Document:

exv10w1

 

Exhibit 10.1

BEFORE THE AMERICAN ARBITRATION ASSOCIATION

	 	 	 
	Case No. 11 180 Y 01333 05

	 	 
	 
	 	 
	RALPH SILVER and
	 	 
	DR. WARREN HELLER,
	 	 
	 
	 	 
	Claimants,
	 	 
	v.
	 	 
	 
	 	 
	WESTIN REALTY CORP., STARWOOD
	 	 
	HOTELS & RESORTS WORLDWIDE,
	 	 
	INC., 909 NORTH MICHIGAN AVENUE
	 	 
	CORPORATION and THE ST. FRANCIS
	 	 
	HOTEL CORPORATION,
	 	 
	 
	 	 
	Respondents.
	 	 
	 
	 	 
	WESTIN HOTELS LIMITED
	 	 
	PARTNERSHIP, THE WESTIN CHICAGO
	 	 
	LIMITED PARTNERSHIP and THE
	 	 
	WESTIN ST. FRANCIS LIMITED
	 	 
	PARTNERSHIP,
	 	 
	 
	 	 
	Nominal Respondents.
	 	 

	 
	Arbitrators:

	 

	MICHAEL D. ZIMMERMAN

	ROBERT A. HOLTZMAN

	HON. TIMOTHY D. O’LEARY

	 

	 

	 

	
Case Specialist:

	 

	TANYA SRABIAN

SETTLEMENT AGREEMENT AND RELEASE 

     A. DEFINITIONS

          1. The following definitions are applicable to this Agreement:

          a. “909 Corp.” refers to 909 North Michigan Avenue Corporation, a subsidiary
of Starwood.

          b. “Agreement” refers to this Settlement Agreement and Release.

          c. “Application for Fees and Costs” refers to the application to be filed by Class Counsel by
which they will seek an award of attorneys’ fees and reimbursement of costs and expenses, to be
paid from the Settlement Fund.

 

 

          d. “Arbitration” refers to this arbitration between the parties in the caption above.

          e. “Chicago Hotel” refers to the Westin Hotel, Chicago, which was also known as the Michigan
Avenue Hotel.

          f. “Chicago Hotel Management Agreement” refers to the management agreement WHLP entered into
on August 21, 1986 among 909 Corp., WCLP and Starwood. According to the terms of the Chicago Hotel
Management Agreement, WCLP was considered the owner, and 909 Corp. the agent and manager of the
Chicago Hotel.

          g. “Claimants” refers to Ralph Silver and Dr. Warren Heller, who brought this Arbitration.

          h. “Claimants’ Awards” refers to the payments to Claimants, in consideration of the time and
effort expended by Claimants in this Arbitration, that will be requested to be paid from the
Settlement Fund.

          i. “Class” refers to all current limited partners of WHLP, with the exception of Kalmia
Investors, LLC, such limited partners who previously opted out of the Class, Respondents herein,
and any person, firm trust, corporation or other entity affiliated with any of the Respondents. The
Class was certified by the Panel’s Award on Class Certification dated October 12, 2006.

          j. “Class Counsel” refers to Wolf Haldenstein Adler Freeman & Herz LLP, which was appointed as
counsel to the Class by the Panel’s Award on Class Certification dated October 12, 2006.

          k. “Final Hearing” refers to a hearing that will be held before that Panel at which the
parties will move the Panel to make a final determination on this proposed settlement.

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          l. “Hotels” refers to the Chicago Hotel and the St, Francis Hotel.

          m. “Joint Application” refers to the letter application to be submitted to the Panel by which
the parties hereto will jointly apply for an order: (A) setting a schedule for a hearing on the
final approval of this proposed settlement, (B) approving the form and manner of dissemination of
the Notice, and (C) other relief incidental to this settlement process, in the form attached hereto
as Exhibit A.

          n. “Judgment Order” refers to a final judgment order issued by the Panel that finally
approves the proposed settlement, dismisses the arbitration with prejudice, and rules upon the
Application for Fees and Costs, in the form attached hereto as Exhibit C.

          o. “Limited Partners” refers to the current holders of WHLP limited partnership units, which
includes the named Claimants.

          p. “Limited Partnership Agreement” refers to the limited partnership agreement entered into
on August 13, 1986 that created WHLP.

          q. “Management Agreements” refer to the Chicago Hotel Management Agreement and the St.
Francis Hotel Management Agreement.

          r. “Nominal Respondents” refers to WCLP, WSFLP, and WHLP, collectively.

          s. “Notice” refers to the Notice to Limited Partners of Proposed Settlement of Arbitration to
be sent to the Limited Partners, in the form attached hereto as Exhibit B.

          t. “Panel” refers to The American Arbitration Association Panel before whom this
arbitration is pending.

          u. “Respondents” refers to Starwood, Westin Realty, St. Francis Corp., and 909 Corp.,
collectively.

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          v. The “Settlement Fund” refers to the settlement amount of two million dollars ($2,000,000)
as described in Paragraph 10 of this Agreement.

          w. “Settling Parties” refers to the parties to this Agreement as specified in Section B of
this Agreement.

          x.
“St. Francis Corp.” refers to the St. Francis Hotel
Corporation, a subsidiary of Starwood.

          y. “St. Francis Hotel” refers to Westin St. Francis in San Francisco, California.

          z. “St. Francis Hotel Management Agreement” refers to a management agreement WHLP entered
into on or about January 29, 1982 between WSFLP, St. Francis Corp., and Starwood. According to the
terms of the St. Francis Hotel Management Agreement, WSFLP was considered the owner, and St.
Francis Corp. the managing agent and manager of the St. Francis Hotel.

          aa. “Starwood” refers to Starwood Hotels & Resorts Worldwide, Inc.

          bb. “WCLP” refers to Westin Chicago Limited Partnership, a wholly-owned subsidiary of WHLP,
through which WHLP owned the Chicago Hotel.

          cc. “WCLP Partnership Agreement” refers to a partnership agreement entered into on August 13,
1986 between 909 Corp. and WHLP that created WCLP. According to the terms of the WCLP Partnership
Agreement, WHLP is the sole limited partner and 909 Corp. is the general partner of WCLP.
According to the WCLP Partnership Agreement, 909 Corp. was required to manage WCLP on behalf of
WHLP.

          dd. “Westin Realty” refers to Westin Realty Corp., a subsidiary of Starwood and the general
partner of WHLP.

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          ee. “WHLP” or the “Partnership” refers to the Westin Hotels Limited Partnership.

          ff. “WSFLP” refers to Westin St. Francis Limited Partnership, a wholly-owned subsidiary of
WHLP, through which WHLP owned the St. Francis Hotel.

          gg. “WSFLP Partnership Agreement” refers to a partnership agreement that WHLP and St. Francis
Corp. entered into that created WSFLP. According to the terms of the WSFLP Partnership Agreement,
WHLP is the sole limited partner of WSFLP and St. Francis Corp. is the general partner of WSFLP.
According to the WSFLP Partnership Agreement, St. Francis Corp. was required to manage WSFLP on
behalf of WHLP.

