Document:

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

 

 

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.

 

2

 

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

 

5

 

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

 

6

 

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.

 

7

 

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,

 

8

 

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.

 

9

 

(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

 

10

 

(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

 

11

 

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,

 

12

 

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

 

13

 

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

 

14

 

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 

 

15

 

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.

 

16

 

(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.

 

17

 

(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

 

18

 

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

 

19

 

(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.

 

20

 

(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:

 

21

 

(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

 

22

 

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

 

23

 

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.

 

24

 

(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”,

 

25

 

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

 

26

 

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

 

27

 

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

 

28

 

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.

 

29

 

(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

 

30

 

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,

 

31

 

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;

 

32

 

(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 

 

33

 

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.

 

34

 

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 

 

35

 

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

 

36

 

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.

 

37

 

(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

 

38

 

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

 

39

 

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.

 

40

 

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

 

41

 

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 

 

42

 

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

 

43

 

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.

 

44

 

(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

 

45

 

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]

 

46

 

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

  	
   

  

 

47

 

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

  	
   

  
					

 

48Exhibit 10.7

 

LOAN
AGREEMENT

 

Elk Funding, L.L.C.

c/o Starwood Capital Group Global, L.L.C.

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as the “Lender”)

 

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina  29401

(Individually and collectively “Borrower”)

 

This Loan Agreement (“Agreement”) is entered
into as of July 15, 2004, by and between Lender and Borrower.

 

This Agreement applies to that certain loan
(the “Loan”) from Lender to Borrower in the amount of $2,000,000 evidenced by
that certain Promissory Note A in the amount of $700,000 and that certain
Promissory Note B in the amount of $1,300,000 each of even date herewith (“Note
A” and “Note B” respectively and, collectively, the “Note”).  The terms “Loan Documents” and
“Obligations,” as used in this Agreement, are defined in Note A and Note B,
respectively.  Note A is non-recourse to
Borrower as provided therein and is secured by that certain Assignment of
Defense and Escrow Agreement (the “Assignment”) from Borrower to Lender of even
date herewith.  Notwithstanding anything
contained in any Loan Document to the contrary, Note B is full recourse to
Borrower and is secured by (i) the Assignment, and (ii) those certain two
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing agreements
executed by Borrower for the benefit of Lender encumbering certain real and
personal property known as the Black Bear Golf Club and the Wekiva Golf Club as
more particularly described therein (collectively, the “Mortgage”).  A default under Note A shall constitute a
default under Note B and vice versa.

 

Relying upon the covenants, agreements,
representations and warranties contained in this Agreement, Lender is willing
to extend credit to Borrower upon the terms and subject to the conditions set
forth herein, and Lender and Borrower agree as follows:

 

REPRESENTATIONS.  Borrower represents that from the date of
this Agreement and until final payment in full of the Obligations:  Accurate Information.  All information now and hereafter furnished
to Lender is and will be materially true, correct and complete.  Authorization; Non-Contravention.  The execution, delivery and performance by
Borrower of this Agreement and other Loan Documents to which it is a party are
within its power, have been duly authorized as may be required and are the
legal, binding, valid and enforceable obligations of Borrower; and do not (i)
contravene, or constitute (with or without the giving of notice or lapse of
time or both) a violation of any provision of applicable law, a violation of
the organizational documents of Borrower, or a default under any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting Borrower, (ii) result in the creation or imposition of any lien
(other than the lien(s) created by the Loan Documents) on any of Borrower’s
assets, or (iii) give cause for the acceleration of any obligations of Borrower
to any

 

1

 

other creditor.  Asset Ownership. 
Borrower has good and marketable title to any collateral.  Discharge of Liens and Taxes.  Borrower has duly filed, paid and/or
discharged all taxes or other claims that may become a lien on any collateral,
except to the extent that such items are being appropriately contested in good
faith and an adequate reserve for the payment thereof is being maintained.  Compliance with Laws.  To its knowledge, Borrower is in material
compliance in all respects with all federal, state and local laws, rules and regulations
applicable to any collateral.  No
Litigation.  There are no
material pending or threatened suits, claims or demands against Borrower that
have not been disclosed by Borrower.

