AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF MERIDIAN SHORES HOSPITALITY LLC
A Florida Limited Liability Company
EIN: 59-4021867
Effective Date: December 15, 2025
This Agreement amends and restates in its entirety the prior Limited Liability Company Operating Agreement of Meridian Shores Hospitality LLC
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AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF MERIDIAN SHORES HOSPITALITY LLC
This Amended and Restated Limited Liability Company Operating Agreement (this "Agreement") of Meridian Shores Hospitality LLC, a Florida limited liability company (the "Company"), is entered into and effective as of December 15, 2025 (the "Effective Date"), by and among the Members identified herein and on the Membership Schedule attached hereto as Exhibit A.
RECITALS
WHEREAS, the Company was organized as a Florida limited liability company by the filing of Articles of Organization with the Florida Department of State, Division of Corporations, pursuant to and in accordance with the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes, as amended (the "Act");
WHEREAS, the members of the Company previously entered into that certain Limited Liability Company Operating Agreement, dated as of the original date of formation of the Company (the "Prior Agreement"), which Prior Agreement has governed the affairs of the Company since its inception;
WHEREAS, the Members desire to amend and restate the Prior Agreement in its entirety to reflect certain changes in ownership interests resulting from that certain Membership Interest Purchase Agreement dated December 15, 2025 (the "MIPA"), pursuant to which Salvatore A. Pellegrino, acting through Pellegrino Capital Group LLC, a Florida limited liability company ("PCG"), as Seller, sold a ninety-two percent (92%) Class A membership interest in the Company to The Salvatore A. Pellegrino 2025 Family Trust, an irrevocable trust established under the laws of the State of Florida, with Cornerstone Fiduciary Services, Inc. serving as Independent Trustee (the "Trust" or the "2025 IDGT"), as Purchaser;
WHEREAS, in connection with the transactions contemplated by the MIPA, the Trust has issued in favor of Salvatore A. Pellegrino that certain Secured Promissory Note dated December 15, 2025 in the original principal amount of Forty Million Dollars ($40,000,000) (the "Promissory Note"), bearing interest at the rate of four and 40/100 percent (4.40%) per annum, maturing on December 15, 2034, and the Trust has entered into that certain Pledge and Security Agreement of even date therewith (the "Pledge Agreement"), pursuant to which the Trust has pledged the 92% Class A membership interest acquired under the MIPA as security for the Trust's obligations under the Promissory Note;
WHEREAS, the Members now desire to amend and restate the Prior Agreement in its entirety to reflect the foregoing transactions, to set forth the rights, obligations, and interests of the Members with respect to the Company, and to address such other matters as are set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members agree as follows, and this Agreement supersedes and replaces the Prior Agreement in all respects:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Act" means the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes, as amended from time to time.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. With respect to a natural person, the term "Affiliate" shall include (a) such person's spouse, (b) any lineal descendant or ancestor of such person, (c) any sibling of such person, (d) any trust for the primary benefit of such person or any of the foregoing, and (e) any entity controlled by any of the foregoing.
"Agreement" means this Amended and Restated Limited Liability Company Operating Agreement, as it may be further amended, restated, supplemented, or otherwise modified from time to time in accordance with the provisions hereof.
"Assignee" means a transferee of all or any portion of a Membership Interest who has not been admitted as a substitute Member in accordance with Article VIII of this Agreement.
"Available Cash" means, with respect to any period, the net cash of the Company derived from operations during such period, after payment or provision for (a) all operating expenses of the Company, (b) all debt service obligations of the Company, including without limitation any payments required to be made under or in connection with the Promissory Note, (c) all Reserves established or maintained by the Manager in accordance with this Agreement, and (d) all capital expenditures approved by the Manager.
"Capital Account" means, with respect to each Member, the capital account maintained for such Member in accordance with Section 3.4 of this Agreement and Treasury Regulations Section 1.704-1(b)(2)(iv).
"Capital Contribution" means the total amount of cash and the fair market value of any property (net of liabilities assumed or to which such property is subject) contributed to the Company by a Member, as reflected in such Member's Capital Account and on the Membership Schedule.
"Class A Interest" means a Class A membership interest in the Company as described in Section 3.1 of this Agreement.
"Class B Interest" means a Class B membership interest in the Company as described in Section 3.1 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto. References to specific sections of the Code shall be deemed to include references to any corresponding successor provisions.
"Company" means Meridian Shores Hospitality LLC, a Florida limited liability company, EIN 59-4021867.
"Company Property" means all real and personal property, whether tangible or intangible, owned by the Company from time to time, including without limitation the Meridian Shores Resort & Spa located at 4500 Gulf Shore Boulevard, Naples, FL 34102, as more particularly described in Exhibit B attached hereto.
"COO" means the Chief Operating Officer of the Company, as appointed from time to time in accordance with Section 5.4(b) of this Agreement.
"Cornerstone" means Cornerstone Fiduciary Services, Inc., a Florida corporation, Florida Trust Company License No. FTC-2014-00287, with principal offices at 200 West Forsyth Street, Suite 1500, Jacksonville, FL 32202.
"Effective Date" means December 15, 2025.
