocation of appraisal costs as part of any final award in this arbitration, to the extent permitted by the Operating Agreement, JAMS rules, or applicable law.
SECTION 6: DETERMINATION OF FAIR MARKET VALUE UNDER SECTION 12.4(c)
6.1. Determination Mechanism. Upon delivery of the Final Report by Linden Park, the Fair Market Value of PGV's real property and operating assets as of the Valuation Date for purposes of the call option under Section 12.4 of the Operating Agreement shall be determined in accordance with Section 12.4(c) of the Operating Agreement. Specifically, the Fair Market Value shall be the arithmetic average of the two appraisals (out of the Whitfield Appraisal, the Beacon Appraisal, and the Linden Park appraisal) that are closest in value to each other. The third appraisal (i.e., the outlier) shall be disregarded for purposes of this calculation.
6.2. Reservation of Rights to Challenge. Notwithstanding the foregoing, the Parties reserve all rights to challenge the admissibility, weight, reliability, or accuracy of any appraisal — whether the Whitfield Appraisal, the Beacon Appraisal, or the Linden Park appraisal — in the arbitration proceeding, subject to the Arbitrator's rulings on such challenges. The Parties acknowledge that the appointment of Linden Park and the application of the Section 12.4(c) mechanism do not foreclose any arguments regarding the propriety of the underlying appraisals or the assumptions, methodologies, or data employed therein.
6.3. No Waiver of Claims or Defenses. Nothing in this Stipulation shall be construed as a waiver of either Party's claims, counterclaims, or defenses in this arbitration. Without limiting the generality of the foregoing:
(a) MSH expressly reserves all rights under its Demand for Arbitration, including without limitation its claims under Section 12.7 of the Operating Agreement (relating to bad-faith penalties and remedies), its claims for breach of fiduciary duty, and its position that the Beacon Appraisal at $151,500,000 more accurately reflects the Fair Market Value of PGV's assets;
(b) PCG expressly reserves all rights under its Response and Counterclaim, including without limitation its counterclaim for declaratory relief confirming the validity of its exercise of the call option, its position that the Whitfield Appraisal at $118,000,000 reflects the proper Fair Market Value, and its defenses to MSH's claims.
SECTION 7: CONFIDENTIALITY
7.1. Confidential Treatment. The Preliminary Indication and the Final Report prepared by Linden Park, together with all drafts, work papers, correspondence, and other materials generated by Linden Park in connection with the appraisal engagement (collectively, the "Appraisal Materials"), shall be treated as confidential. The Appraisal Materials shall not be disclosed to any third party other than the Parties' respective counsel, retained experts and consultants, and the Arbitrator, except as may be required by applicable law, regulation, or court or arbitral order, or by order of the Arbitrator.
7.2. Confidentiality Agreement. Prior to commencing its appraisal work, Linden Park shall execute a confidentiality agreement in a form reasonably acceptable to both Parties, which shall govern Linden Park's obligations with respect to the confidential treatment of all information received from the Parties and from PGV in connection with the appraisal engagement. The confidentiality agreement shall survive the completion of the appraisal engagement and the termination of this arbitration.
7.3. Existing Obligations. The confidentiality obligations set forth in this Section 7 are in addition to, and not in lieu of, any confidentiality obligations arising under the JAMS Comprehensive Arbitration Rules and Procedures, any confidentiality order entered by the Arbitrator, or any confidentiality provisions of the Operating Agreement.
SECTION 8: COMMUNICATIONS PROTOCOL
8.1. Joint Substantive Communications. All substantive communications between the Parties (or their counsel) and Linden Park, including communications concerning valuation methodology, assumptions, data inputs, comparable transactions, market conditions, and any other matters bearing on Linden Park's analysis or conclusions, shall be conducted jointly — that is, with both Parties or their respective counsel present on any telephone call or videoconference, or copied on any written correspondence (including electronic mail). This requirement is intended to avoid any appearance of ex parte influence over the Neutral Third Appraiser and to ensure transparency in the appraisal process.
8.2. Logistical Communications. Logistical and scheduling communications with Linden Park (such as arranging site inspection dates, coordinating document deliveries, and confirming receipt of materials) may be conducted unilaterally by either Party or its counsel; provided, however, that the other Party's counsel shall be promptly informed of the substance and outcome of any such communication, and in no event later than one (1) business day thereafter.
8.3. Designated Recipients. Written communications pursuant to this Stipulation shall be directed to the following:
For Respondent Pellegrino Capital Group LLC: Francesca Morano, Partner Calderwood & Harkness LLP 801 Brickell Avenue, Suite 2800 Miami, Florida 33131
Email: fmorano@calderwoodharkness.com
For Claimant Meridian Shores Hospitality LLC: Victoria Castillo, Partner Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, Florida 33131
Email: vcastillo@hdclaw.com
For Linden Park Advisory LLC: Thomas Carraway, MAI, FRICS Linden Park Advisory LLC 100 Southeast Second Street, Suite 3600 Miami, Florida 33131
Email: tcarraway@lindenparkadvisory.com
8.4. Change of Contact Information. Any Party may change its designated contact information by providing written notice to the other Party and to Linden Park in accordance with this Section 8.
