1027-00003 · Calderwood & Harkness LLP · Engagement

engagement-letter.docx DOCUMENT Litigation

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

801 Brickell Avenue, Suite 2800 Miami, Florida 33131 Telephone: (305) 814-7000 Facsimile: (305) 814-7001 www.calderwoodharkness.com

March 22, 2023

Mr. Dominic R. Pellegrino Managing Member Pellegrino Capital Group LLC 1900 Bayshore Boulevard, Suite 1400 Tampa, Florida 33606

Re: Engagement of Calderwood & Harkness LLP — Representation of Pellegrino Capital Group LLC in Connection with Buyout-Valuation Dispute with Meridian Shores Hospitality LLC (JAMS Ref. No. 1440032871)

Firm Matter No. 1027-00003

Dear Mr. Pellegrino:

This letter confirms the terms and conditions of the engagement of Calderwood & Harkness LLP (the "Firm," "Calderwood & Harkness," or "C&H") by Pellegrino Capital Group LLC ("PCG" or the "Client") in connection with the matter described below. We are grateful for your confidence in our Firm, and we look forward to working with you and your team on this significant matter. Please review this engagement letter carefully, as it constitutes a binding agreement between the Firm and the Client governing our attorney-client relationship in this matter.

1. Engagement and Scope of Representation

Calderwood & Harkness LLP is pleased to confirm its engagement by Pellegrino Capital Group LLC in connection with the dispute initiated by Meridian Shores Hospitality LLC ("MSH") concerning the valuation and mandatory buyout of MSH's thirty-five percent (35%) membership interest in Palmetto Grand Ventures LLC ("PGV"), a Florida limited liability company. The dispute arises from PCG's exercise of the call option under Section 12.4 of the Amended and Restated Operating Agreement of PGV, dated June 15, 2017, as subsequently amended (the "Operating Agreement"), and MSH's allegation that the redemption price of Forty-One Million Three Hundred Thousand Dollars ($41,300,000.00) tendered by PCG on March 1, 2023 materially understated the fair market value of MSH's membership interest in PGV. MSH filed a Demand for Arbitration with JAMS on March 20, 2023, which has been assigned JAMS Reference Number 1440032871.

The scope of this engagement encompasses the following:

(a) Defense of PCG in the JAMS Arbitration. The Firm will defend PCG against all claims asserted by MSH in the JAMS arbitration proceeding, including but not limited to (i) MSH's allegations of bad faith in the determination of the redemption price under Section 12.7 of the Operating Agreement, (ii) MSH's claims for breach of fiduciary duty owed by PCG as majority member and manager of PGV, and (iii) MSH's claims related to alleged deferred maintenance and capital expenditure shortfalls under Section 8.3 of the Operating Agreement, which MSH contends artificially depressed the appraised value of PGV's assets.

(b) Prosecution of PCG's Counterclaim. The Firm will prosecute PCG's counterclaim for declaratory relief establishing that the buyout price of $41,300,000.00 tendered on March 1, 2023 constitutes the proper fair market value of MSH's 35% membership interest as determined in accordance with the valuation methodology set forth in Section 12.4 of the Operating Agreement, including the minority-interest and marketability discounts prescribed therein.

(c) Settlement and Transaction Support. The Firm will advise PCG in connection with the negotiation and documentation of any settlement, mediation, or redemption transaction that may arise in connection with the dispute, including the drafting and review of any related agreements, releases, or amendments to the Operating Agreement.

(d) Related Matters. The Firm will advise PCG on such related matters as may be mutually agreed upon by the Firm and the Client in writing, including preparation for and participation in any preliminary proceedings, discovery, expert retention and management, and pre-hearing motions before the JAMS arbitrator.

The arbitration will be seated in Jacksonville, Florida, and will be conducted in accordance with the JAMS Comprehensive Arbitration Rules and Procedures, pursuant to Section 15.2 of the Operating Agreement. All substantive issues in the dispute are governed by the laws of the State of Florida.

Limitations on Scope. The Client acknowledges and agrees that this engagement does not extend to the following, unless separately agreed in writing by the Firm and the Client:

(i) Tax advice, tax planning, or tax return preparation relating to any aspect of the buyout transaction, the dispute, or any settlement thereof. The Client should consult with its independent tax advisors, including Grantham, Pryce & Associates CPAs, with respect to all tax-related matters.

(ii) Regulatory matters, including any filings, notices, or approvals that may be required under federal, state, or local laws or regulations in connection with the buyout or the operation of PGV's properties.

(iii) Representation of Palmetto Grand Ventures LLC as a separate entity. PGV is not a client of the Firm in this engagement, and the Firm owes no professional obligations to PGV.

(iv) Representation of any individual member of the Pellegrino family — including, without limitation, Dominic R. Pellegrino, Adriana Pellegrino-Voss, or any other family member — in their personal capacity. Any such representation would require a separate engagement letter.

2. Engagement Team

The following attorneys have been assigned to this engagement and will serve as the core members of the engagement team:

Francesca Morano, Partner (Miami Office) — Responsible Partner. Ms. Morano will serve as the primary contact for client communications, strategic direction, and overall management of the engagement. All significant decisions regarding case strategy, settlement posture, and hearing preparation will be directed through Ms. Morano. Ms. Morano can be reached directly at (305) 814-7142 or fmorano@calderwoodharkness.com.

