Document:

Exhibit
10.1

 

THIRD AMENDMENT TO
CREDIT AND SECURITY AGREEMENT 

AND WAIVER OF DEFAULTS

 

This THIRD AMENDMENT
TO CREDIT AND SECURITY AGREEMENT, dated as of January 10, 2005, is
made by and between AULT INCORPORATED, a Minnesota corporation (the “Borrower”),
and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the “Lender”).

 

Recitals

 

The Borrower and the Lender are parties to a Credit
and Security Agreement dated as of December 4, 2003 (the “Credit Agreement”) as
amended by that First Amendment to Credit and Security Agreement dated as of
April 2, 2004, as further amended by that Second Amendment to Credit and
Security Agreement dated as of July 21, 2004 (as amended the “Credit Agreement”).
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.

 

The Borrower has requested that certain amendments be
made to the Credit Agreement, which the Lender is willing to make pursuant to
the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements herein contained, it is agreed as
follows:

 

1.             Defined
Terms.  Capitalized terms used in
this Amendment which are defined in the Credit Agreement shall have the same
meanings as defined therein, unless otherwise defined herein.  In addition, Section 1.1 of the Credit
Agreement is amended by adding, or amending, as the case may be, the following
definitions:

 

“Obligations” means each Note, the Obligation
of Reimbursement and each and every other debt, liability and obligation of
every type and description which the Borrower may now or at any time hereafter
owe to the Lender, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it arises in a transaction involving the
Lender alone or in a transaction involving other creditors of the Borrower, and
whether it is direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, or sole, joint, several or
joint and several, and including all indebtedness of the Borrower arising under
any Loan Document between the Borrower and the Lender, whether now in effect or
hereafter entered into and all Wells Fargo Bank Obligations.

 

“Prime Rate” means at any time the rate of
interest most recently announced by Wells Fargo Bank at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one of Wells
Fargo Bank’s base rates, and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is
evidenced by the recording thereof in such internal publication or publications
as Wells Fargo Bank may designate.  Each
change in the rate of interest shall become effective on the date each Prime
Rate change is announced by Wells Fargo Bank.

 

 

“Wells Fargo Bank Obligations” means all
obligations, liabilities, contingent reimbursement obligations, fees, and
expenses owing by the Borrower or its Subsidiaries to Wells Fargo Bank with
respect to Wells Fargo Bank Products, whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, whether or not Borrower is obligated to reimburse said
amounts to the Lender as a result of the Lender purchasing participations from
or agreeing to indemnify or reimburse Wells Fargo Bank for any loss or
indebtedness arising with respect to Wells Fargo Bank Products provided to the
Borrower or its Subsidiaries.

 

“Wells Fargo Bank Obligations Reserve” means,
as of any date of determination, the dollar amount that the Lender then
determines is a reasonable determination of the credit exposure with respect to
Wells Fargo Bank Obligations and which is available for payment of Wells Fargo
Bank Obligations.

 

“Wells Fargo Bank Products” means any service
or facility extended to the Borrower or its Subsidiaries by Wells Fargo Bank
including but not limited to: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) cash management or related
services including the Automated Clearing House processing of electronic funds
transfers, (f) controlled disbursement accounts or services, and (g) any
agreement which provides for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging the
Borrower’s or its Subsidiaries’ exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.

 

“Wells Fargo Bank” means Wells Fargo Bank,
National Association.

 

2.             Minimum
Book Net Worth.  Section 6.2(a) of
the Credit agreement is deleted in its entirety and the following is
substituted in lieu thereof:

 

(a)           Minimum Book Net Worth.  The Borrower will maintain, during each
monthly period described below, its Book Net Worth, determined as at the end of
such month, at an amount not less than the amount set forth opposite such
period:

 

	
  Month

  	
   

  	
  Minimum Book 

  Net Worth

  	
   

  
	
  December, 2004

  	
   

  	
  $

  	
  14,036,000

  	
   

  
	
  January, 2005

  	
   

  	
  $

  	
  13,961,000

  	
   

  
	
  February, 2005

  	
   

  	
  $

  	
  13,827,000

  	
   

  
	
  March, 2005

  	
   

  	
  $

  	
  13,654,000

  	
   

  
	
  April, 2005

  	
   

  	
  $

  	
  13,768,000

  	
   

  
	
  May, 2005

  	
   

  	
  $

  	
  13,809,000

  	
   

  

 

3.             Minimum
Earnings Before Taxes.  Section
6.2(b) of the Credit Agreement is deleted in its entirety and the following is
substituted in lieu thereof:

 

2

 

(b)           Minimum Earnings Before Taxes.  The Borrower will achieve Earnings Before
Taxes, for the periods from June 1, 2004 to the last day of the month indicated
below, of not less than the amount set forth opposite such period (numbers
appearing between “( )” are negative):

 

	
  Month

  	
   

  	
  Minimum Earnings 

  Before Taxes

  	
   

  
	
  December 2004

  	
   

  	
  $

  	
  (634,000

  	
  )

  
	
  January, 2005

  	
   

  	
  $

  	
  (709,000

  	
  )

  
	
  February, 2005

  	
   

  	
  $

  	
  (843,000

  	
  )

  
	
  March, 2005

  	
   

  	
  $

  	
  (727,000

  	
  )

  
	
  April, 2005

  	
   

  	
  $

  	
  (614,000

  	
  )

  
	
  May, 2005

  	
   

  	
  $

  	
  (573,000

  	
  )

  

 

4.             Capital
Expenditures.  Section 6.2(c) of the
Credit Agreement is deleted in its entirety and the following is substituted in
lieu thereof:

 

(c)           Capital Expenditures.  The Borrower will not incur or contract to
incur Capital Expenditures, for the period from June 1, 2004 to the last day of
the month indicated below, of more than the amount set forth opposite such
period.

 

	
  Month

  	
   

  	
  Capital Expenditures

  	
   

  
	
  December. 2004

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  January, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  February, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  March, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  April, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  May, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  

 

5.             Exit
Costs.  Section 6.2(e) of the Credit
Agreement is deleted in its entirety and the following is substituted in lieu
thereof:

 

(e)           Exit Costs.  The Borrower will not incur total Exit Costs
of more than $1,400,000 in the aggregate during its fiscal year ending on May
31, 2005 of which no more than $0 shall constitute cash Exit Costs.

 

6.                                       Grant
of Security Interest. Section 3.1 of the Credit Agreement is amended to
read as follows:

 

Section 3.1             Grant
of Security Interest.  The Borrower
hereby pledges, assigns and grants to the Lender, for the benefit of itself and
Wells Fargo Bank with respect to Wells Fargo Bank Obligations, a lien and
security interest (collectively referred to as the “Security Interest”) in the
Collateral, as security for the payment and performance of the Obligations.
Upon 

 

3

 

request by the Lender,
the Borrower will grant the Lender, for the benefit of itself and Wells Fargo
Bank, with respect to any Wells Fargo Bank Obligations, a security interest in
all commercial tort claims it may have against any Person.”

 

7.             Prime
Rate.  Each reference in the Credit
Agreement to “Base Rate” will be deleted and replaced with the newly defined
term “Prime Rate” set forth in Paragraph 1 of this Amendment.

 

8.             Compliance
Certificate.  Exhibit B to the Credit
Agreement is hereby amended to read as set forth on Exhibit A attached to this
Amendment which is made a part of the Credit Agreement as Exhibit B thereto.

 

9.             No
Other Changes.  Except as explicitly
amended by this Amendment, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect and shall apply to any advance
or letter of credit thereunder.

