Document:

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                                                                    EXHIBIT 10.5

                             OPERATING AGREEMENT OF
                                THE CHATEAUX, LLC
                       A NEVADA LIMITED LIABILITY COMPANY

         THIS OPERATING AGREEMENT is made as of the 26th day of September, 2002
(the "Effective Date"), by and between Grand Casinos Nevada I, Inc., a Minnesota
corporation ("Grand"); and Diamond Resorts, LLC, a Nevada limited liability
company ("Diamond"), each of which has signed this Operating Agreement as an
initial member of The Chateaux, LLC, a Nevada limited liability company (the
"Company").

                                  INTRODUCTION

         WHEREAS, Grand, Nevada Resort Properties Polo Plaza Limited Partnership
("Plaza") and Cloobeck Enterprises, a Nevada corporation ("Enterprises"), have
executed that certain Irrevocable License Agreement dated December 23, 1998,
recorded in public records on April 21, 1999, and re-recorded on February 22,
2000 (the "Original License Agreement"), which provides Enterprises with certain
rights, and provides for certain use restrictions, with respect to specified
land located in Clark County, Nevada, commonly referred to as the Shark Club
Parcel, the Brooks Parcel and the Plaza Parcel, and collectively defined in the
Original License Agreement as the "Parcels" (also referred to herein as the
"Parcels");

         WHEREAS, Enterprises has assigned certain of its rights under the
Original License Agreement to Diamond, as permitted under Section 12 of the
Original License Agreement;

         WHEREAS, pursuant to separate written purchase agreements, Grand has
sold to two parties unrelated to Grand (the "Buyers") its interests in all of
the Parcels owned or controlled by Grand, except for the Parcel identified in
the Original License Agreement as the "Shark Club Parcel" (also referred to
herein as the "Shark Club Parcel");

         WHEREAS, all of the Parcels and the adjoining real estate parcel (the
"Towers Parcel") held by Polo Towers Master Owners Association, Inc. (the
"Association") are also encumbered and benefited by the provisions of a written
agreement entitled "Grant of Reciprocal Easements and Declaration of Covenants,
Conditions and Restrictions," among Grand, Plaza and the Association, dated as
of December 23, 1998 (the "Grant of Reciprocal Easements");

         WHEREAS, Section 1 of the Original License Agreement entitles Diamond
as Enterprises' assignee to participate in, or exercise a first right of refusal
for, any Timeshare Opportunity (as defined in the Original License Agreement) in
the event Grand or any other party elects to pursue any such Timeshare
Opportunity on one or more of the Parcels before October 2008;

         WHEREAS, Grand and the Buyers are obligated under their purchase
agreements to enter into, and to exert reasonable efforts to: (a) cause all of
the persons holding interests in the Parcels and the Towers Parcel (including
without limitation Diamond and the Association) to enter into, an

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instrument entitled "Amended and Restated Grant of Reciprocal Easements and
Declaration of Covenants, Conditions and Restrictions" (the "Amended Grant of
Reciprocal Easements"), which is intended to amend, combine and supersede the
Original License Agreement, the Grant of Reciprocal Easements and certain other
instruments encumbering one or more of the Parcels and/or the Towers Parcel; and
(b) cause the Original License Agreement to be terminated pursuant to a separate
instrument entitled "Termination of Irrevocable License Agreement," which is
intended to be executed by the original parties (or their successors in
interest) to the Original License Agreement;

         WHEREAS, Diamond has been assisting Grand in causing all necessary
parties to enter the Termination of Irrevocable License Agreement and the
Amended Grant of Reciprocal Easements; and, because that process has been
completed (except for any necessary consent to the Amended Grant of Reciprocal
Easements by one or more of the persons holding deeds of trust with respect to
the Parcel held by the Association), Grand is willing to enter into this
Agreement, which provides the parties with a Timeshare Opportunity (as defined
in the Original License Agreement); and

         WHEREAS, the parties hereto desire to set out the terms for pursuing
such opportunity in accordance with the intent of the Original License Agreement
and pursuant to the terms specified herein;

                                    AGREEMENT

         NOW THEREFORE, pursuant to the Act (as hereinafter defined), the
following Agreement, including, without limitation, Appendix 1 (Tax Accounting
Procedures) and Appendix 2 (Articles of Organization) attached hereto and by
reference incorporated herein, shall constitute the operating agreement, as
amended from time to time, for the Company.

                                    ARTICLE 1
                                   DEFINITIONS

         1.1. General Definitions. The following terms used in this Operating
Agreement shall have the following meanings (unless otherwise expressly provided
herein). Other capitalized terms used herein have the meanings set forth in
Section 1.1 (Tax Definitions) of Appendix 1 (Tax Accounting Procedures).

         "Act" means the Nevada Limited Liability Company Act, Nev. Rev. Stat.
Sections 86.011 to 86.571, as amended from time to time.

         "Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, a specified Person. For the purpose of this definition, the term "control"
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Grand hereby
represents that it has no interest in either of the Buyers referred to in the
Introduction to this Agreement, except as the secured holder of deeds of trust
with respect to the Parcels purchased by such Buyers.

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         "Agreement" shall mean this Operating Agreement, including Appendix 1
(Tax Accounting Procedures) and Appendix 2 (Articles of Organization) attached
hereto, as originally executed and as amended from time to time.

         "Articles of Organization" is defined in Section 2.1

         "Business Day" shall mean a day other than a Saturday, a Sunday or a
state or federally recognized holiday on which banks in Nevada are permitted to
close.

         "Business Hours" shall mean 8:00 A.M. to 5:00 P.M. Standard Time or
Daylight Time, as the case may be, at a location specified in this Agreement. If
no location is specified, a reference to Business Hours shall refer to Business
Hours as determined by Pacific Standard Time or Pacific Daylight Time, as the
case may be.

         "Capital Contributions" shall mean the Initial Working Capital
Contribution and the Project Capital Contribution of a Member, together with the
amount of money and the fair market value (as reasonably determined by the
Manager as of the date of contribution) of any other property contributed, or
services rendered or to be rendered without compensation, to the Company by a
Member with respect to the Member's Membership Interest in the Company.

         "Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.

         "Company" means The Chateaux, LLC, a Nevada limited liability company.

         "Diamond Manager" means the Diamond Member, or any of its members or
managers designated in writing by the Diamond Member, when serving in the
capacity of Manager of the Company. The initial Diamond Manager has been
designated by the Diamond Member and is identified in Section 9.1(a).

         "Diamond Member" means Diamond Resorts, LLC, a Nevada limited liability
company, or its successors and assigns as permitted under Article 11.

         "Effective Date" shall mean the date first set forth above, and shall
be the date on which the business of the Company shall commence, notwithstanding
any earlier filing date of the Company's Articles of Organization.

         "Entity" shall mean any general partnership, government entity, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, cooperative, association or similar organization.

         "Fiscal Year" shall mean the taxable year of the Company for federal
income tax purposes as determined by Code Section 706 and the Regulations
thereunder. The first Fiscal Year shall commence as of the Effective Date.

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         "Grand" means Grand Casinos Nevada I, Inc., a Minnesota corporation.

         "Grand Member" means Grand or its successors and assigns as permitted
under Article 11.

         "Initial Working Capital Contribution" means each of the Capital
Contributions required by Section 5.1 to be made by the initial Members in cash,
in order to pay organizational and other start-up expenses of the Company, and
to serve as initial working capital, up to an aggregate total contributed by
both Members not to exceed Five Hundred Thousand Dollars ($500,000).

         "Manager" shall mean one or more Managers of the Company. Specifically,
"Manager" shall mean the initial Manager designated by this Agreement, or any
other Persons that succeed such Manager in that capacity. References to a
Manager in the singular or as him, her, it, itself, or other like references
shall also, where the context so requires, be deemed to include the plural or
the masculine or feminine references or as the case may be.

         "Managing Person" shall mean a Manager, officer, director or any of
their agents.

         "Member" shall mean each of those Persons executing this Agreement and
any Person who may hereafter become an additional or Substitute Member.

         "Membership Interest" means a Member's Units, the associated right to
vote (if any) on or participate in management, the right to share in Profits,
Losses and distributions, and any and all other benefits to which the holder of
such Units may be entitled pursuant to this Agreement, together with all
obligations to comply with the terms and provisions of this Agreement.

         "Net Cash" refers to Net Cash Flow from Operations and/or Net Cash from
Sales of Refinancings.

         "Net Cash Flow from Operations" means the gross cash proceeds from
Company operations (including sales and dispositions of Property in the ordinary
course of business) less the portion thereof used to pay or establish reserves
for all Company expenses, debt payments, capital improvements, replacements and
contingencies, all as determined by the Manager. Net Cash Flow from Operations
shall not be reduced by depreciation, amortization, cost recovery deductions or
similar allowances, but shall be increased by any reductions of reserves.

         "Net Cash from Sales or Refinancings" means the net cash proceeds from
all sales and other dispositions (other than in the ordinary course of business)
and all refinancings of Property, less any portion thereof used to establish
reserves, all as determined by the Manager.

         "Non-Voting Units" as to any Member shall mean and refer to Units which
entitle the holder to share in the economic performance of the Company but which
do not entitle the holder to participate in voting or to certain other rights
reserved to holders of Voting Units. Non-Voting Units have equal rights with
Voting Units with respect to the sharing of Net Cash from Operations, Net Cash
from Sales or Refinancings, Profits and Losses and net proceeds of the Company's
dissolution. The initial number of Non-Voting Units is shown next to the name of
such Member in Section 5.1.

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         "Percentage Interest" means, as to a Member, the ratio of the Units
held by such Member, to all outstanding Units of the Company. For purposes of
calculating a Member's Percentage Interest, there shall be no distinction
between Voting Units and Non-Voting Units.

         "Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so requires.

         "Property" means all real and personal property, tangible and
intangible, owned by the Company.

         "Project Capital Contribution" means the Capital Contributions required
to be made by the initial Members, in the form of the Shark Club Parcel and
certain services to be rendered without compensation (as described in Section
5.1), all on the terms and conditions set forth in Section 5.1.

         "Regulations" means the federal income tax regulations, including
temporary (but not proposed) regulations, promulgated under the Code.

         "Shark Club Parcel" is defined in the Introduction to this Agreement.

         "Substitute Member" means a transferee of a Membership Interest who has
been admitted to all of the rights of membership pursuant to Article 11.

         "Time Share Project" is defined in Section 3.1.

         "Units" as to any Member shall mean and refer to the cumulative number
of both Voting Units and Non-Voting Units held by such Member.

         "Voting Units" as to any Member shall mean and refer to Units which
entitle the holder to cast one vote for each such Unit held by the Member on all
matters reserved for the Members' approval, consent or consideration. The
initial number of each Member's Voting Units is shown next to the name of such
Member in Section 5.1.

                                    ARTICLE 2
                              FORMATION OF COMPANY

         2.1. Formation. The initial Articles of Organization as filed, or to be
filed, and attached hereto as Appendix 2 (the "Articles of Organization"), are
hereby ratified and incorporated by reference in this Agreement. Upon the filing
of the Articles of Organization the Company shall be formed as The Chateaux,
LLC, a Nevada limited liability company under and pursuant to the Act, and the
parties hereto shall take all action necessary to cause such formation.

         2.2. Name. The name of the Company is "The Chateaux, LLC".

         2.3. Principal Place of Business. The principal place of business of
the Company within

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the State of Nevada shall first be at the office of Diamond Resorts, LLC, 3745
Las Vegas Blvd. South, Las Vegas, Nevada 89109. The Company may locate its
places of business and registered office at any other place or places as the
Manager may from time to time deem advisable. The Company shall allow each of
the Diamond Member and the Grand Member, and each of their principals (including
without limitation, Lyle Berman), to use space within the Company office for
such Members' own purposes, within reason, without the payment of rent or other
monies to the Company.

         2.4. Registered Office and Agent. The Company's registered office shall
first be at Diamond Resorts, LLC, 3745 Las Vegas Blvd. South, Las Vegas, Nevada
89109. The name of its initial registered agent at such address shall be Richard
L. Cloobeck.

         2.5. Term. Unless the Company is dissolved in accordance with the
provisions of this Agreement, the Act or other Nevada law, the existence of the
Company shall be perpetual.

                                    ARTICLE 3
                             BUSINESS OF THE COMPANY

         3.1. Permitted Business. The Company has been formed to acquire,
finance, develop, improve and own the Shark Club Parcel, for the purpose of
constructing, selling, operating and managing residential time share units,
hotel rooms dedicated or used for "right to use" programs or similar point-based
club concepts, or similar time sharing inventory facilities, on all or any
portion of the Shark Club Parcel (collectively, the "Time Share Project"), for
income-producing purposes and as an investment; to furnish goods and services
(including but not limited to the operation of concierge services,
restaurant/lounge services, limited slot-machine gaming, a convenience store and
other amenities for guests of the Time Share Project) in connection with the
operation and management of the Time Share Project; to acquire the Shark Club
Parcel and any personal property, in fee or by lease, or any rights therein as
may be necessary or appropriate for the Time Share Project; to borrow funds for
such purposes and to mortgage or otherwise encumber any or all of the Company
Property to secure such borrowings; to sell or otherwise dispose of all or any
part of the Shark Club Parcel or the Time Share Project and other Company
Property; and to undertake and carry on all activities necessary or in the best
interests of the Company, in connection with such acquisition, financing,
development, construction, ownership, operation, management and sale of the Time
Share Project, all subject to the limitations set forth in Article 9.

         The Company may not engage in any other business incompatible with the
Time Share Project without the consent of Members holding one hundred percent
(100%) of the Voting Units.

         3.2. Limits on Foreign Activity. The Company shall not directly engage
in business in any state, territory or country that does not recognize limited
liability companies or the effectiveness of the Act in limiting the liabilities
of the Members of the Company. If the Company desires to conduct business in any
such state, it shall do so through a separate Entity that will ensure limited
liability to the Members.

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                                    ARTICLE 4
                            CONTRIBUTIONS TO COMPANY

         4.1. Issuance of Units and Members' Initial Capital Contributions.
There are hereby authorized and issued one thousand (1,000) Units, consisting of
one hundred (100) Voting Units and nine hundred (900) Non-Voting Units, which
are initially divided as set forth in Section 5.1. Each Member shall contribute
an Initial Working Capital Contribution and a Project Capital Contribution on
the terms and conditions as set forth in Section 5.1. The Initial Working
Capital Contribution and, if necessary, any additional cash Capital
Contributions, first shall be applied to the organizational expenses of the
Company, including without limitation, legal, accounting and promotional fees
and costs, and thereafter retained as initial working capital for the Company.

         4.2. Additional Capital Contributions. Except with respect to the
Initial Working Capital Contributions, the Project Capital Contributions, and as
may be otherwise provided for under the Act, no Member shall be obligated to
make any additional Capital Contributions to the Company unless all Members
agree. If the Company needs additional capital to meet its obligations, it shall
seek such capital in such manner as the Managers shall determine, including,
without limitation, in any of the following manners (without any particular
order of priority):

                  a. From additional Capital Contributions from the Members of
the Company in proportion to their Units; provided, however, that no Member
shall be required to make any additional Capital Contributions to the Company;

                  b. From any source from which the Company may borrow
additional capital, including, without limitation, any Member (subject to the
provisions of Section 9.4), provided, however, that no Member shall be obligated
to make a loan to the Company and the Shark Club Parcel shall not be encumbered
as security for any such loan without the consent of Members holding at least
60% of the Voting Units; or

                  c. Upon compliance with Section 5.3 and the failure of one or
more Members to exercise its rights to contribute its share thereunder, from an
additional disproportionate Capital Contribution from one (1) or more Members of
the Company. Such disproportionate Capital Contributions shall be deemed
"Extraordinary Capital Contributions" and shall be entitled to a Priority Return
as calculated in Section 7.3.

