Document:

EXHIBIT 10.4

 

MANAGEMENT AGREEMENT

 

(Innisbrook Resort)

 

 

	
  WESTIN:

  	
   

  	
  WESTIN
  MANAGEMENT COMPANY SOUTH, a

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OWNER:

  	
   

  	
  GTA-IB, LLC,
  a Florida limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EFFECTIVE
  DATE:

  	
   

  	
  July 15,
  2004

  

 

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”) is
made as of this 15th day of July, 2004 (the “Effective Date”), by
and between WESTIN MANAGEMENT COMPANY SOUTH,
a Delaware corporation (“Westin”), and GTA-IB,
LLC, a Florida limited liability company (“Owner”).

 

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

 

A.            Westin is
knowledgeable and experienced in managing and promoting first-class hotels and
golf resorts and has performed such services throughout the world.

 

B.            Owner is the owner of
a first-class golf resort known as The Westin Innisbrook Golf Resort, located
near Tarpon Springs, Florida (the “Resort”). 
Owner desires to engage Westin to manage and promote the Resort.

 

C.            The Resort includes
the following components:  (i) 72
holes of championship golf, practice facilities, three (3) clubhouses and pro
shops, golf and beverage carts and related facilities (collectively, the “Golf
Facility”); (ii) Nine Hundred Thirty-Eight (938) individually owned condominium
units currently containing approximately Six Hundred (600) rentable guest rooms
which are subject to a Master Lease Agreement (as defined herein);
(iii) three (3) conference centers containing a total of approximately
59,728 square feet of meeting area; (iv) three (3) full service food and
beverage facilities; (v) recreational facilities, including tennis courts,
racquetball courts, a fitness center and six (6) outdoor heated swimming pools;
(vi) the Loch Ness Monster Water Park; and (vii) parking areas and
other supporting facilities.  In
addition, Westin and Owner acknowledge and agree that the Resort has certain
characteristics which distinguish it from other hotels and/or golf resorts
managed by Westin (collectively, the “Unique Characteristics”), including,
without limitation: (i) that the Resort consists of 72 holes of championship
golf located over a large geographic area; (ii) that the Resort consists of a
condominium rental pool structure in lieu of traditional hotel operations;
(iii) that the Resort is subject to certain limited rights in allowing public
golf play; (iv) that the Resort is subject to certain golf membership
restrictions; and (v) the significance of the golf revenue component to the
revenue performance of the Resort as compared to the revenue generated from
rooms.

 

D.            The Resort is located
on that certain real property described on the attached Exhibit A (the
“Resort Land”).

 

E.             This Agreement is
intended to replace and supersede that certain Management Contract dated as of
May 7, 1997, by and between Golf Host Resorts, Inc. (“GHR”) and Westin
Hotel Company (“WHC”), Westin’s predecessor in interest (the “GHR Agreement”),
which is hereby terminated.

 

F.             Westin and Troon Golf
L.L.C., a Delaware limited liability company (“Troon”), are parties to that
certain Facility Management Agreement for The Westin Innisbrook Golf Resort
dated as of the Effective Date (the “Golf Management Agreement”).  A copy of the Golf Management Agreement is
attached hereto as Exhibit B.

 

 

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

 

1.             INTERPRETATION, DEFINITIONS, AND
REPRESENTATIONS

AND WARRANTIES

 

1.1          Interpretation.

 

1.1.1  The foregoing Recitals and the attached Exhibits
A through J hereof are hereby incorporated in and made a part of
this Agreement.

 

1.1.2  Unless the language specifies or the context
implies that a term of this Agreement is a condition, all of the terms of this
Agreement shall be deemed and construed to be covenants to be performed by the
designated party.

 

1.1.3  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 the examples listed.

 

1.1.4  Unless expressly stated otherwise in this
Agreement, whenever a matter is submitted to a party for approval or consent in
accordance with the terms of this Agreement, that party has a duty to act
reasonably and timely in rendering a decision on the matter.

 

1.2          Definitions.  As used throughout this Agreement and the
attached Exhibits, the following terms shall have the respective meanings set
forth below:

 

1.2.1  Affiliate - with respect to Westin
and Owner, any other person or entity directly or indirectly controlling,
controlled by, or under common control with Westin or Owner, as the case may
be.

 

1.2.2  Approvals - licenses, approvals,
permits, authorizations, registrations and the like required by any
governmental organization or unit having jurisdiction over Owner or the Resort.

 

1.2.3  Base Fee - that portion of the
Management Fee calculated on the basis of Gross Operating Revenue in accordance
with Section 3.2.1.

 

1.2.4  Benefit Plans - all employee benefit
plans for the Resort Personnel, including, without limitation, any and all
savings, pension, retirement, medical and dental plans.

 

1.2.5  Business Interruption Insurance -
insurance coverage against “Business Interruption and Extra Expense” (as that
phrase is used within the United States insurance industry for application to
transient lodging facilities).

 

1.2.6  Capital Expenditures - all amounts
expended by Owner or Westin (on behalf of Owner) for Capital Improvements in
accordance with the terms of this Agreement.

 

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1.2.7  Capital Improvement - an item of any
nature incorporated into the Resort that, according to Generally Accepted
Accounting Principles, is not properly deducted as a current expense on the
books of the Resort, but rather should be capitalized.  Equipment and golf carts under operating
leases of greater than one year shall be included as Capital Improvements.

 

1.2.8  Casualty Restoration - the activity
of repairing, restoring, replacing, or rebuilding the Resort as required by
Article 7.

 

1.2.9  Central Reservations Fee - the fee
for the Resort’s access to Westin’s central reservations system, to be paid by
Owner to Westin in accordance with Section 3.1.4.

 

1.2.10  Certified Financial Statements -
financial statements with respect to the operations of the Resort which contain
the information and the certificate described in Section 2.5.3 and which
are necessary for Owner to prepare an audit report with respect thereto.

 

1.2.11  Committee - the policy committee
established in accordance with Section 12.3.

 

1.2.12  Comparable Golf Resorts - at any time
when the Performance Test is being applied, the five (5) golf resorts in
Florida that are most comparable to the Resort in quality, price and market
(with due consideration given to age, quality, size, amenities, amount of
meeting space and business mix).  Owner
and Westin agree that, as of the Effective Date, the Comparable Golf Resorts
are: (i) PGA National Golf Resort; (ii) Belleview Biltmore Resort; (iii) Amelia
Island Plantation; (iv) Marriott Sawgrass Resort; and (v) Doral Resort and
Country Club; provided, however, any of the foregoing which do not report (or
cease to report) to Smith Travel Research shall be excluded from the definition
of Comparable Golf Resorts.  All
determinations as to which first-class golf resorts are to be included in the
group of Comparable Golf Resorts shall be made by the mutual written agreement
of Owner and Westin or, if the parties are unable to reach agreement within
thirty (30) days after the request of either party to do so, as determined by
PricewaterhouseCoopers LLP, or another reputable hospitality industry
consultant that is mutually acceptable to Owner and Westin.

 

1.2.13  Computer Services - the services
Westin performs with respect to automating the operations of the Resort, as
generally described in Exhibit C.

 

1.2.14  Consumer Price Index - the Consumer
Price Index for All Urban consumers, All Items, for the U.S. City Average, as
published by the Bureau of Labor Statistics of the U.S. Department of Labor,
using the years 1982-84 as a base of 100.

 

1.2.15  Controller - means the controller of
the Resort appointed by Westin and approved by Owner pursuant to Section 2.6.1.

 

1.2.16  Cost Sharing Payments - any payments,
including interest thereon, in respect of Cost Sharing (as defined in the
Master Lease Agreement) payable to the owners of the individual condominium
units within the Resort pursuant to Section 3 of the First Addendum to the
Master Lease Agreement. Such Cost Sharing Payments and any interest thereon
shall be treated as additional rent due to the owners of the individual
condominium units under the Master Lease Agreement.

 

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1.2.17  Date of Taking - the earlier of the
date on which the relevant governmental authority is entitled to possession or
takes possession as the result of a Taking.

 

1.2.18  Director of Golf Sales - means the
director of golf sales for the Resort appointed by Westin, if any.

 

1.2.19  Director of Group Sales - means the
director of group sales for the Resort appointed by Westin.

 

1.2.20  Director of Operations - means the
director of operations of the Resort appointed by Westin and approved by Owner
pursuant to Section 2.6.1.

 

1.2.21  Director of Sales and Marketing -
means the employee with oversight responsibility with respect to the sales and
marketing of the Resort, as appointed by Westin and approved by Owner pursuant
to Section 2.6.1.

 

1.2.22  Dispute - any dispute, claim or issue
arising under this Agreement, except claims (i) relating to preserving or
protecting Westin’s proprietary rights or Owner’s proprietary rights, if any,
or (ii) for extraordinary relief such as injunction or eviction.

 

1.2.23  Event of Default - any of the events
so defined in Section 4.2.

 

1.2.24  Excess Loss Expenditures - the
portion of any Capital Expenditures incurred in connection with any Casualty
Restoration that is (a) not covered by the proceeds of insurance and (b)
exceeds twenty-five percent (25%) of the total cost of the Casualty
Restoration.  By way of example, if the
total cost of a Casualty Restoration is $5,000,000 and if Owner receives
$3,000,000 in insurance proceeds in connection with such casualty, then
$750,000 of the total $2,000,000 uninsured cost of the Casualty Restoration
would be treated as Excess Loss Expenditures.

 

1.2.25  Expected Management Fees - the
Management Fees Westin would have earned from the date of the cessation of
Westin’s management of the Resort through the end of the full term of this
Agreement, as mutually agreed in writing by Westin and Owner or, absent such
agreement, as determined pursuant to Article 10.

 

1.2.26  Fee Statement - the statement
delivered by Westin to Owner in accordance with Section 3.2.3.

 

1.2.27  FF&E - items of furniture,
fixtures and equipment used in the ordinary course of operating the Resort  that, under Generally Accepted Accounting
Principles, properly must be capitalized on the books of the Resort.

 

1.2.28  Force Majeure Event - any event or
circumstance beyond the reasonable control of Westin that adversely affects the
operation of the Resort, including fire, storm or other casualty, strikes or
other labor interruptions, acts of war or terrorism, or riots or other civil
unrest, but expressly excluding general economic conditions or other events or
circumstances having an adverse impact on the Competitive Set generally.

 

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1.2.29  Fund - the separate bank account
established to provide funds for Capital Improvements in accordance with
Section 2.4.2.

 

1.2.30  General Manager - the individual
appointed by Westin, and approved by Owner in writing, in accordance with the
terms of this Agreement to provide on-site supervision of the Resort
operations.

 

1.2.31  Generally Accepted Accounting Principles
or GAAP - those conventions, rules, procedures and practices, consistently
applied, affecting all aspects of recording and reporting financial
transactions which are generally accepted by major independent public
accounting firms in the United States. 
If Owner and Westin cannot agree on what constitutes Generally Accepted
Accounting Principles, then the public accounting firm then or most recently
engaged to prepare the Certified Financial Statements for the Resort in
accordance with Section 2.5.3 shall make the determination upon the request of
either party (with a concurrent copy to the non-requesting party).  Any financial or accounting terms not
otherwise defined herein shall be construed and applied according to Generally
Accepted Accounting Principles.

 

1.2.32  Golf Director - means the director of
all golf operations for the Golf Manager.

 

1.2.33  Golf Facility - as defined in Recital
C above.

 

1.2.34  Golf Manager - the management company
engaged from time to time to operate the Golf Facility.  Initially, the Golf Manager shall be Troon
or another professional golf manager selected by Westin and approved by Owner
in writing.

 

1.2.35  Golf Management Agreement - means the
agreement between Westin and Golf Manager with respect to the management of the
Golf Facility.

 

1.2.36  Golf Management Fee - with respect to
any period, an amount equal to the actual fee or compensation paid to Golf
Manager with respect to such period for the management of the Golf Facility
pursuant to the Golf Management Agreement.

 

1.2.37  Golf Operating Revenue - all revenue
and income of any kind derived from the following operations at the Golf
Facility: greens fees, cart fees, pro shop sales, club rental fees, member dues
and initiation fees, lesson fees (only the portion received by the Golf
Facility, if services are provided by independent contractors), and revenues
derived from On-Course Food and Beverage Operations (provided that and for so
long as Golf Manager is responsible for on-course food and beverage
operations), and determined in accordance with Generally Accepted Accounting Principles
consistently applied which are properly attributable to the period under
consideration, and specifically excluding the following, without limitation:

 

(a)           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;

 

(b)           receipts from the financing, refinancing,
sale, master lease or other disposition of capital assets or any portion of the
Golf Facility, including, without limitation, any

 

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payment arising in connection with the
settlement of any disputes with GHR, or any affiliate thereof, including,
without limitation, any proceeds from the sale of any portion of the Resort;

 

(c)           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 Facility;

 

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

 

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

 

(f)            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 Revenues);

 

(g)           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

 

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

 

To the extent applicable and
not inconsistent with this Section 1.2.37, 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.

 

1.2.38  Gross Operating Profit - means, with
respect to any period of time, the amount by which the sum of Gross Operating
Revenue and Golf Operating Revenue for such period exceeds Operating Expenses
for such period.

 

1.2.39  Gross Operating Revenue - all revenue
and income of any kind derived directly or indirectly from operations at the
Resort (other than the Golf Operating Revenue) which are properly attributable
to the Operating Year under consideration (including gross revenues generated
from the rental of the individual condominium units  within the Resort and including rentals or other payments
from licensees, lessees, or concessionaires in the Resort, but not gross
receipts of such licensees, lessees, or concessionaires), determined in
accordance with Generally Accepted Accounting Principles and the Uniform System
of Accounts, except that the following shall not be included in
determining Gross Operating Revenue:

 

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

 

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(b)           receipts from the financing, refinancing,
sale or other disposition of capital assets and other items not in the ordinary
course of the Resort’s operations and income derived from securities and other
property acquired and held for investment, including, without limitation, any
payments arising in connection with the settlement of any disputes with GHR, or
any affiliate thereof, including, without limitation, any proceeds from the
sale of any portion of the Resort;

 

(c)           receipts from awards or sales in connection
with any Taking, from other transfers in lieu of and under the threat of any
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 Resort;

 

(d)           proceeds of any insurance, including the
proceeds of any Business Interruption Insurance;

 

(e)           Third Party Credits (not including charge or
credit card discounts, which shall not constitute a deduction from revenues in
determining Gross Operating Revenue but shall be an Operating Expense and
therefore shall constitute an Incentive Income Deduction in determining
Incentive Income); and

 

(f)            gratuities added to the retail sales
receipts which are actually passed through to the employees as part of their
compensation.

 

1.2.40  Gross Rooms Revenue - that portion of
Gross Operating Revenue derived from the rental, use or occupancy of the
Rentable Guest Rooms.

 

1.2.41  GTA - means Golf Trust of America,
L.P., a Delaware limited partnership.

 

1.2.42  GTA Mortgage - that certain Mortgage,
Security Agreement, Fixture Filing with Assignment of Rents dated as of June
20, 1997, by Golf Host Resorts, Inc. for the benefit of Golf Trust of America,
L.P.

 

1.2.43  Incentive Income - with respect to
any Operating Year (or partial Operating Year), the amount by which the sum of
Gross Operating Revenue and Golf Operating Revenue properly attributable to
such Operating Year (or partial Operating Year) exceeds the Incentive Income
Deductions for the same period.

 

1.2.44  Incentive Income Deductions - with
respect to any period, the sum of the following items payable with respect to
such period, all calculated on an accrual basis and without duplication:  (i) Operating Expenses; (ii) the
Base Fee; (iii) Taxes; (iv) Insurance Costs; (v) payments under
leases of capital items (to the extent not covered by amounts in the Fund);
(vi) the amount to be contributed to the Fund pursuant to
Section 2.4.2; (vii) Cost Sharing Payments to the extent not
otherwise included in Operating Expenses; 
(viii) the Incremental Capital Amount; and (ix) Excess Loss
Expenditures.

 

1.2.45  Incentive Fee - that portion of the
Management Fee calculated on the basis of Incentive Income in accordance with
Section 3.2.1.

 

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1.2.46  Included Asset Management Personnel –
as defined in Section 3.5.4

 

1.2.47  Incremental Capital Amount - with
respect to any period, one sixth of the amount by which (a) the aggregate
amount of all Capital Expenditures made during such period (excluding Owner’s
Capital Expenditures and Excess Loss Expenditures) exceed (b) the sum of
(i) the amount to be contributed to the Fund during such period pursuant
to Section 2.4.2, plus (ii) any amounts that were contributed to the
Fund but not expended during prior periods.

 

1.2.48  Insurance Costs - insurance premiums
relating to fire, extended coverage, liability and Business Interruption
Insurance policies maintained with respect to the Resort.

 

1.2.49  Legal Requirements - all laws,
statutes, ordinances, rules, regulations, permits, licenses, authorizations,
directions and requirements of all governments and governmental authorities,
that now or hereafter may be applicable to the Resort and the operation
thereof, including those relating to employees, zoning, building, life/safety,
health and environmental matters, and accessibility of public facilities.

 

1.2.50  Management Fee - the fee for Westin’s
management services to be paid by Owner to Westin in accordance with Section
3.2.

 

1.2.51  Marketing Fee - the fee for Westin’s
corporate sales and marketing services to be paid by Owner to Westin in
accordance with Section 3.1.1.

 

1.2.52  Master Lease Agreement - that certain
Innisbrook Rental Pool Master Lease Agreement dated January 1, 2002, by and
among certain lessors and Golf Host Resorts, Inc., as lessee, as amended from
time to time (including, without limitation, by that First Addendum dated
October 5, 2001; that certain Second Addendum dated December, 2001; and by
those certain Annual Lease Agreements executed by certain lessors to adopt the
benefits and burdens of the Innisbrook Rental Pool Master Lease Agreement for
the relevant forthcoming year), as hereafter modified with the prior written
consent of Owner and Westin; provided, however, that Westin’s prior written
consent shall not be required with respect to non material changes that do not
affect the economic terms and provisions thereof (although a copy of any such
change shall be delivered to Westin).

 

1.2.53  Mortgage - any real estate,
leasehold, or chattel mortgage, security agreement, or similar document or
instrument encumbering Owner’s interest in the Resort or any part thereof,
together with all promissory notes, loan agreements or other documents relating
thereto including, without limitation, the GTA Mortgage.

 

1.2.54  Mortgagee - any holder of a Mortgage,
including, without limitation, GTA or its successors and assigns.

 

1.2.55  Operating Account(s) - the bank
account or accounts established for the Resort in accordance with Section
3.5.1.

 

1.2.56  Operating Expenses - all those ordinary
and necessary expenses incurred in the operation of the Resort (including,
without limitation, the Golf Facility) as contemplated by the applicable
Operating Plan and Budget, including salaries, wages and costs of Benefit

 

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Plans for all Resort Personnel, the Golf
Management Fee (other than the “Supplemental Fee” described in Article VII of
the Golf Management Agreement), the cost of maintenance and utilities, payments
made to the owners of the individual condominium units within the Resort in
connection with the rental of their units, administrative expenses, the costs
of marketing, advertising and business promotion, the Marketing Fee, the
Central Reservations Fee and any other amounts payable to Westin as set forth
in this Agreement.  Notwithstanding the
foregoing description, the following shall not constitute Operating
Expenses:  (i) the Management Fee; (ii)
Taxes; (iii) Insurance Costs; (iv) rentals of real and personal property
(except for payments made to the owners of the individual condominium owners in
connection with the rental of their units, including, without limitation, the
Cost Sharing Payments, with respect to personal property, rentals directly in
connection with revenue generating activities); (v) depreciation and
amortization on capitalized assets; (vi) costs and expenses of Owner or Owner’s
personnel that are not incurred directly for the operation of the Resort, such
as entertainment expenses, salaries, wages and employee benefits of Owner’s
employees that are not Resort Personnel, directors’ fees and the expenses of
directors or Owner’s employees to attend board meetings; and (viii) costs and
professional fees, including the fees of attorneys, accountants and appraisers,
incurred directly or indirectly in connection with any category of expense that
would not properly be treated as an Operating Expense.

 

1.2.57  Operating Plan and Budget - the
annual marketing and operating plan and budget for the Resort prepared in
accordance with the terms of Section 2.3 on a calendar year basis.

 

1.2.58  Operating Standard - the standard of
management of the Resort described in Section 2.2.

 

1.2.59  Operating Year - each calendar year
during the term of this Agreement, except that the first Operating Year shall
be a partial year beginning on the Effective Date and ending on the following
December 31, and if this Agreement is terminated effective on a date other than
December 31 in any year, then the partial year from January 1 of the year in which
such termination occurs to such effective date of termination.

 

1.2.60  Owner’s Capital Expenditures - those
Capital Expenditures, if any, that are required to be made to satisfy Owner’s
obligations under Section 2.4.4 or that are made by or at the direction of
Owner in excess of the Capital Expenditures recommended by Westin in writing to
Owner for the period in question.

 

1.2.61  Owner Obligations - all of the
obligations of Owner to third parties under the Master Lease Agreement
(including the obligation to make Cost Sharing Payments as a component of rent)
and any Mortgage a copy of which has been provided to Westin (including,
without limitation, the GTA Mortgage).

 

1.2.62  Performance Test - shall have the
meaning provided in Section 4.3.

 

1.2.63  Permitted Financing – shall mean any
financing(s) of the Resort the aggregate amount of which (after taking into
account all then outstanding financings of the Resort ) is less than 70% of the
market value of the Resort at the time of closing of such

 

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financing(s), as such market value is
determined by a duly licensed and qualified and nationally recognized
independent appraisal firm (or by an independent appraisal firm selected by a
bona-fide third party who is the lender under such financing); provided,
however, that a financing that (x) results (itself, or in combination with
other financings of the Resort entered into from and after the Effective Date)
in Owner, GTA or their Affiliates receiving more than the Permitted Financing
Proceeds (determined as of the date of such financing, and excluding (1) any
financing proceeds that are reinvested by Owner, GTA or their Affiliates
directly in the Resort in any form or for any purpose, including, without limitation,
working capital and capital improvements, or (2) amounts necessary to reimburse
Owner, GTA or their Affiliates for any investment, cash contribution or
expenditure made by any of such persons in the Resort on or after the Effective
Date), or (y) is otherwise in substance a sale, transfer or liquidation of
more than fifty percent (50%) of the legal, beneficial or economic interest of
Owner, GTA or their Affiliates in the Resort (other than a pledge of such
interest solely as collateral) shall not be a Permitted Financing but, rather,
shall be deemed to be a Sale of the Resort.

 

1.2.64  Permitted Financing Proceeds – shall
mean, as of any date, proceeds of any financing of the Resort that are (when
added to the proceeds of any other financing entered into from and after the
Effective Date) equal to or less than the sum of (x) $26,500,000,
increased by (y) $6,849 for each day between the Effective Date and the
date of the financing in question, provided, however, that the Permitted
Financing Proceeds shall in no event exceed $34,000,000.

 

1.2.65  Present Value - the Expected
Management Fees, discounted to the date of payment, at a rate equal to the
prime rate of Bank of America, N.A. in effect on the date of cessation of
Westin’s management of the Resort.

 

1.2.66  Reimbursable Expenses - all
out-of-pocket costs and expenses actually incurred by Westin for Owner’s
account in the ordinary course of providing services in accordance with this
Agreement (net of any and all Third Party Credits received directly in
connection with the operation of the Resort), whether or not such costs or
expenses are specifically so denominated in this Agreement.

 

1.2.67  Rentable Guest Room - an enclosed
guest-room space that contains its own entrance from a common area, a bed, a toilet,
a sink and a bathing facility.

 

1.2.68  Representatives - the individuals
appointed by each of Owner and Westin in accordance with Section 12.3.1 to
serve on the Committee.

