Document:

Exhibit 10.1

 

AMENDMENT NO. 3 TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDMENT NO. 3 TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of
September 29, 2006 is executed with reference to the Third Amended and Restated
Credit Agreement (as amended from time to time, the “Credit Agreement”) dated
as of April 25, 2006, among Harrah’s Operating Company, Inc., a Delaware
corporation (the “Company”), Harrah’s Entertainment, Inc., a Delaware
corporation (the “Parent”), the Lenders referred to therein, and Bank of
America, N.A., as Administrative Agent. 
Capitalized terms used but not defined herein are used with the meanings
set forth for those terms in the Credit Agreement.

RECITALS

A.            The credit facilities provided by
the Lenders under the Credit Agreement have heretofore consisted of Aggregate
Commitments in the principal amount of US$4,000,000,000.

B.            Pursuant to Section 2.6 of the
Credit Agreement, the Company has requested an increase in the credit
facilities under the Credit Agreement by means of  US$1,000,000,000 in additional Commitments
contemplated herein (the “Additional Commitments”).  The Additional Commitments consist entirely
of revolving commitments.

C.            The Company has also requested that
the Lenders establish a sublimit for the making of Loans under the Credit
Agreement denominated in Euros and Sterling in an amount which does not exceed
US$1,000,000,000 at any time.  It is
anticipated that each of the Lenders will ratably participate in Euro and
Sterling Loans made pursuant to this sublimit, other than Lenders
submitting an Alternative Currency Opt-Out Designation (as described below).

D.            Banc of America Securities LLC and
Wells Fargo Bank, N.A. have served as Joint Lead Arrangers and Joint Book
Managers for the additional credit facilities contemplated by this Amendment.

E.             Certain of the Lenders already
party to the Credit Agreement which are designated as the “Increasing Lenders”
on Schedule 1 hereto have agreed to extend Additional Commitments under the
Credit Agreement.

F.             The Company has also requested
certain amendments to the maximum permitted Total Debt Ratio and to the
definition of EBITDA set forth in the Credit Agreement.

G.            The Company, Parent and the Administrative Agent,
acting with the written consent of the Requisite Lenders pursuant to Section
11.2 of the Credit Agreement, have agreed to amend the Credit Agreement as set
forth herein.

AGREEMENT

NOW, THEREFORE, the parties
hereto hereby agree as follows:

1.             Defined Terms.   Section 1.1 of the Credit Agreement is hereby amended
to add the following additional defined terms thereto (or, in the case of any
such term already defined therein, so that such defined term reads in full as
follows with the amended text shown in bold and italics for the convenience of
the reader):

  
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“Alternative
Currency” means either Euro or Sterling, as applicable.

“Alternative
Currency Advances” means Advances made pursuant to Section 2.1A in either
Alternative Currency by each Lender which is not an Alternative Currency Opt-Out
Lender.

“Alternative
Currency Loan” means the group of loans that are comprised of Committed
Advances denominated in either Alternative Currency.

“Alternative Currency
Opt-Out Designation” means an Alternative Currency Opt-Out Designation
submitted by a Lender, substantially in the form of Exhibit J.

“Alternative Currency
Opt-Out Lender” means, as of each date of determination, a Lender as to
which an Alternative Currency Opt-Out Designation is then effective.

“Alternative
Currency Sublimit” means an amount equal to the lesser of the Aggregate
Commitments and the Alternative Currency equivalent of US$1,000,000,000.  The Alternative Currency Sublimit is part of,
and not in addition to, the Aggregate Commitments.

“Applicable Time”
means, with respect to any borrowings and payments in any Alternative Currency,
the local time in the place of settlement for such Alternative Currency as may
be determined by the Administrative Agent, to be necessary for timely
settlement on the relevant date in accordance with normal banking procedures in
the place of payment.

“Designated Eurodollar
Market” means, with respect to any Eurodollar Rate Loan:

(a)                                  the London Eurodollar Market; or

(b)                                 if prime banks in the London Eurodollar
Market are at the relevant time not accepting deposits of Dollars or if the
Administrative Agent determines that the London Eurodollar Market does not
represent at the relevant time the effective pricing to the Lenders for
deposits of Dollars in the London Eurodollar Market, the Cayman Islands Eurodollar
Market; or

(c)                                  if prime banks in the Cayman Islands
Eurodollar Market are at the relevant time not accepting deposits of Dollars or
if the Administrative Agent determines that the Cayman Islands Eurodollar
Market does not represent at the relevant time the effective pricing to the
Lenders for deposits of Dollars in the Cayman Islands Eurodollar Market, such
other Eurodollar Market as may from time to time be selected by the
Administrative Agent with the approval of Borrowers and the Requisite Lenders; or

(d)                                 in the case of Alternative
Currency Loans, the prime banks in London or other applicable offshore
interbank market for such currency.

“Dollar Equivalent”
means, at any time, (a) with respect to any amount denominated in Dollars, such
amount, and (b) with respect to any amount denominated in any
Alternative Currency or any L/C Alternative Currency, the
equivalent amount thereof in Dollars as determined by the Administrative Agent
at such time on the basis of the Spot Rate (determined in respect of the most
recent Revaluation Date) for the purchase of Dollars with such Alternative Currency or L/C
Alternative Currency.

  
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“EMU
Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

“Euro” means the lawful currency of the Participating
Member States introduced in accordance with the EMU Legislation.

“Eurodollar Base Rate”
means, for such Interest Period:

(a)                                  the rate per annum equal to the rate
determined by the Administrative Agent to be the offered rate that appears on
the page of the Telerate screen (or any successor thereto) that displays an
average British Bankers Association Interest Settlement Rate for deposits in
Dollars in the relevant currency (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period; or

(b)                                 if the rate referenced in the preceding
clause (a) does not appear on such page or service or such page or service
shall not be available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other service
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars in the relevant currency (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period; or

(c)                                  if the rates referenced in the preceding
clauses (a) and (b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in Dollars for
delivery on the first day of such Interest Period in Same Day Funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch (or
other Bank of America branch or Affiliate) to major banks in the
London or other offshore interbank
market for such currency at their
request at approximately 4:00 p.m. (London time) two Business Days prior to the
first day of such Interest Period.

“Eurodollar
Business Day” means any Business Day on which dealings in Dollar deposits, or the relevant Alternative Currency,
are conducted by and among banks in the Designated Eurodollar Market.

“Eurodollar Rate
Advance” and “Eurodollar Rate Loan” mean, respectively, a Committed
Advance or a Committed Loan made hereunder that bears interest at the
Eurodollar Rate.  All Alternative
Currency Loans must be Eurodollar Rate Loans.

“Facility Office”
means (a) the United States office or offices of that Lender, or (b) if
identified by that Lender, such other office or offices notified by a Lender to
the Administrative Agent in writing as the office or offices through which it
will perform its obligations under this Agreement.

  
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“Mandatory
Cost” means, with respect to any period, the percentage rate per annum
determined in accordance with Schedule 1.2.

“Participating
Member State” means each state so described in any EMU Legislation.

“Revaluation Date”
means (a) with respect to any Loan, each of the following:  (i) each date of a Borrowing of a
Eurocurrency Rate Loan denominated in an Alternative Currency, (ii) each date
of a continuation of a Eurocurrency Rate Loan denominated in an Alternative
Currency, and (iii) such additional dates as the Administrative Agent shall
determine or the Requisite Lenders shall require (or that the Company may
request); and (b) with respect to any Letter of Credit, each of the
following:  (i) each date of issuance of
a Letter of Credit denominated in an Alternative Currency, (ii) each date of an
amendment of any such Letter of Credit having the effect of increasing the
amount thereof (solely with respect to the increased amount), and
(iii) each date of any payment by the L/C Issuer under any Letter of
Credit denominated in an Alternative Currency, and (iv), such additional dates
as the Administrative Agent or the L/C Issuer shall determine or the Requisite
Lenders shall require (or that the Company may request).

