EXHIBIT 10.6

 

FACILITY MANAGEMENT AGREEMENT

 

FOR THE WESTIN INNISBROOK GOLF RESORT

 

THIS FACILITY MANAGEMENT AGREEMENT FOR THE WESTIN INNISBROOK GOLF RESORT (this
“Golf Agreement”) is entered into and effective as of July 15, 2004 (the
“Effective Date”), by and among (i) WESTIN MANAGEMENT COMPANY SOUTH, a Delaware
corporation (“Hotel Manager”), (ii) TROON GOLF L.L.C., a Delaware limited
liability company (“Golf Manager”) (each, a “Party” and together, the
“Parties”), and (iii) for the limited purposes described below, GTA-IB, LLC, a
Florida limited liability company (“Owner”).

 

THE PARTIES ENTER THIS GOLF AGREEMENT on the basis of the following facts,
understandings and intentions:

 

A.                                   Golf Manager is knowledgeable and
experienced in managing first-class, championship golf facilities, including
golf course operations, and has adequate time, energy, resources and qualified
personnel in order to perform and complete its obligations under this Golf
Agreement.

 

B.                                     Hotel Manager and Owner are parties to a
management agreement dated as of the Effective Date (as such agreement may from
time to time be amended in a written agreement between Hotel Manager and Owner,
the “Resort Management Agreement”), pursuant to which Hotel Manager manages that
certain first-class resort property located in Tarpon Springs, Florida, commonly
known as “The Westin Innisbrook Golf Resort” (the “Resort”), and operates the
Golf Facilities (as defined below) located at the Resort.  A copy of the Resort
Management Agreement is attached hereto as Exhibit A.

 

C.                                     As of the Effective Date, the Resort’s
golf facilities consist of the following components: (i) 72 holes of
championship golf (the “Golf Course”); (ii) two (2) practice ranges; (iii) three
(3) clubhouses and pro shops (including retail sales items), office space,
locker room, cart storage and bag storage (but excluding food and beverage
operations which will be managed by Hotel Manager); and (iv) various buildings
and related facilities used for storage of golf course maintenance equipment,
golf carts, and other golf course-related supplies, all as generally shown on
Exhibit B attached hereto (collectively, the “Golf Facilities”).

 

D.                                    Pursuant to the Resort Management
Agreement, Hotel Manager operates the Resort, including the Golf Facilities, at
a first-class standard and in accordance with the standards set forth in the
Resort Management Agreement (collectively, the “Resort Standard,” a copy of
which is attached hereto as Exhibit C (the capitalized terms used but not
defined therein shall have the meaning ascribed to such terms in the Resort
Management Agreement)).

 

E.                                      Subject to Owner’s approval (as
evidenced by the Owner Consent and Agreement to Certain Provisions attached
hereto), Hotel Manager desires to engage Golf Manager on behalf of Owner to
operate the Golf Facilities (subject to Article 3.01 herein), and Golf Manager
has agreed to operate the Golf Facilities (subject to Article 3.01 herein), in
accordance with the Resort Standard and the terms of the Resort Management
Agreement  (provided that Golf

 

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Manager and Owner are apprised and approve, in writing, such standards and terms
(collectively, the “Golf Course Standard”)), and in accordance with the terms,
provisions and limitations set forth in this Golf Agreement, including, without
limitation, the Golf Facilities Annual Plan (as defined below), which Golf
Facilities Annual Plan shall be subject to the prior written approval of Hotel
Manager and Owner.

 

F.                                      Golf Manager acknowledges that to
operate the Golf Facilities properly as an integral component of the Resort it
must adhere to the Golf Course Standard, including, without limitation,
balancing the respective interests of the Resort’s overnight guests, patrons,
and invitees (the “Resort Guests”) and, as permitted, the general public allowed
to use the Golf Facilities and other Resort facilities, in accordance with the
Resort Management Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I
INTERPRETATION, CONSTRUCTION AND DEFINITIONS

 

1.01                        Interpretation.

 

(a)                                  The foregoing Recitals A through F,
inclusive, are hereby incorporated in and made a part of this Golf Agreement.

 

(b)                                 Unless the language specifies or the context
implies that a term of this Golf Agreement is a condition, all of the terms of
this Golf Agreement shall be deemed and construed to be covenants to be
performed by the designated Party.  “Shall” means “covenants to” whenever the
context permits.

 

(c)                                  Unless expressly stated otherwise in this
Golf Agreement, whenever a matter is submitted to a Party for approval or
consent pursuant to the terms of this Golf Agreement, that Party has a duty to
act reasonably in rendering a decision on the matter, which shall include not
unreasonably withholding, delaying, or conditioning its approval.

 

(d)                                 “According to law” means in strict
compliance with applicable statutes, ordinances, and regulations of any
governmental authority having jurisdiction.

 

(e)                                  All exhibits attached hereto and/or
referred to herein are incorporated into this Golf Agreement as if set forth
fully in this Golf Agreement.

 

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1.02                        Construction.  The use of the terms “including”,
“include”, and “includes” followed by one or more examples is intended to be
illustrative and shall not be deemed or construed to limit the scope of the
classification or category to just the examples listed.

 

1.03                        Definitions.  Capitalized terms used in this Golf
Agreement are defined as follows:

 

Definition

 

Recital or Article

 

 

 

Affiliated Facilities

 

Article 4.01(w)

Affiliation Marks

 

Article 13.01(b)

Base Management Fee

 

Article 7.01

Centralized Services

 

Article 4.01(w)

Centralized Services Fee

 

Article 4.01(w)

Claims

 

Article 5.01(a)

Cross Marketing Program

 

Article 14.01

Director – Golf Operations

 

Article 4.01(b)

Effective Date

 

Introductory Paragraph

Events of Default

 

Article 9.01

Executive Employees

 

Article 4.01(b)

GAAP

 

Article 7.04(a)

Golf Agreement

 

Introductory Paragraph

Golf Course

 

Recital C

Golf Course Standard

 

Recital E

Golf Facilities

 

Recital C

Golf Facilities Annual Plan

 

Article 4.01(g)

Golf Facilities Employees

 

Article 4.01(b)

Golf Operating Revenue

 

Article 7.04(a)

Golf Facilities Parties

 

Article 5.01(b)

Golf Manager

 

Introductory Paragraph

Hotel and Owner Parties

 

Article 5.01(a)

Hotel Manager

 

Introductory Paragraph

Key Employees

 

Article 12.01(a)

Lease

 

Article 8.03

Monthly Operating Report

 

Article 4.01(u)

National Marketing Services

 

Article 4.01(y)

National Marketing Services Fee

 

Article 4.01(y)

On-Course Food and Beverage Operations

 

Article 4.01(t)

Operating Expenses

 

Article 7.04(b)

Operating Plan and Budget

 

Article 4.01(g)

Owner

 

Introductory Paragraph

Party or Parties

 

Introductory Paragraph

Proposed Golf Facilities Annual Plan

 

Article 4.01(g)

Purchasing Policy

 

Article 4.01(d)

Repairs

 

Article 4.01(p)

Resort

 

Recital B

 

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Resort Guests

 

Recital F

Resort Management Agreement

 

Recital B

Resort Standard

 

Recital D

Revenue Management Policy

 

Article 4.01(c)(i)

Sheraton Marks

 

Article 13.01(b)

Starwood Marks

 

Article 13.01(b)

Supplemental Fee

 

Article 7.01

Taking

 

Article 10.02

Term

 

Article 8.01

Termination Fee

 

Article 8.02

Troon Marks

 

Article 13.02(b)(i)

USGA

 

Article 4.01(i)

Westin Marks

 

Article 13.01(b)

 

Exhibits:

 

Resort Management Agreement – Exhibit A

Golf Facilities – Exhibit B

Specific Resort Standard Requirements – Exhibit C

Management of Hourly Employees – Exhibit D

Revenue Management Policy – Exhibit E

Purchasing Policy – Exhibit F

Specimen Golf Facilities Annual Plan – Exhibit G

Golf Manager’s Benefit Policies – Exhibit H

Starwood Marks – Exhibit I

Westin Marks – Exhibit J

Current Location Troon Institute – Exhibit K

Relocation Area Troon Institute – Exhibit L

Form of Subordination, Non-Disturbance and Attornment Agreement – Exhibit M

Section 3.5.4 of Resort Management Agreement – Exhibit N

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES

 

2.01                        Representations and Warranties of Hotel Manager. 
Hotel Manager represents and warrants to Golf Manager and Owner that as of the
Effective Date:

 

(a)                                  Hotel Manager is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business as a corporation in Florida.

 

(b)                                 Hotel Manager has full power, authority and
legal right to execute, perform and timely observe all of the provisions of this
Golf Agreement.  Hotel Manager’s execution, delivery and performance of this
Golf Agreement have been duly authorized.

 

(c)                                  This Golf Agreement constitutes a valid and
binding obligation of Hotel Manager and does not and will not constitute a
material breach of or material default under the

 

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charter documents or bylaws of Hotel Manager or the terms, conditions or
provisions of any law, order, rule, regulation, judgment decree, agreement, or
instrument to which Hotel Manager is a party or by which it or any of its assets
is bound or affected.

 

(d)                                 To Hotel Manager’s knowledge, Hotel Manager
has all licenses and permits that are necessary or required by law to perform
its duties and obligations under this Golf Agreement.

 

(e)                                  During the term of this Golf Agreement,
Hotel Manager shall, at its own expense, obtain and keep in full force and
effect its existence as a corporation and the rights required for it to observe
and comply with all of the terms and conditions of this Golf Agreement.

 

2.02                        Representations and Warranties of Golf Manager. 
Golf Manager represents and warrants to Hotel Manager and Owner as follows as of
the Effective Date:

 

(a)                                  Golf Manager is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business as a foreign limited
liability company in Florida.

 

(b)                                 Golf Manager has full power, authority and
legal right to execute, perform and timely observe all of the provisions of this
Golf Agreement.  Golf Manager’s execution, delivery and performance of this Golf
Agreement have been duly authorized.

 

(c)                                  This Golf Agreement constitutes a valid and
binding obligation of Golf Manager and does not and will not constitute a
material breach of or material default under the charter documents or bylaws of
Golf Manager or the terms, conditions or provisions of any law, order, rule,
regulation, judgment decree, agreement or instrument to which Golf Manager is a
party or by which it or any of its assets is bound or affected.

 

(d)                                 Golf Manager has all licenses and permits
that are necessary or required by law to perform its duties and obligations
under this Golf Agreement.

 

(e)                                  During the term of this Golf Agreement,
Golf Manager shall, at its own expense, obtain and keep in full force and effect
its existence as a limited liability company and the rights required for it to
observe and comply with all of the terms and conditions of this Golf Agreement.

 

2.03                        Representations and Warranties of Hotel Manager and
Golf Manager.  Hotel Manager and Golf Manager each represent and warrant to the
other and to Owner as follows:

 

(a)                                  Neither execution and delivery of this Golf
Agreement nor performance by it of the transactions contemplated hereby nor
compliance by it with any provision hereof shall conflict with or violate or
constitute a default under or a breach of (i) its articles of incorporation (or
equivalent), by-laws or other organizational documents, (ii) any provision of
any written contract, lease, mortgage, indenture, agreement or other instrument
or obligation to which it is a party or by which it or any of its properties or
assets are bound, the violation of

 

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which would adversely affect in any material respect the transactions
contemplated hereby, (iii) any provision of applicable law the violation of
which would adversely affect in any material respect the transactions
contemplated hereby, or (iv) any judgment, decree, writ, injunction or order of
any court or administrative or governmental authority or any arbitration board
to which it is a party or by which it or any of its properties or assets are
bound, the violation of which would adversely affect in any material respect the
transactions contemplated hereby.

 

(b)                                 Except as contemplated by this Golf
Agreement, no consent or approval by, nor notification of or filing with, any
person or entity (governmental or otherwise) is required in connection with the
execution and delivery by it of this Golf Agreement or the performance by it of
the transactions contemplated hereby.

 

ARTICLE III
APPOINTMENT OF GOLF MANAGER; AUTHORITY & CONTROLS

 

3.01                        Appointment of Golf Manager; Limitation of Hotel
Manager’s Responsibility.  With the consent of Owner, Hotel Manager hereby
appoints Golf Manager as its exclusive manager and limited agent (and limited
subagent of Owner)  to supervise, direct, and control the management, operation,
and promotion of the Golf Facilities pursuant to the terms and conditions of,
and as set forth in, this Golf Agreement, and Golf Manager hereby accepts the
relationship of trust and confidence included in the appointment and agrees to
perform its duties in accordance with, and subject to, the provisions of this
Golf Agreement.  This appointment is effective as of the Effective Date. 
Everything undertaken or done by Golf Manager under this Golf Agreement shall be
done as an independent contractor under Hotel Manager and not as an employee or
partner of Hotel Manager or Owner.  Golf Manager acknowledges and agrees that
the scope of Golf Manager’s agency and subagency shall be strictly limited to
the authority granted to Golf Manager under the express terms of this Golf
Agreement.  Except for the limited matters specifically set forth herein,
nothing contained in this Golf Agreement shall be deemed or construed as an
appointment by Owner of any party hereto as Owner’s agent.  As an integral part
of the Resort, the Golf Facilities shall be managed and operated by Golf Manager
to promote the Resort’s overall best interests as determined by Hotel Manager
(subject to the provisions set forth in the Resort Management Agreement). 
Notwithstanding anything to the contrary in this Golf Agreement, Hotel Manager
shall have no personal (corporate) liability for the payment of any Resort or
Golf Facilities expenses, or for the payment of any fees, costs and other
amounts due Golf Manager hereunder (excepting to the extent Golf Manager’s fees
are a part of Hotel Manager’s fees and Hotel Manager actually receives payment
of the corresponding fee due Hotel Manager), and Owner is solely responsible
therefor.  All references herein to “Hotel Manager shall pay” expenses or fees,
or similar words or expressions, shall be expressly deemed modified by this
limitation for all purposes, to avoid repeating this limitation throughout the
document.

 

3.02                        Authority and Controls.

 

(a)                                  Golf Manager shall have no authority to
execute any contract or incur any liability on behalf of Hotel Manager or Owner
or the Resort unless specifically authorized in the Purchasing Policy (described
in Article 4.01(d) below) or the approved Golf Facilities Annual Plan or unless
specifically approved in writing by Hotel Manager (in accordance with the

 

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provisions set forth in the Resort Management Agreement).  Except as
specifically stated in the Purchasing Policy, Hotel Manager shall sign all
contracts for services and all documents establishing any liability with respect
to any work performed in connection with the Golf Facilities.  Golf Manager’s
authority to act for or bind Hotel Manager or Owner is expressly limited to the
authority set forth in this Golf Agreement.  Golf Manager shall not be required
to make any advance or payment to or for the account of Hotel Manager or Owner,
or the Golf Facilities, and Golf Manager shall not be obligated to incur any
liability or obligation for Hotel Manager’s or Owner’s account, or the Golf
Facilities’ account, without assurances that Owner shall provide all necessary
funds for the discharge thereof.

 

(b)                                 Golf Manager shall deposit all revenues from
the operation of the Golf Facilities with the Resort cashier in accordance with
the Revenue Management Policy described in Article 4.01(c).

 

(c)                                  Subject to the third paragraph of
Article 4.01(g) below, Golf Manager shall have no authority to and shall not do
anything, take any actions or incur any obligations that would violate or
contravene and extend beyond the Golf Facilities Annual Plan, without obtaining
Hotel Manager’s and Owner’s prior written consent.  If Golf Manager is unable to
perform any of its obligations under this Golf Agreement because of the failure
on the part of Hotel Manager or Owner to provide the funds in accordance with
the terms of this Golf Agreement, then, to the extent that such failure to
perform is a result of the Hotel Manager’s failure to provide funds, such
failure of performance on the part of Golf Manager shall not be deemed a default
on the part of Golf Manager and shall not give rise to any right to termination,
damages or any other remedy against Golf Manager, provided that Golf Manager
provides prompt written notice thereof to Hotel Manager and Owner.

 

(d)                                 The Parties hereto agree that this Golf
Agreement and all rights, powers and actions of Golf Manager under and pursuant
to this Golf Agreement are expressly subject to the Resort Management Agreement,
provided Golf Manager is provided a copy thereof.  Golf Manager acknowledges
having received and thoroughly reviewed the Resort Management Agreement as it
relates, or may relate, to Golf Manager or Golf Manager’s duties or performance
under this Golf Agreement, and in the event of any conflict between the Resort
Management Agreement and this Golf Agreement, the Resort Management Agreement
shall control.  Within five (5) days of execution of any amendment or supplement
to the Resort Management Agreement (which Hotel Manager and Owner have approved
in writing), Hotel Manager shall provide a complete copy thereof to Golf
Manager; provided, however, Owner and Hotel Manager hereby agree that the
performance termination right set forth in Article 4.3 of the Resort Management
Agreement shall not be amended without the prior written consent of Golf
Manager, which consent shall not be unreasonably withheld or delayed by Golf
Manager.  Any amendment in violation of the preceding sentence shall be null and
void as it may pertain to Golf Manager.  Golf Manager will maintain the strict
confidentiality of the Resort Management Agreement Article 16.01(o) below.