"Fiscal Year" means the calendar year or such other fiscal year as may be established by the Manager with the consent of the Members; provided, however, that the initial Fiscal Year under this Agreement shall commence on January 1, 2025 and end on December 31, 2025, and each subsequent Fiscal Year shall be the twelve-month period commencing January 1 and ending December 31 of each year.
"Independent Trustee" means Cornerstone Fiduciary Services, Inc. in its capacity as trustee of the Trust, or any successor trustee appointed in accordance with the terms of the Trust Agreement.
"Majority Interest" means Members holding more than fifty percent (50%) of the aggregate Membership Interests outstanding at the time of the applicable determination.
"Manager" means the Person or Persons designated to manage the Company in accordance with Article V of this Agreement, including any successor Manager appointed in accordance with the provisions hereof.
"Member" means any Person who has been admitted as a member of the Company in accordance with this Agreement and who has not ceased to be a member, as reflected on the Membership Schedule attached hereto as Exhibit A, as amended from time to time. "Members" means all such Persons collectively.
"Membership Interest" means a Member's entire interest in the Company, including such Member's economic interest (the right to receive allocations of Net Income and Net Loss and distributions of Available Cash), voting rights, and all other rights, powers, and privileges conferred upon a Member under this Agreement and the Act.
"MIPA" means that certain Membership Interest Purchase Agreement dated December 15, 2025 among Salvatore A. Pellegrino (acting through Pellegrino Capital Group LLC), as Seller, and Cornerstone Fiduciary Services, Inc. as Trustee of The Salvatore A. Pellegrino 2025 Family Trust, as Purchaser, together with all exhibits, schedules, and amendments thereto.
"Net Income" and "Net Loss" mean, for each Fiscal Year or other applicable period, the Company's taxable income or taxable loss, as the case may be, for such period as determined under Code Section 703(a), with the following adjustments: (a) all items of income, gain, loss, deduction, or credit required to be stated separately under Code Section 703(a)(1) shall be included in computing Net Income or Net Loss; (b) any tax-exempt income of the Company not otherwise taken into account in computing Net Income or Net Loss shall be added to such income or loss; (c) any expenditures of the Company described in Code Section 705(a)(2)(B), or treated as Code Section 705(a)(2)(B) expenditures under Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss, shall be subtracted from such income or loss; and (d) if the book value of any Company asset differs from its adjusted tax basis for federal income tax purposes, gain or loss resulting from any disposition of such asset shall be computed by reference to the book value of such asset rather than its adjusted tax basis.
"Pellegrino Capital Group" or "PCG" means Pellegrino Capital Group LLC, a Florida limited liability company, EIN 65-1238074, with principal offices at 2400 Salzedo Street, Suite 1200, Coral Gables, FL 33134.
"Percentage Interest" means, with respect to each Member, the percentage set forth opposite such Member's name on the Membership Schedule, as such percentage may be adjusted from time to time in accordance with this Agreement.
"Permitted Transfer" means a Transfer permitted under Section 8.2 of this Agreement.
"Person" means any individual, corporation, limited liability company, partnership, limited partnership, joint venture, trust, estate, unincorporated association, governmental authority, or other entity.
"Pledge Agreement" means that certain Pledge and Security Agreement dated December 15, 2025, between the Trust (as Pledgor) and Salvatore A. Pellegrino (as Secured Party), as such agreement may be amended, restated, supplemented, or otherwise modified from time to time.
"Promissory Note" means that certain Secured Promissory Note dated December 15, 2025 in the original principal amount of Forty Million Dollars ($40,000,000), issued by the Trust in favor of Salvatore A. Pellegrino, bearing interest at the rate of four and 40/100 percent (4.40%) per annum, with interest-only payments due annually and a balloon payment of principal due at maturity on December 15, 2034, as such note may be amended, restated, or otherwise modified from time to time.
"Property" means the Meridian Shores Resort & Spa, a 142-room boutique resort and spa located at 4500 Gulf Shore Boulevard, Naples, FL 34102, as more particularly described in Exhibit B attached hereto, together with all improvements, fixtures, furnishings, equipment, and personal property located thereon or used in connection therewith.
"Reserves" means amounts set aside from Available Cash as determined by the Manager in its reasonable discretion for working capital, capital improvements, repairs and maintenance, contingencies, insurance deductibles, debt service reserves, and such other Company needs as the Manager may determine from time to time.
"Secured Party" means Salvatore A. Pellegrino, in his capacity as the secured party under the Pledge Agreement.
"Supermajority Interest" means Members holding at least seventy-five percent (75%) of the aggregate Membership Interests outstanding at the time of the applicable determination.
"Transfer" means any direct or indirect sale, assignment, transfer, conveyance, gift, pledge, hypothecation, mortgage, encumbrance, or other disposition of all or any portion of a Membership Interest, whether voluntary or involuntary, by operation of law or otherwise, including any transfer by foreclosure, execution, or judicial sale.
"Treasury Regulations" means the Income Tax Regulations, including temporary regulations, promulgated under the Code by the U.S. Department of the Treasury, as such regulations may be amended from time to time. References to specific sections of the Treasury Regulations shall be deemed to include references to any corresponding successor provisions.