“Same Day Funds”
means (a) with respect to disbursements and payments in Dollars, immediately
available funds, and (b) with respect to disbursements and payments in an
Alternative Currency, same day or other funds as may be determined by the
Administrative Agent or the L/C Issuer, as the case may be, to be customary in
the place of disbursement or payment for the settlement of international
banking transactions in the relevant Alternative Currency.

“Sterling” and “£”
mean the lawful currency of the United Kingdom.

2.             Amendment to Section 1.9 (Exchange Rates).   Section 1.9 of the Credit Agreement is
hereby amended in its entirety to read as follows (with the added text shown in
bold and italics for the convenience of the reader):

“1.9         Exchange
Rates.  The Administrative Agent shall
determine the Spot Rates as of each Revaluation Date to be used for calculating
Dollar Equivalent amounts of Credit Extensions
and Outstanding Amounts denominated in Alternative Currencies or L/C
Alternative Currencies.  Such Spot Rates
shall become effective as of such Revaluation Date and shall be the Spot Rates
employed in converting any amounts between the applicable currencies until the
next Revaluation Date to occur.  Except
for purposes of financial statements delivered by Loan Parties hereunder or
calculating financial covenants hereunder or except as otherwise provided
herein, the applicable amount of any currency (other than Dollars) for purposes
of the Loan Documents shall be such Dollar Equivalent.”

3.             Alternative Currency Loans.    The Credit Agreement is amended to add a
new Section 2.1A, to add a subline in the amount of US$1,000,000,000 for the
making of Alternative Currency Advances as set forth below, provided
that notwithstanding anything contained in this Amendment or the Credit Agreement
to the contrary, it is expressly agreed that no Lender shall be required to
make any Committed Advance (whether in Dollars or any Alternative Currency),
and no Letter of Credit or Swing Line shall be made or issued, which would
result in the Dollar Equivalent of that Lender’s exposure in respect of the
Total Outstandings being in excess of that Lender’s Commitment:

  
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“2.1A Alternative Currency Subline.

(a)           The Lenders hereby severally agree to
make Alternative Currency Advances in such amounts as any Borrower may request
provided that giving effect to such Committed Advances, the aggregate
Outstanding Amount of all Loans denominated in Alternative Currencies shall not
exceed the Alternative Currency Sublimit, provided that (i) no Lender
which is an Alternative Currency Opt Out Lender shall participate in
Alternative Currency Advances, and (ii) no Alternative Currency Advances may be
made prior to October 1, 2006.   Each
Alternative Currency Advance shall be deemed to be a Committed Advance.  If on the date any Alternative Currency
Advance is to be made, any Lender is an Alternative Currency Opt-Out Lender,
then the remaining Lenders shall, subject to the conditions set forth herein,
make the entire amount of the requested Alternative Currency Advance (and, for
this purpose, their respective percentages of the Aggregate Commitments shall
be adjusted to eliminate the Alternative Currency Opt-Out Lenders).

(b)           In addition to the conditions set
forth in Sections 2.1, 2.2 and 2.3, each Alternative Currency Loan shall be
made pursuant to a Request for Loan, which shall indicate the Alternative
Currency in which such Alternative Currency Loan shall be denominated.  All such Requests for Loans shall be received
by the Administrative Agent, at Administrative Agent’s Office, not later than
10:00 a.m. Las Vegas local time at least four Eurodollar Business Days before
the date of such Alternative Currency Loan.  
Each Alternative Currency Loan must be in an amount which is not less than
3,000,000 of the currency units of the relevant Alternative Currency.

(c)           Each Lender which is from time to
time legally prohibited from providing Advances to the Company in either of the
Alternative Currencies, or which is operationally unable to provide Advances to
the Company in either of the Alternative Currencies, shall deliver to the
Administrative Agent an Alternative Currency Opt-Out Designation.  Each Alternative Currency Opt-Out Designation
shall become effective five Business Days following its delivery to the
Administrative Agent, and the Lender providing the same shall thereupon be
designated as an Alternative Currency Opt-Out Lender and will not participate
in any Alternative Currency Advances.  
Each Alternative Currency Opt-Out Lender shall promptly terminate its
Alternative Currency Opt-Out Designation should the facts underlying its
delivery change.

(d)           The Lenders acknowledge that the
Alternative Currency Opt-Out Lenders will not participate in the making of the
Alternative Currency Advances, that interest payments in respect of the
Alternative Currency Advances shall be solely for the account of the Lenders
participating in such Advances, and that, except as set forth in clause (e)
below, payments made in the Alternative Currencies shall be applied ratably to
the payment of principal and interest in respect of the Alternative Currency
Advances made in the relevant currency (and that, for this purpose, payments in
respect of the Advances shall not be ratable in respect of the Lenders).

(e)           During the existence of a Default or
Event of Default, the Requisite Lenders may require that any or all of the then
outstanding Alternative Currency Loans denominated in an Alternative Currency
be prepaid.  If any Event of Default is
asserted in writing by the Administrative Agent or by the Requisite Lenders,
then any payments received by the Administrative Agent (whether in Dollars or
Alternative Currencies) shall be applied ratably to all of the outstanding
Advances (regardless of the currency in which such Advances are outstanding).

  
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(f)            The Alternative Currency Loans may,
at any time and from time to time, voluntarily be paid or prepaid in whole or
in part without premium or penalty, except that with respect to any voluntary
prepayment under this Section 2.1A(f):

(i)            any partial prepayment shall be in
an amount which is not less than 3,000,000 units of the applicable Alternative
Currency (or any lesser outstanding amount);

(ii)           the Administrative Agent shall have
received written notice of any prepayment, by 10:00 a.m. Las Vegas local time, three
Eurodollar Business Days before the date of prepayment, which notice shall
identify the date and amount of the prepayment and the Alternative Currency
Loan(s) being prepaid;

(iii)          each prepayment of principal shall be
accompanied by payment of interest accrued to the date of payment on the amount
of principal paid; and

(iv)          any payment or prepayment of all or
any part of any Eurodollar Rate Loan on a day other than the last day of the
applicable Interest Period shall be subject to Section 3.8(d).

(g)           If the Administrative Agent notifies
the Borrowers at any time that, by reason of any fluctuation in the values of
Alternative Currencies versus the Dollar:

(i)  the aggregate Outstanding Amount of the
Committed Loans denominated in Alternative Currencies as any Revaluation Date,
if converted to their Dollar Equivalent, exceeds the Alternative Currency
Sublimit then, within four Eurodollar Business Days after receipt of such
notice, the Borrowers shall prepay Loans in an aggregate amount sufficient to
reduce such Outstanding Amount as of such date of payment to an amount not to
exceed the Alternative Currency Sublimit; or

(ii)  the aggregate Outstanding Amount of the
Committed Loans (including the Outstanding Amount of the Committed Loans
denominated in Alternative Currencies converted to their Dollar Equivalent)
exceeds the Aggregate Commitments then, within two Eurodollar Business Days
after receipt of such notice, the Borrowers shall prepay Loans in an aggregate
amount sufficient to reduce such Outstanding Amount, as of such date of
payment, to an amount not in excess of the Aggregate Commitments.

