1027-00003 · Calderwood & Harkness LLP · Mediation & Settlement

term-sheet.docx DOCUMENT Litigation

27 / 38 ← → ✕

BINDING TERM SHEET

Redemption of Membership Interest in Palmetto Grand Ventures LLC

Dated: April 8, 2024

This Binding Term Sheet (this "Term Sheet") is entered into as of April 8, 2024, by and between Pellegrino Capital Group LLC, a Florida limited liability company ("PCG"), and Meridian Shores Hospitality LLC, a Delaware limited liability company ("MSH," and together with PCG, the "Parties," and each individually, a "Party"). This Term Sheet is legally binding and enforceable upon execution by both Parties, and each Party acknowledges that it has been represented by independent legal counsel in connection with the negotiation and execution hereof.

This Term Sheet memorializes and gives binding effect to the framework agreement reached by the Parties at mediation on March 25, 2024, before mediator Raymond Alcazar of Alcazar Dispute Resolution LLC, 333 SE 2nd Avenue, Suite 2100, Miami, FL 33131. This Term Sheet sets forth the principal terms pursuant to which the Parties intend to consummate the Redemption (as defined below) and resolve the Arbitration (as defined below). In the event of any conflict between this Term Sheet and a subsequently executed Definitive Redemption Agreement, the Definitive Redemption Agreement shall control in accordance with Section 13 hereof; until such time, this Term Sheet shall govern the Parties' respective rights and obligations with respect to the subject matter set forth herein.

Section 1: Parties

1.1 Purchaser. Pellegrino Capital Group LLC, a Florida limited liability company ("PCG"), with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606. PCG's authorized signatory for purposes of this Term Sheet and all transactions contemplated hereby is Dominic R. Pellegrino, in his capacity as Managing Member of PCG. PCG represents and warrants that Mr. Pellegrino has full power and authority to bind PCG to the terms and conditions of this Term Sheet without the need for any additional corporate or member approval.

1.2 Seller. Meridian Shores Hospitality LLC, a Delaware limited liability company ("MSH"), with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480. MSH's authorized signatory for purposes of this Term Sheet and all transactions contemplated hereby is Nathaniel Cordero, in his capacity as Managing Member of MSH. MSH represents and warrants that Mr. Cordero has full power and authority to bind MSH to the terms and conditions of this Term Sheet without the need for any additional corporate or member approval.

1.3 Collective Reference. PCG and MSH are referred to collectively herein as the "Parties" and individually as a "Party."

Section 2: Recitals and Background

2.1 Formation of PGV. PCG and MSH are the sole members of Palmetto Grand Ventures LLC, a Florida limited liability company ("PGV" or the "Company"), EIN 82-5063921, Florida Department of State Filing No. L17000124583, which was duly organized and formed on June 15, 2017, under the laws of the State of Florida.

2.2 Membership Interests. PCG holds a sixty-five percent (65%) membership interest in PGV, and MSH holds a thirty-five percent (35%) membership interest in PGV. These percentage interests reflect the initial capital contributions made by PCG and MSH at the time of PGV's formation and have not been adjusted or modified since such date.

2.3 The Property. PGV owns and operates The Palmetto Grand Resort & Spa, a 312-room luxury beachfront hotel and resort property located at 650 Mandalay Avenue, Clearwater Beach, FL 33767, Pinellas County, Florida (the "Property"). The Property is managed under a franchise agreement with Aurelian Hotels & Resorts Inc. (the "Franchise Agreement"), and has operated continuously as a full-service luxury resort since its acquisition and repositioning by PGV in 2017.

2.4 The Operating Agreement. PGV is governed by that certain Operating Agreement of Palmetto Grand Ventures LLC, dated as of June 15, 2017, as such agreement may have been amended, supplemented, or otherwise modified from time to time (the "Operating Agreement" or "OA"). The Operating Agreement sets forth the respective rights, obligations, and economic entitlements of PCG and MSH as members of PGV, including, without limitation, provisions governing distributions, capital accounts, management authority, transfer restrictions, buy-sell mechanisms, and dispute resolution.

2.5 Call-Option Exercise. On January 9, 2023, PCG exercised its call option under Section 12.4 of the Operating Agreement (the "Call Option") to purchase MSH's 35% membership interest in PGV at Fair Market Value (as defined in Section 12.4(a) of the Operating Agreement). The exercise of the Call Option was timely and made in accordance with the notice and procedural requirements set forth in the Operating Agreement.

2.6 PCG's Valuation and Tender. In connection with the Call Option exercise, PCG retained Whitfield Realty Advisors LLC ("Whitfield") as its appraiser. Whitfield delivered an appraisal report valuing 100% of PGV's assets at One Hundred Eighteen Million Dollars ($118,000,000) as of December 31, 2022. Based on the Whitfield appraisal, PCG tendered Forty-One Million Three Hundred Thousand Dollars ($41,300,000) to MSH on March 1, 2023, which amount was calculated by PCG as representing the Fair Market Value of MSH's 35% membership interest after application of the valuation methodology prescribed by Section 12.4(b) of the Operating Agreement.

2.7 MSH's Rejection and Demand for Arbitration. MSH rejected PCG's tender on March 10, 2023, asserting that the Whitfield appraisal materially understated the Fair Market Value of PGV's assets and that PCG's valuation was conducted in bad faith. On March 20, 2023, MSH filed a Demand for Arbitration with JAMS, Case Reference No. 1440032871 (the "Arbitration"), asserting claims for, among other things, breach of the Operating Agreement, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty, and seeking a determination that the Fair Market Value of MSH's 35% membership interest substantially exceeded the amount tendered by PCG.

2.8 MSH's Valuation. In support of its Arbitration claims, MSH retained Beacon Valuation Group Inc. ("Beacon"), which delivered an appraisal report valuing 100% of PGV's assets at One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) as of December 31, 2022. Based on the Beacon appraisal and MSH's calculation of its economic entitlements under the Operating Agreement, MSH demanded Seventy Million Dollars ($70,000,000) for its 35% membership interest.

2.9 Pending Arbitration. The Arbitration is currently pending before the Honorable Margaret Liu Chen (Ret.) as sole arbitrator, seated in Jacksonville, Florida. Discovery has been substantially completed, and both Parties have incurred significant legal fees, expert costs, and other expenses in connection with the Arbitration proceedings.

2.10 Neutral Third Appraiser. Pursuant to Section 12.4(c) of the Operating Agreement, which provides for the retention of a neutral third appraiser in the event the parties' respective appraisals differ by more than ten percent (10%), the Parties jointly retained Linden Park Advisory LLC, acting through Thomas Carraway, MAI, FRICS, as neutral third appraiser. Linden Park Advisory LLC delivered a preliminary indication of value in the range of One Hundred Thirty Million Dollars ($130,000,000) to One Hundred Thirty-Eight Million Dollars ($138,000,000) for 100% of PGV's assets as of December 31, 2022. The Linden Park preliminary indication of value has not been finalized and remains subject to further analysis and review.