"Trust" or "2025 IDGT" means The Salvatore A. Pellegrino 2025 Family Trust, an irrevocable trust established under the laws of the State of Florida pursuant to a Trust Agreement dated November 10, 2025, with Cornerstone Fiduciary Services, Inc. serving as Independent Trustee.
Section 1.2 — Rules of Construction
(a) Unless the context of this Agreement otherwise requires: (i) words of any gender shall include each other gender; (ii) words using the singular or plural number shall also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (iv) the terms "Article," "Section," "Subsection," "Exhibit," and "Schedule" refer to the specified Article, Section, Subsection, Exhibit, or Schedule of or to this Agreement unless otherwise specified; and (v) the term "including" shall mean "including, without limitation."
(b) The headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(c) Unless otherwise expressly provided herein, references to any agreement, document, or instrument shall mean such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
(d) References to any statute or statutory provision shall include any statute or statutory provision that amends, extends, consolidates, or replaces such statute or statutory provision, and all regulations, rulings, and other guidance issued thereunder or in connection therewith.
(e) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
ARTICLE II — ORGANIZATION AND PURPOSE
Section 2.1 — Formation
The Company was formed as a Florida limited liability company by the filing of Articles of Organization with the Florida Department of State, Division of Corporations, in accordance with and pursuant to the Act. The rights and obligations of the Members and the terms and conditions of the Company's governance shall be as provided in this Agreement. To the extent any provision of this Agreement is inconsistent with any mandatory provision of the Act, the Act shall control. To the extent any provision of the Act provides a rule that may be modified or overridden by agreement of the members, the terms of this Agreement shall control.
Section 2.2 — Name
The name of the Company is "Meridian Shores Hospitality LLC." The Company's business shall be conducted under such name or such other trade names or fictitious names as the Manager may determine from time to time, provided that all necessary filings are made with the appropriate governmental authorities.
Section 2.3 — Principal Office and Registered Agent
(a) The principal office of the Company shall be located at 4500 Gulf Shore Boulevard, Naples, FL 34102, or at such other place as the Manager may designate from time to time by written notice to the Members.
(b) The registered agent and registered office of the Company in the State of Florida shall be as set forth in the Company's records on file with the Florida Department of State, Division of Corporations. The Manager may change the registered agent and registered office from time to time by filing the appropriate amendment or statement with the Florida Secretary of State in accordance with the Act.
Section 2.4 — Purpose
The purpose of the Company is:
(a) To own, operate, manage, maintain, improve, renovate, finance, refinance, and otherwise deal with the Meridian Shores Resort & Spa, a 142-room boutique resort property located at 4500 Gulf Shore Boulevard, Naples, FL 34102;
(b) To engage in hospitality, lodging, food and beverage, event hosting, conference and banquet services, spa and wellness services, recreational amenities, retail operations, and all ancillary operations related to the ownership and operation of a boutique resort property;
(c) To enter into, perform, and carry out contracts, agreements, and other undertakings that may be necessary, advisable, or incidental to the accomplishment of the foregoing purposes; and
(d) To engage in any other lawful activity for which a limited liability company may be organized under the Act.
Section 2.5 — Term
The Company shall have perpetual existence and shall continue in full force and effect until dissolved in accordance with the provisions of Article XI of this Agreement or as otherwise required by applicable law. The existence of the Company as a separate legal entity shall continue until cancellation of the Company's Articles of Organization as provided in the Act.
Section 2.6 — Entity Tax Classification
(a) So long as the Company has two or more Members, it is the intent of the Members that the Company shall be classified as a partnership for federal and, where applicable, state and local income tax purposes. The Company shall not file an election on IRS Form 8832 (or any successor form) to be classified as an association taxable as a corporation, and no Member shall take any action inconsistent with the treatment of the Company as a partnership for federal income tax purposes, unless the Members unanimously agree otherwise in writing.
(b) In the event that the Company at any time has only a single Member, the Company shall be treated as a disregarded entity for federal income tax purposes, unless the remaining Member elects otherwise.
(c) The Members acknowledge and agree that the Trust is an intentionally defective grantor trust treated as owned by Salvatore A. Pellegrino for federal income tax purposes under Sections 671 through 679 of the Code. As a result, for federal income tax purposes, Salvatore A. Pellegrino is treated as the owner of the Trust's assets and is required to report on his individual federal income tax return all items of income, gain, loss, deduction, and credit attributable to the Trust's Membership Interest. The income tax treatment of the Trust's Membership Interest shall be reported in accordance with applicable grantor trust rules, and the Company shall cooperate with the Trust and Salvatore A. Pellegrino in connection with such tax reporting.
Section 2.7 — Employer Identification Number
The Company's federal Employer Identification Number is 59-4021867. The Company shall use such number in connection with all federal, state, and local tax filings and such other filings as may require the use of the Company's EIN.
ARTICLE III — MEMBERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS
Section 3.1 — Classes of Membership Interests
The Membership Interests of the Company shall be divided into two classes:
(a) Class A Interests. Class A Interests shall carry full voting rights and full economic rights, including the right to receive allocations of Net Income and Net Loss and distributions of Available Cash in accordance with the distribution waterfall set forth in Article VI of this Agreement. Holders of Class A Interests shall be entitled to vote on all matters submitted to a vote of the Members and shall have priority distribution rights as set forth in Section 6.2.