 

10.           Waiver
of Defaults. The Borrower is
in default of the following provisions of the Credit Agreement (collectively,
the “Existing Defaults”):

 

	
  Section/Covenant

  	
   

  	
  Required Performance

  	
   

  	
  Actual Performance

  	
   

  
	
  6.2(b) Minimum Earnings Before Taxes period ending as of
  November 30, 2004

  	
   

  	
  $

  	
  (110,000

  	
  )

  	
  $

  	
  (299,288

  	
  )

  
								

 

Upon
the terms and subject to the conditions set forth in this Amendment, the Lender
hereby waives the Existing Defaults. This waiver shall be effective only in
this specific instance and for the specific purpose for which it is given, and
this waiver shall not entitle the Borrower to any other or further waiver in
any similar or other circumstances.

 

11.           Waiver
Fee. The Borrower shall pay the Lender as of the date hereof a fully
earned, non-refundable fee in the amount of $30,000 in consideration of the
Lender’s execution and delivery of this Amendment and for the waivers set forth
in Section 10.

 

12.           Conditions
Precedent.  This Amendment, shall be
effective when the Lender shall have received an executed original hereof,
together with each of the following, each in substance and form acceptable to
the Lender in its sole discretion:

 

(a)           A
Certificate of the Secretary of the Borrower certifying as to (i) the
resolutions of the board of directors of the Borrower approving the execution
and delivery of this Amendment, (ii) the fact that the articles of
incorporation and bylaws of the Borrower, which were certified and delivered to
the Lender pursuant to the Certificate of Authority of the Borrower’s secretary
or assistant secretary dated as of 

 

4

 

December 4, 2003 continue in full force and effect and
have not been amended or otherwise modified except as set forth in the
Certificate to be delivered, and (iii) certifying that the officers and
agents of the Borrower who have been certified to the Lender, pursuant to the
Certificate of Authority of the Borrower’s secretary or assistant secretary
dated as of December 4, 2003, as being authorized to sign and to act on behalf
of the Borrower continue to be so authorized or setting forth the sample
signatures of each of the officers and agents of the Borrower authorized to
execute and deliver this Amendment and all other documents, agreements and
certificates on behalf of the Borrower.

 

(b)           Payment of
the fee described in Section 11.

 

(c)           Such
other matters as the Lender may reasonably require.

 

13.           Representations
and Warranties.  The Borrower hereby
represents and warrants to the Lender as follows:

 

(a)           The
Borrower has all requisite power and authority to execute this Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered
by the Borrower and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.

 

(b)           The
execution, delivery and performance by the Borrower of this Amendment have been
duly authorized by all necessary corporate action and do not (i) require
any authorization, consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
(ii) violate any provision of any law, rule or regulation or of any order,
writ, injunction or decree presently in effect, having applicability to the
Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or affected.

 

(c)           All
of the representations and warranties contained in Article V of the Credit
Agreement are correct on and as of the date hereof as though made on and as of
such date, except to the extent that such representations and warranties relate
solely to an earlier date.

 

14.           References.  All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

 

15.           No
Other Waiver.
  Except as set forth in Section 10 hereof, the
execution of this Amendment and acceptance of any documents related hereto
shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or breach,
default or event of default under any Security Document or other document held
by the Lender, whether or not known to the Lender and whether or not existing
on the date of this Amendment.

 

16.           Release.  The Borrower hereby
absolutely and unconditionally releases and forever discharges the Lender, and
any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof,
together with all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or causes
of action of any kind, nature or 

 

5

 

description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made claim
to have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

 

17.           Costs
and Expenses.  The Borrower hereby
reaffirms its agreement under the Credit Agreement to pay or reimburse the
Lender on demand for all costs and expenses incurred by the Lender in
connection with the Loan Documents, including without limitation all reasonable
fees and disbursements of legal counsel. 
Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation
of this Amendment and the documents and instruments incidental hereto.  The Borrower hereby agrees that the Lender
may, at any time or from time to time in its sole discretion and without
further authorization by the Borrower, make a loan to the Borrower under the
Credit Agreement, or apply the proceeds of any loan, for the purpose of paying
any such fees, disbursements, costs and expenses.

 

18.           Miscellaneous.  This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original and all of which counterparts, taken together, shall constitute one
and the same instrument.

 

[Remainder of page intentionally left blank.]

 

6

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first written above.

 

	
  WELLS FARGO BUSINESS
  CREDIT, INC.

  	
  AULT INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
  Michael Guillou

  	
  Name:

  	
  Donald L. Henry

  
	
  Its:

  	
  Assistant Vice
  President

  	
  Its:

  	
  Vice President and
  Chief Financial

  
	
   

  	
   

  	
  Officer

  
					

 

S-1

 

Exhibit A to Second
Amendment to Credit and Security 

Agreement and Exhibit B to Credit and Security Agreement

 

Compliance Certificate

 

	
  To:

  	
   

  	
  Michael L. Guillou

  
	
   

  	
   

  	
  Wells Fargo Business Credit, Inc.

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
               ,
  200    

  
	
   

  	
   

  	
   

  
	
  Subject:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Financial Statements

  

 

In accordance with our Credit and Security Agreement
dated as of December 4, 2003 (the “Credit Agreement”), attached are the
financial statements of Ault Incorporated (the “Borrower”) as of and for                      ,
200     (the “Reporting Date”) and the year-to-date period
then ended (the “Current Financials”). 
All terms used in this certificate have the meanings given in the Credit
Agreement.

 

I certify that the Current Financials have been prepared
in accordance with GAAP, subject to year-end audit adjustments, and fairly
present the Borrower’s financial condition as of the date thereof.

 

Events of Default. 
(Check one):

 

o                                    The undersigned
does not have knowledge of the occurrence of a Default or Event of Default
under the Credit Agreement except as previously reported in writing to the
Lender.

 

o                                    The undersigned has
knowledge of the occurrence of a Default or Event of Default under the Credit
Agreement not previously reported in writing to the Lender and attached hereto
is a statement of the facts with respect to thereto.  The Borrower acknowledges that pursuant to
Section 2.10(d) of the Credit Agreement, the Lender may impose the Default Rate
at any time during the resulting Default Period.

 

Financial
Covenants.  I further hereby certify as
follows:

 

1.             Minimum
Book Net Worth.  Pursuant to Section
6.2(a) of the Credit Agreement, as of the Reporting Date, the Borrower’s Book
Net Worth was $             
which o satisfies o
does not satisfy the requirement that such amount be not less than $                  
on the Reporting Date as set forth in table below:

 

8

 

	
  Month

  	
   

  	
  Minimum Book 

  Net Worth

  	
   

  
	
  December, 2004

  	
   

  	
  $

  	
  14,036,000

  	
   

  
	
  January, 2005

  	
   

  	
  $

  	
  13,961,000

  	
   

  
	
  February, 2005

  	
   

  	
  $

  	
  13,827,000

  	
   

  
	
  March, 2005

  	
   

  	
  $

  	
  13,654,000

  	
   

  
	
  April, 2005

  	
   

  	
  $

  	
  13,768,000

  	
   

  
	
  May, 2005

  	
   

  	
  $

  	
  13,809,000

  	
   

  

 

2.             Minimum
Earnings Before Taxes.  Pursuant to
Section 6.2(b) of the Credit Agreement, the Borrower’s Earnings Before Taxes on
a fiscal year to date basis for the monthly period ending on the Reporting
Date, was $                ,
which o satisfies o
does not satisfy the requirement that such amount be not less than $                    
during such period as set forth in table below (numbers appearing between “( )”
are negative):

 

	
  December 2004

  	
   

  	
  $

  	
  (634,000

  	
  )

  
	
  January, 2005

  	
   

  	
  $

  	
  (709,000

  	
  )

  
	
  February, 2005

  	
   

  	
  $

  	
  (843,000

  	
  )

  
	
  March, 2005

  	
   

  	
  $

  	
  (727,000

  	
  )

  
	
  April, 2005

  	
   

  	
  $

  	
  (614,000

  	
  )

  
	
  May, 2005

  	
   

  	
  $

  	
  (573,000

  	
  )

  

 

3.             Capital
Expenditures.  Pursuant to Section 6.2(c)
of the Credit Agreement, for the fiscal year-to-date period ending on the
Reporting Date, the Borrower has expended or contracted to expend during the
fiscal year ended                   ,
200    , for Capital Expenditures, $                   
in the aggregate, which o satisfies o
does not satisfy the requirement that such expenditures not exceed $              
in the aggregate during such period as set forth in table below.