2.11 Mediation and Framework Agreement. On March 25, 2024, the Parties participated in a full-day mediation before Raymond Alcazar of Alcazar Dispute Resolution LLC, 333 SE 2nd Avenue, Suite 2100, Miami, FL 33131, at which the Parties, through their respective counsel and principals, reached a framework agreement resolving the Arbitration and all related disputes on the terms set forth herein. This Term Sheet memorializes and gives binding legal effect to the framework agreement reached at the March 25, 2024 mediation.

Section 3: The Redemption

3.1 Transaction. Subject to and upon the terms and conditions set forth in this Term Sheet (and, upon execution, the Definitive Agreements), PCG shall purchase, and MSH shall sell, transfer, assign, convey, and deliver to PCG, MSH's entire thirty-five percent (35%) membership interest in PGV (the "Redeemed Interest"), free and clear of all liens, pledges, security interests, charges, claims, encumbrances, options, restrictions, and other adverse interests of any kind or nature whatsoever (collectively, "Liens"), such that following consummation of the transaction, PCG shall hold a one hundred percent (100%) membership interest in PGV and shall be the sole member and manager of PGV (the "Redemption").

3.2 Redemption Price. The total purchase price for the Redeemed Interest shall be Fifty-Two Million Eight Hundred Fifty Thousand Dollars ($52,850,000) (the "Redemption Price"). The Redemption Price has been negotiated between the Parties at arm's length and reflects a negotiated resolution of the Parties' dispute regarding the Fair Market Value of MSH's membership interest. The Redemption Price is inclusive of all of the following:

(a) MSH's thirty-five percent (35%) share of the net equity value of PGV as determined by the Parties for purposes of this settlement;

(b) MSH's accrued and unpaid preferred return in the amount of Seventeen Million Ten Thousand Dollars ($17,010,000) under Section 5.2 of the Operating Agreement, as stipulated and agreed upon by the Parties for purposes of this Term Sheet; and

(c) all other amounts owed to MSH under the Operating Agreement, including, without limitation, any unpaid distributions, capital account balances, promote entitlements, incentive allocations, or other economic interests of any kind to which MSH may be entitled under the Operating Agreement or applicable law.

3.3 Finality of Payment. MSH acknowledges and agrees that, upon receipt of the Redemption Price in full, MSH shall have no further claims, rights, or entitlements to distributions, preferred returns, capital account balances, promote payments, incentive allocations, management fees, or any other economic interest in PGV, whether arising under the Operating Agreement, at law, in equity, or otherwise. The Redemption Price shall constitute full and final consideration for the Redeemed Interest and for the resolution and settlement of all claims and disputes between the Parties as more fully set forth in Section 7 hereof.

Section 4: Payment Terms

4.1 Lump-Sum Payment. The Redemption Price of Fifty-Two Million Eight Hundred Fifty Thousand Dollars ($52,850,000) shall be paid in a single lump-sum wire transfer of immediately available funds to a bank account designated by MSH in writing at least five (5) business days prior to the scheduled closing date. Payment shall be made on the closing date simultaneously with the delivery of all closing deliverables described in Section 5 hereof.

4.2 No Holdback, Escrow, or Installments. The Parties acknowledge and agree that there shall be no holdback, escrow, earn-out, installment payment, or any other deferred payment mechanism with respect to any portion of the Redemption Price. The full Redemption Price shall be paid at closing in immediately available funds, without setoff, deduction, or counterclaim.

4.3 Closing Date. The closing of the Redemption (the "Closing") shall occur no later than seventy-five (75) days after the date of execution of this Term Sheet. Accordingly, the target Closing date shall be on or before June 28, 2024 (the "Outside Closing Date"). The Parties shall cooperate in good faith to effect Closing as promptly as practicable, subject to the satisfaction or waiver of the conditions to closing set forth herein and in the Definitive Agreements.

Section 5: Closing and Definitive Agreements

5.1 Negotiation of Definitive Agreements. The Parties shall negotiate in good faith and use commercially reasonable efforts to finalize and execute a Definitive Redemption Agreement (the "Redemption Agreement") within forty-five (45) days of the execution of this Term Sheet (target execution date: on or before May 20, 2024). The Redemption Agreement shall be prepared by counsel for PCG and shall be subject to review and comment by counsel for MSH. Both Parties' respective legal counsel shall cooperate in good faith to resolve any open issues and to execute the Redemption Agreement within the timeframe set forth herein.

5.2 Contents of the Redemption Agreement. The Redemption Agreement shall contain customary representations and warranties of each Party (including, without limitation, representations regarding authority, enforceability, absence of Liens on the Redeemed Interest, and accuracy of material information), customary covenants (including pre-closing covenants regarding the operation of PGV in the ordinary course of business), conditions to closing, and customary indemnification provisions, in each case as appropriate for a transaction of this nature and consistent with the terms set forth in this Term Sheet.

5.3 Closing Deliverables. At or prior to the Closing, the Parties shall deliver the following documents and instruments, in form and substance reasonably satisfactory to both Parties:

(a) the fully executed Redemption Agreement;

(b) an Assignment of Membership Interest, duly executed by MSH, transferring, assigning, conveying, and delivering the Redeemed Interest to PCG, free and clear of all Liens;

(c) the Mutual Release and Settlement Agreement described in Section 7 hereof, duly executed by each Party and each of the individual Released Parties identified therein;

(d) a Closing Certificate of each Party, certifying as to the accuracy of its representations and warranties, the satisfaction of its conditions to closing, and the absence of any material adverse change;

(e) the written consent of Gulf Atlantic National Bank ("GANB"), as lender under Loan No. CRE-2017-06284, to the Redemption and to the transfer of MSH's membership interest to PCG, and to any incremental borrowing under PGV's revolving credit facility with GANB necessary to fund the Redemption Price, such consent to be in form and substance reasonably satisfactory to both Parties (the "Lender Consent");

(f) an Amended and Restated Operating Agreement of PGV, reflecting PCG as the sole one hundred percent (100%) member and manager of PGV, to be executed promptly following Closing; and

(g) such other documents, instruments, certificates, and agreements as may be reasonably required by either Party or its counsel to effectuate the transactions contemplated hereby.

Section 6: Lender Consent and Funding

6.1 Obligation to Obtain Lender Consent. PCG shall use commercially reasonable efforts to obtain the consent of Gulf Atlantic National Bank ("GANB"), as administrative agent and lender under that certain Credit Agreement dated as of June 30, 2017, Loan No. CRE-2017-06284 (the "Loan Agreement"), with an outstanding principal balance of approximately Forty-Eight Million Six Hundred Thousand Dollars ($48,600,000) as of December 31, 2022, to the Redemption and to the transfer of MSH's membership interest in PGV from MSH to PCG. PCG shall further use commercially reasonable efforts to obtain GANB's consent to any incremental draw on PGV's revolving credit facility under the Loan Agreement that may be necessary to fund a portion of the Redemption Price.

6.2 Condition to Closing. The receipt of the Lender Consent from GANB in form and substance reasonably satisfactory to both Parties shall be a condition precedent to the obligation of the Parties to consummate the Closing. PCG shall keep MSH reasonably informed of the status of its efforts to obtain the Lender Consent and shall promptly provide MSH with copies of all material correspondence with GANB relating thereto (subject to redaction of commercially sensitive financial information of PCG unrelated to the Redemption).