 

AFFIRMATIVE
COVENANTS. 
Borrower agrees that from the date hereof and until final payment in
full of the Obligations, unless Lender shall otherwise consent in writing,
Borrower will:  Access to Books and Records.  Allow Lender, or its agents, during normal
business hours, access to the books, records and such other documents related
to any collateral as Lender shall reasonably require, and allow Lender, at
Borrower’s expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof.  Compliance
with Other Agreements. 
Comply with all terms and conditions contained in this Agreement, and
any other Loan Documents.  Estoppel
Certificate.  Furnish, within
15 days after request by Lender, a written statement duly acknowledged of the
amount due under the Loan and whether offsets or defenses exist against the
Obligations.  Insurance.  Maintain adequate insurance coverage with
respect to any collateral against loss or damage of the kinds and in the
amounts customarily insured against by companies of established reputation
engaged in the same or similar businesses. 
Maintain
Properties.  Maintain,
preserve and keep any collateral in good repair, working order and condition,
making all replacements, additions and improvements thereto necessary for the
proper conduct of its business, unless prohibited by the Loan Documents.  Notice of Default and Other Notices.  (a) Notice of Default.  Furnish to Lender immediately upon becoming
aware of the existence of any condition or event which constitutes a Default
(as defined in the Loan Documents) or any event which, upon the giving of
notice or lapse of time or both, may become a Default, written notice
specifying the nature and period of existence thereof and the action which
Borrower is taking or proposes to take with respect thereto.  (b) Other Notices.  Promptly notify Lender in writing of (i) any material adverse
change with respect to collateral; and (ii) at least 30 days prior thereto, any
change in Borrower’s name or address as shown above, and/or any change in
Borrower’s structure.  Reports and
Proxies.  Deliver to Lender,
promptly, a copy of all financial statements, reports, notices, and all regular
or periodic reports required to be filed by Borrower with any governmental
agency or authority.

 

NEGATIVE
COVENANTS. 
Borrower agrees that from the date hereof and until final payment in
full of the Obligations, unless Lender shall otherwise consent in writing,
Borrower will not:  Default on Other Contracts or
Obligations.  Default on any
material contract with or obligation when due with respect to any collateral.  Government Intervention.  Permit the assertion or making of any
seizure, vesting or intervention by or under authority of any governmental
entity with respect to any collateral.  Judgment
Entered.  Permit the entry of
any monetary judgment or the assessment against, the filing of any tax lien
against, or the issuance of any writ of garnishment or attachment against any
collateral.  Limitation on Transfer or Issuance of
Membership Interests of Borrower. 
So long as any portion of the Loan remains outstanding, Golf Trust of
America, Inc. (“GTA”) shall not, directly or indirectly, transfer or otherwise
dispose of all or any part of its interest in Borrower, except that GTA (or its
wholly owned subsidiaries) may transfer their ownership interests in the
Borrower to a wholly controlled

 

2

 

affiliate or wholly owned subsidiary of
Borrower, or to a liquidating trust as described in GTA’s proxy statement dated
April 6, 2001.

 

ADVANCES.  The Loan shall be fully funded at closing
and the proceeds of the Loan shall be delivered to Borrower by federal wire
transfer to the deposit account referenced in the wiring instructions attached
hereto as Exhibit A.

 

CONDITIONS
PRECEDENT.  The
obligations of Lender to make the loan and any advances pursuant to this
Agreement are subject to the following conditions precedent:  Additional Documents.  Receipt by Lender of such additional
supporting documents as Lender or its counsel may reasonably request.

 

ASSIGNMENT.  Notwithstanding anything else contained in
the Loan Documents, the Loan and Loan Documents and the respective parties’
right, title, and interest therein shall not be assigned by Lender or Borrower
without the express written consent of the other, which consent may be withheld
in such other party’s sole discretion, except (i) Lender may assign its right,
title, and interest in the Loan and Loan Documents to a wholly controlled
affiliate or wholly owned subsidiary of Lender without the consent of Borrower,
and (ii) Borrower may assign its right, title, and interest in the Loan and
Loan Documents to a wholly controlled affiliate or wholly owned subsidiary of
Borrower, or to a liquidating trust as described in GTA’s proxy statement dated
April 6, 2001.