 

	
  Month

  	
   

  	
  Capital Expenditures

  	
   

  
	
  December, 2004

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  January, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  February, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  March, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  April, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  May, 2005

  	
   

  	
  $

  	
  500,000

  	
   

  

 

9

 

4.             Availability.  Pursuant to Section 6.2(d) of the Credit
Agreement, since the last Compliance Certificate was delivered, the lowest
Availability was $                  ,
which o satisfies o
does not satisfy the requirement that Availability not be less than $400,000 at
any time.

 

5.             Exit
Costs.  Pursuant to Section 6.2(e) of the
Credit Agreement, for the fiscal year-to-date period ending on the Reporting
Date, the Borrower has expended during the fiscal year ended                    ,
2005, for Exit Costs, $                      
in the aggregate, and cash Exit Costs of $                  
in the aggregate which o satisfies o
does not satisfy the requirement that such expenditures not exceed $1,400,000
in the aggregate during such year and cash Exit Costs of $0 in the aggregate
during such year.

 

6.             Salaries.  As of the Reporting Date, the Borrower o
is o is not in compliance with Section 6.8 of the
Credit Agreement concerning salaries.

 

Attached hereto are all relevant facts in reasonable
detail to evidence, and the computations of the financial covenants referred to
above.  These computations were made in
accordance with GAAP.

 

	
   

  	
  AULT
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its Chief
  Financial Officer

  

 

10Exhibit 10.21

 

TIMESHARE PURCHASE AGREEMENT

 

This TIMESHARE
PURCHASE AGREEMENT (this “Agreement”) is
made and entered into as of the 10th day of December, 2004 (the “Effective Date”),
by and between OPBIZ, L.L.C., a Nevada limited liability company (the “Seller”), and WESTGATE
RESORTS, LTD., a Florida
limited partnership (the “Developer”).

 

RECITALS:

 

A.                                   The Seller has entered into a Purchase and
Sale Agreement (the “PSA”) with Aladdin Gaming, L.L.C. pertaining to the acquisition by the
Seller of the hotel and casino Complex commonly known currently as the Aladdin
Resort & Casino in Las Vegas, Nevada (the “Complex”).  The parcel of land described on Exhibit A attached hereto (or to be attached hereto, in
accordance with the Documentation Schedule defined below) (the “Timeshare Property”) is included in the Complex.

 

B.                                     The Developer develops, markets, manages and
sells Timeshare Units and other real estate related products and wishes to
purchase the Timeshare Property, and the Seller wishes to sell the Timeshare
Property, and the parties wish to enter into certain other agreements and
undertakings identified herein, all subject to the terms and conditions of this
Agreement.

 

NOW,
THEREFORE, in
consideration of the foregoing Recitals, which are incorporated herein by
reference as if fully restated, and the mutual representations, warranties,
certifications, promises, undertakings and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

 

1.                                      Definitions.   In addition to terms defined elsewhere herein, the following terms have
the meanings indicated:

 

(a)                                  100 Percent Sell-Out means that all Timeshare Intervals in the
Timeshare Project, including all phases contemplated as part of the Timeshare
Project, have been sold and conveyed to bona
fide third-party consumer purchasers and that no such purchaser is in breach,
violation or default under any of the Timeshare Documents or under any
documents or agreements pertinent to the purchase and/or financing of the
purchase of any Timeshare Interval in the Project.  100 Percent Sell-Out shall be determined on a
“net” basis in accordance with the Timeshare Interval Measurement Principles.

 

(b)                                 ADR:  Average Daily Rate, as the case may be,
actually charged for the applicable property or portion thereof, determined in
accordance with hotel industry standards as applied at the Hotel/Casino
Property.

 

(c)                                  Aggregate Maximum Marketing Fee Amount:  See Section 3(f).

 

(d)                                 Business Day:  A day other than a day which is a Saturday or
Sunday or a day on which banks are closed in Las Vegas,
Nevada, or Orlando, Florida.

 

 

(e)                                  CERCLA:  The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et
seq. (“CERCLA”), and the regulations adopted
pursuant to CERCLA.

 

(f)                                    City Block Covenants: 
Documents and agreements binding upon the properties in the city block
(the “City Block”) in which the Complex is
located – including the Northwind Property, the Mall Property and the Complex
(which includes the Hotel/Casino Property and the Timeshare Property
(collectively, the “City Block Properties”)
– and the owners of said properties.  See
Section 19.

 

(g)                                 Closing:   Consummation of the transfer of the Timeshare
Property to the Developer, as provided in Section 25
and other applicable sections of this Agreement, and subject to the conditions
and contingencies in said Section and other applicable provisions of this
Agreement.

 

(h)                                 Closing Date:  The date on which Closing occurs.  The parties agree that the Closing shall
occur not later than December 31, 2004,
in any event.  See, e.g., Section 25.

 

(i)                                     Complex:  The
hotel and casino complex commonly known currently as the Aladdin Resort &
Casino in Las Vegas, Nevada, including but not limited to the Hotel/Casino
Property and the Timeshare Property, and all amenities and other common support
facilities and other facilities now or hereafter owned or controlled by Seller
and serving the Complex which constitute amenities for the Complex, of which
some or all shall be available to occupants of the Timeshare Property, as and
to the extent provided herein.

 

(j)                                     Complex Standards:  The Timeshare
Project will be constructed and furnished in accordance with the standards agreed
upon by Seller and Developer as to brand adherence, quality of furnishings,
amenities and other attributes, all as more particularly set forth in the final
Development and Construction Plan for the Timeshare Project, as amended and
supplemented from time to time by mutual agreement.

 

(k)                                  Critical Jurisdictions:  See Section 11.

 

(l)                                     Deed Delivery:  See Section 25(f).

 

(m)                               Design/Approval Process:  See Section 5.

 

(n)                                 Developer:  WESTGATE
RESORTS, LTD., a Florida
limited partnership.  Westgate Resorts,
Ltd. may form a single-purpose entity wholly owned by Westgate Resorts, Ltd.
for the purpose of acting as Developer hereunder, in which event said
wholly-owned single-purpose entity shall be the Developer hereunder;
notwithstanding the foregoing, in the event Westgate Resorts, Ltd. forms a
wholly-owned single-purpose entity for such purpose, Westgate Resorts, Ltd.
shall remain liable to Seller hereunder.

 

(o)                                 Disposal:  Refer to definition of Hazardous Substances.

 

(p)                                 Documentation Schedule:  The schedule hereby agreed upon for
negotiation and attachment to this Agreement of exhibits, schedules and other
items, as set forth in Section 37.

 

2

 

(q)                                 Effective Date:  Regardless of the date of execution and/or
delivery of this Agreement by any or all parties, the date identified as the
Effective Date on page 1 of
this Agreement.

 

(r)                                    Environmental Assessment:  Any
Phase One, Phase Two or other environmental assessment of the Timeshare Property
pursuant to the provisions of Section 9
and/or any other applicable provisions of this Agreement, any and all of which
shall be Developer’s its sole cost and expense.

 

(s)                                  Environmental Matters:  Any matter arising under and in violation of
any federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any state or federal environmental agency
relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the usage,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, Release or Disposal of any substance presently
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, whether by type or by quantity, including
any material containing any such substance as a component.

 

(t)                                    Environmental Objections: 
Environmental Matters which may materially and adversely impair
Developer’s intended purpose for the Timeshare Property, as determined by
Developer in its reasonable discretion, and to which Developer validly objects
pursuant to the terms of this Agreement.