     B. THE PARTIES

     2. This Agreement is entered into by the following:

a. Claimants, individually and on behalf of the Class

b. Starwood

c. Westin Realty

d. St. Francis Corp.

e. 909 Corp.

     C. RECITALS

     3. Claimants commenced this Arbitration to recover damages allegedly sustained by members of
the Class as a result of the Respondents’ alleged breaches of fiduciary duties and breaches of
contract. Claimants also sought an accounting between the Partnership’s Limited Partners and the
General Partner.

     4. Claimants in the Arbitration assert direct claims against Respondents.
Specifically, Claimants allege that Respondents (i) caused the Hotels to be assessed charges for
chain-wide services, the cost of which were wrongfully inflated; (ii) entered into contracts with

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their vendors under which the vendors provided kickbacks to Starwood and/or its affiliates; (iii)
used an improper accounting methodology to boost their management fees; and (iv) imposed improper
fees on interest income belonging to the Partnership. These practices allegedly breached
Respondents’ fiduciary and contractual duties and damaged the Limited Partners by reducing the
cash-flows of the Hotels, which also resulted in diminished sales values of the Hotels.

     5. Respondents deny all allegations of wrongdoing asserted against them and have asserted
affirmative defenses to the claims asserted by Claimants. In addition, Respondents assert that:
(i) the charges to the Hotels for chain-wide services were fair, reasonable, and in compliance
with the applicable Management Agreements; (ii) Respondents’ activities with respect to the
purchase of goods and services from vendors for the Hotels were lawful and complied with the
Management Agreements; (iii) Respondents’ accounting methodologies with respect to the Hotels, and
calculations of management fees based thereon, were proper and in compliance with the Management
Agreements; and (iv) Respondents appropriately accounted for and handled interest income relating
to the Partnership and the Hotels. Respondents further assert that none of the acts and practices
alleged by Claimants constituted a breach of any fiduciary or contractual duties owed by
Respondents to Claimants or the members of the Class, or otherwise injured or damaged the Limited
Partners by reducing the cash flows of the Hotels or diminishing the sales values thereof.
Respondents also assert that claims identical to those being pursued by Claimants in this
arbitration were previously presented by Kalmia Investors, LLC, WHLP’s single largest limited
partner, and were defeated by Respondents and Nominal Respondents in an earlier arbitration
proceeding in Seattle, Washington.

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     6. Claimants state that they filed this Arbitration because they believe they have meritorious
claims and that they may have prevailed if the Arbitration had proceeded to trial. This Agreement
is not an admission of any infirmity in any of Claimants’ claims. However, Claimants and Claimants’
attorneys believe that it is in Claimants’ and the Class’s best interests to obtain the substantial
benefits afforded by this Agreement and avoid the risk, expense and delay attendant to the trial
and any appeals in this matter.

     7. It is expressly agreed and understood that Respondents have entered into this Agreement
solely for the purpose of compromise and without admission or concession of liability of any kind.
It is further expressly agreed and understood that no payment or obligations undertaken by
Respondents is to be construed as an admission of liability on any of the claims asserted in the
Arbitration. The Respondents deny any liability in regard to these actions, but consider it
desirable that they be settled and dismissed because such settlement and dismissal will (a) halt
the substantial expense, inconvenience and uncertainties associated with continued litigation, and
(b) finally put to rest claims relating to the sales of the Hotels and the operation of WHLP and
avoid the expense associated with such claims.

	 	D.	 	THE SETTLEMENT, THE PROCEDURES FOR APPROVAL OF THE SETTLEMENT,
AND THE DISTRIBUTION OF THE SETTLEMENT PROCEEDS.

     8. Subject to final approval and issuance of an order of dismissal with prejudice by the
Panel, the Settling Parties agree to settle and compromise their claims, defenses and disputes
under the terms and conditions set forth in this Agreement.

     9. The Settling Parties have agreed to the settlement of this Arbitration and to the terms of
this Agreement, in consideration of the mutual covenants set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

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     10. The Settlement Fund for the Class is two million dollars ($2,000,000). This amount, net
of fees and expenses as set forth herein, will be paid by Respondents to WHLP, to hold on behalf of
the Class and not as a Partnership asset, for distribution to the Class.

     11. As soon as practicable after this Agreement is fully executed, Claimants and Respondents
will file with the Panel the Joint Application.

     12. Prior to the Final Hearing at a time to be determined by the Panel, Class Counsel will
file with the Panel the Application for Fees and Costs. Class Counsel will seek from the Panel an
award of fees in an amount not to exceed 30% of the Settlement Fund, plus costs and expenses,
payable from the Settlement Fund. Class Counsel will also request Claimants’ Awards of up to
$3,000.00 for each Claimant, payable from the Settlement Fund. The Respondents will take no
position on these applications.

     13. Within ten (10) days after the issuance of the Judgment Order, Respondents will transfer
the Settlement Fund, net of (a) the fees, costs and expenses awarded to Class Counsel, (b) any
Claimants’ Awards, and (c) the cost of providing the Notice to the Class, to WHLP, to hold on
behalf of the Class and not as a Partnership asset.

     14. Respondents and/or Claimants shall have the right, but not the obligation, to file the
Judgment Order for enforcement purposes in the United States District Court for the Western
District of Missouri in Kansas City, Missouri pursuant to the applicable provisions of the Federal
Arbitration Act. The parties agree to cooperate with each other in any such efforts.

     15. Within five (5) days after the issuance of the Judgment Order, Respondents will pay from
the Settlement Fund the attorneys’ fees and reimbursement of costs and expenses awarded by the
Panel, pursuant to Paragraph 12 above, by wire transfer to an account to be designated by Class
Counsel. Contemporaneously, Respondents will provide by overnight

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delivery to Class Counsel checks payable from the Settlement Fund to Claimants in the amount of any
Claimants’ Awards.

     16. Within twenty (20) days after the issuance of the Judgment Order, Westin Realty will cause
WHLP to distribute the Settlement Fund, net of the fees and expenses paid pursuant to Paragraphs
12-13 and 15 above, to the Class, pro rata according to each Class member’s interest in WHLP.

     17. Claimants and the Class acknowledge and agree that Respondents may, and will, exercise
their right to indemnification from the Partnership for Respondents’ payment to the Class of the
Settlement Fund. Respondents shall cause their affiliate, WHLP Acquisition LLC (“Acquisition”),
to assign to the Class its right to receive Partnership liquidating distributions up to the amount
of $940,000, in order to offset the cost to the Class members of Respondents’ exercise of their
right to indemnification. However, in the event that the liquidating distributions that Acquisition
has a right to receive from the Partnership are less than $940,000 in amount, Acquisition shall
assign to the Class the entirety of its right to liquidating distributions, regardless of amount,
but shall have no further obligations hereunder.