SECTION 9: RESERVATION OF RIGHTS
9.1. Limited Purpose. This Stipulation is entered into solely for the purpose of implementing the neutral-appraisal mechanism prescribed by Section 12.4(c) of the Operating Agreement and shall not constitute, and shall not be construed as, an admission by either Party regarding the proper Fair Market Value of PGV's real property and operating assets, the validity or accuracy of any appraisal, or any other issue in dispute in this arbitration.
9.2. PCG's Reservation. PCG reserves all rights, claims, counterclaims, and defenses asserted or available to it under its Response and Counterclaim filed on April 5, 2023, and otherwise in this arbitration. Without limiting the foregoing, PCG reserves its position that the Whitfield Appraisal at One Hundred Eighteen Million Dollars ($118,000,000) reflects the proper Fair Market Value of PGV's real property and operating assets as of the Valuation Date.
9.3. MSH's Reservation. MSH reserves all rights, claims, and defenses asserted or available to it under its Demand for Arbitration filed on March 20, 2023, and otherwise in this arbitration. Without limiting the foregoing, MSH reserves its claims under Section 12.7 of the Operating Agreement (including claims for bad-faith penalties) and its position that the Beacon Appraisal at One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) more accurately reflects the Fair Market Value of PGV's real property and operating assets as of the Valuation Date.
9.4. Expert Testimony and Evidentiary Rights. The Parties reserve all rights to present expert testimony (including testimony by their respective retained appraisers and any other experts), to challenge the admissibility, weight, or reliability of any appraisal (including the Linden Park appraisal), and to make any arguments at the arbitration hearing, in each case subject to the JAMS Comprehensive Arbitration Rules and Procedures and the Arbitrator's rulings.
9.5. No Precedent. Nothing in this Stipulation shall be deemed to establish a precedent or practice for purposes of any other proceeding, dispute, or transaction between the Parties.
SECTION 10: ARBITRATOR'S APPROVAL AND JURISDICTION
10.1. Entry as Agreed Order. The Parties jointly and respectfully request that the Arbitrator, Hon. Margaret Liu Chen (Ret.), enter this Stipulation as an Agreed Order of the Tribunal in the above-referenced arbitration proceeding (JAMS Ref. No. 1440032871).
10.2. Continuing Jurisdiction. The Arbitrator shall retain jurisdiction to resolve any disputes arising under or in connection with this Stipulation, including without limitation disputes regarding: (a) the provision of, or access to, information and documents by or to Linden Park; (b) extensions of the deadlines established in Section 4 hereof; (c) compliance by any Party with its obligations under this Stipulation; (d) the interpretation or application of any provision of this Stipulation; and (e) any other matters necessary to effectuate the purposes of this Stipulation and Section 12.4(c) of the Operating Agreement.
10.3. Governing Rules. This Stipulation shall be governed by and construed in accordance with the Operating Agreement, the JAMS Comprehensive Arbitration Rules and Procedures, and the laws of the State of Florida, without regard to conflict-of-laws principles.
IN WITNESS WHEREOF, the undersigned counsel, duly authorized to act on behalf of their respective clients, have executed this Joint Stipulation and Agreed Order as of the date first set forth above.
FOR CLAIMANT MERIDIAN SHORES HOSPITALITY LLC:
HARGROVE, DUNLAP & CASTILLO LLP
By: ________
Victoria Castillo, Partner 1395 Brickell Avenue, Suite 3100 Miami, Florida 33131
Attorneys for Claimant Meridian Shores Hospitality LLC
Date: May 30, 2023
FOR RESPONDENT PELLEGRINO CAPITAL GROUP LLC:
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano, Partner 801 Brickell Avenue, Suite 2800 Miami, Florida 33131
Attorneys for Respondent Pellegrino Capital Group LLC
Date: May 30, 2023
AGREED ORDER
The foregoing Joint Stipulation having been submitted to the undersigned Arbitrator by and with the consent of both Parties, and the Arbitrator having reviewed the Stipulation and finding it to be consistent with the Operating Agreement, the JAMS Comprehensive Arbitration Rules and Procedures, and the interests of a fair and efficient resolution of this dispute, it is hereby:
ORDERED that the Joint Stipulation and Agreed Order Re: Appointment of Neutral Third Appraiser Pursuant to Section 12.4(c) of the Operating Agreement is SO ORDERED and entered as an Agreed Order of this Tribunal, with full force and effect.
ORDERED that the Parties shall comply with each of their respective obligations set forth in the Stipulation in accordance with the terms and deadlines stated therein.
ORDERED that the Arbitrator retains jurisdiction to resolve any disputes arising under or in connection with the Stipulation, as set forth in Section 10.2 thereof.
SO ORDERED.
________________________________________
Hon. Margaret Liu Chen (Ret.) Arbitrator JAMS Ref. No. 1440032871
Date: ____, 2023
JAMS, Jacksonville, FL Resolution Center 1 Independent Drive, Suite 1600 Jacksonville, Florida 32202
MERIDIAN SHORES HOSPITALITY LLC,
Claimant,
v. | JAMS Ref. No. 1440032871
PELLEGRINO CAPITAL GROUP LLC,
Respondent.