 

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ARTICLE IV
OPERATIONAL DUTIES OF GOLF MANAGER

 

4.01                        Golf Manager’s Operational Duties.  Except as
specifically identified in this Golf Agreement as being the responsibility of
Golf Manager, Hotel Manager shall be responsible for all Resort operations,
including, without limitation, all Resort food and beverage operations other
than the On-Course Food and Beverage Operations (as defined in Article 4.01(t)
below).  Golf Manager shall perform all duties necessary to operate, maintain
and manage the Golf Facilities at the Resort in accordance with the Golf Course
Standard and for the overall best interests of the Resort, each of which shall
be an expense of the Resort and provided for in the Golf Facilities Annual Plan
(as the same may be amended from time to time upon Owner’s prior written
approval thereof).  Such duties shall include, but shall not be limited to:

 

(a)                                  General.  Golf Manager shall supervise and
administer daily operations and act as general manager for all functions
relating to or in connection with the Golf Facilities, such as the operation and
promotion of the Golf Facilities, including the golf course, golf bag storage
facilities, golf shop sales and services, cart rentals, locker room, golf course
maintenance, but specifically excluding (i) any general Resort security services
to be provided by Hotel Manager (however, Hotel Manager does not make any
representations to Golf Manager concerning whether any particular security
services will be provided, or the nature or extent thereof), (ii) accounting
services, and (iii) personnel training provided by Hotel Manager to Golf
Facilities Employees under Article 4.01(b)(iii).  The services described in
clauses (i) through (iii) hereof shall be provided by Hotel Manager with respect
to the Resort and Golf Facilities as a whole.  The cost of such services shall
be operating expenses of the Resort and shall be equitably allocated in writing
by Hotel Manager between those portions of the Resort covered by this Golf
Agreement (which portion shall be Operating Expenses) and those not so covered,
as further provided in Article 7.04(c).

 

(b)                                 Employees.  Subject to the following
requirements of this Article 4.01(b), the approved Golf Facilities Annual Plan
and all limitations in this Golf Agreement, Golf Manager shall hire, train
(except as provided in Article 4.01(b)(iii)), discipline, supervise, compensate
(subject to Hotel Manager’s written approval thereof in accordance with the
provisions of the Resort Management Agreement and the provisions of
Section 4.01(g) hereof), promote, direct and terminate all employees, including
an individual to act as the manager of the Golf Facilities (the “Director – Golf
Operations”), necessary or advisable for the operation of the Golf Facilities in
accordance with Article 4.  The identity of the Director – Golf Operations shall
be subject to the prior approval of Hotel Manager and Owner.  All employees at
the Golf Facilities (collectively, the “Golf Facilities Employees”) shall be
employed by Owner or an Affiliate of Owner, provided that Golf Manager shall be
the employer of certain key personnel (including the Director – Golf Operations,
senior golf professional, and the golf superintendent (collectively, the
“Executive Employees”)); provided, further, that if Golf Manager does not elect
to employ such Executive Employees (and provides prior written notice thereof to
Owner and Hotel Manager), Owner may elect, in Owner’s sole discretion, to employ
such Executive Employees directly.  All employees at the Golf Facilities, other
than the Executive Employees will be under the direction of, and supervised by,
the Executive Employees for all operational purposes under this Golf Agreement,
subject to the limitations and requirements set forth herein, including on
Exhibit D attached hereto.  The Executive Employees will be under the direction
of,

 

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and shall report to, the general manager of the Resort; provided, however, that
the Golf Manager shall concurrently provide to Owner copies of any written
reports Golf Manager provides to Hotel Manager from time to time and any other
material verbal reports Golf Manager provides to Hotel Manager from time to
time; and provided, further, Owner shall have access to all of Golf Manager’s
and Hotel Manager’s records regarding the subject of this Golf Agreement during
regular business hours upon prior notice to Golf Manager or Hotel Manager, as
applicable.

 

(i)                                     All costs associated with the employment
of the Golf Facilities Employees (including salaries, fringe benefits, bonuses,
relocation costs, employment related legal costs and costs incurred in
connection with governmental laws and regulations and insurance rules, but not
penalties and interest arising from a failure to pay the same where such
expenses have been approved) shall be an expense of the Golf Facilities, and
shall be payable from revenue of the Golf Facilities or reimbursed by Owner to
Golf Manager, in all cases pursuant to the Golf Facilities Annual Plan (as
defined below) approved by Hotel Manager and Owner.  To the extent benefit costs
were paid by Hotel Manager for Owner and the Resort, benefit plan forfeitures of
non-vested employees shall be credited back to Owner and the Resort, resulting
in a credit against Operating Expenses, consistent with applicable law.

 

(ii)                                  All direct expenses of the Golf Facilities
Employees shall also be expenses reimbursable to Golf Manager to the extent such
expenses are contained in the Golf Facilities Annual Plan approved by the Hotel
Manager and Owner.  Such direct expenses shall include to the extent set forth
in the Golf Facilities Annual Plan the following: continuing education seminars;
out-of-pocket travel expenses to and from the Golf Facilities for Golf Manager’s
home office employees who directly advise Golf Manager on the operation of the
Golf Facilities; and expenses for promotion of the Golf Facilities.  To the
extent that any Golf Facilities Employees are not employed or engaged
exclusively at the Golf Facility, the expenses of such Golf Facilities Employees
that are reimbursable to the Golf Manager under this Golf Agreement shall be
reduced in proportion to the amount of time such Golf Facilities Employees are
employed or engaged other than with respect to the Golf Facility.

 

(iii)                               Golf Manager shall at all times abide by all
local, state and federal employment laws and regulations (including, without
limitation, worker’s compensation, social security, unemployment insurance,
legal status, hours of labor, wages, working conditions, and employment
nondiscrimination) and ensure that all Golf Facilities Employees are properly
trained and licensed, as necessary, for the responsibilities assigned to and
performed by them, including the use of pesticides, herbicides and other
chemicals.  All Golf Facilities Employees who may have interaction with Resort
Guests shall be provided general guest service training consistent with Hotel
Manager’s guest service training generally as described in Article 4.01(a) above
along with any employee training provided by Golf Manager and Hotel Manager
shall determine whether such persons meet the applicable standards.  Golf
Manager and Hotel Manager shall identify Golf Facilities Employees for whom
sales and marketing training is appropriate and shall provide such training
consistent with Hotel Manager’s sales and marketing training generally as
described in Article 4.01(a) above.  Such general guest training and sales and
marketing training shall be provided to Golf Facilities Employees on
substantially the same terms as Hotel Manager provides such programs to its
employees.

 

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(iv)                              Subject to the terms of this Article 4.01(b)
and Exhibit D, Golf Manager shall establish the terms of compensation, benefits,
human resources policies and procedures (including, without limitation drug
testing policies and procedures to the extent deemed necessary or advisable by
any one of Golf Manager, Hotel Manager or Owner), and performance standards for
Golf Facilities Employees and directly control and supervise the time and manner
of work performed by Golf Facilities Employees, subject to the following
provisions.  Golf Manager shall be responsible for, and use commercially
reasonable efforts to hire only, capable and qualified personnel with
appropriate experience and no criminal records or other problems in their
employment history, and shall require, to the extent deemed necessary or
advisable by any one of Golf Manager, Hotel Manager or Owner, all Golf
Facilities Employees submit to and pass mandatory drug testing, and to adhere to
the standards of conduct, grooming, quality and service consistent with those
established for Hotel Manager’s employees.  Golf Manager shall remove from
employment at the Resort any Golf Facilities Employee against whom Hotel Manager
or Owner reasonably objects.  With respect to the Executive Employees, Golf
Manager shall pay salaries and make available bonuses on a discretionary basis
only.  Golf Manager may establish its own reasonable methods of establishing
eligibility for and payment of discretionary bonuses, but the criteria to earn
bonuses and the available amounts thereof may not be less favorable than the
policies in effect immediately prior to the date hereof; the foregoing shall be
subject to the prior written approval of Hotel Manager and Owner.

 

(v)                                 Unless expressly consented to in writing in
advance by Owner and Hotel Manager, all Golf Facilities Employees shall be
employed exclusively with respect to the Resort.

 

(vi)                              Owner and Hotel Manager reserve the right to
interview and approve the selection of the Executive Employees.  Golf Manager
shall propose to Owner and Hotel Manager any replacement for any such position
and, thereafter, shall seek the appropriate approvals for any such person.  When
Golf Manager wishes or is required to propose the appointment of a person to
fill any such position, Golf Manager shall submit such proposal with a written
summary of such individual’s professional experience and qualifications and Golf
Manager’s reasons for recommending the appointment of such individual to this
position, and shall offer Hotel Manager and Owner the opportunity to interview
such individual at the Golf Facilities or another mutually acceptable location
and to disapprove such person.  Owner and Hotel Manager will forego their right
to interview any such individual if Owner or Hotel Manager (as the case may be)
is unwilling or unable to arrange for an authorized representative to
participate in the interview within seven (7) business days following Golf
Manager’s offer.  If such person is otherwise qualified based on Golf Manager’s
review, Owner and Hotel Manager shall not have standing to disapprove the
appointment of any such individual unless Owner or Hotel Manager, as the case
may be, delivers notice of its disapproval of such appointment within ten (10)
business days after Owner’s and Hotel Manager’s receipt of the aforementioned
written summary and offer to interview.  Owner or Hotel Manager may disapprove
any individual proposed by Golf Manager for any reason or for no reason
whatsoever, in Owner’s or Hotel Manager’s sole and absolute discretion, as the
case may be, and whether or not the Owner or Hotel Manager conducted or failed
to conduct an interview of such candidate; provided, however, if Owner or Hotel
Manager disapprove three (3) consecutive qualified candidates for a single
particular Executive Employee position (who have relevant and reputable industry
experience for such Executive Employee position) within any twelve (12) month
period, then

 

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(and only then) shall Golf Manager shall have the right to appoint a qualified
person to such particular Executive Employee position within ten (10) days after
Golf Manager complies with all of the other aforesaid conditions.  Nothing
contained in this Article 4.01(b)(v) shall be deemed to require Hotel Manager’s
or Owner’s consent to Golf Manager’s termination of the employment of any Golf
Facilities Employee, including those subject to this paragraph.

 

Golf Manager agrees to use reasonable efforts to ensure that any individual
selected by Golf Manager (and approved by Hotel Manager and Owner) as an
Executive Employee is prepared to remain employed at the Resort for a period of
at least twenty-four (24) months from the date of such individual’s appointment
to such position.  Moreover, Golf Manager agrees that it shall not, without the
written consent of Hotel Manager and Owner, propose a transfer to, solicit the
transfer of, terminate and re-hire, terminate and permit an Affiliate to rehire,
or permit a transfer of any individual in an Executive Employee position for a
period of twenty-four (24) months from the Effective Date.  The foregoing
restrictions shall not apply to prohibit Golf Manager from approving a transfer
requested by an Executive Employee primarily for family or other personal
reasons (as distinct from Golf Manager’s approval of a transfer requested by an
employee primarily for career-motivated reasons); provided, however, Owner
expects this exception to be used on a limited basis only.  Further, Golf
Manager shall not solicit for employment or permit any of its Affiliates to
solicit for employment any employee of Owner or Hotel Manager at the Resort. 
For purposes of this Article 4.01(b), the term “Affiliate” as it relates to Golf
Manager shall mean Troon Golf, L.L.C. (“Troon Golf”), and any entity which Troon
Golf controls.  In no event shall Putnam Golf, L.L.C., Putnam Golf II, L.L.C.,
Whitehall Street Real Estate Limited Partnership XI, a Delaware limited
partnership, or WXI/TRO, L.L.C., a Delaware limited liability company, or any of
their respective affiliates be considered an Affiliate of Troon.

 

(c)                                  Revenue and Expenses of Golf Facilities

 

(i)                                     Golf Manager shall comply with the
policies and procedures for control of and accounting for all cash receipts and
other revenue related to operation of the Golf Facilities as provided in the
attached Exhibit E (hereinafter referred to as “Revenue Management Policy”) and
as such policies and procedures may be amended from time to time by Hotel
Manager for the Resort and Golf Facilities as a whole.  Any amendment to the
Revenue Management Policy shall be provided to Golf Manager and Owner on a
prompt and timely basis.

 

(ii)                                  As stated in the Revenue Management
Policy, on behalf of Owner, Hotel Manager shall pay, from Resort revenues, all
expenses relating to ownership and operation of the Golf Facilities which have
been incurred pursuant to the Golf Facilities Annual Plan approved by the Hotel
Manager and Owner.  Hotel Manager will not pay (nor will Golf Manager be
entitled to reimbursement for) general expenses for or on the account of Golf
Manager not directly related to operation of the Golf Facilities, such as for
the maintenance of Golf Manager’s business, general corporate licenses for the
Golf Manager, meals for Golf Facilities Employees (as defined in
Article 4.01(b)(i) above), travel to and from the Resort by Golf Manager’s
corporate personnel (except as provided in the approved Golf Facilities Annual
Plan or Article 4.01(w)), and insurance (except that insurance required under
Article 6.02(b) – (d)).  The amounts to be paid by Hotel Manager on behalf of
Owner shall include the charges of Golf Manager for Centralized Services of Golf
Manager under Article 4.01(w) below and National

 

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Marketing Services under Article 4.01(y) below and any other charges or expenses
incurred by Golf Manager included in the then applicable approved Golf
Facilities Annual Plan, but shall exclude any other home office, regional office
or other offsite charges, expenses or costs of any kind or nature incurred or
sustained by Golf Manager (except as otherwise provided in the approved Golf
Facilities Annual Plan or Article 4.01(w)) and Golf Manager shall not be
entitled to reimbursement therefor.  To facilitate the timely and orderly
payment of expenses, Golf Manager will (a) deliver all invoices or bills
received by Golf Manager to Hotel Manager in the manner reasonably specified by
Hotel Manager and (b) either approve and recommend payment of all invoices and
bills related to the Golf Facilities and code them for purposes of comparison to
the Golf Facilities Annual Plan, or state the basis for Golf Manager’s
objections thereto and recommendations concerning the same, with all such
actions to occur in a reasonable timeframe specified by Hotel Manager to
accommodate its processing requirements.

 

In addition, commencing on the Effective Date and continuing throughout the
remainder of the Term, Hotel Manager shall deposit, or shall request that Owner
deposit, into Golf Manager’s separate payroll account (which Golf Manager
represents and warrants shall be solely used for approved payroll expenses), at
least two (2) days before a payroll is to be paid by Golf Manager for Golf
Manager’s Employees for the Golf Facilities, an amount equal to such payroll as
set forth in a detailed payroll request certified by Golf Manager as being
correct and in compliance with the Golf Facilities Annual Plan, provided such
certified payroll request is delivered to Hotel Manager at least ten (10) days
before the payroll is to be paid.  In addition, Hotel Manager or Owner shall
deposit in the same manner and subject to the same requirements the benefits
costs incurred by Golf Manager for the Golf Facilities Employees at the Golf
Facilities, less any forfeitures described in Article 4.01(b)(i).

 

(d)                                 Purchasing Policy.  Golf Manager shall
comply with the policies and procedures for purchasing of merchandise for the
Golf Facilities, including controls and reports, as provided in the “Purchasing
Policy” attached hereto as Exhibit F, and as such policies and procedures may be
amended from time to time (provided that any such amendment is provided to Golf
Manager and does not materially and adversely affect the ability of Golf Manager
to operate the Golf Facilities) by Hotel Manager for the Resort and Golf
Facilities as a whole.  Pursuant to the Purchasing Policy, but subject to the
Golf Facilities Annual Plan, as an Operating Expense of the Golf Facilities,
Golf Manager shall establish and maintain inventory levels and ensure the
distribution of first quality merchandise and supplies to assigned departments
of the Golf Facilities, including sufficient inventories for retail sale
throughout the Golf Facilities and shall prepare and submit to Hotel Manager and
Owner (on a basis reasonably determined by Hotel Manager) purchase, sale and use
reports concerning inventory, merchandise and supplies.  The Parties agree to
develop an inventory of materials, supplies, inventory and equipment to be used
or managed by Golf Manager pursuant to this Golf Agreement.  All property
purchased with Resort, Owner or Hotel Manager funds shall be property of the
Resort, Owner or Hotel Manager, and not Golf Manager.