 

IN
WITNESS WHEREOF, Borrower and Lender, on the day and
year first written above, have caused this Agreement to be executed under seal.

 

 

	
   

  	
  GOLF TRUST OF AMERICA, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: GTA GP, Inc., its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  W. Bradley Blair, II

  	
   (SEAL)

  
	
   

  	
  Name: W. Bradley Blair, II

  	
   

  
	
   

  	
  Title: President and CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ELK FUNDING, L.L.C.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Jerome Silvey

  	
   

  
	
   

  	
  Its:

  	
   

  	
  EVP

  	
   

  
							

 

3

 

PROMISSORY NOTE A

(Non-Recourse)

 

$700,000.00

 

July 15, 2004

 

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina 
29401

(Hereinafter referred to as “Borrower”)

 

Elk Funding, L.L.C.

c/o Starwood Capital Group, L.L.C.

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as “Lender”)

 

Borrower promises to pay to the order of
Lender, in lawful money of the United States of America, at its office
indicated above or wherever else Lender may specify, the sum of Seven Hundred
Thousand and No/100 Dollars ($700,000.00) or such sum as may be advanced and outstanding from time to time, with
interest on the unpaid principal balance at the rate and on the terms provided
in this Promissory Note A (including all renewals, extensions or modifications
hereof, this “Note”).

 

LOAN AGREEMENT.  This Note is subject to the provisions of
that certain Loan Agreement between Lender and Borrower of even date herewith,
as modified from time to time.

 

SECURITY. 
Borrower has granted Lender a security interest in the collateral described in
that certain Assignment of Defense and Escrow Agreement (the “Assignment”) from
Borrower to Lender of even date herewith and is otherwise non-recourse to
Borrower as set forth below.

 

INTEREST RATE.  Interest
shall accrue on the unpaid principal balance of this Note from the date hereof
at the prime rate of Bank of America, N.A., or its successor in interest (as
announced by Bank of America, N.A., or its successor in interest, from time to
time) plus 1.0%, as that rate may change from time to time (“Interest Rate”).  The Interest Rate shall be compounded
monthly but shall be adjusted each month on the first business day of each
month.

 

REPAYMENT TERMS.  Payments
of interest shall accrue during the term of the Note and all principal and
accrued interest shall be due and payable on September 30, 2006 (the
“Maturity Date”), subject to the extension described in the following
paragraph.

 

EXTENSION.  Provided
that the closing date for the sale of Parcel F (as more particularly described
in that certain Parcel F Development Agreement recorded in the public records
for Pinellas County, Florida in O.R. Book 13496 at page 480) to Parcel F,
L.L.C. is extended until

 

4

 

December 31, 2006 or later, the Maturity
Date shall be extended until December 31, 2006 upon the request of the
Borrower.

 

APPLICATION OF
PAYMENTS.  Monies received by Lender from any source
for application toward payment of the Obligations shall be applied to accrued
interest and then to principal.  If any
payment received by Lender under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Lender because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

 

DEFINITIONS.  Loan Documents.  The term
“Loan Documents”, as used in this Note and the other Loan Documents, refers to
the Loan Agreement, this Note, Note B, the Mortgages, and the Assignment.  Obligations.  The term “Obligations”, as used in this Note
and with respect thereto in the other Loan Documents, refers to any and all
indebtedness and other obligations under this Note and all other obligations
under any other Loan Document(s) but specifically excludes any obligations with
respect to Promissory Note B.  Certain Other Terms.  All terms that are used but not otherwise
defined in any of the Loan Documents shall have the definitions provided in the
Uniform Commercial Code.

 

DEFAULT RATE.  In addition
to all other rights contained in this Note, if a Default (as defined herein)
occurs and as long as a Default continues, all outstanding Obligations,
other than Obligations under any swap agreements (as defined in 11 U.S.C.
§ 101) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 5.0% (“Default
Rate”).  The Default Rate shall also
apply from acceleration until the Obligations or any judgment thereon is paid
in full.