 

1.2.69  Resort - as defined in Recital B
above.

 

1.2.70  Resort Personnel - all individuals
performing services in the name of the Resort at the Resort, whether such
individuals are employed by Owner, Westin, Golf Manager or any Affiliate
thereof; excluding, however, any asset management personnel employed by GTA
with respect to the Resort other than Included Asset Management Personnel.

 

1.2.71  Restricted Area - the area north of
the Tampa/Clearwater metropolitan areas and south of Ocala, Florida, as
depicted on the attached Exhibit D.

 

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1.2.72  RevPAR - with respect to any resort
that is one of the Comparable Golf Resorts, and with respect to any period of
time, the “Revenue Per Available Room” for the resort in question, as measured
and reported by Smith Travel Research or such other reputable independent third
party market research firm as may be mutually approved in writing by Owner and
Westin.

 

1.2.73  Sale of the Resort – shall mean (i) a
sale of more than fifty percent (50%) of the legal, beneficial or economic
interest of Owner, GTA or their Affiliates in the Resort (including, without
limitation, through a sale or assignment of an interest in the GTA Mortgage) to
an unaffiliated third party in a bona fide arm’s length transaction, or (ii) a
conveyance of the Resort in connection with a merger, consolidation, sale or
contribution of assets or other business combination or reorganization with a
third party in consideration of the issuance or transfer of securities in the
acquiring entity (including a conveyance of the Resort in connection with an
initial public offering), regardless of whether Owner or any Affiliate of Owner
is a participant in such offering, or (iii) any financing of the Resort other
than a Permitted Financing (it being acknowledged that a Permitted Financing
shall not constitute a Sale of the Resort).  Nothing
in this definition shall override the liquidating trust exception set forth in
Section 9.6.

 

1.2.74  Senior Executive Personnel - the
individuals employed from time to time as the General Manager, the Director of
Operations, the Director of Sales and Marketing and the Controller of the
Resort.  The overall annual compensation
of each of the Senior Executive Personnel shall be specified in the Operating
Plan and Budget.

 

1.2.75  Superintendent of Golf - means the
person responsible for the maintenance and agronomical conditions of the Golf
Facility and approved by Owner pursuant to Section 2.6.1.

 

1.2.76  Supplemental Fee – as defined in the
Golf Management Agreement.

 

1.2.77  Taking - a taking as a result of
condemnation or eminent domain, or a conveyance by Owner in lieu thereof, of
all or part of the Resort; and any taking by any governmental authority or
governmental unit (or any authority or entity acting on behalf of or purporting
to act on behalf of any governmental authority or unit) for any purpose
whatsoever, including confiscation, or a conveyance by Owner in lieu thereof,
of all or part of the Resort; and any change in laws, regulations, orders,
decrees, or the like which has the effect of a taking of all or part of the
Resort.

 

1.2.78  Taxes - all taxes, including ad
valorem taxes on real property, personal property taxes and business and
occupation taxes, relating to or assessed in connection with the ownership or
operation of the Resort (but excluding sales and use taxes on leases or
materials and inventory purchases used in the operations and intangible taxes
assessed upon any outstanding accounts receivable balances).

 

1.2.79  Termination Fee - as defined in
Section 4.4.

 

1.2.80  Third Party Credits - any and all
rebates, discounts, payments, fees or credits received by or credited to Westin
in connection with the management or operation of the Resort.  Third Party Credits shall specifically
exclude any rebates, discounts, payments, fees or

 

12

 

credits received by or credited to Westin in
connection with its purchasing program described in Section 2.9.

 

1.2.81  Uniform System of Accounts - the
latest edition of the Uniform System of Accounts for Hotels that is published
by the Resort Association of New York City, Inc., and approved by the American
Hotel & Motel Association (currently, the 9th Revised Edition, 1996), a
copy of which Westin shall provide to Owner prior to the Effective Date.

 

1.2.82  Westin Investment Amount - as of any
date, an amount equal to Ten Million Two Hundred Sixty-Five Thousand Dollars
($10,265,000), reduced by the aggregate amount (if any) paid by Owner to Westin
on or before such date on account of Incentive Fees for any period commencing
on or after the Effective Date.

 

1.2.83  Westin Managed Hotels - the hotels
and other resorts (including golf resorts) in North America that are managed by
Westin under the name “Westin Hotels & Resorts,” or any such successor
name.

 

1.2.84  Westin Recovery Date - the date (if
any) when the Westin Investment Amount has been reduced to zero.

 

1.2.85  Westin Software - certain computer
software specially developed by or for Westin for use in hotels and resorts
managed by Westin or for use in hotels operated in affiliation with the name
“Westin Hotels & Resorts” (or as otherwise set forth in Section 1.2.82), as
more fully described in Exhibit C.

 

1.2.86  Westin Trademarks - the intellectual
property rights described in Section 11.1.

 

1.3          Representations and Warranties of Westin.  Westin represents and warrants to Owner as
of the Effective Date as follows:

 

1.3.1  Westin is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, and is duly
qualified to do business as a foreign corporation in Florida.

 

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

 

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

 

1.3.4  Westin shall, at its own expense, keep in
full force and effect its legal existence and the rights required for it timely
to observe all of the terms and conditions of this Agreement.

 

13

 

1.3.5  Westin has full power, authority and legal
right to use the Westin Trademarks in conjunction with its performance of this
Agreement.

 

1.3.6  There is no material litigation or
proceeding pending or threatened against Westin that could reasonably be
expected to adversely affect the validity of this Agreement or the ability of
Westin to comply with its obligations under this Agreement except as disclosed
in a writing to Owner from Westin sent in July 2004.

 

1.4          Representations and Warranties of Owner.  Owner represents and warrants to Westin as
follows:

 

1.4.1  Owner is a limited liability company, duly
organized, validly existing and in good standing under the laws of
Florida.  To Owner’s actual knowledge,
Owner holds all material Approvals necessary to permit Owner to own and operate
the Resort.

 

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

 

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

 

1.4.4  Owner shall, at its own expense, keep in
full force and effect its legal existence and shall obtain, as and when
required for the performance of its obligations under this Agreement, the
Approvals required for it timely to observe all of the terms and conditions of
this Agreement.

 

1.4.5  Owner is the sole owner of the real property
on which the Resort is located and is the sole owner or lessee of the
improvements comprising the Resort and all real and personal property located
therein, other than the individually owned condominium units within the
Resort.  Owner has full power, authority
and legal right to own such real and personal property, other than the individually
owned condominium units within the Resort.

 

1.4.6  There is no litigation or proceeding pending
or threatened against Owner that could reasonably be expected to adversely
affect the validity of this Agreement or the ability of Owner to comply with
its obligations under this Agreement.

 

2.             GENERAL MANAGEMENT AND OPERATIONS

 

2.1          General Management Services;
Operating Standard. 
Owner hereby engages Westin to supervise, direct and control the
management, operation and promotion of the Resort during the term of this
Agreement.  Subject to the terms,
provisions and limitations set forth in this Agreement (including all approval
rights granted to Owner hereunder and those approval rights of Owner set forth
in the Golf Management Agreement, as summarized in Schedule 2.1, subject to the
specific terms of the Golf Management Agreement), Westin shall have the

 

14

 

exclusive authority and duty to direct,
supervise, manage and operate the Resort on a day-to-day basis in an efficient
and economical manner and (subject to Owner’s compliance with its obligations
under this Agreement and the absence of any legal constraint or Force Majeure
Event that would prevent such operation) shall operate the Resort consistent
with the standards of a first-class upscale golf resort and in compliance with
the requirements imposed by this Agreement and otherwise in compliance with the
standards prevailing in other similar Westin Managed Hotels.  Owner shall commit the financial and other
resources necessary to permit the Resort to be operated in accordance with the
foregoing standards and in a manner consistent with each Operating Plan and
Budget and this Agreement, including Westin’s standards and policies applicable
to all phases of operation and programs such as purchasing programs, sales
promotion programs, golf marketing programs and quality improvement
programs.  Subject to these standards,
policies and programs, and while at all times maintaining a service level that
is generally considered to be “first-class,” Westin’s primary performance
objectives shall be (without order of priority) to: (i) protect and
preserve the assets that comprise the Resort; (ii) maximize the financial
return to Owner from all of the Resort’s operations and profit centers
recognizing the Unique Characteristics of the Resort; (iii) control
Operating Expenses of the Resort; and (iv) market the Resort as a
destination first-class golf resort and facility.  Throughout this Agreement, the standards, policies, programs and
objectives of operation set forth in this Section 2.1 shall be referred
to as the “Operating Standard.”

 

2.2          Authority and Duty of Westin.  Without limiting the generality of the
foregoing, but subject to any specific qualifications and limitations set forth
in this Agreement (including, without limitation, the provisions of
Section 2.3 relating to the Operating Plan and Budget, and the provisions
of Section 12.3 relating to the parties’ discussion through the Committee
of material issues affecting the Resort’s operations), Westin shall have the
authority and duty, as Westin deems necessary or advisable for the proper
operation and maintenance of the Resort in accordance with the Operating
Standard to:

 

2.2.1  determine and implement all personnel
policies relating to the Resort, including (i) policies and practices
relating to terms and conditions of employment, screening, selection, training,
supervision, compensation, bonuses, Benefit Plans, discipline, discharge and
replacement for all Resort Personnel, and (ii) policies and practices
relating to the exercise by any Person of rights under the National Labor
Relations Act or any applicable labor laws in relation to the Resort (including
union organization, recognition and withdrawal of recognition, union elections,
contract negotiation on a single-employer or multi-employer basis, grievances,
unfair labor practice charges, strikes and lockouts); provided, however, that
Westin shall not enter into any collective bargaining agreement for the Resort
Personnel without the prior written consent of Owner;

 

2.2.2  subject to the restrictions contained in
Sections 2.6.1 and 2.6.5, recruit, hire (on terms consistent with the Operating
Plan and Budget), relocate, pay, supervise and discharge all Resort Personnel;

 

2.2.3  administer, in the name and on behalf of
Owner, a program for the rental to the public of the individually owned
condominium units within the Resort in accordance with Owner Obligations, to
the extent the same have been provided to Westin and, in consultation

 

15

 

with Owner, determine and implement any
modifications to such program that may be necessary or advisable for the
operation of the Resort in accordance with the Operating Standard;

 

2.2.4  establish (as part of the Operating Plan and
Budget) all prices, price schedules, rates and rate schedules, and all rents,
lease charges and concession charges for all areas of the Resort, and
supervise, direct and control collection of income of any nature from the
Resort’s operations and the giving of receipts in connection therewith;

 

2.2.5  supervise and maintain complete books and
records consistent with the Uniform System of Accounts and Generally Accepted
Accounting Principles, including the books of accounts and the accounting procedures
of the Resort, all as more specifically described in Section 2.5 below;

 

2.2.6  negotiate and administer, in the name and on
behalf of Owner, leases, licenses and concession agreements on prevailing
market terms for all public space at the Resort, including all stores, office
space and lobby space, provided that any lease with a term in excess of one (1)
year or affecting any material portion of the Resort shall be subject to
Owner’s prior written consent;

 

2.2.7  keep the Resort and the FF&E in good
operating order, repair and condition, including making necessary replacements,
improvements, additions and substitutions thereto generally consistent with the
Operating Plan and Budget for such Operating Year;

 

2.2.8  manage the design, construction and installation
of any renovations, improvements, repairs, or replacements of FF&E,
building systems, or other physical components of the Resort that may be
undertaken in accordance with this Agreement;

 

2.2.9  negotiate, enter into and administer, in the
name and on behalf of Owner and on prevailing market terms, service contracts
and licenses for ordinary course Resort operations and maintenance, including
contracts and licenses for life-safety systems maintenance, electricity, gas,
telephone, cleaning, elevator and boiler maintenance, air conditioning
maintenance, laundry and dry cleaning, master television service, use of
copyrighted materials (such as music and videos), entertainment, and other
services Westin deems reasonably advisable; provided, however, that Westin
shall not enter into any new contracts that are outside of the ordinary course
of Resort operations and maintenance or are for amounts in excess of Fifty
Thousand Dollars ($50,000) per year for contracts of durations longer than one
(1) year, or in excess of One Hundred Thousand Dollars ($100,000) for all other
contracts without Owner’s prior written approval, and, subject to the
provisions of Section 2.9, any and all Third Party Credits received
directly in connection with such contracts shall be accounted for by Westin in
the books and records of the Resort and shall either be remitted to the
Operating Accounts, credited against the Resort’s Operating Expenses or
credited against amounts payable by Owner to Westin pursuant to this Agreement;

 

2.2.10  negotiate, enter into and administer, in the
name and on behalf of Owner, contracts for the use of banquet and meeting
facilities and guest rooms by groups and individuals;

 

16

 

2.2.11  supervise and purchase, or arrange for the
purchase of, all inventories, provisions, consumable supplies and operating
supplies that are necessary and proper to maintain and operate the Resort, and
to use the same in the management and operation of the Resort;

 

2.2.12  prepare and submit to Owner the Operating
Plan and Budget in accordance with Section 2.3.1;

 

2.2.13  at Owner’s request, cooperate with Owner and
any prospective purchaser, lessee, Mortgagee, or other lender in connection
with any proposed sale, lease, or financing of or relating to the Resort; provided,
however, that Westin shall not be required to release to any person or
entity any information that is proprietary to Westin or its Affiliates or
(except as expressly contemplated in Section 2.3) any financial projections
(including the Operating Plan and Budget) prepared by Westin in connection with
the Resort; and provided, further, that Owner shall reimburse
Westin for any out-of-pocket expenses actually incurred in connection with such
cooperation when such expense is not otherwise paid or reimbursed under this
Agreement;

 

2.2.14  following prior written notice to Owner in
each instance, institute in its own name or in the name of Owner or the Resort,
but in any event at Owner’s expense, any and all legal actions or proceedings
to collect charges, rent, or other income derived from the Resort’s operations
or to oust or dispossess guests, tenants, or other persons in possession
therefrom, or to cancel or terminate any lease, license, or concession agreement
for the breach thereof or default thereunder by the tenant, licensee, or
concessionaire, provided that commencement of any such legal action or
proceeding involving a claim in excess of Fifty Thousand Dollars ($50,000)
shall be subject to Owner’s prior written approval and shall be with counsel
approved in writing and in advance by Owner; in addition, at the direction and
expense of Owner, Westin shall take appropriate steps to challenge, protest,
appeal and/or litigate to final decision in any appropriate court or forum any
laws affecting the Resort or any alleged violation of any law;

 

2.2.15  be available to consult with and advise
Owner or Owner’s designee at Owner’s reasonable request concerning policies and
procedures affecting the conduct of the business of the Resort;

 

2.2.16  do or cause to be done all such acts and
things in or about the Resort as shall be reasonably necessary to comply with
the Legal Requirements, the Owner Obligations, and the terms of all insurance
policies, and, as directed by Owner, to discharge any lien, encumbrance, or
charge on or with respect to the Resort and the operation thereof;

 

2.2.17  collect on behalf of Owner and account for
and remit to governmental authorities all applicable excise, sales, occupancy
and use taxes or similar governmental charges collected by the Resort directly
from patrons or guests, or as part of the sales price of any goods, services,
or displays, such as gross receipts, admission, or similar or equivalent taxes;

 

2.2.18  keep Owner informed and advised of all
material financial and other matters concerning the Resort and the operation
thereof;

 

2.2.19  collect all charges, rent and other amounts
due from guests, lessees and concessionaires of the Resort and use those funds,
as well as funds from other sources as may be

 

17

 

available to the Resort, first to pay all
Operating Expenses, and then any other financial obligations of the Resort as
Owner may direct, or as may be otherwise set forth in this Agreement;

 

2.2.20  perform such other tasks as are customary
and usual in the operation of a first-class golf resort of a class and standing
consistent with the Resort’s facilities;

 

2.2.21  oversee the operation of the Resort with
Golf Manager’s management of the Golf Facility pursuant to the Golf Management
Agreement, including, without limitation, working with Owner and Golf Manager
to (a) monitor and manage the alignment of available tee times and rooms
(including, without limitation, taking commercially reasonable steps to
maintain the availability of an appropriate number of guest rooms for greens
fee paying guests only) to maximize utilization thereof (and Golf Operating
Revenues generated therefrom), recognizing that the success of the Golf Facility
is critical to the success of the Resort and that the Resort is to be marketed
primarily as a destination golf resort, and (b) use environmentally
sensitive management practices with respect to the Resort and the Golf
Facility.

 

2.3          Operating Plan and Budget.

 

2.3.1  Owner and Westin acknowledge that Westin has
prepared and delivered to Owner (and Owner has approved) the Operating Plan and
Budget respecting the Resort for the Operating Year 2004.  On or before November 1 of each Operating
Year, Westin shall prepare and deliver to Owner, for Owner’s review and written
approval, a proposed Operating Plan and Budget for the next ensuing Operating
Year, which shall be designed to permit operation of the Resort in accordance
with the Operating Standard, together with annualized projections of Gross
Operating Revenue, Golf Operating Revenue, Operating Expenses, Capital
Expenditures and other Incentive Income Deductions for the two (2) Operating
Years thereafter, and which shall include the Golf Facilities Annual Plan (as
defined in the Golf Management Agreement). 
The proposed Operating Plan and Budget for each Operating Year shall be
prepared in accordance with Westin’s standard planning and budgeting
requirements for first-class golf resorts and with any reasonable requirements
imposed by any Mortgagee or Owner and shall contain the following items, which
shall be set forth for each month of the Operating Year: (i) estimated results
of operations; (ii) itemized estimated Capital Expenditures; and (iii) a statement
of cash flow, including a schedule of any anticipated requirements for funding
by Owner, together with the following supporting data: (x) estimates of total
labor costs, including both fixed and variable labor (with specific line items
for the aggregate annual compensation for each of the Senior Executive
Personnel); (y) estimates of the average house rate and occupancy; and (z) an
estimate of Management Fees, Marketing Fees, Central Reservations Fees and Golf
Management Fees.  The parties agree that
(a) the overall annual compensation of each of the Senior Executive Personnel
shall also be specified in the proposed Operating Plan and Budget, (b) Senior
Executive Personnel shall be incentivized primarily based on the Resorts’
performance against the approved budgeted Gross Operating Profit for the
Operating Year, and (c) the proposed Operating Plan and Budget shall include
estimates of the target bonuses for each of the Senior Executive
Personnel.  The proposed Operating Plan
and Budget shall also include: 
(1) a five (5) year forward-looking plan for the Resort, (2) a
two (2) year history of operations at the Resort, and (3) an appropriate
site-specific marketing plan consistent with the Operating Standard which shall
reflect the Resort’s position as a destination first-class golf resort and
which shall contain a

 

18

 

description of the Resort’s target markets,
the Resort’s relative position in those markets, the proposed room rate and
golf rate structures for each market segment, the current and future sales plan
for the Resort, the advertising and public relations plan for the Resort and
the proposed staffing and incentive plans and programs for the sales and
marketing activities of the Resort.  The
parties hereto agree that the initial marketing plan shall include an
Innisbrook site-specific Eastern U.S. and Canadian small group (less than 49
persons) golf package program, including e-mail and direct mail solicitation,
regional advertising in golf publications, golf manager database utilization,
small or regional business entity solicitation, private club membership (with
PGA professional member) solicitation and newspaper sports editor public
relations or press release programs.

 

2.3.2  The parties acknowledge that the planning
and budgeting process is an important factor in the successful operation of the
Resort and is a key communication link between the parties.  Any proposed Operating Plan and Budget
submitted to Owner shall be deemed approved if Owner does not provide Westin
with objections within forty-five (45) days after receiving the Operating Plan
and Budget.  Owner and Westin shall
discuss any objections provided by Owner within the aforesaid forty-five (45) day
period, and Westin shall then submit to Owner written revisions to the proposed
Operating Plan and Budget following such discussion.  To the extent that the parties agree in writing to the revisions
of the Operating Plan and Budget, the proposed Operating Plan and Budget
(modified to reflect such revisions) shall become the Operating Plan and Budget
for the next Operating Year.  Westin
shall act reasonably and exercise prudent business judgment in preparing each
proposed Operating Plan and Budget and, as applicable, with respect to Owner’s
objections and revisions thereto.  Owner
shall act reasonably and exercise prudent business judgment in approving or
disapproving all or any portion of the Operating Plan and Budget, and Owner
shall at all times act in a manner that shall permit compliance with the
Operating Standard.

 

2.3.3  If the parties, despite their good faith
efforts, are unable to reach final written agreement on any portion of the
Operating Plan and Budget for an Operating Year by January 1 of that Operating
Year, the matter(s) in dispute may be submitted by either party to arbitration
in accordance with Article 10 of this Agreement.  Until the arbitrator issues a decision on the matter(s)
submitted, the proposed Operating Plan and Budget shall govern the areas of
operations not in dispute and the prior year’s Operating Plan and Budget (with
expenses increased by a percentage equal to the percentage increase in the
Consumer Price Index from January of the prior Operating Year to January of the
Operating Year in question) shall govern the areas of operation in dispute.

 

2.3.4  Once the Operating Plan and Budget is
finally approved (whether by written agreement or by arbitration) for an
Operating Year, Westin shall use diligent efforts to achieve the results
projected in, and adhere to limitations on expenditures contained in, the
Operating Plan and Budget.  However,
Westin shall not, without Owner’s prior written approval, which approval shall
be deemed given if not denied within ten (10) days after Westin’s written
request therefor, incur costs or expenses or make expenditures that would cause
the total expenditures in the operating budget or the budget for Capital
Expenditure included in any Operating Plan and Budget to exceed the aggregate
amount of expenditures provided for in such budget by more than five percent
(5%).  Notwithstanding the foregoing,
Owner understands and agrees as follows:

 

19

 

(a)           Certain expenses provided for in the
Operating Plan and Budget for any Operating Year will vary based on the
occupancy and use of the Resort and, accordingly, to the extent that occupancy
and use of the Resort for any Operating Year exceeds the occupancy projected in
the approved Operating Plan and Budget for such Operating Year, such approved Operating
Plan shall be deemed to include corresponding increases in such variable
expenses.

 

(b)           The amount of certain expenses
(“Uncontrollable Expenses”), including real estate and personal property taxes,
utilities, insurance premiums, license and permit fees and charges provided for
in contracts and leases entered into pursuant to this Agreement, are not within
the ability of Westin to control. 
Westin shall have the right to pay from the Operating Account all Uncontrollable
Expenses without reference to the amounts provided for in respect thereof in
the approved Operating Plan and Budget for any Operating Year.

 

(c)           If any expenditures are required on an
emergency basis to avoid damage to the Resort or injury to Persons or property,
Westin may make such expenditures, whether or not provided for or within the
amounts provided for in the approved Operating Plan and Budget for the
Operating Year in question, as may reasonably be required to avoid or mitigate
such damage or injury.  Such
expenditures shall be treated as Operating Expenses or Capital Expenditures as
determined in accordance with the terms hereof; provided, however, that Westin
may initially make such expenditure out of the Fund.  If such expenditure is made out of the Fund, Owner shall within
thirty (30) days after written notice from Westin replenish the Fund (to the
extent that such expenditures exceed amounts available or otherwise allocated
for contingencies) in the amount expended by Westin in accordance with the
terms hereof.  Westin shall notify Owner
as promptly as reasonably possible of the making of any such expenditure.