Samuel Eklund, Partner (Miami Office) — Billing Partner. Mr. Eklund will be responsible for all fee arrangements, billing matters, and financial aspects of the engagement. Any questions regarding invoices, payment terms, or fee-related issues should be directed to Mr. Eklund at (305) 814-7209 or seklund@calderwoodharkness.com.

Simone Laroche, Associate (Miami Office) — Lead Associate. Ms. Laroche will serve as the primary associate responsible for day-to-day case management, research, discovery, drafting of arbitration submissions, and coordination with experts.

Jeffrey Park, Associate (Miami Office) — Working Associate. Mr. Park will assist with research, document review, discovery management, and preparation of hearing materials.

Additional attorneys, paralegals, litigation support specialists, and other professional staff may be assigned to the engagement as the needs of the matter require. The Firm will endeavor to staff this matter efficiently and to utilize the most cost-effective personnel appropriate for each task. The Client will be notified of material changes to the composition of the engagement team, including the addition of any new partners or the departure of any team members identified above.

3. Fee Arrangements

3.1 Hourly Billing

This engagement will be conducted on an hourly billing basis. The Client will be charged for time expended by Firm attorneys and professional staff on the matter at their respective standard hourly rates in effect at the time the services are rendered. Time is recorded in increments of one-tenth (0.1) of an hour.

3.2 Current Hourly Rates

The current standard hourly rates for the members of the engagement team and for the categories of timekeepers who may work on this matter are as follows:

Generally, the Firm's current standard hourly rates for personnel who may work on this matter range as follows: Partners, $850.00 to $1,050.00 per hour; Associates, $475.00 to $675.00 per hour; and Paralegals and Legal Assistants, $275.00 to $350.00 per hour. The specific rate for each timekeeper depends on the individual's experience, seniority, and area of expertise.

3.3 Rate Adjustments

The Firm's standard hourly rates are subject to periodic adjustment, typically on an annual basis effective January 1 of each year. The Firm will provide the Client with advance written notice of any rate adjustments not less than thirty (30) days prior to their effective date. Adjusted rates will apply to services rendered on or after the effective date of the adjustment.

3.4 Disbursements and Expenses

In addition to professional fees, the Firm will charge the Client for reasonable out-of-pocket disbursements and expenses incurred in connection with the engagement. Such disbursements and expenses include, but are not limited to, the following:

(a) Court and arbitration filing fees, including all JAMS case-management fees and arbitrator compensation;

(b) Travel expenses, including airfare, ground transportation, lodging, and meals incurred in connection with hearings, depositions, client meetings, and other matter-related travel;

(c) Expert and consultant fees and expenses, including fees of appraisers, valuation experts, forensic accountants, and other professionals retained in connection with the engagement;

(d) Copying, printing, and document reproduction costs;

(e) Electronic discovery costs, including fees for hosting, processing, review platforms, and data management;

(f) Court reporter and transcript fees;

(g) Messenger, courier, and express delivery charges;

(h) Long-distance telephone and videoconference charges; and

(i) Other reasonable out-of-pocket costs and expenses.

3.5 Third-Party Expert and Arbitration Fees

The Client acknowledges that the JAMS arbitration fees, mediator fees (if applicable), and expert and appraiser fees — including but not limited to the fees of Whitfield Realty Advisors LLC and any neutral appraiser retained pursuant to Section 12.4(c) of the Operating Agreement — may represent substantial costs in connection with this engagement. Such fees may be billed through the Firm's invoices or, where appropriate and as agreed with the Client, may be billed directly by the third-party provider to PCG. The Firm will coordinate with the Client regarding the billing arrangements for significant third-party expenses prior to their incurrence, to the extent practicable.

3.6 Invoicing and Payment

The Firm will render monthly invoices for professional fees and disbursements incurred during the preceding calendar month. Each invoice will include a detailed description of the services performed by each timekeeper, the time expended, and an itemization of disbursements. Payment of invoices is due within thirty (30) days of the invoice date. Amounts not paid within such period may be subject to a late charge at the rate of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.

3.7 Retainer. No retainer or advance deposit is required at this time. However, the Firm reserves the right to request a retainer or advance deposit for anticipated costs at any time during the engagement, particularly in advance of significant expenditures such as expert retention, extensive discovery, or hearing preparation. Any retainer or advance deposit received will be held in the Firm's client trust account in accordance with the Florida Rules of Professional Conduct and applied against invoices as they are rendered, or refunded to the Client upon conclusion of the engagement, as applicable.

4. Insurance and Third-Party Funding of Defense Costs

The Client has advised the Firm that PCG maintains a managers' liability / directors' and officers' ("D&O") insurance policy issued by Atlantic Omnivrel Insurance Company, Policy No. AFML-2022-08745, providing coverage with a limit of Ten Million Dollars ($10,000,000.00) per occurrence and Ten Million Dollars ($10,000,000.00) in the aggregate (the "D&O Policy").

The Firm understands that PCG intends to tender the MSH arbitration claim to Atlantic Omnivrel Insurance Company and seek coverage for defense costs incurred in connection with this matter under the D&O Policy. The Firm will cooperate with PCG and its insurance broker in providing such information as may reasonably be required in connection with the tender and any coverage determination, subject to applicable privileges.

Notwithstanding the foregoing, the Client acknowledges and agrees that:

(a) Any insurance reimbursement of defense costs under the D&O Policy or otherwise does not alter, diminish, or defer the Client's obligation to pay the Firm's invoices as rendered in accordance with Section 3.6 above. The Client remains solely and primarily responsible for the payment of all fees and costs incurred by the Firm in connection with this engagement, regardless of whether and to what extent Atlantic Omnivrel Insurance Company reimburses such fees and costs.