(h)           Interest with respect to all
Alternative Currency Loans shall be paid in the same manner as Committed Loans
as provided for in this Agreement, provided that, except as otherwise provided
in Sections 3.1(d) and 3.9 of this Agreement, in the case of any Alternative
Currency Loan of any Lender which is lent from a Facility Office in the United
Kingdom or a Participating Member State, such Alternative Currency Loans shall
bear interest at a rate per annum equal to the Eurodollar Rate for that
Alternative Currency Loan plus the Eurodollar Margin plus the
Mandatory Cost.  With respect to Section
3.9 of this Agreement, the Mandatory Cost shall be added to the interest rate
set forth therein with respect to any Alternative Currency Loans.

  
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(i)            Interest and fees with respect to
Alternative Currency Loans shall be computed in a manner which is consistent
with the basis upon which rates are quoted for the relevant Alternative
Currency Loans by the Administrative Agent (i.e., where the underlying
quotation assumes a year of 360 days and the actual number of days elapsed,
interest shall be charged in a manner consistent with such quotation).  It is anticipated that the Administrative
Agent will ordinarily provide rate quotations in respect of Alternative
Currency Loans based on a year of 360 days and the actual number of days
elapsed, but the Administrative Agent may provide rates quoted on other bases
(and shall charge interest consistently therewith), to the extent that rates
would otherwise be unavailable or impractical in the relevant Alternative
Currency, in each case by notice to the Company and each affected Lender.

(j)            Payments generally shall be made in
the same manner as Committed Loans as provided for in this Agreement, provided
that, except as otherwise expressly provided in this Agreement, and except with
respect to principal of and interest on Loans denominated in an Alternative
Currency, all payments by the Borrowers hereunder with respect to principal and
interest on Alternative Currency Loans shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed,
at the applicable Administrative Agent’s Office in the same Alternative
Currency and in Same Day Funds not later than the Applicable Time specified by
the Administrative Agent on the dates specified herein.  All payments due under this Agreement will
made in the United States.  If, for any
reason, any Borrower is prohibited by any Law from making any required payment
hereunder in an Alternative Currency, such Borrower shall make such payment in
Dollars in the Dollar Equivalent of the Alternative Currency payment amount.”

4.             Special Conditions to Any Alternative Currency
Advance.  In addition to the
conditions set forth in Section 8.2 of the Credit Agreement, the obligation of
each Lender to make any Committed Advance denominated in an Alternative
Currency shall be subject to the condition that there shall not have occurred
any change in national or international financial, political or economic
conditions or currency exchange rates or exchange controls which in the
reasonable opinion of the Administrative Agent or the Requisite Lenders would
make it impracticable for such Committed Advance to be denominated in the
relevant Alternative Currency.

5.             Judgment Currency.  If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due under the Credit Agreement or
under any other Loan Document in one currency into another currency, the rate
of exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the first currency with such
other currency on the Eurodollar Business Day preceding that on which final
judgment is given.  The obligation of
each Borrower in respect of any such sum due from it to the Administrative
Agent or the Lenders under the Credit Agreement or under the other Loan Documents
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than that in which such sum is denominated in accordance with the
applicable provisions of the Credit Agreement (the “Agreement Currency”), be
discharged only to the extent that on the Eurodollar Business Day following
receipt by the Administrative Agent of any sum adjudged to be so due in the
Judgment Currency, the Administrative Agent may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so
purchased is less than the sum originally due to the Administrative Agent from
any Borrower in the Agreement Currency, such Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Administrative
Agent or the Person to whom such obligation was owing against such loss.  If the amount of the Agreement Currency so
purchased is greater than the sum originally due to the Administrative Agent in
such currency, the Administrative Agent agrees to return the amount of any
excess to such Borrower (or to any other Person who may be entitled thereto
under applicable law).

  
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6.             Addition of Exhibit J (Alternative Currency Opt-Out
Designation) and Schedule 1.2 (Mandatory Costs).   The Credit Agreement is hereby amended to
add thereto:

(a)          Exhibit A to this Amendment (the form
of Alternative Currency Opt-Out Designation) as Exhibit J thereto; and

(b)         Exhibit B to this Amendment (Mandatory
Costs) as Schedule 1.2 thereto.

7.             Increase to the Aggregate
Commitments.  Subject to the terms
and conditions set forth in this Amendment, the Aggregate Commitments are
hereby increased from US$4,000,000,000 to US$5,000,000,000.  Each Increasing Lender severally agrees to
assume the Additional Commitments set forth on Schedule 1.  The Company and the Administrative Agent
hereby accept the Additional Commitments of the Increasing Lenders.

8.             Parent’s Reaffirmation of the
Guarantied Obligations.  Parent
hereby confirms that the Obligations guaranteed by Parent under the Parent Guaranty
shall include the Aggregate Commitments (as increased hereby).

9.             Assumption by Increasing Lenders.  By signing this Amendment, each of the
Increasing Lenders agrees that, concurrently with the effectiveness of this
Amendment, it shall increase its Commitment under the Credit Agreement in the
amount set forth opposite such Increasing Lender’s name on Schedule 1.

10.           Representations and Warranties of
Parent and the Company.  Parent and
the Company each hereby represents and warrants to the Administrative Agent and
the Lenders that (a) no Default or Event of Default has occurred and remains
continuing as of the date hereof, and (b) each of the representations and
warranties of and Parent and the Company set forth in the Credit Agreement is
true and correct in all material respects as of the date hereof (other than
those which relate by their terms solely to another date).

11.           Representations and Warranties of
Increasing Lenders.  Each of the
Increasing Lenders hereby represents and warrants to the Company and the
Administrative Agent that it has duly authorized, executed and delivered this
Amendment and it is legally entitled to enter into the transactions
contemplated herein.

12.           Amendment to EBITDA.  Section 1.1 of the Credit Agreement is hereby
amended so that the definition of “EBITDA” reads in full as follows (with the
added text shown in bold and italics for the convenience of the reader):

“EBITDA” means, for
any period, the sum of (y) Net Income for such period plus (in
each case to the extent related to Parent and the Restricted Subsidiaries and
deducted in determining such Net Income):

(a)                                  income taxes;

(b)                                 Interest
Expense;

(c)                                  depreciation
and amortization;

(d)                                 minority
interest;

  
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(e)                                  extraordinary
losses (or minus extraordinary gains);

(f)                                    Pre-Opening
Expenses;

(g)                                 nonrecurring
non-cash charges, and after deduction of any nonrecurring non-cash
gains; and

(h)                                 any
item of expense for equity-based compensation;

provided that, in
calculating “EBITDA,” and to the extent otherwise included in Net Income for
any portion of the relevant period:

(i)                                     the operating
results of each New Project which commences operations and records not less
than one full fiscal quarter’s operations during the relevant period shall be
annualized on a straight line basis; and

(ii)                                  EBITDA shall be
adjusted, on a pro forma basis, (A) to include the operating results of each
Person or group of operating assets or property acquired by Parent and the
Restricted Subsidiaries during the relevant period for a consideration which is
in excess of $50,000,000, and (B) to exclude the operating results of each
Person or group of operating assets (1) which are sold or otherwise disposed of
by Parent and the Restricted Subsidiaries for a consideration in excess of
$50,000,000, (2) whose operations are discontinued during the relevant period,
or (3) which are owned by or contributed to an Unrestricted Subsidiary.

plus, without
duplication, (z) Distributed Unrestricted EBITDA for that period.”