 

(u)                                 Existing Permitting and Zoning Approvals:  All
zoning, PUD or subdivision approvals, ordinances, or resolutions of any
governmental authority, body, agency or entity relating to the Timeshare
Property, and all site plans, development orders, approvals, consents, permits,
certificates and other governmental licenses, which burden, benefit or
otherwise affect the ownership or development of the Timeshare Property or
relate to the payment of any reservation fee, deposit or impact fee benefiting
or burdening the Timeshare Property.

 

(v)                                 Filing Date:  See Section 11.

 

(w)                               Fully Sold or Fully Sold Project or Fully Sold-Out or Fully Sold-Out Project means one year following achievement
by the Developer of Net Interval Sales constituting 95 percent
of all Timeshare Intervals in the Timeshare Project, or such earlier date,
after achievement by the Developer of Net Interval Sales constituting 95 percent of all Timeshare Intervals in the Timeshare
Project, that Developer no longer sells exclusively Timeshare Intervals in the
Timeshare Project.  Fully Sold Project
(and related terms) shall be determined on a “net” basis in accordance with the
Timeshare Interval Measurement Principles.

 

(x)                                   GAAP:  United States generally accepted accounting
principles, provided, however, that, for the
purpose of the definitions of “Net Interval Sales”,
“Interval Sale” and as such terms are
defined herein, and subject to the Timeshare Interval Measurement Principles
and the provisions of such definitions, references to GAAP shall be applicable
only for the purpose of determining whether and when a sale has occurred and
for such

 

3

 

other purposes as shall not be in conflict
with said definitions or with the Timeshare Interval Measurement Principles.

 

(y)                                 Hazardous Materials:  “Solid Waste” (as that term is defined under
RCRA), “Hazardous Waste” (as that term is defined under RCRA), “Hazardous
Substances” (as that term is defined under CERCLA), and other pollutants,
including, without limitation, any solid, liquid, gaseous or thermal irritant
or contaminant, such as smoke, vapor, soot, fumes, acids, alkalis, petroleum
products or chemicals.

 

(z)                                   Hazardous Substances:  The definitions thereof set forth in CERCLA
and RCRA, and all other federal, state, county, local and other laws,
ordinances, codes, statutes, rules, regulations, decrees and orders relating to
or imposing liability or standards of conduct regarding environmental or
hygienic matters.

 

(aa)                            Hazardous Waste:  Refer to definition of Hazardous Materials
and Hazardous Substances.

 

(bb)                          Hotel/Casino Property:  All portions of the Complex other than the
Timeshare Property, including but not limited to that portion of the Complex
upon which the current Aladdin Hotel and Casino and the Theatre for the
Performing Arts are and are to be located, and also including any adjacent land
or buildings that may be acquired in the future by Seller or any affiliate and
designated by Seller as Hotel/Casino Property under this Agreement, and all of
which are (or are to be) owned by the Seller.

 

(cc)                            Interval Sales (sometimes
also referred to as Vacation Ownership Sales)
shall mean, for any period of time, the sales price for each Timeshare Interval
in the Timeshare Project (or, if and to the extent applicable, in other
timeshare projects) sold to bona fide third party consumer purchasers, as such
sales price is set forth in the purchase agreement for each such sale,
multiplied by the number of such sales occurring in the applicable period of
time; less (i) all consumer discounts
(excluding, however, credits given to purchasers of Timeshare Intervals at the
Timeshare Project to the extent said credits pertain to contractual or other
undertakings in connection with properties or products other than the Timeshare
Project); and (ii) the cost of all “first day benefits” included in such
purchase agreement which may include, but not be limited to, unreimbursed
closing costs solely attributable to the purchaser of a Timeshare Unit whether
included as part of the purchase price or separately itemized; and (iii) credits
given to purchasers of Timeshare Intervals at the Timeshare Project as a result
of “trade-ins” or “upgrades”, each such credit not to exceed the Net Interval
Sale price previously recognized by Developer with respect to the Timeshare
Interval being “traded in”.

 

Interval Sales (and Net Interval Sales; see below)
shall be determined on a “net” basis in accordance with the Timeshare Interval
Measurement Principles and, only for the purpose of determining whether and
when a sale has occurred and for such other purposes as shall not be in
conflict with the Timeshare Interval Measurement Principles, GAAP.  Interval Sales (and Net Interval Sales; see
below) shall not include (A) revenues
received by Developer or any affiliate of Developer relating to or arising from
any management fees due to Developer in connection with the Timeshare Project,
or (B) revenues received by Developer or any affiliate of Developer
relating to any timeshare, vacation ownership, fractional, club, exchange
network, credit life insurance or similar resort products offered for sale by
Developer or any affiliate of Developer other

 

4

 

than Interval Sales (aka Vacation Ownership
Sales) (which arise from the Timeshare Project), or (C) other amounts
collected by Developer at the time of the closing or thereafter of the
Timeshare Unit such as assessments and service fees in accordance with
customary schedules for such assessments and fees at Developer’s timeshare
projects generally, and third party exchange membership fees or third party
exchange transaction fees; or (D) interest and finance charges paid by
purchasers of Timeshare Intervals in connection with financing their purchases
thereof.

 

Interval Sales shall be based upon 52 weeks (or
applicable fraction) multiplied by 1,000 Timeshare Units or such larger number
of Timeshare Units as are actually built, in accordance with the Unit Count
Example, adjusted for partial weeks and for other than annual (i.e., biannual)
use.

 

(dd)         Leases: 
The Marketing & Solicitation Leases, the Resort and Amenities Access
Easement/Agreement, the Sales Center Lease (see Section 14),
and the Maintenance Agreement.

 

(ee)         Letter of Credit:  See Section 3(d).

 

(ff)           Maintenance Agreement:  See Section 17.

 

(gg)         Mall Property:   A
portion of the City Block owned by Boulevard Investments and used in whole or
in part as a shopping mall.  Also known
as Desert Passage Shopping Center (aka/fka Aladdin Bazaar).

 

(hh)         Marketing and Leasing Agreement:  See Section 12.

 

(ii)           Marketing Commencement Date:  See Section 12.

 

(jj)           Marketing & Solicitation
Leases:  See Section 13.

 

(kk)         Marketing Fee:  See Section 4.

 

(ll)           Marketing Fee Period:  See Section 4.

 

(mm)       Marketing Plan: 
Developer’s plan for marketing the Timeshare Project to prospective
purchasers.

 

(nn)         Mezzanine Lender Agreements:   Securities
Purchase Agreement among the Seller and the Mezzanine Lenders, together with
all documents and agreements related thereto, all of which affect the Seller
and the Complex including the Timeshare Property.

 

(oo)         Mezzanine Lenders:   Post Advisory Group, LLC, as Agent and Collateral Agent for,
and together with, the lenders who are parties to the Mezzanine Lender
Agreements.

 

(pp)         Minimum Project Density:  The
requirement that the Timeshare Project must consist of no fewer than one thousand (1,000) Timeshare Units, and no fewer than two thousand (2,000) keys, in one-, two-, three- and/or
four-bedroom “lockout” units, located in not more than four (4) buildings,
each containing at least fifteen (15) stories and no fewer than five hundred
(500) keys, in one-, two-, three- and/or four-bedroom “lockout” units.