         4.3. Withdrawal or Reduction of Members' Contributions to Capital.

                  a. A Member shall not receive out of the Company's Property
any part of such Member's Capital Contributions until all liabilities of the
Company, excluding liabilities to Members on account of their Capital
Contributions, have been paid or there remains Property of the Company
sufficient to pay them.

                  b. Subject to the transactions contemplated in Article 11, a
Member shall not resign from the Company before the dissolution and winding up
of the Company pursuant to Article

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12, unless Members holding at least sixty percent (60%) of the Voting Units
consent. A resigning Member's vote shall be included in determining whether such
consent has been granted.

                  c. A Member, irrespective of the nature of such Member's
Capital Contributions, has the right to demand and receive only cash in return
for such Member's Capital Contributions, except as expressly provided in this
Agreement.

         4.4. Miscellaneous.

               a. No Interest on Capital Contribution. No Member shall be
entitled to or shall receive interest on such Member's Capital Contributions,
except as expressly provided for in this Agreement.

               b. No Withdrawal of Capital Contribution. No Member may demand a
return of its Capital Contributions, except as expressly provided herein or in
the Act.

         4.5. No Third Party Beneficiaries. The provisions of this Article 4 are
not intended to be for the benefit of, and shall not confer any rights on, any
creditor or other Person (other than a Member in such Member's capacity as a
Member) to whom any debts, liabilities or obligations are owed by the Company or
any of the Members.

                                    ARTICLE 5
             INITIAL CAPITAL CONTRIBUTIONS AND MEMBERSHIP INTERESTS

         5.1. Initial Interests and Contributions. The Initial Working Capital
Contributions, the Project Capital Contributions (or services in lieu thereof)
and the initial Membership Interests of the Members are as follows; and such
Capital Contributions shall be made (or services provided) as provided below in
this Section 5.1:

<Table>
<Caption>
Members:                   Capital Contributions:                      Units:
--------                   ----------------------                      ------
<S>                        <C>                                         <C>
Diamond Member:                                                        51  Voting Units
                                                                       449  Non-voting Units
                                                                       ---
Unit Subtotal                                                          500  Units

Initial Working Capital
Contribution:                      $250,000 in cash

Services in lieu of Project
Capital Contribution:              Sales, marketing and
                                   administrative services (including
                                   without limitation services as
                                   the Manager) rendered and to be
                                   rendered to the Company.
</Table>

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<Table>
<S>                                <C>                                  <C>
Grand Member:                                                            49  Voting Units
                                                                        451  Non-voting Units
                                                                        ---
Unit Subtotal                                                           500  Units

Initial Working Capital
Contribution:                      $250,000 in cash

Project Capital
Contribution:                       The land described herein as
                                    the Shark Club Parcel, which
                                    shall be valued at $16,000,000,
                                    for the purpose of crediting such
                                    contribution to the Capital
                                    Account of the Grand Member.
</Table>

         The Capital Contributions described in this Section 5.1 shall be made
as follows:

                  a. Initial Working Capital Contributions. The Diamond Member
and the Grand Member shall each fund fifty percent (50%) of any amount or
amounts of the Initial Working Capital Contribution requested from time to time
by the Manager, within fifteen (15) days of such request.

                  b. Project Capital Contributions. The services to be provided
by the Diamond Member in lieu of its Project Capital Contribution shall be
provided from time to time by causing the Diamond Manager to perform the
services required of the Manager of the Company and such obligation shall be
deemed to be satisfied for as long as such services are provided; provided,
however, that the value of such services shall not be credited to the Diamond
Member's Capital Account.

         The Grand Member's Project Capital Contribution shall be made as
follows. Within fifteen (15) Business Days after the Diamond Manager has
provided the Grand Member with a copy of a written financing commitment for a
construction loan sufficient to fund at least the first phase of the building
improvements contemplated by the Time Share Project, which may be constructed
and sold in multiple phases consisting of separate or connected buildings, the
Grand Member shall cause the relevant portion of the Shark Club Parcel to be
formally conveyed to the Company by Grand as the fee owner thereof, via recorded
Grant Bargain and Sale Deed. Upon the written request of the Diamond Member, the
Grand Member shall execute and deliver to the Company a written memorandum
briefly describing such conditional contribution obligation with respect to the
Shark Club Parcel, in a form acceptable for filing in the official records of
Clark County, Nevada; provided, however, that in the event the Company shall be
dissolved for any reason before the conditions for all of such contributions
have been satisfied, the Diamond Member and the Company (before its dissolution)
shall cause a written memorandum releasing any such remaining conditional
contribution obligation to be executed and delivered to the Grand Member, in a
form acceptable for filing in the official records of Clark County, Nevada.

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         5.2. Securities Law Qualification. THE MEMBERS ARE AWARE THAT THE
MEMBERSHIP INTERESTS HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THERE IS NO PUBLIC TRADING MARKET FOR THE
MEMBERSHIP INTERESTS AND IT IS NOT ANTICIPATED THAT ONE WILL DEVELOP.
ADDITIONALLY, THERE ARE SUBSTANTIAL RESTRICTIONS UPON THE TRANSFERABILITY OF THE
MEMBERSHIP INTERESTS. SALE OR ASSIGNMENT BY A MEMBER OF ITS MEMBERSHIP INTERESTS
OR SUBSTITUTION OF MEMBERS MAY BE SUBJECT TO CERTAIN CONSENTS. THE MEMBERSHIP
INTERESTS CANNOT BE RESOLD OR TRANSFERRED WITHOUT (a) REGISTRATION UNDER THE ACT
OR (b) AN EXEMPTION FROM REGISTRATION. THEREFORE, MEMBERS MAY NOT BE ABLE TO
LIQUIDATE THEIR INVESTMENTS IN THE EVENT OF AN EMERGENCY. FURTHER, MEMBERSHIP
INTERESTS MAY NOT BE READILY ACCEPTED AS COLLATERAL FOR A LOAN. MEMBERSHIP
INTERESTS SHOULD BE CONSIDERED ONLY AS A LONG TERM INVESTMENT.

         5.3. Issuance of Additional Units. In the event the Company issues
Units in addition to the Units initially authorized pursuant to Section 5.1, the
Company shall offer to each Member, by sixty (60) days prior written notice, the
right, for a period of sixty (60) days from the date such notice is delivered
(the "Notice Date"), to purchase such Units in a proportionate amount based upon
such Member's Percentage Interest, on the same terms and conditions as such
proposed issuance, including price per Unit; provided, however, that, if such
issuance is for consideration other than cash or a commitment to pay cash, each
Member shall have the option to pay an amount per Unit in cash that the Manager
reasonably determines to be equivalent to the per Unit offering price of such
new issuance of Units. The Company's written notice to the Members shall
describe the Units proposed to be issued by the Company and specify the number,
price and payment terms. Each Member may accept the Company's offer as to the
full number of Units offered to it or any lesser number, by written notice
thereof given by it to the Company prior to the expiration of the sixty (60) day
period, in which event the Company shall promptly sell and such Member shall
purchase and pay for, upon the terms specified, the number of Units agreed to be
purchased by such Member.

         Any Units not purchased by the Members pursuant to this Section 5.3 may
be sold by the Company on the same or similar terms and conditions as those
specified in the Company's notice to the Members commencing on the sixty-first
day following the Notice Date.

         The preemptive rights of Members pursuant to this Section 5.3 shall not
apply to the issuance by the Company of additional Non-Voting Units to employees
of the Company pursuant to the terms of one or more employee option or incentive
plans (an "Employee Option Plan") established by the Company; provided, however,
that the aggregate number of Non-Voting Units issued pursuant to an Employee
Option Plan does not exceed ten percent (10%) of the total Units outstanding
from time to time.

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                                    ARTICLE 6
                        ALLOCATIONS OF PROFITS AND LOSSES

         6.1. Allocation of Profits. After giving effect to the special
allocations set forth in Section 1.2 of Appendix 1 and in Section 6.4, Profits
for any Fiscal Year shall be allocated as follows:

                  a. First, one hundred percent (100%) to the Members, in
proportion to the Losses allocated to each Member pursuant to Section 6.3, in an
amount equal to the excess, if any, of (i) the cumulative amount of Losses
allocated to such Members pursuant to Section 6.3 for all prior Fiscal Years,
over (ii) the cumulative amount of Profits allocated to such Members pursuant to
this Section 6.1(a) for all prior Fiscal Years;

                  b. Second, one hundred percent (100%) to the Members, in
proportion to, and to the extent of the excess, if any, of (i) the cumulative
amount of Losses allocated to each Member pursuant to Section 6.2(c) for all
prior Fiscal Years, over (ii) the cumulative amount of Profits allocated to each
Member pursuant to this Section 6.1(b) for all prior Fiscal Years; and

                  c. Third, the balance, if any, to the Members in proportion
to their Units.

         6.2. Allocation of Losses. After giving effect to the special
allocations set forth in Section 1.2 of Appendix 1 and in Section 6.4, Losses
for any Fiscal Year shall be allocated as follows, subject to Section 6.3:

                  a. First, one hundred percent (100%) to the Members, in
proportion to, and to the extent of the excess, if any, of (i) the cumulative
amount of Profits allocated to each such Member pursuant to Section 6.1(c) for
all prior Fiscal Years, over (ii) the cumulative amount of Losses allocated to
each such Member pursuant to this Section 6.2(a) for all prior Fiscal Years;

                  b. Second, one hundred percent (100%) to the Members, in
proportion to, and to the extent of the excess, if any, of (i) the cumulative
amount of Profits allocated to each such Member pursuant to Section 6.4 for all
prior Fiscal Years, over (ii) the cumulative amount of Losses allocated to each
such Member pursuant to this Section 6.2(b) for all prior Fiscal Years;

                  c. Third, the balance, if any, to the Members in proportion to
their Units.

         6.3. Loss Limitation and Reallocation. The Losses allocated pursuant to
Section 6.2 shall not exceed the maximum amount of Losses that can be so
allocated without causing any Member to have an Adjusted Capital Account Deficit
at the end of the Fiscal Year. In the event that some, but not all of the
Members would have an Adjusted Capital Account Deficit as a consequence of an
allocation of Losses pursuant to Section 6.2, the limitation set forth in this
Section 6.3 shall be applied on a Member-by-Member basis and Losses not
allocable to any Member as a result of such limitation shall be allocated to the
other Members in accordance with the positive balances in such Members' Capital
Accounts so as to allocate the maximum permissible Losses to each Member under
Regulations Section 1.704-1(b)(2)(ii)(d).

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         6.4 Special Allocations for Priority Returns and Adjusted Land Return.
After giving effect to the special allocations set forth in Section 1.2 of
Appendix 1, all or a portion of the remaining items of the Company's income or
gain (if any) for the Fiscal Year shall be specially allocated to any Member or
Members entitled to distributions of any Priority Returns (as defined in Section
7.3) or any Adjusted Land Return (as defined in Section 7.5) for that Fiscal
Year, in proportion to such distributions, in an aggregate amount equal to the
excess, if any, of:

                  a. The lesser of (i) the net sum of the aggregate Losses (if
any) allocated to such Members under Section 6.2 for all prior Fiscal Years; and
the aggregate distributions made to such Members as Priority Returns or Adjusted
Land Return pursuant to Article 7 and Section 12.2 from the Effective Date to a
date thirty (30) days after the end of such Fiscal Year; or (ii) the excess, if
any, of Profits allocated to such Members under Section 6.1, over Losses
allocated to such Members under Section 6.2 for the current and all prior Fiscal
Years; and, solely for this purpose, such allocations of Profits and Losses for
all Fiscal Years shall be determined as if this Section 6.4 and Section 1.2 of
Appendix 1 were not part of this Agreement; over

                  b. The aggregate items of income and gain allocated to such
Members pursuant to this Section 6.4 for all prior Fiscal Years.

                                    ARTICLE 7
                                  DISTRIBUTIONS

         7.1. Net Cash Flow from Operations. Except as otherwise provided in
Section 12.2 (on liquidation), and subject to the mandatory tax distribution set
forth in Section 7.4 and any distributions required by Section 7.5, Net Cash
Flow from Operations shall be distributed with respect to a Fiscal Year at times
determined by the Manager in the following order and priority:

                  a. First, to the Members in proportion to and until each
Member has received an amount equal to the excess, if any, of such Member's
cumulative Priority Return (as defined in Section 7.3) from the inception of the
Company to the end of such Fiscal Year, over the sum of all prior distributions
to such Member pursuant to this Section 7.1(a) and Section 7.2(a); and

                  b. Second, the balance, if any, to the Members in proportion
to their Units.

         7.2. Net Cash from Sales and Refinancings. Except as otherwise provided
in Section 12.2 (on liquidation), and subject to the mandatory tax distribution
set forth in Section 7.4 and any distributions required by Section 7.5, Net Cash
from Sales and Refinancings shall be distributed with respect to a Fiscal Year
at times determined by the Manager in the following order and priority:

                  a. First, to the Members in proportion to and until each
Member has received an amount equal to the excess, if any, of such Member's
cumulative Priority Return (as defined in Section 7.3) from the inception of the
Company to the end of such Fiscal Year, over the sum of all prior distributions
to such Member pursuant to this Section 7.2(a) and Section 7.1(a);

                                       12
<PAGE>
                   b. Second, to the Members in proportion and to the extent of
their respective Unreturned Extraordinary Capital Contributions (as defined
below), if any;

                   c. Third, to the Members in proportion and to the extent of
their respective Capital Account balances; and

                   d. Fourth, the balance, if any, to the Members in proportion
to their Units.

         7.3. Priority Return and Unreturned Extraordinary Capital Contribution.
The "Priority Return" of any particular Member means a sum equal to ten percent
(10%) per annum, determined on the basis of a year of 365 or 366 days, as the
case may be, for the actual number of days occurring in the period for which the
Priority Return is being determined, cumulative (but not compounded) to the
extent not distributed in any given Fiscal Year pursuant to Sections 7.1(a) or
7.2(a), of the average daily balance of such Member's Unreturned Extraordinary
Capital Contribution (as hereinafter defined) from time to time during the
period for which the Priority Return relates, commencing on the date that such
Member first makes an Extraordinary Capital Contribution pursuant to Section
4.2(c). The "Unreturned Extraordinary Capital Contribution" of any Member on any
particular date shall be equal to the excess, if any, of the aggregate
Extraordinary Capital Contributions then made as of such date by such Member
pursuant to Section 4.2 (c), over the aggregate distributions then made as of
such date to such Member pursuant to Section 7.2(b) or Section 12.2. However,
the fact that a Priority Return may accrue in a manner similar to interest shall
not imply that any such Unreturned Extraordinary Capital Contribution is a debt
of the Company.