 

(d)           If any expenditures are required to comply
with any Legal Requirement or to cure or prevent any violation thereof, subject
to Owner’s right to direct Westin to contest such Legal Requirements or
violation provided in Section 2.2.14, Westin may make such expenditures,
whether or not provided for or within the amounts provided for in the approved
Operating Plan and Budget for the Operating Year in question, as may be
necessary to comply with such Legal Requirement or to remove or prevent the
violation thereof.  Such expenditures
shall be treated as Operating Expenses or Capital Expenditures as determined in
accordance with the terms hereof; provided, however, that Westin may initially
make such expenditure out of the Fund. 
If such expenditure is made out of the Fund, Owner shall within thirty
(30) days after written notice from Westin replenish the Fund (to the extent
that such expenditures exceed amounts available or otherwise allocated for
contingencies) in the amount expended by Westin in accordance with the terms
hereof.  To Westin’s actual knowledge as
of the Effective Date, there are no expenditures (other than those included in
the Operating Plan and Budget for 2004) that are required to comply with any
Legal Requirements or to cure or prevent any violation thereof except as
disclosed in a writing to Owner from Westin sent in July 2004.

 

Westin shall have the right from time to time during each Operating
Year to propose modifications to the approved Operating Plan and Budget then in
effect based on actual operations during the elapsed portion of the Operating
Year in question and Westin’s good faith, reasonable judgment as to what will
transpire during the remainder of such Operating Year.  Any such modifications shall be subject to
Owner’s approval in the same manner described in Section 2.3.2.  Any dispute relating to a proposed modification
of an approved Operating Plan may be

 

20

 

submitted by either party for resolution in accordance with
Article 10.

 

2.3.5  Without limiting Owner’s rights under
Section 4.3, the parties acknowledge and agree that the Operating Plan and
Budget is a reasonable estimate of income and expenditure only and neither
party gives any guarantee, warranty or representation whatsoever in connection
with any Operating Plan and Budget.  A
failure of the Resort to achieve any Operating Plan and Budget for any
Operating Year shall not by itself, absent an Event of Default by Westin,
entitle Owner to claim a breach or default by Westin or to terminate this
Agreement under Section 4.2.

 

2.4          Capital Improvements.  From and after the Effective Date, the
following provisions shall apply as to the maintenance, repair and improvement
of the Resort:

 

2.4.1  The Resort shall be maintained, managed and
promoted as a first-class golf resort and as a member of the group of transient
lodging facilities promoted under the name “Westin Hotels & Resorts,” or
otherwise pursuant to Section 11.3.  The
Resort (including the Resort buildings, adjacent grounds, FF&E and hotel
equipment and operating supplies) shall be maintained, repaired and improved by
Westin at Owner’s expense, as contemplated in the Operating Plan and Budget in
effect from time to time, to permit operation of the Resort in accordance with
the Operating Standard.

 

2.4.2  In furtherance of the covenants of Section
2.4.1, Westin shall arrange for the completion of all Capital Improvements
approved by Owner in the Operating Plan and Budget or otherwise, and, subject
to the provisions of Section 3.5.4 below, Westin shall set aside from cash
from operations (on a monthly basis in arrears) an amount equal to Two Hundred
Fifty-Five Thousand Dollars ($255,000) to establish a fund (the “Fund”) in
accordance with paragraphs (b) and (f) of Section 3.5.4 to facilitate funding
of Capital Improvements.  To the extent
amounts contributed to the Fund are not expended in an Operating Year, such
amounts may be accumulated for expenditure in future years, but any such
amounts shall not be credited against the amount to be set aside in accordance
with this Section 2.4.2 during the next Operating Year.  The lack of sufficient monies in the Fund
shall not limit Owner’s obligation to make Capital Improvements necessary to
maintain the Operating Standard.

 

2.4.3  Westin shall maintain the Fund in a separate
interest-bearing account in a banking institution selected by Westin and
approved by Owner in writing.  The Fund
shall be used solely for the purpose of paying for Capital Improvements
included in the approved Operating Plan and Budget or otherwise approved by
Owner in writing; provided, however, that if Westin at any time determines that
expenditures are required to be made to satisfy Owner Obligations or pursuant
to Section 2.3.4(c) or 2.3.4(d), Westin may make such expenditures from the
Fund without the prior written approval of Owner.  Upon any such expenditure, Westin shall notify Owner in writing
prior to the time that repairs are made (except in the event of an emergency),
and shall in any event notify Owner in writing as soon as possible after such
repairs are made.  If Owner disputes the
need for any such expenditures, the matter shall be resolved pursuant to
Article 10.  Any amounts remaining in
the Fund at the expiration or termination of this Agreement will be promptly
disbursed to Owner; provided, however, that Westin may deduct prior to such
disbursement any and all amounts owed by Owner to Westin under this Agreement.

 

21

 

2.4.4  If the design or construction of the Resort
is defective and the defective condition causes damage to the Resort, poses a
risk of injury to people or property, or is not in compliance with one or more
Legal Requirements or Owner Obligations, Owner shall as expeditiously as
reasonably possible, after Owner’s receipt of actual written notice thereof,
remedy such defect. Owner’s obligation to proceed as expeditiously as
reasonably possible shall apply regardless of whether or when insurance
proceeds may be available to cover the necessary expenditures.  Any amounts expended by Owner in effecting
this remedy shall not be deducted in determining Gross Operating Revenue or
Incentive Income and shall not be included in the calculation of the
Incremental Capital Amount for any period.

 

2.5          Books and Records,
Financial Statements and Internal Audits and Marketing Summaries.

 

2.5.1  From and after the Effective Date, in
accordance with Westin’s policies and standards, Westin shall cause books of
account and other records relating to or reflecting the results of the
operation of the Resort to be kept in accordance with Generally Accepted
Accounting Principles and, to the extent applicable, with the Uniform System of
Accounts and with the requirements of any Mortgage of which Westin is provided
a copy.  Westin shall cause such books
of account and records to be kept in such a manner as may be reasonably
requested by Owner; it being agreed that any such Owner request shall be deemed
reasonable to the extent (x) it is made in order for the Owner (or any
Affiliate of Owner) to comply with the Sarbanes-Oxley Act of 2002, as amended
(“Sarbanes-Oxley Act”) or any stock exchange listing standard, and (y) Westin
makes substantially similar accommodations for other publicly traded owners for
which Westin acts as manager.  All books
of account and other financial records shall be available to Owner and its
designated agents at all reasonable times for examination, audit, inspection
and copying.  All of the financial books
and records pertaining to the Resort, including books of account, office
records, and guest information, shall be the sole property of Owner; provided,
however, that guest information shall also be the property of Westin and may be
used by Westin for any of its business purposes.  Upon termination of this Agreement, all of such books of account
and financial records shall be turned over forthwith to Owner so as to ensure
the orderly continuance of the operation of the Resort, but all of such
information shall be retained by Owner and made available to Westin at the
Resort, at all reasonable times, for inspection, audit, examination and copying
(at Westin’s expense) for at least five (5) years subsequent to the date of
termination or the date of the final liquidation distribution of GTA, whichever
occurs first.  Owner agrees to provide
Westin not less than sixty (60) days prior notice of the final liquidation
distribution of GTA and shall provide or make available to Westin such books
and records for copying during such sixty (60) day period.

 

2.5.2  Westin shall cause to be prepared and
delivered reasonably detailed monthly operating reports to Owner, based on
information available to Westin, that reflect operational results for the
Resort for each month of the Operating Year. 
Westin shall deliver the first operating report to Owner on or before
the twentieth (20th) day of the month following the month in which the Effective
Date occurred and thereafter on or before the twentieth (20th) day of each
month of the Operating Year.  The first
operating report shall reflect the results from the Effective Date to the end
of the month in which the Effective Date occurred.  The reports shall be in a format (which may be amended from time
to time) substantially similar to the operating reports provided by Westin to
other Westin Managed Hotels and in such other format and

 

22

 

including such additional information as may
reasonably be required by Owner or any Mortgagee; it being agreed that any such
Owner request shall be deemed reasonable to the extent (x) it is made in order
for the Owner (or any Affiliate of Owner) to comply with the Sarbanes-Oxley Act
or any stock exchange listing requirements and (y) Westin makes substantially
similar accommodations for other publicly traded owners for which Westin acts
as manager.  At a minimum, monthly
operating reports shall include: (i) a balance sheet including current month
and prior year comparisons and differences in reasonable detail; (ii) an income
and expense statement; (iii) a statement of net cash flow from operations in
reasonable detail; (iv) a statement of the amount of the Management Fees,
Marketing Fees, Central Reservations Fees and any other amounts payable or
expenses reimbursable to Westin; and (v) a Capital Improvement and FF&E
improvement schedule showing, in reasonable detail, items budgeted, actual to
date and projected for completion and (vi) the other information contemplated
by Exhibit F.  Westin shall
advise Owner of variances that have occurred and that are anticipated between
the applicable Operating Plan and Budget and actual results by giving Owner a
monthly variance report (along with the statements mentioned above).

 

2.5.3  Beginning with the second Operating Year,
Westin shall cooperate with the auditor to facilitate the auditor’s preparation
of the Certified Financial Statements for the preceding Operating Year to be
prepared and delivered to Owner, and, upon Owner’s request, to any
Mortgagee.  Westin shall cooperate with
the Owner’s auditor to facilitate the delivery of the Certified Financial
Statements to Owner on or before February 28 of each Operating Year (beginning
with the second Operating Year).  Upon
Owner’s request, Westin shall also prepare and deliver (or cause to be prepared
and delivered) any other reports required by any Mortgagee to enable such
Mortgagee to comply with applicable SEC or other regulatory requirements
(provided that Westin received specific notice of any such Mortgagee’s
requirements).  Westin shall provide
reports requested by Owner to comply with the Owner’s reporting obligations to
include quarterly reports by Westin management on the effectiveness of internal
controls at the Resort, including the internal controls in the golf operation,
as detailed in Exhibit G.  Such
reports shall be received on or before February 15 of each Operating Year for
the preceding year or on or before the twentieth (20th) day following the fiscal
quarter, as applicable.  From time to
time, Owner shall have the right to request that an audit of the Resort’s
internal controls be performed by an independent accounting firm and the cost
of any such audit requested by Owner will be an Operating Expense of the
Resort. The preparation of Certified Financial Statements and any reports
required by any Mortgagee shall be an Operating Expense of the Resort.  The Certified Financial Statements shall
consist of a balance sheet, a statement of earnings and retained earnings and a
statement of cash flows.  Westin shall
cause such Certified Financial Statements to contain such additional
information as may be reasonably requested by Owner; it being agreed that any
such Owner request shall be deemed reasonable to the extent (x) it is made in
order for the Owner (or any Affiliate thereof) to comply with the
Sarbanes-Oxley Act or any stock exchange listing standard and (y) Westin makes
substantially similar accommodations for other publicly traded owners for which
Westin acts as manager.  The Certified
Financial Statements shall be prepared in accordance with any reasonable
requirements imposed by the Mortgagee (provided that Westin received specific
notice of such requirements).  The
Certified Financial Statements shall contain a certificate of
PricewaterhouseCoopers LLP, BDO Seidman or another national firm of independent
certified public accountants selected by Owner and reasonably satisfactory to
Westin to the effect that, subject to any qualifications contained therein, the
financial statements fairly present, in conformity with Generally Accepted

 

23

 

Accounting Principles, the financial
position, results of operations and cash flows of the Resort for the Operating Year
then ended.  If Owner does not supply
the information necessary for Westin to cause such financial statements to be
prepared and delivered, Westin shall not be obligated to do so; Owner shall,
nonetheless, deliver to Westin any Certified Financial Statements it causes to
have prepared.

 

2.5.4  An internal audit review of the Resort shall
be conducted as an Operating Expense of the Resort biennially, or more
frequently as the parties shall determine to be advisable.  The audit review shall be conducted by
Westin personnel.  Westin shall notify
Owner in writing as to the scope of such internal audits, the results of the
audits, and the action plans recommended to correct any deficiencies noted by
the audits, within thirty (30) days of the completion of the audits (that is,
when the action plans resulting from such audit have been approved by
Westin).  Owner shall reimburse Westin
(as an Operating Expense of the Resort) for the travel and out-of-pocket
expenses actually incurred by Westin personnel in performing such audits.

 

2.5.5  Simultaneously with the delivery of the
monthly operating reports to Owner, Westin shall deliver to Owner a summary of
Westin’s specific marketing efforts relating to the Resort for such month,
including results tracking information. 
The summary shall include (i) a general description of significant
marketing and promotional events held to promote the Resort and information
regarding the costs and benefits thereof (e.g., among other things,
bookings resulting therefrom), and (ii) a summary which generally
describes the relative success and cost-effectiveness of each such marketing
initiative as well as the incentive compensation plans and programs.

 

2.6          Personnel.  During the term of this Agreement, Westin
shall manage all aspects of the Resort’s human resources functions.  In furtherance of this duty, Westin shall
implement at the Resort Westin’s personnel policies and procedures.  Westin and Owner shall have the
responsibilities and exercise the rights set forth below (in addition to those
set forth in Section 2.2):

 

2.6.1  Westin shall identify, appoint, assign,
instruct and supervise the General Manager and department heads, and they, or
other Resort Personnel to whom they may delegate such authority, shall
identify, appoint, assign, instruct and supervise all personnel necessary or
advisable for the operation of the Resort; provided, however, that Owner shall
have the right to interview and approve (in Owner’s sole reasonable discretion)
the individuals selected by Westin and/or Golf Manager as General Manager,
Director of Operations, Director - Golf Operations (as defined in the Golf
Management Agreement), Director of Sales and Marketing, Superintendent of Golf
and Controller prior to their appointment. 
Prior to appointing an individual to any of the positions specified in
the preceding sentence, Westin shall provide Owner with a written summary of
such individual’s professional experience, qualifications and proposed terms of
employment (including compensation and benefits) and shall offer Owner the
opportunity to interview the candidate at the Resort or another mutually
acceptable location.  Owner will forego
its right to interview any such individual if Owner or its authorized representative
is unwilling or unable to participate in the interview within seven (7)
business days following Westin’s offer. 
Owner shall be deemed to have approved the appointment of any such
individual unless Owner delivers notice of its disapproval of such appointment
within ten (10) business days after

 

24

 

Owner’s receipt of the aforementioned written
summary and Westin’s offer to Owner to interview the candidate.  Owner may disapprove any individual proposed
by Westin hereunder in Owner’s sole reasonable discretion.  The terms of employment, including training,
compensation, bonuses, Benefit Plans, discharge and replacement of all Resort
Personnel shall be established and administered by Westin and shall be on then-prevailing
market terms and included in the Operating Plan and Budget.  For purposes of this Section 2.6.1, Resort
Personnel as defined in Section 1.2.70 does not include Included Asset
Management Personnel.

 

2.6.2  With respect to the Benefit Plans for
non-union Resort Personnel, Westin shall adopt and offer to such Resort
Personnel the group Benefit Plans for non-union employees that are available
through Westin to other companies who employ non-union workers at other Westin
Managed Hotels.  All costs associated
with such plans shall be Operating Expenses of the Resort.

 

2.6.3  All Resort Personnel shall be direct
employees of Owner or an Affiliate of Owner, provided that Westin may designate
and employ certain key Resort Personnel (including the Senior Executive
Personnel) as Westin Personnel and Golf Manager may designate and directly
employ certain employees in accordance with the Golf Management Agreement.  All payroll and other costs of employment of
Resort Personnel, including costs associated with Benefit Plans, out-of-pocket
costs associated with the management of Resort Personnel, and the Resort’s
allocated share of any associated administrative costs (provided that such
allocation is made in the same manner as for substantially all other Westin
Managed Hotels), including costs of recruitment, relocation, employment,
discipline, discharge and severance, shall be Operating Expenses of the Resort
and the responsibility of Owner.

 

2.6.4  Owner acknowledges that Westin or its
Affiliate may have an obligation under federal, state or local law to give
advance notice to Resort Personnel of any termination of employment, and that
failure to comply with this notification obligation could give rise to civil
and criminal liabilities.  Owner shall
indemnify, hold harmless and defend Westin from and against any such
liabilities caused by any action by Owner that results in termination of the
employment of Resort Personnel (including wrongfully terminating this
Agreement) and imposes an advance notification obligation on Westin.  Notwithstanding the foregoing, Owner shall
have no indemnification obligation under this Section 2.6.4 if:  (i) Owner terminates this Agreement in
accordance with Section 4.2 hereof based upon an Event of Default by Westin,
(ii) Westin (or its Affiliates) is given adequate opportunity to comply with
applicable state, federal or local law, or (iii) Owner or a new buyer of the
Resort takes action (such as the immediate rehiring of the Resort Personnel in
question on terms equivalent to those previously in effect) that would obviate
any notification obligation.

 

2.6.5  Westin agrees to use reasonable efforts to
ensure that any individual selected by Westin for the position of General
Manager, Director of Operations, Controller, Director of Golf Sales, Director
of Sales and Marketing, Superintendent of Golf for the Resort intends 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.  Westin shall not, without the consent of
Owner, propose a transfer to, solicit the transfer of, terminate and re-hire,
terminate and permit an Affiliate to re-hire, or permit a transfer of any
individual in the position of General Manager, Director of Operations,
Controller, Director of Sales and Marketing, Director of Golf

 

25

 

Sales, Superintendent of Golf, Director of
Group Sales or Director of Revenue for a period of twenty-four (24) months
following such individual’s appointment to such position.  The foregoing restrictions shall not be
deemed to prohibit Westin from approving a transfer requested by an employee
primarily for family or other personal reasons (as distinguished from Westin’s
approval of a transfer requested by an employee primarily for career-motivated
reasons).

 

2.7          Marketing, Sales
and Reservations.  From
and after the Effective Date, Westin shall provide marketing, sales and
reservation services as follows:

 

2.7.1  Westin shall maintain a marketing and sales
program that promotes Westin’s corporate identity, advertises to Westin’s
markets, and secures bookings for hotels and resorts, including the Resort,
operated in affiliation with “Westin Hotels & Resorts,” or as otherwise
provided in Section 11.3.  In addition,
Westin shall coordinate the individual marketing program for the Resort and
Golf Facility with Westin’s marketing and sales program, and as appropriate,
include the Resort and the Golf Facility in Westin’s identity and national
advertising programs.  The services to
be provided under this Section 2.7.1 shall include, without limitation:

 

(a)           development and implementation of a
marketing program for the Resort and Golf Facility following the Westin
policies and guidelines, which will provide for the planning, publicity,
internal communications, organizing and budgeting activities to be undertaken
and shall aggressively market and promote the Resort as a first-class
destination golf facility catering to business and social guests;

 

(b)           production, distribution and placement of
promotional materials relating to the Resort and Golf Facility, including
materials for the promotion of employee relations;

 

(c)           development and implementation of
promotional offers or programs that benefit the Resort and Golf Facility and
are undertaken by Westin or by a group of Westin hotels and golf resorts that
includes the Resort;

 

(d)           attendance of Resort Personnel at
conventions, meetings, seminars and conferences relevant to their employment at
the Resort, including events relating to the destination golf industry;

 

(e)           selection of and guidance to, as required,
advertising agency and public relations personnel;

 

(f)            preparation and dissemination of news
releases for national and international trade and consumer publications; and

 

(g)           preparation and dissemination to Owner of
the marketing summaries required by Section 2.5.5 and 2.5.6.

 

2.7.2  Westin shall secure bookings for the Resort
through Westin’s sales and reservations offices and other distribution and
sales systems, and shall encourage the use of the Resort by tourists, special
groups, travel congresses, travel agencies, airlines and other recognized
sources of destination golf resort business. 
Westin shall develop a sales program,

 

26

 

represent the Resort at appropriate
conventions and travel congresses, and list the Resort in printings of general
tariff bulletins.  In addition, Westin
shall process reservations for the Resort through Westin’s world-wide
communications network.

 

2.7.3  Development and implementation of the
marketing program for the Resort and the Golf Facility is accomplished
substantially by Resort Personnel, with periodic assistance of corporate
personnel of Westin with marketing and sales expertise.  The cost of development and implementation
of the marketing program for the Resort and the Golf Facility shall be an
Operating Expense.  The program shall
comply with Westin’s sales, advertising and public relations policies and
corporate identity requirements, as they may be modified from time to
time.  Such requirements currently
include the following:  (i) Westin’s
logotype must be used in the identification of the Resort for marketing
purposes (provided that the parties acknowledge that the existing “Innisbrook”
logo or another Resort logo developed by Owner and approved by Westin may also
be used for the marketing of the Resort itself, as distinguished from the
corporate marketing provided by Westin pursuant to Section 2.7.1); (ii) Owner
must obtain Westin’s consent prior to publishing any Resort or Golf Facility
advertising materials or using the name or likeness of the Resort or Golf
Facility in any advertising or promotional programs undertaken by Owner or its
agents, advisors or consultants (and Westin acknowledges that it shall not unreasonably
withhold or delay its consent to any such request by Owner and shall consider
any such request in a manner consistent with similar requests previously
received by Westin and shall not charge any consideration for its consent to
any such matter other than reimbursement of Westin’s reasonable out-of-pocket
expenses actually incurred in reviewing any proposed materials submitted to
Westin for approval pursuant to this clause); and (iii) the Resort must
participate in all Westin promotional and marketing programs (including for
destination golf resorts) for so long as they are continued, including Westin’s
guest recognition program (currently known as Starwood Preferred Guest®) and
any travel agent incentive program. 
Nothing contained herein shall require Westin’s consent or approval with
respect to the form or content of any marketing or offering materials prepared
by or on behalf of Owner to facilitate the sale or transfer of ownership of the
Resort, except to the extent such materials refer to Westin or the Westin
Trademarks, in which case Westin’s consent shall not be unreasonably withheld
or delayed.

 

2.7.4  Without Westin’s consent, Owner shall not
maintain or use in connection with the Resort any toll-free or similar
telephone line or communications device for making reservations that is
independent of the reservations telephone line or communications device
maintained by Westin in connection with “Westin Hotels & Resorts.”  The toll-free telephone line or similar
telephone number or communications device for making reservations that Westin
maintains must be the only telephone reservations line or communications device
for the Resort.  The Resort shall be
listed in all airline reservations systems (which include what are known in the
hospitality industry as Global Distribution Systems) under the code for “Westin
Hotels & Resorts” which is “WI.”

 

2.7.5  Owner agrees that, throughout the term of
this Agreement, the full inventory of the Resort’s available rooms shall be
loaded into Westin’s reservations systems (subject to the requirement that
Owner and Westin shall agree to manage the status and inventory on a daily
basis to maximize golf sales to greens fee paying guests).  Westin, through its

 

27

 

oversight of Resort Personnel, shall ensure
that such inventory is so loaded as required by this Section 2.7.5.

 

2.8          Westin’s Computer Services.  Westin shall perform Computer Services
necessary to operate the Resort and enable the Resort to function as a member
of the group of hotels and golf resorts known as “Westin Hotels & Resorts,”
or any successor thereto, in accordance with the terms and conditions of Exhibit
C attached hereto.

 

2.9          Purchasing.

 

2.9.1  In the performance of its obligations under
Section 2.2.10, Westin may, in its discretion (subject to the following
provisions of this Section 2.9) elect to purchase the items described therein
under vendor contracts available to Westin under any purchasing program
maintained from time to time by Westin or its Affiliates, provided that the
prices and terms of the goods and services purchased under such vendor
contracts are competitive with the prices and terms of goods and services of
equal quality available from others.  In
determining, pursuant to the foregoing, whether such prices and terms are
competitive, they will be compared to the prices and/or fees which would be
charged by reputable and qualified unrelated third parties on an arm’s length
basis for similar goods and/or services. 
The goods and/or services which are being purchased may be grouped in
reasonable categories, rather than being compared item by item.  In respect of such purchases, but subject to
Section 2.9.2 below, Owner understands and acknowledges that Westin and/or its
Affiliates may receive certain payments, fees, commissions or reimbursements
from vendors, and that Westin and/or its Affiliates may have investments in
such vendors.  Notwithstanding the
foregoing, upon at least thirty (30) days’ prior written notice to Westin,
Owner shall have the right to opt out of any purchasing program in respect of
all purchases or such items as Owner may designate in such notice.  Westin shall act in a prudent manner in
purchasing items for the Resort (whether under a purchasing program or otherwise),
but, in selecting such items for purchase, Westin shall be entitled to take
into account the environmental consequences of its selections and the
desirability of encouraging such objectives as recycling of materials.