 

ATTORNEYS’ FEES AND
OTHER COLLECTION COSTS.  Borrower shall pay all of
Lender’s reasonable expenses incurred to enforce or collect any of the
Obligations including, without limitation, reasonable arbitration, paralegals’,
attorneys’ and experts’ fees and expenses, whether incurred without the commencement
of a suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

 

USURY.  If at
any time the effective interest rate under this Note would, but for this
paragraph, exceed the maximum lawful rate, the effective interest rate under
this Note shall be the maximum lawful rate, and any amount received by Lender
in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

 

DEFAULT.  If any
of the following occurs, a default (“Default”) under this Note shall
exist:  Nonpayment; Nonperformance. 
The failure of timely payment or performance of the Obligations or
Default under this Note or any other Loan Documents after written notice or a
15 day cure period (90 days in the case of a non-monetary Default).  False
Warranty.  A warranty or
representation made or deemed made in the Loan Documents or furnished Lender in
connection with the loan evidenced by this Note proves materially false, or if
of a continuing nature, becomes materially false.  Cessation; Bankruptcy.  The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,

 

5

 

appointment of a receiver for, assignment for
the benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or
any general partner of or the holder(s) of the majority ownership interests of
Borrower, or any party to the Loan Documents. 
Default
Under Note B.  Any uncured
default under Note B.

 

REMEDIES UPON DEFAULT.  If a Default occurs under this Note or any
Loan Document, Lender may at any time thereafter, take the following
actions:  Lender Lien.  Foreclose its security interest or lien
against the collateral.  Acceleration Upon Default.  Accelerate the maturity of this Note
whereupon this Note and the accelerated Obligations shall be immediately due
and payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or any guarantor or
endorser of this Note, all Obligations shall automatically and immediately be
due and payable.  Cumulative.  Exercise any rights and remedies as provided under the Note and
other Loan Documents, or as provided by law or equity.

 

RECOURSE.  Notwithstanding anything contained herein or
in any Loan Document to the contrary, this Note shall be non-recourse to the
Borrower except as specifically set forth in Schedule A.

 

WAIVERS AND
AMENDMENTS.  No waivers, amendments or modifications of
this Note and other Loan Documents shall be valid unless in writing and signed
by an officer of Lender.  No waiver by
Lender of any Default  shall operate
as a waiver of any other Default or the same Default on a future occasion.  Neither the failure nor any delay on the
part of Lender in exercising any right, power, or remedy under this Note and
other Loan Documents shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

 

Except to the extent otherwise provided by the Loan Documents or
prohibited by law, each Borrower and each other person liable under this Note
waives presentment, protest, notice of dishonor, demand for payment, notice
of intention to accelerate maturity, notice of acceleration of maturity, notice
of sale and all other notices of any kind. 
Further, each agrees that Lender may (i) extend, modify or renew this Note or make a novation of the loan
evidenced by this Note, and/or (ii) grant releases, compromises or
indulgences with respect to any collateral securing this Note, or with respect
to any Borrower or other person liable under this Note or any other Loan
Documents, all without notice to or consent of each Borrower and other such
person, and without affecting the liability of each Borrower and other such
person; provided, Lender may not extend, modify or renew this Note or make a
novation of the loan evidenced by this Note without the consent of the
Borrower, or if there is more than one Borrower, without the consent of at
least one Borrower; and further provided, if there is more than one Borrower,
Lender may not enter into a modification of this Note which increases the
burdens of a Borrower without the consent of that Borrower.

 

MISCELLANEOUS
PROVISIONS.  Assignment.  This
Note and the other Loan Documents shall inure to the benefit of and be binding
upon the parties and their respective heirs, legal representatives, successors
and assigns.  Neither Borrower nor
Lender shall assign their respective rights and interest hereunder without the
prior written consent of the other, and any

 