(b) Class B Interests. Class B Interests shall carry subordinate economic rights and limited voting rights as expressly set forth in this Agreement. Holders of Class B Interests shall be entitled to receive allocations of Net Income and Net Loss and distributions of Available Cash only as set forth in the distribution waterfall in Section 6.2, and shall have voting rights only with respect to those matters for which a vote of all Members (rather than solely holders of Class A Interests) is expressly required under this Agreement or the Act.
Section 3.2 — Members and Membership Interests
(a) The Members of the Company and their respective classes and Percentage Interests are as set forth on the Membership Schedule attached hereto as Exhibit A and incorporated herein by reference. The Membership Schedule shall be updated from time to time by the Manager to reflect changes in membership, Percentage Interests, or other relevant information.
(b) Effective as of the Effective Date, The Salvatore A. Pellegrino 2025 Family Trust, acting through Cornerstone Fiduciary Services, Inc. as Independent Trustee, is hereby admitted as a Class A Member of the Company holding a ninety-two percent (92%) Class A Membership Interest. The Trust replaces Salvatore A. Pellegrino and Pellegrino Capital Group LLC as the holder of the 92% Class A Membership Interest previously held by Pellegrino Capital Group LLC under the Prior Agreement. The admission of the Trust as a Member is in connection with the MIPA and the transactions contemplated thereby, including the issuance of the Promissory Note and the execution of the Pledge Agreement.
(c) Pellegrino Capital Group LLC shall continue as a Class B Member of the Company holding an eight percent (8%) Class B Membership Interest.
(d) The current Members, their respective classes, and their Percentage Interests are as follows:
Section 3.3 — Capital Contributions
(a) The initial Capital Contributions of the Members are as set forth on the Membership Schedule attached hereto as Exhibit A. The Capital Contributions reflected on the Membership Schedule include all Capital Contributions made under the Prior Agreement, as adjusted to reflect the transactions contemplated by the MIPA.
(b) No Member shall be required to make any additional Capital Contribution to the Company beyond the Capital Contributions set forth on the Membership Schedule without the prior unanimous written consent of all Members. In the event that the Members unanimously agree to a Capital Contribution, the terms, conditions, and amounts of such Capital Contribution shall be as set forth in a written amendment to this Agreement or such other written instrument as the Members may agree.
(c) The existing Capital Contribution records of the Company, as maintained under the Prior Agreement, are hereby carried forward and incorporated into the Capital Accounts maintained under this Agreement, subject to such adjustments as may be required to reflect the transactions contemplated by the MIPA.
Section 3.4 — Capital Accounts
(a) A separate Capital Account shall be maintained for each Member in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv). Each Member's Capital Account shall be:
(i) increased by (A) the amount of cash contributed by such Member to the capital of the Company, (B) the fair market value of any property contributed by such Member to the Company (net of liabilities secured by such property that the Company is considered to assume or to take subject to under Code Section 752), and (C) the amount of Net Income and items of income and gain allocated to such Member; and
(ii) decreased by (A) the amount of cash distributed to such Member by the Company, (B) the fair market value of any property distributed to such Member by the Company (net of liabilities secured by such property that the Member is considered to assume or to take subject to under Code Section 752), and (C) the amount of Net Loss and items of loss and deduction allocated to such Member.
(b) In the event that any Membership Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Membership Interest.
(c) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. The Manager shall make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected by the Membership Interests, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f).
(d) No interest shall be paid on Capital Account balances or Capital Contributions.
Section 3.5 — No Withdrawal of Capital
No Member shall have the right to withdraw any portion of its Capital Contribution or to demand or receive a return of its Capital Contribution, except upon dissolution and winding up of the Company in accordance with Article XI of this Agreement or as otherwise expressly provided herein. No Member shall have the right to demand or receive property other than cash in return for its Capital Contribution, except as provided in Section 11.3.
Section 3.6 — No Priority Among Members
Except as expressly set forth in the distribution waterfall provisions of Article VI of this Agreement, no Member shall have priority over any other Member with respect to the return of Capital Contributions, allocations of Net Income or Net Loss, or distributions of Available Cash.
ARTICLE IV — ALLOCATIONS OF PROFITS AND LOSSES
Section 4.1 — Allocation of Net Income and Net Loss
(a) Except as otherwise provided in Section 4.2, Net Income for each Fiscal Year (or other applicable period) shall be allocated among the Members in accordance with their respective Percentage Interests.
(b) Except as otherwise provided in Section 4.2, Net Loss for each Fiscal Year (or other applicable period) shall be allocated among the Members in accordance with their respective Percentage Interests; provided, however, that Net Loss shall not be allocated to any Member to the extent that such allocation would cause such Member to have a deficit balance in its Capital Account (after taking into account adjustments for items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6)) in excess of the amount, if any, that such Member is obligated to restore or is deemed obligated to restore under Treasury Regulations Sections 1.704-1(b)(2)(ii)(c) and 1.704-2(g)(1). Any Net Loss in excess of the limitation set forth in the preceding sentence shall be allocated to the other Members in accordance with their respective Percentage Interests (subject to the same limitation), and any remaining excess shall be allocated as determined by the Manager in accordance with applicable Treasury Regulations.