 

2.9.2  Notwithstanding Section 2.9.1 above,
Westin’s policy with respect to its purchasing program is based on net pricing,
whereby Westin and its Affiliates (i) absorb the national and regional
administrative costs of its purchasing program; and (ii) integrate any
payments, fees, commission, or reimbursements, which Westin would have
otherwise received from vendors, into the pricing of such goods to reduce the
cost thereof.  In certain exceptional
circumstances, suppliers are not willing to negotiate net pricing arrangements
with Westin, and continue to require participation by Westin and its Affiliates
in marketing partnership arrangements. 
In accordance with such marketing partnership arrangements, Westin may
accept certain funds from such suppliers (the “Supplier Funds”), which Supplier
Funds shall be expended either as agreed upon by Westin and such suppliers, or
as directed by such suppliers.  In
either case, the Supplier Funds received by Westin are intended to be used for
programs designed to benefit the Westin Managed Hotels.  Upon Owner’s request, Westin will provide
Owner with an annual accounting of any Supplier Funds received by Westin.  In the event Westin receives any Supplier
Funds that are not allocated to programs designed to benefit the Westin Managed
Hotels, such Supplier Funds shall be distributed to Owner in an equitable
manner and on the same basis as allocated to substantially all of the other
Westin Managed

 

28

 

Hotels. 
For purposes of clarification, Owner shall not have the right to receive
any Supplier Funds that are allocated by Westin to programs designed to benefit
the Westin Managed Hotels.

 

2.10        Resort
Parking. 
At all times during the term of this Agreement, Owner shall cause to be
available at the Resort, adequate parking to meet the needs of the Resort, at
no incremental cost to the Resort. 
Westin shall manage the Resort’s parking facilities as a department of
the Resort.

 

2.11        Golf
Facility. 
As of the Effective Date, Westin’s management of the Golf Facility shall
be delegated to the Golf Manager pursuant to the Golf Management
Agreement.  In light of the integrated
nature of the Resort, and in light of the importance of the successful
operation of the Golf Facility to the success of the Resort, Westin and Owner
shall cooperate fully with each other with respect to the oversight of the
operation of the Golf Facility and Golf Manager by Westin.  The Golf Director shall, pursuant to the
Golf Management Agreement, report to the General Manager, and shall participate
with Westin in the development of sales and marketing, booking, pricing
strategies and other operational matters affecting the Golf Facility and other
components of the Resort.  Such
oversight by Westin shall be effected with guidance from Owner.  By way of example, but subject to the
limitations contained in other agreements affecting the Resort (including,
without limitation, the Master Lease Agreement), if Owner and Westin determine
that it is in the interest of the Resort to offer package pricing to Resort
guests for rooms and for greens fees and/or lessons or other services at the
Golf Facility, Westin, Golf Manager and Owner shall cooperate in good faith to
make appropriate allocations of the revenues and expenses between the Golf
Facility and the balance of the Resort. 
In addition, Owner agrees to comply and to cause its Affiliates to
comply with the following terms and conditions during the term of this
Agreement.

 

2.11.1  The Golf Facility, as well as all signage,
landscaping, entry and access components of the Golf Facility shall be, and
Owner and Westin shall at all times exercise reasonable and diligent efforts by
direct action, enforcement of contractual rights or otherwise to insure that
such facilities and components are, maintained and operated to a standard
consistent and compatible with the first-class standard of the Resort as
contemplated by this Agreement and consistent with the standards of maintenance
and operation of other first-class golf resorts operated by Westin.  Westin shall ensure that at all times the
operation of the Golf Facility complies with the Operating Standard.

 

2.11.2  Throughout the term of this Agreement, Owner
shall ensure that the Resort is afforded access and use rights with respect to
the Golf Facility in order to seek to satisfy the reasonable needs and
expectations of Resort guests.  In
furtherance of the foregoing covenant, Owner acknowledges that Westin shall
have the authority and duty to cause procedures to be established (including a
system of priority reservation rights) to seek to ensure that the Resort has
access to a sufficient number of tee times daily (at times corresponding to
anticipated demand) to meet the reasonable needs and expectations of Resort
guests for individual and tournament play, subject to the contractual rights of
private members of the Golf Facility and owners of the individual condominium
units within the Resort.

 

2.11.3  Westin agrees that Owner is a third party
beneficiary of the Golf Management Agreement and that Westin shall not amend,
restate, modify, terminate or waive

 

29

 

any provision of the Golf Management
Agreement without Owner’s prior written consent in each instance, and, with
respect to any economic modifications, such consent may be denied in Owner’s
sole and absolute discretion.

 

3.             MARKETING FEES AND EXPENSES;
MANAGEMENT

FEE AND REIMBURSABLE EXPENSES

 

3.1          Sales,
Reservations, Communications and Marketing Expenses; Computer Services.

 

3.1.1  Owner shall pay Westin a fee for the
provision of the corporate marketing and the sales and reservations services
described in Sections 2.7.1. and 2.7.2. (the “Marketing
Fee”).  The Marketing Fee shall be an
Operating Expense of the Resort.  As of
the Effective Date, the Marketing Fee shall be 1.9% of annual Gross Operating
Revenue.  The amount of the Marketing
Fee shall be determined by Westin from time to time in an attempt to obtain on
an equitable basis from all Westin Managed Hotels, reimbursement without profit
over the long term, and not over the course of any specific fiscal period, for
the aggregate costs of providing the services described in
Sections 2.7.1. and 2.7.2. to all Westin Managed Hotels; provided
that the amount of the Marketing Fee shall not exceed 1.9% of Gross Operating
Revenue during the term of this Agreement without Owner’s prior consent.  Owner specifically acknowledges that the
Marketing Fee is a fixed charge, not subject to adjustment or refund, and not
allocated to or earmarked for any specific marketing or sales expense or
service, or for any specific hotel or golf resort.

 

3.1.2  For guests in the Starwood Preferred Guest®
program, Westin’s guest recognition program, Owner shall pay the per-stay
charges, as established by Westin from time to time, applicable under such
program and under travel affiliate programs and the Resort’s allocated share of
the costs of special promotions associated with such programs.  As of January 1, 2003, the Starwood
Preferred Guest® and travel affiliate per-stay charges are those set forth in Exhibit
H attached hereto.

 

3.1.3  Owner shall reimburse Westin for (i) amounts
owed or paid to third parties (such as airlines, travel consortia groups,
electronic distribution channels (including, the Global Distribution System),
Internet-booking services or providers of network communications services) in
connection with securing or processing reservations for the Resort; (ii)
amounts owed or paid to Hotel Clearing Corporation (known as “HCC”) or to World
Travel Payment (known as “WTP”) or to such other centralized payers of travel
agent commissions as Westin may contract with in the future for the processing
of travel agents’ commission earned for reservations consumed at the Resort;
and (iii) the cost of the Resort’s participation in any incentive program
sponsored by Westin for any travel arrangers. 
The expense reimbursements described in this Section 3.1.3 shall be
charged to the Resort on the same bases as they are generally charged to
substantially all of the Westin Managed Hotels and, to the extent any such
expenses relate to charges from Affiliates of Westin, such expenses shall be
limited to amounts that would have been charged by unrelated third parties for
similar goods or services.

 

3.1.4  In addition to paying the expenses identified
in Section 3.1.3, Owner shall pay Westin a fee for the Resort’s access to
Westin’s central reservations system (the “Central

 

30

 

Reservations Fee”).  The amount and basis for calculation of the Central Reservations
Fee are determined by Westin from time to time in an attempt to obtain
reimbursement without profit (over the long term, and not over the course of
any fiscal period) for the aggregate costs of providing Westin Managed Hotels
with access to Westin’s central reservations system.  As of the effective date of the GHR Agreement, the Central
Reservations Fee was one percent (1.0%) of Gross Rooms Revenue.  The Central Reservations Fee shall not
exceed one percent (1.0%) of Gross Rooms Revenue during the term of this
Agreement without Owner’s prior written consent.

 

3.1.5  From time to time, Westin may change the
rates and methods for allocating the costs and expenses described in
Sections 3.1.2 and 3.1.3, and Owner agrees to any such change so long as
such change is reasonable and made in good faith and generally applicable to
substantially all of the Westin Managed Hotels.  Westin agrees not to change any methods of allocation or change
any rate over which Westin has control (i.e., charge/rates that are not
billed to Westin by third parties and passed through to the Resort) more often
than once annually and shall notify Owner of any such change in method or rate
by November 1 prior to the Operating Year for which the change shall be
effective.

 

3.1.6  The Marketing Fee and the Central
Reservations Fee for each Operating Year shall be paid monthly in arrears
beginning after the Effective Date, and each monthly installment shall be due
on the date Westin furnishes to Owner the monthly operating report required by
Section 2.5.2.  The reimbursements
required by Section 3.1.2 and Section 3.1.3 shall be paid by Owner to Westin by
the due date specified by Westin and shall constitute “Operating Expenses” of
the Resort.

 

3.1.7  For Westin’s performance of Computer
Services, Owner shall compensate Westin in the amounts and at the times
specified by Westin in monthly invoices delivered for services provided in
accordance with the terms and conditions of Exhibit C attached hereto.

 

3.2          Management Fee.

 

3.2.1  For the services Westin provides in
accordance with Article 2, Owner shall pay Westin a Management Fee with respect
to each Operating Year calculated as follows:

 

(a)           a Base Fee in an amount equal to two and
two-tenths percent (2.2%) of the sum of annual Gross Operating Revenue and Golf
Operating Revenue for such Operating Year;

 

plus

 

(b)           an Incentive Fee calculated as follows:

 

(i)            For each Operating Year or partial
Operating Year commencing on or after the Effective Date and ending on or
before the Westin Recovery Date (including, for the sake of clarity, the
partial Operating Year commencing July 1 of the calendar year in which the
Westin Recovery Date occurs and ending on the Westin Recovery Date), the
Incentive Fee shall equal the sum of (A) twenty-five percent (25%) of the
amount (if any) of Incentive Income for such Operating Year (or partial
Operating Year) that exceeds Eight Million Dollars ($8,000,000) and is equal to
or less than Ten Million Dollars ($10,000,000), plus  (B) fifty percent (50%) of the amount (if
any) of Incentive Income

 

31

 

for such Operating Year (or partial
Operating Year) that exceeds Ten Million Dollars ($10,000,000); and

 

(ii)           For each Operating Year or partial Operating
Year commencing after the Westin Recovery Date (including, for the sake of
clarity, the partial Operating Year commencing the day after the Westin
Recovery Date and ending on the last day of the Operating Year in which the
Westin Recovery Date occurs), the Incentive Fee shall equal fifty percent (50%)
of the amount (if any) of Incentive Income for such Operating Year (or partial
Operating Year) that exceeds the Post-Recovery Incentive Fee Threshold (as
defined below) for such Operating Year (or partial Operating Year).

 

For purposes of this
Section 3.2.1(b), the “Post-Recovery Incentive Fee Threshold” means, (x) in
respect of the partial Operating Year commencing the day after the Westin
Recovery Date and ending December 31 of the same calendar year, an amount equal
to $10,000,000 (pro rated as described in the following sentence), increased by
a percentage equal to (1) the percentage increase in the Consumer Price Index
from January 1, 2004 to the Westin Recovery Date, plus (2) one percent (1%),
and (y) in respect of each subsequent Operating Year, the most recently
calculated Post Recovery Incentive Fee Threshold, increased by (1) the
percentage increase in the Consumer Price Index during the immediately
preceding Operating Year, plus (2) one percent (1%).

 

When calculating the
Incentive Fee for any period of less than a full Operating Year (the periods
from the Effective Date through December 31st of such calendar year (the
“Initial Stub Period”), and January 1st of the calendar year in which this
Agreement terminates through the actual termination date (the “Final Stub
Period”), shall collectively be referred to as the “Stub Periods”), the
Incentive Income for the Stub Periods shall be an amount equal to the product
of (x) the Incentive Income for the twelve (12) month period ending on the
last day of the month prior to the calendar month in which (i) the Initial
Stub Period ends, or (ii) the Final Stub Period ends, as applicable, and
(y) the length, in days, of such Stub Period, divided by Three Hundred
Sixty (360).

 

3.2.2  The Management Fee shall be paid monthly in
arrears beginning after the Effective Date, in accordance with and subject to
the provisions of Section 3.5.4 below. 
The Base Fee shall be paid monthly in accordance with Section
3.2.1(a).  The Incentive Fee shall be
paid in substantially equal monthly installments based on the anticipated
Incentive Income for the Operating Year as disclosed in the approved Operating
Plan and Budget, as updated and adjusted monthly during the Operating Year in
accordance with actual operating results and forecasts from Westin reasonably
approved by Owner.  Each monthly
installment of the Management Fee shall be due and payable on the date Westin
furnishes to Owner the monthly operating report required by Section 2.5.2.

 

3.2.3  Within thirty (30) days after Owner receives
the Certified Financial Statements for each Operating Year, Westin shall cause
to be prepared and delivered to Owner a Fee Statement showing the calculation
and payment of the Management Fee, the Marketing Fee and the Central
Reservations Fee for that Operating Year, and appropriate adjustments shall be
made for any overpayment or underpayment of the Management Fee, the Marketing
Fee or the Central Reservations Fee during such Operating Year.  The party owing money as a result of the

 

32

 

overpayment or underpayment during such
Operating Year shall pay such amount within thirty (30) days after the Fee
Statement has been delivered by Westin to Owner.

 

3.3          Reimbursement of Expenses.

 

3.3.1  Owner shall reimburse Westin or (if directed
by Westin) its Affiliates, at the time and in the manner provided in Section
3.3.3 below, for all Reimbursable Expenses incurred in accordance with this
Agreement (including Section 2.3.4 hereof) or as otherwise approved by Owner in
writing.  The annual Operating Plan and
Budget submitted to Owner for approval in accordance with Section 2.3 shall
include a reasonably detailed estimate of those Reimbursable Expenses that are
susceptible of estimation.  Reimbursable
Expenses shall include the following, subject to the limitations in Section
3.3.2:

 

(a)           all costs reasonably and actually incurred
in accordance with this Agreement, in accordance with Westin’s standard
personnel policies (as they may be amended from time to time) with respect to
the employment of any of the Resort Personnel, which costs include: salaries
and wages, payroll taxes, and other payroll-related items; bonuses; severance
obligations; paid leave (or pay in lieu thereof), including vacation, holiday,
and sick leave; costs of Benefit Plans; and relocation expenses;

 

(b)           the daily per diem rate of pay for personnel
of Westin or its Affiliates assigned to special projects for the Resort,
including projects undertaken in accordance with Section 2.2.7;

 

(c)           reasonable and actually incurred
out-of-pocket travel costs and reasonable and actually incurred other
out-of-pocket expenses incurred by Westin directly in connection with its
management of the Resort;

 

(d)           the expenses described in Sections 3.1.2 and
3.1.3;

 

(e)           charges for the Resort’s allocated share of
the costs of standard and customary group services provided by Westin,
including: Starwood’s employee publications; the preparation, printing, and
dissemination of operations manuals such as accounting bulletins and employee
handbooks; administration of compensation and group health and welfare benefits
by the corporate group benefits department of Westin; and other services
provided by the corporate human resources division of Westin (provided that
such costs are generally comparable to those which would be charged by a
cost-effective third-party provider of such services);

 

(f)            charges for the Resort’s allocated share of
the costs (including the costs of printing handbooks, manuals and forms) of
Westin’s annual management conference and other company-wide conferences
sponsored by various corporate divisions of Westin and attended by Resort
Personnel;

 

(g)           payments made by Westin or its Affiliates,
employees, or consultants to third parties for goods and services in the
ordinary course of business in the operation of the Resort; and

 

33

 

(h)           all taxes and similar assessments levied
against any reimbursements payable to Westin under this Agreement for expenses
incurred for Owner’s account, including reimbursable items described in this
Section 3.3 but specifically excluding any and all income taxes.

 

3.3.2  As of the Effective Date, the Resort’s
annual share of the costs described in Sections 3.3.1(b), 3.3.1(e) and 3.3.l(f)
would be calculated based on various methods of allocation, ranging from a per
capita charge for Resort Personnel (not including personnel employed by
Golf Manager) to a percentage of payroll-related expenses for Resort Personnel
(not including personnel employed by Golf Manager).  Westin acknowledges that the methods and rates for the expenses
described in Section 3.3.1 are generally applicable to substantially all Westin
Managed Hotels as of the Effective Date. 
The methods for allocating such costs may change from time to time, and
Owner agrees to any such change so long as it is generally applicable to
substantially all of the Westin Managed Hotels.  Furthermore, Westin shall not change any method of allocation or
change any rate on which charges to the Resort are based more often than once a
year and shall notify Owner in writing of any such change in method or rate by
November 1 prior to the Operating Year for which the change shall be effective.

 

3.3.3  The Reimbursable Expenses described in
Section 3.3.1(a) shall be payable by Owner at the time specified by Westin for
payment of such amounts.  All other
Reimbursable Expenses shall be payable by Owner to Westin within thirty (30)
days following Westin’s submission of an invoice therefor.

 

3.4          Place and Means of Payment.

 

3.4.1  All amounts payable to Westin or its
Affiliates under this Agreement shall be paid to Westin (or, if applicable, its
Affiliates) in United States Dollars, in immediately available funds, without
reduction for any withholding tax, value added tax, or other assessment
required under the laws of any applicable jurisdiction.

 

3.4.2  All payments made to Westin or its
Affiliates by Owner under this Agreement shall be made to Westin at the place
for the giving of notice to Westin set forth in Section 12.8, or to such other
place as Westin shall designate to Owner in writing.

 

3.4.3  At Westin’s option, payments due Westin or
its Affiliates from Owner under this Agreement, may be made by Westin
electronically out of the appropriate bank account or accounts established
under Section 3.5, in accordance with Section 3.5.4 below and Westin’s
applicable accounting policies in effect from time to time and provided or made
available to Owner in advance thereof.

 

3.4.4  All disbursements of funds made by Westin to
Owner under this Agreement shall be made to an account designated in writing by
Owner from time to time or, if no such designation has been made, to the place
for the giving of notice to Owner set forth in Section 12.8.

 

3.4.5  Except as set forth in the following
sentence, any and all amounts that may become due from either party to the
other or its Affiliates under this Agreement shall bear interest from and after
the respective due dates thereof until the date on which the amount is

 

34

 

received in the bank account designated by
Westin or Owner, as the case may be, at the annual rate of the lesser of
(a) nine percent (9%), and (b) the maximum rate allowed by applicable
law.  The parties hereto agree that
interest shall in no event accrue on (i) the Westin Investment Amount, unless
(and then only to the extent) any portion thereof is not paid when due pursuant
to the terms of this Agreement or (ii) any payment to Westin properly deferred
pursuant to Section 3.5.4 or as otherwise provided in this Agreement.

 

3.5          Operating Accounts and Working Capital.

 

3.5.1  Owner authorizes Westin to establish the
following bank accounts on Owner’s behalf at a bank or banks selected by
Westin:

 

(a)           an account or accounts, bearing the name of
the Resort, in the city of Tampa, Florida at a bank or banks having a branch
reasonably convenient to the Resort and approved by Owner for the purpose of
depositing all funds received in the operation of the Resort and for the
purpose of paying all Operating Expenses and amounts due to Westin under this
Agreement (the “Operating Accounts”); and

 

(b)           an account or accounts for the purpose of
obtaining for the Resort the most favorable terms available for settling
electronic transactions effected with bank and nonbank credit cards; provided,
however, that the discount and other fees charged by any such bank as well as
payment terms must be competitive with the charges for such services and
timeliness of payment prevailing among banks in Tampa, Florida.

 

3.5.2  Westin’s designees shall be the only persons
authorized to draw from the Operating Account(s), and Westin shall be entitled
to make deposits in all of such accounts, in accordance with the terms of this
Agreement and Westin’s standard accounting policies and practices.  Westin shall establish controls to ensure
accurate reporting of all transactions involving such accounts.  All Operating Expenses of the Resort and, at
Westin’s option, Westin’s fees and Reimbursable Expenses, shall be paid timely
by Westin out of the Operating Account(s).

 

3.5.3  Subject to the other provisions of this
Agreement (including those relating to the calculation of Incentive Income),
Owner shall commit the financial and other resources reasonably necessary to
permit the Resort to be operated in accordance with the Operating
Standard.  Pursuant to the foregoing
obligation, to the extent Gross Operating Revenue is insufficient at any time
to enable Westin to pay current expenses of the Resort, Owner shall from time
to time upon Westin’s written request deposit funds into the Operating
Accounts) sufficient in amount to allow for the uninterrupted and efficient
operation of the Resort in accordance with the terms of this Agreement.  Owner’s deposit shall be completed within
thirty (30) days of receiving Westin’s funding request.  If Owner fails to deposit all or any portion
of the working capital requested and Westin uses or pledges its credit (the
parties agreeing that Westin has no obligation to do so) in making ordinary and
customary purchases of goods and services for the Resort on Owner’s behalf;
Owner shall pay for such purchases when payment is due and shall indemnify and
defend Westin against all losses, costs and expenses, including attorneys’ fees
and costs, interest and any late payment fees that may be incurred by or
asserted against Westin by reason of Owner’s failure to pay for such
purchases.  Owner shall pay interest to
Westin on any

 

35

advance Westin may elect, without obligation,
to make on Owner’s behalf in payment of any due and unpaid obligations of Owner
to third parties at the rate specified in Section 3.4.4.

 

3.5.4 
The following payments, disbursements and reserves shall be made by
Westin on behalf of Owner, from the Operating Accounts or from funds made
available by Owner pursuant to Section 3.5.3, in the following order of
priority:

 

(a)           payment of Operating Expenses,
including, without limitation, the expenses of Owner’s personnel who are
dedicated solely to the management of the Resort (currently, the individuals
filling the positions identified on Schedule 3.5.4 attached hereto), whose
number and compensation is substantially consistent with historical practices
at the Resort and whose general duties are generally consistent with historical
practices (the “Included Asset Management Personnel”), and the payment of the
Base Fee, excepting only a portion of the Base Fee equal to 0.367% of Gross
Operating Revenue;

 

(b)           deposit of $170,000 per month to the Fund;

 

(c)           retention in the Operating Accounts of working capital reserves for the
Resort sufficient in Westin’s reasonable determination (when added to
reasonably anticipated future Gross Operating Revenue and Golf Operating Revenue)
to enable timely payment of the items described in subparagraphs (a) and
(b) above, as well as Taxes and Insurance Costs, for a period of 12 months;

 

(d)           repayment of any funds borrowed from the Fund from and after the
Effective Date to support operational needs during previous months;

 

(e)           payment of any unpaid portion of the Base Fee;

 

(f)            deposit to the Fund of an additional $85,000 per month, up to a maximum
deposit pursuant to this subparagraph (f) of $1,000,000 per year;

 

(g)           payment of any unpaid portion of the Supplemental Fee due and payable to
Golf Manager under the Golf Management Agreement and that has been deferred;

 

(h)           payment of the Incentive Fee (if any is anticipated to be due for the
Operating Year in question); 

 

(i)            creation of a supplemental capital reserve in an amount that Owner and
Westin reasonably agree to be necessary or advisable to provide a source of
funds for Capital Improvements approved by Owner in the Operating Plan and
Budget or otherwise, or necessary to maintain the Operating Standard; and

 

(j)            disbursement of any remaining balance to Owner or, as directed by Owner
to pay other obligations of Owner.

 

The payments, disbursements and
reserve fundings enumerated in this Section 3.5.4 shall be made by Westin
on behalf of Owner on a monthly basis; provided that payments required to
satisfy the Resort’s obligations to third parties shall be made from time to
time as and when

 

36

 

determined by Westin to be
necessary or advisable for the continued uninterrupted operation of the Resort.