(b) The Firm's professional obligations run solely to PCG as the Client. The Firm does not represent Atlantic Omnivrel Insurance Company, and no attorney-client relationship exists or will be created between the Firm and any insurance carrier. The Firm's duty of loyalty, the exercise of independent professional judgment, and all obligations under the Florida Rules of Professional Conduct are owed exclusively to PCG, regardless of any carrier's involvement in, funding of, or reservation of rights with respect to the defense of this matter.

(c) In the event that Atlantic Omnivrel Insurance Company issues a reservation of rights or declines coverage, the Client's obligations under this engagement letter remain in full force and effect.

5. Conflicts of Interest and Waiver

5.1 Conflicts Check

The Firm has conducted a comprehensive conflicts check as of March 21, 2023, in accordance with the Firm's internal policies and procedures and the Florida Rules of Professional Conduct. A separate Conflict Check Memorandum has been prepared in connection with this engagement and is maintained in the Firm's records.

5.2 Current Representations

Based on the results of the conflicts check, the Firm has confirmed that it does not currently represent, and has not recently represented, any of the following parties:

(a) Meridian Shores Hospitality LLC;

(b) Nathaniel Cordero or Elena Cordero (the principals of MSH);

(d) Hargrove, Dunlap & Castillo LLP (counsel for MSH in the arbitration); or

(e) Any other party that is adverse to PCG in connection with this matter.

The Firm does not currently represent any party to this dispute in any other matter, and to the best of the Firm's knowledge following its conflicts check, no other conflict of interest exists with respect to this engagement.

5.3 Advance Waiver — Unrelated Matters

The Client acknowledges that Calderwood & Harkness LLP is a large, multi-office law firm with a diverse client base. It is possible that the Firm currently represents, or may in the future represent, other clients in matters unrelated to this engagement that may involve parties or entities referenced in this engagement letter or in the underlying dispute — including, by way of example, lenders, vendors, contractors, or other counterparties of PGV or its portfolio properties.

By executing this engagement letter, the Client consents to the Firm's representation of other clients in matters that are not substantially related to this engagement, provided that such representations do not create a direct adversity to PCG in this matter or in any other matter in which the Firm represents PCG. This consent does not extend to any representation that would require the Firm to act adversely to PCG in the JAMS arbitration or any related proceeding.

5.4 Conflict Notification

If an actual or potential conflict of interest arises during the course of this engagement, the Firm will promptly notify the Client and discuss appropriate steps to address the conflict, which may include the implementation of ethical screens, the procurement of informed written consent, or, if the conflict cannot be satisfactorily resolved, the Firm's withdrawal from this engagement in accordance with Section 8 below and applicable rules of professional conduct.

6. Confidentiality and Privilege

6.1 Attorney-Client Privilege and Work-Product Protection

All communications between the Firm and the Client in connection with this engagement are subject to the protection of the attorney-client privilege and the work-product doctrine. These protections are vital to the effective representation of the Client's interests and must be zealously maintained throughout the engagement and thereafter.

6.2 Client's Obligation to Preserve Confidentiality

The Client agrees to take reasonable steps to preserve the confidentiality of all privileged communications with the Firm, including the Firm's legal advice, case assessments, strategy memoranda, and all other work product generated in connection with this engagement. Within PCG, access to privileged communications and work product should be limited to those individuals with a legitimate need to know in connection with the management and oversight of this matter. At this time, the Client has identified the following individuals as authorized recipients of privileged communications:

• Dominic R. Pellegrino, Managing Member

• Adriana Pellegrino-Voss, Senior Vice President of Investments

• Marcus Thiel, Chief Financial Officer

The Client should not disseminate privileged communications to other PCG employees, members, advisors, or third parties without prior consultation with the Firm, as inadvertent or unauthorized disclosure may result in a waiver of privilege.

6.3 Communications with Third Parties

The Firm recognizes that the effective prosecution and defense of this matter will require coordination with third parties, including Grantham, Pryce & Associates CPAs (the Client's independent accounting firm) and Whitfield Realty Advisors LLC (the appraiser retained by PCG). Communications with such third parties will be managed by the Firm to preserve applicable privileges to the greatest extent possible, including by structuring such communications to fall within the common-interest doctrine or the Kovel doctrine, as appropriate under Florida law. The Firm will advise the Client regarding best practices for preserving privilege in third-party communications on an ongoing basis.

7. Document Preservation

The Client is hereby placed on notice of its obligation to preserve all documents and electronically stored information ("ESI") that are or may be relevant to the dispute with MSH. A formal Litigation Hold Notice will be issued separately by the Firm on March 23, 2023, and will be directed to the Client and to appropriate custodians within PCG and PGV.

Without limiting the scope of the forthcoming Litigation Hold Notice, the Client's preservation obligation extends to all materials related to the following subjects, among others:

(a) The Operating Agreement, including all amendments, exhibits, and schedules thereto;

(b) The exercise of the call option by PCG, including the Notice of Exercise dated January 9, 2023, and all internal communications, analyses, and board materials related to the decision to exercise the call option;

(d) PGV's financial records, including financial statements, tax returns, general ledger entries, bank statements, capital account records, and distribution records;

(e) All communications between PCG (or its representatives) and MSH (or its representatives), including Nathaniel Cordero and Elena Cordero, regarding PGV operations, the buyout, and any valuation-related matters;

(f) All documents relating to deferred maintenance, capital expenditure budgets, property condition assessments, and repair or improvement plans for PGV's portfolio properties; and

(g) All communications with insurers, lenders, and other third parties relating to the matters in dispute.