6.3 Funding Sources. PCG represents that it intends to fund the Redemption Price from a combination of (i) existing liquidity of PCG and its affiliates and (ii) an incremental draw on PGV's revolving credit facility with GANB. Nothing in this Section 6.3 shall be deemed to limit PCG's obligation to pay the full Redemption Price at Closing or to condition PCG's obligations hereunder on PCG's ability to secure any particular source of financing.

Section 7: Mutual Release of Claims

7.1 Mutual Release. Simultaneously with the Closing, PCG, MSH, and their respective members, managers, officers, directors, partners, affiliates, subsidiaries, successors, and assigns, including specifically Dominic R. Pellegrino, Adriana Pellegrino-Voss, Marcus Thiel, Nathaniel Cordero, and Elena Cordero (collectively, the "Released Parties"), shall execute a Mutual Release and Settlement Agreement (the "Release Agreement") providing for a full, final, unconditional, and irrevocable release of all claims, counterclaims, demands, actions, causes of action, suits, debts, obligations, liabilities, damages, losses, costs, and expenses of every kind and nature, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, accrued or contingent, at law or in equity, arising out of or in any way relating to any of the following:

(a) the Operating Agreement of Palmetto Grand Ventures LLC, dated as of June 15, 2017, and any and all rights, obligations, and disputes arising thereunder;

(b) the call-option exercise notice issued by PCG to MSH, dated January 9, 2023, and all actions taken or not taken in connection therewith;

(c) the appraisals prepared by Whitfield Realty Advisors LLC and Beacon Valuation Group Inc., including any claims regarding the methodology, accuracy, independence, or good faith of such appraisals;

(d) any alleged breach by any Party of OA Section 8.3, including, without limitation, any claims regarding capital expenditure obligations, deferred maintenance, or failure to fund required reserves;

(e) any alleged breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, or bad faith under OA Section 12.7 or otherwise;

(f) the Arbitration, JAMS Reference No. 1440032871, and all claims, counterclaims, defenses, and matters asserted or which could have been asserted therein; and

(g) all related matters, disputes, controversies, and transactions between or among the Parties and the Released Parties, from the inception of PGV through the date of the Release Agreement.

7.2 Scope of Release. The release contemplated by this Section 7 is intended to be as broad as permitted by applicable law. Each Party expressly waives any and all rights or benefits that it may have under Section 542 of the California Civil Code, or any analogous statutory or common law provision of any other jurisdiction, to the extent applicable, which provides that a general release does not extend to claims which the releasing party does not know or suspect to exist in its favor at the time of executing the release. The Parties acknowledge that they may discover facts different from or in addition to those they now know or believe to be true with respect to the released claims, and the Parties agree that the Release Agreement shall remain in full force and effect notwithstanding any such discovery.

Section 8: Dismissal of Arbitration

8.1 Stipulation of Dismissal. Within fifteen (15) business days following the Closing, the Parties shall jointly file a Stipulation of Dismissal with Prejudice (the "Stipulation of Dismissal") in JAMS Reference No. 1440032871 before the Honorable Margaret Liu Chen (Ret.), as arbitrator, dismissing the Arbitration and all claims, counterclaims, and cross-claims asserted therein with prejudice, with each Party to bear its own attorneys' fees, costs, and expenses.

8.2 Counsel Execution. The Stipulation of Dismissal shall be executed by counsel of record for each Party: Francesca Morano of Calderwood & Harkness LLP, as counsel for PCG, and Victoria Castillo of Hargrove, Dunlap & Castillo LLP, as counsel for MSH. Each Party shall direct its counsel to cooperate fully in the preparation, execution, and filing of the Stipulation of Dismissal in accordance with the requirements of JAMS and the arbitrator's standing orders.

8.3 Obligation to Cooperate. Following execution of this Term Sheet and pending Closing, the Parties shall jointly request that the arbitrator stay all proceedings in the Arbitration, including any pending discovery deadlines, motion practice, and the scheduled arbitration hearing, to allow the Parties to consummate the Redemption and resolve the dispute in accordance with this Term Sheet.

Section 9: Fees and Costs

9.1 Own Fees and Costs. Each Party shall bear its own attorneys' fees, expert and appraiser costs, arbitration fees and assessments, mediation fees and assessments, and all other costs and expenses incurred in connection with the Arbitration, the mediation on March 25, 2024, the negotiation and execution of this Term Sheet, the negotiation and execution of the Definitive Agreements, and all related matters. No Party shall seek an award, reimbursement, or recovery of any fees, costs, or expenses from the other Party in any forum, whether in connection with the Arbitration, any other proceeding, or otherwise.

9.2 Transaction Costs. All transaction costs and expenses directly incurred in connection with the Redemption, including, without limitation, any lender consent fees charged by GANB, any transfer taxes, intangible taxes, documentary stamp taxes, recording fees, filing fees, and similar charges, shall be borne solely by PCG. MSH shall have no obligation to contribute to or reimburse PCG for any such transaction costs.

Section 10: Confidentiality

10.1 Confidentiality Obligations. The terms of this Term Sheet and the Redemption, including, without limitation, the Redemption Price, the existence and terms of the framework agreement reached at mediation, and any information exchanged between the Parties in connection with the negotiation of this Term Sheet and the Definitive Agreements, shall be treated as strictly confidential by both Parties and shall not be disclosed to any third party, except in the following circumstances:

(a) as required by applicable law, regulation, or order of a court or governmental authority of competent jurisdiction, provided that the disclosing Party shall use commercially reasonable efforts to provide the other Party with advance notice of any such required disclosure and an opportunity to seek a protective order or other appropriate remedy;

(b) to the Parties' respective legal, tax, and financial advisors, including Calderwood & Harkness LLP (counsel for PCG), Hargrove, Dunlap & Castillo LLP (counsel for MSH), Grantham, Pryce & Associates CPAs (tax advisors to PGV and the Parties), and the Parties' respective appraisers, in each case on a need-to-know basis and subject to such advisors' professional obligations of confidentiality;

(c) to Gulf Atlantic National Bank in connection with obtaining the Lender Consent described in Section 6 hereof, subject to such confidentiality protections as GANB may require or as the Parties may reasonably request;

(d) to Atlantic Omnivrel Insurance Company as necessary in connection with PCG's pending insurance claim related to the Property, subject to applicable confidentiality requirements; and

(e) to JAMS and the Honorable Margaret Liu Chen (Ret.) in connection with the stay of proceedings and dismissal of the Arbitration as contemplated by Section 8 hereof.

10.2 Survival. The confidentiality obligations set forth in this Section 10 shall survive the Closing and shall remain in full force and effect in perpetuity, regardless of whether the Redemption is consummated or this Term Sheet is terminated.

Section 11: Exclusivity and Standstill

11.1 MSH Exclusivity. From the date of execution of this Term Sheet through the earlier of (i) the Closing and (ii) the termination of this Term Sheet in accordance with Section 14 hereof, MSH shall not, and shall cause its members, managers, officers, agents, and representatives not to, directly or indirectly, solicit, initiate, encourage, negotiate, discuss, or enter into any agreement, letter of intent, term sheet, or other arrangement with any third party with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation, or other disposition of all or any portion of MSH's membership interest in PGV. MSH shall promptly notify PCG in writing of any unsolicited inquiry or proposal received by MSH from any third party with respect to such a transaction during the exclusivity period.