Section 4.2 — Special Allocations
The following special allocations shall be made in the following order of priority:
(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article IV, if there is a net decrease in Company minimum gain (as defined in Treasury Regulations Section 1.704-2(b)(2)) during any Fiscal Year, each Member shall be allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Company minimum gain, determined in accordance with Treasury Regulations Section 1.704-2(g). Allocations pursuant to the preceding sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.2(a) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(b) Partner Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any other provision of this Article IV (other than Section 4.2(a)), if there is a net decrease in partner nonrecourse debt minimum gain (as defined in Treasury Regulations Section 1.704-2(i)(2)) attributable to a partner nonrecourse debt during any Fiscal Year, each Member who has a share of the partner nonrecourse debt minimum gain attributable to such partner nonrecourse debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in partner nonrecourse debt minimum gain attributable to such partner nonrecourse debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(4). This Section 4.2(b) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) Qualified Income Offset. If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit (as defined in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)) of the Member as quickly as possible, provided that an allocation pursuant to this Section 4.2(c) shall be made only if and to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.2(c) were not in this Agreement.
(d) Gross Income Allocation. In the event that any Member has a deficit Capital Account balance at the end of any Fiscal Year that is in excess of the amount such Member is obligated to restore or is deemed obligated to restore pursuant to Treasury Regulations Sections 1.704-1(b)(2)(ii)(c) and 1.704-2(g)(1), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 4.2(d) shall be made only if and to the extent that such Member would have a deficit Capital Account balance in excess of such sum after all other allocations provided for in this Article IV have been tentatively made as if Section 4.2(c) and this Section 4.2(d) were not in this Agreement.
(e) Nonrecourse Deductions. Nonrecourse deductions (as defined in Treasury Regulations Section 1.704-2(b)(1)) for any Fiscal Year shall be allocated among the Members in accordance with their respective Percentage Interests.
(f) Partner Nonrecourse Deductions. Any partner nonrecourse deductions (as defined in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2)) for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the partner nonrecourse debt to which such deductions are attributable, in accordance with Treasury Regulations Section 1.704-2(i)(1).
(g) Curative Allocations. The allocations set forth in Sections 4.2(a) through 4.2(f) (the "Regulatory Allocations") are intended to comply with certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. It is the intent of the Members that, to the extent possible, the Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 4.2(g). Therefore, notwithstanding any other provision of this Article IV (other than the Regulatory Allocations), the Manager shall make such offsetting special allocations of Company income, gain, loss, or deduction in whatever manner the Manager determines is appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Section 4.1.
Section 4.3 — Tax Allocations
(a) Except as otherwise provided in this Section 4.3, for federal, state, and local income tax purposes, each item of income, gain, loss, deduction, and credit of the Company shall be allocated among the Members in the same manner as the corresponding item of Net Income or Net Loss is allocated pursuant to Sections 4.1 and 4.2 of this Agreement.
(b) In accordance with Code Section 704(c) and the Treasury Regulations promulgated thereunder, income, gain, loss, and deduction with respect to any Company property contributed to the Company by a Member shall, solely for federal income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial book value. If the book value of any Company asset is adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f), subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its book value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder.
(c) Allocations under Code Section 704(c) shall be made using the traditional method described in Treasury Regulations Section 1.704-3(b), or such other reasonable method as the Manager may determine in its discretion consistent with the requirements of Code Section 704(c) and the applicable Treasury Regulations.
(d) Allocations pursuant to this Section 4.3 are solely for purposes of federal, state, and local income taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Net Income, Net Loss, other items, or distributions pursuant to any provision of this Agreement.
Section 4.4 — Grantor Trust Acknowledgment
(a) The Members acknowledge and agree that the Trust is an intentionally defective grantor trust (IDGT) treated as owned by Salvatore A. Pellegrino for federal income tax purposes under Sections 671 through 679 of the Code (the "Grantor"). As a result, for federal income tax purposes, the Grantor is treated as the owner of the Trust's share of all Company items of income, gain, loss, deduction, and credit, and such items shall be reported on the Grantor's individual federal income tax return.
(b) All allocations of Net Income, Net Loss, and other tax items to the Trust pursuant to this Article IV shall be reported on the Company's federal partnership income tax return (IRS Form 1065) and the corresponding Schedule K-1 in a manner consistent with the Trust's grantor trust status and applicable Treasury Regulations and IRS guidance.
(c) The Company's Partnership Representative (as defined in Section 7.3 of this Agreement) shall coordinate with Baxter Whitfield CPA Group, P.A. (Sandra T. Whitfield, CPA, Managing Partner, 150 Alhambra Circle, Suite 800, Coral Gables, FL 33134) in the preparation of all Company tax returns and related schedules to ensure proper reporting of the Trust's grantor trust status and the Grantor's obligations with respect thereto.