 

In the performance of such obligations, Golf Manager may elect to purchase items
described therein under vendor contracts negotiated by Golf Manager under its
vendor contracts and national purchasing programs, subject to the following
provisions.  In respect of purchases made under Golf Manager’s vendor contracts,
Hotel Manager and Owner acknowledge that Golf Manager may receive and retain
certain payments, rebates or administrative fees from vendors,

 

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and that Golf Manager and/or its Affiliates may have investments in such
vendors; and, provided, further, any price discounts achieved under such
contracts for items purchased for the Golf Facilities shall be passed on to the
Golf Facilities.  Upon Hotel Manager’s or Owner’s request, Golf Manager shall
disclose in writing to Hotel Manager and/or Owner (as the case may be) in a
reasonably detailed writing any applicable arrangements for Golf Manager to
receive payments, rebates, concessions or administrative fees.  In any event,
Golf Manager shall prepare a quarterly written report for delivery to Hotel
Manager and Owner, which report shall fully and fairly disclose all rebates,
concessions, and administrative fees Golf Manager (or its Affiliates) may have
received (or direct that others should receive) from any vendor relating to
purchases made on behalf of the Resort.  Notwithstanding any contrary provisions
of this Article 4.01(d), it is the intention of the Parties that the net cost
(including, without limitation, rebates, concessions, payment terms, service
policies, return policies and the like) of using Golf Manager’s national
purchasing program shall not be greater than if a third party purchasing agent
or Hotel Manager or Owner purchased the same items.  Accordingly, if Hotel
Manager or Owner is able to identify vendors to Golf Manager from which the Golf
Facilities can purchase items of the same quality, and same brand (for those
items where brand is a differentiating feature), as those available through
vendors recommended by Golf Manager, but at lower prices than the prices
available through vendors recommended by Golf Manager, at Hotel Manager’s
direction, Golf Manager shall purchase the goods and services in question from
the vendors identified by Hotel Manager or Owner.  Notwithstanding the
foregoing, upon at least thirty (30) days’ prior written notice to Golf Manager,
Hotel Manager or Owner shall have the right to opt out of any purchasing program
in respect of all purchases or such items as Hotel Manager or Owner may
designate in such notice.

 

(e)                                  Changes in Policies.  Golf Manager shall
coordinate with Hotel Manager with respect to any proposed changes to the
Purchasing Policy, the Revenue Management Policy and other policies, rules and
regulations of the Resort applicable to the Golf Facilities (and promptly
disclose the same to Owner in writing) and, in coordination with Hotel Manager,
review, re-establish and interpret the same from time to time as is appropriate
for operation of the Golf Facilities according to this Golf Agreement.  Hotel
Manager and Owner shall have the right to approve in writing all amendments to
such policies, rules and regulations proposed by Golf Manager that would have a
material effect on golf operations, prior to the issuance or implementation of
such amendments.  If a circumstance arises where Golf Manager believes its
obligations under this Golf Agreement conflict with the requirements of the
Revenue Management Policy, the Purchasing Policy or an express directive from
Hotel Manager or Owner, Golf Manager shall promptly notify Hotel Manager and
Owner in writing of the conflict and shall follow Hotel Manager’s direction
regarding resolution of the conflict, provided that such direction does not
materially conflict with the provisions of the Resort Management Agreement or
this Golf Agreement relating to compensation and costs and expenses payable and
reimbursable to Golf Manager under this Golf Agreement.

 

(f)                                    Weekly Meetings.  Unless otherwise
agreed, the Director - Golf Operations, or his designee, shall hold weekly
meetings with Hotel Manager’s general manager (or his designee) and Owner’s
designee (if Owner so elects from time to time) to review revenue management and
accounts payable as well as to discuss operational issues related to the Golf
Facilities (including course maintenance projects with potential impact on
Resort operations, such as green and fairway aeration), and shall hold monthly
meetings with Hotel Manager’s

 

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general manager and Golf Manager’s executive personnel responsible for general
supervision of the Golf Facilities.

 

(g)                                 Preparation and Approval of and Compliance
with Golf Facilities Annual Plan.  On or before September 1 of each calendar
year, Golf Manager shall prepare and submit to Hotel Manager and Owner for
written approval a proposed operating and capital plan and budget (the “Proposed
Golf Facilities Annual Plan,” a specimen of which is attached hereto as Exhibit
G) of anticipated revenues and expenses and capitalized expenditures for the
forthcoming calendar year.  The deadline for Golf Manager’s submission of the
Proposed Golf Facilities Annual Plan to Hotel Manager and Owner shall be subject
to change from time to time upon at least sixty (60) days prior written notice
from Hotel Manager to Golf Manager (provided that no extension of such deadline
shall be effective without the prior written approval of Owner).  The Proposed
Golf Facilities Annual Plan proposed by Golf Manager each year shall set forth
in reasonable detail the assumptions underlying the plan, the projected revenues
and expenses on a monthly basis, and a schedule for capital projects and costs,
and shall be in a format, form and scope reasonably determined by Hotel Manager
(and in satisfaction of any requirements set forth in the Resort Management
Agreement).  In addition, the Proposed Golf Facilities Annual Plan shall include
any proposed modifications to the published schedule of golf fees (including the
greens fees for Resort Guests and/or the general public, shotgun start fees,
golf cart rental and use of the driving range) and all fees for other services
and activities available at the Golf Facilities (e.g., private lessons, locker
space and bag storage).  Hotel Manager and Golf Manager shall cooperate with one
another to prepare any additional or special elements of the Golf Facilities
Annual Plan as may be required or imposed from time to time by Owner.

 

Hotel Manager and Owner shall review the Proposed Golf Facilities Annual Plan
with Golf Manager prior to the commencement of the forthcoming calendar year and
shall provide preliminary approval of or comments to Golf Manager within sixty
(60) days of Hotel Manager’s receipt of the Proposed Golf Facilities Annual
Plan.  Within ten (10) business days of Golf Manager’s receipt of Hotel
Manager’s and Owner’s comments to the Proposed Golf Facilities Annual Plan, if
any, Golf Manager shall make appropriate modifications of the Proposed Golf
Facilities Annual Plan to comply with such comments provided that would not
result in a breach of or express inconsistency with any provision of this Golf
Agreement, and resubmit the same to Hotel Manager and Owner for preliminary
approval or comments by Hotel Manager and Owner.  This process shall be repeated
as necessary until each of Hotel Manager and Owner has finally approved the
Proposed Golf Facilities Annual Plan but the Parties will use their best effort
to conclude this process not later than January 1 of the year in question.  Golf
Manager understands and agrees that the Proposed Golf Facilities Annual Plan, as
preliminarily approved by the Hotel Manager and Owner, shall become an element
of the Resort’s annual plan and budget, including its Capital Budget submitted
by Hotel Manager to Owner for review and final approval (the “Operating Plan and
Budget”), which approval may be given after the beginning of the calendar year
for which the plan was originally proposed.  Upon final approval of the Proposed
Golf Facilities Annual Plan by Hotel Manager and Owner the same shall be the
“Golf Facilities Annual Plan” for the year in question.

 

Hotel Manager and Owner may require modification of the Golf Facilities Annual
Plan during the calendar year subject to the Plan to reflect a Resort-wide
expense reduction program expressed on a uniform percentage or other uniform
basis.  Further, the Parties agree

 

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that failure to achieve, during any operating year, the budgeted operating
profit of the Golf Facilities, as approved by Hotel Manager and Owner in any
Golf Facilities Annual Plan, may result, upon the mutual written agreement of
the Parties and Owner or at the joint direction of Hotel Manager and Owner, in
cancellation or modification of expense and/or capital projects previously
approved in the Golf Facilities Annual Plan.

 

Golf Manager agrees to use diligent efforts to ensure that the actual costs of
maintaining and operating the Golf Facilities shall not exceed the approved Golf
Facilities Annual Plan, either in total or in any one category.  Notwithstanding
the foregoing, Golf Manager may elect to reapply savings within any particular
budget categories of the Golf Facilities Annual Plan to other categories
provided that (i) no single reapplication of savings shall exceed the lesser of
$50,000 or 10% of the budget category from which savings are realized, (ii) the
total of all reapplied savings in any operating year shall not exceed 5% of the
total expenses reflected in the applicable Golf Facilities Annual Plan, and
(iii) the Hotel Manager’s prior written approval shall in all events be required
for expenditures in the capital expenditures budget category that are in excess
of the amounts authorized therefore in the most recent Golf Facilities Annual
Plan.  Golf Manager agrees to immediately inform Hotel Manager and Owner in
writing of any actual or anticipated increase in costs and/or expenses for items
that were reflected in such approved budget prior to such expenditure obtain
Hotel Manager’s and Owner’s written approval of such change and otherwise comply
with Article 3.02(c).

 

(h)                                 Allocation of Tee Times; Tournaments; Public
Play.  Subject to the rights of members, Golf Manager shall schedule golf course
usage for Resort Guests, tournament (including, without limitation, members’
tournaments) and permitted outside play to maximize cost effective and
profitable operation of the Golf Facilities and the Resort, taking into
consideration the priority of Resort Guest use and the overall best interests of
the Resort (including its profitability) as determined by Hotel Manager (subject
to Hotel Manager’s obligations to Owner under the Resort Management Agreement). 
No tournament shall be scheduled without obtaining the prior written approval of
Hotel Manager and Owner in each case, in their sole discretion.  Hotel Manager
shall provide group coordinators to manage tournaments booked by the Golf
Manager and the Hotel Manager.  In order to maximize the potential for booking
group (defined as 16 or more players for purposes of this Golf Agreement)
business at the Resort, requests for golf bookings and shotgun starts by groups
not staying at the Resort (e.g., staying at another hotel and playing golf at
the Resort or locally-based groups) shall be confirmed and approved in advance
in writing by Hotel Manager.  Approval shall take into consideration whether
Hotel Manager is pursuing the group for the same business, and whether Hotel
Manager reasonably believes the tee times the group would utilize would be
needed for group or other Resort business.  The general manager of the Resort
and the Director-Golf Operations shall meet and/or communicate periodically
concerning policies and procedures for tee time allocation and booking, always
recognizing the need for priority of Resort Guests as determined by Hotel
Manager.

 

(i)                                     Special Functions and Events.  Golf
Manager shall coordinate, plan and promote various functions that shall generate
operating revenues for and develop a strong community awareness of the Golf
Facilities and that are consistent with parameters mutually approved by Golf
Manager, Hotel Manager and Owner in the Golf Facilities Annual Plan or that are
otherwise specifically approved by each of Hotel Manager, Golf Manager and
Owner.  This

 

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shall include cooperating with any organization designated by Hotel Manager and
Owner for the use of the Golf Facilities for special events, including, without
limitation, any one-time, periodic or annual event sponsored by the any
reputable golf association.  In connection with any such reputable golf
association event, the Golf Manager and the Hotel Manager shall also coordinate
and cooperate with any event manager appointed by the such reputable golf
association; provided, however, that such cooperation shall not extend beyond
the duties and obligations contained in this Agreement without Hotel Manager’s
and Owner’s prior written consent in each instance.  Golf Manager shall abide by
any and all agreements entered into by Hotel Manager in connection with such
special events, including group bookings, subject to Article 7.05 below.

 

(j)                                     Public Relations.  Golf Manager shall
coordinate and communicate with local news media, business firms, hotels, civic
organizations and other entities to promote an increased public interest in golf
at the Golf Facilities, with expenses, if any, to be subject to the Golf
Facilities Annual Plan.  All promotional programs and public relations efforts
shall be subject to the prior written approval of Hotel Manager and Owner.

 

(k)                                  Promotional Materials.  Golf Manager shall
supervise the publishing and distribution of informational and promotional
literature on the Golf Facilities, which shall be subject to the prior written
approval of Hotel Manager and Owner and subject to the Golf Facilities Annual
Plan.

 

(l)                                     Licenses and Permits.  Golf Manager
shall, in consultation with Hotel Manager, maintain and acquire, as necessary,
in the name of Owner (or Hotel Manager to the extent so required by applicable
law), or in such other names as may be required by Owner and permitted by
applicable law, all licenses and permits required by law for the operation of
the Golf Facilities.

 

(m)                               Compliance with Laws and Covenants.  In
accordance with Article 16.02, Golf Manager shall cause Golf Manager’s
performance of its duties hereunder, and the operation of the Golf Facilities
generally, to be in compliance with (i) any and all applicable ordinances, laws,
codes, rules and regulations, and guidelines of all governmental authorities
with jurisdiction over the Golf Facilities, including, but not limited to, the
U. S. Environmental Protection Agency, and the applicable state and local
departments and divisions, and (ii) any covenants, conditions or restrictions
that the Golf Facilities are, or may become, subject (including, without
limitation, the terms of any credit facility), so long as Hotel Manager or Owner
has provided Golf Manager with notice of any such covenants, conditions or
restrictions, and (iii) orders of the local Board of Fire Underwriters or any
other body that may have similar functions.  Golf Manager shall give Hotel
Manager and Owner prompt written notice of any actual or potential
non-compliance with the requirements or standards identified in this
Article 4.01(m) of which Golf Manager has actual knowledge.  Golf Manager shall
be deemed to have notice of all matters recorded against the title of the
Resort, to the extent copies thereof are provided to Golf Manager.

 

(n)                                 Golf Lessons.  Golf Manager shall offer
private and group lessons to patrons of the Golf Facilities at rates approved in
writing by Hotel Manager.

 

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(o)                                 Coordinate with Resort Insurance.  Golf
Manager shall coordinate with Hotel Manager’s personnel to make additions,
changes, and deletions to Hotel Manager’s insurance policies as necessary or
desirable in light of the business and operations of the Golf Facilities, and
assist as requested with respect to any claims made that affect or relate to the
Golf Facilities or the operation thereof.

 

(p)                                 Repairs.  Subject to complying with the Golf
Facilities Annual Plan or obtaining the prior approval from Hotel Manager and
Owner (if or to the extent not set forth in the Golf Facilities Annual Plan),
and to the limitations in Article 3.02 above, Golf Manager shall at all times
make or cause to be made all necessary repairs, alterations, additions,
maintenance and improvements (collectively “Repairs”) to the Golf Facilities and
supervise the same so that all Repairs are diligently completed in a good and
workmanlike manner, purchase all necessary supplies and materials, and do all
other things necessary to maintain the Golf Facilities to comply with the Golf
Course Standard.  Golf Manager shall use diligent efforts to cause (including
the imposition of contractual obligations) ensure that all contractors
performing work on the Golf Facilities to maintain insurance consistent with the
requirements imposed on other contractors working at the Resort who perform
similar services.  Any Repairs shall be the property of Owner and shall remain
at the Golf Facilities upon any termination of this Golf Agreement.  The
administration (including coordination of payment and pursuit of mechanics’ lien
waivers in all instances) of the contracts of such contractors shall be
performed by Hotel Manager.  However, Golf Manager shall assist Hotel Manager,
as requested, in obtaining all necessary receipts, releases, waivers, discharges
and assurances necessary to keep, and shall keep the Golf Facilities free from
mechanics’ and materialmen’s liens and other claims and liens, all of which
documentation shall be in form and content as reasonably required by Hotel
Manager and Owner;  provided, however, in all events the form and documentation
thereof shall be in a form, in a content and sufficiently timely to cause all
such releases, waivers, discharges, assurances, mechanics’ and materialmen’s
liens to be legally effective.

 

(q)                                 Books and Records.  Golf Manager shall
establish and maintain complete and orderly files (in written, electronic and
electronically readable form) containing correspondence, maintenance, service
contracts, payroll records, receipts, unpaid bills, vouchers and all other
documents and papers pertaining to the Golf Facilities and the management and
operation thereof, all of which shall be and shall remain the property of Owner,
shall be subject to the requirements of Hotel Manager’s and Owner’s records
retention policy, and shall be available to Hotel Manager and Owner, and their
respective representatives, for inspection, wherever located, at any time during
regular business hours.

 

(r)                                    Inspections and Inspection Reports. 
Subject to compliance with the Golf Facilities Annual Plan, Golf Manager shall
inspect the Golf Facilities each week (or more often if Hotel Manager so
requests or if Golf Manager deems prudent in light of its duties hereunder)
during the term of this Golf Agreement and provide to Hotel Manager and Owner a
written report in reasonable detail any material issues discovered with respect
to the physical condition of the Golf Facilities, such report to be included in
the monthly reports provided to Hotel Manager and Owner, or separately reported
if in Golf Manager’s reasonable judgment a report is required before the
issuance of such monthly reports.

 

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(s)                                  Taxes and Assessments; Condemnation Awards;
Litigation.  Golf Manager shall cooperate with and assist Hotel Manager and
Hotel Manager’s accountants in preparing and filing (only after review and
approval by Hotel Manager, and, if requested by Owner, after review and approval
by Owner) on behalf of Hotel Manager or Owner any tax returns (other than income
or real estate tax returns) relating to the Golf Facilities; render advice and
assistance to Hotel Manager and Owner in the negotiation and prosecution of all
claims for the abatement or reduction of taxes and assessments affecting the
Golf Facilities and for awards for complete or partial takings of the Golf
Facilities by eminent domain; and render its advice and assistance to Hotel
Manager and Owner with respect to any litigation, administrative proceedings or
other legal proceedings of any kind or nature affecting the Golf Facilities,
provided that all assessment, taxation, condemnation and litigation matters
shall be at all times within the control and direction of Hotel Manager (subject
to any approval rights of Owner provided in the Resort Management Agreement) and
that any reasonable costs and expenses incurred by Golf Manager after Owner’s
approval thereof in connection with such assistance shall be reimbursed to Golf
Manager, provided the same are reimbursable expenses expressly permitted by the
Resort Management Agreement.  Golf Manager shall have no authority to retain any
attorneys, accountants or other professionals or to participate in any
litigation, arbitration, legal negotiations or settlement proceedings of any
kind or nature unless expressly agreed to in writing by Hotel Manager and Owner
and subject to the limits of Section 2.2.14 of the Resort Management Agreement. 
Golf Manager acknowledges and agrees that Owner has final authority over all
decision-making regarding litigation matters, arbitration matters and settlement
proceedings for which the amount in dispute exceeds the limits set forth in
Section 2.2.14 of the Resort Management Agreement.