11.2 PCG Standstill. From the date of execution of this Term Sheet through the earlier of (i) the Closing and (ii) the termination of this Term Sheet in accordance with Section 14 hereof, PCG shall not exercise any additional rights or remedies under the Operating Agreement that are adverse to MSH's membership interest in PGV or that would materially impair MSH's ability to receive the Redemption Price at Closing, including, without limitation, any right to forfeit, dilute, or involuntarily redeem MSH's interest other than as contemplated by this Term Sheet.

Section 12: Governing Law and Dispute Resolution

12.1 Governing Law. This Term Sheet shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

12.2 Dispute Resolution. Any dispute, claim, or controversy arising out of or relating to this Term Sheet, including any dispute regarding its formation, validity, interpretation, performance, breach, or termination, shall be resolved by binding arbitration administered by JAMS in Jacksonville, Florida, in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then in effect, consistent with the arbitration provisions set forth in Section 15.2 of the Operating Agreement. The arbitrator shall be selected by mutual agreement of the Parties, or, if the Parties are unable to agree within fifteen (15) days after the filing of a demand for arbitration, in accordance with the JAMS arbitrator selection procedures. The arbitrator's award shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction.

Section 13: Binding Effect

13.1 Binding Agreement. This Term Sheet constitutes a legally binding and enforceable agreement between the Parties upon execution by both Parties. Each Party acknowledges that it has had the opportunity to consult with independent legal counsel regarding this Term Sheet, that it has read and understands the terms and conditions hereof, and that it enters into this Term Sheet voluntarily and with full knowledge of its binding nature.

13.2 Successors and Assigns. This Term Sheet shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. Neither Party may assign its rights or obligations under this Term Sheet without the prior written consent of the other Party, except that PCG may assign its rights (but not its obligations) to an affiliate of PCG upon written notice to MSH, provided that PCG shall remain fully liable for all obligations hereunder.

13.3 Priority of Agreements. In the event of any conflict or inconsistency between the terms and provisions of this Term Sheet and the terms and provisions of the Definitive Agreements (including the Redemption Agreement, the Release Agreement, or any other agreement executed in connection with the Closing), the Definitive Agreements shall control upon their execution and delivery by the Parties. Until such time as the Definitive Agreements are fully executed and delivered, this Term Sheet shall govern the Parties' respective rights and obligations with respect to the subject matter hereof.

Section 14: Termination

14.1 Termination for Failure to Execute Definitive Agreements. If the Definitive Agreements (including the Redemption Agreement) are not fully executed by both Parties within sixty (60) days of the date hereof (i.e., by June 7, 2024), either Party may terminate this Term Sheet upon ten (10) days' prior written notice to the other Party, provided that the terminating Party is not then in material breach of its obligation to negotiate the Definitive Agreements in good faith as set forth in Section 5.1 hereof.

14.2 Termination for Failure to Close. If the Closing has not occurred within ninety (90) days of the date hereof (i.e., by July 7, 2024), either Party may terminate this Term Sheet upon ten (10) days' prior written notice to the other Party, subject to the same proviso set forth in Section 14.1 above (i.e., that the terminating Party is not in material breach of its obligations hereunder).

14.3 Effect of Termination. Upon any termination of this Term Sheet in accordance with this Section 14, the Parties' respective rights, remedies, claims, counterclaims, and defenses in the Arbitration (JAMS Reference No. 1440032871) shall be fully preserved, and neither Party shall be deemed to have waived any such rights or remedies by virtue of having entered into or performed under this Term Sheet. The confidentiality obligations set forth in Section 10 shall survive any such termination.

Section 15: Miscellaneous

15.1 Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted under this Term Sheet shall be in writing and shall be delivered by (i) personal delivery, (ii) nationally recognized overnight courier service, or (iii) electronic mail (with confirmation of receipt), addressed as follows:

If to PCG:

Pellegrino Capital Group LLC 1900 Bayshore Boulevard, Suite 1400 Tampa, FL 33606

Attention: Dominic R. Pellegrino, Managing Member

with a copy (which shall not constitute notice) to:

Calderwood & Harkness LLP 801 Brickell Avenue, Suite 2800 Miami, FL 33131

Attention: Francesca Morano, Esq.

If to MSH:

Meridian Shores Hospitality LLC 220 Royal Palm Way, Suite 300 Palm Beach, FL 33480

Attention: Nathaniel Cordero, Managing Member

with a copy (which shall not constitute notice) to:

Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, FL 33131

Attention: Victoria Castillo, Esq.

Either Party may change its address for purposes of this Section 15.1 by providing written notice of such change to the other Party in accordance with this Section.

15.2 Entire Agreement. This Term Sheet constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous discussions, negotiations, understandings, commitments, agreements, proposals, and term sheets, whether oral or written, between the Parties with respect to the matters set forth herein. No Party has relied on any representation, warranty, promise, or inducement not expressly set forth in this Term Sheet.

15.3 Amendments and Modifications. No amendment, modification, supplement, or waiver of any provision of this Term Sheet shall be effective unless it is set forth in a written instrument duly executed by both Parties. No failure or delay by either Party in exercising any right, power, or remedy under this Term Sheet shall operate as a waiver thereof, and no single or partial exercise of any such right, power, or remedy shall preclude any other or further exercise thereof.

15.4 Counterparts. This Term Sheet may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Term Sheet by facsimile, electronic mail in portable document format (.pdf), or other electronic transmission shall be deemed to be, and shall have the same force and effect as, execution and delivery of an original.

15.5 No Third-Party Beneficiaries. This Term Sheet is entered into solely for the benefit of the Parties and their respective permitted successors and assigns. Nothing contained in this Term Sheet, express or implied, is intended to, or shall be construed to, confer upon any person or entity other than the Parties and their permitted successors and assigns any legal or equitable right, benefit, remedy, or claim under or by reason of this Term Sheet, except that the Released Parties identified in Section 7 hereof shall be third-party beneficiaries of the release provisions set forth therein upon execution of the Release Agreement.

[Remainder of page intentionally left blank. Signature page follows.]

SIGNATURE PAGE TO BINDING TERM SHEET REDEMPTION OF MEMBERSHIP INTEREST IN PALMETTO GRAND VENTURES LLC

IN WITNESS WHEREOF, each of the undersigned Parties has caused this Binding Term Sheet to be executed by its duly authorized representative as of the date first written above.