The Client must take immediate steps to ensure that no relevant documents or ESI are destroyed, altered, or discarded, including by suspending any routine document-destruction or data-retention policies that might result in the loss of relevant materials. Failure to preserve relevant evidence may result in adverse consequences in the arbitration, including adverse inference sanctions.

8. Termination of Engagement

Either the Client or the Firm may terminate this engagement upon reasonable written notice to the other party. In the event of termination:

(a) The Client remains responsible for the payment of all fees and costs incurred by the Firm through the effective date of termination, in accordance with the terms of this engagement letter.

(b) The Firm will take such steps as are reasonably necessary and consistent with its professional obligations to protect the Client's interests during the transition period, including cooperating in the orderly transfer of the Client's files and work product to successor counsel designated by the Client.

(c) Upon the Client's request and payment of all outstanding fees and costs, the Firm will promptly deliver to the Client or its successor counsel all original documents and property belonging to the Client that are in the Firm's possession. The Firm may retain copies of such materials for its own records, subject to applicable confidentiality obligations.

The Firm's right to terminate this engagement is subject to compliance with the Florida Rules of Professional Conduct and any applicable orders of the arbitrator. Circumstances that may give rise to the Firm's election to withdraw include, but are not limited to, the Client's failure to pay invoices in a timely manner, the Client's failure to cooperate with the Firm in the prosecution or defense of the matter, the emergence of an irreconcilable conflict of interest, or the Client's insistence upon a course of action that the Firm believes to be contrary to applicable rules of professional conduct.

9. No Guarantee of Outcome

The Firm cannot and does not guarantee any particular outcome in the JAMS arbitration, any related mediation or settlement negotiations, or any other aspect of this engagement. While the Firm will apply its best professional judgment and efforts to achieve a favorable result for the Client, the outcome of any dispute resolution proceeding is inherently uncertain and depends upon numerous factors outside the Firm's control.

The Client acknowledges that MSH's Demand for Arbitration seeks a total recovery of approximately Seventy Million Dollars ($70,000,000.00), consisting of an alleged fair market value of approximately Fifty-Three Million Twenty-Five Thousand Dollars ($53,025,000.00) for MSH's 35% interest, plus a claimed bad-faith premium of approximately Sixteen Million Nine Hundred Seventy-Five Thousand Dollars ($16,975,000.00) under Section 12.7 of the Operating Agreement. This represents a significant potential exposure for PCG, and the Client understands that the ultimate resolution of this matter will depend upon, among other things, the findings of the arbitrator or any neutral appraiser appointed pursuant to Section 12.4(c) of the Operating Agreement, the strength and persuasiveness of the evidence presented by each side, the credibility of the parties' respective experts, and the dynamics of negotiation and settlement.

The Firm will prepare and deliver to the Client a detailed Initial Case Assessment Memorandum within approximately thirty (30) days of the date of this engagement letter, which will set forth the Firm's preliminary analysis of the merits of MSH's claims and PCG's defenses and counterclaim, an assessment of litigation risks, a preliminary budget, and a recommended strategic approach.

10. Governing Law

This engagement letter and the terms and conditions set forth herein shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to this engagement letter that cannot be resolved by mutual agreement shall be submitted to binding arbitration in Miami-Dade County, Florida, in accordance with the Florida Arbitration Code.

11. Acceptance and Countersignature

If the foregoing terms and conditions are acceptable to the Client, please indicate PCG's agreement by signing and dating this letter in the space provided below and returning a signed copy to the Firm. An executed copy may be returned by hand delivery, overnight courier, or electronic transmission (PDF) to Francesca Morano at the contact information set forth in Section 2 above. This engagement letter will become effective upon receipt by the Firm of the Client's countersigned copy.

We look forward to working with you on this matter, Mr. Pellegrino, and we are committed to providing the highest quality representation to PCG throughout this engagement. Please do not hesitate to contact Francesca Morano or Samuel Eklund with any questions regarding this letter or any other aspect of the representation.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano Partner

By: ________

Samuel Eklund Partner

ACCEPTANCE AND AGREEMENT

The undersigned, on behalf of Pellegrino Capital Group LLC, hereby acknowledges receipt of this engagement letter, has reviewed its terms and conditions, and agrees to be bound thereby.

AGREED AND ACCEPTED:

PELLEGRINO CAPITAL GROUP LLC

By: ________

Name: Dominic R. Pellegrino

Title: Managing Member

Date: ________

Enclosures:

Firm's Standard Terms of Engagement (Schedule A)

cc:

Adriana Pellegrino-Voss, Senior Vice President of Investments, Pellegrino Capital Group LLC Marcus Thiel, Chief Financial Officer, Pellegrino Capital Group LLC

Timekeeper	Title	Current Hourly Rate
Francesca Morano	Partner	$1,050.00
Samuel Eklund	Partner	$975.00
Simone Laroche	Senior Associate	$675.00
Jeffrey Park	Associate	$525.00
Paralegals / Legal Assistants	—	$275.00 – $350.00