 

(t)                                    Food and Beverage Operations.  Golf
Manager shall cooperate and assist Hotel Manager in coordinating the operation
of the food and beverage facilities at the Resort and other aspects of the
Resort with the Golf Facilities. Hotel Manager shall operate the Golf Course
clubhouse food and beverage operations in accordance with the Resort Management
Agreement.  If requested by Hotel Manager, Golf Manager shall manage the on-golf
course food and beverage operations (i.e., any “snack bar” located on the golf
course and the roaming food and beverage carts) (the “On-Course Food and
Beverage Operations”) Hotel Manager and Golf Manager will consult and agree as
to the products, services and frequency of services to be offered on-course,
however, Hotel Manager in its sole discretion may designate periods and/or
events during which alcohol will not be served. All liquor licenses shall be
maintained by Hotel Manager or its designees and Golf Manager shall fully
cooperate with Hotel Manager and its designees in obtaining and maintaining all
such licenses in good standing to the extent of liquor provided through the Golf
Facilities and/or the Golf Facilities Employees.  Golf Manager shall enter into
a sub-management agreement with the holder of the applicable license providing
for provision of liquor through Golf Facilities Employees which agreement shall
contain customary terms.  Golf Manager shall ensure that all appropriate Golf
Facilities Employees are properly trained in the serving of alcoholic beverages
and provide supervision thereof.

 

(u)                                 Monthly Operating Reports.  Golf Manager
shall provide to Hotel Manager and Owner a reasonably detailed monthly operating
report, based on information available to Golf Manager, that reflects
operational results of the Golf Facilities for each month of the calendar year
(the “Monthly Operating Report”).  Golf Manager shall provide the Monthly
Operating Report within the time-frames requested by Hotel Manager and Owner to

 

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enable Hotel Manager to prepare its monthly reports for the whole Resort
promptly upon the conclusion of each month of the calendar year, and in all
events within the time-frames required to satisfy Hotel Manager’s obligations to
Owner under the Resort Management Agreement (provided that Hotel Manager
apprises Golf Manager of the relevant deadlines).  The Monthly Operating Report
shall utilize a format reasonably designated by Hotel Manager and using a medium
designated by Hotel Manager, which may include electronic transmission in an
approved electronic format.  To the extent not provided in the ordinary course
of business, Golf Manager shall also provide all necessary information to enable
Hotel Manager and Owner to prepare its annual reports and to enable the Resort’s
accountants to prepare audited financial statements, with such material to be
provided in a format and using a medium designated by Hotel Manager.  Golf
Manager shall advise Hotel Manager of variances that have occurred and that are
anticipated to occur between the applicable Golf Facilities Annual Plan and
actual results by giving Hotel Manager a monthly and year to date variance
report (along with the information mentioned above).

 

(v)                                 General Operations and Care of the Golf
Facilities.  Golf Manager shall perform any other services reasonably necessary
(and/or reasonably requested by Hotel Manager or Owner) and generally consistent
with the express terms of this Golf Agreement for the care, protection,
maintenance and efficient operation of the Golf Facilities and the prevention of
waste, nuisance, trespass, damage or injury thereto.  Golf Manager agrees to
operate the Golf Facilities in a good and businesslike fashion consistent with
the Golf Course Standard, including the Resort Standard (provided that the Hotel
Manager keeps Golf Manager apprised of relevant standards incorporated in the
Resort Standard).  Subject to the terms of this Golf Agreement, Golf Manager
shall operate the Golf Facilities on a continuous basis throughout the Term of
this Golf Agreement and shall keep the Golf Facilities open to Resort Guests
during the times established by Hotel Manager.  Golf Manager shall operate all
areas of the Golf Facilities during such times and on such days of each calendar
year as approved in writing by the Hotel Manager and Owner.

 

(w)                               Centralized Services.  Golf Manager shall
cause to be furnished to the Golf Facilities certain services (“Centralized
Services”) which are furnished generally on a central or regional basis to other
“Affiliated Facilities,” which are other golf facilities owned, leased or
managed by Golf Manager or affiliates.  Centralized Services shall include the
following categories of services:

 

(i)                                     “Facility Training, Recruiting, and
Standards,” which includes recruitment materials and seminars, personnel
training programs and associated materials, and the preparation and maintenance
of operating standards manuals, materials, and programs;

 

(ii)                                  To the extent requested by Hotel Manager
and Owner, “Payroll Processing”;

 

(iii)                               To the extent requested by Hotel Manager and
Owner, “Employee and Benefits Administration,” which includes administration of
employee benefits, such as COBRA, new hire paperwork, FMLA leaves, vacation
balances and termination issues; and

 

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(iv)                              To the extent required by Hotel Manager and
Owner, “EPL/Fraud Insurance,” which includes the cost of insurance for the
Employers Practices Liability insurance and the Crime Coverage Policy.

 

Golf Manager may from time to time propose that additional central or regional
services be furnished and included as part of Centralized Services for the
benefit of the Affiliated Facilities or in substitution for services now
performed at the Golf Facilities which may be more efficiently performed on a
group basis.  Any modification to the foregoing list of Centralized Services
shall be made by Golf Manager in conjunction with the Golf Facilities Annual
Plan and subject to Hotel Manager’s and Owner’s approval in advance for the Golf
Facilities to participate therein.

 

Centralized Services costs and expenses shall consist of the actual cost of the
services without mark-up or profit to Golf Manager or any Affiliate of Golf
Manager, but shall include salary and employee benefit costs, and appropriate
depreciation/amortization cost of equipment used in performing such services;
provided, however, that any costs attributed to corporate office accounting for
Golf Manager or any affiliate of Golf Manager shall not be included.

 

Costs and expenses incurred in the providing of Centralized Services for
Affiliated Facilities shall be allocated by Golf Manager and its affiliates on a
fair and equitable basis, consistently applied, among all Affiliated Facilities
receiving such services (the “Centralized Services Fee”); provided, however,
that the allocation methodology applied to the Golf Facilities shall be no less
favorable to the Resort than the allocation methodology applied to any other
Affiliated Facilities, taking into account the time at which a facility became
part of the portfolio of Affiliated Facilities during the year of the
assessment; and provided, further, Golf Manager shall provide to Hotel Manager
and Owner all back-up or supporting information bearing on the allocation.  If
equipment is installed and maintained at the Golf Facilities solely in
connection with the rendering of any Centralized Services therefor, all costs
thereof shall be charged to the operation of the Golf Facilities either as a
current expense or capitalized over a period of years, as determined in
accordance with generally accepted accounting principles consistently applied,
and shall belong to Owner upon full payment or depreciation thereof.

 

As of the date hereof, Centralized Services are allocated to the Golf Facilities
in accordance with the following respective allocation methods:

 

(i)                                     “Facility Training, Recruiting, and
Standards” costs shall be allocated among Affiliated Facilities on a per hole
basis.

 

(ii)                                  “Payroll Processing” costs (if applicable)
shall be allocated among Affiliated Facilities on the basis of the number of
employees for which the payroll is processed by Golf Manager at each of the
Affiliated Facilities.

 

(iii)                               “Employee and Benefits Administration” costs
(if applicable) shall be allocated among Affiliated Facilities on the basis of
the number of employees at each of the Affiliated Facilities.

 

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(iv)                              “EPL/Fraud Insurance” costs shall be allocated
among Affiliated Facilities on a per Affiliated Facility basis.

 

Such allocation methodology may be amended in an equitable fashion from time to
time by Golf Manager, provided that the allocation methodology applied to the
Golf Facilities shall be no less favorable to the Resort than the allocation
methodology applied to any other Affiliated Facility.

 

Costs of Centralized Services shall be payable monthly as an Operating Expense
and shall be included as a line item in the Golf Facilities Annual Plan.  At its
sole cost and expense, Hotel Manager and/or Owner may at any reasonable time
review or audit the records of Golf Manager pertaining to such charges to
confirm Golf Manager’s compliance with the foregoing.  In the event that such
review or audit reveals that Golf Manager has not complied with the foregoing,
such noncompliance shall be an Event of Default hereunder.

 

Notwithstanding the foregoing, Hotel Manager may elect to provide or have a
third party provide services in lieu of any particular portion of Centralized
Services provided or proposed to be provided by Golf Manager, upon giving
reasonable prior written notice to Golf Manager.

 

Without limiting the foregoing, the parties agree that Golf Manager employs
regional or area managers and senior agronomists to provide overall supervision
of golf operations at multiple projects (including projects not under common
ownership with the Resort).  With the exception of any employee holding such
title as of the date hereof, Golf Manager shall not employ any regional or area
manager or senior agronomist at the Golf Facilities without the prior written
consent of Hotel Manager and Owner.  Travel for Golf Facilities Employees at the
Golf Facilities and/or travel of home office or regional employees to and from
the Golf Facilities shall be reimbursable to Golf Manager provided the same is
included in the Golf Facilities Annual Plan and travel is by coach airline
tickets and otherwise complies with Hotel Manager’s policies limiting travel
expenses.

 

(x)                                   Golf Experience Standards.  Hotel Manager
intends to employ an outside service (to be selected by Hotel Manager and Owner
and engaged at Owner’s expense) to evaluate the golf experience at the Golf
Facilities to create a baseline evaluation thereof and thereafter to monitor
changes and progress.  Through the evaluation process, Hotel Manager intends to
develop golf experience standards to apply to the Golf Facilities and Golf
Manager’s operation thereof.  Golf Manager agrees to comply with all such
standards developed and implemented from time to time by Hotel Manager;
provided, however, that Hotel Manager shall consult with Golf Manager concerning
the development, change and implementation of any such golf experience standards
and provided that Golf Manager is provided a reasonable period and resources
necessary to adjust operations of the Golf Facilities to comply with such
standards.  An appropriately allocated portion of the costs of the auditor or
other party performing an evaluation, and all costs of Golf Manager to comply
with golf experience standards, as set forth in the Golf Facilities Annual Plan,
shall be Operating Expenses for purposes of Article 7 below.

 

(y)                                 National Marketing Services.  Golf Manager
shall provide national services (the “National Marketing Services”) to the Golf
Facilities which shall include:

 

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(i)                                     coordination of local marketing
activities, including the development of an overall Golf Facilities marketing
plan, development and design of a Golf Facilities specific advertisement
campaign in conjunction with the Hotel Manager and development and design of
collateral marketing materials;

 

(ii)                                  communication with local news media,
including Golf Facilities specific press releases, business firms, golf courses,
civic organizations and other entities to promote an increased local interest in
golf at the Golf Facilities;

 

(iii)                               assistance in the development and sales of
golf products (e.g., golf leagues, coupon programs, instructional schools,
etc.);

 

(iv)                              system-wide sales and marketing activities,
including inclusion of the Golf Facilities and the Resort in national
advertising collateral material, for the Golf Facilities and all Affiliated
Facilities, including national and international advertising, group sales
promotion, public relations and direct selling efforts for the benefit of the
Golf Facilities and the collective business development at all Affiliated
Facilities;

 

(v)                                 participation in the Golf Manager’s Troon
brand central reservation system which provides a regional, national and
international toll-free system for inquiries regarding customer bookings and for
making, changing and canceling reservations at the Golf Facilities and/or
Affiliated Facilities;

 

(vi)                              representation at golf industry sales and
trade shows;

 

(vii)                           inclusion on, and a hyperlink from, Golf
Manager’s Troon world wide web site to the Golf Facilities world wide web site;
and

 

(viii)                        such other additional sales and marketing services
as Golf Manager may determine may benefit the Golf Facilities and the Affiliated
Facilities or develop and promote further the Golf Facilities or the Golf
Manager’s Troon brand, subject to approval of the Hotel Manager and the
coordination with any golf-related marketing and promotional activities Hotel
Manager may undertake.

 

Golf Manager agrees to strictly comply with the terms and provisions of
Section 2.7.3 of the Resort Management Agreement in connection with its
performance of the National Marketing Services and its operations generally.

 

As part of the Golf Facilities Annual Plan, the Owner shall pay an assessment to
reimburse the Golf Manager for a portion of Golf Manager’s costs for Golf
Manager’s provision, and/or arranging for the provision of the National
Marketing Services (the “National Marketing Services Fee”) which shall not
exceed:  $55,000 per annum for the first thirty-six (36) months after the
Effective Date; and an increase of not more than 10% per annum over the
aforesaid sum for the next twenty-four (24) months. The National Marketing
Services Fee shall be in addition to the “Marketing Fee” payable by Owner to
Hotel Manager under section 3.1.1 of the Resort Management Agreement.  National
Marketing Services costs and expenses shall consist of the actual cost of the
services without markup or profit to Golf Manager or any affiliate of Golf
Manager, but shall include salary and employee benefit costs, and appropriate

 

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depreciation/amortization cost of equipment used in performing such services;
provided, however, that any costs attributed to corporate office accounting for
Golf Manager and any affiliate of Golf Manager shall not be included.  The
National Marketing Services Fee shall be allocated by Golf Manager and its
affiliates on a fair and equitable basis, consistently applied, among all
affiliated facilities receiving such services; provided, however, that the
allocation methodology applied to the Golf Facilities shall be no less favorable
to the Resort than the allocation methodology applied to any other Affiliated
Facility and back-up or supporting documentation thereof shall be provided to
the Hotel Manager and Owner on an annual basis.

 

No new National Marketing Services for which Owner is to be charged will be
provided without Hotel Manager’s and Owner’s approval.

 

At the sole cost and expense of Hotel Manager or Owner, Hotel Manager or Owner
may at any reasonable time review or audit the records of Golf Manager
pertaining to the National Marketing Services Fee under this provision to
confirm Golf Manager’s compliance with the foregoing.  In the event that such
review or audit reveals that Golf Manager has not complied with the foregoing,
such noncompliance shall be an Event of Default hereunder.

 

If any time Hotel Manager determines (subject to Owner’s approval rights set
forth in the Resort Management Agreement) that any or all National Marketing
Services provided by Golf Manager are not in the best interests of the Resort or
are duplicative of services provided by Hotel Manager or others, Hotel Manager
may elect to withdraw the Resort from the program therefor and the National
Marketing Services Fee shall be adjusted accordingly.

 

ARTICLE V
INDEMNIFICATION

 

5.01                        Indemnification.  The following provisions shall
apply with respect to any Claims (as defined below) that may arise from the
operation or condition of the Golf Facilities, but only to the extent that such
Claims are not actually paid by insurance or by any indemnity payments by Owner
under the Resort Management Agreement:

 

(a)                                  At its own expense, Golf Manager shall
indemnify, defend (with counsel reasonably acceptable to Hotel Manager or Owner,
as the case may be) and hold harmless Owner and Hotel Manager, and each of their
respective parent and subsidiary entities, agents, officers, directors,
shareholders, members, managers, partners, trustees and employees, and each of
their successors and assigns (the “Hotel and Owner Parties”), from and against
any and all demands, claims, actions, penalties, suits, losses, expenses,
liabilities of any kind or nature to persons or property, injunctions, damages
and costs (including reasonable attorneys’ fees and costs) (collectively, the
“Claims”) of any nature whatsoever alleged, made against or incurred by Hotel
and Owner Parties arising out of (i) the negligent or intentional acts or
omissions of Golf Manager (including the failure to properly supervise the Golf
Facilities Employees and contractors) and Golf Facilities Employees, agents and
contractors, (ii) any Golf Facilities Employee’s failure to adhere to, or any
Golf Facilities Employee’s breach of, the terms of this Golf Agreement, or (iii)
any violation by Golf Manager or the Golf Facilities Employees, agents and
contractors of any governmental laws or regulations.  This indemnity shall
survive the termination of this Golf Agreement.  When Golf Manager is providing
Hotel and Owner Parties

 

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with defense and/or indemnification pursuant to this Article 5.01, Hotel and
Owner Parties may participate, at their own expense, in the defense of such
matter, including the selection of legal counsel.  Golf Manager shall keep Hotel
and Owner Parties apprised of the status of any such matter and shall not settle
any such matter without the prior written consent of Hotel Manager and Owner.