 

5

 

(qq)                          Net Interval Sales shall
mean, for any period of time, the aggregate amount of Interval Sales (aka Vacation
Ownership Sales) during said period, determined on a “net” basis in accordance
with the Timeshare Interval Measurement Principles and, only for the purpose of
determining whether and when a sale has occurred and for such other purposes as
shall not be in conflict with the Timeshare Interval Measurement Principles,
GAAP.  Net Interval Sales shall not include (A) revenues received by Developer or
any affiliate of Developer relating to or arising from any management fees due
to Developer in connection with the Timeshare Project, or (B) revenues
received by Developer or any affiliate of Developer relating to any timeshare,
vacation ownership, fractional, club, exchange network, credit life insurance
or similar resort products offered for sale by Developer or any affiliate of
Developer other than Interval Sales (which arise from the Timeshare Project),
or (C) other amounts collected by Developer at the time of the closing or
thereafter of the Timeshare Unit such as assessments and service fees in
accordance with customary schedules for such assessments and fees at Developer’s
timeshare projects generally, and third party exchange membership fees or third
party exchange transaction fees; or (D) interest and finance charges paid
by purchasers of Timeshare Intervals in connection with financing their
purchases thereof.

 

(rr)                                Northwind Property:   A portion of the City Block owned by
Northwind Aladdin LLC (a Nevada limited liability company) and used in whole or
in part as an electric generating facility.

 

(ss)                            Operating Budget:  See Section 17.

 

(tt)                                Operating Costs:  The direct out-of-pocket expenses of
operating the Timeshare Project (which include all Timeshare Units both
dedicated to the timeshare plan and any Timeshare Units operated as hotel
units), including but not limited to maintenance expenses, reserves required to
be funded pursuant to the Timeshare Documents, real estate taxes, fees payable
to Westgate for management of the Timeshare Project; fees payable to Starwood
for management and maintenance of the Timeshare Project; the PHII License Fee;
the Westgate License Fee; the amenities fee payable pursuant to the Resort and
Amenities Access Easement/Agreement; the actual cost of operation and
maintenance of parking facilities serving the Timeshare Project constructed by
Developer to the extent necessitated by Seller’s inability, pursuant to the
City Block Covenants (see Section 6(d)),
to provide and make available to Developer the entire number of parking spaces
required by the Parking Requirement; the Parking Fee; and all other applicable
fees and expenses mutually agreed by Seller and Developer.  See Section 17
and Section 18 for provisions
pertinent to payment of Operating Costs and other related items, including, to
the extent applicable, construction loan interest and construction cost
amortization.

 

(uu)                          Parent Guaranty:  See Section 9(n).

 

(vv)                          Parking Fee:  See Section 6(d).

 

(ww)       Parking Requirement:  The
entire number of parking spaces required by Developer pursuant to applicable
legal requirements to develop the Timeshare Project.  See Section 6(d).

 

(xx)          Permitted Environmental Matters:  Facts
and circumstances pertaining to environmental issues affecting the Timeshare
Property, other than Environmental Objections.

 

6

 

(yy)                          Permitted Survey Matters:  Matters of survey to the
Timeshare Property, other than Survey Objections.

 

(zz)                              Permitted Title Matters:  Matters of title to the
Timeshare Property, other than Title Objections.

 

(aaa)                      Permitted Zoning and Land Use Matters:  Facts
and circumstances pertaining to zoning and land use issues affecting the
Timeshare Property, other than Zoning and Land Use Objections.

 

(bbb)                   PHII
Licensing and Memorabilia Agreement:  See Section 10.

 

(ccc)                      PH Sales Commencement Date:  See Section 11.

 

(ddd)                   Plans
and Specifications and Development Schedule:  The Developer’s plans and
specifications for the development and construction of the Timeshare Project, including
but not limited to the Developer’s schedule and timeline therefor, all subject
to approval by the Seller in accordance with this Agreement.

 

(eee)                      PSA:  See Recital A.

 

(fff)                            Purchase Price:  The monetary consideration to be paid by
Developer to Seller for the Timeshare Property pursuant to the terms of this
Agreement, as provided in Section 3
and other applicable provisions of this Agreement.

 

(ggg)                   RCRA:  The
Resource Conservation and Recovery Act, as amended, 42 U.S.C.§ 6901 et
seq. (“RCRA”), and the regulations adopted
pursuant to RCRA.

 

(hhh)                   REA
Approval Deadline:  See Section 6(a).

 

(iii)                               Release (when used
in connection with Hazardous Substances and/or Environmental Matters):  Refer to definition of Hazardous Substances.

 

(jjj)                               Rental Income:  See Section 18.

 

(kkk)                      Resort and Amenities Access Easement/Agreement:  See Section 13.

 

(lll)                               Sales Center Lease:  See Section 14.

 

(mmm)    Seller:  OPBIZ, L.L.C., a Nevada limited liability company, and, as
applicable affiliate(s) thereof, including but not limited to its parent, MezzCo LLC, a Nevada limited liability company.

 

(nnn)                   Seller’s
Environmental Assessment:  That certain Environmental Assessment dated February 24,
1998 prepared by Ninyo & Moore.

 

(ooo)                   Seller’s
Survey:  That certain ALTA Survey dated March 24,
2003 by Horigan Survey for the Complex.

 

(ppp)                   Seller’s
Title Report:   That certain Preliminary Title Report
dated March 14, 2003 prepared by United Title of
Nevada.

 

7

 

(qqq)                   Senior
Lender Agreements:   Amended and Restated Loan and Facilities
Agreement among the Seller and the Senior Lenders, together with all documents
and agreements related thereto, all of which affect the Seller and the Complex
including the Timeshare Property.

 

(rrr)                            Senior Lenders:   BNY Asset Solutions, as Agent and Collateral
Agent for, and together with, the lenders who are parties to the Senior Lender
Agreements.

 

(sss)                      Shore Up:   The difference between (1) all
maintenance fees, calculated on a non-discounted basis, on all completed
Timeshare Units and Timeshare Intervals, as provided in the mutually agreed Operating
Budget, and (2) the amount of maintenance fees actually collected.  See Section 18.

 

(ttt)                            Solid Waste:  Refer to the definition of Hazardous
Materials.

 

(uuu)                   Survey:  Any
delineation or other measurement of the Timeshare Property obtained or requested
by Developer at its sole cost and expense pursuant to the provisions of Section 8(a).

 

(vvv)                   Survey
Objections:  Any matters of survey arising in the Survey
which may materially and adversely affect Developer’s intended purpose for the
Timeshare Property, as determined by Developer in its reasonable discretion, and
to which Developer objects pursuant to the provisions of this Agreement.

 

(www)           Threatened Release:  Refer to definition of Hazardous Substances.

 

(xxx)                       Timeshare Advances:  See Section 3.

 

(yyy)                 Timeshare Development
Agreements:  All documents and agreements executed or to
be executed by Seller and/or Developer, in connection with this Agreement and
the development of the Timeshare Project on the Timeshare Property, and all
documents and agreements which otherwise pertain thereto, including but not
limited to this Agreement, the Timeshare Documents, the Marketing and Leasing
Agreement, the Letter of Credit, the Parent Guaranty, the completion bond(s)
described in Section 9(n), the Marketing &
Solicitation Leases, the Resort and Amenities Access Easement/ Agreement, the
Sales Center Lease, and the Maintenance Agreement, all of which are to be
acceptable to the parties and such third parties (e.g., Senior Lenders and
Developer’s construction and receivables lenders) whose approval may be called
for under this Agreement.

 

(zzz)                       Timeshare Documents: 
Documents creating the timeshare plan and form of timeshare ownership
for the Timeshare Project pursuant to Nevada law, including but not limited to
Nevada Revised Statutes Ch. 119A and Nevada Administrative Code Ch. 119A.

 

(aaaa)              Timeshare Interval means
and includes a right to use a Timeshare Unit, in whatever format may at any
time apply, including but not limited to vacation ownership, fractional ownership,
rights to use, vacation clubs, non-equity clubs and similar or related
products, and whether or not established via deed, and whether or not measured
on the basis of “points” or any other basis, and whether or not on a partial-week
or full-week basis or on an annual or other than annual (e.g., biannual) use
basis.