         7.4. Tax Distribution. To the extent of available Net Cash, the Members
shall be entitled to receive cash distributions for each taxable year in amounts
sufficient to enable each Member to discharge any federal, state and local tax
liability for such taxable year (excluding penalties) arising as a result of
their interest in the Company, determined by assuming the applicability to each
Member of the highest combined effective marginal federal, state and local
income tax rates for any individual or corporation actually obligated to report
on any tax returns income derived from the Company. To the extent distributions
otherwise payable to a Member pursuant to Section 7.1, Section 7.2 and Section
7.5, as appropriate, are insufficient to cover such tax liabilities, the Company
shall make cash distributions (the "Tax Distributions") in amounts that, when
added to the cash distributions otherwise payable, shall equal such tax
liability. The amount of such tax liability shall be calculated (a) taking into
account the deductibility (to the extent allowed) of state and local income
taxes for United States federal income tax purposes, and (b) taking into account
the amount of net cumulative tax loss previously allocated to such Member in
prior Fiscal Years and not used in prior Fiscal Years to reduce taxable income
for the purpose of making distributions under this Section 7.4 (based on the
assumption that taxable income or tax loss from the Company is each Member's
only taxable income or tax loss). Tax Distributions shall be debited against
such Member's Capital Account. Distributions pursuant to this Section 7.4 shall
be treated as distributions to the Members pursuant to Section 7.1 or Section
7.2, as appropriate. To the extent this Section 7.4 results in distributions
other than in the ratio required by Section 7.1 or Section 7.2, as appropriate,
the first distributions of Net Cash, securities or other property that are not
made pursuant to Section 7.4 shall be made so as to cause the aggregate
distributions pursuant to Section

                                       13
<PAGE>

7.1 or Section 7.2, as appropriate, including those made pursuant to Section
7.4, to be, as nearly as possible, in the ratio required by Section 7.1 or
Section 7.2, as appropriate.

         7.5. Adjusted Land Return and Return of the Grand Member's Project
Capital Contribution. Special cash distributions shall be made to the Grand
Member from time to time as provided below in this Section 7.5, until the Grand
Member has received a cumulative amount of such distributions that is equal to
its actual Project Capital Contribution, together with interest on the
unreturned amount thereof at the rate of eight percent (8%) per annum, adjusted
as provided in Section 7.6 (the "Adjusted Land Return"), which shall be accrued
from the Effective Date on the maximum amount of the Project Capital
Contribution, but such Adjusted Land Return shall be payable in cash only as and
when special cash distributions are made under paragraph (b) of this Section
7.5. However, the use of the term "interest" with respect to any such unreturned
amount shall not imply that the balance of such account, on which any Adjusted
Land Return may accrue, is a debt of the Company. It is agreed and acknowledged
that the value of the entire Shark Club Parcel to be contributed by Grand as its
Project Capital Contribution shall be recorded on the Company's books and in the
Capital Account of the Grand Member as $16,000,000, pro rated for any partial
conveyances as provided in Section 5.1. Notwithstanding any other provisions of
this Section 7.5, the unpaid balance of the Grand Member's actual Project
Capital Contribution and Adjusted Land Return may be prepaid by the Company at
any time without penalty.

                  a. Interval Distribution Amounts. Fifty percent (50%) of the
Grand Member's actual Project Capital Contribution shall be returned by
distributions made as follows under this paragraph (a), whether or not Net Cash
is available. On or before the last day of each month following a month in which
the Company has sold one or more of its timeshare intervals from the Time Share
Project, the Company shall make a cash distribution to the Grand Member equal to
the product of (i) the Interval Distribution Amount, times (ii) the number of
such intervals sold during that month. The "Interval Distribution Amount" shall
be an amount determined by dividing the Grand Member's cumulative Project
Capital Contributions by the number of timeshare intervals reasonably expected
to be reserved or reservable for sale by the Company, and multiplying the result
by 50%. Notwithstanding the above, such distributions shall not be deemed
mandatory to the extent such mandatory characterization would convert the
designation of the Grand Member's Project Capital Contribution from equity to
debt of the Company (it being acknowledged that such contribution is expressly
intended to be designated and treated solely as equity), or to the extent any
such distribution is prohibited by loan or other covenants, restrictions or
laws, or to the extent any such distribution would significantly adversely
affect the Company.

                  b. Special Distributions from Net Cash. The other fifty
percent (50%) of the Grand Member's actual Project Capital Contribution, and all
of the Adjusted Land Return thereon, shall be returned by distributions made as
follows under this paragraph (b). To the extent that any Net Cash is available
to make distributions at the end of any month, after the Company has made any
distribution of monthly Interval Distribution Amounts payable under paragraph
(a) of this Section 7.5 during that month, the Company shall make additional
cash distributions to the Members in each month as follows, and the portion of
such distributions designated below in this paragraph (b) for repayment of the
Grand Member's Project Capital Contributions and payment of the Adjusted Land
Return shall continue until the Grand Member has received (under all provisions
of this Section 7.5)

                                       14
<PAGE>
at any time an aggregate cash amount equal to the cumulative amount of the Grand
Member's Project Capital Contribution actually received by the Company through
that time, plus all of the Adjusted Land Return accrued as provided in this
Section 7.5 and Section 7.6:

                           i. first, to the extent of such available Net Cash,
the Company shall distribute to the Grand Member an amount equal to the unpaid
balance of Adjusted Land Return accrued as of the beginning of such month;

                           ii. second, to the extent of one hundred percent
(100%) of any remaining available Net Cash, the Company shall distribute cash to
the Members pursuant to the provisions of this Article 7 other than this Section
7.5; provided, however, that cumulative distributions to all Members under this
clause (ii) shall not exceed Twenty Million and no/100 Dollars ($20,000,000.00);
and

                           iii. third, for any month after the cumulative
distributions to all Members under clause (ii) have reached Twenty Million and
no/100 Dollars ($20,000,000.00), the Company shall distribute any available Net
Cash remaining after distributions under the preceding clause (i), as follows:
(A) to the extent of fifty percent (50%)of such remaining available Net Cash,
the Company shall distribute cash to the Grand Member in repayment of the Grand
Member's actual Project Capital Contribution; provided, however, that cumulative
repayments of the Grand Member's actual Project Capital Contribution under this
clause (iii) at any time shall not exceed fifty (50%) of such actual Project
Capital Contribution through that time; and (B) any available Net Cash remaining
after any distributions required under the preceding clause (A) have been made
shall be distributed to the Members pursuant to the provisions of this Article 7
other than this Section 7.5; provided, however, that one hundred percent (100%)
of any distributions under this clause (iii) for a month (rather than the usual
50%) shall be made to the Grand Member (and no other Member) under clause (A)
if, at the beginning of that month, it is reasonably anticipated that repayment
of that portion of the Grand Member's Project Capital Contributions required by
this paragraph (b) would not otherwise be completed within any reasonable period
of time.

         7.6 Adjustment of Interest Accrual on Project Capital Contribution. To
the extent that the Grand Member incurs a Profit or Loss (as those terms are
defined for purposes of this Agreement with respect to its ownership of the
Shark Club Parcel for any of its fiscal years (or portion thereof) after the
Effective Date and before the Shark Club Parcel is entirely conveyed to the
Company, the amount of such Profit or Loss for such fiscal year (or portion)
shall be applied as follows to determine the Adjusted Land Return for such
period:

                  a. As of the last day of such period, any such Profit for the
period shall be applied to reduce the 8% interest amount otherwise accrued
during the period with respect to the unreturned amount of the Grand Member's
Project Capital Contribution and, to the extent that such Profit exceeds such
interest amount, the excess shall be treated as if it were paid to the Company
and paid to the Grand Member as a return of such Project Capital Contribution,
or paid in cash to the Company if the entire Project Capital Contribution and
all previously accrued Adjusted Land Return amounts have already been paid to
the Grand Member.

                                       15
<PAGE>
                  b. As of the last day of such period, any such Loss for the
period shall be applied to increase the 8% interest amount otherwise accrued
during the period with respect to the unreturned amount of the Grand Member's
Project Capital Contribution; and added to the amount of accrued and unpaid
Adjusted Land Return due the Grand Member under Section 7.5.

                  c. Promptly following each such period, the Grand Member shall
deliver to the Company an accounting for its Profit or Loss for such period,
determined on a cash basis with respect to revenues and expenses directly
resulting from ownership of the Shark Club Parcel, without taking into account
any overhead costs, depreciation or amortization. The Company shall have the
right to have its outside accountants (the "Company's Accountants") review the
records of the Grand Member that are relevant to the determination of such
Profit or Loss for each such period and, if such accountants object in writing
to the calculation of such Profit or Loss, and such objection is not resolved by
agreement within thirty (30) days, the Company's Accountants and the outside
accountants serving the Grand Member shall together appoint an independent
certified public accountant familiar with real estate investment matters, who
shall be given access to such records and shall determine such Profit or Loss.
Any such determination shall be final and binding on the Grand Member and the
Company.

                                    ARTICLE 8
                         BOOKS, RECORDS, AND ACCOUNTING

         8.1.     Books and Records.

                  a. The Company shall maintain or cause to be maintained books
of account that reflect Profits and Losses (as defined in Section 1.1 of
Appendix 1) and other items of income and expenditure relating to the business
of the Company. Such books of account shall be maintained on the method of
accounting selected by the Company and on the basis of the Fiscal Year;
provided, however, that allocations of the Company's Basis (as defined Section
1.1 of Appendix 1) in the Shark Club Parcel (without regard to any improvements
thereof) as income tax deductions from gross income received from the Company's
sale of interests therein shall be made in a manner that provides the most
advantageous federal income treatment available under the Code and applicable
Regulations for the share of such income allocable to the Grand Member under
this Agreement. The Grand Member shall be provided with a written statement of
the proposed method for such Basis allocations at least thirty (30) days before
the due date for the Company's initial income tax return on which such
deductions will be allowed, and the Grand Member's tax consultant shall be
provided with a reasonable opportunity to discuss such proposed method with the
Company's tax return preparer.

                  b. Each Member, upon not less than seventy-two (72) hours
advance written notice to the Manager of the Company, at such Member's own
expense, shall have the right to inspect, copy, and audit the Company's books
and records at any time during normal Business Hours without notice to any other
Member. The Grand Member acknowledges that the information contained in such
books of account and any other records of the Company that it may from time to
time request from the Company or which the Company may deliver to it may
constitute business and commercial information not in the public domain or
generally known in the timeshare industry

                                       16
<PAGE>

including, but not limited to methods, techniques, systems, customer lists,
business opportunities, business plans, tax returns, operating and financial
statements and knowledge of and experience in the timeshare industry
(collectively, "Confidential Information"). Except to the extent disclosure
thereof is required by applicable law, regulation or court order, the Grand
Member agrees that it shall not disclose any Confidential Information that it
has requested or that the Company has delivered to it to a third party, or use
such Confidential Information for its own benefit.

                  c. The Company shall keep at its registered office such
records as are required by the Act.

         8.2. Tax Returns. The Company shall prepare and file, or cause to be
prepared and filed, all income tax and other tax returns of the Company. The
Company shall furnish to each Member a copy of all such returns together with
all schedules thereto and such other information which each Member may request
in connection with such Member's own tax affairs.

         8.3. Bank Accounts. The Company shall establish and maintain one or
more separate accounts in the name of the Company in one or more federally
insured banking institutions of its choosing, into which shall be deposited all
funds of the Company and from which all Company expenditures and other
disbursements shall be made. Funds may be withdrawn from such accounts on the
signature of the Manager.

                                    ARTICLE 9
                                   MANAGEMENT

         9.1. General Management.

                  a. The business and affairs of the Company shall be managed by
or under the direction of one or more Managers, who need not be Members of the
Company. The initial Manager shall be Stephen J. Cloobeck (an individual
designated by the Diamond Member), who shall remain as Manager until such
Manager's death, physical or mental incapacity to serve, bankruptcy, resignation
or removal by a unanimous vote of the Members holding Voting Units. In the event
such individual ceases to be the Manager, a successor Manager or Managers shall
be elected upon such event, and annually thereafter, by Members holding a
majority of the Voting Units, provided, however, that the Manager or Managers
shall always be a Diamond Manager.

                  b. The Manager shall direct, manage and control the business
of the Company and, subject to the limitations and qualifications set forth in
this Article 9, shall have full and complete authority, power and discretion to
make any and all decisions and to do any and all things which the Manager shall
deem to be reasonably required in light of the Company's business and
objectives. Without limiting the generality of the foregoing, the Manager shall
have power and authority to:

                           i. acquire property from any Person as the Manager
may determine; and, subject to Section 9.4 below, the fact that a Member is
directly or indirectly an Affiliate of such Person shall not prohibit the
Manager from dealing with that Person;

                                       17
<PAGE>
                           ii. establish policies for investment and invest
Company funds (by way of example but not limitation, in time deposits,
short-term governmental obligations, commercial paper or other investments);

                           iii. make distributions of available Net Cash to
Members;

                           iv. develop and implement construction and operating
budgets for the Company; provided, however, that the Grand Member shall have the
right to reasonably and timely approve each construction budget, and the annual
operating budget.

                           v. develop and implement all aspects of construction
planning and design; provided, however, that the Grand Member shall have the
right to reasonably and timely approve the final site plan and building design
for each phase of the Time Share Project.

                           vi. employ accountants, legal counsel, managers,
managing agents or other experts or consultants to perform services for the
Company with compensation from Company funds;

                           vii. enter into any transaction on behalf of the
Company involving the incurrence of any indebtedness or the hypothecation,
encumbrance or granting of a security interest or lien upon any Company
Property; provided, however, that the Grand Member shall have the right to
reasonably and timely approve any such transaction, except the following.
Notwithstanding any thing herein to the contrary, the Manager shall have the
power and authority, without any requirement to obtain the consent or approval
of any Member, to obtain (A) one or more a revolving, general purpose, lines of
credit in amounts up to $3,000,000 in the aggregate; and (B) timeshare accounts
receivable hypothecation loans in amounts up to $3,000,000 in the aggregate; and
to grant collateral security interests in Company property to the extent
necessary to obtain and secure such loans.

                           viii. purchase liability and other insurance to
protect the Company's Property and business;

                           ix. organize Entities to serve as the Company's
subsidiaries and to determine the form and structure thereof;

                           x. establish a board of directors; delegate
management decisions thereto; appoint directors thereto and remove directors
therefrom;

                           xi. establish offices of President, Vice President,
Secretary and Treasurer; delegate to such offices daily management and
operational responsibilities; appoint Persons to act as such officers and remove
Persons therefrom; and

                                       18
<PAGE>
                           xii. establish reasonable payments or salaries to
Persons (other than Richard L. Cloobeck or Stephen J. Cloobeck) appointed as
officers and directors, employees or agents.

                  c. Where this Agreement specifies an act of the Manager, it
means an act taken by majority vote of the Managers when more than one Manager
exists.

                  d. Unless authorized to do so by this Agreement or by the
Manager, no Managing Person, Member, agent or employee of the Company shall have
any power or authority to bind the Company in any way, to pledge its credit or
to render it liable pecuniary for any purpose. However, the Manager may act (or
may cause the Company to act) by a duly authorized power of attorney.

         9.2. Compensation. A Manager shall not be compensated for services
rendered as a Manager, except that any reasonable compensation that the Manager
would otherwise earn for services to the Company shall be treated under Section
5.1 as part of the Project Capital Contribution by the Diamond Member in
exchange for a portion of its Units. This provision is not intended to, and does
not, limit the Manager's further ability to establish and pay reasonable
salaries, fees and other compensation to its own officers, directors, employees
and agents who render services to the Company; and to allocate a reasonable
portion of such costs to the Company, to the extent such individuals (other than
Richard L. Cloobeck or Stephen J. Cloobeck) actually provide services to the
Company.