13.           Amendment to Section 6.5 (Total
Debt Ratio).  Section 6.5 of the
Credit Agreement is hereby amended in its entirety to read as follows (with the
added text shown in bold and italics for the convenience of the reader):

6.5           Total Debt Ratio.  Permit the Total Debt Ratio as of the last
day of any Fiscal Quarter to exceed (a) 5.00:1.00 for any Fiscal Quarter
through and including the Fiscal Quarter ending December 31, 2007 or (b) 4.50:1.00 as of the last
day of any subsequent Fiscal Quarter.

15.           Increasing Lenders.  Each Lender which signs this Amendment as an
Increasing Lender confirms that it has approved the terms of this Amendment as
a part of the Requisite Lenders.

16.           Conditions Precedent.  The effectiveness of this Amendment is
subject to the satisfaction of each of the following conditions:

(a)           Documentation.  Administrative Agent shall have received the
following documents (in such number as Administrative Agent shall reasonably
request), each in form and substance acceptable to Administrative Agent:

(1)           a fully executed
original of this Amendment;

(2)           if requested by any
Increasing Lender, an executed Committed Advance Note in favor of that Lender
in the amount of its Commitment;

  
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(3)           consents to the
execution and delivery of this Amendment, substantially in the form of Exhibit
C hereto, from those of the Lenders which, with the Increasing Lenders signing
this Amendment, constitute the Requisite Lenders (as determined prior to the
effectiveness of this Amendment);

(4)           a Certificate of a
Responsible Official signed on Parent’s and the Company’s behalf by a Senior
Officer certifying that (A) that attached thereto are the resolutions
adopted by Parent and the Company approving or consenting to the increase in
the Commitments, and (B) certifying that, before and after giving effect
to such increase, (1)  each of the representations and warranties of
Parent and the Company set forth in the Credit Agreement is true and correct as
of the date hereof (other than those which relate by their terms solely to
another date), and (2) no Default or Event of Default exists or would result
from the increase to the Commitments; and

(5)           the favorable legal
opinion of Latham & Watkins, LLP and internal counsel to the Company as to
such matters as the Administrative Agent may request.

(b)           The Administrative
Agent shall have received, for the account of each of the Increasing Lenders, a
fee of 15 basis points times the amount of the Additional Commitments assumed
by the Increasing Lenders pursuant to this Amendment;

(c)           The Company shall
have paid to the Administrative Agent for the account of the Lead Arrangers
certain fees as set forth in a letter agreement with the Lead Arrangers; and

(d)           Such other
assurances, certificates, documents, consents or opinions as the Administrative
Agent reasonably may require.

17.           Confirmation.  Parent and the Company each acknowledges that
the terms and provisions of the Credit Agreement and each of the other Loan
Documents remain in full force and effect.

18.           Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of California.

  
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19.           Counterparts.  This Amendment may be executed in
counterparts in accordance with Section 11.7 of the Credit Agreement.

IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as of the date first written above
by their duly authorized representatives.

	
  

  	
   

  	
   

  	
  HARRAH’S ENTERTAINMENT, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Jonathan S. Halkyard, Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  HARRAH’S OPERATING COMPANY, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Jonathan S. Halkyard, Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BANK OF AMERICA, N.A., as Administrative

  Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

  
 11TERMINATION AND RELEASE AGREEMENT

This Termination and
Release Agreement (“Agreement”) is made as of the 28th day of
September, 2006 (the “Execution Date”), by and among (i) GTA-IB,
LLC, a Florida limited liability company (“Owner”), (ii) Golf Trust
of America, Inc. (“GTA”), as guarantor with respect to paragraphs 2, 4, 5,
6, 16, 17, 18, 19, 20, 21, 22, 23 and 27 herein, and (iii) Westin Hotel
Management L.P., a Delaware limited partnership, as successor in interest to
Westin Management Company South, a Delaware corporation (“Operator,” and
together with Owner and GTA, the “Parties”).

W I T N E S S E T H :

WHEREAS, Owner and
Operator are parties to a Management Agreement, dated as of July 15, 2004 (the “Management
Agreement”), pursuant to which Operator agreed to manage the resort known
and designated as “The Westin Innisbrook Golf Resort” and located near Tarpon
Springs, Florida (the “Resort”); and

WHEREAS, Owner and
Operator have mutually agreed to terminate the Management Agreement as of the Termination
Date (as defined below) and Operator has agreed to continue to manage the
Resort during the period from the Execution Date to the Termination Date (the “Transition
Period”), on and subject to the terms and conditions of this Agreement.

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending to be legally bound, agree as
follows:

1.             Definitions.  Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Management Agreement.

2.             Operating Capital.   Within three business days following the
Execution Date, Owner agrees to deposit in the Operating Account the sum of
$600,000 (the “Initial Capital Supplement”), representing the Parties’
current estimate of the amount of additional working capital that will be
needed, when added to the existing cash resources in the Operating Account and
the Fund and taking into account the Parties presently anticipated revenues and
expenses of the Resort during the Transition Period, to allow for the continued
operation of the Resort during the Transition Period and the payment of Fees
and Charges provided for in paragraph 4 below.  In addition, within three business days
following the Execution Date, Owner shall cause all funds (other than funds for
existing leases through December 31, 2006, previously approved capital
expenditures and a contingency reserve of $150,000) presently in the Fund to be
transferred to the Operating Account and Owner hereby authorizes and instructs
Operator to use all available amounts in the Operating Account (including those
amounts transferred from the Fund) to pay expenses of operating the Resort
during the Transition Period.  Operator
agrees to use good faith efforts to manage such expenses, including the
continuation of the practice of managing account payable deferrals during
periods of limited cash, to the extent reasonably feasible in light of the
obligations of the Resort to third parties (including Operator), in a manner
reasonably calculated to minimize or avoid the need for Owner to supply
additional funds to the Resort during the Transition Period beyond the Initial
Capital Supplement.  Nevertheless, the
Parties acknowledge 

 

and agree that Operator
shall not be required (a) to forego or delay payment of any amounts owed
to Operator or any of its Affiliates pursuant to the Management Agreement
during the Transition Period or in connection with the termination of the
Management Agreement on the Termination Date, or (b) to advance any of its
own funds in order to manage the Resort during the Transition Period, and,
accordingly, if the actual needs of the Resort require additional cash
resources for Operator to operate the Resort during the Transition Period,
Owner agrees to deposit such additional funds in the Operating Account as may
actually and reasonably be needed by the Resort during the Transition Period,
with such deposit being made within five business days following Operator’s
written request for such additional funds, accompanied by a reasonably detailed
explanation of the need for such additional funds (with any dispute as to the
amount of funds so required being submitted to resolution in accordance with
paragraph 19 below).

3.             Termination.

(a)           Subject to and in accordance with the
terms hereof, the Management Agreement will be terminated effective as of
11:59.59 P.M., Eastern Standard Time on October 31, 2006 (the “Termination
Date”).  Notwithstanding the
termination of the Management Agreement, (i) provided that all amounts due
and payable to Operator under this Agreement have been paid as and when due,
Operator shall permit Owner to continue to have access to Operator’s “SAP”
accounting system for the operation of the Resort between the Termination Date and
January 31, 2007, at a monthly charge of $2,000 (for a total charge of
$6,000, payable in advance on the Termination Date), and on such reasonable
terms and conditions as Operator may establish to protect its proprietary
rights in such accounting system (additionally, Operator shall provide Owner
with “view only” access through March 31, 2007 to the Resort’s
historical SAP data), (ii) Operator shall cooperate with Owner for up to
90 days following the Termination Date to assist Owner in completing technical
aspects of the transition of management (including facilitating a transfer of
the Resort’s accounting data from the SAP system to Owner’s replacement system
upon the termination of Owner’s access to the SAP system and making Kim
Chappell, the current General Manager of the Resort, available to Owner on a
consulting basis), provided that Owner reimburses Operator for actual personnel
costs and other reasonable costs incurred by Operator to perform its obligation
to cooperate with Owner pursuant to this paragraph 3(a)(ii), and
(iii) those provisions of the Management Agreement that either expressly
survive termination by their terms or that require action by any of the parties
thereto upon or subsequent to termination (as such provisions may be modified herein),
including without limitation Section 4.5 of the Management Agreement and
any provisions related to indemnification and/or provisions requiring
reimbursement of expenses, shall survive the Termination Date.  As of the Execution Date, Operator is not
aware of any such indemnification obligations or unpaid reimbursable expenses,
except as set forth in the attached Exhibit A.  All references in the Management Agreement to
the “termination date” or the “date of termination”, applicable pursuant to
this Agreement, shall mean the Termination Date defined herein.