(d) The Company shall furnish to the Trust and to the Grantor such information as may reasonably be required to enable the Grantor to comply with his individual federal and state income tax reporting obligations with respect to the Trust's Membership Interest.
ARTICLE V — MANAGEMENT
Section 5.1 — Manager-Managed
(a) The Company shall be a "manager-managed" limited liability company within the meaning of the Act. Except as otherwise expressly provided in this Agreement or required by the Act, all powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Manager.
(b) The Manager shall have full, complete, and exclusive authority, power, and discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to take all such actions as the Manager deems necessary or appropriate to accomplish the purposes of the Company set forth in Section 2.4, subject only to the limitations set forth in Section 5.5 and any other express limitations contained in this Agreement.
(c) No Member, in its capacity as a Member (as distinguished from its capacity as Manager, if applicable), shall have any authority to act for, bind, or otherwise obligate the Company.
Section 5.2 — Designation of Manager
(a) The initial Manager of the Company under this Agreement shall be The Salvatore A. Pellegrino 2025 Family Trust, acting through Cornerstone Fiduciary Services, Inc. as Independent Trustee, or its designee (collectively, the "Manager").
(b) The Manager may delegate day-to-day operational authority to the Chief Operating Officer and such other officers and agents of the Company as the Manager may appoint from time to time in accordance with Section 5.4, but no such delegation shall divest the Manager of its ultimate authority and responsibility for the management and affairs of the Company.
(c) The Manager may be removed and a successor Manager appointed by the affirmative vote or written consent of Members holding a Supermajority Interest.
Section 5.3 — Trustee's Exercise of Management Rights
(a) Cornerstone Fiduciary Services, Inc., as Independent Trustee of the Trust, shall exercise all management, voting, and consent rights attributable to the Trust's ninety-two percent (92%) Class A Membership Interest in the Company. Such rights include, without limitation, the right to vote on all matters submitted to a vote of the Members, the right to provide or withhold consent on behalf of the Trust with respect to any matter requiring Member consent, and the right to act as or on behalf of the Manager.
(b) Helena R. Matsuda, Senior Trust Officer of Cornerstone Fiduciary Services, Inc., or her duly appointed successor, shall serve as the authorized representative of the Trust for purposes of executing documents on behalf of the Trust, attending meetings of the Members, communicating with the Company and the other Members, providing consents and approvals on behalf of the Trust, and taking all other actions necessary or appropriate in connection with the Trust's Membership Interest and the Trust's role as Manager.
(c) All actions taken by Cornerstone Fiduciary Services, Inc. as Independent Trustee on behalf of the Trust in connection with the Trust's Membership Interest and the Trust's role as Manager shall be taken in accordance with (i) the terms and conditions of the Trust Agreement for The Salvatore A. Pellegrino 2025 Family Trust dated November 10, 2025, (ii) Cornerstone's fiduciary duties under applicable Florida law, including Chapter 736, Florida Statutes (the Florida Trust Code), and (iii) the terms of this Agreement.
(d) Cornerstone Fiduciary Services, Inc. shall promptly notify the Company and the other Members in writing of any change in the identity of the authorized representative of the Trust or of any change in the trusteeship of the Trust.
Section 5.4 — Officers
Section 5.4(a) — Appointment of Officers. The Manager may, from time to time, appoint one or more officers of the Company, including a Chief Operating Officer, Chief Financial Officer, Secretary, Treasurer, and such other officers as the Manager may deem necessary or desirable for the conduct of the Company's business. Any officer may hold more than one office. Officers of the Company need not be Members of the Company. Each officer shall have such authority and shall perform such duties as the Manager may from time to time determine.
Section 5.4(b) — Chief Operating Officer. (i) Marco A. Pellegrino shall continue to serve as the Chief Operating Officer ("COO") of the Company. The COO's address for purposes of this Agreement is 1285 Gulf Pavilion Drive, Naples, FL 34108.
(ii) The COO shall have primary responsibility for the day-to-day operations of the Meridian Shores Resort & Spa, including without limitation the management of personnel, guest services, vendor and supplier relationships, food and beverage operations, spa operations, event and conference services, operational budgeting, maintenance and capital improvement oversight, and compliance with applicable health, safety, and regulatory requirements.
(iii) The COO shall report to and serve at the pleasure of the Manager. The COO shall keep the Manager reasonably informed of all material matters relating to the operations of the Property and shall provide such reports and information as the Manager may request from time to time. The COO shall have the authority to execute contracts and agreements on behalf of the Company in the ordinary course of business, subject to any dollar thresholds or other limitations established by the Manager.
Section 5.4(c) — Removal and Resignation of Officers. (i) Each officer shall serve at the pleasure of the Manager and may be removed by the Manager at any time, with or without cause, upon written notice to such officer. The removal of an officer shall be without prejudice to the contract rights, if any, of the Person so removed. Appointment of an officer shall not of itself create contract rights.
(ii) Any officer may resign at any time by delivering written notice to the Manager. Such resignation shall take effect at the time specified in such notice, or if no time is specified, upon delivery of the notice. Unless otherwise specified in the notice, acceptance of a resignation shall not be necessary to make it effective.