 

(b)                                 Hotel Manager, shall indemnify, defend (with
counsel reasonably acceptable to Golf Manager) and hold harmless Golf Manager
and Owner, and its parent and subsidiary entities, agents, officers, directors
shareholders, members, managers, partners, trustees and employees (the “Golf
Facilities Parties”), from and against any and all Claims of any nature
whatsoever that the Golf Facilities Parties may have alleged against, incur,
become responsible for, or pay out that are caused in whole or in part by, arise
out of or are related to (i) the negligent acts or omissions of Hotel Manager or
its officers, directors or employees, including Hotel Manager’s failure to
properly supervise the personnel at the Resort that are not Golf Facilities
Employees or contractors under the control of Golf Manager, (ii) Hotel Manager’s
failure to adhere to, or Hotel Manager’s breach of, the terms of this Golf
Agreement, or (iii) any violation by Hotel Manager of any governmental laws or
regulations.  This indemnity shall survive the termination of this Golf
Agreement.  When Hotel Manager is providing the Golf Facilities Parties with
defense and/or indemnification pursuant to this Article 5.01, Golf Manager may
participate, at its own expense, in the defense of such matter, including the
selection of counsel.  Hotel Manager shall keep Golf Manager apprised of the
status of such matter and shall not settle any such matter without the prior
written consent of Golf Manager.  Golf Manager acknowledges and agrees that
Hotel Manager’s indemnification obligation to Golf Manager under this
Section 5.01(b) shall be limited to acts or omissions in its capacity as agent
for Owner, and for which Owner is obligated to indemnify Hotel Manager at
Owner’s sole cost and expense under the Hotel Management Agreement.  Nothing in
this Section 5.01(b) shall be deemed to modify Owner’s indemnification
obligations (or the limitations therein) under the Resort Management Agreement,
or limit Hotel Manager’s right to enforce such obligations under the Resort
Management Agreement (subject to the limitations therein and procedures required
thereby).

 

ARTICLE VI

 

6.01                        Hotel Manager’s Insurance.  At all times during the
Term commencing not later than the date Golf Manager commences its on-site
services hereunder, Hotel Manager shall provide and maintain, as an Operating
Expense, the insurance policies described in Article 5 of the Resort Management
Agreement.

 

6.02                        Golf Manager’s Insurance.  From the Effective Date
and thereafter at all times during the Term, Golf Manager shall provide and
maintain, as an Operating Expense, the following insurance:

 

(a)                                  Property insurance covering all of Golf
Manager’s personal property used in the Golf Manager’s business at the Golf
Facilities.  The Property insurance required herein shall be written on an “all
risk” or equivalent basis (including earthquake and boiler/machinery) at 100%
Replacement Cost.

 

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(b)                                 Workers’ Compensation insurance providing
statutory Workers’ Compensation coverage and Employer’s Liability insurance with
limits of not less than $500,000 bodily injury and $500,000 bodily injury
disease for all Golf Facilities Employees.

 

(c)                                  Employment Practices insurance with minimum
limits of $1,000,000 per claim/$2,000,000 aggregate per policy period.

 

(d)                                 Commercial Crime insurance including
coverage for employee dishonesty, loss inside the Premises, loss outside the
Premises, money orders, counterfeit currency and depositor’s forgery.  The limit
for each of these coverages shall be not less than $250,000 per occurrence and
$500,000 in the aggregate.

 

The Golf Facilities’ reasonable allocated cost of such insurance shall be
reimbursable as part of the Centralized Services Fee, and included in Operating
Expenses.

 

6.03                        General.  The cost of any or all of the insurance
policies required by this Golf Agreement or actually provided by Owner with
respect to the Golf Facilities shall be paid by Hotel Manager, from Resort
revenues, on behalf of Owner, as an Operating Expense.  All insurance coverage
required by Golf Manager shall include Hotel Manager (together with each partner
or member in Hotel Manager as applicable), Owner, the holder of any superior
lease, and any mortgagee and Golf Manager as additional insureds and shall be
placed with reputable insurance companies reasonably acceptable to Hotel Manager
and Owner.  All insurance policies shall contain an express waiver of
subrogation against Hotel Manager, Owner or Golf Manager to the extent they are
not an insured thereunder.  Any insurance required by Hotel Manager or Golf
Manager hereunder may be provided under blanket policies of insurance.

 

Contemporaneously with execution of this Golf Agreement, each Party shall
provide the other with certificates of insurance for the insurance provided by
such Party, which certificates shall name the other Party as an additional
insured as its interests appear with respect to the insurance required in this
Article 6.  At least thirty (30) days prior to expiration of any insurance
policy, the Party required to provide the same shall provide a replacement
certificate evidencing that such insurance has been renewed or replaced in
accordance with the requirements of this Article.  Each certificate shall
provide the certificate holder with at least thirty (30) days notice of any
nonrenewal or cancellation and in the event such notice is issued, the Party
required to provide such insurance shall provide a replacement certificate
satisfying the requirements of this Article within ten (10) days.  In the event
of noncompliance by a Party with the foregoing requirements, in addition to all
other rights and remedies that the other Party may have under this Golf
Agreement, the other Party may provide the required coverage and obtain
reimbursement, as appropriate, for the cost thereof from the noncomplying Party.

 

ARTICLE VII
GOLF MANAGER’S COMPENSATION

 

7.01                        Base Management Fee and Supplemental Fee.  In
consideration of the performance of its management duties and obligations
hereunder, and in addition to the amounts reimbursable to Golf Manager pursuant
to Article 4.01 above, Hotel Manager or Owner shall pay to Golf Manager
throughout the Term a “Base Management Fee” and a “Supplemental Fee”,

 

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provided in Articles 7.02 and 7.03 below.  Both the Base Management Fee and the
Supplemental Fee are to be paid by Hotel Manager, on behalf of Owner, out of
Resort revenues, or, if Resort revenues are insufficient, directly by Owner. 
Hotel Manager shall have no personal obligation to pay such amounts to Golf
Manager.  The Base Management Fee, but not the Supplemental Fee, shall be an
Operating Expense under the Resort Management Agreement.

 

7.02                        Base Management Fee.  From and after the Effective
Date, Golf Manager shall receive a Base Management Fee equal to two percent (2%)
of Golf Operating Revenue, payable within fifteen (15) days after the end of
each calendar month for the preceding calendar month (subject to annual
adjustment upon submission of the Monthly Operating Report, including year-end
financial information and audited financial statements) pursuant to
Article 4.01(u).

 

7.03                        Supplemental Fee.  From and after the Effective
Date, Golf Manager shall receive a Supplemental Fee equal to $800,000, payable
as follows, without interest accruing thereon, until such time as the
Supplemental Fee has been paid in full:

 

(i)                                     From the Effective Date through the
first anniversary date of the Effective Date, an amount equal to 0.5% of Golf
Operating Revenue;

(ii)                                  From the first anniversary date of the
Effective Date through the remainder of the Term, an amount equal to 0.75% of
Golf Operating Revenue; and

(iii)                               Commencing with the calendar year beginning
January 1, 2005, if the Golf Operating Revenue during any calendar year during
the Term is greater than $14,000,000, then Golf Manager shall be entitled to
receive towards payment of the Supplemental Fee an amount equal to the
following:  (A) 15% of any amount of Golf Operating Revenue between $14,000,000
and $14,499,999; (b) 17.5% of any amount of Golf Operating Revenue between
$14,500,000 and $14,999,999; and (C) 20% of any Golf Operating Revenue in excess
of $15,000,000.

 

The Hotel Manager shall pay, on behalf of Owner, the Supplemental Fee as soon as
the items described in clauses (a) through (f) of Section 3.5.4 of the Resort
Management Agreement have been paid, but before the items described in clauses
(h) through (j) have been paid, as provided in the document attached hereto as
Exhibit N (the capitalized terms used but not defined therein shall have the
meaning ascribed to such terms in the Resort Management Agreement).  The
Supplemental Fee payable with respect to subsections (i) and (ii) above shall be
payable within thirty (30) days after the end of each calendar month for the
preceding calendar month (subject to annual adjustment upon submission of the
Monthly Operating Report, including year-end financial information and audited
financial statements) pursuant to Article 4.01(u) after the Owner’s receipt
thereof.  The Supplemental Fee payable with respect to subsection (iii) above
shall be computed annually, based upon cumulative Golf Operating Revenue for the
calendar year, and payment shall be made to Golf Manager within thirty (30)
calendar days after the receipt by Owner of audited financial statements for
such calendar year.

 

Except as otherwise provided in this Article 7.03, Article 8.03, and
Article 8.04, upon the earlier of (i) April 30, 2010, or (ii) expiration or
earlier termination of this Golf Agreement for any reason, including upon a
termination of the Resort Management Agreement (and as a condition to any such
expiration or earlier termination of this Golf Agreement), Owner

 

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shall pay to Golf Manager on April 30, 2010 or the expiration date or the
effective date of such termination, as applicable, an amount equal to any amount
remaining outstanding on the Supplemental Fee (i.e., the Supplemental Fee less
any amounts previously paid to Golf Manager pursuant to this Article 7.03 prior
to the expiration date or effective date of termination); provided, however, if
this Golf Agreement is terminated as a result of an Event of Default on the part
of Golf Manager in accordance with the terms of Article 15, neither Hotel
Manager nor Owner shall be obligated to deliver to Golf Manager any amount
remaining outstanding on the Supplemental Fee (except for any amounts that have
been earned pursuant to this Article 7.03 but that remain unpaid as of the
effective date of termination).

 

In addition, in the event Owner sells the Golf Facilities or the Resort (which
shall include any “change in control” of Owner), subject to the following
proviso, Owner shall pay to Golf Manager on the effective date of such sale (or
“change in control”) any amount remaining outstanding on the Supplemental Fee;
provided, however, no amounts shall be due from Owner in respect thereof if the
transferee of the Golf Facilities or the Resort, as the case may be:  (a) agrees
in writing to assume Owner’s obligations with respect to the Supplemental Fee;
(b) has financial resources sufficient to enable it to satisfy the Owner’s
obligations with respect to the Supplemental Fee; (c) is not generally
recognized in the community as being of ill repute; and (d) has assumed and
agreed to be bound by all of the terms of this Golf Agreement with respect to
the obligations thereunder accruing from and after the effective date of Owner’s
transfer of its obligations under this Golf Agreement to the transferee.  For
purposes of this Article 7.03, a “change in control” is evidenced by the
transfer of power to direct or cause the direction of the management and
policies of Owner, whether through the direct or indirect ownership of more than
50% of the outstanding voting interests or securities of Owner, by contract or
credit agreement or otherwise.  Notwithstanding anything in this Golf Agreement
to the contrary, no change of control shall be deemed to have occurred in the
event that Owner (or any of its Affiliates) causes a transfer to occur
consistent with its formation of a liquidating trust.

 

In connection with the determination of the Management Fee and the Supplemental
Fee payable to Golf Manager with respect to the Golf Facilities, Hotel Manager
and Owner shall provide to Golf Manager such records and information with
respect to the Golf Facilities as may be reasonably necessary for Golf Manager
to calculate the Base Management Fee and Supplemental Fee.  In addition, Golf
Manager shall have the right, at its sole cost and expense, to retain
independent public accountants to consult with Hotel Manager’s or Owner’s
independent public accountants (or its internal accounting department) to
confirm the accuracy of the information related to the Management Fee and the
Supplemental Fee.  In the event that, as a result of such examination, it is
discovered that the Management Fee or Supplemental Fee has been overpaid or
underpaid then the affected party shall return such overpayment, or pay such
underpayment, as the case may be, within ten (10) calendar days after such
delivery.

 

7.04                        Definitions.

 

(a)                                  For purposes hereof, “Golf Operating
Revenue” shall mean revenue and income of any kind derived from the following
operations at the Golf Facilities: greens fees, cart fees, pro shop sales, club
rental fees, member dues and initiation fees, lesson fees (only the portion
received by the Golf Facilities, if services are provided by independent
contractors), and revenues derived from On-Course Food and Beverage Operations
(provided that and for so long

 

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as Golf Manager is responsible for on-course food and beverage operations), and
determined in accordance with generally accepted accounting principles
consistently applied (“GAAP”) which are properly attributable to the period
under consideration, and specifically excluding the following, without
limitation:

 

(i)                                     applicable excise, sales, occupancy and
use taxes, or similar government charges collected directly from patrons or
guests, or as part of the sales price of any goods, services, or displays, such
as gross receipts, admission, cabaret, or similar or equivalent taxes;

 

(ii)                                  receipts from the financing, refinancing,
sale, master lease or other disposition of capital assets or any portion of the
Golf Facilities;

 

(iii)                               receipts from Taking awards or sales or
other transfers in lieu of or under the threat of Taking, and other receipts in
connection with any Taking, but only to the extent that such amounts are
specifically identified as compensation for alterations or physical damage to
the Golf Facilities;

 

(iv)                              proceeds of any insurance, judgment or other
award, including the proceeds of any Business Interruption insurance;

 

(v)                                 receipts from food and beverage sales other
than from On-Course Food and Beverage Operations;

 

(vi)                              discounts, rebates or credits of a similar
nature (not including charge or credit card discounts paid to credit card
companies, which shall not constitute a reduction from revenues in determining
Golf Operating Revenue);

 

(vii)                           any credit for individual or business
development-related complimentary golf (e.g., there shall be no credit toward
Golf Operating Revenue for any complimentary golf); and

 

(viii)                        gratuities or services charges collected for
payment to and paid to Golf Facilities Employees or other personnel.

 

To the extent applicable, Golf Operating Revenue shall be calculated (and
isolated from gross revenue for the rest of the Resort) according to the Uniform
System of Accounts for Hotels, 9th Revised Edition, or such later editions as
may be adopted by the International Association of Hospitality Accountants.

 

(b)                                 For purposes hereof, “Operating Expenses”
shall have the meaning provided in the Resort Management Agreement.  No such
change to the definition of Operating Expenses in the Resort Management
Agreement, shall occur which is materially prejudicial to Golf Manager without
Golf Manager’s prior written approval, which approval may not be unreasonably
withheld or delayed.

 

7.05                        Allocation of Revenue and Costs for Resort/Golf
Packages.  The Parties acknowledge that Hotel Manager, Golf Manager and/or third
parties from time to time

 

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arrange group bookings, special promotions and other “packaged” resort programs
that include a combination of Resort accommodations and use of Resort
facilities, including the Golf Facilities, at discounted prices.  To the extent
the allocation of such revenues was not addressed in the Golf Facilities Annual
Plan process, the Parties agree to allocate the revenues for such Resort
packages, together with related commissions and other costs, on a case-by-case
basis between the Golf Facilities and the Resort based upon market conditions
and operations at the Resort and the Golf Facilities as a whole.  If there is a
fundamental change in the way that Hotel Manager conducts its business with
respect to the utilization of the Golf Facilities, or individual circumstances
require a change, such that it is advantageous to the Resort and the Golf
Facilities as a whole to allocate revenues between the Resort and the Golf
Facilities in a way that was not contemplated in the Golf Facilities Annual
Plan, and such allocation negatively impacts the Base Management Fee or the
Supplemental Fee, then Hotel Manager and Golf Manager shall negotiate in good
faith to modify the Golf Operating Revenue by providing a “credit” to Golf
Operating Revenue that takes into account such change for purposes of
calculating the Management Fee.

 

ARTICLE VIII
TERM OF GOLF AGREEMENT, POST-TERMINATION PROCEDURES, AND TERMINATION RIGHTS

 

8.01                        Term.  This Golf Agreement shall commence as of the
Effective Date and shall continue in full force and effect, unless earlier
terminated in accordance with its terms (including any termination under
Article 9 below), until the fifth anniversary of the Effective Date (the
“Term”).

 

8.02                        Without Cause Termination. At any time during the
Term of this Golf Agreement,  Hotel Manager shall have the right, without cause,
to terminate this Golf Agreement on not less than one hundred twenty (120)
calendar days’ prior written notice; provided, however, in no event shall such
termination occur without Owner’s prior written approval, which Owner may grant
or not in its sole discretion.  As a condition to any termination pursuant to
this Article 8.02, Owner shall pay to Golf Manager on the effective date of such
termination, a lump sum termination fee (the “Termination Fee”) equal to (i)
$50,000, plus any amount remaining outstanding on the Supplemental Fee, if the
effective date of the termination occurs on or before December 31, 2005; or (ii)
any amount remaining outstanding on the Supplemental Fee, if the effective date
of the termination occurs after December 31, 2005.  The receipt of the
Termination Fee, together with any amount due and owing Golf Manager pursuant to
Article 8.04 below, shall be the sole and exclusive remedy available to Golf
Manager against Hotel Manager and Owner (and their respective Affiliates) upon
any termination of this Golf Agreement by Hotel Manager (and Owner’s prior
written approval thereof) pursuant to this Article 8.02.  Nothing in this
Article 8.02 shall be deemed to impair any right of Hotel Manager to terminate
this Golf Agreement in accordance with the terms of Article 9.01.

 

8.03                        Deleted.

 

8.04                        Termination of Resort Management Agreement.

 

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(a)                                  If Owner terminates the Resort Management
Agreement pursuant to any of (i) Sections 4.3 (Termination for Failure to
Achieve Performance Test), (ii) 7.2 (Termination after Substantial Insured
Casualty), (iii) 7.3 (Substantial Uninsured Casualty – Owner’s Option to
Terminate or Restore), (iv) 7.5 (Permanent Taking), or (v) 7.6 (Taking for
Temporary Use) of the Resort Management Agreement, this Golf Agreement shall
automatically terminate upon the effective date of the termination of the Resort
Management Agreement.