         9.3. No Liability for Certain Acts. A Managing Person of the Company
shall perform such Managing Person's duties, in good faith, in a manner that
such Managing Person reasonably believes to be in the best interests of the
Company. A Managing Person does not, in any way, guarantee the return of the
Members' Capital Contributions or a profit for the Members from the operations
of the Company. A Managing Person shall not be responsible to any Members
because of a loss of their investment in the Company or a loss in the operations
of the Company, unless the loss shall have been the result of the Managing
Person not acting in good faith as provided in this Section. A Managing Person
shall incur no liability to the Company or to any of the Members as a result of
engaging in any other business or venture. A Manager shall be entitled to any
other protection afforded to a Manager under the Act. A Managing Person who so
performs such Managing Person's duties shall not have any liability by reason of
being or having been a Managing Person of the Company. In performing the duties
of a Managing Person, a Managing Person shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by Persons and groups
listed below unless such Managing Person has knowledge concerning the matter in
question that would cause such reliance to be unwarranted:

                  a. one or more employees or other agents of the Company whom
the Managing Person believes in good faith to be reliable and competent in the
matters presented;

                                       19
<PAGE>
                  b. legal counsel, public accountants or other Persons, as to
matters that the Managing Person believes in good faith to be within such
Persons' professional or expert competence; or

                  c. a committee, upon which such Managing Person does not
serve, duly designated in accordance with the provisions of this Agreement, as
to matters within its designated authority, which committee the Managing Person
believes in good faith to merit confidence.

         9.4. Transactions with Affiliates. Except for those agreements or
transactions described on EXHIBIT B attached hereto, the Company shall not enter
into any agreement or transaction with any Member or an Affiliate of any Member
without the prior written consent of all Members, not to be unreasonably
withheld; provided, however, that in the event such agreement or transaction is
on terms commercially reasonable to the Company and comparable to, or better
than, such terms as could be obtained from unaffiliated third parties in arm's
length transactions, such prior written consent shall not be required; provided
further that the Company shall in any event use its commercially reasonable
efforts to obtain the prior written consent of all Members (time constraints
permitting) with respect to any such agreement or transaction which is for one
year or more. In the event the Company requests the consent of a Member pursuant
to this Section 9.4, such consent shall be deemed given if an objection to such
transaction or agreement is not delivered in writing to the Company within five
(5) Business Days after receipt of the Company's request for consent. The
Company shall deliver to the Members, after the end of each calendar year, a
list and brief description of any transactions or agreements with such
Affiliates during such year.

         Notwithstanding the above paragraph, in the event a personal or
corporate guarantee is required of a Member or an Affiliate of a Member in order
to effectuate a loan to the Company pursuant to Section 4.2 , the Company shall
provide written notice to all Members describing the nature of the loan and the
requested guarantee. Any or all Members or Affiliates of a Member shall be
permitted, but in no event required, to provide such guarantee and to receive a
reasonable fee from the Company for providing such guarantee.

         Notwithstanding any other provision of this Section 9.4, the Company
shall not borrow any money or pledge any Company Property as security, except as
permitted under Section 9.1.

         9.5. Managing Persons Have No Exclusive Duty to Company. A Managing
Person shall not be required to manage the Company as such Managing Person's
sole and exclusive activity, and each Managing Person may have other business
interests and may engage in other activities in addition to those relating to
the Company. Neither the Company nor any Member shall have any right, by virtue
of this Agreement, to share or participate in such other investments or
activities of any Managing Person.

         9.6. Indemnity of Managing Persons.

              a. The Company agrees to indemnify, pay, protect and hold harmless
Managing Persons from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever

                                       20
<PAGE>

(including, without limitation, all reasonable costs and expenses of defense,
appeal and settlement of any and all suits, actions or proceedings instituted
against the Managing Persons or the Company and all costs of investigation in
connection therewith) which may be imposed on, incurred by, or asserted against
the Managing Persons or the Company in any way relating to or arising out of, or
alleged to relate to or arise out of, any action or inaction on the part of the
Company or on the part of a Managing Person, acting in a manner believed in good
faith to be in the best interests of the Company, in connection with the
formation, operation and/or management of the Company, the Company's purchase
and operation of Property, and/or as a result of the Managing Person agreeing to
act as a Managing Person of the Company. If any action, suit or proceeding shall
be pending or threatened against the Company or a Manager relating to or arising
out of, or alleged to relate to or arise out of, any such action or nonaction, a
Manager shall have the right to employ, at the expense of the Company, separate
counsel of such Manager's choice in such action, suit or proceeding and the
Company shall advance the reasonable out-of-pocket expenses in connection
therewith. The satisfaction of the obligations of the Company under this Section
shall be from and limited to the assets of the Company and no Member shall have
any personal liability on account thereof. The foregoing rights of
indemnification are in addition to and shall not be a limitation of any rights
of indemnification as provided in Sections 86.411 through 86.451 of the Act, as
such may be amended from time to time.

                  b. This Section shall not limit the Company's power to pay or
reimburse expenses incurred by a Managing Person in connection with such
Managing Person's appearance as a witness in a proceeding at a time when the
Managing Person has not been made a named defendant or respondent in the
proceeding.

                  c. The Company may indemnify and advance expenses to an
employee or agent of the Company who is not a Managing Person to the same or to
a greater extent as the Company may indemnify and advance expenses to a Managing
Person.

                  d. The Company shall use its reasonable efforts to purchase
and maintain insurance on behalf of any Person who is or was a Managing Person,
Member, employee, fiduciary or agent of the Company or who, while a Managing
Person, Member, employee, fiduciary, or agent of the Company, is or was serving
at the request of the Company as a manager, member, director, officer, partner,
trustee, employee, fiduciary or agent of any other foreign or domestic limited
liability company or any corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan against any liability asserted against or
incurred by such Person in any such capacity or arising out of such Person's
status as such, whether or not the Company would have the power to indemnify
such Person against such liability under the provisions of this Section. Any
such insurance may be procured from any insurance company designated by the
Managers of the Company, whether such insurance company is formed under the laws
of this state or any other jurisdiction of the United States or elsewhere.

                                       21
<PAGE>
                                   ARTICLE 10
                        RIGHTS AND OBLIGATIONS OF MEMBERS

         10.1.    Limitation of Liability.

                  a. Each Member's liability shall be limited as set forth
herein, in the Act and in other applicable law. A Member will not personally be
liable for any debts or losses of the Company, except as expressly provided in
the Act. Without limiting the foregoing, no Member shall be required to guaranty
any obligation of the Company unless otherwise specifically provided herein.

                  b. When a Member has received the return in whole or in part
of such Member's Capital Contribution, the Member is nevertheless liable to the
Company for any sum, not in excess of the return of its Capital Contribution
with interest at the rate provided for judgments under the laws of the State of
Nevada, necessary to discharge the Company's liability to all creditors of the
Company who extended credit or whose claims arose before the return of such
Member's Capital Contribution.

                  c. When a Member has received a distribution wrongfully
conveyed by the Company, the Member shall hold such distribution as trustee for
the Company.

         10.2. Member Indemnity. The Company agrees to indemnify, pay, protect
and hold harmless any Member (on demand and to the satisfaction of the Member)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever in any way relating to any
agreement, liability, commitment, expense or obligation of the Company which may
be imposed on, incurred by, or asserted against the Member solely as a result of
such Member being a Member (including, without limitation, all reasonable costs
and expenses of defense, appeal and settlement of any and all suits, actions or
proceedings instituted against the Member and all costs of investigation in
connection therewith). The satisfaction of the obligations of the Company under
this Section shall be from and limited to the assets of the Company and no
Member shall have any personal liability on account thereof. The foregoing
rights of indemnification are in addition to and shall not be a limitation of
any rights that may be provided in the Act.

         10.3. List of Members. Upon written request of any Member, the Company
shall provide a list showing the names, addresses and Units (identified as
Voting or Non-voting Units) of the Members in the Company.

         10.4. Voting. Members shall be entitled to one vote for each Voting
Unit they hold, on all matters reserved for their approval or consent.

         10.5. Additional Members. Except with respect to Units issued in
compliance with Section 5.3 or employees holding Units pursuant to an Employee
Option Plan or as provided in Article 11, no Person shall be admitted to the
Company as an additional Member without the unanimous consent of the Members
owning collectively one hundred percent (100%) of the Voting Units.

                                       22
<PAGE>
         10.6. Meetings. Unless otherwise prescribed by the Act, meetings of the
Members may be called, for any purpose or purposes, by the Manager or by Members
holding a majority of the Voting Units.

         10.7. Place of Meetings. Whoever calls a meeting of the Members may
designate any place within or outside the State of Nevada, as the place of
meeting.

         10.8. Notice of Meetings. Except as otherwise provided in this
Agreement, written notice stating the date, time, and place of any meeting of
the Members, and the purpose or purposes for which the meeting is called, shall
be delivered not less than three (3) nor more than fifty (50) days before the
date of the meeting, either personally or by mail, facsimile, or overnight or
next-day delivery services by or at the direction of the Manager, or the Member
or Members calling the meeting, to each Member entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered two (2) days after
deposited in the United States mail, postage prepaid, addressed to the Member at
its address as it appears on the books of the Company. If transmitted by way of
facsimile, such notice shall be deemed to be delivered on the date of such
facsimile transmission to the fax number, if any, for the respective Member
which has been supplied by such Member to the Manager and identified as such
Member's facsimile number. If transmitted by overnight or next-day delivery,
such notice shall be deemed to be delivered on the next business day after
deposit with the delivery service addressed to the Member at his or her address
as it appears on the books of the Company. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless the adjournment is for more than thirty (30) days. At the
adjourned meeting the Company may transact any business which might have been
transacted at the original meeting.

         10.9. Meeting of All Members. If all of the Members shall meet at any
time and place, including by conference telephone call, either within or outside
of the State of Nevada, and consent to the holding of a meeting at such time and
place, such meeting shall be valid without call or notice.

         10.10. Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, the
date on which notice of the meeting is mailed or otherwise sent shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
Section, such determination shall apply to any adjournment thereof, unless
notice of the adjourned meeting is required to be given pursuant to Section 10.8
..

         10.11. Quorum. Members holding at least sixty percent (60%) of the
Voting Units, represented in person or by proxy, shall constitute a quorum at
any meeting of Members. Business may be conducted once a quorum is present.

         10.12. Voting Rights of Members. Each Member shall be entitled to vote
based on any Voting Units held by the Member. If all or a portion of a
Membership Interest which includes Voting Units is transferred to an assignee
who does not become a Member, the Member from whom the Membership Interest is
transferred shall no longer be entitled to vote the Voting Units transferred,
nor shall the Voting Units transferred be considered outstanding for any purpose

                                       23
<PAGE>

pertaining to meetings or voting. No withdrawn Member shall be entitled to vote,
nor shall such Member's Units be considered outstanding for any purpose
pertaining to meetings or voting.

         10.13. Manner of Acting. Unless otherwise provided in the Act, the
Articles of Organization or this Agreement, the affirmative vote of Members
holding at least a majority of the Voting Units shall be the act of the Members.

         10.14. Proxies. At all meetings of Members, a Member holding Voting
Units may vote in person or by proxy executed in writing by the Member or by a
duly authorized attorney-in-fact. Such proxy shall be filed with the Manager of
the Company before or at the time of its exercise. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy.

         10.15. Action by Members without a Meeting. Any action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, circulated to all the Members with an explanation of the background and
reasons for the proposed action, signed by that percentage or number of the
Members holding Voting Units required to take or approve the action. Any such
written consents shall be delivered to the Manager of the Company for inclusion
in the minutes or for filing with the Company records. Action taken by written
consent under this Section shall be effective on the date that Members holding
the required percentage or number of the Voting Units have signed and delivered
the consent to the Manager, unless the consent specifies a different effective
date. The record date for determining Members entitled to take action without a
meeting shall be the date the written consent is circulated to the Members.

         10.16. Telephonic Communication. Members may participate in and hold a
meeting by means of conference telephone or similar communications equipment, by
means of which all persons participating in the meeting can hear each other; and
participation in such meeting shall constitute attendance and presence in
person, except where the Member participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.

         10.17. Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the Person entitled to such
notice, whether before, at or after the time stated therein, shall be equivalent
to the giving of such notice.

                                       24
<PAGE>
                                   ARTICLE 11
                        TRANSFERS OF MEMBERSHIP INTERESTS

         11.1. Right to Pledge. Every Membership Interest may be pledged to
secure any borrowing of a Member or its Affiliate, provided, however, that any
Person acquiring such Membership Interest pursuant to such pledge shall not have
the right to be admitted as a Member, but shall be entitled only to receive such
allocations and distributions as are otherwise payable with respect to such
Member's Membership Interest under this Agreement, unless such pledge is for the
purpose of securing borrowings for the Company in which case there shall be no
restrictions except as provided in Section 9.1.

         11.2. Transfers Among Members and Affiliates. A Member may freely
transfer or assign all or any portion of its Membership Interest to (a) other
Members or their Affiliates (other than Metroplex, LLC, a Nevada limited
liability company that has an interest in each of the Buyers referred to in the
Introduction to this Agreement, or any Affiliate of Metroplex, LLC), or (b) for
estate planning purposes to family members of any such Persons who are
individuals. Grand hereby represents that Metroplex, LLC is not currently an
Affiliate of Grand.

         11.3. Other Transfers. Except with the written consent of Members
holding at least sixty percent (60%) of all Units, which consent shall not be
unreasonably withheld, or except as otherwise permitted hereunder, no Member
shall transfer or assign all or any portion of its Membership Interest, unless
such transfer is to successor entities that have acquired a substantial portion
of the assets of the transferring Member. In no event shall any transfers be
made to persons or entities currently blacklisted by the Nevada Gaming Control
Board, or that would be likely to adversely affect any Gaming Licenses (as
defined in Section 11.4) of current Company members or any of their Affiliates.

         11.4. Gaming Licenses and Effect of Adverse Finding. Each Member
acknowledges that Grand is a wholly owned indirect subsidiary of Lakes Gaming,
Inc. ("Lakes"); that the primary business of Lakes and its subsidiaries and
other Affiliates is the operation and management of gaming facilities; and that
Lakes and its subsidiaries and other Affiliates must obtain and maintain in
effect various approvals, findings of suitability, licenses, permits and
registrations (collectively "Gaming Licenses") from various gaming authorities.
The provisions of this Section 11.4, as they apply to each current Member other
than Lakes or any of its subsidiaries and other Affiliates (a "Non-Lakes
Member"), shall also apply in the same manner to any assignee of a Member, or
any additional or substituted Member that is or becomes a Non-Lakes Member.

         If (a) any Non-Lakes Member or any of its Affiliates, or any other
Person who directly or indirectly owns or has any interest in a Non-Lakes Member
or is otherwise affiliated with a Non-Lakes Member, is found unsuitable or
unqualified by any gaming authority to be associated with Lakes or any
subsidiary or other Affiliate of Lakes; or (b) the Board of Directors of Lakes
determines in good faith that the continued association of Lakes with the
Non-Lakes Member may result in (i) the disapproval, modification or non-renewal
of any contract or agreement under which Lakes or any subsidiary or other
Affiliate of Lakes has sole or shared authority to manage any gaming facility;
or (ii) the loss or non-reinstatement of any Gaming License, then Lakes shall
give the Non-Lakes

                                       25
<PAGE>

Member written notice of such finding or determination. Such notice shall
describe the situation or relationship that is the basis for such finding or
determination.