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
801 Brickell Avenue, Suite 2800 Miami, Florida 33131 Telephone: (305) 814-7000 Facsimile: (305) 814-7001 www.calderwoodharkness.com
March 22, 2023
Mr. Dominic R. Pellegrino Managing Member Pellegrino Capital Group LLC 1900 Bayshore Boulevard, Suite 1400 Tampa, Florida 33606
Re: Engagement of Calderwood & Harkness LLP — Representation of Pellegrino Capital Group LLC in Connection with Buyout-Valuation Dispute with Meridian Shores Hospitality LLC (JAMS Ref. No. 1440032871)
Firm Matter No. 1027-00003
Dear Mr. Pellegrino:
This letter confirms the terms and conditions of the engagement of Calderwood & Harkness LLP (the "Firm," "Calderwood & Harkness," or "C&H") by Pellegrino Capital Group LLC ("PCG" or the "Client") in connection with the matter described below. We are grateful for your confidence in our Firm, and we look forward to working with you and your team on this significant matter. Please review this engagement letter carefully, as it constitutes a binding agreement between the Firm and the Client governing our attorney-client relationship in this matter.
1. Engagement and Scope of Representation
Calderwood & Harkness LLP is pleased to confirm its engagement by Pellegrino Capital Group LLC in connection with the dispute initiated by Meridian Shores Hospitality LLC ("MSH") concerning the valuation and mandatory buyout of MSH's thirty-five percent (35%) membership interest in Palmetto Grand Ventures LLC ("PGV"), a Florida limited liability company. The dispute arises from PCG's exercise of the call option under Section 12.4 of the Amended and Restated Operating Agreement of PGV, dated June 15, 2017, as subsequently amended (the "Operating Agreement"), and MSH's allegation that the redemption price of Forty-One Million Three Hundred Thousand Dollars ($41,300,000.00) tendered by PCG on March 1, 2023 materially understated the fair market value of MSH's membership interest in PGV. MSH filed a Demand for Arbitration with JAMS on March 20, 2023, which has been assigned JAMS Reference Number 1440032871.
The scope of this engagement encompasses the following:
(a) Defense of PCG in the JAMS Arbitration. The Firm will defend PCG against all claims asserted by MSH in the JAMS arbitration proceeding, including but not limited to (i) MSH's allegations of bad faith in the determination of the redemption price under Section 12.7 of the Operating Agreement, (ii) MSH's claims for breach of fiduciary duty owed by PCG as majority member and manager of PGV, and (iii) MSH's claims related to alleged deferred maintenance and capital expenditure shortfalls under Section 8.3 of the Operating Agreement, which MSH contends artificially depressed the appraised value of PGV's assets.
(b) Prosecution of PCG's Counterclaim. The Firm will prosecute PCG's counterclaim for declaratory relief establishing that the buyout price of $41,300,000.00 tendered on March 1, 2023 constitutes the proper fair market value of MSH's 35% membership interest as determined in accordance with the valuation methodology set forth in Section 12.4 of the Operating Agreement, including the minority-interest and marketability discounts prescribed therein.
(c) Settlement and Transaction Support. The Firm will advise PCG in connection with the negotiation and documentation of any settlement, mediation, or redemption transaction that may arise in connection with the dispute, including the drafting and review of any related agreements, releases, or amendments to the Operating Agreement.
(d) Related Matters. The Firm will advise PCG on such related matters as may be mutually agreed upon by the Firm and the Client in writing, including preparation for and participation in any preliminary proceedings, discovery, expert retention and management, and pre-hearing motions before the JAMS arbitrator.
The arbitration will be seated in Jacksonville, Florida, and will be conducted in accordance with the JAMS Comprehensive Arbitration Rules and Procedures, pursuant to Section 15.2 of the Operating Agreement. All substantive issues in the dispute are governed by the laws of the State of Florida.
Limitations on Scope. The Client acknowledges and agrees that this engagement does not extend to the following, unless separately agreed in writing by the Firm and the Client:
(i) Tax advice, tax planning, or tax return preparation relating to any aspect of the buyout transaction, the dispute, or any settlement thereof. The Client should consult with its independent tax advisors, including Grantham, Pryce & Associates CPAs, with respect to all tax-related matters.
(ii) Regulatory matters, including any filings, notices, or approvals that may be required under federal, state, or local laws or regulations in connection with the buyout or the operation of PGV's properties.
(iii) Representation of Palmetto Grand Ventures LLC as a separate entity. PGV is not a client of the Firm in this engagement, and the Firm owes no professional obligations to PGV.
(iv) Representation of any individual member of the Pellegrino family — including, without limitation, Dominic R. Pellegrino, Adriana Pellegrino-Voss, or any other family member — in their personal capacity. Any such representation would require a separate engagement letter.
2. Engagement Team
The following attorneys have been assigned to this engagement and will serve as the core members of the engagement team:
Francesca Morano, Partner (Miami Office) — Responsible Partner. Ms. Morano will serve as the primary contact for client communications, strategic direction, and overall management of the engagement. All significant decisions regarding case strategy, settlement posture, and hearing preparation will be directed through Ms. Morano. Ms. Morano can be reached directly at (305) 814-7142 or fmorano@calderwoodharkness.com.
Samuel Eklund, Partner (Miami Office) — Billing Partner. Mr. Eklund will be responsible for all fee arrangements, billing matters, and financial aspects of the engagement. Any questions regarding invoices, payment terms, or fee-related issues should be directed to Mr. Eklund at (305) 814-7209 or seklund@calderwoodharkness.com.
Simone Laroche, Associate (Miami Office) — Lead Associate. Ms. Laroche will serve as the primary associate responsible for day-to-day case management, research, discovery, drafting of arbitration submissions, and coordination with experts.