 

(b)                                 If the Resort Management Agreement is
terminated pursuant to Section 4.2 (Event of Default) of the Resort Management
Agreement, or for any reason other than as set forth in Article 8.04(a) above,
this Golf Agreement shall automatically terminate unless Owner, within ten (10)
days of the termination of the Resort Management Agreement for such reason(s),
notifies Golf Manager that Owner has elected to succeed to all of the rights of
the Hotel Manager hereunder, in which event Golf Manager shall attorn to the
Owner and recognize Owner as successor to Hotel Manager hereunder, and Golf
Manager shall execute any documents which Owner may require to effectuate the
provisions of this Article 8.04(b).

 

(c)                                  In the event of a termination of this Golf
Agreement pursuant to Article 8.04(a)(i) above or as a result of an termination
of the Resort Management Agreement pursuant to Section 4.3 of the Resort
Management Agreement, neither Owner nor Hotel Manager shall be obligated to
deliver to Golf Manager any amount remaining outstanding on the Supplemental Fee
(except for any amounts that have been earned pursuant to Article 7.03 but that
remain unpaid as of the effective date of termination) or any Termination Fee. 
If the Resort Management Agreement is terminated for any reason other than as
set forth in the immediately preceding sentence and the Golf Agreement is
concurrently terminated, then Owner shall, upon the effective date of such
termination of the Resort Management Agreement, deliver to Golf Manager any
amount remaining outstanding on the Supplemental Fee.

 

8.05                        Termination of this Agreement.  If this Golf
Agreement is terminated as a result of a taking pursuant to Article 10.02, or as
a result of an Event of Default of Golf Manager under Article 9.01, neither
Owner nor Hotel Manager shall be obligated to deliver to Golf Manager any amount
remaining outstanding on the Supplemental Fee (except for any amounts that have
been earned pursuant to Article 7.03 but that remain unpaid as of the effective
date of termination) or any Termination Fee.

 

8.06                        Post-Termination Procedures.  On the effective date
of any termination of this Golf Agreement, for any reason, Golf Manager shall
immediately turn over to Hotel Manager (in the event the Resort Management
Agreement has not been terminated)  all funds held for the Golf Facilities, all
equipment, inventory, supplies and materials, and all originals of all books,
records, permits, plans, leases, licenses, contracts and other documents and
records in whatever form maintained (e.g., ledgers, computer files) relating to
the Golf Facilities subject to the immediately following sentence, any other
property of Hotel Manager or Owner or acquired with the funds of either or
Operating Expenses, and such authorizations and letters of direction addressed
to other persons as Hotel Manager may reasonably require; and Golf Manager shall
fully cooperate with Hotel Manager in the transfer of management
responsibilities to Hotel Manager or Owner, as directed, or their respective
designee.  Upon the expiration, or earlier termination for any reason, of this
Golf Agreement, Golf Manager may remove any documents that are proprietary to
Golf Manager (e.g., copies of manuals, copies of software programs that

 

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can be removed without disruption of the continuous operation of the Golf
Facilities and copies of internal correspondence of a proprietary nature).

 

Upon the expiration or earlier termination of this Golf Agreement, for any
reason, Hotel Manager shall pay to Golf Manager (out of funds from the operation
of the Resort or as may otherwise be provided by Owner) in addition to any other
amounts due pursuant to this Golf Agreement, (i) its reasonable out-of-pocket
costs (as may be approved by Owner in advance) incurred by reason of requests by
Hotel Manager for assistance after termination or expiration of this Golf
Agreement not otherwise required under this Golf Agreement or expected of Golf
Manager in the orderly termination of its operations at the Golf Facilities,
(ii) subject to the limitations contained in Articles 8.04 and 8.05 hereof, any
unpaid fees and other charges and reimbursements then actually due Golf Manager
under this Golf Agreement, and (iii) to the extent reasonable and consistent
with Golf Manager’s standard practices and (subject to Hotel Manager’s
reasonable approval) industry standards, termination related employee expenses,
including sick, vacation, pension, bonus and termination payments to employees
less any forfeitures of benefits previously paid for.  Golf Manager’s current
policies related to these matters are attached hereto as Exhibit H and the same
shall not be materially changed with respect to the Golf Facilities without
prior written consent of Hotel Manager and Owner.

 

At the request of Hotel Manager, Golf Manager will cooperate to transition all
or certain employees at the Golf Facilities to the employment of Hotel Manager
or another golf manager selected and, to the extent feasible and legally
permissible, the assumption of benefit obligations.  The Parties will comply
with all applicable laws and legal requirements related to these matters,
including, but not limited to, compliance with the WARN Act, in a manner that
avoids any disruption of operation of the Golf Facilities.

 

To effectuate a smooth transition, at Hotel Manager’s cost, Golf Manager will
further fully cooperate with Hotel Manager with respect to any open purchase
orders; required or advisable insurance notifications; required or advisable
credit card company notifications; pending litigation; required or advisable
vendor and employee communications; removal of Golf Manager trademarks; public
relations, publications, promotional materials and related items; transition of
information technology; transition of telecommunication systems; transition of
sales and marketing programs; transfer to Hotel Manager of any liquor licenses
related to On-Course Food and Beverage Operations; and any other matters
reasonably required by Hotel Manager.

 

This Article 8.06 shall survive the expiration or termination of this Golf
Agreement.

 

ARTICLE IX
EVENTS OF DEFAULT

 

9.01                        Events of Default.  At any time during the Term of
this Golf Agreement, if any of the following events (the “Events of Default”)
occur and continue beyond the applicable grace period for curing such Event of
Default (if any, as specified below), the non-defaulting Party may, at its
option, terminate this Golf Agreement by giving notice to the defaulting Party
specifying an effective date of such termination of not less than thirty (30)
days after the date of such notice; provided, however, that in the case of
termination by Golf Manager,

 

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the effective date of termination shall not be less than ninety (90) days unless
Owner is willing to accept any lesser period of time.  Upon the occurrence of
any Event of Default not subject to any grace period for curing such Event of
Default, and at any time while such Event of Default is continuing, the Party
not in default may declare this Golf Agreement to be immediately terminated. 
Upon any termination pursuant to this Article 9.01, Golf Manager shall
immediately vacate the Golf Facilities, subject to the post-termination
procedures provided in Article 8.06 above.  Notwithstanding the foregoing, Hotel
Manager may not terminate this Golf Agreement without the prior written consent
of Owner.

 

(a)                                  Any default by a Party in the payment of
money due under this Golf Agreement that is not cured within thirty (30) days
following notice thereof by the non-defaulting Party;

 

(b)                                 Any breach by a Party of any representation,
warranty or covenant contained in this Golf Agreement (including, without
limitation, the provisions of Section 4.01(g) relating to compliance with the
Golf Facilities Annual Plan), or any failure by a Party to perform or observe
any of the provisions of this Golf Agreement (other than any obligations
expressly excluded) if such failure either (i) cannot be remedied, (ii) can be
remedied within thirty (30) days, following written notice by prompt and
diligent action, but continues unremedied for a period of thirty (30) days after
notice thereof to such Party, or (iii) can be remedied, although not within
thirty (30) days even by prompt and diligent action, but such remedy is not
commenced within fifteen (15) days after notice thereof to such Party or is not
diligently prosecuted to completion within a total of ninety (90) days from the
date of such notice;

 

(c)                                  The filing by a Party or its parent
corporation or company (or by any general partner of such Party or its general
partner) of any proceeding under the federal bankruptcy laws now or hereafter
existing or any other similar statute now or hereafter in effect (or against a
party to which the Party acquiesces or that is not dismissed within forty-five
(45) days after the filing thereof); the entry of an order for relief under such
laws with respect to a Party; or the appointment of a receiver, trustee,
custodian or conservator of all or any part of the assets of a Party;

 

(d)                                 The insolvency of a Party or its parent
corporation or company (or of any general partner of such Party or its general
partner); or the execution by a Party of an assignment for the benefit of
creditors; or the convening by a Party of a meeting of its creditors; or any
class thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts;

 

(e)                                  The admission in writing by a Party that it
is unable to pay its debts as they mature or that it is generally not paying its
debts as they mature;

 

(f)                                    Any attachment or garnishment of, or the
existence or filing of any lien or encumbrance against, any portion of the
Resort caused by Golf Manager that is not removed or released within forty-five
(45) days after its creation, unless Golf Manager is contesting such lien or
encumbrance in good faith and has posted bonds or other appropriate security in
amounts sufficient to ensure that such liens or encumbrances shall not impair
Owner’s title to or Hotel Manager’s interest in any portion of the Resort;

 

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(g)                                 The institution of any legal action or
proceedings to enforce any lien or encumbrance upon any portion of the Resort
caused by Golf Manager that, is not dismissed within forty-five (45) days after
its institution, unless (in the case of any action or proceedings as to which no
judgment has yet been rendered Golf Manager is contesting such legal action or
proceedings in good faith and has provided security satisfactory to Hotel
Manager and Owner to ensure that neither Hotel Manager nor Owner, nor Owner’s
title to or Hotel Manager’s interest in, the Resort shall be adversely affected
by such legal action or proceedings in the sole judgment of Owner and Hotel
Manager;

 

(h)                                 The abandonment by Golf Manager of all or
any part of the Golf Facilities.

 

(i)                                     The Golf Manager transfers this Golf
Agreement or subcontracts the performance of its duties hereunder in breach of
Article 12.01(a) hereof.

 

(j)                                     The failure of the Golf Manager to
comply with the covenant not to compete set forth in Article 14.07 herein.

 

9.02                        Remedies and Enforcement.  In addition to any
remedies provided herein for an Event of Default, the non-defaulting Party shall
have all other legal or equitable remedies allowed under applicable law, except
that each Party voluntarily waives and relinquishes any right or ability to
obtain punitive or exemplary damages.  No failure on the part of a Party to
exercise any of its rights hereunder arising on any Event of Default shall
prejudice its rights on the occurrence of any other or subsequent Event of
Default.  No delay on the part of a Party in exercising any such rights shall
preclude it from the exercise thereof at any time while that Event of Default is
continuing.  A Party may enforce any one or more remedies or rights hereunder
successively or concurrently.  By accepting late performance of any of the
obligations, a Party shall not thereby waive the agreement contained herein that
time is of the essence, nor shall a Party waive either its right to require
prompt future performance or its right to consider the failure to so perform an
Event of Default.  ANYTHING HEREIN CONTAINED, AND ANYTHING AT LAW, TO THE
CONTRARY NOTWITHSTANDING, IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES
(INCLUDING, WITHOUT LIMITATION, ANY ARBITRATION PROCEEDING) ARISING UNDER OR
WITH RESPECT TO THIS GOLF AGREEMENT OR IN ANY MANNER PERTAINING TO THE GOLF
FACILITIES, EACH PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES AND
RELEASES ANY RIGHT, POWER OR PRIVILEGE EITHER MAY HAVE TO CLAIM OR RECEIVE FROM
THE OTHER PARTY HERETO ANY PUNITIVE OR EXEMPLARY DAMAGES, EACH PARTY
ACKNOWLEDGING AND AGREEING THAT THE REMEDIES HEREIN PROVIDED, AND OTHER REMEDIES
AT LAW AND IN EQUITY, WILL IN ALL CIRCUMSTANCES BE ADEQUATE.  THE FOREGOING
WAIVER AND RELEASE SHALL APPLY IN ALL ACTIONS OR PROCEEDINGS BETWEEN THE PARTIES
UNDER OR RELATING TO THIS GOLF AGREEMENT AND FOR ALL CAUSES OF ACTION OR
THEORIES OF LIABILITY FOR BREACH OF THIS GOLF AGREEMENT OR BASED UPON THE
RELATIONSHIP OF THE PARTIES CREATED HEREBY.  BOTH PARTIES FURTHER ACKNOWLEDGE
THAT THEY ARE

 

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EXPERIENCED IN NEGOTIATING AGREEMENTS OF THIS SORT, HAVE HAD THE ADVICE OF
COUNSEL IN CONNECTION HEREWITH, AND HAVE BEEN ADVISED AS TO, AND FULLY
UNDERSTAND, THE NATURE OF THE WAIVERS HEREIN CONTAINED.

 

ARTICLE X
DAMAGE OR DESTRUCTION; EMINENT DOMAIN

 

10.01                 Damage or Destruction.  Golf Manager shall promptly notify
Hotel Manager and Owner upon learning of any potential or actual damage to or
destruction of the Golf Facilities.  If any part of the Golf Facilities is
damaged or destroyed, at Owner’s option, Golf Manager, in addition to the other
duties enumerated herein, shall cause such damage to be repaired at Owner’s
expense according to Golf Manager’s discussions with and instructions of Hotel
Manager and Owner (including an approved budget therefore) and as provided in
this Golf Agreement.  Alternatively, Owner may conduct such repairs with the
full cooperation of Golf Manager, or Owner may determine not to perform such
repairs, to rebuild in a manner different from pre-existing improvements or some
combination thereof, pursuant to the Resort Management Agreement.

 

In the event Golf Manager is to proceed with repairs, Golf Manager, in
coordination with Owner’s consultants, contractors, architects and other
consultants, shall inspect, monitor and supervise all reconstruction or repair
work on a periodic basis to ensure that the Golf Facilities is being repaired
orderly, efficiently, and all in a manner approved in writing in advance by
Hotel Manager, and Golf Manager shall advise and consult with Hotel Manager at
such times as Hotel Manager shall request with respect to such reconstruction or
repair.  The fees payable to Golf Manager for such activity shall be determined
in an agreement between Owner and Golf Manager and shall not be included in the
determination of “Operating Expenses” under the Resort Management Agreement.

 

Golf Manager acknowledges and agrees that the Owner has the right, in certain
circumstances, to terminate the Resort Management Agreement following damage to
or destruction of the Golf Facilities and that, pursuant to Section 8.04 hereof,
such termination of the Resort Management Agreement will operate to
automatically terminate this Golf Agreement.

 

10.02                 Eminent Domain.  After June 30, 2005, this Golf Agreement
may be terminated by either Party on the date of a taking (no grace period shall
apply) of either a fee interest in or a perpetual easement on, or a temporary
use of for more than sixty (60) consecutive days, all or any part of the Golf
Facilities that results in the Golf Facilities having less than eighteen (18)
holes.  For purposes of this Golf Agreement, the term “Taking” shall mean a
taking as a result of condemnation or eminent domain, or a conveyance by Owner
in lieu thereof, of all or part of the Golf Facilities.  Golf Manager
acknowledges and agrees that the Owner has the right, in certain circumstances,
to terminate the Resort Management Agreement following a “Taking” (as defined
therein) of the Golf Facilities and that, pursuant to Section 8.05 hereof, such
termination of the Resort Management Agreement will operate to automatically
terminate this Golf Agreement.

 

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ARTICLE XI
COMMUNICATIONS FROM THIRD PERSONS

 

11.01                 Communications From Third Persons.  Golf Manager shall
advise Hotel Manager and Owner immediately in person, by telephone, facsimile or
hand delivery, with prompt confirmation by mail (including the sending of the
document received by Golf Manager) of the service on Golf Manager of any
summons, subpoena or similar legal document, or of the receipt by Golf Manager
of any notices, letters or other communications setting forth or claiming any
(i) actual or alleged potential criminal activity of Hotel Manager, Owner, or
the Golf Facilities, or (ii) actual or alleged potential civil liability of
Hotel Manager, Owner or the Golf Facilities in excess of Five Thousand Dollars
($5,000).  All other notices, letters or other communications related to any
actual or potential liability shall be brought to the attention of the Hotel
Manager’s general manager by Golf Manager no less often than weekly, together
with concurrent copies to Owner.  At Hotel Manager’s option and upon reasonable
notice to Golf Manager, any or all of these items shall be required to be
brought to the attention of another representative of Hotel Manager, in lieu or
in addition to the general manager.