PELLEGRINO CAPITAL GROUP LLC a Florida limited liability company

By: ________

Name: Dominic R. Pellegrino

Title: Managing Member

Date: April 8, 2024

MERIDIAN SHORES HOSPITALITY LLC a Delaware limited liability company

By: ________

Name: Nathaniel Cordero

Title: Managing Member

Date: April 8, 2024

BINDING TERM SHEET
Redemption of Membership Interest in Palmetto Grand Ventures LLC
Dated: April 8, 2024
This Binding Term Sheet (this "Term Sheet") is entered into as of April 8, 2024, by and between Pellegrino Capital Group LLC, a Florida limited liability company ("PCG"), and Meridian Shores Hospitality LLC, a Delaware limited liability company ("MSH," and together with PCG, the "Parties," and each individually, a "Party"). This Term Sheet is legally binding and enforceable upon execution by both Parties, and each Party acknowledges that it has been represented by independent legal counsel in connection with the negotiation and execution hereof.
This Term Sheet memorializes and gives binding effect to the framework agreement reached by the Parties at mediation on March 25, 2024, before mediator Raymond Alcazar of Alcazar Dispute Resolution LLC, 333 SE 2nd Avenue, Suite 2100, Miami, FL 33131. This Term Sheet sets forth the principal terms pursuant to which the Parties intend to consummate the Redemption (as defined below) and resolve the Arbitration (as defined below). In the event of any conflict between this Term Sheet and a subsequently executed Definitive Redemption Agreement, the Definitive Redemption Agreement shall control in accordance with Section 13 hereof; until such time, this Term Sheet shall govern the Parties' respective rights and obligations with respect to the subject matter set forth herein.
Section 1: Parties
1.1 Purchaser. Pellegrino Capital Group LLC, a Florida limited liability company ("PCG"), with its principal office at 1900 Bayshore Boulevard, Suite 1400, Tampa, FL 33606. PCG's authorized signatory for purposes of this Term Sheet and all transactions contemplated hereby is Dominic R. Pellegrino, in his capacity as Managing Member of PCG. PCG represents and warrants that Mr. Pellegrino has full power and authority to bind PCG to the terms and conditions of this Term Sheet without the need for any additional corporate or member approval.
1.2 Seller. Meridian Shores Hospitality LLC, a Delaware limited liability company ("MSH"), with its principal office at 220 Royal Palm Way, Suite 300, Palm Beach, FL 33480. MSH's authorized signatory for purposes of this Term Sheet and all transactions contemplated hereby is Nathaniel Cordero, in his capacity as Managing Member of MSH. MSH represents and warrants that Mr. Cordero has full power and authority to bind MSH to the terms and conditions of this Term Sheet without the need for any additional corporate or member approval.
1.3 Collective Reference. PCG and MSH are referred to collectively herein as the "Parties" and individually as a "Party."
Section 2: Recitals and Background
2.1 Formation of PGV. PCG and MSH are the sole members of Palmetto Grand Ventures LLC, a Florida limited liability company ("PGV" or the "Company"), EIN 82-5063921, Florida Department of State Filing No. L17000124583, which was duly organized and formed on June 15, 2017, under the laws of the State of Florida.
2.2 Membership Interests. PCG holds a sixty-five percent (65%) membership interest in PGV, and MSH holds a thirty-five percent (35%) membership interest in PGV. These percentage interests reflect the initial capital contributions made by PCG and MSH at the time of PGV's formation and have not been adjusted or modified since such date.
2.3 The Property. PGV owns and operates The Palmetto Grand Resort & Spa, a 312-room luxury beachfront hotel and resort property located at 650 Mandalay Avenue, Clearwater Beach, FL 33767, Pinellas County, Florida (the "Property"). The Property is managed under a franchise agreement with Aurelian Hotels & Resorts Inc. (the "Franchise Agreement"), and has operated continuously as a full-service luxury resort since its acquisition and repositioning by PGV in 2017.
2.4 The Operating Agreement. PGV is governed by that certain Operating Agreement of Palmetto Grand Ventures LLC, dated as of June 15, 2017, as such agreement may have been amended, supplemented, or otherwise modified from time to time (the "Operating Agreement" or "OA"). The Operating Agreement sets forth the respective rights, obligations, and economic entitlements of PCG and MSH as members of PGV, including, without limitation, provisions governing distributions, capital accounts, management authority, transfer restrictions, buy-sell mechanisms, and dispute resolution.
2.5 Call-Option Exercise. On January 9, 2023, PCG exercised its call option under Section 12.4 of the Operating Agreement (the "Call Option") to purchase MSH's 35% membership interest in PGV at Fair Market Value (as defined in Section 12.4(a) of the Operating Agreement). The exercise of the Call Option was timely and made in accordance with the notice and procedural requirements set forth in the Operating Agreement.
2.6 PCG's Valuation and Tender. In connection with the Call Option exercise, PCG retained Whitfield Realty Advisors LLC ("Whitfield") as its appraiser. Whitfield delivered an appraisal report valuing 100% of PGV's assets at One Hundred Eighteen Million Dollars ($118,000,000) as of December 31, 2022. Based on the Whitfield appraisal, PCG tendered Forty-One Million Three Hundred Thousand Dollars ($41,300,000) to MSH on March 1, 2023, which amount was calculated by PCG as representing the Fair Market Value of MSH's 35% membership interest after application of the valuation methodology prescribed by Section 12.4(b) of the Operating Agreement.
2.7 MSH's Rejection and Demand for Arbitration. MSH rejected PCG's tender on March 10, 2023, asserting that the Whitfield appraisal materially understated the Fair Market Value of PGV's assets and that PCG's valuation was conducted in bad faith. On March 20, 2023, MSH filed a Demand for Arbitration with JAMS, Case Reference No. 1440032871 (the "Arbitration"), asserting claims for, among other things, breach of the Operating Agreement, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty, and seeking a determination that the Fair Market Value of MSH's 35% membership interest substantially exceeded the amount tendered by PCG.
2.8 MSH's Valuation. In support of its Arbitration claims, MSH retained Beacon Valuation Group Inc. ("Beacon"), which delivered an appraisal report valuing 100% of PGV's assets at One Hundred Fifty-One Million Five Hundred Thousand Dollars ($151,500,000) as of December 31, 2022. Based on the Beacon appraisal and MSH's calculation of its economic entitlements under the Operating Agreement, MSH demanded Seventy Million Dollars ($70,000,000) for its 35% membership interest.
2.9 Pending Arbitration. The Arbitration is currently pending before the Honorable Margaret Liu Chen (Ret.) as sole arbitrator, seated in Jacksonville, Florida. Discovery has been substantially completed, and both Parties have incurred significant legal fees, expert costs, and other expenses in connection with the Arbitration proceedings.
2.10 Neutral Third Appraiser. Pursuant to Section 12.4(c) of the Operating Agreement, which provides for the retention of a neutral third appraiser in the event the parties' respective appraisals differ by more than ten percent (10%), the Parties jointly retained Linden Park Advisory LLC, acting through Thomas Carraway, MAI, FRICS, as neutral third appraiser. Linden Park Advisory LLC delivered a preliminary indication of value in the range of One Hundred Thirty Million Dollars ($130,000,000) to One Hundred Thirty-Eight Million Dollars ($138,000,000) for 100% of PGV's assets as of December 31, 2022. The Linden Park preliminary indication of value has not been finalized and remains subject to further analysis and review.
2.11 Mediation and Framework Agreement. On March 25, 2024, the Parties participated in a full-day mediation before Raymond Alcazar of Alcazar Dispute Resolution LLC, 333 SE 2nd Avenue, Suite 2100, Miami, FL 33131, at which the Parties, through their respective counsel and principals, reached a framework agreement resolving the Arbitration and all related disputes on the terms set forth herein. This Term Sheet memorializes and gives binding legal effect to the framework agreement reached at the March 25, 2024 mediation.