         Such Non-Lakes Member shall, promptly after its receipt of the written
notice from Lakes specifying such finding or determination, take all actions
required to terminate or discontinue or otherwise cure, to the satisfaction of
the Board of Directors of Lakes and any gaming authority having jurisdiction
over Lakes or any subsidiary or other Affiliate of Lakes, the situation or
relationship described in the notice given by Lakes. If, within thirty (30) days
after such Non-Lakes Member's receipt of the notice given by Lakes (or such
shorter period of time as may be required or requested by any gaming authority),
such Non-Lakes Member fails or is unable to take such actions to the
satisfaction of the Board of Directors of Lakes and any gaming authority having
jurisdiction, such Non-Lakes Member may at any time within such period give
Lakes and the Company written notice of such failure or inability or, if such
Non-Lakes Member has not already given such notice, Lakes may before the end of
such period give a notice of such failure or inability to such Non-Lakes Member
and the Company. In the event any notice of such failure or inability is given,
the Grand Member shall then have the right and option (whether or not such
notice is timely given) to purchase such Non-Lakes Member's entire Membership
Interest in the Company pursuant to Section 11.6 or, if applicable under that
Section, the Grand Member will sell the entire Membership Interest of the Grand
Member pursuant thereto; provided, however, that such Non-Lakes Member shall
also have the option to sell its entire Membership Interest in the Company to
any third party, and the Grand Member shall have the right to participate as a
buyer in any such attempt to sell such Membership Interest.

         Notwithstanding any other provision of this Agreement, Lakes shall be a
third party beneficiary of Section 11.3, this Section 11.4 and Section 11.6.

         11.5 Substitute Member. With respect to all or any portion of a
Membership Interest that is transferred or assigned to a Substitute Member as
permitted in this Article 11, the Substitute Member has the rights and powers
and is subject to the restrictions and liabilities that are associated with such
Membership Interest which accrued prior to the date of substitution, except that
the substitution of the assignee does not release the assignor from existing
liability to the Company. In any event, no transfer or assignment of all or any
portion of a Membership Interest in the Company (including the transfer or
assignment of any right to receive or share in profits, losses, or
distributions) shall be effective unless and until written notice (including the
name and address of the proposed transferee or assignee, the interest to be
transferred or assigned, and the date of such transfer or assignment) has been
provided to the Company and the non-transferring or non-assigning Member(s).
Every Person before becoming a Substitute Member must assume this Agreement, as
amended from time to time, in writing.

         11.6. Buy/Sell Options.

                  a. Buy/Sell Offer and Buy/Sell Event. At any time at least one
building of the Time Share Project has received a certificate of occupancy, or
sooner if permitted by Section 11.4, and before any Notice of Dissolution Event
has been given under Section 12.1, any Member (an "Initiating Member") may send
a written notice (a "Buy/Sell Offer") to each other Member stating

                                       26
<PAGE>

the Initiating Member's offer to sell all (but not less than all) of its Units
to the other Members (or any of them), or to buy all (but not less than all) of
the Units of the other Members (a "Buy/Sell Event"), at a price (which shall be
the sum of a stated dollar amount and the Capital Account balance of the Member
whose Units are actually sold pursuant to the Buy/Sell Offer) set forth in the
notice, and on the payment terms set forth in the notice. With respect to that
portion of any such price consisting of the balance of the Grand Member's
Project Capital Contribution that has not been recovered under Section 7.5 (or
if less, the Grand Member's Capital Account balance), the payment terms and
related terms shall be identical to the terms for distribution of such
unrecovered balance under Section 7.5. Each recipient of the notice shall have
the right to elect, pursuant to a written response sent to the Initiating Member
no later than ninety (90) days from the receipt of the Buy/Sell Offer, either to
(i) buy the Units offered by the Initiating Member (pro rata in accordance with
their respective Units, if more than one Member elects to do so), or (ii) sell
the recipient's Units to the Initiating Member, for the applicable sale price
and on the applicable terms set forth in the Buy/Sell Offer. The final closing
of any Buy/Sell Event shall occur no later than one hundred eighty (180) days
months from the date the Buy/Sell Offer is deemed to have been given under
Section 13.1; provided, however, that an Expedited Closing may be elected under
the following paragraph (b).

                  b. Expedited Closing. The Members acknowledge that it is
likely that, if the Grand Member initiates a Buy/Sell Event pursuant to Section
11.4, it will do so to protect the ability of Lakes (as defined in Section
11.4), or a subsidiary or other Affiliate of Lakes, to obtain or maintain a
Gaming License (as defined in Section 11.4) or a contract or agreement to manage
a gaming facility. Accordingly, the Grand Member may need to purchase the Units
of each other Member or sell the Grand Member's Units, and close such
transaction (an "Expedited Closing") before the end of the 6-month period during
which any other Member could reasonably be expected to arrange financing to
purchase the Grand Member's Units in accordance with the Buy/Sell Offer.
Therefore, if the Grand Member initiates a Buy/Sell Event under Section 11.4, it
shall have the right and option to require each other Member to assign all of
its Units to the Grand Member pursuant to the Buy/Sell Offer, at any time after
the event giving rise to the Buy/Sell Offer under Section 11.4, and before any
other Member can arrange financing to purchase the Units of the Grand Member, by
giving each other Member written notice of the Grand Member's exercise of such
option and its election to require an Expedited Closing. If the Grand Member
elects an Expedited Closing, then (i) the Grand Member and each other Member
shall complete the conveyance of each other Member's Units at a closing within
five (5) business days after the Grand Member is deemed to have given notice of
its Expedited Closing election; (ii) the Grand Member shall pay to the other
Members at the Expedited Closing an amount of cash equal to the balance in each
other Member's Capital Account as of the date the Buy/Sell Offer is given, which
amount shall be deducted from the final price set forth in the Buy/Sell Offer
when paid by the Grand Member pursuant to the preceding paragraph (a); (iii) the
Grand Member shall pay the balance (if any) of such final price (less the
advance payment made under the preceding clause) to each other Member pursuant
to the provisions of the preceding paragraph (a); and (iv) if the amount of any
such advance payment exceeds the final price due to any decrease in any other
Member's Capital Account balance before the date of the final closing, each such
other Member shall repay the excess amount to the Grand Member on such final
closing date.

                  c. Continuing Options after Expedited Closing. In the event
that the Grand Member has purchased the Units of each other Member at an
Expedited Closing, each Member

                                       27
<PAGE>

whose Units were purchased by the Grand Member shall continue to have the right
and option to repurchase the Units purchased by the Grand Member (for the same
price payable by the Grand Member) and to purchase all of the other Units of the
Grand Member at the price set forth in the Buy/Sell Offer, which option may be
exercised within the time allowed for exercise of such option under paragraph
(a) of this Section 11.6. If any such other Members exercises their option to
purchase the Units held by Grand after an Expedited Closing, such other Members
shall close such repurchase and their purchase of the Grand Member's other Units
within the 6-month period required by paragraph (a) of this Section 11.6.

         11.7. Further Assurances. It is the intent of the Members that, in the
event of any closing of a purchase of Units under Section 11.6, each selling
Member shall fully convey, transfer and assign all of its Units and any rights
associated therewith. Each selling Member agrees that, at any such closing and
any time thereafter, upon request of the purchasing Member or the Company, the
selling Member shall execute, acknowledge and deliver to the purchasing Member
and/or the Company such assignments, conveyances, transfers and other
instruments and documents, and perform such other acts, as may be reasonably
necessary to fully effect the transfer of the Units sold by such Member.

                                   ARTICLE 12
                           DISSOLUTION AND TERMINATION

         12.1.    Dissolution.

                  a. The Company shall be dissolved upon the occurrence of any
of the following events (a "Dissolution Event"):

                           i. if the Company voluntarily enters bankruptcy under
chapter VII of the federal bankruptcy law, or any other insolvency proceeding
that contemplates its final liquidation, or does so involuntarily and such
proceeding is not vacated or dismissed within one hundred twenty (120) days
after commencement thereof;

                           ii. by the vote or written consent of Members owning
at least sixty percent (60%) of the Voting Units; provided, however, that,
unless such consent or vote occur, the death, dissolution, withdrawal or
termination of any Member for any reason shall not constitute a Dissolution
Event;

                           iii. if any Member gives a written notice to each
other Member (a "Notice of Dissolution Event") stating correctly that the
Company has failed to secure financing for the First Phase of the Time Share
Project within the first five (5) years after the Effective Date (for purposes
of this Section 12.1, any such "First Phase" must include a substantial
transient timeshare/hotel building); or

                           iv. if any Member gives each other Member a Notice of
Dissolution Event stating correctly that the Company has failed to commence
construction of any such First Phase of the Time Share Project within the first
six (6) years after the Effective Date or, if construction was timely commenced,
it has been either suspended for a period of time (not less than 180 days) for
any

                                       28
<PAGE>

reason other than a Force Majeure (as defined below in paragraph (c) of this
Section 12.1), or permanently terminated for any reason, in either case without
substantial completion of the First Phase, as of the end of such 6-year period.

                  b. As soon as possible following the occurrence of any
Dissolution Event the appropriate representative of the Company shall make all
filings and do all acts necessary to dissolve the Company.

                  c. For purposes of this Section 12.1, "Force Majeure" means
any of the following causes, to the extent material to the Company's
construction operations and beyond the reasonable control of the Company: fire,
explosion, flood, act of God, civil disorder or disturbance, labor strike,
vandalism, war, sabotage, energy shortage, failure of third parties to perform
significant obligations, governmental rules or regulations (other than existing
zoning ordinances and conditions for use permits), other unforeseen governmental
action or any like cause.

         12.2. Distribution of Assets Upon Dissolution. In settling accounts
after dissolution, the assets of the Company shall be distributed in the
following order:

                  a. First, to pay those liabilities to creditors, in the order
of priority as provided by law (except those to Members on account of their
Capital Contributions); and

                  b. The balance, if any, to the Members in accordance with
Section 7.2; provided, however, that no distribution shall be made pursuant to
Section 12.2(a) that creates or increases any Member's Adjusted Capital Account
Deficit beyond its obligation (deemed or actual) to restore such deficit,
determined as follows: (i) any distribution to a Member under to Section 12.2(a)
shall first be determined tentatively without regard to the Member's Capital
Account; and (ii) the allocation provisions of Article 6 shall then be applied
tentatively as if such tentative distribution had been made. If the Member would
thereby have an Adjusted Capital Account Deficit that exceeds its deemed and
actual obligation to restore such deficit, the actual distribution to the Member
under Section 12.2(a) shall be equal to the tentative distribution to the
Member, less the amount of such excess.

                  c. Notwithstanding Section 12.2(a), in the event of a
dissolution based on a Notice of Dissolution Event pursuant to Section
12.1(a)(iii) or Section 12.1(a)(iv), any land contributed to the Company by
Grand or any other Grand Member shall be distributed back to the Grand Member as
if the Company's formation had been rescinded, to the extent permitted by law.
If the Initial Working Capital Contribution and any subsequent cash Capital
Contributions have not been sufficient to pay all liabilities to creditors and
pay other Company costs incurred, including without limitation hard and soft
costs incurred by the Diamond Member (other than compensation to Richard L.
Cloobeck or Stephen J. Cloobeck) on behalf of the Company prior to distributing
such land to the Grand Member, then the Grand Member shall reimburse the Company
for such unpaid liabilities and costs prior to such distribution of the land.

         12.3. Winding Up. Except as provided by law, upon dissolution each
Member shall look solely to the assets of the Company for the return of its
Capital Contributions. If the Property of the

                                       29
<PAGE>

Company remaining after the payment or discharge of the debts and liabilities of
the Company is insufficient to return the Capital Contribution of each Member,
such Member shall have no recourse against any other Member. The winding up of
the affairs of the Company and the distribution of its assets shall be conducted
exclusively by the Manager, who is hereby authorized to take all actions
necessary to accomplish such distribution, including without limitation, selling
any Company assets the Manager deems necessary or appropriate to sell. In the
discretion of the Manager, a pro rata portion of the amounts that otherwise
would be distributed to the Members under this Article 12 may be withheld to
provide a reasonable reserve for unknown or contingent liabilities of the
Company.

         12.4. Notice of Dissolution. Within ninety (90) days of the happening
of a Dissolution Event, the Manager shall give written notice thereof to each of
the Members, to the banks and other financial institutions with which the
Company normally does business, and to all other parties with whom the Company
regularly conducts business, and shall publish a notice of dissolution in a
newspaper of general circulation in each place in which the Company generally
conducts business.

                                   ARTICLE 13
                            MISCELLANEOUS PROVISIONS

         13.1. Notices. Any notice or communication required or permitted to be
given by any provision of this Agreement, including, but not limited to, any
consents, shall be in writing and shall be deemed to have been given and
received by the Person to whom directed (a) when delivered personally to such
Person or to an officer or partner of the Member to which directed, (b) when
transmitted by facsimile transmission, with evidence of a confirmed
transmission, to the facsimile number of such Person who has notified the
Company and every other Member of its facsimile number and received during
Business Hours on a Business Day at the destination of such facsimile
transmission, (c) the following Business Day after being otherwise transmitted
after Business Hours by facsimile, with evidence of a confirmed transmission, to
the facsimile number of such Person who has notified the Company and every other
Member of its facsimile number, or (d) three (3) Business Days after being
posted in the United States mails if sent by registered, express or certified
mail, return receipt requested, postage and charges prepaid, or one (1) Business
Day after deposited with overnight courier, return receipt requested, delivery
charges prepaid, in either case addressed to the Person to which directed at the
address, if any, shown on the page containing their signatures, or such other
address of which such Person has notified the Company and every other Member. If
no address appears on the page containing a Member's signature and if the
Company and the Members have not been notified of any other address at which
such Person shall receive notifications, then a notice delivered to the Manager,
who shall reasonably attempt to forward the notice to such Person, shall
constitute sufficient notice to such Person.

         13.2. Application of Nevada Law. This Agreement, and the application
and interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Nevada, and specifically the Act. Clark County, Nevada
shall be the exclusive venue for any action brought by any party in any way
related to this Agreement.

         13.3. Waiver of Action for Partition. Each Member irrevocably waives
during the term of the Company any right that such Member may have to maintain
any action for partition with respect to the Property of the Company.

                                       30
<PAGE>
         13.4. Amendments. A proposed amendment to this Agreement shall become
effective at such time as it has been approved by Members owning at least sixty
per cent (60%) of the Voting Units; provided, however, that without the prior
written consent of the Member affected, no amendment may be made to the
provisions herein with respect to a Member's limited liability, distributions,
Profit and Loss allocation, preemptive rights, contribution obligations, the
provisions of Articles 11 and 12, or any other amendments that would materially
and adversely affect the rights of a Member holding Non-Voting Units.

         13.5. Construction. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural
and the masculine gender shall include the feminine and neuter genders and vice
versa. References in this Agreement to a Section or Article shall mean a Section
or Article of this Agreement, except as the context indicates otherwise.

         13.6. Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof.

         13.7. Waivers. The failure of any party to seek redress for violation
of or to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation, except
in the event of a written waiver to the contrary that specifically states that
this Section 13.7 shall be inapplicable.

         13.8. Rights and Remedies Cumulative. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies
subject to the provisions of Section 13.3. Said rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance or
otherwise, subject to the provisions of Section 13.3.