Section 5.5 — Actions Requiring Member Approval
Notwithstanding the authority granted to the Manager pursuant to Sections 5.1 and 5.2 of this Agreement, the Manager shall not take any of the following actions without the prior written consent or affirmative vote of Members holding a Supermajority Interest (seventy-five percent (75%) of the aggregate Membership Interests):
(a) The sale, exchange, lease, or other disposition of all or substantially all of the Company's assets, including the Property;
(b) The merger, consolidation, conversion, or domestication of the Company with or into any other entity;
(c) The voluntary dissolution or winding up of the Company;
(d) The incurrence of any indebtedness or guarantee by the Company in an aggregate principal amount in excess of Five Hundred Thousand Dollars ($500,000), exclusive of the Company's obligations, if any, arising under or in connection with the Promissory Note;
(e) Any amendment, modification, or restatement of this Agreement;
(f) The admission of any new Member to the Company, whether by the issuance of additional Membership Interests or otherwise;
(g) The making of capital calls to the Members in an aggregate amount exceeding Two Hundred Fifty Thousand Dollars ($250,000) in any single Fiscal Year;
(h) Any transaction, contract, or arrangement between the Company and any Affiliate of any Member (including any related-party transaction), other than the continued employment or engagement of officers of the Company on terms previously approved by the Members;
(i) The filing of a voluntary petition for bankruptcy, the making of a general assignment for the benefit of creditors, or the consent to the appointment of a receiver for the Company or all or any substantial part of the Company's assets;
(j) Any change in the Company's tax classification; and
(k) Any act that would make it impossible to carry on the ordinary business of the Company.
Section 5.6 — Standard of Care; Exculpation
(a) The Manager and each officer of the Company shall discharge their duties to the Company and the Members in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Manager or officer reasonably believes to be in the best interests of the Company.
(b) Neither the Manager nor any officer of the Company shall be personally liable to the Company or to any Member for any act or omission taken in good faith in the performance of his, her, or its duties as Manager or officer, unless such act or omission constitutes willful misconduct, bad faith, gross negligence, or a knowing violation of law. The Manager and officers shall be entitled to rely in good faith on information, opinions, reports, or statements (including financial statements and other financial data) prepared or presented by employees, agents, attorneys, accountants, appraisers, or other professional advisors of the Company.
Section 5.7 — Indemnification
(a) The Company shall, to the fullest extent permitted by the Act and applicable law, indemnify and hold harmless the Manager, each officer, and each Member (each, an "Indemnified Person") from and against any and all losses, claims, damages, liabilities, expenses (including reasonable attorneys' fees and expenses), judgments, fines, settlements, and other amounts arising from or in connection with any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, in which such Indemnified Person may be involved, or is threatened to be involved, by reason of such Person's status as a Manager, officer, or Member of the Company, or by reason of any action taken or omitted to be taken by such Person in such capacity; provided, however, that no indemnification shall be provided to any Person with respect to any matter as to which such Person shall have been finally adjudicated in any such action, suit, or proceeding to have engaged in willful misconduct, bad faith, or gross negligence.
(b) The Company shall, to the fullest extent permitted by the Act, advance expenses (including reasonable attorneys' fees) incurred by an Indemnified Person in defending any action, suit, or proceeding in advance of the final disposition of such action, suit, or proceeding; provided that such Indemnified Person provides an undertaking to repay such amounts if it is ultimately determined that such Person is not entitled to be indemnified hereunder.
(c) The indemnification provided by this Section 5.7 shall be in addition to, and not exclusive of, any other rights to which an Indemnified Person may be entitled under any agreement, resolution of the Members, insurance policy, or otherwise, both as to action in such Person's capacity as Manager, officer, or Member of the Company and as to action in any other capacity.
Section 5.8 — Compensation and Reimbursement
(a) The Manager and officers of the Company shall be entitled to receive reasonable compensation for services rendered to the Company, as approved by the Members from time to time. Any compensation paid to the Manager or to Cornerstone Fiduciary Services, Inc. in its capacity as Manager shall be as set forth in a separate compensation agreement or as otherwise determined by the Members.
(b) The Company shall reimburse the Manager, officers, and Members for all reasonable out-of-pocket expenses incurred on behalf of the Company in connection with the Company's business, including travel expenses, professional fees, and other costs, upon presentation of appropriate documentation.
ARTICLE VI — DISTRIBUTIONS
Section 6.1 — Distributable Cash
(a) Subject to the Manager's determination of appropriate Reserves and the limitations set forth in this Article VI, Available Cash of the Company shall be distributed to the Members at least quarterly (or at such other intervals as the Manager may determine in its reasonable discretion). The Manager shall determine the amount of Available Cash, if any, available for distribution following each fiscal quarter.
(b) The Members acknowledge that the estimated annual distributable cash flow from the hospitality portfolio owned and operated by Salvatore A. Pellegrino and his affiliated entities (including the Company, Costa Luma Resort Holdings LLC, and Azulia Beach Club LLC) is approximately Four Million Eight Hundred Thousand Dollars ($4,800,000) in the aggregate. The Company's individual net operating income for the fiscal year ended December 31, 2024 was approximately Three Million Two Hundred Thousand Dollars ($3,200,000). These figures are estimates and are subject to change based on actual operating performance, capital expenditure requirements, market conditions, and other factors.