6

 

attempt by either to assign without the
other’s prior written consent is null and void.  Applicable Law; Conflict
Between Documents.  This Note
and, unless otherwise provided in any other Loan Document, the other Loan
Documents shall be governed by and construed  under the laws of the state of Florida without
regard to that state’s conflict of laws principles.  If the terms of this Note should conflict with the terms of any
Loan Documents or the terms of this Note shall control.  Jurisdiction.  Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state of Florida. 
Severability.  If any provision of this Note or of the
other Loan Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note or other such document.  Notices.  Any notices required hereunder shall be
sufficiently given, if in writing and mailed or delivered to the address shown
above or such other address as may be specified in writing from time to
time.  In the event that Borrower
changes Borrower’s address at any time prior to the date the Obligations are
paid in full, Borrower agrees to promptly give written notice of said change of
address by registered or certified mail, return receipt requested, all charges
prepaid.  Plural; Captions.  All
references in the Loan Documents to Borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case
may be, and the term “person” shall mean any individual, person or entity.  The captions contained in the Loan Documents
are inserted for convenience only and shall not affect the meaning or
interpretation of the Loan Documents.  Advances. 
Lender may, in its sole discretion, make other advances which shall be
deemed to be advances under this Note, even though the stated principal amount
of this Note may be exceeded as a result thereof.  Fees and Taxes.  Borrower shall promptly pay all documentary,
intangible recordation and/or similar taxes on this transaction whether
assessed at closing or arising from time to time.  LIMITATION ON LIABILITY;
WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING
LENDER BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR
ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT
MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE
OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY
HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.  EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES
ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY
ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR
CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY
OR OTHERWISE.

 

WAIVER OF JURY TRIAL.  TO THE
EXTENT PERMITTED BY APPLICABLE LAW, EACH OF  BORROWER  BY EXECUTION HEREOF AND LENDER BY
ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR
ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS  NOTE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY

 

7

 

PARTY WITH RESPECT HERETO.  THIS PROVISION IS A MATERIAL INDUCEMENT TO
LENDER TO ACCEPT THIS  NOTE.  EACH
OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES
CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE
EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED,
EXTENDED OR MODIFIED BY, THIS NOTE.

 

IN WITNESS WHEREOF, Borrower, on the day and year first above
written, has caused this Note to be executed under seal.

 

PLACE OF EXECUTION AND DELIVERY.  Borrower hereby certifies that this Note and
the Loan Documents were executed in the State of Florida and delivered to
Lender in the State of Florida.

 

 

	
   

  	
  Taxpayer Identification Number: 
  58-22888961

  
	
   

  	
   

  
	
   

  	
  GOLF TRUST OF AMERICA, L.P.

  
	
   

  	
   

  
	
   

  	
  By: GTA GP, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  W. Bradley Blair, II

  	
   

  
	
   

  	
  Name:  W. Bradley Blair, II

  
	
   

  	
  Title: President and CEO

  

 

8

 

SCHEDULE A

 

Carve-Out Acts

 

This Note shall be recourse to Borrower to
the extent set forth more particularly below in the event of the occurrence of
the following actions by the Borrower, or its affiliates, which are referred to
herein as the “Limited Recourse Acts”: 
(A) fraud or willful misconduct of Borrower or its affiliates the
Premises (as defined in the Mortgage), (B) damage or destruction of Premises
caused by Borrower or its affiliates, (C) failure to use any proceeds of the
Premises which are, at the time of receipt, required for the payment of debt
service, and/or the payment of amounts which are then due and payable to the
Lender, to the extent of the loss suffered by Lender therefrom; (D)
misappropriation of condemnation or insurance proceeds, or other funds or
similar proceeds from the Premises, to the extent of the loss suffered by
Lender therefrom; (E) failure to pay real estate taxes or to make sufficient
funds available through escrow to pay real estate taxes related to the
Premises, before they become delinquent, to the extent of the loss suffered by
Lender therefrom; (F) the removal of any material personal Premises, fixtures
and equipment from the Premises by or on behalf of Borrower and the failure to
replace same with items of the same utility and the same or greater value, to
the extent of the loss suffered by Lender therefrom; (G) [Reserved]; (H) if, in
the event of default by Borrower, the Lender notifies Borrower that Borrower or
any other party is taking actions, other than pursuant to Borrower’s or such
party’s rights under the Loan Documents or at law, solely for the purpose of
hindering impairing or delaying the legitimate exercise by the Lender of its
rights and remedies under the Loan Documents and such actions are not stopped
or rescinded within ten (10) days after the date of such notice, to the extent
of the loss suffered by Lender therefrom.