         13.9. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the
applications thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.

         13.10. Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.

         13.11. Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of the Company.

         13.12. Counterparts. This Agreement may be executed in counterparts,
each of which shall

                                       31
<PAGE>

be deemed an original, but all of which shall constitute one and the same
instrument.

         13.13. Further Assurances. The Members and the Company agree that they
and each of them will take whatever action or actions as are deemed by counsel
to the Company to be reasonably necessary or desirable from time to time to
effectuate the provisions or intent of this Agreement and, to that end, the
Members and the Company agree that they will execute, acknowledge, seal and
deliver any further instruments or documents which may be necessary to give
force and effect to this Agreement or any of the provisions hereof, or to carry
out the intent of this Agreement or any of the provisions hereof.

         13.14. Entire Agreement. This Agreement, including every Appendix
attached hereto, sets forth all (and is intended by all parties hereto to be an
integration of all) of the promises, agreements, conditions, understandings,
warranties, and representations among the parties hereto solely with respect to
the Company; and there are no promises, agreements, conditions, understandings,
warranties, or representations, oral or written, express or implied, among them
other than as set forth herein solely regarding the Company. Notwithstanding
anything herein to the contrary, it is hereby confirmed and agreed that this
Agreement together with the acts contemplated hereby shall not supersede or
amend, or void in any way the Original License Agreement or the Grant of
Reciprocal Easements, or any agreements executed in connection therewith or
related thereto, all of which shall remain in full force and effect and continue
to bind the Parcels (as defined in the Original License Agreement) and relevant
parties, except to the extent the Original License Agreement and the Grant of
Reciprocal Easements are expressly amended by that certain Amended and Restated
Grant of Reciprocal Easements and Declaration of Covenants, Conditions and
Restrictions, executed by the parties to the Original License Agreement and the
Grant of Reciprocal Easements, and dated as of the Effective Date.

         13.15. Time of Essence. Time is of the essence of this Agreement and
all of the terms, provisions, covenants and conditions hereof.

                            [SIGNATURE PAGE FOLLOWS]

                                       32
<PAGE>
         IN WITNESS WHEREOF, the Members have executed this Agreement to be
effective as of the Effective Date.

                                        Diamond Resorts, LLC
                                        Notice Address:
                                        3745 Las Vegas Blvd. South
                                        Las Vegas, NV 89109

                                        By:    /s/ Stephen J. Cloobeck
                                             -------------------------------
                                        Its:   Managing Member
                                              ------------------------------

                                                           MEMBER

                                        Grand Casinos Nevada I, Inc.

                                        Notice Address:
                                        130 Cheshire Lane
                                        Minnetonka, MN  55305

                                        By:    /s/ Lyle Berman
                                             -------------------------------
                                        Its:   CEO
                                              ------------------------------

                                                           MEMBER

                                       33
<PAGE>
                                   APPENDIX 1

                            TAX ACCOUNTING PROCEDURES

         1.0. References to Sections of the Code or Regulations. References
within this Appendix to sections of the Code or Regulations shall be applied by
substituting for the Regulations' terms of "partnership" and "partner" the terms
"limited liability company" (or "Company") and "Member," respectively.

         1.1. Tax Definitions. The following terms used in this Agreement and
Appendix shall have the following meanings:

                  a. "Adjusted Capital Account Deficit" with respect to any
Member means the deficit balance, if any, in such Member's Capital Account as of
the end of any Fiscal Year after giving effect to the following adjustments: (i)
credit to such Capital Account the sum of (A) any amount which such Member is
obligated to restore to such Capital Account pursuant to any provision of this
Agreement, plus (B) an amount equal to such Member's share of Company Minimum
Gain (as defined in Section 1.2(a)) and determined under Regulations Section
1.704-2(g), and such Member's share of Member Nonrecourse Debt Minimum Gain (as
defined in Section 1.2(b)) and as determined under Regulations Section
1.704-2(i)(5), plus (c) any amounts which such Member is deemed to be obligated
to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c); and (ii) debit
to such Capital Account the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).

                  b. "Asset Value" with respect to any Company asset means:

                           i. The fair market value when contributed of any
asset contributed to the Company by any Member;

                           ii. The fair market value of any Company asset when
such asset is distributed to any Member;

                           iii. The fair market value of all Property at the
time of the happening of any of the following events: (A) the admission of a
Member to, or the increase of a Membership Interest of an existing Member in,
the Company in exchange for a Capital Contribution; (B) the distribution of any
asset distributed by the Company to any Member as consideration for a Membership
Interest in the Company; or (c) the liquidation of the Company under Regulations
Section 1.704-1(b)(2)(ii)(g); or

                           iv. The Basis of the asset in all other
circumstances.

For purposes of this definition, the Manager shall determine fair market value,
except as provided otherwise in Section 7.5 with respect to the agreed valuation
of the Grand Member's Project Capital Contribution.

                                       34
<PAGE>
                  c. "Basis" with respect to an asset means the adjusted basis
from time to time of such asset for federal income tax purposes.

                  d. "Capital Account" means an account maintained for each
Member in accordance with Regulations Sections 1.704-1(b) and 1.704-2 and to
which the following provisions apply to the extent not inconsistent with such
Regulations:

                           i. There shall be credited to each Member's Capital
Account: (1) such Member's Capital Contributions (excluding the value of any
services); (2) such Member's distributive share of Profits; (3) any items of
income or gain specially allocated to such Member under this Agreement; and (4)
the amount of any Company liabilities (determined as provided in Code Section
752 (c) and the Regulations thereunder) assumed by such Member or to which
Property distributed to such Member is subject;

                           ii. There shall be debited to each Member's Capital
Account (1) the amount of money and the Asset Value of any Property distributed
to such Member pursuant to this Agreement; (2) such Member's distributive share
of Losses; (3) any items of expense or loss which are specially allocated to
such Member under this Agreement, and (4) the amount of liabilities (determined
as provided in Code Section 752 (c) and the Regulations thereunder) of such
Member assumed by the Company (within the meaning of Code Section 704) or to
which Property contributed to the Company by such Member is subject; and

                           iii. The Capital Account of any transferee Member
shall include the appropriate portion of the Capital Account of the Member from
whom the transferee Membership Interest was obtained.

                  e. "Depreciation" for any Fiscal Year or other period means
the cost recovery deduction with respect to an asset for such year or other
period as determined for federal income tax purposes, provided, however, that if
the Asset Value of such asset differs from its Basis at the beginning of such
year or other period, depreciation shall be determined as provided in
Regulations Section 1.704-1(b)(2)(iv)(g)(3).

                  f. "Profits" and "Losses" for any Fiscal Year or other period
means an amount equal to the Company's taxable income or loss for such year or
period determined in accordance with Code Section 703(a) and the Regulations
thereunder with the following adjustments:

                           i. All items of income, gain, loss and deduction of
the Company required to be stated separately shall be included in taxable income
or loss;

                           ii. Income of the Company exempt from federal income
tax shall be treated as taxable income;

                           iii. Expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as such expenditures under Regulations Section
1.704-1(b)(2)(iv)(1) shall be subtracted from taxable income;

                                       35
<PAGE>
                           iv. In the event the Asset Value of any Company asset
is adjusted pursuant to Sections 1.1(b)(ii) or (iii) of this Appendix, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for the purposes of computing Profits or Losses;

                           v. Gain or loss resulting from the disposition of
Property from which gain or loss is recognized for federal income tax purposes
shall be determined with reference to the Asset Value of such Property;

                           vi. Depreciation shall be determined based upon Asset
Value as determined under Regulations Section 1.704-1(b)(2)(iv)(g)(3) instead of
as determined for federal income tax purposes;

                           vii. To the extent an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a distribution
other than in complete liquidation of a Membership Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Profits and Losses; and

                           viii. any items that are specially allocated under
the Agreement or this Appendix shall not be taken into account.

         1.2.     Special Allocations of Profits and Losses.

                  a. Minimum Gain Chargeback. Notwithstanding any other
provision of this Appendix, if there is a net decrease in Company Minimum Gain
(as defined in Regulations Section 1.704-2(d)) during any Fiscal Year, then each
Member shall be allocated such amount of income and gain for such year (and
subsequent years, if necessary) determined under and in the manner required by
Regulations Section 1.704-2(f) as is necessary to meet the requirements for a
minimum gain chargeback as provided in that Regulation.

                  b. Member Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Appendix, if there is a net decrease
in Member Nonrecourse Debt Minimum Gain (as defined in accordance with
Regulations Section 1.704-2(i)(3)) attributable to a Member Nonrecourse Debt (as
defined in Regulations Section 1.704-2(b)(4)) during any Fiscal Year, any Member
who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt determined in accordance with Regulations Section
1.704-2(i)(5) shall be allocated such amount of income and gain for such year
(and subsequent years, if necessary) determined under and in the manner required
by Regulations Section 1.704-2(i)(4) as is necessary to meet the requirements
for a chargeback of Member Nonrecourse Debt Minimum Gain as is provided in that
Regulation.

                                       36
<PAGE>
                  c. Qualified Income Offset. If a Member unexpectedly receives
any adjustment, allocation or distribution described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be
specifically allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Member as quickly as possible; provided, however, that
an allocation pursuant to this Subsection shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in Sections 6.1, 6.2, and 6.3 of the Agreement
and this Section 1.2 have been made without giving effect to this Subsection
(c).

                  d. Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of Fiscal Year which is in excess of the sum
of (i) the amount such Member is obligated to restore pursuant to this
Agreement, and (ii) the amount such Member is deemed to be obligated to restore
pursuant to Regulations 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall
be specially allocated items of Company income and gain in the amount of such
excess as quickly as possible; provided, however, that an allocation pursuant to
this Subsection shall be made only if and to the extent that such Member would
have a deficit Capital Account after all other allocations provided for in
Sections 6.1, 6.2 and 6.3 of the Agreement and this Section 1.2 have been made
without giving effect to Subsection 1.2(c) and this Subsection 1.2(d).

                  e. Nonrecourse Deductions. Nonrecourse Deductions (as defined
and determined in Regulations Sections 1.704-2(b) and 1.704-2(c)) for any Fiscal
Year shall be allocated among the Members in proportion to their Units.

                  f. Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions (as defined under Regulations Section 1.704-2(i)(2)) shall be
allocated pursuant to Regulations Section 1.704-2(i)(1) to the Member who bears
the economic risk of loss with respect to the "Member Nonrecourse Debt" to which
it is attributable.

                  g. Code Section 754 Adjustment. To the extent that an
adjustment to the Basis of any asset pursuant to Code Section 734(b) or Code
Section 743(b) is required to be taken into account in determining Capital
Accounts as provided in Regulations Section 1.704-1(b)(2)(iv)(m), the adjustment
shall be treated (if an increase) as an item of gain or (if a decrease) as an
item of loss, and such gain or loss shall be allocated to the Members consistent
with the allocation of the adjustment pursuant to such Regulation.

                  h. Purpose and Application. The purpose and the intent of the
special allocations provided for in Section 6.3 of the Agreement and Sections
1.2(a) through (g) of this Appendix are to comply with the provisions of
Regulations Sections 1.704-1(b) and 1.704-2, and such special allocations are to
be made so as to accomplish that result. However, to the extent possible, the
Manager, in allocating items of income, gain, loss, or deduction among the
Members, shall take into account the special allocations in such a manner that
the net amount of allocations to each Member shall be the same as such Member's
distributive share of Profits and Losses would have been had the events
requiring the special allocations not taken place. The Manager shall apply the
provisions of this Section in whatever order the Manager reasonably believes
will minimize the effect of the special allocations.

                                       37
<PAGE>
         1.3. General Provisions.

                  a. Except as otherwise provided in this Agreement, the
Members' distributive shares of all items of Company income, gain, loss, and
deduction are the same as their distributive shares of Profits and Losses.

                  b. The Manager shall allocate Profits, Losses and other items
properly allocable to any period using any method permitted by Code Section 706
and the Regulations thereunder.

                  c. To the extent permitted by Regulations Section 1.704-2(h)
and Section 1.704-2(i)(6), the Manager shall endeavor to avoid treating
distributions as being from the proceeds of a Nonrecourse Liability (as defined
in Regulations Section 1.752-1(a)(2)) or a Member Nonrecourse Debt.

                  d. If there is an increase or decrease in one or more Member's
Units in the Company during a Fiscal Year, each Member's distributive share of
Profits or Losses or any item thereof for such Fiscal Year shall be determined
by any method prescribed by Code Section 706(d) or the Regulations thereunder
that takes into account the varying Members' Membership Interests in the Company
during such Fiscal Year.

                  e. The Members agree to report their shares of income and loss
for federal income tax purposes in accordance with the provisions of this
Appendix.

         1.4. Code Section 704(c) Allocations. Solely for federal income tax
purposes and not with respect to determining any Member's Capital Account,
distributive shares of Profits, Losses, other items, or distributions, a
Member's distributive share of income, gain, loss, or deduction with respect to
any Property (other than money) contributed to the Company, or with respect to
any Property the Asset Value of which was determined as provided in this
Agreement upon the acquisition of Membership Interest in the Company by a new
Member or existing Member in exchange for a Capital Contribution, shall be
determined in accordance with Code Section 704 (c) and the Regulations
thereunder or with the principles of such provisions.

         In the event the Asset Value of any Company asset is adjusted pursuant
to Section 1.1(b)(iii), subsequent allocations of income, gain, loss, and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes and its Asset
Value in the same manner as under Code Section 704(c) and the Regulations
thereunder.

         1.5. Curative Reallocations Regarding Payments to Members. To the
extent that compensation paid to any Member by the Company ultimately is not
determined to be a guaranteed payment under Code Section 707(c) or a payment
other than in his capacity as a Member pursuant to Code Section 707(a), the
Member shall be specially allocated gross income of the Company in an amount
equal to the amount of such compensation, and the Member's Capital Account shall
be adjusted to reflect the payment of such compensation. If the Company's gross
income for a Fiscal Year is less than the amount of such compensation paid in
such year, the Member shall be specially

                                       38
<PAGE>

allocated gross income of the Company in the succeeding year or years until the
total amount so allocated equals the total amount of such compensation.

         1.6. Special Basis Adjustment. At the request of either the transferor
or transferee in connection with a transfer of a Membership Interest in the
Company, the Manager will, at the request of any Member, cause the Company to
make the election provided for in Code Section 754 and maintain a record of the
adjustments to Basis of Property resulting from that election. Any such
transferee shall pay all costs incurred by the Company in connection with such
election and the maintenance of such records.

         1.7. Tax Matters Member.

                  a. The Diamond Member is hereby designated the Tax Matters
Member (as defined in Section 6231(a)(7) of the Code) on behalf of the Company
and shall take steps so that each "eligible member" is a "notice partner" as
defined in Code Section 6231.

                  b. Without the unanimous consent of the Members owning one
hundred percent (100%) of the Voting Units, the Tax Matters Member shall have no
right to extend the statute of limitations for assessing or computing any tax
liability against the Company or the amount of any Company tax item.

                  c. If the Tax Matters Member elects to file a petition for
readjustment of any Company tax item (in accordance with Code Section 6226(a))
such petition shall be filed in the United States Tax Court unless the Members
owning one hundred percent (100%) of the Voting Units unanimously agree
otherwise.

                  d. The Tax Matters Member shall, within ten (10) Business Days
after receipt thereof, forward to each Member a photocopy of any correspondence
relating to the Company received from the Internal Revenue Service. The Tax
Matters Member shall, within ten (10) Business Days thereof, advise each Member
in writing of the substance of any conversation held with any representative of
the Internal Revenue Service.

                  e. Any reasonable costs incurred by the Tax Matters Member for
retaining accountants and/or lawyers on behalf of the Company in connection with
any Internal Revenue Service audit of the Company shall be expenses of the
Company. Any accountants and/or lawyers retained by the Company in connection
with any Internal Revenue Service audit of the Company shall be selected by the
Tax Matters Member and the fees therefor shall be expenses of the Company.