Jeffrey Park, Associate (Miami Office) — Working Associate. Mr. Park will assist with research, document review, discovery management, and preparation of hearing materials.
Additional attorneys, paralegals, litigation support specialists, and other professional staff may be assigned to the engagement as the needs of the matter require. The Firm will endeavor to staff this matter efficiently and to utilize the most cost-effective personnel appropriate for each task. The Client will be notified of material changes to the composition of the engagement team, including the addition of any new partners or the departure of any team members identified above.
3. Fee Arrangements
3.1 Hourly Billing
This engagement will be conducted on an hourly billing basis. The Client will be charged for time expended by Firm attorneys and professional staff on the matter at their respective standard hourly rates in effect at the time the services are rendered. Time is recorded in increments of one-tenth (0.1) of an hour.
3.2 Current Hourly Rates
The current standard hourly rates for the members of the engagement team and for the categories of timekeepers who may work on this matter are as follows:
Generally, the Firm's current standard hourly rates for personnel who may work on this matter range as follows: Partners, $850.00 to $1,050.00 per hour; Associates, $475.00 to $675.00 per hour; and Paralegals and Legal Assistants, $275.00 to $350.00 per hour. The specific rate for each timekeeper depends on the individual's experience, seniority, and area of expertise.
3.3 Rate Adjustments
The Firm's standard hourly rates are subject to periodic adjustment, typically on an annual basis effective January 1 of each year. The Firm will provide the Client with advance written notice of any rate adjustments not less than thirty (30) days prior to their effective date. Adjusted rates will apply to services rendered on or after the effective date of the adjustment.
3.4 Disbursements and Expenses
In addition to professional fees, the Firm will charge the Client for reasonable out-of-pocket disbursements and expenses incurred in connection with the engagement. Such disbursements and expenses include, but are not limited to, the following:
(a) Court and arbitration filing fees, including all JAMS case-management fees and arbitrator compensation;
(b) Travel expenses, including airfare, ground transportation, lodging, and meals incurred in connection with hearings, depositions, client meetings, and other matter-related travel;
(c) Expert and consultant fees and expenses, including fees of appraisers, valuation experts, forensic accountants, and other professionals retained in connection with the engagement;
(d) Copying, printing, and document reproduction costs;
(e) Electronic discovery costs, including fees for hosting, processing, review platforms, and data management;
(f) Court reporter and transcript fees;
(g) Messenger, courier, and express delivery charges;
(h) Long-distance telephone and videoconference charges; and
(i) Other reasonable out-of-pocket costs and expenses.
3.5 Third-Party Expert and Arbitration Fees
The Client acknowledges that the JAMS arbitration fees, mediator fees (if applicable), and expert and appraiser fees — including but not limited to the fees of Whitfield Realty Advisors LLC and any neutral appraiser retained pursuant to Section 12.4(c) of the Operating Agreement — may represent substantial costs in connection with this engagement. Such fees may be billed through the Firm's invoices or, where appropriate and as agreed with the Client, may be billed directly by the third-party provider to PCG. The Firm will coordinate with the Client regarding the billing arrangements for significant third-party expenses prior to their incurrence, to the extent practicable.
3.6 Invoicing and Payment
The Firm will render monthly invoices for professional fees and disbursements incurred during the preceding calendar month. Each invoice will include a detailed description of the services performed by each timekeeper, the time expended, and an itemization of disbursements. Payment of invoices is due within thirty (30) days of the invoice date. Amounts not paid within such period may be subject to a late charge at the rate of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.
3.7 Retainer.  No retainer or advance deposit is required at this time. However, the Firm reserves the right to request a retainer or advance deposit for anticipated costs at any time during the engagement, particularly in advance of significant expenditures such as expert retention, extensive discovery, or hearing preparation. Any retainer or advance deposit received will be held in the Firm's client trust account in accordance with the Florida Rules of Professional Conduct and applied against invoices as they are rendered, or refunded to the Client upon conclusion of the engagement, as applicable.
4. Insurance and Third-Party Funding of Defense Costs
The Client has advised the Firm that PCG maintains a managers' liability / directors' and officers' ("D&O") insurance policy issued by Atlantic Omnivrel Insurance Company, Policy No. AFML-2022-08745, providing coverage with a limit of Ten Million Dollars ($10,000,000.00) per occurrence and Ten Million Dollars ($10,000,000.00) in the aggregate (the "D&O Policy").
The Firm understands that PCG intends to tender the MSH arbitration claim to Atlantic Omnivrel Insurance Company and seek coverage for defense costs incurred in connection with this matter under the D&O Policy. The Firm will cooperate with PCG and its insurance broker in providing such information as may reasonably be required in connection with the tender and any coverage determination, subject to applicable privileges.
Notwithstanding the foregoing, the Client acknowledges and agrees that:
(a) Any insurance reimbursement of defense costs under the D&O Policy or otherwise does not alter, diminish, or defer the Client's obligation to pay the Firm's invoices as rendered in accordance with Section 3.6 above. The Client remains solely and primarily responsible for the payment of all fees and costs incurred by the Firm in connection with this engagement, regardless of whether and to what extent Atlantic Omnivrel Insurance Company reimburses such fees and costs.