 

Unless cured within the period provided
below, if any, Note A shall be full recourse to Borrower for the unpaid balance
of the Loan, plus all accrued and unpaid interest thereon, for the following
“Full Recourse Acts”:

 

(1)                                  the filing of
voluntary bankruptcy by the Borrower.

 

(2)                                  the sale, transfer
conveyance or, the further encumbrance of the Premises, without the consent of
the Lender as required under the Lender Loan Documents, except for a transfer
of assets to a wholly controlled affiliate or wholly owned subsidiary of
Borrower, or to a liquidating trust as described in GTA’s proxy statement dated
April 6, 2001.

 

(3)                                  Borrower aiding,
acquiescing or abetting in the filing of an involuntary bankruptcy against
Borrower.

 

(4)                                  a transfer, directly
or indirectly, in GTA’s ownership interests of Borrower during the term of the
Loan, without the Lender’s prior consent to the extent required under the Loan
Documents, except that GTA may transfer its ownership interest in Borrower to a
wholly controlled affiliate or wholly owned subsidiary of Borrower, or to a
liquidating trust as described in GTA’s proxy statement dated April 6,
2001.

 

9

 

(5)                                  criminal activity of
Borrower, or its affiliates.

 

The
Limited Recourse Acts and the Full Recourse Acts are collectively referred to
herein as the “Carve Out Acts”.  The
personal liability of Borrower for Limited Recourse Acts or Full Recourse Acts
as set forth above shall also include reasonable attorneys’ fees and costs of
enforcement and collection.

 

10

 

PROMISSORY NOTE B

 

$1,300,000.00

 

July 15, 2004

 

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina 
29401

(Hereinafter referred to as “Borrower”)

 

Elk Funding, L.L.C.

c/o Starwood Capital Group, L.L.C.

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as “Lender”)

 

Borrower promises to pay to the order of
Lender, in lawful money of the United States of America, at its office
indicated above or wherever else Lender may specify, the sum of One Million
Three Hundred Thousand and No/100 Dollars ($1,300,000.00) or such sum as may be advanced and outstanding
from time to time, with interest on the unpaid principal balance at the rate
and on the terms provided in this Promissory Note A (including all renewals,
extensions or modifications hereof, this “Note”).

 

LOAN AGREEMENT.  This Note is subject to the provisions of
that certain Loan Agreement between Lender and Borrower of even date herewith,
as modified from time to time.

 

SECURITY. 
Borrower has granted Lender a security interest in the collateral described in
(i) those certain two Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing agreements from Borrower to Lender of even date herewith, and
(ii) that certain Assignment of Defense and Escrow Agreement (the “Assignment”)
from Borrower to Lender of even date herewith.

 

INTEREST RATE.  Interest
shall accrue on the unpaid principal balance of this Note from the date hereof
at the prime rate of Bank of America, N.A., or its successor in interest (as
announced by Bank of America, N.A., or its successor in interest, from time to
time) plus 1.0%, as that rate may change from time to time (“Interest
Rate”).  The Interest Rate shall be
compounded monthly but shall be adjusted each month on the first business day
of each month.

 

REPAYMENT TERMS.  Payments
of interest shall accrue during the term of the Note and all principal and
accrued interest shall be due and payable on September 30, 2006 (the
“Maturity Date”); provided, however, payments of principal and accrued interest
shall be due in the form of Release Fees during the term of the Note as
provided in Section 26 of each Mortgage; and provided, further that
Borrower shall be entitled to the benefit of the Forgiven Principal Balance
(defined in the following paragraph), subject to the terms provided in the
following paragraph.

 

11

 

PRINCIPAL
DEBT FORGIVENESS.  If during the term of this Note there has been
no Default which has not be cured by Borrower or which is expressly waived by
Lender in writing, upon Borrower’s satisfaction of the balance of the Note
(less the amount of the Forgiven Principal Balance set forth herein) on the
Maturity Date (or sooner in the event of a prepayment), Lender agrees to
forgive $121,712.50 of principal of the final payment of the Note (“Forgiven
Principal Balance”), whether the Note is prepaid or paid at maturity.  The Forgiven Principal Balance constitutes
the mortgage tax applicable to be paid on the existing outstanding mortgage
loan balance ($78,975,000.00) of that certain loan from Golf Trust of America,
L.P. to Golf Host Resorts, Inc., an affiliate of the Lender.  This mortgage tax equals $243,425.00 and
each of Borrower and Golf Host Resorts, Inc. agrees to be responsible for
payment of half of this amount, or $121,712.50, as of the date of this Note.

