Exhibit 10.37

 

GRAPHIC [g26262kni001.jpg]

 

April 12, 2006

 

 

AEW Targeted Securities Fund, L.P.

World Trade Center East

Two Seaport Lane

Boston, MA 02210-2021

Attn: Mr. Robert G. Gifford

 

Re:                             Golf Trust of America, Inc. — Option to Acquire
Series A Convertible Redeemable Preferred Stock

 

Gentlemen:

 

As you know, Golf Trust of America, Inc. (the “Company”) has engaged Houlihan
Lokey Howard & Zukin (“Houlihan”) to assist the Company in its implementation of
the Company’s stockholder approved plan of liquidation or a recapitalization of
the Company. In the foregoing context, and in consideration of a more
expeditious completion of the Company’s liquidation process, which the Company
expects will allow the Company to maximize the value received by all of its
stockholders, the Company requests that AEW Targeted Securities Fund, L.P.
(“AEW”) confirm by countersigning below AEW’s agreement to and approval of the
terms of this letter agreement (the “Agreement”).

 

1.                                      Option Agreement.

 

1.1.                              AEW hereby grants the Company the option (the
“Option”), exercisable by the Company in the Company’s sole discretion, to
purchase, on or before June 30, 2006 (the “Option Termination Date”), all
800,000 shares of the Company’s Series A Cumulative Convertible Redeemable
Preferred Stock held by AEW Targeted Securities Fund, L.P. (“AEW”) including,
without limitation, all of AEW’s rights to Liquidation Preferences (as defined
in the Company’s Articles Supplementary, including, without limitation,
Liquidation Preferences in respect of any accrued and unpaid dividends) payable
in respect of such shares as of the Company’s exercise of the Option (the
“Series A Shares”), for a total price of $20,000,000.00 (the “Exercise Price”);
provided, however, that the Option shall only be exercisable by the Company in
the event that the business of the Westin Innisbrook Golf Resort (the “Resort”)
is purchased for cash consideration of no more than $35,000,000.

 

1.2                                 Except to the extent expressly limited by
the final clause of Section 1.1, exercise of the Company’s purchase rights
pursuant to the Option may be made at any time on or

 

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before the Option Termination Date by delivery to AEW in the manner set forth in
Section 7 of this Agreement of a duly executed notice of exercise in the
form set forth in Exhibit A hereto (the “Notice”), provided that within three
(3) business days of the date the Notice is delivered to AEW, the Company shall
have delivered to AEW the Exercise Price by wire transfer or cashier’s check of
immediately available funds drawn on a United States bank.

 

1.3                                 Upon the Company’s exercise of the Option
and payment of the Exercise Price in accordance with the provisions of
Section 1.2, all rights of AEW pursuant to any agreements between AEW and the
Company, the Company’s Articles Supplementary or otherwise shall terminate, and
the Series A Shares shall be authorized and unissued shares of Preferred Stock
to which AEW shall no longer have any ownership rights.

 

2.                                      Representations and Warranties of AEW.

 

2.1                                 This Agreement has been duly authorized,
executed and delivered by or on behalf of AEW.

 

2.2                                 The execution and delivery by AEW of, and
the performance by AEW of its obligations under, this Agreement shall not
contravene (i) any provision of applicable law, or (ii) the organizational
documents of AEW, or (iii) any agreement or other instrument binding upon AEW or
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over AEW, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by AEW of its obligations under this Agreement.

 

2.3                                 AEW has, and on the date that the Company
exercises the Option (if the Option is exercised) will have (i) good and
marketable title to the Series A Shares to be sold by AEW free and clear of all
security interests, claims, liens, equities or other encumbrances known to or
arising through AEW (except for encumbrances arising under this Agreement), and
(ii) the legal right and power, and all authorization and approval required by
law, to (A) enter into this Agreement, and to (B) sell, transfer and deliver the
Series A Shares to be sold by AEW or a security entitlement in respect of the
Series A Shares.

 

2.4                                 Upon delivery to the Company of certificates
representing the Series A Shares to be sold by AEW, each endorsed to the Company
or in blank, by an effective endorsement and payable therefore by the Company
pursuant to this Agreement, the Company will, assuming the Company does not have
notice of any adverse claims thereof, acquire the Series A Shares to be sold by
AEW free and clear of adverse claims.

 

2.5                                 AEW has not transferred (i) any rights or
interest in the Series A Shares or (ii) any rights pursuant to its agreements
with the Company (“Contract Rights”).

 

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3.                                      Representations and Warranties of the
Company.

 

3.1                                 This Agreement has been duly authorized,
executed and delivered by or on behalf of the Company.

 

3.2                                 The execution and delivery by the Company
of, and the performance by the Company of its obligations under, this Agreement
shall not contravene the organizational documents of the Company, or any
agreement or other instrument binding upon the Company or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement.