Section 3: The Redemption
3.1 Transaction. Subject to and upon the terms and conditions set forth in this Term Sheet (and, upon execution, the Definitive Agreements), PCG shall purchase, and MSH shall sell, transfer, assign, convey, and deliver to PCG, MSH's entire thirty-five percent (35%) membership interest in PGV (the "Redeemed Interest"), free and clear of all liens, pledges, security interests, charges, claims, encumbrances, options, restrictions, and other adverse interests of any kind or nature whatsoever (collectively, "Liens"), such that following consummation of the transaction, PCG shall hold a one hundred percent (100%) membership interest in PGV and shall be the sole member and manager of PGV (the "Redemption").
3.2 Redemption Price. The total purchase price for the Redeemed Interest shall be Fifty-Two Million Eight Hundred Fifty Thousand Dollars ($52,850,000) (the "Redemption Price"). The Redemption Price has been negotiated between the Parties at arm's length and reflects a negotiated resolution of the Parties' dispute regarding the Fair Market Value of MSH's membership interest. The Redemption Price is inclusive of all of the following:
(a) MSH's thirty-five percent (35%) share of the net equity value of PGV as determined by the Parties for purposes of this settlement;
(b) MSH's accrued and unpaid preferred return in the amount of Seventeen Million Ten Thousand Dollars ($17,010,000) under Section 5.2 of the Operating Agreement, as stipulated and agreed upon by the Parties for purposes of this Term Sheet; and
(c) all other amounts owed to MSH under the Operating Agreement, including, without limitation, any unpaid distributions, capital account balances, promote entitlements, incentive allocations, or other economic interests of any kind to which MSH may be entitled under the Operating Agreement or applicable law.
3.3 Finality of Payment. MSH acknowledges and agrees that, upon receipt of the Redemption Price in full, MSH shall have no further claims, rights, or entitlements to distributions, preferred returns, capital account balances, promote payments, incentive allocations, management fees, or any other economic interest in PGV, whether arising under the Operating Agreement, at law, in equity, or otherwise. The Redemption Price shall constitute full and final consideration for the Redeemed Interest and for the resolution and settlement of all claims and disputes between the Parties as more fully set forth in Section 7 hereof.
Section 4: Payment Terms
4.1 Lump-Sum Payment. The Redemption Price of Fifty-Two Million Eight Hundred Fifty Thousand Dollars ($52,850,000) shall be paid in a single lump-sum wire transfer of immediately available funds to a bank account designated by MSH in writing at least five (5) business days prior to the scheduled closing date. Payment shall be made on the closing date simultaneously with the delivery of all closing deliverables described in Section 5 hereof.
4.2 No Holdback, Escrow, or Installments. The Parties acknowledge and agree that there shall be no holdback, escrow, earn-out, installment payment, or any other deferred payment mechanism with respect to any portion of the Redemption Price. The full Redemption Price shall be paid at closing in immediately available funds, without setoff, deduction, or counterclaim.
4.3 Closing Date. The closing of the Redemption (the "Closing") shall occur no later than seventy-five (75) days after the date of execution of this Term Sheet. Accordingly, the target Closing date shall be on or before June 28, 2024 (the "Outside Closing Date"). The Parties shall cooperate in good faith to effect Closing as promptly as practicable, subject to the satisfaction or waiver of the conditions to closing set forth herein and in the Definitive Agreements.
Section 5: Closing and Definitive Agreements
5.1 Negotiation of Definitive Agreements. The Parties shall negotiate in good faith and use commercially reasonable efforts to finalize and execute a Definitive Redemption Agreement (the "Redemption Agreement") within forty-five (45) days of the execution of this Term Sheet (target execution date: on or before May 20, 2024). The Redemption Agreement shall be prepared by counsel for PCG and shall be subject to review and comment by counsel for MSH. Both Parties' respective legal counsel shall cooperate in good faith to resolve any open issues and to execute the Redemption Agreement within the timeframe set forth herein.
5.2 Contents of the Redemption Agreement. The Redemption Agreement shall contain customary representations and warranties of each Party (including, without limitation, representations regarding authority, enforceability, absence of Liens on the Redeemed Interest, and accuracy of material information), customary covenants (including pre-closing covenants regarding the operation of PGV in the ordinary course of business), conditions to closing, and customary indemnification provisions, in each case as appropriate for a transaction of this nature and consistent with the terms set forth in this Term Sheet.
5.3 Closing Deliverables. At or prior to the Closing, the Parties shall deliver the following documents and instruments, in form and substance reasonably satisfactory to both Parties:
(a) the fully executed Redemption Agreement;
(b) an Assignment of Membership Interest, duly executed by MSH, transferring, assigning, conveying, and delivering the Redeemed Interest to PCG, free and clear of all Liens;
(c) the Mutual Release and Settlement Agreement described in Section 7 hereof, duly executed by each Party and each of the individual Released Parties identified therein;
(d) a Closing Certificate of each Party, certifying as to the accuracy of its representations and warranties, the satisfaction of its conditions to closing, and the absence of any material adverse change;
(e) the written consent of Gulf Atlantic National Bank ("GANB"), as lender under Loan No. CRE-2017-06284, to the Redemption and to the transfer of MSH's membership interest to PCG, and to any incremental borrowing under PGV's revolving credit facility with GANB necessary to fund the Redemption Price, such consent to be in form and substance reasonably satisfactory to both Parties (the "Lender Consent");
(f) an Amended and Restated Operating Agreement of PGV, reflecting PCG as the sole one hundred percent (100%) member and manager of PGV, to be executed promptly following Closing; and
(g) such other documents, instruments, certificates, and agreements as may be reasonably required by either Party or its counsel to effectuate the transactions contemplated hereby.
Section 6: Lender Consent and Funding
6.1 Obligation to Obtain Lender Consent. PCG shall use commercially reasonable efforts to obtain the consent of Gulf Atlantic National Bank ("GANB"), as administrative agent and lender under that certain Credit Agreement dated as of June 30, 2017, Loan No. CRE-2017-06284 (the "Loan Agreement"), with an outstanding principal balance of approximately Forty-Eight Million Six Hundred Thousand Dollars ($48,600,000) as of December 31, 2022, to the Redemption and to the transfer of MSH's membership interest in PGV from MSH to PCG. PCG shall further use commercially reasonable efforts to obtain GANB's consent to any incremental draw on PGV's revolving credit facility under the Loan Agreement that may be necessary to fund a portion of the Redemption Price.
6.2 Condition to Closing. The receipt of the Lender Consent from GANB in form and substance reasonably satisfactory to both Parties shall be a condition precedent to the obligation of the Parties to consummate the Closing. PCG shall keep MSH reasonably informed of the status of its efforts to obtain the Lender Consent and shall promptly provide MSH with copies of all material correspondence with GANB relating thereto (subject to redaction of commercially sensitive financial information of PCG unrelated to the Redemption).