 

APPLICATION OF
PAYMENTS.  Monies received by Lender from any source
for application toward payment of the Obligations shall be applied to accrued
interest and then to principal.  If any
payment received by Lender under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Lender because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

 

DEFINITIONS.  Loan Documents.  The term
“Loan Documents”, as used in this Note and the other Loan Documents, refers to
the Loan Agreement, this Note, Note A, the Mortgages and the Assignment.  Obligations.  The term “Obligations”, as used in this Note
and with respect thereto in the other Loan Documents, refers to any and all
indebtedness and other obligations under this Note and all other obligations
under any other Loan Document(s) but specifically excludes any obligations with
respect to Promissory Note A.  Certain Other Terms.  All terms that are used but not otherwise
defined in any of the Loan Documents shall have the definitions provided in the
Uniform Commercial Code.

 

DEFAULT RATE.  In
addition to all other rights contained in this Note, if a Default (as defined
herein) occurs and as long as a Default continues, all outstanding Obligations,
other than Obligations under any swap agreements (as defined in 11 U.S.C.
§ 101) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 5.0% (“Default
Rate”).  The Default Rate shall also
apply from acceleration until the Obligations or any judgment thereon is paid
in full.

 

ATTORNEYS’ FEES AND
OTHER COLLECTION COSTS.  Borrower shall pay all of
Lender’s reasonable expenses incurred to enforce or collect any of the
Obligations including, without limitation, reasonable arbitration, paralegals’,
attorneys’ and experts’ fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative
proceeding, or in any appellate or bankruptcy proceeding.

 

USURY.  If at
any time the effective interest rate under this Note would, but for this
paragraph, exceed the maximum lawful rate, the effective interest rate under
this Note shall be the maximum lawful rate, and any amount received by Lender
in excess of such rate shall be applied

 

12

 

to principal and then to fees and expenses,
or, if no such amounts are owing, returned to Borrower.

 

DEFAULT.  If any
of the following occurs, a default (“Default”) under this Note shall
exist:  Nonpayment; Nonperformance. 
The failure of timely payment or performance of the Obligations or
Default under this Note or any other Loan Documents after written notice or a
15 day cure period (90 days in the case of a non-monetary Default).  False
Warranty.  A warranty or
representation made or deemed made in the Loan Documents or furnished Lender in
connection with the loan evidenced by this Note proves materially false, or if
of a continuing nature, becomes materially false.  Cessation; Bankruptcy.  The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against Borrower,
its Subsidiaries or Affiliates, if any, or any general partner of or the
holder(s) of the majority ownership interests of Borrower, or any party to the
Loan Documents.  Default Under Note A.  Any uncured default under Note A.

 

REMEDIES UPON DEFAULT.  If a Default occurs under this Note or any
Loan Document, Lender may at any time thereafter, take the following
actions:  Lender Lien.  Foreclose its security interest or lien
against the collateral.  Acceleration Upon Default.  Accelerate the maturity of this Note
whereupon this Note and the accelerated Obligations shall be immediately due
and payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or any guarantor or
endorser of this Note, all Obligations shall automatically and immediately be
due and payable.  Cumulative.  Exercise any rights and remedies as provided under the Note and
other Loan Documents, or as provided by law or equity.