 

4.                                      Covenants and Agreements of AEW.

 

4.1                                 AEW shall not transfer the Series A Shares
or Contract Rights unless each transferee receiving the Series A Shares or
Contract Rights enters into a binding written agreement with the Company
providing that (i) such transferee agrees to be bound by the obligations of AEW
under this Agreement, and (ii) such transferee will not subsequently transfer
any of the Series A Shares or Contract Rights without the prior written consent
of the Company.

 

4.2                                 In the event that AEW exercises any
redemption right on or before the Option Termination Date, or in the event that
a transaction involving the Company which would give AEW a right to liquidation
preference payments or mandatory redemption arises on or before the Option
Termination Date, the aggregate redemption price or liquidation payment, as the
case may be, in respect of the Series A Shares shall be the Exercise Price.

 

4.3                                 At such time as the Company requests AEW’s
consent or approval in contemplation of a merger, acquisition or
recapitalization of the Company, a sale of all or substantially all of the
assets of the Company, or any similar transaction requiring its consent as the
holder of the Series A Shares, AEW will approve and consent to such transaction,
and will waive any rights to dissent from the approval of such a transaction,
provided that the Company will pay to AEW the Exercise Price within three
(3) business days of the Company’s exercise of the Option in accordance with the
terms of this Agreement in connection with such transaction.

 

5.                                      Expenses. The Company agrees to pay the
reasonable and actually incurred legal expenses of AEW associated with (i) this
Agreement and (ii) AEW’s filings with the Securities and Exchange Commission in
connection with this Agreement.

 

6.                                      Governing Law. This Agreement shall be
deemed to have been executed and delivered within the State of New York, and the
rights and obligations of the parties hereunder shall be construed and enforced
in accordance with, and governed by, the laws of the State of New York without
regard to principles of conflict of laws. Any action or proceeding arising from
or relating to this Agreement must be brought in New York, and each party
irrevocably submits to the jurisdiction and venue of any such court in any such
action or proceeding.

 

7.                                      Notices. All communications pursuant to
this Agreement shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:

 

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If to the Company:

 

Golf Trust of America, Inc.

10 North Adgers Wharf

Charleston, South Carolina  29401

Attention:  Mr. W. Bradley Blair, II

President & Chief Executive Officer

 

with a copy to:

 

O’Melveny & Myers LLP

275 Battery Street, Suite 2600

San Francisco, California 94111-3305

Facsimile:  (415) 984-8701

Attention:  Peter T. Healy, Esq.

 

If to AEW:

 

AEW Targeted Securities Fund, L.P.

World Trade Center East

Two Seaport Lane

Boston, MA 02210-2021

Attention: Mr. Robert G. Gifford

 

with a copy to:

 

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA  02109

Facsimile:  (617) 523-1231

Attention:  Laura C. Hodges Taylor, Esq.

 

Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, (ii) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iii) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall
be as set forth above.

 

Any party hereto may change the address for receipt of communications by giving
written notice to the other party.

 

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8.                                      Successors Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, and to
their respective successors, and no other person shall have any right or
obligation hereunder.

 

9.                                      Partial Unenforceability. The invalidity
or unenforceability of any section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other section, paragraph
or provision hereof. If any section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

 

10.                         Remedies. The Company, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. AEW agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.

 

11.                               Entire Agreement. This Agreement constitutes
the entire agreement of the Company and AEW with respect to the matters
discussed herein. Except as set forth in this Agreement, all other agreements
between the parties shall be in full force and effect and unmodified.

 

12.                               Counterparts. This Agreement may be executed
in several counterparts with the same effect as if the parties executing the
several counterparts had all executed one counterpart.

 

Thank you.

 

 

Very truly yours,

 

 

 

/s/W. Bradley Blair, II

 

 

 

 

W. Bradley Blair, II

 

Chief Executive Officer, President and

 

Chairman of the Board of Directors of

 

Golf Trust of America, Inc.

 

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AGREED TO AND APPROVED BY:

 

“AEW”

 

AEW Targeted Securities Fund, L.P.

 

By:

AEW TSF, L.L.C., its General Partner

 

 

By:

AEW TSF, Inc., its Managing Member

 

 

By:

/s/ Robert G. Gifford

 

Printed Name: Robert G. Gifford

Title: President, AEW TSF, Inc.

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

To: AEW Targeted Securities Fund, L.P.

 

Date:       , 2006

World Trade Center East

 

 

Two Seaport Lane

 

 

Boston, MA 02210-2021

 

 

Attn: Mr. Robert G. Gifford

 

 

 

The undersigned hereby elects to exercise the Option granted pursuant to the
attached letter agreement between AEW Targeted Securities Fund, L.P. and Golf
Trust of America, Inc. (the “Agreement”). Payment of the Exercise Price shall be
made in accordance with the provisions of Section 1.2 of the Agreement.

 

 

By:

 

Printed Name:

 

Title:

 

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