Section 6.2 — Distribution Waterfall
Available Cash shall be distributed among the Members in the following order of priority:
First, to the payment of, or the establishment of Reserves for, all Company obligations, including without limitation operating expenses, real and personal property taxes, insurance premiums, capital expenditures (whether planned or emergency), and debt service, including any amounts payable under or in connection with the Promissory Note;
Second, to the Members holding Class A Interests, pro rata in accordance with their respective Class A Percentage Interests, until each such Member has received a cumulative preferred return equal to eight percent (8%) per annum on such Member's unreturned Capital Contributions (the "Preferred Return"), computed from the date of such Capital Contribution (or, in the case of the Trust, from the Effective Date) and compounded annually, reduced by the amount of all prior distributions to such Member under this "Second" tier (or such other rate as the Members may agree in writing from time to time);
Third, to the Members holding Class A Interests, pro rata in accordance with their respective Class A Percentage Interests, until each such Member has received an aggregate amount of distributions under this "Third" tier equal to such Member's aggregate unreturned Capital Contributions;
Fourth, thereafter, to all Members (holders of both Class A Interests and Class B Interests), pro rata in accordance with their respective aggregate Percentage Interests.
Section 6.3 — Tax Distributions
(a) Notwithstanding the distribution waterfall set forth in Section 6.2, the Company shall distribute to each Member, prior to or concurrently with other distributions for the applicable period, an amount sufficient to cover such Member's estimated federal and state income tax liability arising from allocations of Company Net Income to such Member for the applicable period (each such distribution, a "Tax Distribution").
(b) Tax Distributions shall be computed by multiplying the Company Net Income allocated to each Member for the applicable period by the highest combined marginal federal and state income tax rate applicable to individuals domiciled in the State of Florida for such period (taking into account the deductibility, or lack thereof, of state income taxes for federal income tax purposes).
(c) Given the Trust's status as a grantor trust under Sections 671 through 679 of the Code, the Members acknowledge and agree that Salvatore A. Pellegrino, as the Grantor, bears the federal and state income tax liability attributable to the Trust's share of Company income. Tax Distributions with respect to the Trust's Membership Interest shall be made to the Trust (or as otherwise directed by the Independent Trustee in writing) and shall be applied in accordance with the terms of the Trust Agreement and the Pledge Agreement.
(d) Tax Distributions shall be treated as advances against, and shall reduce dollar-for-dollar, the distributions otherwise to be made to the applicable Member under the distribution waterfall set forth in Section 6.2.
Section 6.4 — Distributions Subject to Pledge Agreement
(a) The Members acknowledge and agree that distributions attributable to the Trust's ninety-two percent (92%) Class A Membership Interest are subject to the Pledge and Security Agreement dated December 15, 2025, pursuant to which the Trust has pledged its Class A Membership Interest to Salvatore A. Pellegrino as security for the Trust's obligations under the Promissory Note.
(b) Distributions to the Trust shall be applied first to satisfy the Trust's obligations under the Promissory Note, including (i) annual interest-only payments in the amount of One Million Seven Hundred Sixty Thousand Dollars ($1,760,000) per annum (calculated as 4.40% of the $40,000,000 principal amount), and (ii) the balloon principal payment of Forty Million Dollars ($40,000,000) due and payable at maturity on December 15, 2034.
(c) The Company shall, upon receipt of written instruction from the Secured Party (Salvatore A. Pellegrino) or the Independent Trustee, direct distributions payable to the Trust to the Trust's designated account at Prescott National Bank (401 East Las Olas Boulevard, Fort Lauderdale, FL 33301; Thomas J. Andersen, Senior Vice President, Private Banking), or to such other account or in such other manner as may be directed under the Pledge Agreement. The Company shall comply with any distribution direction letter or similar instruction provided by the Secured Party or the Independent Trustee in accordance with the terms of the Pledge Agreement.
(d) The Members acknowledge that the coverage ratio of estimated annual distributable cash flow to annual note service obligations is approximately 2.73 times ($4,800,000 aggregate estimated portfolio cash flow divided by $1,760,000 annual interest), which coverage ratio is based on estimates and is subject to fluctuation based on actual operating results.
(e) The Company shall cooperate with the Secured Party, the Independent Trustee, and their respective counsel in providing such information, certifications, and acknowledgments as may be reasonably required in connection with the administration of the Pledge Agreement and the Promissory Note.
Section 6.5 — Limitations on Distributions
(a) No distribution shall be made to the Members if, after giving effect to such distribution, the Company would be unable to pay its debts as they become due in the ordinary course of the Company's business.
(b) No distribution shall be made in violation of Section 605.0405 of the Act or any other applicable provision of law restricting distributions by a limited liability company.
(c) The Manager may, in its reasonable discretion, withhold or defer any distribution if the Manager determines that such withholding or deferral is necessary or appropriate to provide for the Company's operating needs, maintain adequate Reserves, or comply with the Company's obligations, including obligations under any loan agreements or other contracts to which the Company is a party.