 

3.5.5  No Right of Setoff. 
All of Owner’s obligations to make payments to Westin under this
Agreement are absolute and unconditional, not subject to any rights of setoff,
except to the extent of any undisputed amounts payable by Westin to Owner or
others under this Agreement.  Similarly,
all of Westin’s obligations to make payments to Owner under this Agreement are
absolute and unconditional, not subject to any right of setoff, except to the extent
of any fees and other amounts payable by Owner to Westin or others as
specifically provided under this Agreement.

 

3.6          Fees.  Owner shall have no obligation to pay Westin any fees or other
payments except as specified in this Agreement.

 

4.             TERM
AND TERMINATION

 

4.1          Term of
Agreement.

 

4.1.1  Westin’s services under this Agreement shall commence at 12:01
a.m. local time on the Effective Date and shall end, unless earlier terminated
as provided in this Agreement, at midnight local time on December 31,
2017. 

 

4.1.2  Owner shall have the right (the “Extension Right”) to extend the
term of this Agreement for up to ten (10) additional periods of one (1) year
each (each such period being referred to as an “Extension Term”), by giving
Westin written notice (an “Extension Notice”) of such extension on or before
the date (the “Notice Date”) that is ninety (90) days prior to the scheduled
expiration of the then-current term. 
Owner’s Extension Right shall expire automatically as to all future
Extension Terms if Owner has not given an Extension Notice to Westin by the
applicable Notice Date and any Extension Notice given by Owner shall, at
Westin’s option, be of no force or effect if an Event of Default by Owner has
occurred and remains uncured as of the scheduled commencement of the applicable
Extension Term.

 

4.2          Events of
Default.  Subject to the other provisions of this
Agreement addressing termination (including Section 2.6.4), if at any time
during the term of this Agreement any of the events set forth in this Section
4.2 occurs and continues beyond the applicable grace period (an ”Event of
Default”), the nondefaulting party may, at its option, terminate this Agreement
by giving written notice to the other party specifying a date, not earlier than
five (5) days after the giving of such written notice when the Agreement shall
terminate.  If this Agreement is
terminated by Westin due to an Event of Default by Owner, then, in addition to
those amounts payable pursuant to Section 4.5, Owner shall pay to Westin the
then applicable Termination Fee.  In
addition to its right of termination, the nondefaulting party shall be entitled
to pursue all other remedies available to it under applicable law as a result
of such Event of Default.  Events of
Default are as follows:

 

4.2.1  A breach of any material representation, warranty, or covenant in
this Agreement, or any default in the performance of any obligation under this
Agreement that can be cured by the payment of money, but that is not cured
within ten (10) days following an initial written notice of default given by
the nondefaulting party and remains uncured for an additional

 

37

 

twenty (20) days following a second written notice of default given by
the nondefaulting party at least ten (10) days following the initial written
notice of default.

 

4.2.2  A breach of any material representation, warranty, or covenant in
this Agreement, or a default in the performance of any obligation under this
Agreement that cannot be cured by the payment of money and that is not cured
within twenty (20) days following an initial written notice of default given by
the nondefaulting party and remains uncured for an additional ten (10) days
following a second written notice of default given by the nondefaulting party
at least twenty (20) days following the initial notice of default; provided
that if curing the breach or default is not possible within the aggregate
notice and cure period described above and the defaulting party commences to cure
the breach or default within such period and thereafter proceeds diligently and
in good faith to complete the cure, the defaulting party shall have a period of
not more than ninety (90) days following the initial notice of default to cure
such breach or default.

 

4.2.3  Any action by a party toward dissolution of its operations; a
general assignment for the benefit of creditors, a judgment of insolvency
against a party; a voluntary petition for relief under applicable bankruptcy,
insolvency, or similar debtor relief laws or regulations; the appointment (or
petition or application for appointment) of a receiver, custodian, trustee,
conservator, or liquidator to oversee all or any substantial part of a party’s
assets or the conduct of its business; an order for relief against a party
under applicable bankruptcy, insolvency, or similar debtor relief laws or
regulations; a party’s failure generally to pay its debts as such debts become
due; or notice to any governmental body of insolvency or pending insolvency or
suspension of operations.

 

4.2.4  The issuance of a levy or an attachment against all or any
portion of the Resort resulting from a final judgment for which all appeal
periods have expired, which is in an amount in excess of One Million Dollars ($1,000,000)
and is not fully covered by insurance.

 

4.3          Termination
for Failure to Achieve Performance Test.

 

4.3.1  From and after the 2006 Operating Year,  Owner shall have the right to terminate this Agreement,
without payment of any additional fee or premium, and otherwise in accordance
with the provisions of Section 4.5 below, if, for any two consecutive Operating
Years (i.e., beginning with the 2006 and 2007 Operating Years), the
Gross Operating Profit achieved by the Resort for each such Operating Year is less
than eighty-five percent (85%) of the Gross Operating Profit set forth in the
approved Operating Plan and Budget for such Operating Year (the “Performance
Test”).   Owner may exercise the
termination right after a failure to achieve the Performance Test for two (2)
consecutive Operating Years by delivering an irrevocable notice of termination
to Westin that satisfies the following requirements: (i) the notice shall be
delivered to Westin within sixty (60) days after receipt by Owner of Certified
Financial Statements for the second such Operating Year, and the notice shall
specify an effective termination date not less than sixty (60) days nor more
than one hundred twenty (120) days after the delivery of such notice.  In the event the Operating Plan and Budget
for any Operating Year shall not have been approved by Owner and Westin in
accordance with the provisions of this Agreement by the end of such Operating
Year or settled by the Dispute resolution procedures described in
Article 10 by the end of such Operating Year, Owner shall not have the
right to

 

38

 

terminate this Agreement pursuant to the provisions of this
Section 4.3 based on the Resort’s Gross Operating Profit for such
Operating Year until Owner and Westin have approved such applicable Operating
Plan and Budget or until the Dispute in respect of such applicable Operating
Plan and Budget has been settled in accordance with the provisions of
Article 10.  Owner’s termination
right under this Section 4.3 shall not be exercisable in the event that
the applicable level of Gross Operating Profit is not achieved as a result of:
(1) a Force Majeure Event (including a material reduction in occupancy
resulting from a Force Majeure Event), (2) a breach by Owner of Owner’s
obligation to provide working funds for Westin to maintain the Resort in
accordance with the Operating Standard, (3) a Taking, (4) a reduction in
available room nights or tee times resulting from a capital improvement program
that was not contemplated in the Operating Plan and Budget for the Operating
Year in question, or (5) general adverse market and economic conditions,
as reflected by a material decline (i.e., a decline of more than five
percent (5%)) in the average RevPAR of the Comparable Golf Resorts.

 

4.3.2  Notwithstanding the provisions of Section 4.3.1, Westin shall
have the right (but not the obligation) to avoid a termination of this
Agreement under this Section 4.3 by paying to Owner, within ten (10) days after
Westin’s receipt of Owner’s termination notice, an amount equal to the
difference between: (i) eight-five percent (85%) of the Gross Operating
Profit set forth in the approved Operating Plan and Budget for the second of
the two consecutive Operating Years giving rise to Owner’s right to terminate,
and (ii) the actual Gross Operating Profit for such Operating Year (the
“Cure Right”).  Westin’s Base Fee and
Incentive Fee shall also be equitably adjusted upward to reflect the additional
Gross Operating Profit being paid to Owner. 
In the event Westin makes such payment on a timely basis, Owner’s notice
of termination shall be deemed withdrawn and Owner shall not have the right to
send another notice of termination unless the Resort has failed to satisfy the
Performance Test for each of two consecutive Operating Years thereafter, in
which case the Cure Right may be exercised again. 

 

4.4          Termination
Without Cause.  Notwithstanding any contrary provision of
this Agreement, Owner, or any assignee or successor thereof, may terminate this
Agreement at any time by delivering written notice to Westin, subject to the
following provisions of this Section 4.4.

 

4.4.1  Any termination notice from Owner to Westin pursuant to this
Section 4.4 shall specify the effective date of such termination, which
shall be at least seventy-five (75) days following the date of such written
notice.  The actual date of such
termination shall be referred to in this Section 4.4 as the “Termination Date.”

 

4.4.2  As a condition to the effectiveness of any termination of this
Agreement pursuant to this Section 4.4, Owner shall pay to Westin, on or before
the Termination Date, an amount (the “Termination Fee”) equal to Five Million
Nine Hundred Thousand Dollars ($5,900,000), reduced by Three Hundred Sixty-Five
Dollars ($365) per day for each day elapsed between the Effective Date and the
Termination Date; provided, however, that the Termination Fee shall not be
reduced below Five Million Five Hundred Thousand Dollars ($5,500,000).

 

4.4.3  In addition to the Termination Fee, Owner shall pay to Westin in
connection with any termination of this Agreement pursuant to this
Section 4.4:  ( a) any accrued
but unpaid Management Fees outstanding as of the Termination Date, and (b) all
other amounts

 

39

 

to be paid or reimbursed by Owner pursuant to Section 4.5 in connection
with any termination of this Agreement.

 

4.5          Actions To
Be Taken on Termination.  Upon termination of this Agreement for any
reason, the parties covenant and agree to comply with the provisions of this
Section 4.5, which shall expressly survive termination of this Agreement. The
provisions set forth in this Section 4.5 shall not be deemed to impair the
rights of the nondefaulting party to pursue any other remedies available under
applicable law.

 

4.5.1  Except in connection with a termination of this Agreement based
upon an Event of Default by Westin, any and all reasonably and actually
incurred out of pocket expenses arising as a result of such termination or as a
result of the cessation of Resort operations shall be for the sole account of
Owner, and Owner shall reimburse Westin within thirty (30) days after receipt
of any invoice or invoices from Westin, for any reasonably and actually
incurred expenses, including those arising from or in connection with the
termination of those Resort Personnel employed by Westin with severance
benefits calculated according to Westin’s policies applicable to employees of
Westin and according to Westin’s policies applicable generally to employees of
Westin Managed Hotels, reasonably and actually incurred by Westin in the course
of effecting the termination of this Agreement or the cessation of Resort
operations; provided that such terminated Resort Personnel are not otherwise employed
by Westin or an Affiliate of Westin.

 

4.5.2  Within thirty (30) days after termination, Owner shall pay Westin
the then-unpaid portion of the Marketing Fee for the balance of the Operating
Year in which the termination occurs (except in connection with a termination
of this Agreement based upon an Event of Default by Westin, in which event only
the portion of the Marketing Fee accrued through the date of termination shall
be payable), and all then-unpaid Management Fees (including any accrued but unpaid
portion of the Base Fee) and Central Reservations Fees accrued through the date
of termination and all outstanding unpaid Reimbursable Expenses due Westin
under the terms of this Agreement. 
Owner shall not have or exercise any rights of setoff with respect to
such payment or payments. 

 

4.5.3  Westin shall peacefully vacate and surrender the Resort to Owner
promptly upon Owner’s written request that Westin do so.

 

4.5.4  Westin shall purchase from Owner in cash, at the cost paid by the
Resort for such supplies, all unbroken cases of hotel equipment and operating
supplies bearing only the identification of Westin then on hand at the Resort
or ordered or purchased.

 

4.5.5  Westin shall assign and transfer to Owner:

 

(a)           all books and records
respecting the Resort and all contracts, leases, and other documents respecting
the Resort that are not Westin’s proprietary information and are in the custody
and control of Westin, including, without limitation, those provided for in
Section 2.5; and

 

(b)           all of Westin’s right, title
and interest in and to all liquor, restaurant and any other licenses and
permits, if any, used by Westin in the operation of the Resort, to the extent

 

40

 

such assignment or transfer is permitted under Florida law; provided,
however, that if Westin has expended any of its own funds in the acquisition of
licenses or permits, Owner shall reimburse Westin therefor to the extent such
licenses are transferable and such amounts have not been previously reimbursed.

 

4.5.6  Owner shall honor all business confirmed for the Resort with
reservation dates after the termination. 
Westin shall take no action to divert or frustrate the confirmed business
at the Resort; provided, however, that the mere notice that the Resort is no
longer a Westin Managed Hotel will not, in and of itself, be deemed to divert
or frustrate such confirmed business.

 

4.5.7  Owner shall immediately take all steps reasonably requested by
Westin to disassociate the Resort and Owner from the Westin Trademarks and
shall in any event delete all Westin Trademarks from the Resort name and cease
to use all FF&E and Operating Supplies bearing any of the Westin Trademarks
within a reasonable period of time after the termination at Owner’s cost and
expense.  If Owner fails to remove
Trademark-bearing Resort signage within a reasonable period of time after the
termination, Westin has the right to remove and retain all such interior or
exterior signage and, unless the termination was due to an Event of Default by
Westin, Westin’s removal of such signage shall be without any liability to
Owner for the cost to restore or repair the Resort premises or equipment for
damages resulting therefrom.  Westin
shall have the right to remove from the Resort within a reasonable period of
time after the termination all Westin operations manuals, policy statements and
the like, any other proprietary information of Westin, and all other written
materials bearing the Westin Trademarks. 
Owner shall not copy, reproduce, or retain any of these materials.

 

4.5.8  As of the effective date of the termination, Westin shall remove
all Westin Software from the Resort and shall disconnect the Resort from
Westin’s reservations systems and their related software applications.  Westin shall provide reasonable assistance
to Owner in facilitating the orderly transfer of Owner’s records and data
contained in Westin Software.  To the
extent necessary to facilitate the orderly transfer of Owner’s records and data
and to the extent permitted by the terms of licenses with software
producers.  Owner and Westin shall
execute a software license agreement substantially in the form attached to Exhibit
C to provide for the use by Owner of appropriate Westin Software
(excluding, in any event, the reservations system) for a reasonable period of
time (to be mutually agreed to by the parties) following the effective date of
the termination; provided, however, Owner’s payment obligations thereof shall
be on a most-favored nations basis.

 

4.5.9  As of the effective date of termination, there shall be an
apportionment of any prepaid insurance premiums in respect of insurance
policies obtained by Westin under Sections 5.1 and 5.3 which Owner may in its
sole discretion elect to retain.

 

4.6          Consequences
of a Wrongful Termination by Owner.  If this Agreement is wrongfully terminated
by Owner, as determined by a final, nonappealable order issued by a court of
competent jurisdiction, the parties stipulate and agree that Westin’s damages
shall include (a) the Present Value of the Expected Management Fees due and
payable on the date of cessation of Westin’s management of the Resort, and (b)
the amounts described in Sections 4.4.2 and 4.4.3

 

41

 

above, calculated using the date of cessation of Westin’s management of
the Resort as the Termination Date.

 

4.7          Sale of the
Resort.  Notwithstanding any contrary provision of
this Agreement, the following provisions shall apply in connection with any
Sale of the Resort:

 

4.7.1  Owner may, at its election, terminate this Agreement in
connection with a Sale of the Resort. 
Any such termination by Owner shall be treated as a termination pursuant
to the provisions of Section 4.4 above and, therefore, shall be subject to
all of the provisions of Section 4.4.

 

4.7.2  Whether or not Owner elects to terminate this Agreement in
connection with a Sale of the Resort, Westin may, by written notice to Owner,
elect to terminate this Agreement in connection with a Sale of the Resort, subject
to the following provisions of this Section 4.7.

 

(a)           Any termination notice from
Westin to Owner pursuant to this Section 4.7 shall be given (if at all)
within thirty (30) days following Owner’s written notice to Westin that a Sale
of the Resort will occur (although Owner’s failure to provide such written
notice of a Sale of the Resort shall not preclude Westin from exercising its
right to terminate this Agreement in connection with such Sale of the
Resort).  Any such termination notice
shall specify the effective date of such termination, which shall be no earlier
than the actual closing of the Sale of the Resort and no later than sixty (60)
days following the date when Westin is notified in writing that such closing
has occurred.  The actual date of such
termination shall be referred to in this Section 4.7 as the “Sale Termination
Date.”

 

(b)           Owner shall pay to Westin in
connection with any termination of this Agreement pursuant to this
Section 4.7: (a) the Termination Fee (calculated in the manner provided
in Section 4.4 as if the Sale Termination Date were the Termination Date
described in Section 4.4), (b) any accrued but unpaid Management Fees
outstanding as of the Sale Termination Date, and (c) all other amounts to
be paid or reimbursed by Owner pursuant to Section 4.5 in connection with
any termination of this Agreement.

 

4.7.3  Whether or not Owner or Westin elects to terminate this Agreement
in connection with a Sale of the Resort, Owner shall pay to Westin,
contemporaneously with the date of closing of any Sale of the Resort (the “Sale
Closing Date”): (a) any accrued but unpaid Management Fees outstanding as
of the Sale Closing Date; and (b) an amount equal to 10% of the amount (if
any) by which the net sales price for the Resort exceeds Fifty-Nine Million
Dollars ($59,000,000); provided, however, that the provisions of this clause
(b):  (i) shall automatically terminate
if the net sales price for the Resort shall not exceed such amount; (ii) are
personal to Owner and Westin and may not be assigned; and (iii) shall
automatically expire upon the occurrence of the first Sale of the Resort.  Westin shall have the right to submit a
demand for payment of the foregoing amounts to any escrow holder facilitating
the closing of the Sale of the Resort, and any closing of the Sale of the
Resort that occurs without payment of all of the foregoing amounts shall be an
Event of Default by Owner under this Agreement.

 

42

 

5.             INSURANCE

 

5.1          Insurance
by Westin.

 

5.1.1  Westin shall, at all times during the term of this Agreement, and
at Owner’s cost and expense:

 

(a)           maintain Commercial General
Liability insurance, including products and completed operations, bodily injury
and property damage liability, liquor liability, innkeepers’ liability,
contractual liability, independent contractors’ liability, and personal and
advertising injury liability against claims occurring upon, in, or about the
Resort, or any elevator or escalator therein, and upon, in, or about the adjoining
streets and passageways thereof, or otherwise, arising under this Agreement;

 

(b)           maintain business automobile
liability insurance, including coverage for the operation of owned, leased,
hired and non-owned vehicles;

 

(c)           maintain appropriate
worker’s compensation and employer’s liability insurance as shall be required
by, and be in conformance with, the laws of the State of Florida for all Resort
Personnel; and

 

(d)           maintain such other
insurance (including fidelity/crime coverage and employment practices
liability) against other insurable risks not covered under subsections (a) and
(b) which may be required by any Mortgagee or which, at the time, are commonly
insured against by owners of hotel premises in the Restricted Area, with due
regard being or to be given to the then existing circumstances and to the
construction, design, use, and occupancy of the Resort.

 

5.1.2  If at any time during the term of this Agreement any one or more
of the coverages specified in Section 5.1.1 shall be unavailable to Westin
through blanket policies, Owner shall place and maintain any such coverages,
subject to the requirements of Section 5.4.

 

5.1.3  Westin agrees that it shall use commercially reasonable efforts
to ensure that the premium payments required to maintain the coverages
specified in Section 5.1.1 are at not more than competitive market rates.

 

5.2          Special
Conditions or Hazards.  Owner shall disclose to Westin (and Westin
shall disclose to Owner) the presence of any condition or hazard of which Owner
(or Westin, as applicable) has actual knowledge that may create or contribute
to any claims, damages, losses, or expenses not typically insured against by
the coverages specified in Section 5.1.1. 
If any such condition or hazard requires removal, abatement, or any other
special procedures, such special procedures shall be performed at Owner’s
expense in compliance with all Legal Requirements.  Conditions or hazards to which this Section 5.2 refers include:  latent risks to health such as asbestos;
silicosis; toxic or hazardous chemicals; and waste products; hazards to the
environment such as underground storage tanks; and latent or patent toxic,
nontoxic, abrasive, or irritant pollutants. 
At Owner’s expense, Westin shall endeavor to obtain appropriate
insurance coverages against such conditions and hazards to protect the
interests of both Westin and Owner.

 

43

 

5.3          Property/Casualty
Insurance.

 

5.3.1  Subject to Section 5.3.3, Westin shall, at all times during the
term of this Agreement, and at Owner’s cost and expense, keep the Resort
(including, without limitation, the conference centers, entertainment and
recreation facilities, golf course improvements, pro-shops, and other common
areas), and its contents (including, without limitation, all furniture,
fixtures, equipment, appliances, machinery, tools, golf carts and golf
equipment) insured for the benefit of Owner and Westin, and in compliance with
the requirements set forth in any Mortgage(s):

 

(a)           against “all risks” of
physical loss or damage for the full replacement value thereof, without
exclusion for loss or damage by fire, lightning, windstorm, hail, explosion,
riot, civil commotion, aircraft, vehicles, smoke, vandalism, malicious
mischief, sprinkler leakage, volcanic action, terrorist acts (to the extent
such coverage is available at commercially reasonable rates, as mutually
determined by Owner and Westin), breakage of glass, falling objects, weight of
ice and snow or sleet, water damage, weather conditions, or collapse;

 

(b)           against such other “all
risk” perils, including earthquake and flood, commonly insured against by a
Difference in Conditions insurance policy in such amounts as are obtainable
from time to time, but in no event in amounts less than those required under
the terms of the Mortgage(s);

 

(c)           on equipment for the supply
or control of heat, light, power, hot water, cold water, gas, refrigeration, or
air conditioning against direct or consequential loss or damage, as customarily
covered under a Boiler and Machinery policy with a comprehensive definition of
insured equipment, in the amount of at least Five Million Dollars ($5,000,000)
or amounts as Owner or Westin may from time to time reasonably require;

 

(d)           for such other risks
(including loss to fine arts, accounts receivable, valuable papers and records,
electronic media and records, and shipments in transit) that, at the time, are
commonly insured against by owners of hotel premises in the Restricted Area,
with due regard being or to be given to the then existing circumstances and to
the type, construction, design, use, and occupancy of the Resort; and

 

(e)           against Business
Interruption and Extra Expense in a form no less comprehensive resulting from
loss or damage from the hazards specified above, to owned or non-owned property
which prevents normal-operations from continuing; such insurance shall be
written on an Actual Loss Sustained basis in an amount equal to at least one
(1) year’s expected net income before income tax (calculated according to
Generally Accepted Accounting Principles), plus continuing normal operating
expenses, including Westin’s Management Fee, Marketing Fee, Central
Reservations Fee, salaries and related payroll items, and all other
Reimbursable Expenses, that necessarily continue, notwithstanding the business
interruption; the insurance shall also provide Extended Period of Indemnity
provisions for payment of loss until normal operations resume, but in any event
for a period of not less than one hundred eighty (180) days after business
operations have resumed.

 

5.3.2  “Full replacement value,” as used herein, means the cost of
repairing, replacing, or reinstating, including demolishing, any item of
property, with materials of like kind

 

44

 

and quality in compliance with, and without, an exclusion pertaining to
application of, any law or building ordinance regulating repair or construction
at the time of loss, and without deduction for physical, accounting, or any
other depreciation, in an amount sufficient to meet the requirements of any
applicable co-insurance clause and to prevent Owner from being a co-insurer.

 

5.3.3  If Westin is unable to place the insurance referred to in Section
5.3.1, at premiums and otherwise on terms and conditions (including amounts of
coverage and deductibles) at least as advantageous to Owner as the premiums and
other terms and conditions available to Owner under blanket insurance policies
available to Owner from time to time, then Owner may arrange for such insurance
through its blanket policies at Owner’s cost and expense with such payment being made
from Resort operations.  If Owner
desires to place its own insurance pursuant to this Section 5.3.3, Owner shall
so notify Westin in writing at least sixty (60) days prior to the scheduled
effective date of such insurance.