 

ARTICLE XII
ASSIGNMENT

 

12.01                 Assignment by Golf Manager.

 

(a)                                  This Golf Agreement is personal to Golf
Manager, and Golf Manager agrees that, except as provided in this Article 12.01,
it shall not transfer this Golf Agreement or subcontract the performance of its
duties hereunder, either voluntarily or by operation of law, without the advance
written consent of Owner and Hotel Manager, which consent may be withheld in
Owner’s or Hotel Manager’s sole discretion.  A “transfer” shall include a change
in control of Golf Manager as evidenced by the transfer of the power to direct
or cause the direction of the management and policies of Golf Manager, whether
through the direct or indirect ownership of more than 50% of the outstanding
voting interests or securities of Golf Manager, by contract or credit
arrangement or otherwise, but shall exclude a public offering by Golf Manager of
its securities pursuant to the Securities Act of 1933, as amended or any
successor statutory provision.  Golf Manager shall have the right, without the
consent (but upon written notice to, together with all legal documents) of Owner
or Hotel Manager, to assign this Golf Agreement, whether by operation of law or
otherwise,

 

(i)                                     to any wholly owned subsidiary of Golf
Manager, or

 

(ii)                                  in connection with the sale of Golf
Manager (whether by sale of substantially all of Golf Manager’s assets, a change
in control of Golf Manager resulting from a transfer or issuance of member
interest, partnership interest or stock, a merger, a consolidation or
otherwise),

 

provided, however, that in any such case the assignee/transferee thereafter (i)
continues to operate the golf course and club management business of Golf
Manager; (ii) has, on a pro forma basis, for the twelve months ending
immediately prior to the assignment a net worth that equals or exceeds the
average of Golf Manager’s net worth at the end of its preceding two (2) calendar

 

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years, and (iii) retains and employs not less than two thirds (2/3) of Golf
Manager’s Key Employees, and, in addition (but included in such two thirds (2/3)
calculation), at least one of the chief executive officer or chief operating
officer, for at least twelve (12) months following the assignment or transfer,
such Key Employees remaining in positions of authority and responsibility
comparable to the positions held by such individuals prior to Golf Manager
undertaking the negotiations that led to the assignment or transfer.  For the
purposes hereof, “Key Employees” shall mean the corporate employees of Golf
Manager holding the title of Senior Vice President or higher.  Hotel Manager
shall have the right to terminate this Golf Agreement if any of conditions (i),
(ii) or (iii) above are not satisfied continually or for the stated period.

 

(b)                                 As a condition precedent to an assignment,
any assignee shall assume and agree in an Assignment and Assumption reasonably
acceptable to Hotel Manager to be bound by all of the terms and provisions of
this Golf Agreement for the benefit of Owner and Hotel Manager.  No Assignment
and Assumption shall constitute or result in a release of Golf Manager from
continuing responsibility and liability hereunder, jointly and severally with
the assignee.  In the event Golf Manager is required under the terms of this
Article 12.01 to seek the consent of Owner to a transfer in connection with a
change of control, Golf Manager shall give to Owner and/or Hotel Manager written
notice seeking such consent and Owner and Hotel Manager shall have sixty (60)
days within in which to respond to such notice. In the event Golf Manager seeks
such consent and Owner or Hotel Manager declines to so consent, if Golf Manager
elects to proceed with such transfer, then Owner and Hotel Manager shall have
the right to terminate this Golf Agreement.  Owner and Hotel Manager may
exercise such right to terminate by sending written notice to Golf Manager to
terminate at any time on or before the date that is ninety (90) days after Golf
Manager’s and Owner’s receipt of notification from the Golf Manager regarding
the consummation of such transfer.  The notice of election to terminate shall
specify the effective date of the termination.  In the event Golf Manager
attempts or completes an assignment that does not comply with this
Article 12.01, such assignment or subcontracting shall be void, and Golf Manager
shall be deemed to have committed a non-curable breach of this Golf Agreement.

 

12.02                 Assignment by Hotel Manager.  In the event Hotel Manager
assigns its rights and obligations under the Resort Management Agreement to a
third party in accordance with the provisions of Section 9.2 of the Resort
Management Agreement, Hotel Manager shall have the right to concurrently assign
its rights and obligations under this Golf Agreement to such assignee, subject
to satisfaction of the terms and conditions set forth in Section 9.2 of the
Resort Management Agreement.

 

12.03                 Assignment by Owner.  Owner may assign its rights under
this Golf Agreement by contract, operation of law or otherwise, to any assignee
of Owner’s rights under the Resort Management Agreement; provided that such
assignee is a permitted assignee/transferee under Section 9.3 of the Resort
Management Agreement.  Golf Manager and Hotel Manager shall recognize any such
assignee of or successor to Owner as “Owner” under this Golf Agreement with all
of the rights afforded to Owner hereunder, and will execute, within fifteen (15)
days after recent, any documents which such assignee or successor to Owner may
require to effectuate the provisions of this Article 12.03.  Notwithstanding the
foregoing, upon the occurrence of (i) a transfer of (but not independent of) all
or substantially all of Owner’s interest in the Golf Facilities or the Resort,
or (ii) a “change in control” (as defined in Section

 

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7.03 above), Owner shall pay to Golf Manager any amount remaining outstanding on
the Supplemental Fee (as defined in Section 7.03 above); provided, however, no
amounts shall be due from Owner in respect thereof if the transferee of the Golf
Facilities or the Resort, as the case may be:  (a) agrees in writing to assume
Owner’s obligations with respect to the Supplemental Fee; (b) has financial
resources sufficient to enable it to satisfy the Owner’s obligations with
respect to the Supplemental Fee; (c) is not generally recognized in the
community as being of ill repute; and (d) has assumed and agreed to be bound by
any of Owner’s then applicable obligations under this Golf Agreement with
respect to the obligations thereunder accruing from and after the effective date
of Owner’s transfer of its obligations under this Golf Agreement to the
transferee.

 

12.04                 Effect of Permitted Assignment.  Any consent to a
permitted assignment pursuant to this Article XII  shall not be deemed to be a
consent to any future assignment or waiver of the requirement that consent be
obtained for any further assignment.  Upon the completion of any permitted
assignment hereunder , the assigning party shall be relieved of all liabilities
and obligations under this Golf Agreement based on acts or omissions occurring
on or after the effective date of the assignment; provided that no permitted
assignment shall relieve the assigning party from its liabilities or obligations
under this Golf Agreement based on acts or omissions occurring  prior to the
effective date of the assignment .

 

ARTICLE XIII
TRADEMARKS

 

13.01                 Hotel Manager Trademarks.

 

(a)                                  The Resort, including the Golf Facilities,
is to be operated under the name “The Westin Innisbrook Golf Resort” and Hotel
Manager approves the same and represents that it has the power and authority to
do so.  Accordingly, Golf Manager shall market and operate the Golf Facilities
under the name “The Westin Innisbrook Golf Resort” and shall use the “Troon”
name in connection with the Golf Facilities only in connection with Golf
Manager’s corporate marketing as described in Article 4.01(y) above, or as
expressly permitted by Hotel Manager, as provided in this Article 13.

 

(b)                                 Hotel Manager and/or an affiliate represent
and warrant that they are the owner or licensee of the trade names, trademarks,
service marks and copyrights associated with the names “WESTIN”, “STARWOOD
HOTELS & RESORTS WORLDWIDE, INC.”, “STARWOOD HOTELS”, and other Starwood
trademarks and logos (the “Starwood Marks”), including, but not limited to (x)
the Westin trademarks and logos (the “Westin Marks”) and (y) the Sheraton
trademarks and logos (the “Sheraton Marks”), all of which marks are referred to
collectively as the “Affiliation Marks.”  Hotel Manager hereby grants to Golf
Manager the right to use the Starwood Marks and the Westin Marks in the
operation of the Golf Facilities and the conduct of business therein subject to
the terms and conditions set forth in this Golf Agreement and for so long as the
Resort Management Agreement exists.  Golf Manager shall not have the right to
use the Starwood Marks or the Westin Marks in any other way, and shall have no
right to use any of the other Affiliation Marks.  The standards for use and
reproduction of the Starwood Marks and the Westin Marks are attached as Exhibit
I and Exhibit J, respectively.

 

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(c)                                  Golf Manager shall maintain the quality of
the services provided in conjunction with the Affiliation Marks at a level which
is satisfactory to Hotel Manager and at all times in compliance with the
specifications furnished by Hotel Manager, which level and specifications shall
be reasonably consistent with those ordinarily observed by, and imposed upon,
other operations at the Resort and other first-class resorts with golf
facilities in the Tarpon Springs, Florida area.  Hotel Manager shall have the
right to enter the Golf Facilities at any time during normal business hours for
the purpose of ensuring that Golf Manager is in fact complying with the
requirements of this Golf Agreement.

 

(d)                                 The rights granted to Golf Manager in this
Article 13 shall be non-assignable and, upon any assignment or attempted
assignment of such rights by Golf Manager, all of the Golf Manager’s rights
under this Article 13 shall be immediately forfeited and terminated.

 

(e)                                  Golf Manager acknowledges that Hotel
Manager is the owner or licensee of all right, title and interest in and to the
Affiliation Marks and the good will associated therewith, and Golf Manager
agrees never to contest Hotel Manager’s title thereto or the validity of any
service mark, trademark or trade name application for registration therefor
filed or registration therefor obtained by Hotel Manager.  Golf Manager agrees
to execute any and all documents necessary to maintain all of Hotel Manager’s
rights in the Affiliation Marks and to complete any other actions necessary to
perfect Hotel Manager’s rights in the Affiliation Marks.  All use of the
Affiliation Marks by the Golf Manager shall inure to the benefit of Hotel
Manager.  Golf Manager acknowledges that Golf Manager shall acquire no ownership
rights in the Affiliation Marks through the use thereof and that any and all
rights that may arise through Golf Manager’s use of the Affiliation Marks are
the sole and exclusive property of Hotel Manager.

 

(f)                                    Hotel Manager shall have the exclusive
right to determine the existence of infringement of the Affiliation Marks and
Golf Manager shall have no right whatsoever to file or maintain a suit for
infringement of the Affiliation Marks.

 

(g)                                 Hotel Manager may require Golf Manager to
use the Hotel Manager’s designated trademark or copyright notation either on or,
as appropriate, adjacent to the Affiliation Marks and on all advertising or
promotional literature upon which the Affiliation Marks appear.

 

(h)                                 Golf Manager shall not use any Affiliation
Marks, or make any reference to the existence or terms of this Golf Agreement,
in any publicity or advertising without the prior approval of Hotel Manager,
which approval may be withheld in Hotel Manager’s sole discretion.

 

(i)                                     Upon termination of the Golf Agreement,
Golf Manager agrees to immediately discontinue all use of the Affiliation Marks
and to refrain from using any trade name, trademark or service mark confusingly
similar to the Affiliation Marks.

 

13.02                 Golf Manager Trademarks.

 

(a)                                  Except as described in Article 4.01(y) or
as expressly approved by Hotel Manager, Golf Manager shall not use the name
“Troon” or any other trademark or logo owned by Golf Manager in connection with
the identification, promotion or operation of the Golf

 

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Facilities, nor shall Golf Manager include merchandise with the “Troon” logo in
the inventory of the retail facilities within the Golf Facilities, it being
understood, as provided above, that the Golf Facilities are to be marketed and
operated under the name “The Westin Innisbrook Golf Resort.”  Subject to Hotel
Manager’s consent, in its sole discretion, Golf Manager’s “Troon” logo may be
included in an approved secondary location and size on apparel sold at the Golf
Facilities.

 

(b)                                 In the event Hotel Manager consents to any
use of the “Troon” name in any manner in connection with the identification,
promotion, or operation of the Golf Facilities, the following general provisions
shall apply:

 

(i)                                     Hotel Manager acknowledges that Golf
Manager is the owner or licensee of all right, title and interest in and to or
is the licensee of the trademark Troon®, and others (the “Troon Marks”) and the
good will associated therewith, and Hotel Manager agrees never to contest Golf
Manager’s title thereto or the validity of any service mark, trademark or trade
name application for registration therefor filed or registration therefor
obtained by Golf Manager.  Hotel Manager agrees to execute any and all documents
necessary to maintain all of Golf Manager’s rights in the Troon Marks and to
complete any other actions necessary to perfect Golf Manager’s rights in the
Troon Marks.  All use of the Troon Marks by the Hotel Manager shall inure to the
benefit of Golf Manager.  Hotel Manager acknowledges that Hotel Manager shall
acquire no ownership rights in the Troon Marks through the use thereof and that
any and all rights that may arise through Hotel Manager’s use of the Troon Marks
are the sole and exclusive property of Golf Manager.

 

(ii)                                  Golf Manager shall have the exclusive
right to determine the existence of infringement of the Troon Marks and Hotel
Manager shall have no right whatsoever to file or maintain a suit for
infringement of the Troon Marks.

 

(iii)                               Hotel Manager shall not use any Troon Marks,
or make any reference to the existence or terms of this Golf Agreement, in any
publicity or advertising without the prior approval of Golf Manager, which
approval may be withheld in Golf Manager’s sole discretion.

 

(iv)                              Upon termination of the Golf Agreement, Hotel
Manager agrees to immediately discontinue all use of the Troon Marks and to
refrain from using any trade name, trademark or service mark confusingly similar
to the Troon Marks.

 

13.03                 Trademarks.  Golf Manager shall comply with the terms and
provisions of Article 11 of the Resort Management Agreement with respect to the
“The Westin Innisbrook Golf Resort” name.

 

ARTICLE XIV
OTHER AGREEMENTS

 

14.01                 Customer Lists.  Hotel Manager and Owner has unlimited
access to guest information relating directly to the Golf Facilities and Resort,
and may use such information for any purpose.  Golf Manager shall make available
to Hotel Manager and Owner its guest

 

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information relating to the Golf Facilities for use as determined by Hotel
Manager as Owner, as the case may be.

 

Golf Manager shall have access to and may use lists of Golf Facilities patrons
to perform its obligations under this Golf Agreement, but in no event may Golf
Manager use such information to promote Affiliated Facilities or the preferred
customer program operated by Golf Manager, except as expressly authorized below,
or make such lists or related data available to third parties.  Hotel Manager
may specifically authorize Golf Manager to use such information, and/or Hotel
Manager may provide access to Golf Manager to guest information relating to the
Resort for persons who do not use the Golf Facilities, and/or guest information
from other projects managed by Hotel Manager or affiliates, pursuant to the
express written terms of a Cross Marketing Program.  Golf Manager and its
affiliates shall make no use of and shall have no rights to such data after the
completion of the specific Cross Marketing Program, and in no event may such
data or any derivative data be used by Golf Manager and its affiliates after
expiration or termination of the Term except to the extent that such persons
have responded to such a Cross Marketing Program.

 

Golf Manager may provide access to its customer data relating to other
properties pursuant to the express terms of a Cross Marketing Program; provided,
however, that Hotel Manager and its affiliates shall make no use of and shall
have no rights to such data after the completion of the specific Cross Marketing
Program and in no event may such data or any derivative data be used by Hotel
Manager and its affiliates after expiration or termination of the Term except to
the extent that such persons have responded to such a Cross Marketing Program.

 

For purposes of this Article 14.01, “Cross Marketing Program” shall mean
advertising and other promotional efforts conducted on a one-time basis or
conducted over time, conducted in each instance pursuant to parameters agreed to
in advance in writing by Hotel Manager and Golf Manager.  Either party may at
any time withdraw approval for future advertising or other promotional efforts
under a cross marketing program or require changes thereto.

 

With respect to data for which access is terminated as provided above, the Party
required to terminate access thereto shall provide reasonable notice of such
termination to the other Party.

 

14.02                 Estoppel Certificates.  On request at any time, and from
time to time, during the term of this Golf Agreement, either Party shall
execute, acknowledge, and deliver to the other Party or any mortgagee of the
Golf Facilities, within five days following such Party’s receipt of written
request therefor, a certificate:(i) certifying that this contract has not been
modified and is in full force and effect, (or, if there have been modifications,
that the same is in full force and effect as modified and specifying the
modification); (ii) stating whether, to the best knowledge of the signatory of
such certificate, any default exists, including any Event of Default, and if so
specifying each default of which the signatory may have knowledge; and (iii)
providing any additional information reasonably requested by such Party or Owner
or a mortgagee; provided, however, in no event shall any Party be required to
agree to any modifications or waivers with respect to the Golf Agreement or
other agreements then in effect between Hotel Manager and Golf Manager.

 

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14.03                 Course Closure.  In order to coordinate use of the Golf
Facilities, the Golf Manager and Hotel Manager shall agree as long as possible
in advance on the period when each golf course shall be closed for seeding or
other necessary purposes.

 

14.04                 Use of Golf Facilities by Hotel Manager.  Hotel Manager’s
executive staff (general manager, operations manager, director of sales and
marketing, controller, and their guests) and Owner’s board of directors,
executives, staff and their guests, shall be able to play golf without charge
for greens and cart fees at times when tee times are available.  Hotel Manager’s
sales and marketing staff and their sales prospects and convention and event
planners shall be able to play golf without charge for greens and cart fees in
connection with a legitimate business development effort when approved in
writing by the director of sales and marketing, the general manager or the
operations manager, and when tee times are available.

 

14.05                 Unrecovered Charges.  Unrecovered charges (i.e., unpaid
Guest bills) shall be proportionately allocated back to the sources of the
charges.  In addition, Hotel Manager, including Hotel Manager’s customer service
staff, shall have the authority to resolve Guest-related complaints involving
the Golf Facilities without the consent of the Golf Manager, including by
refunding or discounting Golf Facilities (greens and cart fees) charges and
other reparations.  Golf Manager will fully cooperate with Hotel Manager,
including providing required information to enable Hotel Manager to resolve
complaints consistent with Hotel Manager’s policies and determinations.  The
Golf Facilities will proportionately participate in Hotel Manager’s internal
charges for addressing complaints by a charge to Operating Expenses, based on
the Golf Facilities’ relative share of charges subject to the complaint.