     18. Westin Realty shall use reasonable efforts to wind down and liquidate WHLP in 2007, with
the intention that 2007 will be the last year in which the Limited Partners will receive K-l forms
from WHLP.

     E. CONDITION.

     19. This Agreement is expressly conditioned upon the Panel approving the settlement and
entering an order of dismissal with prejudice of the Arbitration. If the Panel does not approve
this settlement, then this Agreement shall be considered null and void and shall not be admissible
for any purpose in any subsequent proceeding in the Arbitration.

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     F. RELEASE.

     20. In consideration of the terms of this Agreement, and except for their rights
under this Agreement, Claimants, the Class, and each of them, hereby release, remise, acquit and forever
discharge the Respondents and Nominal Respondents, including their respective former and present
joint venturers, partnerships, affiliates, parents, wholly or partially owned subsidiaries,
predecessors, successors, assigns, partners, representatives, shareholders, officers, directors,
managing agents, employees, attorneys and agents from any and all claims, demands, controversies,
actions, causes of action, debts, liabilities, rights, contracts, damages, costs (including
attorneys’ fees and arbitration, court and litigation costs and expenses), expenses, indemnities,
obligations and losses of every kind or nature whatsoever, anticipated or unanticipated, direct or
indirect, fixed or contingent, asserted or unasserted, which Claimants, the Class, and each of
them ever had, now have, or may hereafter have, related to WHLP, or to any of the Limited
Partners’ investments in the WHLP, including, but not limited to, all claims that were or could
have been asserted in the Arbitration and all claims relating to the sales of the Hotels and the
operation of WHLP. Claimants and the Class hereby retain and reserve all of their rights under the
terms of the WHLP Limited Partnership Agreement that are not specifically released herein.

     21. In consideration of the terms of this Agreement, and except for their rights under the
Agreement, Respondents, and each of them, hereby release, remise, acquit and forever discharge
Claimants, including their respective and former and present joint venturers,
partnerships, affiliates, parents, wholly- or partially-owned subsidiaries,
predecessors, successors, assigns, partners, representatives, shareholders, officers, directors,
managing agents, employees, attorneys and agents from any and all claims, demands, controversies,
actions, causes of action, debts, liabilities, rights, contracts, damages, costs (including
attorneys’ fees and

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arbitration, court and litigation costs and expenses), expenses, indemnities, obligations, and
losses of every kind and nature whatsoever, anticipated or unanticipated, direct or indirect, fixed
or contingent, asserted or unasserted, which the Respondents ever had, now have, or may hereafter
have, related to the Partnership, or to any of the Limited Partners’ investments in the WHLP,
including, but not limited to, all claims that were or could have been asserted in the Arbitration
and all claims relating to the sales of the Hotels and the operation of WHLP (“WHLP Claims”).
Respondents shall neither cause nor permit Nominal Respondents to assert any WHLP Claims of the
Nominal Respondents against Claimants (including Claimants’ respective and former joint venturers,
partnerships, affiliates, parents, subsidiaries, predecessors, successors, assigns, partners,
representatives, shareholders, officers, directors, managing agents, employees, attorneys, and
agents). The Respondents hereby retain and reserve all of their rights under the terms of the WHLP
Limited Partnership Agreement that are not specifically released herein.

     22. The Settling Parties fully understand that the facts upon which the Agreement is executed
may be found hereafter to be other than or different from the facts now believed by the Settling
Parties and their attorneys to be true, and expressly accept and assume the risk of such possible
differences in facts and agree that the Agreement shall remain effective notwithstanding any such
difference in facts.

     G. EFFECTIVE DATE.

     23. This Agreement shall become effective upon a completion of all of the following: (a)
complete execution of the Agreement and (b) the Panel’s approval of the settlement and issuance of
the Judgment Order (the “Effective Date”).

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     H. GENERAL.

     24. This Agreement constitutes the final and complete expression of the entire understanding
of the Settling Parties with respect to the subject matter of the Agreement. To that end, the
Settling Parties acknowledge and agree that:

     (a) The literal words of the Agreement govern the rights and obligations of the parties
under the Agreement.

     (b) The Agreement is the best evidence of the understanding of the parties of the terms
and conditions of the subject matter of the Agreement.

     (c) All prior or contemporaneous negotiations, representations, statements, drafts of
the Agreement and other extrinsic communications between the Settling Parties which vary or
contradict the terms of the Agreement are of no evidentiary significance in interpreting the
meaning of any of the provisions of this Agreement.

     (d) To the full extent permitted by law, parol evidence shall not be used to explain,
clarify, supplement, vary or contradict any provision of the Agreement.

     (e) No modification or waiver of any term or terms contained in the Agreement shall
be valid unless such modification or waiver is in writing and signed by the party against
which the enforcement of such modification or waiver is sought.

     25. The Settling Parties each execute this Agreement after arm’s-length negotiations and
acting upon their independent judgment and upon the advice of their respective counsel without any
warranties or representations, express or implied, of any kind or nature from each to the other
except only as specifically set forth herein. The Settling Parties and their respective counsel
agree that the settlement is fair, reasonable, adequate, and in the best interests of the Settling
Parties.

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     26. This Agreement shall be subject to, governed by, construed, and enforced pursuant to
the laws of the State of Delaware.

     27. The Settling Parties, by and through their attorneys in the Arbitration, agree to execute,
acknowledge and deliver, or cause to be executed, acknowledged or delivered, such further
instruments and documents as may be necessary to effectuate this Agreement.
Claimants’ attorneys and the attorneys for the Respondents represent and warrant that they have the
right and authority to execute, on behalf of the respective Settling Parties, this Agreement and
such further instruments and documents as may be necessary to effectuate this Agreement.

     28. Each party to this Agreement shall bear its, his or her own attorneys’ fees and costs,
except as expressly stated herein. If any party brings or defends any lawsuit, action, or
proceeding for breach hereof or to enforce the terms hereof, the prevailing party in such lawsuit,
action or proceeding shall be awarded its expenses therein and on appeal, including its
reasonable costs and attorneys’ fees.

     29. Pursuant to paragraph 15.01 of the Partnership Agreement, the parties hereto agree that
the place of this Arbitration is Kansas City, Missouri.

     30. This Agreement may be executed in counterparts and may be filed with the Panel with
separately executed counterpart signature pages attached. For this purpose, signature pages
transmitted by telecopier or e-mail shall be deemed to be original signature pages.