 

5.4          Parties
Insured and Amounts of Coverage.  The carriers of all insurance policies provided by Owner under
this Agreement shall be subject to Westin’s approval, which shall not be unreasonably
withheld or delayed.  All insurance
policies provided for in this Article 5 shall include:

 

5.4.1  Westin and Owner as parties insured thereunder, as their
interests may appear;

 

5.4.2  when maintained by Owner, amounts and types of coverages and
amounts of deductibles as shall be approved from time to time by Westin;

 

5.4.3  where appropriate, mortgage endorsement(s) in favor of
Mortgagee(s), as their interests may appear;

 

5.4.4  where appropriate (including the insurance provided for in Section
5.1.1), the insurer’s waiver of subrogation rights against Westin and Owner;
and

 

5.4.5  a requirement that the insurer provide at least thirty (30) days’
written notice of cancellation or material change in the terms and provisions
of the applicable policy.

 

5.5          Evidence of
Insurance.

 

5.5.1  As soon as practicable prior to the effective date of the
applicable coverages, the party obtaining the insurance coverages under this
Article 5 shall provide the other party with binders evidencing that the applicable
insurance requirements of this Agreement have been satisfied and, as soon as
practicable thereafter, shall provide certified copies of policies for such
insurance or certificates of insurance. 
As soon as practicable prior to the expiration date of each such policy,
the party obtaining such insurance shall provide the other party with binders
evidencing renewal of existing or acquisition of new coverages.  Certified copies-of renewed or new policies
or certificates of insurance shall be provided by the party obtaining insurance
coverage under this Article 5 to the other party as soon as practicable after
renewed or new coverages become effective.

 

45

 

5.5.2  On request, each party shall furnish the other with a schedule of
insurance obtained under this Article 5 listing the policy numbers of the
insurance obtained the names of the companies issuing such policies, the names
of the parties insured, the amounts of coverage, the expiration date or dates
of such policies, and the risks covered thereby.

 

5.6          Reports by
Westin.  Westin shall promptly:

 

5.6.1  cause to be investigated all accidents and claims for damage
relating to the operation and maintenance of the Resort, as they become known
to Westin, and shall report to Owner in writing any such incident that is
material;

 

5.6.2  cause to be investigated all damage to or destruction of the
Resort as it becomes known to Westin, and shall report to Owner in writing any
such incident that is material, together with the estimated cost of repair
thereof;

 

5.6.3  prepare any and all reports required by any insurance company as
the result of an incident mentioned in this Section 5.6, acting as the sole
agent for all other named insureds, additional insureds, mortgages (to the
extent approved), and loss payees (provided that, with respect to any insurance
claim in excess of Fifty Thousand Dollars ($50,000), Owner shall have the right
of prior approval of any such report prepared by Westin); and

 

5.6.4  retain on behalf of Owner all consultants and experts, including
architects, engineers, contractors, accountants, and attorneys, as needed, and
at Owner’s expense, to assist in analyzing any loss or damage, determining the
nature and cost of repair, and preparing and presenting any Proofs of Loss or
claims to any insurers (provided that Owner shall have the right to approve any
such matters in connection with any claims in excess of Fifty Thousand Dollars
($50,000) and any expense in excess of Ten Thousand Dollars ($10,000)).

 

5.7          Review of
Insurance.  All insurance policy limits provided under
this Article 5 shall be reviewed by the parties every two (2) years  following the Effective Date, or sooner if
reasonably requested by Westin or Owner, to determine the suitability of such
insurance limits in view of exposures reasonably anticipated over the ensuing
two (2) years.  Owner and Westin hereby
acknowledge that changing practices in the insurance industry and changes in
the local law and custom may necessitate additions or deletions to types or
amounts of coverage during the term of this Agreement.  Owner and Westin agree to comply with any
other insurance requirements in order to protect the Resort and the respective
interests of Owner and Westin.

 

6.             MORTGAGES

 

6.1          Owner’s
Right to Mortgage.

 

6.1.1  In addition to the GTA Mortgage, Owner shall have the right to
encumber all of the assets that comprise the Resort, any part thereof, or any
interest therein, including, without limitation, the real estate on which the
Resort is to be constructed, the Resort building and all improvements thereto,
all receivables relating to the Resort (provided that any Mortgagee shall
recognize Westin’s right to collect and apply such receivables in accordance
with this Agreement) 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

 

46

 

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 Agreement; provided, however, that any such Mortgage must meet the
requirements and limitations set forth in this Section 6.1 and in Section 6.3
of this Agreement.  Owner shall not
grant a Mortgage or security interest of any type in, or name a Mortgagee as
insured with respect to, or assign before or after a loss any Business
Interruption Insurance coverage, proceeds or policy covering the Resort or its
operations, except any Business Interruption Insurance proceeds specifically
attributable to the payment of principal, interest or other amounts due and
payable to the Mortgagee under the Mortgage in question, and provided that if,
at the time of the disbursement of any Business Interruption Insurance proceeds
there are any sums due and payable to any Mortgagee (excluding payment
obligations accelerated solely by the occurrence of the casualty giving rise to
such proceeds), then any such Business Interruption Insurance shall be applied
first to such outstanding amounts payable to the Mortgagee.  Owner shall provide Westin with a true and
complete copy of any Mortgage and related documents within thirty (30) days of
the signing of such documents by all parties thereto.

 

6.1.2  On reasonable advance notice from a Mortgagee, Westin shall
accord to such person or entity and its agents the right to enter on any part
of the Resort at any reasonable time for the purposes of examining, inspecting
or making extracts from the books of account and financial records of the
Resort; provided, however, that any expenses incurred in the Resort’s name in
connection with such activities shall be Operating Expenses of the Resort.

 

6.1.3  Owner represents and warrants that, as of the Effective Date,
there are no Mortgages encumbering all or any part of the real and personal
property that comprise the Resort or upon which the Resort is operated, other
than the GTA Mortgage. 

 

6.1.4  Westin agrees that, upon request of Owner, Westin shall execute a
subordination, non-disturbance and attornment agreement in the form attached
hereto as Exhibit I (the “SNDA”).

 

6.2          Quiet
Enjoyment.  So long as Westin is not in default under
this Agreement, Westin shall be entitled to enjoy, occupy, and manage the
Resort throughout the term of this Agreement free from interference or ejection
by Owner, any Mortgagee, any ground lessor, or any other entity or individual
claiming under, through, or by right of Owner. 
In furtherance of the foregoing, Owner shall pay and discharge any
charge, assessment or imposition against the Resort and, at its sole expense,
prosecute all actions necessary to assure Westin’s receipt of the benefits of
this Agreement for the full term hereof and to assure Westin’s quiet and
uninterrupted management of the Resort. 
In addition, at Westin’s written request, Owner shall request from any
existing and future Mortgagees and lessors an agreement in form and content
reasonably acceptable to Owner, Westin and any Mortgagees and lessors providing
nondisturbance protection (a “Nondisturbance Agreement”), but Owner shall not
be required to incur any expense, other than de minimis expenses, in requesting
such an agreement and Owner’s inability to obtain such an agreement shall not
constitute a default by Owner under this Agreement.  Notwithstanding the foregoing, Owner shall not enter into any
ground lease or Mortgage unless (x) Owner pays to Westin an amount equal to the
then-applicable Termination Fee on or before the effective date of such ground
lease or Mortgage (in which event, no Termination Fee shall thereafter be
payable to Westin hereunder), or (y) the lessor or Mortgagee executes an
agreement

 

47

 

in form and content reasonably acceptable to Westin which includes the
agreement of such Mortgagee or lessor to assume the obligations of Owner
hereunder with respect to the Termination Fee in the event of a termination of
Owner’s interest in the Resort whether by foreclosure or lease termination as
applicable.

 

6.3          Estoppel
Certificates.  On request at any time and from time to time
during the term of this Agreement. 
Westin shall execute, acknowledge, and deliver to Owner or any Mortgagee
within thirty (30) days following Westin’s receipt of written request therefor,
a certificate: (i) certifying that this Agreement 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 modifications);
(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 Owner or a
Mortgagee; provided, however, that in no event shall Westin be required to
agree to any modifications or waivers with respect to this Agreement or other
agreements in effect between the parties. 
On similar notice, Westin shall be entitled to a similar certificate
from Owner, any Mortgagee (with respect to any Mortgage), or any ground lessor
(with respect to any ground lease).

 

7.             DESTRUCTION; TAKING

 

7.1          Owner To
Restore After Insured Casualty.  Subject to Section 7.2, if the whole or any part of the real or
personal property used in the operation of the Resort is damaged or destroyed
by a peril or event for which this Agreement requires insurance coverage and
for which property damage insurance is available, then Owner shall repair,
restore, replace or rebuild the Resort as nearly as is reasonably possible to
the value, condition and character of the Resort immediately prior to the
occurrence of the damage or destruction (“Casualty Restoration”).  Westin shall cooperate with Owner in
obtaining all property damage insurance proceeds payable with respect to the
Casualty Restoration so that the same shall be available to Owner as the
Casualty Restoration progresses.  Owner
shall use commercially reasonable efforts at no material cost to Owner to
ensure that any applicable Mortgage or Mortgages provide that, subject to
reasonable restrictions, all insurance proceeds covering damage or destruction
to any real or personal property used in the operation of the Resort shall be
available for and may be used for the funding of the Casualty Restoration.

 

7.2          Termination
After Substantial Insured Casualty.  If the major food and beverage facilities in
the Resort are rendered substantially unusable for their intended use during
the last eighteen (18) months of the term of this Agreement, or if the
percentage of the guest rooms in the Resort referred to in column (a) below is
rendered unsuitable for use by guests as a result of any damage or destruction
to the whole or any part of the Resort when the term of this Agreement, has no
more than the number of years to run that is set forth in column (b) below:

 

48

 

	
  (a)

  	
   

  	
  (b)

  
	
  50%

  	
   

  	
  five

  
	
  40%

  	
   

  	
  four

  
	
  30%

  	
   

  	
  three

  
	
  20%

  	
   

  	
  two

  
	
  10%

  	
   

  	
  one

  

 

then Owner may terminate this Agreement within thirty (30) days after
the occurrence of the damage or destruction by giving notice to Westin,
irrespective of the insurance coverage applicable to the damage or
destruction.  Any such termination shall
be effective on the date specified in Owner’s termination notice, which shall
be at least (30) days after the delivery of such notice.

 

7.3          Substantial
Uninsured Casualty - Owner’s
Option To Terminate or Restore.  If the whole or any part of the Resort is
damaged or destroyed by any peril or event for which insurance coverage was not
required by this Agreement, or by any peril or event for which property damage
insurance is unavailable, and the cost of the Casualty Restoration with respect
thereto exceeds twenty percent (20%) of the replacement value of the Resort as
of the date of the casualty as determined by an independent licensed architect
selected by the parties, then Owner may terminate this Agreement by giving
notice to Westin within thirty (30) days after the report is delivered by such
independent licensed architect; otherwise, Owner shall complete a Casualty
Restoration.  Any termination of this
Agreement pursuant to this Section 7.3 shall be effective on the date specified
in Owner’s termination notice, which shall be at least thirty (30) days after
delivery of the termination notice.

 

7.4          Commencement
and Completion of Casualty Restoration.  Unless Owner is entitled to terminate this
Agreement under Sections 7.2 or 7.3, Owner shall commence the Casualty
Restoration as soon as reasonably practicable after the occurrence of the
damage or destruction and shall complete the work with diligence.  If a right of termination does exist, the
obligation to commence the Casualty Restoration shall be delayed until the
earlier of the giving of the applicable notice of termination (in which event
the obligation shall not become operative) or the expiration of the applicable
notice period (in which event the obligation to commence and complete the
Casualty Restoration as provided in this Section 7.4 shall become operative
immediately).

 

7.5          Permanent
Taking.

 

7.5.1  Upon a Taking of either the fee interest in, or a perpetual
easement on, all or a part of the Resort, if Owner’s architect reasonably
determines that the part not so taken may not be repaired, restored, replaced
or rebuilt so as to constitute a first-class golf resort facility as
contemplated by this Agreement, then this Agreement shall terminate as of the
Date of Taking.

 

7.5.2  Upon a Taking of either the fee interest in, or a perpetual
easement on, less than all of the Resort, and if this Agreement has not been
terminated in accordance with Section 7.5.1, this Agreement shall remain
in full force and effect with respect to the remainder of the Resort, and the
awards or other proceeds on account of the Taking (including any interest
included or paid with respect to such awards or proceeds) shall be retained by
Owner and applied

 

49

 

as necessary to the restoration of the Resort or to the payment of any
amounts required to be paid to any Mortgagee in connection with such Taking;
provided that any portion of such awards or proceeds in excess of the amount
(if any) necessary to restore the Resort or required to be paid to a Mortgagee
in connection with such Taking shall not be included in Gross Operating Revenue
or Incentive Income and shall be paid directly to Owner.  Owner shall repair, restore, replace, or
rebuild the remainder of the Resort as nearly as possible to its value,
condition, and character immediately prior  to
the Taking.  Owner shall commence the
work as promptly as reasonably practicable after the Date of Taking and shall
complete the same with reasonable diligence. 
The costs of any such work in excess of the award or proceeds retained
by Owner in connection with such Taking, if any, shall constitute Capital
Expenditures.

 

7.6          Taking for
Temporary Use.

 

7.6.1  Subject to Section 7.6.2, upon a Taking of all or part of the
Resort for temporary use, this Agreement shall remain in full force and effect,
and the awards or other proceeds on account of the Taking (including any
interest included or paid with respect to such awards or proceeds) shall be
retained by Owner and applied as necessary to the restoration of the Resort or
to the payment of any amounts required to be paid to any Mortgagee in
connection with such Taking; provided that any portion of such awards or
proceeds in excess of the amount (if any) necessary to restore the Resort or
required to be paid to a Mortgagee in connection with such Taking shall not be
included in Gross Operating Revenue or Incentive Income and shall be paid
directly to Owner.  When and if, during
the term of this Agreement, the period of temporary use ceases, Owner shall
make all such restoration, repairs and alterations as are necessary to restore
the Resort to its condition prior to the Taking for temporary use.  Owner shall commence such restoration,
repairs, and alterations as soon as reasonably practicable and shall complete
the same with diligence.

 

7.6.2  Notwithstanding the provisions of Section 7.6.1, if a Taking of
the nature described in Section 7.6.1 occurs and if (a) Owner’s architect
reasonably determines that the part of the Resort not taken may not be repaired,
restored, replaced or rebuilt so as to constitute a first-class golf resort as
contemplated by this Agreement, and (b) the taking continues in effect for a
period longer than twelve (12) months, then either Westin or Owner shall, in
its sole discretion, be entitled to terminate this Agreement on thirty (30)
days’ prior notice to the other party.

 

7.7          Effect of
Termination.

 

7.7.1  If this Agreement is terminated in accordance with Sections 7.2,
7.3, 7.5 or 7.6, Owner and Westin shall comply with Section 4.5 hereof and all
expenses reasonably and actually incurred as a result of termination of this
Agreement or as a result of the cessation of Resort operations shall be for the
sole account of Owner.

 

7.7.2  If this Agreement is terminated in accordance with Sections 7.5
or 7.6, the aggregate of the awards or other proceeds of the Taking (including
any interest included in or paid with respect to such awards or proceeds) shall
be paid to Owner.

 

50

 

7.7.3  Upon receipt by Westin of the applicable amounts set forth above
(and in Section 7.7.4 below), neither Owner nor Westin shall have any further
rights against the other under this Agreement (except in connection with any
provisions of this Agreement that by their terms survive a termination of this
Agreement).

 

7.7.4  In the event this Agreement is terminated in accordance with
Sections 7.2, 7.5 or 7.6, Owner shall promptly pay to Westin the Termination
Fee pursuant to Section 4.4.2 hereof.

 

8.             BUSINESS
INTERRUPTION

 

8.1          Business Interruption.

 

8.1.1  If the Resort suffers damage or loss that results in an
interruption in the operations of the Resort, Owner shall nevertheless be
obligated to pay to Westin all amounts that would be due to Westin under this
Agreement had such damage or loss not occurred, including the Management Fee,
the Marketing Fee, the Central Reservations Fee and all Reimbursable Expenses,
for the period of the business interruption provided, however, that if Owner
has approved the placement of the Resort’s Business Interruption Insurance with
Westin’s insurance program, Owner’s obligation to pay the aforementioned
amounts shall be limited to the Business Interruption Insurance proceeds
received by Owner that are specifically attributable to such amounts.  In the event of such a business
interruption, the Management Fee, the Marketing Fee and the Central
Reservations Fee shall be calculated based on projections of the Gross
Operating Revenue and Incentive Income that Owner and Westin reasonably agree
in writing would have been generated had the loss or damage not occurred.  The projections regarding Gross Operating
Revenue and Incentive Income shall be derived from then-accepted practices in
the hotel and insurance industries for such matters, with due consideration
given to the approved Operating Plan and Budget for the Operating Year in which
the loss occurred and any financial projections for the Resort most recently
prepared by Westin prior to the loss or damage.

 

8.1.2  If the Resort suffers damage or loss that results in an
interruption in the operation of the Resort, Owner shall nevertheless be
obligated to pay all reasonable and actually incurred expenses of operating and
maintaining the Resort (at the level which is reasonably determined by Owner
and Westin to be practicable given the damage or loss that has occurred)
regardless of whether there are available to Owner any Business Interruption
Insurance proceeds to cover such amounts, and Owner shall be responsible for
depositing all amounts necessary for the operation and maintenance of the
Resort in the Operating Account(s) in accordance with Section 3.5.3 during
the period of the business interruption.

 

8.2          Proceeds of
Business Interruption Insurance.

 

8.2.1  If the business of the Resort is interrupted by any event or
peril covered by Business Interruption Insurance, the proceeds of any such
insurance shall be allocated between Owner and Westin as their interests may
appear, and Westin shall share in any proceeds (regardless of whether this
Agreement has been terminated based on the event or peril in question) to the
extent that the proceeds represent the Management Fee, the Marketing Fee, the
Central Reservation Fee or Reimbursable Expenses payable by Owner to Westin
under this

 

51

 

Agreement.  The parties
acknowledge and agree that Westin has a separate, independent insurable
interest in the receipt of the Management, Marketing and Central Reservations
Fees and in the receipt of any Reimbursable Expenses, which insurable interest
will exist throughout the covered period of any business interruption,
regardless of whether this Agreement may be earlier terminated as a result
thereof.  Any amounts received by Westin
in accordance with this Section 8.2 shall be applied against and shall
accordingly reduce the applicable amounts that Owner would otherwise be
required to pay to Westin in accordance with Section 7.7.1 or 7.7.2.

 

8.2.2  Owner shall, immediately upon receipt, deposit any and all proceeds
of Business Interruption Insurance received by Owner in the Operating
Account(s) for the timely and full payment of Operating Expenses, or, to the
extent the outstanding Operating Expenses have been timely paid in full, at
Westin’s option, otherwise make any such proceeds immediately available to
Westin, for use in payment of the Management Fee, the Marketing Fee, the
Central Reservations Fee and all Reimbursable Expenses.

 

9.             ASSIGNMENTS

 

9.1          Intentionally
deleted.

 

9.2          Assignment
by Westin.  So long as no Event of Default attributable
to Westin has occurred and remains uncured, Westin shall have the right,
without Owner’s consent, to assign all or a portion of its interest in this
Agreement to: (i) any Affiliate or Affiliates of Westin capable of performing
the assigned obligations in accordance with the Operating Standard;
(ii) any successor of Westin that may result from any merger,
consolidation or reorganization; provided, however, that subject to the
provisions of Section 11.3, any such successor or assignee shall be
required to manage and operate the Resort under the “Westin” name and brand
unless Owner otherwise consents in writing in its sole discretion; or (iii) any
person or entity not generally recognized in the community as being of ill repute
and that acquires all or substantially all of the business and assets of
Westin’s hotel management operations and continues the hotel management
business of Westin using the Westin Personnel and the Westin Trademarks;
provided, however, that subject to the provisions of Section 11.3, any
such successor or assignee shall be required to manage and operate the Resort
under the “Westin” name and brand unless Owner otherwise consents in writing in
its sole discretion.  The assignee must
assume and agree to be bound by, and be capable of performing, all of the terms
and provisions of this Agreement (including the provisions relating to
satisfaction of the Operating Standard). 
As a condition to the effectiveness of any such assignment, Westin shall
deliver to Owner an executed counterpart of the instrument of assignment and
assumption of rights and obligations. 
Any assignment by Westin in violation of the terms of this Section 9.2
shall be void and of no force or effect and shall constitute a material breach of
this Agreement by Westin governed by the terms of Article 4.

 

9.3          Assignment
by Owner.  Notwithstanding, and without limitation of,
Owner’s obligation to make certain payments to Westin pursuant to Section
4.7.2, so long as no Event of Default attributable to Owner has occurred and
remains uncured, Owner shall have the right to (i) assign its entire
interest in this Agreement, together with the transfer of (but not independent
of) all or substantially all of its ownership interest in the Resort or
(ii) transfer equity ownership interests to Owner to, in either event, an
assignee/transferee that:

 

52

 

9.3.1  has been reasonably approved by Westin and has assumed and agreed
to be bound by all of the terms of this Agreement; or

 

9.3.2  meets the following criteria:

 

(a)           has financial resources
sufficient to enable the transferee to satisfy the obligations of Owner under
this Agreement;

 

(b)           does not have (and is not
affiliated with a person or entity that has) as one of its businesses the
management of a chain of more than fifty  (50)
three to four star transient lodging facilities;

 

(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 Agreement.

 

Any transfer in any manner by Owner of all or any portion of its
ownership interest in the Resort without a permissible assignment of its
interest in this Agreement concurrently therewith (in accordance with this
Section 9.3) shall be a material breach of this Agreement governed by the terms
of Article 4.

 

9.4          Effect of
Permitted Assignments.  A consent to any particular assignment shall
not be deemed to be a consent to any other assignment or waiver of the
requirement that consent be obtained in the case of any other assignment.  Upon any such permitted assignment by Owner
or Westin (except in the case of an assignment by Westin pursuant to clause (i)
or (ii) of Section 9.2 above) the assigning party shall be relieved of all
liabilities and obligations under this Agreement accruing after the effective
date of such assignment.  No such
assignment shall relieve the assigning party from its liabilities or
obligations under this Agreement accruing prior to the effective date of the
assignment.  Any assignee shall succeed
to and assume responsibility for all obligations and liabilities including
vacation, sick leave, severance, and other benefits based on length of service
accrued for Resort Personnel as of the effective date of the assignment.

 

9.5          Public
Offering and Private Placement Exception.  Neither any transfers of publicly traded
stock nor any public offering of equity ownership interests (whether
partnership interests, corporate stock or otherwise) in either party or by a
parent company or other owner of either party shall be deemed to be an
“assignment” or “transfer” under this Article 9.

 

9.6          Liquidating
Trust Exception.  Transfers of any interests or assets of
Owner or any of its Affiliates into a liquidating trust, the beneficiaries of
which are substantially similar to the shareholders of the Owner or GTA
immediately prior to the creation of such liquidating trust and which has
financial resources substantially equivalent to that of the Owner or GTA
immediately prior to the effectiveness of such transfer, shall not be deemed to
be a “Sale of the Resort”, an “assignment” or a “transfer” under this Article
9, and therefore will not trigger an obligation of Owner or any Affiliate
thereof to make payments pursuant to Section 4.7.2.

 

53

 

10.          DISPUTES

 

10.1        Alternative
Dispute Resolution Required.  The parties shall resolve any Dispute
through a two-step dispute resolution process administered by
J.A.M.S./Endispute, Inc. or its successors (“JAMS”).  If, at the time a Dispute arises JAMS does not exist or is unable
to administer the resolution of the Dispute in accordance with the terms of
this Article 10, then the dispute resolution process will be administered, in
accordance with the terms of this Article 10, United States Arbitration and
Mediation or its successors (“USA&M”). 
If USA&M is similarly unavailable or unable to administer the
dispute resolution process and the parties cannot agree on the identity of a
substitute service provider, then the complaining party must petition to a
state or federal court in Pinellas County, Florida to identify a substitute
service provider, and the substitute service provider identified by such Court
will administer the dispute resolution process in accordance with the terms of
this Article 10.