 

WAIVERS AND
AMENDMENTS.  No waivers, amendments or modifications of
this Note and other Loan Documents shall be valid unless in writing and signed
by an officer of Lender.  No waiver by
Lender of any Default  shall operate
as a waiver of any other Default or the same Default on a future occasion.  Neither the failure nor any delay on the
part of Lender in exercising any right, power, or remedy under this Note and
other Loan Documents shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

 

Except to the extent otherwise provided by the Loan Documents or
prohibited by law, each Borrower and each other person liable under this Note
waives presentment, protest, notice of dishonor, demand for payment, notice
of intention to accelerate maturity, notice of acceleration of maturity, notice
of sale and all other notices of any kind. 
Further, each agrees that Lender may (i) extend, modify or renew this Note or make a novation of the loan evidenced
by this Note, and/or (ii) grant releases, compromises or indulgences
with respect to any collateral securing this Note, or with respect to any
Borrower or other person liable under this Note or any other Loan Documents,
all without notice to or consent of each Borrower and other such person, and
without affecting the liability of each Borrower and other such person;
provided, Lender may not extend, modify or renew this Note or make a novation
of the loan evidenced by this Note without the consent of the Borrower, or if
there is more than one Borrower, without the consent of at least one Borrower;
and further provided, if there is more than one Borrower,

 

13

 

Lender may not enter into a modification of this Note which increases
the burdens of a Borrower without the consent of that Borrower.

 

MISCELLANEOUS
PROVISIONS.  Assignment.  This
Note and the other Loan Documents shall inure to the benefit of and be binding
upon the parties and their respective heirs, legal representatives, successors
and assigns.  Neither Borrower nor
Lender shall assign their respective rights and interest hereunder without the
prior written consent of the other, and any attempt by either to assign without
the other’s prior written consent is null and void.  Applicable Law; Conflict
Between Documents.  This Note
and, unless otherwise provided in any other Loan Document, the other Loan
Documents shall be governed by and construed  under the laws of the state of Florida without regard to that state’s
conflict of laws principles.  If the
terms of this Note should conflict with the terms of any Loan Documents or the
terms of this Note shall control.  Jurisdiction.  Borrower irrevocably agrees to non-exclusive personal
jurisdiction in the state of Florida.  Severability.  If any provision of this Note or of the other Loan Documents
shall be prohibited or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Note or other such document.  Notices. 
Any notices required hereunder shall be sufficiently given, if in
writing and mailed or delivered to the address shown above or such other address
as may be specified in writing from time to time.  In the event that Borrower changes Borrower’s address at any time
prior to the date the Obligations are paid in full, Borrower agrees to promptly
give written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid. 
Plural; Captions.  All references in the Loan Documents to
Borrower, guarantor, person, document or other nouns of reference mean both the
singular and plural form, as the case may be, and the term “person” shall mean
any individual, person or entity.  The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents.  Advances.  Lender may, in its sole discretion, make
other advances which shall be deemed to be advances under this Note, even
though the stated principal amount of this Note may be exceeded as a result
thereof.  Fees and Taxes. 
Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.  LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH
OF THE PARTIES HERETO, INCLUDING LENDER BY ACCEPTANCE HEREOF, AGREES THAT IN
ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY
BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH
THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN
OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO
EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1)
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY
DAMAGES.  EACH OF THE PARTIES HEREBY
EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY
HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING,
CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION,
JUDICIALLY OR OTHERWISE.

 

14

 

WAIVER OF JURY TRIAL.  TO THE
EXTENT PERMITTED BY APPLICABLE LAW, EACH OF  BORROWER  BY EXECUTION HEREOF AND LENDER BY
ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR
ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS  NOTE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH
RESPECT HERETO.  THIS PROVISION IS A
MATERIAL INDUCEMENT TO LENDER TO ACCEPT THISNOTE.  EACH OF THE PARTIES AGREES THAT THE
TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO
ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR
ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED
TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

 

IN WITNESS WHEREOF, Borrower, on the day and year first above
written, has caused this Note to be executed under seal.

 

PLACE OF EXECUTION AND DELIVERY.  Borrower hereby certifies that this Note and
the Loan Documents were executed in the State of Florida and delivered to
Lender in the State of Florida.

 

 

	
   

  	
  Taxpayer Identification Number: 
  58-22888961

  
	
   

  	
   

  
	
   

  	
  GOLF TRUST OF AMERICA, L.P.

  
	
   

  	
   

  
	
   

  	
  By: GTA GP, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  W. Bradley Blair, II

  	
   

  
	
   

  	
  Name:  W. Bradley Blair, II

  
	
   

  	
  Title: President and CEO

  

 

15

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