         1.8. Deemed Liquidation. If no Dissolution Event has occurred, but the
Company is deemed terminated as a partnership for federal income tax purposes,
within the meaning of Regulations Section 1.708-1 (b)(2)(iv), due to a sale or
exchange of fifty percent (50%) or more of the Units, the Company shall not be
wound up and dissolved, but such termination will result in the closing of the
Company's Fiscal Year for all Members and the following steps shall be deemed to
occur: (a) the Company's assets and liabilities will be treated as having been
contributed to a new limited liability company treated as a partnership, in
exchange for an interest in the new company;

                                       39
<PAGE>

(b) the Company will be treated as having distributed interests in the new
company to the purchasing Members and the remaining Members in liquidation of
the Company; and (c) the new company shall thereafter operate and be governed by
the terms of this Agreement, as a partnership for federal income tax purposes.

            [THE REMAINDER OF THIS PAGE IS INTENDED TO BE LEFT BLANK]

                                       40<PAGE>
                                                                    EXHIBIT 10.6

                                 LOAN AGREEMENT

         THIS AGREEMENT is made as of this 25th day of September 2002, by and
between THE CHATEAUX, LLC, a Nevada limited liability company ("Borrower"),
whose address is 3745 Las Vegas Blvd. South, Las Vegas, NV 89109; and GRAND
CASINOS NEVADA I, INC., a Minnesota corporation ("Lender"), with offices at 130
Cheshire Lane, Minnetonka, MN 55305.

         In consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto hereby agree as follows:

                                   ARTICLE 1.

                                   DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
following meanings:

         1.1 "Collateral Documents" shall mean the following documents, each of
which shall be in form and substance acceptable to Lender, in its sole and
absolute discretion:

                  1.1.1 A Promissory Note in the amount of One Million and
         No/100 Dollars ($1,00,000.00), dated of even date herewith, from
         Borrower to Lender (the "Note").

                  1.1.2 A Guaranty (the "Guaranty") executed by Diamond Resorts,
         LLC (the "Guarantor").

                  1.1.3 A Collateral Pledge Agreement (the "Pledge Agreement")
         executed by the Guarantor, granting a security interest in the
         Guarantor's membership interests in the Borrower to secure the
         Guaranty.

                  1.1.4 UCC-1 Financing Statement covering the collateral
         described in the Pledge Agreement.

         1.2 "Improvements" shall mean the proposed timeshare sales center to be
installed and constructed by Guarantor on the Property, including without
limitation leasehold improvements, trade fixtures, furniture and equipment, all
of which are intended to be owned and used primarily for the benefit of
Borrower.

         1.3 "Loan" shall mean the loan referred to in Article 2 hereof as
evidenced by the Note, but only to the extent Lender is required to make
advances under the provisions of this Agreement.

         1.4 "Organizational Documents" shall mean the following documents, each
of which shall be in form and substance acceptable to Lender, in its sole and
absolute discretion:

                  1.4.1 A certified copy of the Articles of Organization for the
         Borrower.

<PAGE>

                  1.4.2 A copy of the Operating Agreement, for the Borrower,
         certified as true, correct and complete by an officer of the Borrower.

                  1.4.3 Copies of the Resolutions of all members and board of
         governors of Borrower authorizing the execution and delivery of this
         Agreement, the Note, and the other Collateral Documents certified as
         true, correct and complete by one or more officers of Borrower.

                  1.2.1. A copy of the Certificate of Good Standing for
         Borrower.

                  1.2.2. A certified copy of the Articles of Organization for
         the Guarantor.

                  1.2.3. A copy of the Operating Agreement, for the Guarantor,
         certified as true, correct and complete by an officer of the Guarantor.

                  1.2.4. Copies of the resolutions of all members and board of
         governors of Guarantor authorizing the execution and delivery of the
         Guaranty and the other Collateral Documents to be executed by
         Guarantor, certified as true, correct and complete by one or more
         officers of Borrower.

                  1.2.5. A copy of the Certificate of Good Standing for
         Guarantor.

         1.5 "Project Costs" shall mean the costs of the materials, supplies,
furniture, equipment and labor actually incorporated into the Improvements, and
of the building permit therefore, all as itemized in the Sworn Construction and
Project Cost Statement for such Improvements, approved by Lender.

                  1.5.1 "Project Documents" shall mean the following documents,
         all of which shall be in form and substance acceptable to Lender, in
         its sole and absolute discretion:

                  1.5.2 The plans and specifications ("Plans") for the
         Improvements approved by Lender.

                  1.5.3 Executed sales and marketing Agreement between the
         Borrower and the Guarantor (the "Marketing Agreement").

                  1.5.4 Executed Commercial Lease Agreement between the
         Guarantor and Nevada Resort Properties Polo Towers Limited Partnership,
         a Nevada limited partnership that owns the Property, to which lease
         agreement the Borrower is a third party beneficiary (the "Lease").

                  1.5.5 Certificates or Policies, as Lender shall determine, of
         Builders' Risk 100% Non-Reporting Completed Value Form Insurance, in
         amounts approved by Lender.

                  1.5.6 Certificates of Public Liability Insurance providing for
         coverage of not less than $2,000,000.00 combined single limit, Workers'
         Compensation Insurance, fire and extended coverage insurance and all
         other insurance required by Lender.

                                       2
<PAGE>
                  1.5.7 A Sworn Construction and Project Cost Statement,
         certified to by Borrower, for the Improvements stating and itemizing in
         full the Project Costs for the Improvements and certifying that they
         are fair and reasonable.

                  1.5.8 A schedule of the estimated time and amount of the
         advances to be requested by Borrower under Article 5 hereof to complete
         the Improvements (the "Improvement Estimate").

                  1.5.9 If requested by Lender, signed copies of all
         construction contracts ("Construction Contracts") executed by Borrower
         and/or Borrower's contractors and subcontractors ("Contractors") for
         labor, equipment, materials or supplies with respect to the
         Improvements.

                  1.5.10 If requested by Lender, an assignment or assignments of
         the Construction Contracts permitting Lender to complete the
         Improvements in the case of a default by Borrower. Lender in its
         reasonable discretion may require one or more of the Contractors to
         consent to such an assignment or assignments by Borrower to Lender.

                  1.5.11 All building and occupancy permits and such other
         evidence as Lender shall request to establish that all necessary
         building, zoning and rezoning, planned unit development, subdivision,
         platting and environmental protection and land use permits and
         approvals have been obtained, and that the Improvements, as
         constructed, and the occupancy thereof will comply in all respects with
         all applicable ordinances, including building, zoning and rezoning,
         planned unit development, subdivision, platting and environmental
         protection and land use

                  1.5.12 Copies of all contracts entered into by Borrower with
         architects and engineers relating to the Improvements.

         1.6 "Property" shall mean the "Premises" as defined in the Lease.

                                   ARTICLE 2.

                                    THE LOAN

         2.1 Lender shall, subject to the terms and conditions of this
Agreement, lend to Borrower, and Borrower shall borrow from Lender, up to the
aggregate principal amount of One Million and No/100 Dollars ($1,000,000.00) for
the purpose of Borrower's reimbursement of the Project Costs incurred by
Guarantor under the Marketing Agreement. The Loan and Borrower's obligation to
repay the Loan shall be evidenced by the Note. The Loan, or so much thereof as
is from time to time outstanding, shall bear interest as set forth in the Note.
All such interest shall commence as of the date of advances by Lender made
pursuant to this Agreement. The Loan shall be advanced in stages in accordance
with, and subject to the terms and conditions of Articles 3, 4 and 5 of this
Agreement. The Loan shall be due and payable from the first available cash flow
of the Borrower, excluding any member's required capital contribution, and prior
to any distribution to any of the Borrower's members, and in any event shall be
payable in full upon the earliest of the following:

                                       3
<PAGE>
                  2.1.1 The closing of any construction financing with respect
         to Borrower's time-share units.

                  2.1.2 Such time as Lender is no longer a member of the
         Borrower; provided that Lender is not in violation of the Operating
         Agreement of the Borrower.

                  2.1.3 Such time as the Lender reasonably believes that the
         Guarantor has abandoned the Project or is no longer able to complete
         the Project due to financial or other reasons.

                  2.1.4 October 1, 2004.

         2.2 Anything herein to the contrary notwithstanding, it is specifically
understood and agreed that all funds furnished by the Lender and employed in
performance of the obligations of the Borrower under this Agreement shall be
deemed advanced by the Lender under an obligation to do so regardless of the
identity of the person or persons to whom such funds are furnished. Funds
advanced by the Lender in the reasonable exercise of its judgment that the same
are needed to complete the Improvements or to protect its security are to be
deemed obligatory advances hereunder and are to be added to the total
indebtedness secured by the Note and Mortgage and other Collateral Documents and
said indebtedness shall be increased accordingly.

         2.3 Until the Loan has been paid in full, Borrower (i) shall not make
any distributions to its members, pursuant to its Operating Agreement or
otherwise; and (2) shall not make any payments on any loan to Borrower from the
Guarantor.

                                   ARTICLE 3.

                      CONDITIONS PRECEDENT TO ALL ADVANCES

         3.1 The following shall be conditions precedent to the first advance
and all subsequent advances for the construction of Improvements under this
Agreement:

         3.2 Borrower shall deliver, without expense to Lender, the Collateral
Documents, and Organizational Documents, each to be duly executed to the extent
required by Lender and approved by Lender's legal counsel and if applicable,
recorded with the appropriate public recording office. All filing fees, charges
and expenses shall have been paid by Borrower.

                  3.2.1 Borrower shall not be in default under this Agreement or
         under any of the Collateral Documents.

                  3.2.2 There shall have been no material adverse change in the
         financial condition of Borrower prior to any advance.

                  3.2.3 Borrower shall deliver, without expense to Lender and
         for review and comment by Lender, a copy of the construction bid for
         the Improvements.

                                       4
<PAGE>
                  3.2.4 Borrower shall deliver, without expense to Lender,
         copies of all Project Documents for the Improvements, each to be duly
         executed to the extent required by Lender and approved by Lender's
         legal counsel.

                  3.2.5 Borrower shall provide Lender with the name of each
         Contractor who contracts, either directly or indirectly, for any work
         to be done, material supplied or services furnished in connection with
         constructing the Improvements. Borrower will keep advised at all times
         of the names of all Contractors, and the type of work or material and
         the amount covered by each of their respective Construction Contracts
         and will furnish Lender with copies of all such Construction Contracts.
         It is understood that only Contractors who actually perform work or
         supply material and whose names and contract descriptions have been
         furnished to Lender shall be entitled to receive advances under this
         Agreement.

                                   ARTICLE 4.

                    ADVANCES AND DISBURSEMENTS UNDER THE LOAN

         4.1 Upon at least five (5) days' prior written request by Borrower for
an advance under the Loan, made no more often than once a month, Lender shall
advance to Borrower for Project Costs pursuant to a draw request ("Draw
Request") in form and substance prescribed by Lender and containing a breakdown
of the Project Costs. Borrower shall submit to Lender all lien waivers and other
evidence required by Lender from the previous advances prior to disbursement of
any further advance. No portion of any advance shall be used for any purpose
other than the payment of Project Costs.

         4.2 If interest has accrued on the Loan and is unpaid, or if Borrower
has failed to make when due any payments required under the terms and conditions
of this Agreement or the Collateral Documents, or if fees are payable to Lender
hereunder, Lender shall be, and hereby is, authorized to advance, for payment to
Lender from the proceeds of the Loan, the total amount of such accrued interest,
payments and fees (whether or not a Draw Request has been submitted by
Borrower), and the same shall be deemed to be an advance of the proceeds of the
Loan under this Agreement in the same manner and with the same effect as if
advanced under the provisions of Section 2.2 above.

         4.3 No advance will be made for payment of any profit or overhead to
Borrower unless specifically approved by Lender.

         4.4 If Borrower shall withhold any sums from any Contractor, Lender may
withhold from Borrower a like sum or sums. Such sums withheld by Lender, when
paid out, will be paid out directly to the Contractor.

         4.5 All sums advanced and disbursed under this Agreement shall be
disbursed under and secured by the Collateral Documents.

                                       5
<PAGE>
                                   ARTICLE 5.

                     COVENANTS, WARRANTIES, REPRESENTATIONS
                           AND AGREEMENTS OF BORROWER

         5.1 Borrower warrants and represents:

         5.2 that the Borrower is a Nevada limited liability company, duly
organized and validly existing under the laws of the State of Nevada.

                  5.2.1 That the making and performance of this Agreement and
         the execution and delivery of the Note and other Collateral Documents
         do not result in the breach of, or constitute a default under, or
         result in the creation of any lien or encumbrance upon any property or
         assets of Borrower pursuant to any indenture or loan or credit
         agreement or other agreement or instrument to which Borrower is a party
         or by which Borrower or its property may be bound or affected (other
         than the Collateral Documents).

                  5.2.2 That this Agreement and the Collateral Documents are the
         legal, valid and binding obligations of Borrower enforceable against
         Borrower in accordance with their respective terms.

                  5.2.3 That the Note, when duly executed and delivered for
         value, will constitute the legal, valid and binding obligation of
         Borrower enforceable in accordance with its terms.

                  5.2.4 That there are no actions, suits or proceedings pending
         or, to the knowledge of Borrower, threatened against or affecting
         Borrower or the properties of Borrower before any court or governmental
         department, commission, board, bureau, agency or instrumentality,
         which, if determined adversely to Borrower, would have a material
         adverse effect on the financial condition, properties or operations of
         Borrower or on the ability of Borrower to perform this Agreement.

         5.3 Borrower covenants and agrees:

                  5.3.1 That all advances under the Loan after payment of
         existing mortgage liens on the Property shall be used solely to pay
         Project Costs; that the Property and Improvements do and shall comply
         with all applicable ordinances, regulations and laws of governmental
         departments and agencies having jurisdiction over the Property and do
         not and shall not violate any set-back requirements, private
         restrictions or covenants or encroach upon or interfere with easements
         affecting the Property; that Borrower will carry on continuously,
         diligently and with reasonable dispatch the construction of the
         Improvements in accordance with the Plans, free from all mechanic's,
         laborer's, and materialman's liens and in a good and workmanlike manner
         and shall complete construction of the Improvements in a timely manner.

                                       6
<PAGE>
                  5.3.2 To keep, perform, enforce and maintain in full force and
effect all of the terms, covenants, conditions and requirements of this
Agreement, the Collateral Documents and the Project Documents; not to amend,
cancel, change, terminate, supplement or waive any of the terms, covenants or
conditions of the Collateral Documents or Project Documents without the consent
of Lender.

                  5.3.3 Upon the demand of Lender for reasonable cause, from
time to time and at any time, to deliver to Lender updated and recertified
copies of the Collateral Documents and Project Documents.