 

10.1.1  The parties shall first attempt to settle the Dispute by
participating in at least ten (10) hours of mediation at the offices of JAMS
closest to Tampa, Florida.  The complaining
party must notify the other party that a Dispute exists and then contact JAMS
to schedule the mediation conference. 
The mediator will then be selected in accordance with the rules of JAMS,
but the mediator must have experience in the hospitality and golf industries
and must not have any conflict of interest. 
The mediation will be a non-binding conference between the parties
conducted in accordance with the applicable rules and procedures of JAMS.  Neither party may initiate arbitration
proceedings until the mediation is complete. 
Any mediation will be considered complete: (i) if the parties enter into
an agreement to resolve the Dispute; (ii) with respect to the party submitting
the Dispute to mediation, if the other party fails to appear at or participate
in a reasonably scheduled mediation conference; or (iii) if the Dispute is not
resolved within five (5) days after the mediation is completed.

 

10.1.2  If any Dispute refrains between the parties after the mediation
is complete, the parties shall submit the Dispute to final and binding
arbitration (without appeal or review), administered by JAMS under its
then-current rules.  The arbitrator must have
experience in the hospitality industry and golf industries and must not have
any conflict of interest.

 

10.1.3  Arbitration must be initiated within one (1) year from the date
on which the Dispute giving rise to the arbitration arose, and any party who
fails to commence an arbitration within such one-year period shall be deemed to
have waived any of its affirmative rights and claims in connection with the
Dispute and shall be barred from asserting such rights and claims at any time
thereafter.  An arbitration shall be
deemed commenced by a party when the party sends a notice to JAMS, with a copy
of the notice to the other party, identifying the Dispute and requesting
arbitration.

 

10.2        Compensation
of Mediator or Arbitrator.  Subject to the prevailing party’s right to
recover fees and costs pursuant to Section 10.4, the parties agree to share
equally the costs, including fees, of any mediator or arbitrator (referred to
in this Article 10 as a “neutral”) selected or appointed under this Article
10.  As soon as practicable after
selection of the neutral, the neutral or the neutral’s designated representative
shall determine a reasonable estimate of the neutral’s anticipated fees and
costs, and send a statement to each party setting forth that party’s

 

54

 

equal share of the fees and costs. 
Each party shall, within ten (10) days after receipt of the statement,
deposit the required sum with the neutral.

 

10.3        Venue, Jurisdiction, and Jury Waiver.  The venue of any mediation, arbitration or
judicial proceedings shall be in Tampa, Florida unless otherwise mutually
agreed by the parties.  Each party
irrevocably submits to the exclusive jurisdiction of the federal and state
courts located in Tampa, Florida, unless otherwise mutually agreed by the
parties.  Each party waives to the
fullest extent permitted by law, trial by jury of all Disputes arising out of
or relating to this Agreement.

 

10.4        Expenses.  The prevailing party in any arbitration, suit or other action
arising out of or related to this Agreement shall be entitled to recover its
reasonable fees, costs, and expenses relating to the action or the Dispute,
including reasonable judicial and extra judicial attorneys’ fees, expenses, and
disbursements, and fees, costs, and expenses relating to any mediation or
appeal.

 

10.5        Survival
and Severance.  The provisions of this Article 10 shall survive
the termination of this Agreement for any reason, regardless of whether a
Dispute arises before or after termination of this Agreement, and regardless of
whether the related arbitration proceedings occur before or after termination
of this Agreement.  If any part of this
Article 10 is held to be unenforceable, it shall be severed and shall not
affect either the duties to mediate or arbitrate or any other part of this
Article 10.

 

11.          TRADEMARKS AND OTHER PROPRIETARY MATERIALS

 

11.1        Ownership
of Westin Trademarks.  Owner acknowledges and agrees that Westin
and its Affiliates are and shall remain the owners of the trademarks, trade
name, service marks, and copyrights associated with the name WESTIN or the
guest recognition program, and the related marks that include the word WESTIN
or STARWOOD, including WESTIN HOTELS & RESORTS, WESTIN HOTELS, HEAVENLY
BED, HEAVENLY BATH, WESTIN RESORTS, STARWOOD PREFERRED GUEST, the mark SERVICE
EXPRESS, and the Westin and Starwood corporate logos or symbols, together with
the right to use any and all slogans, derivations, trade secrets, know-how, and
trade dress, and all other proprietary rights associated with such names, marks
and slogans (the “Westin Trademarks”). 
Owner agrees not to contest the rights of Westin and its Affiliates in
respect of the Westin Trademarks, including any additions or improvements to
the Westin Trademarks by whomever developed.

 

11.2        Use of
Westin Trademarks.  As part of the management services to be
provided under the terms of this Agreement, Westin shall use the Westin
Trademarks as it deems appropriate and advisable in operating the Resort,
subject to the following terms and to the terms of Section 11.3 below:

 

11.2.1  Owner may not itself use the Westin Trademarks, except as
expressly provided in this Agreement (or otherwise with Westin’s express
consent) or apply for international, United States federal, or state or
territorial registration of any rights in the Westin Trademarks.  Without Westin’s prior consent, Owner may
not use any of the Westin Trademarks as all or part of its legal name or any
other trade or assumed name under which Owner does

 

55

 

business, and Owner shall disclose in any trade or assumed name filing
that the Resort is independently managed and that Owner has no ownership rights
in the Westin Trademarks.  Except as
provided in Section 11.3, no other letter, word, design, symbol or other matter
of any kind shall be superimposed on, associated with, or shown in such
proximity to the Trademarks so as-to alter or dilute them, and Owner shall not
combine any of the Trademarks with any other trademark service mark or logo.

 

11.2.2  Westin retains the sole right and discretion to:

 

(a)           set reasonable minimum
operating standards associated with the Westin Trademarks for the Resort which
must be met as a condition of continued association with “Westin Hotels &
Resorts”;

 

(b)           determine how and on what
materials the Westin Trademarks may be used;

 

(c)           require the signing of
commercially reasonable secrecy agreements by Resort Personnel and third
parties to protect the confidentiality and the proprietary nature of the Westin
Trademarks;

 

(d)           set standards for and
designate approved third-party suppliers of products bearing any of the Westin
Trademarks, and receive third-party commissions, fees, or royalty payments from
field of use licenses; and

 

(e)           handle disputes and control
actual or threatened litigation with third parties relating to any part of the
Westin Trademarks.

 

11.3        Name of Resort.  The Resort shall be operated by Westin under the name “The Westin
Innisbrook Golf Resort.”  If Westin
changes its corporate name or the name used in the system-wide identification
of Westin, the name “Westin” as part of the Resort name may be changed, at
Westin’s expense, without Owner’s consent to reflect the change in the
corporate name or the change in the system-wide identification; provided that
the foregoing shall not permit Westin to change the name of the Resort in a
manner that identifies the Resort as part of any “second class” brand of hotels
and resorts or to a name that is not in keeping with the Operating
Standard.  The name “Westin” and any
replacement or substitute name constitutes a distinctive hotel service mark for
use in connection with the Resort.  The
words used in conjunction with “Westin,” but not “Westin” or other Westin
Trademarks in the service mark, are presently and shall continue to be the
property of Owner on termination of this Agreement.

 

11.4        Obligations
of Owner.

 

11.4.1  Without first obtaining Westin’s consent, which consent shall not
be unreasonably withheld or delayed, Owner shall not publish any Resort
advertising materials or implement any Resort advertising or promotional programs
of its own.

 

11.4.2  Owner shall notify Westin as soon as reasonably practicable, of
any litigation filed or threatened against Owner involving the Westin
Trademarks, as well as any

 

56

 

apparent third-party infringement of the Westin Trademarks of which
Owner becomes aware and, at Westin’s expense, shall reasonably cooperate with
Westin on such matters.

 

12.          MISCELLANEOUS

 

12.1        Limitation
on Scope of Westin’s Services.

 

12.1.1  In connection with any insurance coverages required or obtained
under this Agreement, neither Westin nor any insurance broker Westin may retain
makes any warranty or representation regarding the advisability, nature or
extent of the insurance coverages provided by Westin for the benefit of Owner
or any other coverages that Owner should consider for the protection of the
Resort and its operations.  Owner agrees
to rely exclusively on its own insurance advisors with respect to all insurance
matters.

 

12.1.2  Any and all financial projections and budgets prepared by Westin
under this Agreement, including the annual Operating Plan and Budget, are
intended to assist Owner in operating the Resort, but are not to be relied upon
by Owner or any third party as to the accuracy of the information contained
therein or the results predicted. 
Westin does not guarantee the accuracy of the information contained in
such projections and budgets, nor does it guarantee the results such
projections and budgets predict, and Owner acknowledges that Westin shall not
be held responsible by Owner or any third party for any divergence between such
projections and budgets and actual operating results achieved, except in the
event of a breach under this Agreement (provided that the foregoing shall not
limit Owner’s right to terminate for failure to satisfy the Performance Test as
provided in Section 4.3).

 

12.1.3  Subject to the provisions of Section 12.10 below, Owner hereby
unconditionally releases Westin and their officers, directors, employees,
agents, and assigns from any and all claims, liabilities, and obligations,
whether now existing or hereafter arising, and whether known, unknown, fixed,
contingent, or otherwise, arising from or related to the matters specified in
Sections 12.1.1 and 12.1.2, namely: (i) the adequacy of insurance coverages
with respect to the Resort; and (ii) the accuracy or achievement of projections
and budgets with respect to the Resort.

 

12.2        Use of
Affiliates by Westin.  In fulfilling its obligations under this
Agreement, Westin may from time to time use the services of an Affiliate
(provided that such Affiliate has the capability to perform such services in
accordance with the Operating Standard and is generally providing such services
to other Westin Managed Hotels).  If an
Affiliate performs services Westin is required to provide under this Agreement,
Westin shall be ultimately responsible to Owner for the Affiliate’s
performance, and Owner shall not pay more for the Affiliate’s services and
expenses than Westin would have been entitled to receive under this Agreement
had Westin performed the services.  If
an Affiliate otherwise performs services for or provides goods to the Resort,
such goods or services shall be supplied at prices and on terms at least as
favorable to the Resort as generally available in the relevant market.

 

12.3        The
Committee.

 

12.3.1  A policy committee (the “Committee”) shall be established to
coordinate the performance by Owner and Westin of their respective obligations
under this Agreement so

 

57

 

that the operation and promotion of the Resort may be conducted in an
efficient manner and under the terms and provisions of this Agreement.  Owner and Westin shall each appoint three
(3) representatives (“Representatives”) to serve on the Committee, with the
persons whose names are listed on Exhibit J attached hereto being the
persons who are to serve as the initial Representatives.  At all times, at least one of Westin’s
Representatives shall be a designee of the Golf Manager.  Either party may, at any time and from time
to time, on notice to the other party, name an alternate for one or more
meetings or remove any of its Representatives and appoint a successor or
successors.  With respect to those
matters over which either party or both parties are granted approval rights
under this Agreement, each Representative and each designated alternate shall
have the authority to act for and bind his or her principal in giving or
withholding such approval.

 

12.3.2  The Committee shall hold periodic meetings not less frequently
than quarterly on not less than ten (10) days’ notice from either party to the
other (or more frequently as circumstances may make necessary or desirable and
which may include, at Owner’s request, telephonic bi-weekly meetings).  Meetings shall be held at the Resort or in
any other city agreeable to both parties as set forth in the notice.  No more than two (2) of the Representatives
of each party shall be required to attend any meeting.  If the Committee so chooses, it may appoint
a secretary to keep minutes of its meetings, and the minutes shall be
distributed to all Representatives within thirty (30) days after each meeting.

 

12.3.3  The purpose of the Committee meetings is to provide Westin and
Owner with a forum in which to discuss any aspect of the Resort’s
operations.  Westin agrees to discuss
with Owner, among other topics, Westin’s selection of the Senior Executive
Personnel of the Resort and key department managers; review of personnel
deployment at the Resort (i.e., allocation of human resources to best
promote the Resort’s business plan); policies that materially affect Resort
Personnel; incentive plan results and modifications thereto; special projects
recommended by Westin, Owner or Golf Manager; the annual Operating Plan and
Budget and the periodic updates thereto prepared by Westin; the content and
implementation of the marketing program for the Resort (as proposed and
implemented by Westin from time to time), including the coordination of
Westin’s marketing program with the specific marketing of the Golf Facility and
evaluation of the extent to which funds from the Resort should be specifically
earmarked for golf-oriented marketing; sales and booking models for the Resort
(including issues relating to the provision of incentives to Resort guests to
book tee times at the Golf Facility); consideration of any modification or
supplementation that may be advisable with respect to the financial reports to
be prepared by Westin; any proposed or planned Capital Improvements, and
policies and practices relating to the exerciseby any person or entity of rights under the National Labor Relations
Act or any applicable labor laws in relation to the Resort (including union
organization, recognition and withdrawal of recognition, union elections, contract
negotiation on a single-employer or mufti-employer basis, grievances, unfair
labor practice charges, strikes and lockouts). 
In making decisions in connection with its operation of the Resort
pursuant to this Agreement, Westin shall consider in good faith Owner’s views
(as expressed during Committee meetings or during other discussions between
Owner and Westin).

 

12.4        Owner’s
Compliance With Legal Requirements.  Owner and Westin shall, as an Operating
Expense of the Resort, jointly endeavor to ensure that the business being
conducted at the Resort is in full compliance with all Legal Requirements.  Without limiting the generality

 

58

 

of the foregoing, Owner shall provide adequate funds to enable Westin
to take the actions necessary to comply with Legal Requirements.

 

12.5        Governing
Law.  This Agreement and all disputes relating to
the performance or interpretation of any term of this Agreement shall be
construed under and governed by the laws of Florida applicable to contracts to
be performed entirely within that jurisdiction.

 

12.6        Waivers, Modifications, Remedies.  No failure or delay by a party to insist on
the strict performance of any term of this Agreement, or to exercise any right
or remedy consequent on a breach thereof, shall constitute a waiver of any
breach or any subsequent breach of such term. 
Neither this Agreement nor any of its terms may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against whom the enforcement of the change, waiver, discharge, or termination
is sought.  No waiver of any breach
shall affect or alter this Agreement, but each and every term of this Agreement
shall continue in full force and effect with respect to any other then existing
or subsequent breach thereof.  The
remedies provided in this Agreement are cumulative and not exclusive of the
remedies provided by law or in equity.

 

12.7        Severability
of Provisions.  If a court of competent jurisdiction or an
arbitrator determines that any term of this Agreement is invalid or
unenforceable to any extent under applicable law, the remainder of this
Agreement (and the application of this Agreement to other circumstances) shall
not be affected thereby, and each remaining term shall be valid and enforceable
to the fullest extent permitted by law.

 

12.8        Notices.  All notices, consents, determinations, requests, approvals,
demands, reports, objections, directions, and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given on the date upon which such communications are
delivered by a reputable overnight carrier service or by the United States
Postal Service or its successor after being deposited with the United States
Postal Service as Express Mail or as registered or certified matter, postage
prepaid, return receipt requested, addressed as follows:

 

If to Westin:

 

Westin Management
Company South

c/o Starwood Hotels
& Resorts Worldwide, Inc.

1111 Westchester
Avenue

White Plains, New
York  10604

Attention:  General Counsel

Fax:  (914) 640-8260

 

with a copy, to the
same address, marked:

 

Attention:  President, North America Division

 

59

 

and with a copy to:

 

Heller Ehrman White
& McAuliffe LLP

333 Bush Street

San Francisco,
California  94104

Attention:  Judith C. Miles, Esq.

Fax:  (415) 772-6268

 

If to Owner:

 

GTA-IB, LLC

c/o Golf Trust of
America, Inc.

14 North Adger’s
Wharf

Charleston, South
Carolina  29401

Attention:  Mr. W. Bradley Blair, II

Fax:  (843) 723-0479

 

with a copy to:

 

O’Melveny &
Myers LLP

Embarcadero Center
West

275 Battery Street

San Francisco,
California  94111

Attention:  Peter T. Healy, Esq.

Fax:  (415) 984-8701

 

or at such other address as the party to whom the notice is sent has
designated in accordance with this Section 12.8.

 

12.9        Successors
and Assigns.  Subject to the provisions of Articles 6 and
9, this Agreement shall inure to the benefit of and shall be binding on the
successors and assigns of the parties, and the terms “Owner” and “Westin” as
used in this Agreement shall include all permitted successors and assigns of
the original parties.

 

12.10      Indemnification.

 

12.10.1  Subject to Sections 12.10.2. and 12.10.3 below, Owner shall
indemnify, defend, and hold Westin and its officers, directors, employees,
agents, consultants and assigns harmless from and against any and all claims,
demands, actions (including enforcement proceedings initiated by any government
agency), penalties, suits, and liabilities (including the cost of defense,
settlement, appeal, and reasonable attorneys’ fees and costs, but excluding
consequential damages), which they or any of them may have alleged against
them, incur, become responsible for, or pay out for any reason including:  the death of or personal or bodily injury to
any person; destruction or damage to any property; contamination of or any
adverse effects on the environment; breach of any express contract; any
violation of governmental laws, regulations, orders or the like; any claim the
basis for which is a defect in the design or construction of the Resort; or any
of the matters specified in Sections 5.2, 12.1.1, or 12.1.2; caused in
whole or in part by, arising out of, or related to:  (i) the ownership or operation of the

 

60

 

Resort after the Effective Date, including the employment and discharge
of Resort Personnel and matters pertaining to the accessibility of the Resort
to persons with disabilities; (ii) Owner’s breach of any provision of this
Agreement; (iii) any breach by Owner of any legal, contractual, or other
duties; (iv) any violation of governmental laws, regulations, orders or
the like with respect to the Resort occurring on or after the Effective Date;
or (v) acts or omissions of Westin or its Affiliates or any of their
respective officers, directors, employees, agents or consultants, in the
performance of their services pursuant to this Agreement, or in connection with
winding up such services upon termination of this Agreement; provided, however,
that in no event shall Owner’s indemnification obligations under this
Section 12.10.1 extend to acts of fraud, gross negligence, or willful
misconduct on the part of Westin or its Affiliates or any of their respective
officers, directors, employees, agents, consultants or assigns.

 

12.10.2  Subject to Section 12.10.3 below, Westin shall indemnify, defend,
and hold Owner and its officers, directors, employees, agents, consultants and
assigns harmless from and against any and all claims, demands, actions
(including enforcement proceedings initiated by any government agency),
penalties, suits, and liabilities (including the cost of defense, settlement,
appeal, and reasonable attorneys’ fees and costs, but excluding consequential
damages), which they or any of them may have alleged against them, incur,
become responsible for, or pay out for any reason, to the extent such matters
are caused by any acts of fraud, gross negligence or willful misconduct by
Westin or its officers, directors, employees, agents or consultants in the
performance of services under this Agreement or in connection with winding up
such services upon termination of this Agreement; provided, however, that in no
event shall Westin’s indemnification obligations under this Section 12.10.2
extend to acts of fraud, gross negligence or willful misconduct on the part of
Owner or its Affiliates or any of their respective officers, directors,
employees, agents, consultants or assigns.

 

12.10.3  The obligations set forth in this Section 12.10 shall survive any
termination of this Agreement for the statutory period of the applicable claim;
provided, however, Westin shall be indemnified and held harmless by Owner
against any claim asserted against Westin by a third-party unaffiliated with
Westin for which Westin has indemnification protection hereunder,
notwithstanding the expiration of the applicable statute of limitations,
subject to all applicable defenses, including, without limitation, a defense
that the applicable statute of limitations has expired.  For purposes of determining the scope of the
indemnification obligations of each party under this Section 12.10, the parties
expressly acknowledge and agree that errors in judgment made reasonably and in
good faith by Westin or its Affiliates or their respective officers, directors,
employees, agents or consultants in the management of the Resort (including, in
connection with the employment or discharge of Resort Personnel) shall not be
deemed to constitute gross negligence within the meaning of this Section 12.10
unless such errors in judgment (i) are material to the business of the Resort,
(ii) are repeated after written notice to Westin bringing the error in judgment
to Westin’s attention, and (iii) result in debts or liabilities being incurred
that would not normally be incurred in the ordinary course of business of a
project similar to the Resort. 
Moreover, for purposes of determining the scope of the indemnification
obligations of each party under this Section 12.10, the acts and omissions of
Resort Personnel shall not be imputed to Westin or be the subject of any
indemnification obligation of Westin under this Agreement unless (x) such acts
and omissions are committed by the Senior Executive Personnel, or (y) Westin or
the Senior Executive Personnel acted with gross

 

61

 

negligence in employing, training, supervising or continuing the
employment of the individual committing such acts or omissions.

 

In no event shall (x) the settlement by
either party in good faith of any claim brought by a third party (including,
without limitation, any Resort Personnel) in connection with the ownership or
operation of the Resort be deemed to create any presumption of the validity of
the claim or (y) any such settlement be deemed to create any presumption that
the acts or omissions giving rise to such claim constituted fraud, gross
negligence, or willful misconduct on the part of Westin or its officers, directors,
employees, agents or consultants.

 

12.11      Limitation
on Pledging Owner’s Credit.  Except as is set forth in an Operating Plan
and Budget which has been approved by Owner, and as is necessary or advisable
for the purchase of goods and services in the ordinary course of business in
the operation of the Resort within the scope of this Agreement, Westin shall
not borrow any money or execute any credit obligation in the name and on behalf
of Owner or pledge the credit of Owner without Owner’s prior consent.  Westin shall indemnify Owner and its
Affiliates, and any of their officers, directors, employees, agents,
consultants or assigns against any claims, suits, liabilities, costs, and
expenses, including attorneys’ fees and costs, which may be asserted against or
incurred by Owner and any of the foregoing others because of any such
unauthorized actions by Westin.

 

12.12      Entire
Agreement.  This Agreement and the Exhibits constitute
the entire contract between the parties and supersede all prior contracts and
understandings, written or oral, with respect to the subject matter hereof.

 

12.13      Counterparts.  This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.

 

12.14      Captions.  The Table of Contents and captions to the Articles and Sections
of this Agreement are for convenience of reference only and in no way define,
limit, describe, or affect the scope or intent of any part of this Agreement.

 

12.15      Relationship
of the Parties.  Westin and Owner are not joint venturers,
partners, or joint owners with respect to the Resort, and nothing contained in
this Agreement shall be construed as creating a partnership, joint venture, or
similar relationship between the parties. 
In operating the Resort, signing contracts, accepting reservations,
conducting financial transactions and making any other commitment, Westin acts
as agent for a disclosed principal and assumes no independent contractual
liability nor shall Westin extend its own credit with respect to any obligation
incurred in operating the Resort and performing its obligations under this
Agreement.  Westin’s agency as
established by this Agreement is coupled with an interest and may not be
terminated by Owner until the expiration of the term of this Agreement or the
prior termination of this Agreement in accordance with its terms.

 

12.16      Attorneys’
Fees.  In the event of any legal proceedings,
including any arbitration proceeding, dispute resolution, or litigation of any
nature, relating to this Agreement, the prevailing party shall be entitled to
reimbursement of its reasonable costs and reasonable attorneys’ fees from the
other party.  If any party secures a
judgment in any proceeding brought to enforce or interpret this Agreement, then
any costs or expenses (including reasonable

 

62

 

attorneys’ fees) incurred in enforcing, or in appealing from, such
judgment shall be payable by the party against whom such judgment has been rendered
and shall be recoverable separately from and in addition to any other amount
included in such judgment.  This Section
12.16 is intended to be severable from the other provisions of this Agreement
and to survive and not be merged into any such judgment.