(b)           During the Transition Period, the
Management Agreement shall remain in full force and effect, except as modified
herein, and Operator shall be entitled to receive all Management Fees and other
fees and charges required to be paid pursuant to the Management Agreement
during the Transition Period as and when due under the terms of the Management
Agreement.

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4.             Fees.

(a)           Without limiting Operator’s right to
continue to be paid its Management Fee and other fees and charges required to
be paid pursuant to the Management Agreement during the Transition Period,
Operator shall be entitled to receive from, and will be paid by Owner, at the
times and in the manner described below, all outstanding (i) accrued and
unpaid Management Fees (including any portion of the previously accrued Base
Fees as to which payment may have been deferred pursuant to Section 3.5.4(a) of
the Management Agreement, and including any other accrued but unpaid Base Fees
and Incentive Fees; (ii) any accrued and unpaid fees and charges described
in Section 3.1 of the Management Agreement, including the unpaid balance of the
Marketing Fee for 2006 (but excluding that portion of the Marketing Fee
designated as the “Golf Marketing Fund” pursuant to paragraph A of that
certain side letter between Operator and Owner dated as of
July 15, 2004) and the Central Reservations Fees accrued and unpaid
through the Termination Date; and (iii) any amounts due and owing from
Owner to Operator as a Reimbursable Expense pursuant to the terms of the
Management Agreement, net of any amount due and owing from Operator to Owner
(the amounts described in clauses (i) through (iii) above being referred to
collectively as, the “Fees and Charges”).  Notwithstanding Section 3.1 of the
Management Agreement, the Marketing Fee for the months of November and December
2006 shall be estimated utilizing the most recent operational forecast for the
resort dated September 18, 2006 wherein the projected year end EBITDA number equals
$370,292.  All portions of the Fees and
Charges that are able to be determined and documented by Operator as of the
Termination Date, based on the financial information then available, shall be
paid to Operator on the Termination Date from funds then in the Operating
Account or otherwise supplied by Owner. 
With respect to any portions of the Fees and Charges that are not able
to be finally determined as of the Termination Date (the “Additional Fees
and Charges”), Operator shall deliver to Owner on or prior to the
Termination Date its reasonable estimate of such amounts, based upon the
financial information then available (the “Estimated Additional Fees and
Charges”) and the Parties shall follow the following procedure to finalize
and reconcile the calculation payment of such amounts to Operator:  (x) the Parties shall deposit into
escrow with a recognized national title insurance company mutually acceptable
to the Parties (the “Escrow Holder”), from funds then remaining in the
Operating Account, supplemented if necessary with additional funds provided by
Owner, an amount equal to 100% of the Estimated Additional Fees and Charges,
with instructions to the Escrow Holder to disburse to Operator an amount equal
to 90% of the Estimated Additional Fees and Charges and to retain the remaining
portion of the deposited funds until the Parties have completed their
reconciliation of the Additional Fees and Charges; and (y) within 30 days
following the Termination Date, the Parties shall make a final determination of
the actual Additional Fees and Charges, whereupon any remaining escrowed funds
shall be distributed as appropriate (and the Parties shall make any necessary
payments to each other) so that, following such distribution or payment,
Operator will have received the full amount of the Fees and Charges and Owner
will have received any other escrowed funds.

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(b)           On the Termination Date, Operator
shall transfer to an account or accounts to be specified by Owner, by wire
transfer of immediately available funds, all of the funds in the Operating
Account and all other funds of Owner or the Resort under the control of
Operator, as of such date (collectively, the “Owner Funds”) in excess of
the amounts to be paid to Operator or deposited into escrow with the Escrow Holder
pursuant to paragraph 4(a) above.

(c)           Any dispute between Owner and
Operator regarding any of the calculations or adjustments contemplated in this
paragraph 4 shall be resolved in accordance with paragraph 20 herein.

5.             Termination Fee. 
On or before the earlier to occur of (a) March 31, 2008, or
(b) the date of any Sale of the Resort, Owner shall pay to Operator the
Termination Fee, calculated as of the Termination Date, pursuant to Section
4.4.2 of the Management Agreement.  At
Operator’s request, the Parties shall execute and record against the Resort a
memorandum confirming Owner’s obligation to pay Operator the Termination Fee as
described in this paragraph 5. 
Owner acknowledges that its obligation to pay the Termination Fee shall
survive the Termination Date.  For
avoidance of doubt, the Parties confirm that the Termination Fee does not
include the amounts described in Section 4.7.3 of the Management Agreement
which were to be paid to Operator under certain circumstances in connection
with a Sale of the Resort, and that such Section 4.7.3 shall be of no further
force or effect upon the termination of the Management Agreement on the
Termination Date.

6.             Guarantor.  GTA unconditionally
guarantees, as a primary obligor and not merely as a surety, Owner’s
obligations to make payments to Operator pursuant to paragraphs 2, 4, and 5
herein (“Guaranty Obligations”).  The Operator shall not be required to exhaust
any right or remedy or to take any action against the Owner as a condition to
collecting the Guaranty Obligations from Guarantor.  Owner and GTA agree that, as between
themselves, the Guaranty Obligations may be declared to be due and payable for
the purposes of this Agreement notwithstanding any stay, injunction or other
prohibition which may prevent, delay or vitiate any declaration. GTA hereby acknowledges that this guaranty and
the Guaranty Obligations shall in no way be affected, modified, diminished,
impaired or terminated by reason of any modifications, renewals, extensions or
amendments of the Management Agreement or this Agreement or any agreement,
instrument or document entered into pursuant thereto, whether or not notice
thereof is given to or consent is obtained from GTA.  GTA hereby waives the benefit of any guaranty
or suretyship defenses and of notice of the acceptance of this guaranty and
presentment and demand for payment, notice of non-payment, notice of dishonor,
protest, notice of protest, non-performance, non-observance and any other
defense, notice or demand to which GTA might be entitled.

7.             Books and Records.  During the Transition Period, Operator shall
make available to Owner (or its designee) the financial books and records of
the Resort in order to assist Owner in preparing for the orderly transition of
the Resort’s operations as of the Termination Date.  Such information shall be provided in a
prompt and reasonable manner so as not to disrupt the operations of the
Resort.  On the Termination Date, such
books and records shall be assigned and transferred to Owner in accordance with
Section 4.5.5 of the Management Agreement.