Dated: March 12, 2007

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence P. Kolker
 

Lawrence P. Kolker
	 	 
	 

	 	 	 	lona M. Evans	 	 
	 

	 	 	 	WOLF HALDENSTEIN ADLER	 	 
	 

	 	 	 	FREEMAN & HERZ LLP	 	 
	 

	 	 	 	270 Madison Avenue	 	 
	 

	 	 	 	New York, NY 10016	 	 
	 

	 	 	 	(212) 545-4600	 	 

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	 	 	 	Class Counsel and Attorneys for the

Claimants.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William A. Brewer III
 

William A. Brewer III

James S. Renard

BICKEL & BREWER

1717 Main Street

Suite 4800

Dallas, Texas 75201

(214) 653-4000

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Attorneys for Respondents	 	 

 

 

EXHIBIT A

BEFORE THE AMERICAN ARBITRATION ASSOCIATION

	 	 	 
	Case No. 11 180 Y 01333 05
	 	 
	 
	 	 
	RALPH SILVER and
	 	 
	DR. WARREN HELLER,
	 	 
	 
	 	 
	 

	 	Claimants,
	 
	 	 
	v.
	 	 
	 
	 	 
	 
	 	 
	WESTIN REALTY CORP., STARWOOD

HOTELS & RESORTS WORLDWIDE,

INC., 909 NORTH MICHIGAN AVENUE

CORPORATION and THE ST. FRANCIS
HOTEL CORPORATION,
	 	 
	 
	 	 
	 

	 	Respondents.
	 
	 	 
	WESTIN HOTELS LIMITED

PARTNERSHIP, THE WESTIN CHICAGO
LIMITED

PARTNERSHIP and THE

WESTIN ST. FRANCIS LIMITED
PARTNERSHIP,
	 	 
	 
	 	 
	 

	 	Nominal
Respondents.

	 
	Arbitrators:

	 

	MICHAEL D. ZIMMERMAN

ROBERT A. HOLTZMAN

HON. TIMOTHY D. O’LEARY

	 

	 

	 

	 

	 

	Case Specialist:

	 

	TANYA SRABIAN

ORDER (A) SETTING A SCHEDULE FOR A HEARING ON THE FINAL APPROVAL OF THE PROPOSED SETTLEMENT, (B)

APPROVAL OF THE FORM AND MANNER OF DISSEMINATION OF THE NOTICE OF PROPOSED SETTLEMENT OF

ARBITRATION, AND (C) OTHER RELIEF INCIDENTAL TO THE SETTLEMENT PROCESS

     This matter, having come before this American Arbitration Association Panel (the “Panel”) on
the parties’ joint application for an order: (A) setting a schedule for a hearing on the

 

 

final
approval of this proposed settlement, (B) approval of the form and manner of dissemination of the
Notice of Proposed Settlement of Arbitration, and (C) other relief incidental to this settlement
process (the “joint Application”); and the Panel being fully advised in this matter,

     IT IS HEREBY ORDERED:

     1. For the purposes of this Order, the Panel adopts the definitions set forth in the
Settlement Agreement and Release dated March 12, 2007.

     2. The Panel finds that the proposed settlement is sufficiently within the range of fairness,
reasonableness and adequacy to warrant dissemination of the Notice to the Class members who have
not previously opted out of the Class.

     3. Within two weeks of the date of this Order, the Respondents shall cause the Partnership to
disseminate, by first class mail, copies of the Notice to each Limited Partner that is a current
Class member. Respondents shall file proof of such mailing prior to the hearing for final approval
of the proposed settlement. The Panel finds that the Notice is sufficient and comports with the
requirements of due process and Rule 8 of the American Arbitration Association Supplementary Rule
for Class Arbitration 8(a)(2).

     4. Any objections to the proposed settlement, the Application for Fees and Costs or Claimants’
Awards must be made following the procedure set forth in the Notice or shall be waived. The
Application for Fees and Costs, any application for awards to the named Claimants, and any further
papers relating to the settlement shall be filed within fifteen (15) days of the hearing for final
approval of the proposed settlement, except any papers responding to objections may be filed within
five (5) days of such hearing.

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     5. The Final Hearing is set for                                         , 2007 at            
         
               
               
          .

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 ,	 2007.	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	BY THE PANEL:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

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EXHIBIT B

BEFORE THE AMERICAN ARBITRATION ASSOCIATION

Case No. 11 180 Y 01333 05

RALPH SILVER and

DR. WARREN HELLER,

Claimants,

v.

WESTIN REALTY CORP., STARWOOD 

HOTELS & RESORTS
WORLDWIDE, 

INC., 909 NORTH MICHIGAN AVENUE

CORPORATION and THE ST. FRANCIS 

HOTEL CORPORATION,

Respondents.

WESTIN HOTELS LIMITED

PARTNERSHIP, THE WESTIN
CHICAGO

LIMITED PARTNERSHIP and THE

WESTIN ST.
FRANCIS LIMITED

PARTNERSHIP,

Nominal Respondents.

Arbitrators:

MICHAEL D. ZIMMERMAN
 ROBERT A.
HOLTZMAN

 HON. TIMOTHY D. O’LEARY

 

Case Specialist:

TANYA SRABIAN

	 	 	 
	 

	 	NOTICE OF PROPOSED SETTLEMENT OF ARBITRATION
	 
	 	 
	TO:

	 	ALL CURRENT LIMITED PARTNERS OF THE WESTIN HOTELS LIMITED PARTNERSHIP, WITH THE EXCEPTION OF
KALMIA INVESTORS, LLC, ANY SUCH LIMITED PARTNERS WHO PREVIOUSLY OPTED OUT OF THE CLASS, RESPONDENTS
HEREIN, AND ANY PERSON, FIRM TRUST, CORPORATION OR OTHER ENTITY AFFILIATED WITH ANY OF THE
RESPONDENTS.
	 
	 	 
	 

	 	PLEASE READ THIS NOTICE CAREFULLY, YOUR RIGHTS MAY BE AFFECTED BY A CLASS
ARBITRATION PENDING BEFORE THIS PANEL.

     This Notice describes the proposed settlement of the arbitration (the “Arbitration”) brought
by Ralph Silver and Dr. Warren Heller (the “Claimants”) on behalf of all current limited partners
of the Westin Hotels Limited Partnership (“WHLP” or the “Partnership”), excluding

 

 

Kalmia Investors, LLC (“Kalmia”), Respondents, and any person, firm trust, corporation or other
entity affiliated with any of the Respondents (the “Class”), against Westin Realty Corp. (Westin
Realty” or the “General Partner”), Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), 909
North Michigan Avenue Corporation and The St. Francis Hotel Corporation (collectively,
“Respondents”), relating to the operation of the WHLP and the sale of its two assets, the Westin
Hotel, Chicago, which became known as the Michigan Avenue Hotel (the “Chicago Hotel”) and Westin
St. Francis in San Francisco, California (the “St. Francis Hotel”) (collectively, the “Hotels”).
If approved by the American Arbitration Association Panel before whom this Arbitration is pending
(the “Panel”), the proposed settlement, as fully described in the Settlement Agreement and Release
(the “Agreement”), will result in the dismissal with prejudice of all claims that were asserted in
the Arbitration, and you will be forever barred from pursuing any of the claims settled therein.