 

12.17      Confidentiality.  The parties agree that the matters set forth
in this Agreement are strictly confidential. 
In addition, the parties agree to keep strictly confidential all
information of a proprietary or confidential nature about or belonging to a
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 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 use
reasonable efforts 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 12.17 shall survive any termination of this 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
Agreement, or the performance by either of them of their respective obligations
under this Agreement.

 

12.18      Restrictive
Covenant.  During the initial term of this Agreement,
Westin shall not, without the prior written consent of Owner, manage another resort
within the Restricted Area.  The
provisions of this Section 12.18 shall not apply during any Extension
Term.  In addition, upon the termination
of this Agreement for any reason, the provisions of this Section 12.18 shall be
null and void as of the effective date of the termination.

 

12.19      No Personal
Liability.  Nothing contained herein shall give rise to
any personal liability on the part of any individual officer, director, or
employee, consultant or agent of either of Westin or Owner, or any Affiliates
thereof.

 

12.20      Status of
Agreements.  The parties hereby confirm that the GHR
Agreement has been replaced and superseded in its entirety by this
Agreement.  The parties further confirm
the status of certain other agreements entered into in connection with the GHR
Agreement, as follows:

 

12.20.1  The parties hereby acknowledge and agree that the Interim
Operations Agreement dated as of May 7, 1997 between WHC and GHR has
expired and is of no further force or effect and that neither Owner nor Westin
shall have any obligation to the other in connection with such agreement.

 

12.20.2  The parties further acknowledge and agree that the Agreement re
Guaranty of Funds dated as of May 7, 1997 between WHC and GHR (the
“Minimum Payment Agreement”) has been terminated and is of no further force or
effect and that neither Owner nor

 

63

 

Westin shall have any obligation to the other in connection with the
Minimum Payment Agreement.

 

12.20.3  Effective as of the date of this Agreement, GTA, Owner and Westin
have executed an SNDA in the form attached hereto as Exhibit I.

 

12.20.4  For further clarity, the parties acknowledge and agree that the
only agreements presently in effect between them governing the operation and management
of the Resort or the Golf Facility are (i) this Agreement, (ii) the
SNDA, (iii) the Golf Management Agreement, and (iv) the Side Letter between
Westin and Owner dated as of the Effective Date.

 

12.21      Mutual
Release of Claims.

 

12.21.1  Mutual Release.

 

(a)           Subject only to the
provisions of Section 12.21.3 below, Owner, on behalf of itself and each of its
present and former members, partners, stockholders, trustees, beneficiaries,
predecessors, successors, affiliates (including GTA), subsidiaries, assigns,
heirs, agents, directors, officers, employees, representatives, and all persons
acting by, through, under or in concert with them, or any of them
(collectively, the “Owner Parties”) does hereby release and forever discharge
Westin and each of its present and former members, partners, stockholders,
trustees, beneficiaries, predecessors, successors, affiliates, subsidiaries,
assigns, heirs, agents, directors, officers, employees, partners,
representatives, and all persons acting by, through, under or in concert with
them, or any of them (collectively, the “Westin Parties”), of and from any and
all manner of action or actions, cause or causes of action, in law or in
equity, suits, debts, liens, contracts, agreements, promises, liability,
claims, demands, damages, losses, costs or expenses, of any nature whatsoever,
known or unknown, fixed or contingent, whether now existing or hereafter
arising based upon or relating to (A) the ownership, operation or
management of the Resort or the Golf Facility prior to the Effective Date, or
(B) the indebtedness of GHR to GTA evidenced by, among other things, the
GTA Loan Agreement (collectively, “Released Claims”).

 

(b)           Subject only to the
provisions of Section 12.21.3 below, Westin, on behalf of itself and each of the
other Westin Parties, does hereby release and forever discharge each of the
Owner Parties of and from any and all manner of Released Claims.

 

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

 

64

 

to the date of this Amendment, or (ii) the indebtedness of GHR to
Lender secured by, among other things, the GTA Mortgage.  In furtherance of such intention, the
release herein given shall be and remain in effect as a full and complete
mutual release notwithstanding the discovery or existence of any such
additional different claims or facts.

 

12.21.3  Reservation of Certain Rights.  The releases set forth above shall not limit the ability of
either of the parties to enforce its rights under this Agreement.  In particular, but without limiting the
generality of the preceding sentence, the releases set forth above shall not
limit either party’s rights as against the other pursuant to Section 12.10
above with respect to claims, demands, actions (including enforcement
proceedings initiated by any governmental agency), penalties, suits and
liabilities (including the cost of defense, settlement, appeal, and reasonable
attorneys’ fees and costs, but excluding consequential damages) to the extent
that the same is either (i) based on events occurring after the Effective
Date of this Agreement, or (ii) first asserted by the third party claimant
to Owner and/or Westin in writing following the Effective Date.  Each party hereby represents to the other
that it has no knowledge of the assertion by a third party claimant of any such
claims, demands, actions, penalties, suits or liabilities prior to the
Effective Date (other than claims arising in the ordinary course of the
operation of the Resort or the Golf Facility and fully covered by insurance or
as set forth in that certain letter delivered from Owner to Westin or from
Westin to Owner, as applicable, dated July 2004).

 

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

 

12.22      Interpretation
of Generally Accepted Accounting Principles.  In the event that there is a dispute between
Owner and Westin respecting the application of Generally Accepted Accounting
Principles under this Agreement, a final determination shall be made by one of
the four largest public accounting firms in the United States.  

 

12.23      Other
Agreements.  Westin and its counsel have reviewed the
following agreements (each of which is intended to be entered into
simultaneously with this agreement unless otherwise indicated) and Westin
consents to the contents of such agreements: 
(i) that certain Settlement Agreement by and among GHR, Owner and
certain other parties; (ii) that certain Defense and Escrow Agreement by and
among GHR, Owner and certain other parties; (iii) that certain Operational
Benefits Agreement by and among GHR, Owner and certain other parties; and (iv)
that certain Parcel F Development Agreement by and among GHR, GTA and certain
other parties, dated March 30, 2004.

 

65

 

IN WITNESS WHEREOF,
the parties have executed this Agreement on the Effective Date.

 

	
   

  	
  “WESTIN”

  
	
   

  	
   

  
	
   

  	
  WESTIN
  MANAGEMENT COMPANY SOUTH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nadine Greenwood

  	
   

  
	
   

  	
   

  	
  Name: Nadine Greenwood

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  “OWNER”

  
	
   

  	
   

  
	
   

  	
  GTA-IB,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Bradley Blair, II

  	
   

  
	
   

  	
   

  	
  Name: W. Bradley Blair, II

  
	
   

  	
   

  	
  Title: President

  

 

66EXHIBIT
10.5

 

When Recorded Return
To:

 

 

O’Melveny & Myers LLP

Embarcadero Center West

275 Battery Street, Suite 2600

San Francisco, California 94111

Attention:  Peter T. Healy, Esq.

 

 

ASSIGNMENT,
CONSENT, SUBORDINATION AND NONDISTURBANCE

AGREEMENT

 

This ASSIGNMENT, CONSENT,
SUBORDINATION AND NONDISTURBANCE AGREEMENT (this “Agreement”) is made and entered as of this
15th day of July, 2004 (the “Effective Date”), by and among GTA-IB, LLC,
a Florida limited liability company (“Owner”), (ii) GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership (the “Lender”) and (iii) WESTIN MANAGEMENT
COMPANY SOUTH, a Delaware corporation (“Westin”).

 

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

 

A.                                   Westin has entered into a Management
Agreement dated as of July 15, 2004 (the “Management Agreement”) with
Owner, regarding the management and marketing of the resort currently known as
the Innisbrook Resort, located near Tarpon Springs, Florida, and more fully
described in the Management Agreement (the “Resort”).  The legal description of the real property
on which the Resort is located is set forth on Exhibit A hereto.

 

B.                                     Lender acknowledges its receipt of a duly
executed copy of the Management Agreement.

 

C.                                     Lender made a loan (the “Loan”)
to Owner’s predecessor, Golf Host Resorts, Inc. (“Golf Host”) pursuant to that
certain Loan Agreement between Lender and Golf Host as of June 20,
1997.  The Loan was dispersed in two
tranches and is evidenced by two separate promissory notes (collectively, the “Notes”)
and is secured by security documents creating liens on and security interests
in the Resort, which security documents are identified in Exhibit B
hereto and are hereinafter collectively referred to as the “Mortgage.”  Owner has succeeded to Golf Host’s ownership
interest in the Resort subject to the Loan and the Mortgage.

 

D.                                    Westin and Lender desire to provide that
any interest in the Resort created by the Management Agreement is subordinate
and subject to the Mortgage, to provide for Westin’s

 

 

continued management of
the Resort pursuant to the Management Agreement in the event of a transfer of
ownership of the Resort on foreclosure of the Mortgage or a conveyance in lieu
of foreclosure and to give Lender certain rights respecting Westin’s
obligations under the Management Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement and for other good and valuable consideration, the
receipt and adequacy of which the parties hereby acknowledge, the parties agree
as follows:

 

1.                                       Recitals Part of Agreement. 
The Recitals form a part of this Agreement and are fully incorporated
herein by this reference.  Any
capitalized terms not otherwise specified or defined herein shall have the
meanings set forth in the Management Agreement.

 

2.                                       Security
Interests; No Impairment of Lender’s Rights.  Westin acknowledges the security interests granted to
Lender as set forth in the Security Agreement attached hereto as Exhibit C.  Westin agrees, for the benefit of Lender,
that upon its receipt (the “Receipt Date”) of a written notice from
Lender stating that an Event of Default (as defined in Mortgage) has occurred
and is continuing under the Mortgage and that the obligations owing by Owner to
Lender have been accelerated, Westin shall not apply the Funds (as defined in Section 3
below) to or otherwise make any loans or payments of any kind or nature to
Owner or any affiliate of Owner until the applicable Event of Default is cured
or waived in writing by Lender in each instance.  The foregoing shall not be interpreted to prevent Westin from
paying the management fees under the Management Agreement or from paying bills
properly incurred in connection with its operation of the Resort from operating
accounts as the same become due and payable, or disbursing reserve funds for
the purposes intended in the creation of the reserve, but only pursuant to and
subject to the terms of the Management Agreement.  This Agreement shall not be deemed to impair or to constitute a
condition precedent to the exercise by Lender of any of Lender’s rights against
Owner and/or Westin under this Agreement which are not expressly conditioned
upon the existence of a default under this Agreement or an Event of Default
under the Mortgage.  Owner hereby
acknowledges its consent to the foregoing and releases Westin from any
liability arising out of any action or inaction by Westin which was based on
the direction of Lender and undertaken in good faith by Westin.

 

3.                                       Application of Funds. 
During the term of the Management Agreement and notwithstanding any
default by Owner under the Mortgage:

 

3.1                                 Westin shall have the right, subject to
the terms and conditions hereof and the Management Agreement only, to use those
funds and proceeds of Owner (including income derived from Resort operations
and all proceeds of Business Interruption Insurance), in Westin’s custody,
possession or control, and to which Westin has the right of access pursuant to
the Management Agreement (collectively, the “Funds”), in furtherance of
the performance of the services Westin is to provide in the future only and in
furtherance of Owner’s obligations, including payments of Operating Expenses,
payment of fees and expenses to Golf Manager under the Golf Management Agreement,
and payments of the Management Fee and Reimbursable Expenses, all as specified
in the Management Agreement;

 

 

3.2                                 If the Funds are insufficient to cover
all of Owner’s or Westin’s obligations under the Management Agreement, Westin
shall apply the Funds in accordance with the terms of the Management Agreement
and not otherwise.

 

4.                                       Foreclosure. 
During the term of the Management Agreement:

 

4.1                                 No action or
proceeding to foreclose the Mortgage, no conveyance in lieu of foreclosure, and
no election by Lender to exercise its rights under the Mortgage or other
succession by Lender to Owner’s interest in the Resort shall result in the
cancellation, termination, or modification of the Management Agreement.

 

4.2                                 If Lender elects to
exercise its rights under the Mortgage or otherwise succeeds to Owner’s
interest in the Resort, or if the Resort is sold as a result of any conveyance
in lieu of foreclosure or any action or proceeding to foreclose the Mortgage,
Lender or the purchaser of the Resort at foreclosure, as the case may be (“Subsequent
Owner”), shall be bound by the terms and provisions of the
Management Agreement (as amended by this Agreement) as of the Event of
Transfer.  Notwithstanding anything to
the contrary contained herein or in the Management Agreement, any Subsequent
Owner other than Lender or an affiliate of Lender shall not be (1) bound by any
waiver or modification to the Management Agreement or by any waiver or
forbearance as to Westin’s obligations thereunder not approved in writing by
Lender or Subsequent Owner; (2) liable for any act or omission of Owner
arising prior to the Event of Transfer or for the cure of any alleged defaults
by Owner which occurred prior to Event of Transfer; (3) subject to any offsets
or defenses which Westin may be entitled to assert against Owner; or (4) liable
for any or bound by any covenant or undertaking under the Management Agreement
with respect to any matter arising during any period when the Subsequent Owner
does not own the Resort.  Furthermore,
upon an Event of Transfer if on the date thereof Westin is not then considered
a first-class upscale hotel operator with relevant experience in the operation
and management of first-class golf facilities, the Subsequent Owner at its
election by notice given within thirty (30) days of the date it becomes a
Subsequent Owner, shall not be bound by the terms and conditions of the
Management Agreement.  For purposes of
this Agreement, an “Event of Transfer” shall mean and refer to any transfer of
title to the Resort resulting from a judicial or non-judicial foreclosure or
conveyance in lieu of foreclosure or any transfer resulting from Lender’s
exercise of its rights under Section 14.3 of the Loan Agreement.

 

5.                                       Modification of Management Agreement;
Lender Consent.  Owner and Westin each covenant and agree
that unless otherwise expressly permitted in the Loan Agreement, it will not
initiate, consent to or acquiesce in any amendment, modification, extension,
renewal or surrender of the Management Agreement without the prior written
consent of Lender; provided, however, that Lender shall be deemed to have
consented to any such amendment, modification, extension, renewal or surrender
of the Management Agreement approved by Owner in writing at a time when Owner
is controlled by Lender or one or more affiliates of Lender.  Westin agrees that any interest it may have
in the Resort arising by virtue of the Management Agreement shall be
subordinate to the lien of the Mortgage and to any modifications or amendments
thereto.

 

6.                                       Modification of Loan or Mortgage. 
This Agreement shall continue in full force and effect between the
parties as to any amendment, modification, restatement, or refinancing of

 

 

the Mortgage, regardless
of whether any such amendment, modification, restatement, or refinancing shall
have been approved by Westin.

 

7.                                       Concurrent Delivery of Notices. 
Simultaneously with giving Owner any written notice of default or
termination (“Notice”) under the Management Agreement, Westin shall
concurrently send Lender a copy of the Notice in the same manner as provided in
the Management Agreement.  Westin hereby
agrees to deliver to Lender, concurrently with delivery to Owner, copies of any
and all notices of material events under the Management Agreement.  Lender hereby agrees to deliver to Westin,
concurrently with delivery to Owner, copies of any and all notices of Events of
Default under the Mortgage, provided the failure to give such notice shall not
affect the validity of any such notice given to Owner.

 

8.                                       Right to Cure. 
If a default by Owner has occurred and is continuing so as to constitute
an Event of Default under the Management Agreement, Westin shall not be
entitled to terminate the Management Agreement without the prior written
consent of Lender if:

 

8.1                                 for any default that can be cured solely
by the payment of money, Lender cures the default within thirty (30) days of
receipt of a copy of the Notice from Westin; or

 

8.2                                 for all other defaults, Lender commences
to cure within thirty (30) days of receipt of a copy of the Notice from Westin
and thereafter proceeds with diligence and good faith to cure such other
defaults.

 

Lender shall be deemed to
have commenced a cure of any default (other than the failure to pay money when
due) by giving Westin written notice of Lender’s election to exercise its
rights under the Mortgage and by immediately commencing and proceeding
diligently thereafter to foreclose its lien and security interests in the
Resort.

 

9.                                       Successors and Assigns. 
This Agreement is intended solely for the benefit of Westin, Lender,
Owner and any Subsequent Owner and shall not inure to the benefit of or be
enforceable by any other third party. 
This Agreement shall be binding on and shall inure to the benefit of the
successors and assigns of Westin and shall be binding on and inure to the
benefit of Lender, Owner, any successive holder of the Mortgage and any
Subsequent Owner.

 

10.                                 Notices.  All notices
required or permitted to be given hereunder shall be in writing and shall
become effective on the day of delivery by overnight courier or if delivered by
the United States Postal Service, three (3) days after being deposited in the
United States mail, certified or registered, postage prepaid, addressed as
shown above or to such other address as such party may from time to time
designate to the other in writing.

 

11.                                 Governing Law; Merger; Amendments. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida.  This
Agreement constitutes the sole understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements or
understandings, written or oral, with respect to the subject matter
hereof.  This Agreement cannot be
terminated and none of its terms can be modified or waived except by an
instrument in writing signed by the party against whom enforcement of such
modification, waiver, or termination is sought.

 

 

12.                                 Inspections. 
On reasonable advance notice from Lender, Westin shall accord to Lender
and its agents the right to enter on any part of the Resort at any reasonable
time during the term of this Agreement for the purpose of examining,
inspecting, or copying the books and records of the Resort.

 

13.                                 Estoppels; Assignment of Loan; Attornment. 
Westin agrees that on not less than fifteen (15) days’ prior written
notice from Lender, Westin shall execute, acknowledge, and deliver to Lender or
any other person directed by Lender a certification that the Management
Agreement has not been modified and is in full force and effect.  The certification shall also contain a
statement as to whether any default exists, to the knowledge of the signer, and
if so, specifying each default about which the signer has knowledge.  In the event that Lender pledges its
interest in the Notes and assigns its interest in the Mortgage for security
purposes, Westin shall cooperate with the reasonable requirements of such
lender, provided Westin shall not be required to materially increase its
obligations or materially impair its rights under the Management Agreement; and
provided, further, that Westin shall not be required to expend additional funds
beyond de minimus amounts.  Following an
Event of Transfer, upon the written request of Lender or the Subsequent Owner,
Westin shall enter into an agreement attorning to such requesting party,
subject to the terms and conditions of the Management Agreement (unless Westin
has the right to terminate under the terms of the Management Agreement).

 

14.                                 No Assumption by Lender. 
Excepting only in the case in which Lender becomes a Subsequent Owner,
neither this Agreement nor any action on the part of Lender shall constitute an
assumption by Lender of any of the obligations of Owner under the Management
Agreement.

 

15.                                 No Impairment of
Lender’s or Owner’s Rights. 
The
rights, powers and remedies of Lender hereunder are cumulative and not
exclusive of any other right, power or remedy that Lender would otherwise
have.  The rights of Lender hereunder
are independent of any other security for the Mortgage, and upon the occurrence
and during the continuation of an Event of Default under the Mortgage, Lender
may proceed in the enforcement hereof independently of any other right or
remedy that Lender may at any time hold with respect to the Mortgage.  Lender may file a separate action or actions
hereunder, whether action is brought and prosecuted with respect to any other
security, or whether any other party is joined in any such action or
actions.  In the event any part of the Mortgage,
or any right or remedy of Lender shall be held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other right or remedy granted hereby. 
For so long as Owner is the owner of the Resort, subject to the terms of
this Agreement, Owner shall be entitled to exercise all rights, and enjoy all
benefits and privileges, reserved to Owner under the Management Agreement.

 

16.                                 Construction of Agreement. 
All words used herein in the plural shall be deemed to have been used in
the singular, and all words used herein in the singular shall be deemed to have
been used in the plural where the context and construction so require.  Section headings in this Agreement are
included for convenience of reference only and are not a part of this Agreement
for any other purpose.

 

17.                                 Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which counterparts shall be deemed an original and all of which shall
constitute one and the same Agreement. 
Any signature page of this Agreement may be detached from any

 

 

counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical
in form hereto but having attached to it one or more additional signature
pages.

 

18.                                 Relationship of the Parties. 
The parties agree and acknowledge that the relationship of Lender and
Owner is solely that of lender and borrower, and the relationship between
Lender and Westin is solely that of lender and Owner’s Resort manager, and all
covenants and agreements contained herein are for the sole purpose of
protecting Lender’s security interest in the Management Agreement, and the
Resort, and Westin’s interest in the Management Agreement.

 

19.                                 Reconveyance of Liens. 
Upon payment in full of all monies due under the Mortgage and the
reconveyance of all liens created by the Mortgage, the assignments created
hereunder shall terminate, and Lender (or such subsequent lender), upon written
request of Owner or Westin, shall deliver to the Owner and Westin, in
recordable form, a full, complete and absolute release of this Agreement.

 

20.                                 Attorney Fees. 
If either party commences a legal proceeding to interpret or enforce the
terms of this Agreement, the prevailing party shall be entitled to recover its
costs and expenses and a reasonable sum for attorneys’ fees from the other
party.

 

21.                                 Survival.  The
provisions hereof (including, without limitation, Section 4 hereof)
governing the rights of the parties following an Event of Transfer shall
survive the satisfaction, termination, extinguishment, or cancellation of the
Mortgage in an Event of Transfer, and shall continue until either the
Management Agreement has been terminated, or any Successor has no further
interest in the Resort.

 

[signature pages attached]

 

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.

 

	
   

  	
  “WESTIN”

  
	
   

  	
   

  
	
   

  	
  WESTIN MANAGEMENT

  COMPANY SOUTH, a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nadine Greenwood

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nadine Greenwood

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “OWNER”

  
	
   

  	
   

  
	
   

  	
  GTA-IB, LLC, a Florida limited

  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Bradley Blair, II

  	
   

  
	
   

  	
   

  	
  Name:

  	
  W. Bradley Blair, II

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “LENDER”

  
	
   

  	
   

  
	
   

  	
  GOLF TRUST OF AMERICA, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: GTA GP, Inc., a Maryland corporation

  
	
   

  	
  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Bradley Blair, II

  	
   

  
	
   

  	
  Name:

  	
  W. Bradley Blair, II

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
										

 

 

STATE OF FLORIDA

COUNTY OF PINELLAS

 

The foregoing instrument
was acknowledged before me this 2nd day of July, 2004, by Nadine Greenwood,
Authorized Signatory of WESTIN MANAGEMENT COMPANY SOUTH, a Delaware
corporation, on behalf of the corporation, who is personally known to me and
who did not take an oath.

 

 

	
   

  	
  /s/ Todd R. Matthews

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Todd R. Matthews

  
	
   

  	
  Printed Name of Notary

  
	
   

  	
  My Commission Expires: April 30, 2007

  

 

 

STATE OF SOUTH CAROLINA

COUNTY OF CHARLESTON

 

The foregoing instrument
was acknowledged before me this 13th day of July, 2004, by W.
Bradley Blair, President of GTA-IB, LLC, a Florida limited liability company,
on behalf of the company, who is personally known to me and who did not take an
oath.

 

 

	
   

  	
  /s/ Lorraine McKenna

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lorraine McKenna

  
	
   

  	
  Printed Name of Notary

  
	
   

  	
  My Commission Expires: July 29, 2012

  

 

 

STATE OF SOUTH CAROLINA

COUNTY OF CHARLESTON

 

The foregoing instrument
was acknowledged before me this 13th day of July, 2004, by W.
Bradley Blair, President of Golf Trust of America, L.P., a Delaware limited
partnership, on behalf of the partnership, who is personally known to me and
who did not take an oath.

 

 

	
   

  	
  /s/ Lorraine McKenna

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lorraine McKenna

  
	
   

  	
  Printed Name of Notary

  
	
   

  	
  My Commission Expires: July 29, 2012

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