                  5.3.4 Not to create, permit to be created, or allow to exist
any liens, charges or encumbrances on the Property and Improvements.

                  5.3.5 Not to assign this Agreement or any interest herein or
all or any part of any advances to be made hereunder except with Lender's prior
written consent.

                  5.3.6 To pay to Lender, upon demand, all filing fees and all
other out-of-pocket expenses, if any, directly incurred and from time to time
hereafter incurred by Lender in enforcing the terms and conditions of this
Agreement or any document herein referred to (other than the Operating Agreement
is effect with respect to the Borrower, which shall remain unaffected by this
Agreement), or in exercising any of the rights granted to Lender herein or in
any such document herein referred to, whether suit be brought or not. Borrower
shall remain obligated to pay such out-of-pocket expenses incurred by Lender in
connection with the Loan notwithstanding any cancellation of this Agreement.

                  5.3.7 To set up and maintain accurate and complete books,
accounts and records pertaining to the construction of the Improvements and the
Project Costs in a manner consistent with generally accepted accounting
principles and practices. Lender and its representatives, shall have the right
at all reasonable times to inspect, examine and copy all books and records of
Borrower relating to the Improvements and Project Costs, and to enter and have
free access to the Property and to inspect all work done, labor performed and
material furnished in or about the same. Notwithstanding the foregoing, Borrower
shall be responsible for making inspections of the Improvements during the
course of construction and shall determine to its own satisfaction that the work
done or materials supplied by the Contractors have been properly supplied in
accordance with the applicable Construction Contract. Borrower shall defend and
hold Lender harmless and Lender has and shall have no liability or obligation of
any kind to Borrower or creditors of Borrower, in connection with any defective,
improper or inadequate workmanship or materials brought in or arising out of the
Improvements or the Property, or any mechanic's liens arising as a result of any
workmanship or materials expended or placed in or on the Improvements or the
Property. Upon Lender's request, Borrower shall replace or cause to be replaced
any such defective, improper or inadequate workmanship or materials. Any
inspections made by Inspector are for the sole benefit of Lender and neither
Borrower nor any creditor of Borrower shall be entitled to rely on any
inspections.

                  5.3.8 To make no changes in the Plans for the Improvements
aggregating more than $25,000.00 and/or aggregating more than $50,000.00 for all
of the anticipated

                                       7
<PAGE>

improvements constructed without prior approval of Lender and Borrower's
proposed manner of paying for any such changes shall also be subject to Lender's
prior approval.

                  5.3.9 Not to lease, sell, assign, mortgage, encumber or convey
(whether by contract for deed or otherwise), or otherwise transfer, all or any
part of the interest of Borrower in all or any part of the Property and
Improvements, without obtaining, in each instance, the prior written approval of
Lender which approval can be withheld for any reason.

                  5.3.10 To pay all real estate taxes and installments of
special assessments payable therewith as and when they become due and payable,
and insurance premiums with respect to the insurance required to be maintained
by Borrower under the terms of this Agreement or any of the Collateral
Documents, and utility charges incurred by Borrower prior to or during the term
of this Agreement.

                  5.3.11 To comply with the Marketing Agreement and the Lease.

         5.4 The warranties, agreements, covenants and representations in this
Article 6 shall be deemed to have been renewed and restated by Borrower at the
time of each advance under the Loan after the date hereof, unless Borrower
notifies Lender in writing of any change therein prior to the time of such
advance.

                                   ARTICLE 6.

                              DEFAULT AND REMEDIES

         6.1 The occurrence of any of the following events shall constitute a
default under this Agreement:

                  6.1.1 If Borrower shall fail to pay principal or interest when
due under the Note; and such amount remains unpaid for a period of ten (10) days
after the date on which the Lender has given Borrower written notice of such
default.

                  6.1.2 If Borrower or Borrower's Contractors, abandons
construction of the Improvements or unreasonably delays or ceases work thereon
for a period of thirty (30) days, or delays construction or permits construction
to be delayed for any period of time so that the completion of the Improvements
cannot be accomplished, in the reasonable judgment of Lender, in a timely
manner.

                  6.1.3 If Borrower, or Borrower's Contractors, shall fail to
keep, enforce, perform and maintain in full force and effect any provision of
this Agreement or any of the Collateral Documents or Project Documents, provided
if such failure is for other than the nonpayment of money when due, then such
failure shall continue for a period of fifteen (15) days after notice of such
failure is given to Borrower by Lender or for such longer period of time as is
required to cure the default if the same cannot reasonably be cured within said
15 day period and Borrower is using all reasonable efforts to cure the same but
in no event more than 60 days.

                  6.1.4 If any representation or warranty is made by Borrower
herein, or in any certificate or document furnished pursuant hereto, or
submitted with or in support of the

                                       8
<PAGE>

application to Lender for the Loan, proves untrue in any material respect in the
reasonable opinion of Lender.

                  6.1.5 If Borrower shall become insolvent, however defined, or
shall initiate or have initiated against it, voluntarily or involuntarily, any
act, process or proceeding under any insolvency law or other statute or law
providing for the modification or adjustment of the rights of creditors,
including but not limited to filing for protection under the bankruptcy laws or
having bankruptcy proceedings commenced against it.

                  6.1.6 If the Improvements are materially damaged or destroyed
by fire or other casualty and the loss is not adequately covered by equity funds
of Borrower or insurance proceeds actually collected or in the process of
collection.

                  6.1.7 If at any time any advance under the Loan is requested
by Borrower there is, in Lender's sole opinion, any material adverse change in
Borrower's business or financial condition from that which existed on the date
hereof.

                  6.1.8 If Borrower shall sell or otherwise transfer the
Property or Improvements, or any interest therein, or Borrower shall further
encumber the same, without prior written approval of Lender.

                  6.1.9 If the undisbursed Loan proceeds are insufficient, in
the sole opinion of Lender, to complete the Improvements and pay the remaining
Project Costs, and Borrower has failed , upon demand by Lender, to give the
Lender reasonable assurance that Borrower has sufficient funds to pay such
excess costs.

                  6.1.10 If Borrower shall default on any other obligation of
Borrower to Lender.

     6.2 In the event of a default as defined in Section 7.1 hereof, Lender, at
its option, in addition to any other remedies to which it might by law be
entitled, shall have the right to do one or more of the following:

                  6.2.1 To refrain from making any advance under this Agreement,
but Lender may make advances after the happening of any such event without
hereby waiving the right to refrain from making other or further advances or to
exercise any of the other rights Lender may have.

                  6.2.2 To perform any and all work and labor necessary to
complete all or part of the Improvements contemplated by this Agreement and to
do all things necessary or incidental thereto. Lender may, in its discretion, at
any time, abandon work on the Improvements after having commenced such work, and
may recommence such work at any time, it being understood that nothing herein
shall impose any obligation on Lender to complete the Improvements.

                  6.2.3 To perform such other acts or deeds which may be
necessary to cure any default existing under this Agreement or under the
Collateral Documents or Project Documents and, to this end, it is hereby agreed
as follows:

                                       9
<PAGE>

                  6.2.3.1 All sums expended by Lender in effectuating its rights
under this Agreement shall be deemed to have been paid to Borrower hereunder and
shall become a part of Borrower's indebtedness to Lender under this Agreement
and shall be secured by the Collateral Documents, whether or not such sums, when
added to all previous advances made hereunder, exceed the Loan, such additional
sums advanced by Lender if in the reasonable exercise of Lender's discretion are
necessary to complete the Improvements shall be deemed obligatory advances
hereunder.

                          6.2.3.1.1 Borrower hereby constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution
either in the name of Lender or in the name of Borrower:

                          6.2.3.1.2 To complete or cause to be completed all or
any part of the Improvements; to use the Plans; to make such reasonable
additions and changes and corrections in the Plans which Lender shall deem
reasonably necessary or desirable to complete all or any part of the
Improvements; to use any funds which may remain unadvanced under this Agreement;
to employ such contractors, subcontractors, agents, architects and inspectors
and enter into such contracts and arrangements as shall be required for such
purposes; to pay, settle or compromise all existing bills and claims which may
be liens against the Property or Improvements or as may be necessary or
reasonably desirable for the completion of the work or clearance of title; to
examine and execute all applications and certificates relating to construction
of the Improvements in the name of Borrower, to prosecute and defend all actions
or proceedings in connection with the construction work on, or any other matter
relating to, the Property or Improvements and to do any and every act in
connection with the matters contemplated by this Agreement which Borrower might
do in its own behalf;

                          6.2.3.1.3 To enforce by any means that Lender then
deems necessary or advisable, all of the terms, covenants, and conditions of the
Collateral Documents and Project Documents;

                          6.2.3.1.4 Without limiting the foregoing, to perform
each of the terms, covenants and conditions to be kept and performed by Borrower
under this Agreement, and any of the Collateral Documents and Project Documents;
and

                          6.2.3.1.5 To do all things that Lender then deems
necessary or advisable, including, without limitation, the execution of
instruments in the name of Borrower or as attorney-in-fact for Borrower, for the
purpose of carrying out the powers enumerated in 7.2.3.2.1-3 of this subsection;
provided, however, that Lender (i) shall limit the exercise of its powers herein
granted solely to acts in connection with the Property and the Improvements, and
to completion of the Improvements and payment of all costs and expenses
therefor; (ii) if it enters into new contracts for the completion of the
Improvements, shall do so in its name and not as agent or attorney for Borrower;
and (iii) in exercising its powers herein granted, shall not add to or increase
Borrower's obligations or liabilities beyond those undertaken or agreed to by
Borrower by this Agreement. The immediately preceding provisions (i), (ii), and
(iii) shall not relieve Borrower of its obligation under this Agreement to
provide the equity funds necessary to complete the Improvements.

                                       10
<PAGE>
             The powers herein granted to Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable.

         6.3 To cancel this Agreement.

                  6.3.1 To bring appropriate action to enforce such performance
         and the correction of such failure or default.

                  6.3.2 To declare the entire unpaid principal of the Note and
         any other note between Borrower and Lender, and all accrued interest
         thereon immediately due and payable without notice.

                  6.3.3 Terminate Lender's obligations under this Agreement
         without notice to Borrower.

                  6.3.4 Commence an action to enforce specifically Borrower's
         performance of its obligations under the Loan Documents.

                  6.3.5 Exercise any and all other rights and remedies available
         at law or in equity.

         6.4 No right or remedy by this Agreement, or by any document or
instrument delivered by Borrower pursuant hereto, conferred upon or reserved to
Lender shall be or is intended to be exclusive of any other right or remedy, and
each and every right or remedy shall be cumulative and in addition to any other
right or remedy now or hereafter existing at law or in equity or by statute.

         6.5 Except as Lender may hereafter or otherwise agree in writing, no
waiver by Lender of any breach by or default of Borrower, in any of its
obligations, agreements or covenants under this Agreement shall be deemed to be
a waiver of any subsequent breach of the same, or any other obligation,
agreement or covenant, nor shall any forbearance by Lender to seek a remedy for
such breach be deemed a waiver of its rights and remedies with respect to such
breach, nor shall Lender be deemed to have waived any of its rights and remedies
unless it be in writing and executed with the same formality as this Agreement

                                   ARTICLE 7.

                                  MISCELLANEOUS

         7.1 All notices provided for herein shall be in writing and shall be
deemed to have been given when delivered personally or when deposited in the
United States mail, registered or certified mail, postage prepaid, and addressed
to the locations set forth on page 1 hereof, or addressed to any such party at
such other address as such party shall hereafter furnish by such notice to the
other parties.

         7.2 This Agreement shall be construed according to the internal laws
(other than conflict laws) of the State of Minnesota. However, Clark County,
Nevada shall be the exclusive

                                       11
<PAGE>

venue for any action brought in Federal or state court by any party in any way
related to this Agreement.

         7.3 If any term, condition, or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be held
to be invalid or unenforceable, the remainder thereof and the application of
such term, provision, and condition to persons or circumstances other than those
as to whom it shall be held invalid or unenforceable shall not be affected
thereby, and this Agreement and all the terms, provisions and conditions hereof
shall, in all other respects, continue to be effective and to be complied with
to the full extent permitted by law. No change in the provisions hereof shall be
valid unless in writing and signed by Borrower and Lender.

         7.4 Borrower acknowledges that Lender may, and shall have the right to,
sell participation interests in the Loan.

         7.5 During the construction period of the Improvements, Lender shall
have the right to inspect the Improvements. If Lender determines that the
construction of the Improvements is not in accordance with the Plans, Borrower
agrees to take such actions as is necessary to bring the construction into
compliance with the Plans.

         7.6 If the interest provided for by the Note and this Agreement shall
become in conflict with the applicable statutory interest rate limitations now
or hereafter in effect, Borrower shall pay only such interest as would legally
be permitted; provided, however, that if the defense of usury is unavailable to
Borrower, Borrower shall pay interest as provided for in the Notes. If for any
reason interest in excess of the amount as limited in the foregoing sentence
shall have been paid under the Note, whether by reason of acceleration or
otherwise, then any such excess interest shall constitute and be treated as a
payment of principal thereunder and shall operate to reduce such principal by
the amount of such excess, or if more than the then principal indebtedness, such
excess shall be refunded.

         7.7 Borrower hereby consents to the personal jurisdiction of the state
and federal courts located in the State of Minnesota in connection with any
controversy related in any way to this Agreement, the Note, any other Collateral
Documents or any security or guaranty for the Note, waives any argument that
venue in such forums is not convenient. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their respective heirs,
successors and assigns in interest.

         7.8 Notwithstanding any provision contained herein or in the Collateral
Documents to the contrary, it is agreed that the maximum principal amount of
advances to be made by Lender to Borrower under the Collateral Documents shall
be $1,000,000.00.

         7.9 This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their respective heirs, successors and assigns in
interest.

         7.10 All Collateral Documents shall be construed to give full force and
effect to each provision thereof. However, to the extent there is an express
conflict between any of the provisions of any of the Collateral Documents, the
provisions of the Mortgage, to the extent permitted by law, shall control.

                                       12
<PAGE>
         7.11 BORROWER ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED AND THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY A JURY MAY EXCEED THE TIME AND EXPENSE REQUIRED FOR TRIAL
WITHOUT A JURY. BORROWER, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF BORROWER'S CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THE MUTUAL BENEFIT OF LENDER AND BORROWER, WAIVES ANY RIGHT TO TRIAL BY JURY IN
THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY
WAY RELATED TO, THIS AGREEMENT, ANY RELATED AGREEMENTS OR OBLIGATIONS
THEREUNDER. BORROWER HAS READ ALL OF THIS CONSTRUCTION LOAN AGREEMENT AND
UNDERSTANDS ALL OF THE PROVISIONS OF THIS CONSTRUCTION LOAN AGREEMENT. BORROWER
ALSO AGREES THAT COMPLIANCE BY LENDER WITH THE EXPRESS PROVISIONS OF THIS
CONSTRUCTION LOAN AGREEMENT SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED
REASONABLE FOR ALL PURPOSES.

                                       13
<PAGE>

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

                                            BORROWER:

                                            THE CHATEAUX, LLC

                                            By:      /s/ Stephen J. Cloobeck
                                                 -------------------------------
                                              Its:   Managing Member
                                                    ----------------------------

                                            LENDER:

                                            GRAND CASINOS NEVADA I, INC.

                                            By:      /s/ Lyle Berman
                                                 -------------------------------
                                              Its:   CEO
                                                   -----------------------------

                                       14

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