(b) The Firm's professional obligations run solely to PCG as the Client. The Firm does not represent Atlantic Omnivrel Insurance Company, and no attorney-client relationship exists or will be created between the Firm and any insurance carrier. The Firm's duty of loyalty, the exercise of independent professional judgment, and all obligations under the Florida Rules of Professional Conduct are owed exclusively to PCG, regardless of any carrier's involvement in, funding of, or reservation of rights with respect to the defense of this matter.
(c) In the event that Atlantic Omnivrel Insurance Company issues a reservation of rights or declines coverage, the Client's obligations under this engagement letter remain in full force and effect.
5. Conflicts of Interest and Waiver
5.1 Conflicts Check
The Firm has conducted a comprehensive conflicts check as of March 21, 2023, in accordance with the Firm's internal policies and procedures and the Florida Rules of Professional Conduct. A separate Conflict Check Memorandum has been prepared in connection with this engagement and is maintained in the Firm's records.
5.2 Current Representations
Based on the results of the conflicts check, the Firm has confirmed that it does not currently represent, and has not recently represented, any of the following parties:
(a) Meridian Shores Hospitality LLC;
(b) Nathaniel Cordero or Elena Cordero (the principals of MSH);
(c) Palmetto Grand Ventures LLC (as a separate entity);
(d) Hargrove, Dunlap & Castillo LLP (counsel for MSH in the arbitration); or
(e) Any other party that is adverse to PCG in connection with this matter.
The Firm does not currently represent any party to this dispute in any other matter, and to the best of the Firm's knowledge following its conflicts check, no other conflict of interest exists with respect to this engagement.
5.3 Advance Waiver — Unrelated Matters
The Client acknowledges that Calderwood & Harkness LLP is a large, multi-office law firm with a diverse client base. It is possible that the Firm currently represents, or may in the future represent, other clients in matters unrelated to this engagement that may involve parties or entities referenced in this engagement letter or in the underlying dispute — including, by way of example, lenders, vendors, contractors, or other counterparties of PGV or its portfolio properties.
By executing this engagement letter, the Client consents to the Firm's representation of other clients in matters that are not substantially related to this engagement, provided that such representations do not create a direct adversity to PCG in this matter or in any other matter in which the Firm represents PCG. This consent does not extend to any representation that would require the Firm to act adversely to PCG in the JAMS arbitration or any related proceeding.
5.4 Conflict Notification
If an actual or potential conflict of interest arises during the course of this engagement, the Firm will promptly notify the Client and discuss appropriate steps to address the conflict, which may include the implementation of ethical screens, the procurement of informed written consent, or, if the conflict cannot be satisfactorily resolved, the Firm's withdrawal from this engagement in accordance with Section 8 below and applicable rules of professional conduct.
6. Confidentiality and Privilege
6.1 Attorney-Client Privilege and Work-Product Protection
All communications between the Firm and the Client in connection with this engagement are subject to the protection of the attorney-client privilege and the work-product doctrine. These protections are vital to the effective representation of the Client's interests and must be zealously maintained throughout the engagement and thereafter.
6.2 Client's Obligation to Preserve Confidentiality
The Client agrees to take reasonable steps to preserve the confidentiality of all privileged communications with the Firm, including the Firm's legal advice, case assessments, strategy memoranda, and all other work product generated in connection with this engagement. Within PCG, access to privileged communications and work product should be limited to those individuals with a legitimate need to know in connection with the management and oversight of this matter. At this time, the Client has identified the following individuals as authorized recipients of privileged communications:
•  Dominic R. Pellegrino, Managing Member
•  Adriana Pellegrino-Voss, Senior Vice President of Investments
•  Marcus Thiel, Chief Financial Officer
The Client should not disseminate privileged communications to other PCG employees, members, advisors, or third parties without prior consultation with the Firm, as inadvertent or unauthorized disclosure may result in a waiver of privilege.
6.3 Communications with Third Parties
The Firm recognizes that the effective prosecution and defense of this matter will require coordination with third parties, including Grantham, Pryce & Associates CPAs (the Client's independent accounting firm) and Whitfield Realty Advisors LLC (the appraiser retained by PCG). Communications with such third parties will be managed by the Firm to preserve applicable privileges to the greatest extent possible, including by structuring such communications to fall within the common-interest doctrine or the Kovel doctrine, as appropriate under Florida law. The Firm will advise the Client regarding best practices for preserving privilege in third-party communications on an ongoing basis.
7. Document Preservation
The Client is hereby placed on notice of its obligation to preserve all documents and electronically stored information ("ESI") that are or may be relevant to the dispute with MSH. A formal Litigation Hold Notice will be issued separately by the Firm on March 23, 2023, and will be directed to the Client and to appropriate custodians within PCG and PGV.
Without limiting the scope of the forthcoming Litigation Hold Notice, the Client's preservation obligation extends to all materials related to the following subjects, among others:
(a) The Operating Agreement, including all amendments, exhibits, and schedules thereto;
(b) The exercise of the call option by PCG, including the Notice of Exercise dated January 9, 2023, and all internal communications, analyses, and board materials related to the decision to exercise the call option;
(c) The Whitfield Realty Advisors LLC appraisal and all communications, data, and draft reports related thereto;
(d) PGV's financial records, including financial statements, tax returns, general ledger entries, bank statements, capital account records, and distribution records;