 

8

 

(bbbb)            Timeshare
Interval Measurement Principles.  The parties wish to provide for
maximum flexibility to the Developer in determining, from time to time, the
best and most efficient method for marketing and selling Timeshare Intervals in
the Timeshare Project.  The parties also
wish to describe, with as much clarity as possible, the net effect hereunder of
cancellations, rescissions and other terminations of consumer contracts to
purchase Timeshare Intervals in the Timeshare Project.  To that end, any reference herein to
Timeshare Intervals, 100 Percent Sell-Out, Fully Sold Project, Interval Sales,
Net Interval Sales and similar or related terms and concepts shall be
interpreted in the context of the following principles.

 

(1)                                  Fully Sold Project (and related terms) and
100 Percent Sell-Out and related and/or similarly described terms shall not be
achieved unless at least the Minimum Project Density has been achieved, in
accordance with the Unit Count Example.

 

(2)                                  Timeshare Intervals shall be determined on
the basis of 52 weeks worth of Timeshare Intervals per Timeshare Unit per
year.  Nevertheless, Developer may sell Timeshare
Intervals in increments of less than one week and more than one week and/or on
the basis of less than the entirety of a Timeshare Unit and/or may sell Timeshare
Intervals for other than annual use (i.e., biannual use or other similarly
split use).  Any determination of
Interval Sales, Net Interval Sales, Fully Sold Project, 100 Percent Sell-Out
and similar or related terms and concepts shall be adjusted to reflect the
foregoing.

 

(3)                                  Determinations of Interval Sales, Net
Interval Sales, Fully Sold Project, 100 Percent Sell-Out and similar or related
terms and concepts shall be made on a “net” basis, in accordance with the
Timeshare Measurement Principles and, only for the purpose of determining
whether and when a sale has occurred and for such other purposes as shall not
be in conflict with the Timeshare Interval Measurement Principles, GAAP; and
any applicable benchmark or level of performance shall not have occurred if any
Timeshare Interval necessary for occurrence of such benchmark or level of
performance has been returned or recovered for any reason (e.g., cancellation
of sale by consumer, foreclosure on Timeshare Interval by Developer or
Developer’s factor) and remains unsold and part of the Timeshare Project
inventory for resale to a bona fide third-party consumer purchaser.

 

(4)                                  Within the Timeshare Interval Measurement
Principles, references to Timeshare Units (or, if applicable, “keys”) shall be
deemed to refer to Timeshare Units (or “keys”) actually constructed, but the
foregoing shall not affect the requirements herein pertaining to Minimum
Project Density.

 

(cccc)                Timeshare
Project:  A single-phase or multi-phased (as provided
herein) timeshare development on the Timeshare Property, in accordance with
this Agreement (see, e.g., Section 9)
and the final Complex Standards, complying with the Minimum Project Density, and
with amenities for all Timeshare Units, to be developed and constructed by the
Developer pursuant to this Agreement and subjected to a timeshare plan or
regime pursuant to the Timeshare Documents. 
The Timeshare Project may also include other facilities customarily
contained in a timeshare development, but, with the exception of check-in
facilities and swimming pool, which Developer may in its discretion construct
at its cost as part of the Timeshare Project for use by occupants of the
Timeshare Project,

 

9

 

such other facilities at the Timeshare
Project shall not include any amenities offered by Seller at the Hotel/Casino
Property, including but not limited to gaming, conventions, hotel use
(including facilities developed for hotel use as well as hotel use of Timeshare
Units as provided herein), food and beverage, retail, entertainment (live or
otherwise) and other recreational facilities.

 

Whether or not the entire number of expected
Timeshare Units is ultimately constructed, each dwelling accommodation
constructed at the Timeshare Property shall be deemed for all purposes
hereunder to be a Timeshare Unit and part of the Timeshare Project.

 

The Timeshare Project does not include any
right of the Developer to any use of or payment associated with any activity at
or about or associated with the Complex other than development and marketing of
Timeshare Intervals, such as, but not limited to, gaming, conventions, hotel
use (including facilities developed for hotel use as well as hotel use of
Timeshare Units as provided herein), food and beverage, retail and
entertainment.

 

(dddd)            Timeshare
Property:  The portion of the Complex to be transferred
to the Developer in accordance with and subject to the provisions of this
Agreement, and upon which Developer shall construct at least one thousand (1,000) Timeshare Units, and no fewer than two thousand (2,000) keys, in one-, two-, three- and/or
four-bedroom “lockout” units, and such improvements thereon actually
constructed thereon from time to time, together with all other rights,
privileges and easements appurtenant to such Timeshare Property, whether or not
recorded.

 

(eeee)                Timeshare
Sales Premiums:  See Section 15.

 

(ffff)                      Timeshare Unit:  Each
dwelling unit developed at the Timeshare Property, which is divided into
separate timeshare use periods.  Any
dwelling unit at the Timeshare Property in which a door or doors connecting two
or more separate rooms capable of being locked to create two or more private
dwellings (i.e., each one-, two-, three- and/or four-bedroom “lockout” unit)
shall constitute only one Timeshare Unit, subject, nevertheless, to the Unit
Count Example and other applicable provisions of this Agreement.  Developer may designate one or more portions
of any such “lockout” unit as separate Timeshare Units (so that such “lockout”
unit is thereby considered two or more Timeshare Units) for the purpose of
measuring Interval Sales and Net Interval Sales and for the purpose of
calculating Marketing Fees and other related purposes under this Agreement, but not for the purpose of measuring compliance with the
Minimum Project Density requirement or for other construction or related
purposes under this Agreement.

 

(gggg)            Timeshare
Unit Vacancy:  A Timeshare Unit, or, in the case of a
lock-out unit, a separately keyed portion of a Timeshare Unit, which is
completed and available for occupancy, but which is not actually occupied or
reserved or sold for actual occupancy as to the week or night or other period
of time in question.  Timeshare Unit
Vacancies may include, among other things, Timeshare Units returned or
recovered for any reason (e.g., cancellation of sale by consumer, foreclosure
on Timeshare Interval by Developer or Developer’s factor) and remain unsold and
part of the Timeshare Project inventory for resale to a bona fide third-party
consumer.  See also Section 18.

 

10

 

(hhhh)         Title Commitment:  Any title insurance commitment or title
report or other title information regarding the Timeshare Property obtained or
requested by Developer from the Title Company at Developer’s sole cost and
expense pursuant to the provisions of Section 8(a).

 

(iiii)                         Title Company: First American Title Insurance Company, or
such other nationally recognized title insurance company designated by Developer
and approved by Seller, such approval not to be unreasonably withheld.

 

(jjjj)                         Title Objections:  Any
matters of title arising in the Title Commitment which may materially and
adversely affect Developer’s intended purpose for the Timeshare Property, as
determined by Developer in its reasonable discretion, and to which Developer
objects pursuant to the provisions of this Agreement.

 

(kkkk)             Unit Count Example:   The following example illustrates the
parties’ understanding of the number of Timeshare Units and number of
separately keyed dwelling spaces (also referred to as separate “keys”) to be built by the Developer in the Timeshare Project
in accordance with this Agreement, and how the Developer’s construction of “lockout”
units (see above definition of Timeshare Units) affects the unit count and key
count for purpose of measuring the Developer’s liabilities and obligations
hereunder:

 

(1)                                  If the Developer builds, in accordance with
this Agreement, a total of 1,000 Timeshare Units, each of which is a
two-bedroom “lockout” unit, for a total of 2,000 keys, then the Developer shall
have complied with its obligations concerning Minimum Project Density.

 

(2)                                  If the Developer builds, in accordance with
this Agreement, at least 1,000 Timeshare Units, but does not include a
sufficient number of two-, three- and/or four-bedroom “lockout” units in order
to achieve a total of at least 2,000 keys, then the Developer shall not have complied with its obligations concerning
Minimum Project Density.