8.             Insurance. 
Owner and Operator acknowledge and agree that the insurance coverage
that Operator or any of its Affiliates provides or maintains as of the
Execution Date shall expire as of the Termination Date (subject to any rights
Owner or GTA may have to make 

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claims thereunder pursuant to the terms thereof after
the expiration of such insurance coverage), at which time Owner shall be
responsible for providing and maintaining all such insurance coverage, except
as set forth in paragraph 9 herein; provided, however,
that, after the Termination Date, Operator shall cooperate reasonably with
Owner and take all actions that Owner may reasonably request to make and
process all claims with respect to which the liability was incurred on or prior
to the Termination Date. For purposes of this paragraph 8, Operator
acknowledges and agrees that Troon Golf LLC is not an Affiliate of
Operator.  Nothing herein shall modify
any of the obligations of the insurer under the insurance coverage except the
expiration date thereof as aforesaid.

9.             Employee Matters. 
Operator shall terminate, or shall cause its Affiliates to terminate, at
Operator’s sole cost and expense, only the employment of the General Manager,
and Controller of the Resort, such termination to be effective as of the
Termination Date.  Owner has informed
Operator that Owner intends to make employment offers to the Director of Sales
and Marketing and the Director of Human Resources prior to the Termination
Date, and Operator confirms that it has no objections or reservations
concerning, and consents to, Owner initiating such employment offers.  Owner shall remain the employer of all Resort
Personnel other than the General Manager and Controller, through the Termination
Date, and as of any date subsequent to the Termination Date, Owner shall have
sole authority to make, and shall have sole responsibility and liability for,
any employment related decisions with respect to all Resort Personnel.  Notwithstanding the foregoing, the provisions
of Section 2.6.4 of the Management Agreement shall survive the Termination
Date.  Additionally, nothing contained in
the Management Agreement or this paragraph 9 shall prohibit any Resort Personnel
from transferring, at any time, to another property owned or managed by
Operator or its Affiliates; provided, however, that during the Transition
Period and for the 12-month period commencing on the Termination Date, Operator
agrees that the management level employees of Operator and its Affiliates shall
not initiate contact (or direct any other employee to initiate contact), with
any Resort Personnel (other than the General Manager and Controller) for the
purpose of soliciting such Resort Personnel to relocate from the Resort to any
other property owned or managed by Operator or its Affiliates.  For avoidance of doubt, the preceding
sentence shall not be construed to restrict or otherwise limit any transfer or
relocation of Resort Personnel that is initiated and requested by such Resort
Personnel.  Effective as of the
Termination Date, Operator and its Affiliates shall cease making any Benefit
Plans available to any Resort Personnel (unless any such Resort Personnel
transfer to another property owned or operated by Operator or its Affiliates in
a manner that permits or requires continuation of eligibility for participation
in such Benefit Plans).  Except as
otherwise described in the Management Agreement, any severance obligations
related to the Resort Personnel, excluding the General Manager and Controller,
shall be the sole responsibility of Owner. 
Operator shall have sole responsibility for any severance obligations
related to the General Manager or Controller. 
On or before the Termination Date, Owner shall notify all Resort
Personnel in writing (which notice shall be subject to Operator’s prior
approval) that effective as of the Termination Date, (a) Operator, and its
Affiliates, including Starwood Hotels & Resorts Worldwide, Inc.(“Starwood”)
shall no longer have any affiliation with the Resort, (b) none of the Benefit
Plans provided by Operator or its Affiliates, including Starwood, shall be
available to Resort Personnel, subject to any continuation coverage obligations
mandated by COBRA or as described above in this paragraph 9, and (c) any
references in any employee handbook or policy to Operator, and its Affiliates,
including Starwood, shall be of no further force or effect.

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10.           De-Identification.  Without limiting the obligations set forth in
Section 4.5.7 and 4.5.8 of the Management Agreement, as of the Termination
Date, Owner shall no longer refer to the name “Westin” or “Starwood” in
connection with the operation or management of the Resort and shall de-identify
the Resort as a Westin in all respects and for all purposes.  Owner shall remove (or cover so as to obscure
the Westin name) all “Westin” related sales and marketing materials (e.g., directories and brochures), signs, fixtures and
personal property from the Resort that contain the “Westin” trademark on or
prior to the date that the Resort may no longer use the name “Westin,” as set
forth above, and shall not order any additional supplies and documents
containing the name “Westin” or other trademarks or tradenames of Operator
after such date.  After the Termination
Date, Operator shall no longer allow reservations to be made at the Resort
through its call centers, reservations or distribution systems and shall remove
the Resort from its websites, including Westin.com and Starwoodhotels.com.

11.           Post-Termination Reservations.  Without limiting the obligations set forth in
Section 4.5.6 of the Management Agreement, Owner shall honor all reservations
made pursuant to the Management Agreement of any period on or after the
Termination Date provided they are identified and quantified by Operator in
writing for Owner prior to or on the Termination Date.  Operator shall take no action to divert or
frustrate confirmed or pending business at the Resort, including, without
limitation, contracts being negotiated or considered by prospective customers
and bookings occurring prior to, on or after the Termination Date; provided,
however, the mere notice that the Resort is no longer a Westin Managed Hotel
after the Termination Date shall not, in and of itself, be deemed to divert or
frustrate such confirmed or pending business.

12.           Third Party Payments.  Operator shall pay to Owner any amounts that
are paid to Operator by third parties after the Termination Date relating to
the Operation of the Resort (the “Third Party Payments”), promptly after receipt
thereof by Operator or any of its Affiliates, whether such amounts arise out of
acts, or failures to act, prior to, on or after the Termination Date; provided,
however, in the event Operator has not been paid in full the Fees and Charges
due pursuant to paragraph 4 above at the time of Operator’s receipt of any
such Third Party Payment, Operator shall have the right to retain such portion
of the Third Party Payment as may be less than or equal to the amount of the
outstanding unpaid Fees and Charges (with any portion of the Third Party
Payment in excess of the outstanding Fees and Charges being paid to Owner), and
any portion of the Third Party Payment so retained by Operator shall be applied
to reduce the amount of the outstanding Fees and Charges.

13.           Other Matters.  To the extent not otherwise described in
paragraphs 4 through 12 above, Owner and Operator shall reasonably cooperate
with each other to take the actions contemplated in Section 4.5 of the
Management Agreement.

14.           Waivers and Releases of Claims.

(a)           Mutual Release.

(i)            The releases set forth in Section
12.21 of the Management Agreement shall survive termination.  The following releases are in addition to and
supplemental to the aforesaid releases.

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(ii)           Subject only to the provisions of subparagraph
14(c) below, Owner, on its own behalf and on behalf of each of its present and
former members, partners, stockholders, trustees, beneficiaries, predecessors
with respect to the Management Agreement, successors, affiliates, subsidiaries,
parents, assigns, heirs, agents, directors, officers, employees,
representatives, and all Persons acting by, through, under or in concert with
them, or any of them (collectively, the “Owner Release Parties”) does hereby
release and forever discharge the Operator and each of its present and former
members, partners, stockholders, trustees, beneficiaries, predecessors,
successors, affiliates, subsidiaries, parents, assigns, heirs, agents,
directors, officers, employees, partners, representatives, and all persons acting
by, through, under or in concert with them, or any of them (collectively, the “Operator
Release Parties”), of and from any and all manner of action or actions, cause
or causes of action, in law or in equity, suits, debts, liens, contracts,
agreements, promises, liability, claims, demands, damages, losses, costs or
expenses, of any nature whatsoever, known or unknown, fixed or contingent,
whether now existing or hereafter arising based upon or relating to the
ownership, operation or management of any of the Resort prior to the Execution
Date (collectively, “Released Claims”), provided, however, that this
release shall not affect, waive, limit, modify or otherwise change in any
manner the Parties’ obligations set forth in this Agreement, which obligations
shall remain in full force and effect.