 

14.06                 Relocation of Troon Institute.  In the event that portion
of the Resort known as “Parcel F” is sold during the Term of this Agreement,
Golf Manager agrees that it shall cooperate in any request from Owner or Hotel
Manager to relocate the Troon Golf Institute from its current location as shown
on Exhibit K attached hereto to the location shown on Exhibit L attached hereto
at Owner’s expense and on terms and conditions to be agreed upon by Golf
Manager, Hotel Manager and Owner.

 

14.07                 Non-Competition.  Golf Manager shall not, during the Term
of this Golf Agreement, without Owner’s prior written approval in each instance,
which may be withheld in Owner’s sole and absolute discretion, enter into any
new management or consulting agreements for or relating to, or make any new
investment in, any “golf destination resort” located within a fifty (50) mile
radius of the Resort (the “Radius Restriction”), along with any of the following
golf destination resorts:  (i) PGA National Golf Resort, (ii) Saddlebrook
Resort, (iii) Marriott Sawgrass Resort, (iv) Grand Cypress Resort, and (v) PGA
Village, Port St. Lucie (regardless of whether such resorts fall inside or
outside of the Radius Restriction); provided, however, the sole exception to the
prohibition against Golf Manager entering into a management or consulting
agreement for or at any golf destination resorts subject to the Radius
Restriction or with respect to the aforesaid five (5) golf destination resorts
shall be with respect to any of the aforesaid golf destination resorts during
the period that they may be owned by either of Starwood Hotels & Resorts
Worldwide, Inc. or Goldman Sachs & Co., or entities controlled by either or both
of such persons.  In the event Golf Manager obtains and proceeds to enter into
any such management or consulting agreement, Golf Manager shall pay to Owner
within thirty (30) days after Golf Manager’s actual receipt thereof (without
demand, deduction, offset or delay) a royalty equal to

 

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20% of the management fee or consulting fee income received by Golf Manager from
such management or consulting agreement during the Term of this Golf Agreement. 
The Parties acknowledge and agree that any breach by Golf Manager of this
Article 14.07 may result in irreparable injury to Owner and, therefore, Golf
Manager agrees and consents that, in addition to any other remedies that may be
available to it at law or equity (which shall include, without limitation, the
right to seek monetary damages (including, without limitation, the right to seek
damages related to lost profits at the Resort) which may be greater than the
amount paid by Hotel Manager to Golf Manager under this Golf Agreement), as well
as the termination of this Golf Agreement, Hotel Manager or Owner shall be
entitled to a temporary restraining order and a permanent injunction to prevent
a breach or contemplated breach of this Article 14.07.  For the purposes hereof,
a “golf destination resort” shall mean a golf course or courses physically
integrated with a lodging component (which shall include transient lodging
(e.g., a traditional hotel) along with rental pool, timeshare or interval
ownership, facilities) and that are together marketed as a golf destination, and
at which guests of the lodging component, utilize more than 40% of the tee times
(determined on a historical basis at an existing golf facility and on the
developer’s development pro forma for a golf facility under construction)
available at such golf facility in any year.  Notwithstanding anything to the
contrary in the foregoing, this Article 14.07 shall not be applicable to golf
facilities that are exclusively private clubs (i.e., golf facilities that have
neither a resort play or other public play component). Golf Manager agrees that
the terms of this Article 14.07 (including, without limitation, the duration and
the Radius Restriction) are reasonable and that any breach of or default by Golf
Manager of this Section 14.07 will cause damage to Hotel Manager and Owner in an
amount difficult to ascertain.  Accordingly, notwithstanding anything to the
contrary herein, in addition to any other relief to which Hotel Manager and
Owner may be entitled, Hotel Manager and/or Owner shall be entitled, without
proof of actual damages, to such injunctive relief as may be ordered by any
court of competent jurisdiction, including, without limitation, any injunction
restraining any violation of this Section 14.07.

 

14.08                 Mortgage.  Golf Manager acknowledges that Owner shall have
the right to encumber all of the assets that comprise the Resort, any part
thereof, or any interest therein, including the real estate on which the Resort
is to be constructed, the Resort building and all improvements thereto, all
receivables relating to the Resort and all FF&E and hotel equipment and
operating supplies placed in or used in connection with the operation of the
Resort as contemplated in any mortgage that is entered into by Owner, and to
assign to any mortgagee as collateral security for any loan secured by the
mortgage, all of Owner’s right, title, and interest in and to this Golf
Agreement.

 

14.09                 SNDAs.  Golf Manager agrees that, upon request of Owner,
Golf Manager shall execute one or more subordination, non-disturbance and
attornment agreement(s) in the form attached hereto as Exhibit M.

 

ARTICLE XV
DISPUTE RESOLUTION

 

15.01                 Alternative Dispute Resolution Required.  Except as
otherwise permitted under Article 14.07, the Parties shall resolve any dispute
that may arise in connection with this Golf Agreement through a two-step
resolution process administered by

 

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J.A.M.S./Endispute, Inc. or its successors and according to the procedures set
forth in Article 10 of the Resort Management Agreement.

 

ARTICLE XVI
MISCELLANEOUS PROVISIONS

 

16.01                 Miscellaneous.

 

(a)                                  Benefit of Owner.  The Parties understand
and agree that each of the representations and warranties of each of the Parties
set forth herein are for the benefit of Owner and that Owner is relying on the
truth, accuracy and completeness of such representations and warranties in its
execution and delivery of this Golf Agreement.  The Parties further agree that
Owner is a third party beneficiary of this Golf Agreement, and the Parties shall
not amend, restate, modify, terminate or waive any provision hereof without
Owner’s prior written consent in each instance, which consent may be denied in
Owner’s sole and absolute discretion.

 

(b)                                 Unenforceability.  Unenforceability for any
reason of any provision of this Golf Agreement shall not limit or impair the
operation or validity of any other provision of this Golf Agreement; provided,
however, that in lieu of such unenforceable provision, there shall be added
automatically as a part of this Golf Agreement a provision as similar in terms
to such unenforceable provision as may be possible and be enforceable.

 

(c)                                  Counterparts.  This Golf Agreement may be
executed in any number of counterparts, and by each Party hereto in separate
counterparts, each of which when executed shall be deemed to be an original
instrument, but all of which together shall constitute one and the same
instrument.

 

(d)                                 Cooperation.  The Parties shall cooperate
with each other to execute and deliver such instruments and documents and take
such actions as may be required, or as a party may reasonably deem desirable, to
effectuate the provisions and intent of this Golf Agreement.  The Parties agree
to cooperate with each other in the management of the Golf Facilities as
provided herein, and each Party shall endeavor, in good faith, to promptly
resolve any conflicts or issues that arise under this Golf Agreement.  Golf
Manager’s duty to cooperate shall extend to cooperating with Hotel Manager in
any disputes with Owner concerning the operation of the Golf Facilities and may
require Golf Manager to participate in mediation or arbitration, but any costs
or expenses incurred by Golf Manager in connection with its participation in
such disputes or proceedings at the request of Hotel Manager shall be reimbursed
to Golf Manager by Hotel Manager or Owner.

 

(e)                                  Non-Waiver.  Failure of either Party to
exercise any right hereunder or to enforce any breach hereof shall not operate
as a waiver of such right or breach or of any other right or breach.  Failure on
the part of either Party to notify the other Party of any breach or default
hereunder, irrespective of how long such failure continues, shall not constitute
a waiver by such Party of its rights or remedies under this Golf Agreement.

 

(f)                                    Entire Agreement.  This Golf Agreement
represents the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings of the
Parties concerning the same.  No provision of this Golf Agreement

 

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shall be waived or altered or otherwise amended except pursuant to an instrument
in writing signed by the Party to be charged and no consent to any departure by
any Party from the provisions of this Golf Agreement shall be effective except
pursuant to an instrument in writing signed by the party who is claimed to have
so consented and then such consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

(g)                                 Attorneys’ Fees.  In the event suit is
brought or an attorney is retained by either Party to this Golf Agreement to
enforce the terms of this Golf Agreement or to collect for the breach hereof or
for the interpretation of any provision herein in dispute, the prevailing Party
shall be entitled to recover, in addition to any other remedy, reasonable
attorneys’ fees, court costs, costs of investigation and other related expenses
incurred in connection therewith.  If suit is commenced, attorneys’ fees shall
be fixed by the court.

 

(h)                                 Interpretation.  This Golf Agreement shall
be construed according to its fair meaning and neither for nor against either
Party hereto irrespective of which Party caused the same to be drafted.  Each of
the Parties acknowledges that it has been, or has had the opportunity to be,
represented by an attorney in connection with the preparation and execution of
this Golf Agreement.  The section headings in this Golf Agreement shall not
affect its interpretation.

 

(i)                                     Binding Effect.  This Golf Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective permitted successors and assigns.  Except as expressly provided
herein, no person or entity other than the Parties hereto shall obtain any
rights or benefits under or by virtue of this Golf Agreement.

 

(j)                                     Controlling Law.  This Golf Agreement
shall be governed by and construed in accordance with the laws of the State of
South Carolina without regard to its choice of law principles.

 

(k)                                  Capacity.  Each person signing below
represents and warrants that he or she is fully authorized to execute and
deliver this Golf Agreement in the capacity set forth beneath his or her
signature.

 

(l)                                     Owner’s Approval.  In any instance where
Owner’s prior written approval is required under this Golf Agreement, Golf
Manager may accept Hotel Manager’s representation that such Owner’s approval has
been obtained by Hotel Manager unless Owner advises Golf Manager in writing to
the contrary, excepting, however, in the case of the provisions in Sections
4.01(g), 4.01(s), 5.01, 8.02, 8.03, 9.01, 10.01, 12.01 and Article XXIV, and in
the case of any amendment or termination of this Golf Management Agreement,
Owner’s actual, direct written approval shall be required.

 

(m)                               Telecopy Signatures.  Signatures to this Golf
Agreement transmitted by telecopy shall be valid and effective to bind the Party
so signing; provided, however, that such party shall thereafter promptly deliver
an execution original of this Golf Agreement with its actual signature.  Each
party to this Golf Agreement agrees to be bound by its own telecopied signature
and to accept the telecopied signature of the other Party to this Golf
Agreement.

 

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(n)                                 Notices.  Unless otherwise expressly
provided in this Golf Agreement, all consents, approvals, notices or other
communications provided for in this Golf Agreement shall be in writing and shall
be delivered personally during normal business hours, or sent by a nationally
recognized overnight delivery service (such as FedEx) as follows:

 

If to Hotel Manager:

 

With a copy to:

 

 

 

Westin Management Company South

 

Starwood Hotels & Resorts Worldwide, Inc.

c/o Starwood Hotels and Resorts Worldwide, Inc.

 

1111 Westchester Avenue

1111 Westchester Avenue

 

White Plains, New York 10604

White Plains, New York 10604

 

Fax (914) 640-8260

Fax (914) 640-8260

 

Attention: General Counsel

Attention: General Manager

 

 

 

 

 

 

 

 

If to Golf Manager:

 

With a copy to:

 

 

 

Troon Golf L.L.C.

 

Troon Golf L.L.C.

15044 North Scottsdale Road, Suite 300

 

15044 North Scottsdale Road, Suite 300

Scottsdale, Arizona 85254

 

Scottsdale, Arizona  85254

Tel: (480) 606-1000

 

Tel: (480) 606-1000

Fax: (480) 606- 1010

 

Fax: (480) 606-1010

Attention:  President

 

Attention:  Mr. Timothy S. Schantz

 

 

 

If to Owner:

 

 

 

 

 

GTA-IB LLC

 

With a copy to:

c/o Golf Trust of America, Inc.

 

O’Melveny & Myers LLP

14 North Adgers Wharf

 

275 Battery Street, Suite 2600

Charleston, South Carolina 29401

 

San Francisco, California 94111-3305

Tel: (843) 723-4653

 

Tel: (415) 984-8833

Fax: (843) 723-0479

 

Fax: (415) 984-8701

Attention: Mr. W. Bradley Blair, II

 

Attention: Peter T. Healy, Esq.

 

or at such other addresses (and facsimile numbers) as from time to time are
designated by notice to the other Party.  Any notice personally delivered shall
be deemed given on the date of delivery or refusal.  Any notice sent by
overnight delivery service shall be deemed given upon the date such notice was
properly deposited and prepaid, with the overnight delivery service for delivery
the following business day; provided, however, the time period within which a
response to any such notice must be given shall not commence to run until the
following business day.  A copy of any such notice shall, concurrently with such
delivery or sending, be transmitted by facsimile to the receiving Party at the
facsimile number indicated.  Upon request, a Party shall send copies of any
notice or communication by ordinary mail as instructed by the other Party.

 

(o)                                 Confidentiality.  Owner and the Parties
agree that the matters set forth in this Golf Agreement are strictly
confidential.  In addition, Owner and the Parties agree to keep strictly
confidential all information of a proprietary or confidential nature about or
belonging to a

 

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party to which the other party gains or has access by virtue of the relationship
between the parties.

 

Except as disclosure may be required to obtain the advice of professionals or
consultants, or financing for the Resort from an institutional lender, or in
furtherance of a permitted assignment of this Golf Agreement, or as may be
required by law or by the order of any government, governmental unit or tribunal
including, without limitation, the Securities and Exchange Commission (and the
rules and regulations promulgated thereunder or thereby), each party shall make
every effort to ensure that such information is not disclosed to the press or to
any other third person or entity without the prior consent of the other Party. 
The obligations set forth in this Section 16.01 shall survive any termination of
this Golf Agreement.  The Parties shall coordinate with one another on all
public statements whether written or oral and no matter how disseminated,
regarding their contractual relationship as set forth in this Golf Agreement, or
the performance by either of them of their respective obligations under this
Golf Agreement.

 

16.02                 Compliance with Laws.  Owner, Hotel Manager and Golf
Manager shall, as an expense of the Golf Facilities, and to the extent of their
respective responsibilities under this Golf Agreement, endeavor to assure that
the business being conducted at the Golf Facilities shall comply with all
statutes, ordinances, laws, rules and regulations, orders and requirements of
any federal, state and local government or department having jurisdiction with
respect to the use, ownership or operation of the Resort, including orders of
the local Board of Fire Underwriters or any other body that may have similar
functions.

 

16.03                 No Partnership.  Nothing contained in this Golf Agreement
is intended to give rise to nor shall be construed to give rise to or create a
partnership, joint venture, or lease between Hotel Manager and Golf Manager.

 

16.04                 Jurisdiction and Venue.  The Parties agree that the
appropriate state or federal court with subject matter jurisdiction in South
Carolina is the exclusive venue for any litigation between the Parties
concerning this Golf Agreement.  Each Party hereby waives any right to transfer
or change venue of any litigation brought in any court of competent jurisdiction
by any other Party to enforce its rights under this Golf Agreement.

 

16.05                 Due Diligence.  Golf Manager has inspected the Golf
Facilities and is satisfied as to the present condition of the Golf Facilities
and its ability to manage the Golf Facilities in a manner fully consistent with
the terms of this Golf Agreement.

 

[Remainder Of This Page Has Been Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this instrument has been duly executed as of the Effective
Date.

 

 

 

“Hotel Manager”

 

 

 

WESTIN MANAGEMENT COMPANY
SOUTH,

 

a Delaware Corporation

 

 

 

By

/s/ Nadine Greenwood

 

 

 

Its

Authorized Signatory

 

 

 

 

 

 

“Golf Manager”

 

 

 

TROON GOLF L.L.C., a Delaware limited
liability company

 

 

 

By

/s/ Timothy S. Schantz

 

 

 

Its

Executive Vice President

 

 

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OWNER CONSENT AND AGREEMENT TO CERTAIN PROVISIONS

 

The undersigned, being the Owner identified in the foregoing Golf Agreement,
hereby consents to the execution of the Golf Agreement and agrees that execution
and performance of the Golf Agreement shall not be interpreted to be
inconsistent with or in violation of the Resort Management Agreement between the
undersigned Owner and Hotel Manager.  Owner agrees and acknowledges that (a)
Hotel Manager is executing the Golf Agreement as agent for and on behalf of
Owner, (b) Owner is responsible for all monies due Golf Manager pursuant to the
express terms of the Golf Agreement, including the Base Management Fee, the
Supplemental Fee and all other fees and expenses payable or reimbursable to Golf
Manager, and for all other obligations due Golf Manager under the Golf
Agreement, such that if and to the extent Hotel Manager does not pay or perform
any such item, Owner is fully responsible therefore, and (c) Owner hereby
approves the terms and provisions of the Golf Agreement.  Owner acknowledges
this Golf Agreement is entered into pursuant to an affiliation relationship
between Golf Manager and an affiliate of Hotel Manager, relating to various golf
courses at Hotel Manager’s and its affiliates’ resorts.  However, Owner
acknowledges that all terms, provisions and financial matters related to
management and operation of the Golf Facilities are set forth in the Golf
Agreement.  Owner shall not be bound by any modification of the Golf Agreement
unless or until it approves the same in writing.

 

Dated this 15th day of July, 2004.

 

 

 

GTA-IB, LLC, a Florida limited liability
company

 

 

 

 

 

By:

/s/ W. Bradley Blair, II

 

 

 

Its

President

 

 

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