 

(3)                                  If the Developer builds, in accordance with
this Agreement, in the first phase as and to the extent provided for herein, at
least 500 Timeshare Units and includes in such phase a sufficient number of
two-, three- and/or four-bedroom “lockout” units in order to achieve a total of
at least 1,000 keys, then the Developer shall have completed its construction
obligations concerning the first phase of the Timeshare Project.

 

(4)                                  If the Developer builds, in accordance with
this Agreement, in the first phase as and to the extent provided for herein, at
least 500 Timeshare Units, but does not include in such phase a sufficient
number of two-, three- and/or four-bedroom “lockout” units in order to achieve
a total of at least 1,000 keys, then the Developer shall not
have completed its construction obligations concerning the first phase of the
Timeshare Project.

 

The foregoing is by way of example only and
is only for the purpose of demonstrating the manner in which Timeshare Units
are to be counted in connection with measuring Developer’s compliance with its
construction obligations. 
Notwithstanding this Unit Count Example, the Timeshare Project is
subject to the reversion or perpetual easement

 

11

 

described in Section 9(g) and
other specifically applicable provisions hereof, but only to the extent therein
stated.

 

(llll)                                               Vacation Ownership Sales:  Refer
to definition of Interval Sales.

 

(mmmm)        Westgate License Fee:   Defined in Section 10(g).

 

(nnnn)                                    Zoning and Land Use Assessment:  Any
review or investigation of the Existing Permitting and Zoning Approvals or
other similar data for the Timeshare Property obtained or requested by
Developer at its sole cost and expense pursuant to the provisions of Section 8.

 

(oooo)                                    Zoning and Land Use Objections:  Any
matters relating to zoning and land use classifications arising from the Zoning
and Land Use Assessment which may materially and adversely impair Developer’s
intended purpose for the Timeshare Property, as determined by Developer in its
reasonable discretion, and to which Developer objects pursuant to the terms of
this Agreement.  The fact or circumstance
that the Timeshare Property, prior to action by Developer and/or Seller and/or
others in connection with the Design/Approval Process, is not and/or may not be
zoned and/or otherwise approved by applicable governmental zoning and
permitting authorities to allow Developer’s intended purpose for the Timeshare
Property, shall not constitute a Zoning and
Land Use Objection.  The preceding
sentence shall not prevent Developer or Seller from relying upon any rezoning
or other land use approval undertaken as part of the Design/Approval Process
(see Section 5) as a condition
precedent to Developer’s or Seller’s obligations pertinent to Closing or Deed
Delivery.

 

2.                                      Purchase and Sale.   Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell the Timeshare Property to Developer and Developer agrees to
purchase the Timeshare Property from Seller for the Purchase Price.

 

3.                                      Purchase Price; Advances.

 

(a)                                  The Purchase Price shall be paid by timely
payment of the Marketing Fee provided for in the Marketing and Leasing
Agreement and as provided in Section 4
below.  Notwithstanding the preceding
sentence, the parties agree that the Purchase Price, for the purpose of
calculating any transfer tax or recordation tax or similar payment, and for
related purposes such as allocations among land, improvements, fixtures and
personalty, and for any reporting purposes, is $35,000,000,
subject to confirmation by a definitive appraisal expected by the
Closing Date, which amount is consistent with the allocation assigned to the Timeshare
Property pursuant to the PSA.

 

(b)                                 Notwithstanding Section 4
below or the provisions of the Marketing and Leasing Agreement, Developer
agrees to pay Seller the following annual advances (“Timeshare
Advances”) against the Marketing Fee to be earned by Seller.

 

(i)                                     $3,500,000 for Year 1 (see Section 4(d) for designation of applicable years);
and

 

(ii)                                  $4,500,000 for Year 2; and

 

(iii)                               $6,000,000 for Year 3 and for each year
thereafter until 100 Percent Sell-Out.

 

12

 

Timeshare Advances, in accordance with the above allocation, shall be
paid on a monthly basis, in arrears, as provided
in Section 4 below for payment of
Marketing Fees, with the first Marketing Fee Period (defined below) commencing on
the PH Sales Commencement Date and expiring on the last day of the month
in which the PH Sales Commencement Date occurs.  At the end of each quarter
(i.e., as of each March 31, June 30, September 30 and December 31),
the Timeshare Advance for such quarter will be added to all the previous
Timeshare Advances and compared to the Marketing Fees earned and paid from
inception.  As of the end of each
quarter,

 

(1)                                  if Seller is due Marketing Fees in excess of
Timeshare Advances received to date, Developer shall pay said shortfall within thirty (30) days of the end of each quarter, and

 

(2)                                  if Seller has received Timeshare Advances in
excess of Marketing Fees earned to date, then no Marketing Fees shall be due thereafter,
until the aggregate amount of all Marketing Fees earned exceed aggregate amount
of all Timeshare Advances paid, in which case Developer shall again be
obligated to pay, as provided above, both the
scheduled Timeshare Advances provided for in Section 3(b) plus
the excess of Marketing Fees earned over said scheduled Timeshare Advances; provided, however, in any event, Developer shall be
obligated to pay the scheduled Timeshare Advances provided for in Section 3(b) even if such payments of scheduled
Timeshare Advances in the aggregate exceed Marketing Fees earned to date.

 

In the event of an act occasioned exclusively by forces of nature,
terrorism or war within the continental United States outside the reasonable
control of Developer and which materially impacts the Project, the parties
shall negotiate in good faith whether and to what extent there shall be
adjustments of the Timeshare Advances.

 

(c)                                  All payments in under or in connection with
this Agreement, whether of the Purchase Price or otherwise, shall be in current
funds or by wire transfer to or at the direction of Seller, which may include,
in accordance with Seller’s lending covenants, the direction of such amounts to
separate parent, subsidiary or affiliated entities including, with out
limitation, causing such payments to be made to accounts controlled by or under
common control with the Seller’s lenders.

 

(d)                                 In order to secure Developer’s duty to pay
Timeshare Advances and Marketing Fees and other amounts payable under or in
connection with this Agreement, Developer shall

 

(1)                                  at Deed Delivery, deliver to Seller a letter
of credit (the “Letter of Credit”),
in form and substance as set forth in Exhibit C
attached hereto (or to be attached hereto, in accordance with the Documentation
Schedule) and incorporated herein by reference, issued by a commercial bank the
commercial paper of which is rated “A”
or higher by Standard & Poor’s Corporation.  The Letter of Credit shall be issued in a
face amount of $6,000,000, with an
initial term of one (1) year, and shall be renewed annually with a face amount
of $6,000,000 until the date which
is six (6) years following
the Closing Date; failure of Developer to provide for a renewal or acceptable
substitute Letter of Credit at least thirty (30) days
prior to its then-stated expiration shall entitle the Seller to draw upon said
Letter of Credit in full ten (10) days
prior to its then-stated expiration; and

 

(2)                                  at Closing, establish an escrow account, at a
federally insured bank or savings institution with assets of at least $100
million, from which escrow account withdrawals are permitted to be made only by
or with the express prior written approval of the Seller in each

 

13

 

instance, into which Developer shall deposit such
amounts as are required herein and in the Escrow Agreement.  The amounts required to be deposited in said
escrow account are equal to and not exceeding 10 percent
of the gross purchase price of each Timeshare Interval sold by Developer in
accordance with the Marketing and Leasing Agreement (including, where
applicable, timeshare intervals in timeshare projects other than the Timeshare
Project to the extent marketed by Developer at the Complex).  The form and substance of the Escrow
Agreement for said escrow account is set forth in Exhibit O
which is (or shall be, in accordance with the Documentation Schedule) attached
hereto and incorporated herein by reference.

 

(e)                                  The marketing and use leases and easements
described in Section 13 are included as
part of the Timeshare Property for purpose of determining the Purchase Price.