(iii)          Subject only to the provisions of
subparagraph 14(c) below, Operator, on its own behalf and on behalf of each of
the other Operator Release Parties, does hereby release and forever discharge
each of the Owner Release Parties of and from any and all manner of Released
Claims, provided, however, that this release shall not affect, waive,
limit, modify or otherwise change in any manner the Parties’ obligations set
forth in this Agreement, which obligations shall remain in full force and
effect.

(b)           Waiver of Unknown Claims.  It is the intention of the Parties that the
foregoing mutual releases shall be effective as a full and final accord and
satisfaction, and as a bar to all actions, causes of action, obligations, costs,
expenses, attorneys’ fees, damages, losses, claims, liabilities and demands of
whatsoever nature, character or kind, known or unknown, suspected or
unsuspected, relating to the Released Claims. 
Furthermore, the Parties hereby acknowledge that they are aware that
they or their attorneys may hereafter discover claims or facts in addition to
or different from those which they now know or believe to exist with respect to
the Resort or the Released Claims, but that it is their intention to hereby
fully, finally and forever settle and release all of the claims known or
unknown, suspected or unsuspected, now existing or hereafter arising, which the
Parties have or may have against each other based upon or relating to the
ownership, operation or management of the Resort prior to the Execution
Date.  In furtherance of such intention,
the releases herein given shall be and remain in effect as a full and complete
mutual release notwithstanding the discovery or existence of any such
additional different claims or facts.

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(c)           Reservation of Certain Rights.

(i)            The releases and waivers set forth
above shall not limit the rights of the Operator Release Parties and the Owner
Release Parties as against each other pursuant to Section 12.10 of the
Management Agreement with respect to third party claims, demands, actions
(including enforcement proceedings initiated by any governmental agency),
penalties, suits and liabilities (including the cost of defense, settlement,
appeal, and reasonable attorneys’ fees and costs, but excluding consequential
damages) to the extent that the same are (A) based on events occurring prior to
the Execution Date, and (B) first asserted by the third party claimant to the
Owner Release Parties and/or the Operator Release Parties in writing following
the Execution Date.  Each Party hereby
represents to the other that it has no actual knowledge of the assertion by a
third party claimant of any such claims, demands, actions, penalties, suits or
liabilities prior to the Execution Date (other than claims arising in the
ordinary course of the Resort’s operation and fully covered by insurance)
except as set forth in the attached Exhibit A.

(ii)           Further, the releases and waivers set
forth above shall not limit the right of any Party to enforce the obligations
of any other Party arising on or after the Execution Date, whether under this
Agreement (including, without limitation, the payment obligations of Owner
under paragraphs 2, 4 and 5 above or the payment obligations of Operator, if
any) or under the Management Agreement (as modified by this Agreement).

(d)           Ownership of Released Matters.  The Owner Release Parties and the Operator
Release Parties hereby warrant and represent to each other that they are the
sole and lawful owners of all rights, title and interest in and to all Released
Claims and that they have not heretofore assigned or transferred or purported
to assign or transfer to any other person any Released Claim or any part or
portion of any Released Claim.

(e)           On the Termination Date, Owner and
Operator agree to execute and exchange updated mutual waivers and releases in
the form of the attached Exhibit B.

15.           Representations and Warranties.

(a)           Owner hereby represents and warrants
to Operator as follows:

(i)            Owner has all requisite limited
liability company power and authority to enter into this Agreement and to incur
and perform its obligations hereunder. 
The execution, delivery and performance by Owner of this Agreement have
been duly authorized by all necessary company action on the part of Owner and
this Agreement will constitute a valid, legal and binding obligation of Owner,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights generally or by general
principles of equity.

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(ii)           The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (x) constitute a breach or violation of or default
under Owner’s governing documents, or (y) violate, conflict with or result in a
breach of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or permit
the termination or acceleration under, or result in the creation of any lien,
security interest or other encumbrance upon any of the properties or assets
used in the operation of the Resort under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, commitment,
agreement or other instrument or obligation to which Owner is a party or to
which the properties or assets of the Resort may be subject.  The consummation by Owner of the transactions
contemplated hereby will not require the consent or approval of any party to
any of the above or affect the validity or effectiveness of any of the above
and the execution, delivery and performance by Owner of this Agreement will not
constitute a breach or violation of or default under or require any notice or
filing under any law, rule or regulation or any judgment, decree, order,
governmental permit or license to which Owner is subject.

(b)           Operator hereby represents and
warrants to Owners as follows:

(i)            Operator has all requisite
partnership power and authority to enter into this Agreement and to incur and
perform its obligations hereunder.  The
execution, delivery and performance by Operator of this Agreement has been duly
authorized by all necessary partnership action on the part of Operator and this
Agreement will constitute a valid, legal and binding obligation of Operator,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights generally or by general
principles of equity.

(ii)           The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (x) constitute a breach or violation of or
default under Operator’s governing documents or (y) violate, conflict with or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or permit the termination or acceleration under, or result in the creation of
any lien, security interest or other encumbrance upon any of the properties or
assets used in the operation of the Resort under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, commitment,
agreement or other instrument or obligation to which Operator is a party or to
which the properties or assets of the Resort may be subject.  The consummation by Operator of the transactions
contemplated hereby will not require the consent or approval of any party to
any of the above or affect the validity or effectiveness of any of the above
and the execution, delivery and performance by Operator of this Agreement will
not constitute a breach or violation of or default under or require any notice
or filing under any law, rule or regulation or any judgment, decree, order,
governmental permit or license to which Operator is subject.

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16.           Further Assurances.  Owner and Operator shall take such
commercially reasonable actions following the Execution Date, as shall be
necessary or desirable to achieve an orderly transition of the management and
operation of the Resort.  Without
limiting the foregoing, Owner and Operator shall each execute such additional
documents as any Party may reasonably request from time to time prior to, on or
after the Termination Date to confirm the terms of this Agreement provided,
however, none of the foregoing shall expand or modify the rights or obligations
of the Parties as otherwise set forth in this Agreement.

17.           Confidentiality.  Without limiting the obligations set forth in
Section 12.17 of the Management Agreement, the Parties agree as follows:

(a)           Owner, Operator, and GTA each
covenant and agree that they will not disclose the terms and conditions of this
Agreement to any third party without the prior written consent of the other
Parties; provided, however, that any Party may disclose the terms of this
Agreement as required by law (including in connection with any litigation or
dispute pertaining to this Agreement, filings with local licensing authorities
or franchise regulators, and financial reporting requirements applicable to
public companies), or to (i) the beneficial owners of any of the Parties, (ii)
a financial lending institution in connection with the financing of the Resort,
(iii) consultants or professionals engaged in relation to the Resort on a need
to know basis, or (iv) potential purchasers of the Resort, their affiliates,
lending institutions, consultants, advisors, officers, management personnel or
investors.  The disclosing Party shall
take commercially reasonable steps to assure that third parties shall be
obligated to respect the terms of this paragraph 17 as a condition to such
disclosure.

(b)           Any press releases or other forms of
communications regarding the termination of the Management Agreement and
transition of management of the Resort shall be subject to the mutual approval
of Owner and Operator as provided in Section 12.17 of the Management Agreement.

18.           Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, except that the
arbitration provision herein shall be governed by the Federal Arbitration Act.

19.           Dispute Resolution.  Sections 10.1, 10.2, 10.4, and 10.5 of the
Management Agreement shall be replaced in their entirety by the provisions set
forth below (which, for avoidance of doubt, shall apply to any dispute arising
out of or relating either to this Agreement or the Management Agreement).