     THIS NOTICE IS PROVIDED TO YOU PURSUANT TO RULE 8 OF THE AMERICAN ARBITRATION ASSOCIATION
SUPPLEMENTARY RULES FOR CLASS ARBITRATION, WHICH REQUIRE THAT NOTICE OF A PROPOSED SETTLEMENT AND
DISMISSAL OF THIS ARBITRATION SHALL BE GIVEN TO YOU IN THE MANNER DIRECTED BY THE PANEL.

     IF YOU HAVE NO OBJECTIONS TO THE PROPOSED SETTLEMENT OR AWARD OF ATTORNEYS’ FEES AND
ARBITRATION EXPENSES, YOU DO NOT NEED TO DO ANYTHING. YOU WILL AUTOMATICALLY RECEIVE YOUR SHARE OF
THE SETTLEMENT PROCEEDS. ANY LIMITED PARTNER WHO DOES NOT FOLLOW THE PROCEDURE SET FORTH IN
SECTION III BELOW FOR OBJECTING TO THE SETTLEMENT OR FEE AND EXPENSE AWARD WILL WAIVE ANY AND ALL
OBJECTIONS THERETO.

SUMMARY OF THE PROPOSED SETTLEMENT

     The parties have agreed to a dismissal with prejudice of the Arbitration and to the following
financial terms of a proposed settlement:

     1. The settlement fund for the Class is $2 million (the “Settlement Fund”). This amount, net
of fees and expenses as set forth herein, will be paid by Respondents to WHLP, to hold on behalf of
the Class and not as a Partnership asset, for distribution to the Class.

     2. Prior to the Final Hearing (described below), Class Counsel will file with
the Panel an application for attorneys’ fees and reimbursement of costs and expenses incurred in this
Arbitration. Class Counsel will seek from the Panel an award of fees in an amount not to exceed
30% of the Settlement Fund, plus costs and expenses (approximately $80,000.00) in pursuing the
Arbitration. Class Counsel will also request awards of up to $3000 each to Claimants (“Claimants’
Awards”) in consideration of the time and effort they expended on this Arbitration.

     3. Within twenty (20) days after the final approval of this Settlement, Respondents will cause
WHLP to distribute the Settlement Fund (net of attorneys’ fees, expenses, and Claimants’ Awards) to
the Class, pro rata according to each Class member’s interest in WHLP.

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     4. Westin Realty shall use reasonable efforts to wind down and liquidate the
Partnership in 2007, with the intention that 2007 will be the final year for which you will receive
a Partnership K-1 Form.

     5. Claimants believe that they may have prevailed if the Arbitration proceeded to trial and,
if they were able to prevail on each of their claims at trial, the total amount of damages they
could reasonably expect to recover is approximately twelve million dollars ($12,000,000).
Respondents believe that Claimants would not have prevailed if the Arbitration proceeded to trial
and, thus, that Claimants could not reasonably expect to recover anything ($0). In light of the
risks that the Class may recover nothing if the Arbitration proceeded to trial and the expense and
delay attendant to the trial and any appeals of this matter, Claimants and Class Counsel believe
that it is in the Class’s best interests to obtain the substantial benefits afforded to them by
this settlement. In light of the risks that the Claimants may prevail if the Arbitration proceeded
to trial and the expense attendant to the trial and any appeals of this matter, Respondents and
their attorneys believe that it is also in their best interests to obtain the substantial benefits
afforded to them by this settlement.

     6. The Respondents have entered into this Agreement solely for the purpose of compromise and
without admission or concession of liability of any kind. No payment or obligations undertaken by
the Respondents is to be construed as an admission of liability on any of the claims asserted in
the Arbitration. The Respondents deny any liability in regard to these actions, but consider it
desirable that they be settled and dismissed because such settlement and dismissal will (a) provide
additional monies to the Class from the sale of the hotels and the operation of WHLP; (b) halt the
substantial expense, inconvenience and uncertainties associated with continued arbitration, and (c)
finally put to rest claims relating to the sales of the Hotels and the operation of WHLP.

THE ARBITRATION

     Claimants commenced this Arbitration to recover damages allegedly sustained by members of the
Class as a result of the Respondents’ alleged breaches of fiduciary duties and breaches of
contract. Claimants also sought an accounting between the Partnership’s Limited Partners and the
General Partner.

     Claimants in the Arbitration alleged that Respondents (i) caused the Hotels to be assessed
charges for chain-wide services, the cost of which were wrongfully inflated; (ii) entered into
contracts with their vendors under which the vendors provided kickbacks to Starwood and/or its
affiliates; (iii) used an improper accounting methodology to boost their management fees; and (iv)
imposed improper fees on interest income belonging to the Partnership. These practices allegedly
breached Respondents’ fiduciary and contractual duties and damaged the Limited Partners by reducing
the cash-flows of the Hotels, which also resulted in diminished sales values of the Hotels.

     Respondents deny all allegations of wrongdoing asserted against them and have asserted
affirmative defenses to the claims asserted by Claimants. In addition, Respondents alleged that:
(i) the charges to the Hotels for chain-wide services were fair, reasonable, and in compliance with
the applicable Management Agreements; (ii) Respondents’ activities with respect to the

3

 

purchase of goods and services from vendors for the Hotels were lawful and complied with the
Management Agreements; (iii) Respondents’ accounting methodologies with respect to the Hotels, and
calculations of management fees based thereon, were proper and in compliance with the Management
Agreements; and (iv) Respondents appropriately accounted for and handled interest income relating
to the Partnership and the Hotels. Respondents further assert that none of the acts and practices
alleged by Claimants constituted a breach of any fiduciary or contractual duties owed by
Respondents to Claimants or the members of the Class, or otherwise injured or damaged the Limited
Partners by reducing the case flows of the Hotels or diminishing the sales values thereof.
Respondents also assert that claims identical to those being pursued by Claimants in this
arbitration were previously presented by Kalmia Investors, LLC (“Kalmia”), WHLP’s single largest
limited partner, and were defeated by Respondents and Nominal Respondents in an earlier arbitration
proceeding in Seattle, Washington.