6.3 Funding Sources. PCG represents that it intends to fund the Redemption Price from a combination of (i) existing liquidity of PCG and its affiliates and (ii) an incremental draw on PGV's revolving credit facility with GANB. Nothing in this Section 6.3 shall be deemed to limit PCG's obligation to pay the full Redemption Price at Closing or to condition PCG's obligations hereunder on PCG's ability to secure any particular source of financing.
Section 7: Mutual Release of Claims
7.1 Mutual Release. Simultaneously with the Closing, PCG, MSH, and their respective members, managers, officers, directors, partners, affiliates, subsidiaries, successors, and assigns, including specifically Dominic R. Pellegrino, Adriana Pellegrino-Voss, Marcus Thiel, Nathaniel Cordero, and Elena Cordero (collectively, the "Released Parties"), shall execute a Mutual Release and Settlement Agreement (the "Release Agreement") providing for a full, final, unconditional, and irrevocable release of all claims, counterclaims, demands, actions, causes of action, suits, debts, obligations, liabilities, damages, losses, costs, and expenses of every kind and nature, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, accrued or contingent, at law or in equity, arising out of or in any way relating to any of the following:
(a) the Operating Agreement of Palmetto Grand Ventures LLC, dated as of June 15, 2017, and any and all rights, obligations, and disputes arising thereunder;
(b) the call-option exercise notice issued by PCG to MSH, dated January 9, 2023, and all actions taken or not taken in connection therewith;
(c) the appraisals prepared by Whitfield Realty Advisors LLC and Beacon Valuation Group Inc., including any claims regarding the methodology, accuracy, independence, or good faith of such appraisals;
(d) any alleged breach by any Party of OA Section 8.3, including, without limitation, any claims regarding capital expenditure obligations, deferred maintenance, or failure to fund required reserves;
(e) any alleged breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, or bad faith under OA Section 12.7 or otherwise;
(f) the Arbitration, JAMS Reference No. 1440032871, and all claims, counterclaims, defenses, and matters asserted or which could have been asserted therein; and
(g) all related matters, disputes, controversies, and transactions between or among the Parties and the Released Parties, from the inception of PGV through the date of the Release Agreement.
7.2 Scope of Release. The release contemplated by this Section 7 is intended to be as broad as permitted by applicable law. Each Party expressly waives any and all rights or benefits that it may have under Section 542 of the California Civil Code, or any analogous statutory or common law provision of any other jurisdiction, to the extent applicable, which provides that a general release does not extend to claims which the releasing party does not know or suspect to exist in its favor at the time of executing the release. The Parties acknowledge that they may discover facts different from or in addition to those they now know or believe to be true with respect to the released claims, and the Parties agree that the Release Agreement shall remain in full force and effect notwithstanding any such discovery.
Section 8: Dismissal of Arbitration
8.1 Stipulation of Dismissal. Within fifteen (15) business days following the Closing, the Parties shall jointly file a Stipulation of Dismissal with Prejudice (the "Stipulation of Dismissal") in JAMS Reference No. 1440032871 before the Honorable Margaret Liu Chen (Ret.), as arbitrator, dismissing the Arbitration and all claims, counterclaims, and cross-claims asserted therein with prejudice, with each Party to bear its own attorneys' fees, costs, and expenses.
8.2 Counsel Execution. The Stipulation of Dismissal shall be executed by counsel of record for each Party: Francesca Morano of Calderwood & Harkness LLP, as counsel for PCG, and Victoria Castillo of Hargrove, Dunlap & Castillo LLP, as counsel for MSH. Each Party shall direct its counsel to cooperate fully in the preparation, execution, and filing of the Stipulation of Dismissal in accordance with the requirements of JAMS and the arbitrator's standing orders.
8.3 Obligation to Cooperate. Following execution of this Term Sheet and pending Closing, the Parties shall jointly request that the arbitrator stay all proceedings in the Arbitration, including any pending discovery deadlines, motion practice, and the scheduled arbitration hearing, to allow the Parties to consummate the Redemption and resolve the dispute in accordance with this Term Sheet.
Section 9: Fees and Costs
9.1 Own Fees and Costs. Each Party shall bear its own attorneys' fees, expert and appraiser costs, arbitration fees and assessments, mediation fees and assessments, and all other costs and expenses incurred in connection with the Arbitration, the mediation on March 25, 2024, the negotiation and execution of this Term Sheet, the negotiation and execution of the Definitive Agreements, and all related matters. No Party shall seek an award, reimbursement, or recovery of any fees, costs, or expenses from the other Party in any forum, whether in connection with the Arbitration, any other proceeding, or otherwise.
9.2 Transaction Costs. All transaction costs and expenses directly incurred in connection with the Redemption, including, without limitation, any lender consent fees charged by GANB, any transfer taxes, intangible taxes, documentary stamp taxes, recording fees, filing fees, and similar charges, shall be borne solely by PCG. MSH shall have no obligation to contribute to or reimburse PCG for any such transaction costs.
Section 10: Confidentiality
10.1 Confidentiality Obligations. The terms of this Term Sheet and the Redemption, including, without limitation, the Redemption Price, the existence and terms of the framework agreement reached at mediation, and any information exchanged between the Parties in connection with the negotiation of this Term Sheet and the Definitive Agreements, shall be treated as strictly confidential by both Parties and shall not be disclosed to any third party, except in the following circumstances:
(a) as required by applicable law, regulation, or order of a court or governmental authority of competent jurisdiction, provided that the disclosing Party shall use commercially reasonable efforts to provide the other Party with advance notice of any such required disclosure and an opportunity to seek a protective order or other appropriate remedy;
(b) to the Parties' respective legal, tax, and financial advisors, including Calderwood & Harkness LLP (counsel for PCG), Hargrove, Dunlap & Castillo LLP (counsel for MSH), Grantham, Pryce & Associates CPAs (tax advisors to PGV and the Parties), and the Parties' respective appraisers, in each case on a need-to-know basis and subject to such advisors' professional obligations of confidentiality;
(c) to Gulf Atlantic National Bank in connection with obtaining the Lender Consent described in Section 6 hereof, subject to such confidentiality protections as GANB may require or as the Parties may reasonably request;
(d) to Atlantic Omnivrel Insurance Company as necessary in connection with PCG's pending insurance claim related to the Property, subject to applicable confidentiality requirements; and
(e) to JAMS and the Honorable Margaret Liu Chen (Ret.) in connection with the stay of proceedings and dismissal of the Arbitration as contemplated by Section 8 hereof.
10.2 Survival. The confidentiality obligations set forth in this Section 10 shall survive the Closing and shall remain in full force and effect in perpetuity, regardless of whether the Redemption is consummated or this Term Sheet is terminated.
Section 11: Exclusivity and Standstill
11.1 MSH Exclusivity. From the date of execution of this Term Sheet through the earlier of (i) the Closing and (ii) the termination of this Term Sheet in accordance with Section 14 hereof, MSH shall not, and shall cause its members, managers, officers, agents, and representatives not to, directly or indirectly, solicit, initiate, encourage, negotiate, discuss, or enter into any agreement, letter of intent, term sheet, or other arrangement with any third party with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation, or other disposition of all or any portion of MSH's membership interest in PGV. MSH shall promptly notify PCG in writing of any unsolicited inquiry or proposal received by MSH from any third party with respect to such a transaction during the exclusivity period.