(a)           Any dispute arising out of or
relating to this Agreement (“Dispute”) shall be resolved solely by arbitration
(“Arbitration”) through a dispute resolution process administered by J.A.M.S./Endispute, Inc. or its successors
(“JAMS”), in accordance with the JAMS Streamlined Arbitration Rules and
Procedures (the “Streamlined Rules”), regardless of whether the amount at issue
in the Dispute exceeds $250,000.  An
Arbitration shall be deemed commenced by a Party when the Party sends a written
notice to JAMS, with a concurrent copy of the written notice to the other
Party, identifying the Dispute and requesting arbitration.

 10
 

 

(b)           The Parties agree that any Arbitration shall be final and binding
(without appeal or review), and further agree not to seek to vacate, overturn,
stay, or otherwise challenge any arbitration award or the enforcement thereof,
absent manifest mathematical error.

(c)           Arbitration must be initiated within one (1) year from the date on
which the Dispute giving rise to the Arbitration arose, and any Party who fails
to commence an Arbitration within such one-year period shall be deemed to have
waived any of its affirmative rights and claims in connection with the Dispute
and shall be barred from asserting such rights and claims at any time
thereafter.

(d)           The Arbitration, if it takes place,
shall be conducted at the JAMS offices in Atlanta, Georgia.

(e)           The prevailing party in any
Arbitration shall be entitled to recover its reasonable fees, costs, and
expenses relating to the Dispute, the Arbitration, and the enforcement of any
award issued pursuant to such Arbitration, including reasonable judicial and
extra-judicial attorneys’ fees, expenses, and disbursements.

20.           Jurisdiction, Venue, and Jury
Waiver.  Section 10.3 of the
Management Agreement shall be replaced in its entirety by the provision set
forth below (which, for avoidance of doubt, shall apply to any award resulting
from any Arbitration of a Dispute arising out of or relating either to this
Agreement or the Management Agreement).

“Each Party consents to the conversion of any arbitral award resulting
from any Arbitration to a judgment entered in the federal or state courts of
Florida and consents to submit itself to the personal jurisdiction of the
federal and state courts in the State of Florida for such purpose.  Each Party waives to the fullest extent
permitted by law trial by jury of any Dispute arising out of or relating to
this Agreement.”

21.           Expenses.  Except as provided in this Agreement and the
Management Agreement, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the Party incurring such fees or expenses, whether or not the transactions
contemplated hereby are consummated.

22.           Notices.  Any notice, statement or demand required to
be given under the terms of this Agreement shall be in writing, and shall be
either: (i) delivered by hand against receipt; or (ii) sent by
certified or registered mail, postage prepaid, return receipt requested; or
(iii) sent by a nationally utilized overnight delivery service; or (iv)
sent by facsimile (provided that a confirmatory copy is thereafter sent by a
nationally utilized overnight delivery service or certified or registered mail)
as follows:

 11
 

 

To Owner:

GTA-IB, LLC

c/o Golf Trust of
America, Inc.

10 North Adger’s
Wharf

Charleston, South
Carolina 29401

Attention:  Mr. W. Bradley Blair, II

Fax:  (843)
723-0479

GTA-IB, LLC

36750 US Highway 19 North

Palm Harbor, Florida
34684

Attention:  Mr. R. Keith Wilt

Fax:  (727)
942-5280

with a copy to:

O’Melveny &
Myers LLP

Embarcadero Center
West

275 Battery Street, Suite
2600

San Francisco, California
94111

Attention:  Peter T. Healy, Esq.

Fax:  (415)
984-8701

To Operator:

Westin Hotel Management
L.P.

c/o Starwood Hotels &
Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

Attn:  General Counsel

Fax:  (914)
640-8260

With a copy to:

Heller Ehrman LLP

333 Bush Street

San Francisco,
California 94104

Attention:  Judith C. Miles, Esq.

Fax:  (415)
772-6268

or at such other address
as is from time to time designated by the Party receiving the notice.  Any such notice shall be deemed to have been
given on (x) the date of receipt if delivered personally, or by facsimile or
courier, or (y) the day that is five (5) Business Days after it shall have been
posted if transmitted by mail, whichever shall first occur, but the time period
for any response thereto or action in connection therewith shall not commence
to run until actual receipt or 

 12
 

 

rejection or inability to
deliver such notice.  This paragraph 22
shall be deemed to be notice to the Parties pursuant to Section 12.8 of the
Management Agreement of a change in the address for notices thereunder.

23.           Amendment; Waiver.  This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the Parties hereto.  The Parties may (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein. 
Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such Party by an officer, director or manager of such Party (provided that
any such waiver shall be effective only against the waiving Party and not any
other Party entitled to the benefit of the waived obligation).  The failure or delay by any Party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights nor shall any single or partial exercise
by any Party to this Agreement of any of its rights under this Agreement preclude
any other or further exercise of such rights or any other rights under this
Agreement.

24.           Entire Agreement; No Third Party
Beneficiary.  This Agreement (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter of this Agreement, except for the Management Agreement and (b)
is not intended to confer upon any person other than the Parties, the Owner
Release Parties and the Operator Release Parties (and their respective
successors and assigns) any rights or remedies. 
In the event any provision of this Agreement is inconsistent with any
provision of the Management Agreement, the terms of this Agreement will
control.

25.           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each of the
Parties and delivered to the other Parties.

26.           Interpretation; No Prejudice.  When a reference is made in this Agreement to
a paragraph or Exhibit, such reference shall be to a paragraph of, or an
Exhibit to, this Agreement unless otherwise indicated.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  Words
used in the singular form in this Agreement shall be deemed to import the
plural, and vice versa, as the sense may require, and words importing one
gender shall also include the other (or the neutral gender).  This Agreement has been jointly prepared by
the Parties hereto and the terms hereof shall not be construed in favor of or
against any Party on account of its participation in such preparation.

27.           Binding Effect.  This Agreement is binding upon and will inure
to the benefit of the Parties and their respective successors and permitted
assigns.

[Remainder of page intentionally
left blank.]

 13
 

 

IN WITNESS WHEREOF,
Operator and Owner, with respect to this entire Agreement, and GTA, with
respect to paragraphs 2, 4, 5, 6, 16, 17, 18, 19, 20, 21, 22, 23 and 27 of this
Agreement, acting by and through their proper and duly authorized directors,
members, managers, officers or other representatives, have each duly executed
this Agreement as of the date first set forth above.

	
  OWNER:

  
	
   

  
	
  GTA-IB, LLC

  
	
  A Florida
  limited liability company

  
	
   

  
	
   

  
	
  By:

  	
   /s/ W. Bradley Blair, II

  	
   

  
	
  Name:  W. Bradley Blair, II

  
	
  Title: President

  
	
   

  
	
   

  
	
  OPERATOR:

  
	
   

  
	
  WESTIN HOTEL
  MANAGEMENT LP,

  
	
  A Delaware
  limited partnership

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Marshall J.
  Donat

  	
   

  
	
  Name: Marshall
  J. Donat

  
	
  Title: V.P.
  & Assistant Secretary

  
	
   

  
	
   

  
	
  GUARANTOR:

  
	
   

  
	
  GOLF TRUST OF
  AMERICA, INC.,

  
	
  a Maryland
  corporation

  
	
  (solely with
  respect to paragraphs 2, 4, 5, 6, 16, 17, 18, 19, 20, 21, 22, 23 and 27
  above)

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ W. Bradley
  Blair, II

  	
   

  
	
  Name:W. Bradley
  Blair, II

  
	
  Title: President

  

 

 14

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