     Following an extensive investigation by Class Counsel, this Arbitration was commenced by the
filing of a Demand for Arbitration on October 14, 2005. On October 28, 2005, Class Counsel
submitted a detailed Statement of the Claims to the Panel. On November 4, 2005, Respondents
submitted their Answer and affirmative defenses. On November 11, 2005, Claimants submitted a
Motion for Class Certification and a memorandum or law in support thereof to the Panel by which
they sought an order from the Panel certifying as a class the limited partners of WHLP. On
November 15, 2005, Respondents served discovery requests upon Claimants. Claimants promptly
answered Respondents’ discovery requests. On December 20, 2005 Claimant Silver was deposed by
Respondents’ counsel and on December 21, 2005 Claimant Heller was deposed by Respondents’ counsel.
On December 12, 2005 Respondents Filed a Motion in Opposition to Claimants’ Motion for Class
Certification and a memorandum or law in support thereof. On February 8, 2006, Claimants submitted
Claimants’ Reply Memorandum of Law In Support of Their Motion for Class Certification. On May 26,
2006, a hearing took place in Kansas City, Missouri during which Claimants and Respondents
presented oral arguments concerning class certification. On October 12, 2006, the Panel certified
a class consisting of all current limited partners of WHLP, the exception of Kalmia, Respondents,
and any person, firm, trust, corporation or other entity affiliated with any of the Respondents.

     During 2006, the parties in the Arbitration engaged in comprehensive review of the fact and
expert discovery in the related Kalmia arbitration. This discovery included requests for
production of documents, depositions of the parties and their representatives, depositions of
non-party witnesses, review by Class Counsel of tens of thousands of pages of documents, motions
and proceedings relating to various discovery disputes, expert reports submitted by the parties on
the valuation issues in the case, and trial transcripts and exhibits. As a result of such
discovery, the parties to the Arbitration obtained full knowledge of the strengths and weaknesses
of the various claims and defenses.

     By Final Award dated April 27, 2006, Kalmia lost its arbitration against Respondents that
asserted essentially the same claims as those asserted here.

     Subsequent to the certification of the Class, the parties have engaged in discussions of
settlement. On March 1, 2007, this Settlement Agreement was reached in communications among
counsel after numerous teleconferences and written exchanges.

4

 

PROCEDURE FOR APPROVAL OF THE

SETTLEMENT AND DISMISSAL OF THE ARBITRATION

     The American Arbitration Association Supplementary Rules for Class Arbitration require Panel
approval of the proposed settlement and dismissal with prejudice of the Arbitration. Notice of the
proposed settlement and dismissal of the Arbitration is hereby given to you in the manner approved
by the Panel.

     The Panel has scheduled the Final Hearing on                     , 2007, at                     , to determine
whether the proposed Settlement is fair, reasonable and adequate and therefore should be approved.
If the Panel approves this settlement it will issue an order that will finally approve the
settlement, dismiss the Arbitration with prejudice, and rule upon the Class Counsels’ application
for attorneys fees and reimbursement of costs and expenses (and request for Claimants’ Awards).

     If the proposed settlement is approved by the Panel and the Arbitration is dismissed with
prejudice, it will forever bar and preclude any further claims by Claimants and any and all of the
Class members against Respondents arising out of or relating to the matters which were or could
have been raised in the Arbitration.

     You are entitled to participate in the hearing and show cause why the proposed settlement (or
fee application) should not be approved. Copies of all pleadings and other documents filed with
the Panel are on file with the American Arbitration Association (Silver v. Westin Realty Corp., et
al., Case No. 11 180 Y 01333 05). If you desire to object to the settlement or otherwise be heard
at the hearing to be held on                     , 2007, you must set forth a written summary of your
position and submit it to counsel listed below by                     , 2007. In order to be
considered, all such objections must be made in writing and directed to:

Iona M. Evans

WOLF HALDENSTEIN ADLER

FREEMAN & HERZ LLP

270 Madison Avenue

New York, New York 10016

Telephone: (212) 545-4600

Attorneys for Claimants and the Class

               and

William A. Brewer III

James S. Renard

BICKEL & BREWER

1717 Main Street

Suite 4800

Dallas, Texas 75201

Telephone: (214) 653-4000

Attorneys for Respondents

5

 

FURTHER INFORMATION AVAILABLE

     This Notice contains a summary of the settlement and is not intended, and should not be
construed as, a complete statement of the proposed settlement, which is set forth in the parties’
Settlement Agreement and Release that has been filed with the Panel. Any questions you may have
about this Notice should not be made to the Arbitration Panel but should instead be directed to
Class Counsel at the following address:

Iona M. Evans

WOLF HALDENSTEIN ADLER

FREEMAN & HERZ LLP

270 Madison Avenue

New York, NewYork 10016

Telephone: (212) 545-4600

Dated:
                    , 2007

By Order of the Panel

6

 

EXHIBIT C

BEFORE THE AMERICAN ARBITRATION ASSOCIATION

	 	 	 	 	 
	Case No. 11 180 Y 01333 05

	 	 	 	Arbitrators:
	 
	 	 	 	 
	RALPH SILVER and
	 	 	 	 
	DR. WARREN HELLER,

	 	Claimants,
	 	MICHAEL D. ZIMMERMAN 

ROBERT A. HOLTZMAN

HON. TIMOTHY D. O’LEARY
	 
	 	 	 	 
	v.
	 	 	 	 
	 
	 	 	 	 
	WESTIN REALTY CORP., STARWOOD
	 	 	 	 
	HOTELS & RESORTS WORLDWIDE,
	 	 	 	 
	INC., 909 NORTH MICHIGAN AVENUE
	 	 	 	 
	CORPORATION and THE ST. FRANCIS

	 	 	 	Case Specialist:
	HOTEL CORPORATION,
	 	 	 	 
	 
	 	 	 	 
	 

	 	Respondents.
	 	TANYA SRABIAN
	 
	 	 	 	 
	WESTIN HOTELS LIMITED
	 	 	 	 
	PARTNERSHIP, THE WESTIN CHICAGO
	 	 	 	 
	LIMITED PARTNERSHIP and THE 
WESTIN ST.
FRANCIS LIMITED

PARTNERSHIP,
	 	 	 	 
	 
	 	 	 	 
	 

	 	Nominal	 	 
	 

	 	Respondents.	 	 

JUDGMENT ORDER FINALLY APPROVING THE SETTLEMENT, DISMISSING

THE ARBITRATION WITH PREJUDICE,AND AWARDING ATTORNEYS FEES AND

COSTS AND CLAIMANTS’ AWARDS

     1. On                     , 2007, Claimants and Respondents applied to this American Arbitration
Association Panel (the “Panel”) pursuant to the American Arbitration Association Supplementary Rules for Class Arbitrations for an Order implementing
the settlement of this arbitration (the “Arbitration”) in accordance with the Settlement Agreement
And Release, dated March 12, 2007 (the “Agreement”) that, together with the exhibits annexed
thereto, sets forth the terms and conditions for a proposed settlement of this action (the
“Settlement”) and for a judgment dismissing this Arbitration with prejudice upon the terms and
condition set forth in the Agreement.