11.2 PCG Standstill. From the date of execution of this Term Sheet through the earlier of (i) the Closing and (ii) the termination of this Term Sheet in accordance with Section 14 hereof, PCG shall not exercise any additional rights or remedies under the Operating Agreement that are adverse to MSH's membership interest in PGV or that would materially impair MSH's ability to receive the Redemption Price at Closing, including, without limitation, any right to forfeit, dilute, or involuntarily redeem MSH's interest other than as contemplated by this Term Sheet.
Section 12: Governing Law and Dispute Resolution
12.1 Governing Law. This Term Sheet shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without giving effect to any choice-of-law or conflict-of-law rules or provisions (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.
12.2 Dispute Resolution. Any dispute, claim, or controversy arising out of or relating to this Term Sheet, including any dispute regarding its formation, validity, interpretation, performance, breach, or termination, shall be resolved by binding arbitration administered by JAMS in Jacksonville, Florida, in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then in effect, consistent with the arbitration provisions set forth in Section 15.2 of the Operating Agreement. The arbitrator shall be selected by mutual agreement of the Parties, or, if the Parties are unable to agree within fifteen (15) days after the filing of a demand for arbitration, in accordance with the JAMS arbitrator selection procedures. The arbitrator's award shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction.
Section 13: Binding Effect
13.1 Binding Agreement. This Term Sheet constitutes a legally binding and enforceable agreement between the Parties upon execution by both Parties. Each Party acknowledges that it has had the opportunity to consult with independent legal counsel regarding this Term Sheet, that it has read and understands the terms and conditions hereof, and that it enters into this Term Sheet voluntarily and with full knowledge of its binding nature.
13.2 Successors and Assigns. This Term Sheet shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. Neither Party may assign its rights or obligations under this Term Sheet without the prior written consent of the other Party, except that PCG may assign its rights (but not its obligations) to an affiliate of PCG upon written notice to MSH, provided that PCG shall remain fully liable for all obligations hereunder.
13.3 Priority of Agreements. In the event of any conflict or inconsistency between the terms and provisions of this Term Sheet and the terms and provisions of the Definitive Agreements (including the Redemption Agreement, the Release Agreement, or any other agreement executed in connection with the Closing), the Definitive Agreements shall control upon their execution and delivery by the Parties. Until such time as the Definitive Agreements are fully executed and delivered, this Term Sheet shall govern the Parties' respective rights and obligations with respect to the subject matter hereof.
Section 14: Termination
14.1 Termination for Failure to Execute Definitive Agreements. If the Definitive Agreements (including the Redemption Agreement) are not fully executed by both Parties within sixty (60) days of the date hereof (i.e., by June 7, 2024), either Party may terminate this Term Sheet upon ten (10) days' prior written notice to the other Party, provided that the terminating Party is not then in material breach of its obligation to negotiate the Definitive Agreements in good faith as set forth in Section 5.1 hereof.
14.2 Termination for Failure to Close. If the Closing has not occurred within ninety (90) days of the date hereof (i.e., by July 7, 2024), either Party may terminate this Term Sheet upon ten (10) days' prior written notice to the other Party, subject to the same proviso set forth in Section 14.1 above (i.e., that the terminating Party is not in material breach of its obligations hereunder).
14.3 Effect of Termination. Upon any termination of this Term Sheet in accordance with this Section 14, the Parties' respective rights, remedies, claims, counterclaims, and defenses in the Arbitration (JAMS Reference No. 1440032871) shall be fully preserved, and neither Party shall be deemed to have waived any such rights or remedies by virtue of having entered into or performed under this Term Sheet. The confidentiality obligations set forth in Section 10 shall survive any such termination.
Section 15: Miscellaneous
15.1 Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted under this Term Sheet shall be in writing and shall be delivered by (i) personal delivery, (ii) nationally recognized overnight courier service, or (iii) electronic mail (with confirmation of receipt), addressed as follows:
If to PCG:
Pellegrino Capital Group LLC 1900 Bayshore Boulevard, Suite 1400 Tampa, FL 33606
Attention: Dominic R. Pellegrino, Managing Member
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 801 Brickell Avenue, Suite 2800 Miami, FL 33131
Attention: Francesca Morano, Esq.
If to MSH:
Meridian Shores Hospitality LLC 220 Royal Palm Way, Suite 300 Palm Beach, FL 33480
Attention: Nathaniel Cordero, Managing Member
with a copy (which shall not constitute notice) to:
Hargrove, Dunlap & Castillo LLP 1395 Brickell Avenue, Suite 3100 Miami, FL 33131
Attention: Victoria Castillo, Esq.
Either Party may change its address for purposes of this Section 15.1 by providing written notice of such change to the other Party in accordance with this Section.
15.2 Entire Agreement. This Term Sheet constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous discussions, negotiations, understandings, commitments, agreements, proposals, and term sheets, whether oral or written, between the Parties with respect to the matters set forth herein. No Party has relied on any representation, warranty, promise, or inducement not expressly set forth in this Term Sheet.
15.3 Amendments and Modifications. No amendment, modification, supplement, or waiver of any provision of this Term Sheet shall be effective unless it is set forth in a written instrument duly executed by both Parties. No failure or delay by either Party in exercising any right, power, or remedy under this Term Sheet shall operate as a waiver thereof, and no single or partial exercise of any such right, power, or remedy shall preclude any other or further exercise thereof.
15.4 Counterparts. This Term Sheet may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Term Sheet by facsimile, electronic mail in portable document format (.pdf), or other electronic transmission shall be deemed to be, and shall have the same force and effect as, execution and delivery of an original.
15.5 No Third-Party Beneficiaries. This Term Sheet is entered into solely for the benefit of the Parties and their respective permitted successors and assigns. Nothing contained in this Term Sheet, express or implied, is intended to, or shall be construed to, confer upon any person or entity other than the Parties and their permitted successors and assigns any legal or equitable right, benefit, remedy, or claim under or by reason of this Term Sheet, except that the Released Parties identified in Section 7 hereof shall be third-party beneficiaries of the release provisions set forth therein upon execution of the Release Agreement.
[Remainder of page intentionally left blank. Signature page follows.]
SIGNATURE PAGE TO BINDING TERM SHEET REDEMPTION OF MEMBERSHIP INTEREST IN PALMETTO GRAND VENTURES LLC
IN WITNESS WHEREOF, each of the undersigned Parties has caused this Binding Term Sheet to be executed by its duly authorized representative as of the date first written above.
PELLEGRINO CAPITAL GROUP LLC a Florida limited liability company
By: ________
Name: Dominic R. Pellegrino
Title: Managing Member
Date: April 8, 2024
MERIDIAN SHORES HOSPITALITY LLC a Delaware limited liability company
By: ________
Name: Nathaniel Cordero
Title: Managing Member
Date: April 8, 2024

BINDING TERM SHEET

Record

Parties

Dates

Amounts