(e) All communications between PCG (or its representatives) and MSH (or its representatives), including Nathaniel Cordero and Elena Cordero, regarding PGV operations, the buyout, and any valuation-related matters;
(f) All documents relating to deferred maintenance, capital expenditure budgets, property condition assessments, and repair or improvement plans for PGV's portfolio properties; and
(g) All communications with insurers, lenders, and other third parties relating to the matters in dispute.
The Client must take immediate steps to ensure that no relevant documents or ESI are destroyed, altered, or discarded, including by suspending any routine document-destruction or data-retention policies that might result in the loss of relevant materials. Failure to preserve relevant evidence may result in adverse consequences in the arbitration, including adverse inference sanctions.
8. Termination of Engagement
Either the Client or the Firm may terminate this engagement upon reasonable written notice to the other party. In the event of termination:
(a) The Client remains responsible for the payment of all fees and costs incurred by the Firm through the effective date of termination, in accordance with the terms of this engagement letter.
(b) The Firm will take such steps as are reasonably necessary and consistent with its professional obligations to protect the Client's interests during the transition period, including cooperating in the orderly transfer of the Client's files and work product to successor counsel designated by the Client.
(c) Upon the Client's request and payment of all outstanding fees and costs, the Firm will promptly deliver to the Client or its successor counsel all original documents and property belonging to the Client that are in the Firm's possession. The Firm may retain copies of such materials for its own records, subject to applicable confidentiality obligations.
The Firm's right to terminate this engagement is subject to compliance with the Florida Rules of Professional Conduct and any applicable orders of the arbitrator. Circumstances that may give rise to the Firm's election to withdraw include, but are not limited to, the Client's failure to pay invoices in a timely manner, the Client's failure to cooperate with the Firm in the prosecution or defense of the matter, the emergence of an irreconcilable conflict of interest, or the Client's insistence upon a course of action that the Firm believes to be contrary to applicable rules of professional conduct.
9. No Guarantee of Outcome
The Firm cannot and does not guarantee any particular outcome in the JAMS arbitration, any related mediation or settlement negotiations, or any other aspect of this engagement. While the Firm will apply its best professional judgment and efforts to achieve a favorable result for the Client, the outcome of any dispute resolution proceeding is inherently uncertain and depends upon numerous factors outside the Firm's control.
The Client acknowledges that MSH's Demand for Arbitration seeks a total recovery of approximately Seventy Million Dollars ($70,000,000.00), consisting of an alleged fair market value of approximately Fifty-Three Million Twenty-Five Thousand Dollars ($53,025,000.00) for MSH's 35% interest, plus a claimed bad-faith premium of approximately Sixteen Million Nine Hundred Seventy-Five Thousand Dollars ($16,975,000.00) under Section 12.7 of the Operating Agreement. This represents a significant potential exposure for PCG, and the Client understands that the ultimate resolution of this matter will depend upon, among other things, the findings of the arbitrator or any neutral appraiser appointed pursuant to Section 12.4(c) of the Operating Agreement, the strength and persuasiveness of the evidence presented by each side, the credibility of the parties' respective experts, and the dynamics of negotiation and settlement.
The Firm will prepare and deliver to the Client a detailed Initial Case Assessment Memorandum within approximately thirty (30) days of the date of this engagement letter, which will set forth the Firm's preliminary analysis of the merits of MSH's claims and PCG's defenses and counterclaim, an assessment of litigation risks, a preliminary budget, and a recommended strategic approach.
10. Governing Law
This engagement letter and the terms and conditions set forth herein shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to this engagement letter that cannot be resolved by mutual agreement shall be submitted to binding arbitration in Miami-Dade County, Florida, in accordance with the Florida Arbitration Code.
11. Acceptance and Countersignature
If the foregoing terms and conditions are acceptable to the Client, please indicate PCG's agreement by signing and dating this letter in the space provided below and returning a signed copy to the Firm. An executed copy may be returned by hand delivery, overnight courier, or electronic transmission (PDF) to Francesca Morano at the contact information set forth in Section 2 above. This engagement letter will become effective upon receipt by the Firm of the Client's countersigned copy.
We look forward to working with you on this matter, Mr. Pellegrino, and we are committed to providing the highest quality representation to PCG throughout this engagement. Please do not hesitate to contact Francesca Morano or Samuel Eklund with any questions regarding this letter or any other aspect of the representation.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano Partner
By: ________
Samuel Eklund Partner
ACCEPTANCE AND AGREEMENT
The undersigned, on behalf of Pellegrino Capital Group LLC, hereby acknowledges receipt of this engagement letter, has reviewed its terms and conditions, and agrees to be bound thereby.
AGREED AND ACCEPTED:
PELLEGRINO CAPITAL GROUP LLC
By: ________
Name: Dominic R. Pellegrino
Title: Managing Member
Date: ________
Enclosures:
Firm's Standard Terms of Engagement (Schedule A)
cc:
Adriana Pellegrino-Voss, Senior Vice President of Investments, Pellegrino Capital Group LLC Marcus Thiel, Chief Financial Officer, Pellegrino Capital Group LLC
Timekeeper | Title | Current Hourly Rate
Francesca Morano | Partner | $1,050.00
Samuel Eklund | Partner | $975.00
Simone Laroche | Senior Associate | $675.00
Jeffrey Park | Associate | $525.00
Paralegals / Legal Assistants | — | $275.00 – $350.00

PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

ACCEPTANCE AND AGREEMENT

AGREED AND ACCEPTED:

PELLEGRINO CAPITAL GROUP LLC

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