 

 

EXHIBIT C

     2. In its Order dated                     , (the “Joint Application Order”), this Panel, among
other things: (i) set a schedule for a hearing on the final approval of Settlement; (ii) scheduled
a hearing for                     , 2007 to consider whether to approve the Settlement as being fair,
reasonable and adequate, to enter Judgment Order thereon and to consider any application by Class
Counsel for attorneys’ fees and expenses (the “Final Hearing”); and (iii) directed that Notice of
Proposed Settlement of Arbitration (the “Notice”), substantially in the form attached as Exhibit B
to the Agreement, be mailed to all Class members.

     3. Respondents have submitted an affidavit attesting that the Notice was mailed in accordance
with the Joint Application Order.

     4. The Panel held the Final Hearing on                     ,2007 and
has considered all prior proceedings in the Arbitration, the Agreement and the
exhibits annexed thereto, any submissions made in connection with the proposed
Settlement and all proceedings during the Final Hearing.

     IT IS HEREBY ORDERED as follows:

     5. To the extent not defined herein, this Order Finally
Approving The Settlement, Dismissing The Arbitration With Prejudice, And Awarding Attorneys Fees And Costs And
Claimants’ Awards (the “Judgment Order”) incorporates by reference the definitions in the Agreement
and all terms not otherwise defined herein shall have the same meanings as set forth in the
Agreement.

     6. The Panel hereby determines that the Notice was mailed in accordance with the Joint
Application Order. The mailing of the Notice complied with the requirements of the American
Arbitration Association Supplementary Rules for Class Arbitration and due process and was the best
notice practicable under the circumstances and constituted due and

2

 

EXHIBIT C

sufficient notice to all persons entitled thereto, including individual notice to all current
members of the Class who could be identified through reasonable effort. The Notice provided due
and adequate notice of these proceedings, the Settlement, the application of Class Counsel for an
award of attorneys’ fees and expenses, and payments to Claimants, in consideration of the time and
effort expended by Claimants in this Arbitration (“Claimants’ Awards”), and the other matters set
forth therein, to all persons entitled to such notice.

     7. Due and adequate notice of the proceedings has been given to the current members of the
Class, and a full opportunity has been offered to current members of the Class to object to the
proposed Settlement and to participate in the Final Hearing thereon. The Class members listed on
Exhibit A hereto have properly excluded themselves from the Class (the “Opt-outs”). Accordingly,
it is hereby determined that all Class members except for the Opt-outs are bound by this Judgment
Order (whether or not such Class member objects to the Settlement).

     8. Pursuant to American Arbitration Association Supplementary
Rules for Class Arbitration, this Panel hereby approves the Settlement. The Panel finds that the Settlement
is in all respects, fair, reasonable, and adequate to each of the Released Parties and each member
of the Class, and the Settlement is hereby approved. In making this determination, the Panel has
considered, among other things, the benefits conferred on the Class by the Settlement, the risks
faced by the Class in establishing liability, causation, and damages, and the likely probable
duration, complexity and further expense of this Arbitration in the absence of a settlement. The
Panel further finds that the
Settlement has been entered into and made in good faith. The parties thereto are hereby directed
to consummate the Settlement in accordance with the terms and conditions of the Agreement.

3

 

EXHIBIT C

     9. All pleadings filed by the Claimants in this Arbitration are dismissed on the merits and
with prejudice as to all Respondents and Nominal Respondents named therein, with each party to bear
his, her or its own costs, except for the payment of attorneys’ fees and reimbursement of expenses
as otherwise provided herein.

     10. Except for their rights under the Agreement, Claimants, the
Class, and each of them (collectively, the “Releasors”), for good and sufficient consideration, the
receipt of which is hereby acknowledged, shall be deemed to have fully and finally remised,
released, acquitted and forever discharged the Respondents and Nominal Respondents, including their
respective former and present joint venturers, partnerships, affiliates, parents, wholly or
partially owned subsidiaries, predecessors, successors, assigns, partners, representatives,
shareholders, officers, directors, managing agents, employees, attorneys and agents (collectively,
the “Released Parties”) from any and all claims including unknown claims, demands, controversies,
actions, causes of action, debts, liabilities, rights, contracts, damages, costs (including
attorneys’ fees and arbitration, court and Arbitration costs and expenses), expenses, indemnities,
obligations and losses of every kind or nature whatsoever, anticipated or unanticipated, direct or
indirect, fixed or contingent, asserted or unasserted, which Claimants and each of them ever had,
now have, or may hereafter have, related to WHLP, or to any of the Limited Partners’ investments in
the WHLP, including, but not limited to, all claims that were or could have been asserted in the
Arbitration and all claims relating to the sales of the Hotels and the operation of WHLP. The
release provided in this paragraph shall be personally enforceable by each and every one of the
Released Parties, each of which shall be deemed a third-party beneficiary of such release.

4

 

EXHIBIT C

     11. “Unknown claims” means any and all claims which any Class member does not know or suspect
to exist in his, her or its favor at the time of the release of the Released Parties, which if
known by him, her or it might have affected his, her or its decision not to object to the
Agreement. With respect to any and all claims, the parties stipulate and agree that upon the
Effective Date of the Settlement, the Claimants and the Respondents shall expressly, and each Class
member shall be deemed to have, and by operation of this Judgment Order shall have, expressly
waived any and all provisions, rights and benefits conferred by any law of any state or territory
of the United States, or any other state, sovereign or jurisdiction, or principle of common law
which is similar, comparable, or equivalent to Cal. Civ. Code § 1542 which provides:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

     12. No Class member or other person shall have any claim against Class Counsel, and all other
counsel representing the Claimants in the Arbitration, or against Respondents, their respective
counsel, or the Released Parties based on the distributions made substantially in accordance with
the Agreement or any further orders of the Panel.

     13. The application of Class Counsel for the
award of attorneys’ fees and reimbursement of expenses is granted and said counsel are awarded
legal fees of $                     and expenses of $                    .The Panel hereby finds the amount of fees
and expenses to be fair and appropriate for the services performed and to be performed by Class
Counsel in connection with the prosecution of the Arbitration and the administration of the
Settlement.

14. The Panel hereby awards Claimants’ Awards of $                     to Mr. Silver
and $                     to Dr. Heller. The Panel hereby finds the amount of Claimants’ Awards

5

 

EXHIBIT C

appropriate for the services performed and to be performed by Class Counsel in connection with the
prosecution of the Arbitration.

     15. Neither the Agreement nor any proceedings taken in accordance
with the terms set forth therein shall be construed as or deemed to be evidence, or any admission
or concession, either (a) on the part of Claimants, of the lack of merit of this Arbitration, or
(b) on the part of the Respondents, of any violations of any statute or law or of any liability or
wrongdoing or that any person or entity has suffered any damages as a result of any matter that
underlies any of the allegations or claims in the Arbitration; such activity is hereby expressly
denied and disclaimed by each of the Respondents.

     16. Without in any way affecting the finality of
this Judgment Order, this Panel shall retain continuing jurisdiction over this Arbitration and the
parties to the Agreement in order to enter any further orders as may be necessary to effectuate the
Agreement, the Settlement provided for therein and the provisions of this Judgment Order.

Dated:                      , 2007

	 	 	 	 	 
	 

	 	BY THE PANEL:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

6Exhibit 10.1

Tamalpais Bank
 Bank-Owned Life Insurance (“BOLI”) Program

Employee Certificate of Consent and Coverage

Please complete and return this form to Pamela Stalcup by March 19, 2007, even
if you do not wish to give your consent to be insured. Please return this form
to Pamela Stalcup.

My signature below acknowledges that I have received, read and understand the
Certificate of Consent and Coverage, and the accompanying Employee Communication
Letter and Frequently Asked Questions and Answers form, and that I have
willingly chosen to consent or not consent, as indicated below.

SELECT ONE OPTION:

x YES          I
consent to and authorize the purchase of Bank-Owned Life Insurance
(“BOLI”) coverage on my life by Tamalpais Bank and hereby designate
Tamalpais Bank as the sole beneficiary of the death benefit under this life
insurance.  I understand and acknowledge that Tamalpais will pay all
premiums and will be the sole owner and the sole beneficiary of the coverage on
my life, including any benefits payable after the termination of my employment
whenever and for whatever reason that may occur.  I also understand that by
becoming insured under the BOLI program, neither I nor my survivors or estate
will have any rights in this life insurance, including  (1) any right to
designate a beneficiary of the proceeds other than Tamalpais Bank; (2) any right
to receive dividends, the cash surrender value, loans or withdrawals, or any
proceeds of the insurance; (3) any right to exercise any policy conversion
privilege or assign the coverage; (4) any right to amend or modify the BOLI
policy; or (5) any right to direct the investment of amounts under the BOLI
policy.  I understand and agree that Tamalpais Bank may keep a life
insurance policy or policies in effect on my life after my employment with
Tamalpais Bank or its successors has terminated whenever and for whatever reason
that may occur.

I understand that the proceeds of the BOLI program will be used to finance the
cost of employee benefits.  I understand that the initial face amount of
life insurance on my life will not exceed $2,000,000.  Actual amounts
purchased will vary based on the number of employees who consent and their
eligible compensation.  I acknowledge that Tamalpais Bank is soliciting
this consent under the provisions outlined in California Insurance Code Section
10110.1.  I understand that this consent is valid for an indefinite period
and I also understand and consent to Tamalpais Bank’s purchase of
additional policies/coverage on my life in the future as part of an ongoing BOLI
Program.  

I understand that Tamalpais Bank may restructure this insurance coverage in the
future.  My consent below covers any future changes resulting from any such
restructuring including those that involve increasing the amount of
insurance.  I understand and agree that the Bank will not be required to
seek additional consent from me each time it obtains new or additional coverage
on my life.

I understand that in order to purchase life insurance, the Bank will be required
to provide certain information about me to insurance carriers that will include
my age, gender, social security number, recent employment attendance (including
absences recorded as due to illness or injury) based on information in the
Bank’s employment records.  By consenting to allow the Bank to
purchase life insurance on my life, I also consent to the Bank providing this
information about me to insurance carriers.

	
  
Signature:
  	
  
/s/ Michael E. Moulton
  	
   
 	
  
Print   Name:       
  	
  
Michael E. Moulton
  
	
  
 
  	
  

  	
   
 	
   
 	
  

  

Date:   3/14/07          Social
Security #:
______________          Date
of Birth:  ____________

State of
Residence:   CA          Gender:   M

        
        

        
        

Tamalpais Bank
 Bank-Owned Life Insurance (“BOLI”) Program

Employee Certificate of Consent and Coverage

Please complete and return this form to Pamela Stalcup by March 19, 2007, even
if you do not wish to give your consent to be insured. Please return this form
to Pamela Stalcup.

My signature below acknowledges that I have received, read and understand the
Certificate of Consent and Coverage, and the accompanying Employee Communication
Letter and Frequently Asked Questions and Answers form, and that I have
willingly chosen to consent or not consent, as indicated below.

SELECT ONE OPTION:

x YES          I
consent to and authorize the purchase of Bank-Owned Life Insurance
(“BOLI”) coverage on my life by Tamalpais Bank and hereby designate
Tamalpais Bank as the sole beneficiary of the death benefit under this life
insurance.  I understand and acknowledge that Tamalpais will pay all
premiums and will be the sole owner and the sole beneficiary of the coverage on
my life, including any benefits payable after the termination of my employment
whenever and for whatever reason that may occur.  I also understand that by
becoming insured under the BOLI program, neither I nor my survivors or estate
will have any rights in this life insurance, including  (1) any right to
designate a beneficiary of the proceeds other than Tamalpais Bank; (2) any right
to receive dividends, the cash surrender value, loans or withdrawals, or any
proceeds of the insurance; (3) any right to exercise any policy conversion
privilege or assign the coverage; (4) any right to amend or modify the BOLI
policy; or (5) any right to direct the investment of amounts under the BOLI
policy.  I understand and agree that Tamalpais Bank may keep a life
insurance policy or policies in effect on my life after my employment with
Tamalpais Bank or its successors has terminated whenever and for whatever reason
that may occur.

I understand that the proceeds of the BOLI program will be used to finance the
cost of employee benefits.  I understand that the initial face amount of
life insurance on my life will not exceed $2,000,000.  Actual amounts
purchased will vary based on the number of employees who consent and their
eligible compensation.  I acknowledge that Tamalpais Bank is soliciting
this consent under the provisions outlined in California Insurance Code Section
10110.1.  I understand that this consent is valid for an indefinite period
and I also understand and consent to Tamalpais Bank’s purchase of
additional policies/coverage on my life in the future as part of an ongoing BOLI
Program.  

I understand that Tamalpais Bank may restructure this insurance coverage in the
future.  My consent below covers any future changes resulting from any such
restructuring including those that involve increasing the amount of
insurance.  I understand and agree that the Bank will not be required to
seek additional consent from me each time it obtains new or additional coverage
on my life.

I understand that in order to purchase life insurance, the Bank will be required
to provide certain information about me to insurance carriers that will include
my age, gender, social security number, recent employment attendance (including
absences recorded as due to illness or injury) based on information in the
Bank’s employment records.  By consenting to allow the Bank to
purchase life insurance on my life, I also consent to the Bank providing this
information about me to insurance carriers.

	
  
Signature:
  	
  
/s/ Mark Garwood
  	
   
 	
  
Print   Name:     
  	
  
Mark Garwood
  
	
   
  	
  

  	
   
 	
   
 	
  

  

Date:   3/14/07          Social
Security #:
______________          Date
of Birth:  ____________

State of
Residence:   CA          Gender:   M

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