 

(f)                                    The Developer shall not be required to pay
Marketing Fees or Timeshare Advances after the Seller has received, in the
aggregate, payments of Marketing Fees totaling, in the aggregate, the Aggregate
Maximum Marketing Fee Amount.  For the
purpose hereof, the “Aggregate Maximum
Marketing Fee Amount” is the product of the following:

 

(52) x TCI x TCIP x 10%

 

where
“TCI” means the total number of
Timeshare Intervals (determined in accordance with the Timeshare Interval
Measurement Principles) corresponding to the total number of Timeshare Units
actually constructed in the Timeshare Project, but not less than 1,000
Timeshare Units containing in the aggregate not less than 2,000 “keys”; and “TCIP” means the actual purchase price charged to and paid by
or on behalf of purchasers of Timeshare Intervals of all TCIs.

 

(g)                                 If, after completion of construction of the
last Phase of the Timeshare Project constructed by Developer, Developer’s
remaining inventory of unsold Timeshare Intervals as of the first day of any
year is materially less than an amount which, if 100 Percent Sell-Out were to
occur in such year, would generate aggregate Marketing Fees for such year in an
amount materially less than the aggregate monthly Timeshare Advances prescribed
to be paid for such year in accordance with Subsection (b) above,
then the parties the parties shall negotiate in good faith the extent to which
there shall be adjustments of the Timeshare Advances for such year to reflect
said remaining inventory.

 

4.                                      Marketing Fee.

 

(a)                                  For so long as the Marketing and Leasing
Agreement (see Section 12) remains in
effect, and continuing thereafter until 100 Percent Sell-Out, Developer shall
pay a marketing fee (the “Marketing Fee”)
in an amount equal to nine percent (9%)
of the Net Interval Sales made by Developer of Timeshare Intervals in the
Timeshare Project (including, where applicable, timeshare intervals in
timeshare projects other than the Timeshare Project to the extent marketed at
the Complex, as and to the extent permitted pursuant to this Agreement), in
accordance with the Timeshare Interval Measurement Principles.  The Marketing Fee shall be paid in arrears by
Developer to Seller on a monthly basis
(the “Marketing Fee Period”) not later than
the 20th day following the last day of
the most recently expired Marketing Fee Period, by wire transfer of immediately
available funds to one or more bank accounts as designated by Seller, and in
connection with such payment, Developer shall provide to Seller a reasonably
detailed itemized statement of the cumulative Net Interval Sales made by
Developer for such Marketing Fee Period. 
Said itemized statement shall be in the format set forth in Exhibit L attached hereto (or to be attached hereto, in
accordance with the Documentation Schedule) and

 

14

 

incorporated
herein by reference, with such adjustments, additions and refinements as may be
mutually agreed to by the Seller and Developer from time to time.

 

(b)                                 Seller shall be responsible for obtaining all
licenses and/or permits as may be required under applicable law to receive the
Marketing Fee.  Notwithstanding the
foregoing, no payment of Timeshare Advances and/or Marketing Fees shall be
withheld or delayed or denied in the event any required license or permit is
not obtained, but, rather, any such payment shall be deposited in escrow with
the Title Company and disbursed by the Title Company to the Seller as soon as
any such required license or permit has been obtained.  If any such escrow remains in place for more
than sixty (60) days, Seller and Developer
shall in good faith negotiate an alternative payment arrangement giving Seller
the same net economic result as payment of Timeshare Advances and Marketing
Fees as provided for herein.

 

(c)                                  It is acknowledged and agreed that the
Marketing Fee shall also cover the consideration for all permitted kiosks,
leases and marketing efforts in the Complex. 
See Sections 12, 13, 14, 15 and 16below.

 

(d)                                 Notwithstanding anything contained herein to
the contrary, it is the intention of the parties that the Marketing Fee shall
be calculated and paid based upon Net Interval Sales, which shall be reconciled
and determined on quarterly and annual
bases until the Marketing Fee has been paid in full, with the first year commencing as of the day Developer commences
sales of Timeshare Intervals (i.e., on the PH Sales Commencement Date) and
ending on the last day of the twelfth month thereafter.  Each successive year shall commence on the
first succeeding day and end on the last day of the twelfth month thereafter.  For payments due to the Seller for periods
prior to the commencement of the first year (i.e., prior to the PH Sales
Commencement Date), see Section 12(c) and
other applicable provisions of this Agreement.

 

(e)                                  The aggregate Marketing Fee to be paid by
Developer shall be determined on a “net” basis in accordance with the Timeshare
Interval Measurement Principles.

 

(f)                                    Simultaneously with delivery to Developer’s
lenders for the Timeshare Project and other providers of funds for the
Timeshare Project, but no less often than quarterly, with annual summarization,
Developer shall deliver to Seller, for reliance by Seller, financial and other
reports identical to the reports prepared for said lenders and other providers
of funds, covering the just-ended quarter and the year-to-date period, for
Developer and, where applicable, any and all entities with which Developer may
be consolidated for reporting and/or audit and/or tax purposes; provided, however, Developer shall not be required to
disclose to Seller specific information pertinent to that business of the
Developer which is not related directly to the Timeshare Project.  If necessary, said deliveries to Seller shall
include supplemental information to demonstrate and verify calculation and
payment of Marketing Fees and Timeshare Advances and determination of Net
Interval Sales for the period(s) in question. 
Seller in its reasonable discretion may require any one or more of said
reports and/or other books and records of Seller to be audited, for Seller’s
benefit, by independent third-party certified public accountants acceptable to
Seller.  Any such audit shall be at
Seller’s expense unless the audit identifies a Marketing Fee discrepancy equal
to or greater than 2 percent of any Marketing Fees payable for any covered
period, in which event the audit in question shall be at Developer’s
expense.  Any such reports and any such
audits shall be subject to reasonable confidentiality requirements for the
protection of Developer.

 

(g)                                 Notwithstanding anything to the contrary contained
in this Section 4, Marketing Fees payable
to Seller shall be reduced by the amount of Shore Up or Operating Expenses

 

15

 

actually
paid by Developer, together with interest thereon at the rate of six percent  (6%) per annum,
but the Timeshare Advance payments described in Section 3
above shall not, in any event, be reduced below the minimums described in said
Section.  The amount of any such
reduction not effected due to the minimum Timeshare Advance requirement of Section 3 shall be available to be effected in any
subsequent year, if and to the extent Marketing Fees in such year exceed the
applicable minimum.

 

(h)                                 Of the nine percent (9%) Marketing Fee
payable to Seller, Seller upon actual receipt shall direct that (1) fifty
percent (50%) shall be deposited into a securities account in the name of MezzCo LLC with Wells Fargo Bank NA
established under the Collateral Account Agreement as provided in the Mezzanine
Lender Agreements, and (2) fifty percent (50%) shall be deposited into an
account securing the Senior Lenders as provided in the Senior Lender
Agreements.

 

5.                                      Pre-Closing.

 

(a)                                  Design/Approval Process.  Notwithstanding anything
contained herein to the contrary, it is acknowledged that prior to commencing
construction and as part of its efforts to obtain financing, Developer and
Seller must among other things complete and execute this Agreement and all the
related agreements described herein.  In
addition, Developer must complete the design and planning of the Timeshare
Project and obtain all required governmental approvals (herein referred to as
the “Design/Approval Process”).  The parties acknowledge that the Developer shall
incur substantial expense in connection with the Design/Approval Process and
since Seller and Developer cannot close hereunder unless closing first occurs
under the PSA, the Developer does not wish to incur expenses in connection with
the Design/Approval Process until such time. 
Accordingly, Seller and Developer agree that the Design/Approval Process
will not, except as provided below, commence until the closing under the PSA
and the Effective Date of this Agreement.

 

(b)                                 Reserved.

 

(c)                                  Seller’s Approval.  All aspects of the Design/Approval Process,
including but not limited to the subject matter of this Section 5,
are subject to prior approval of the Seller, as provided in Section 9 below, such approval not to be unreasonably
withheld.

 

(d)                                 Pre-Closing Deliveries by Seller.  Seller shall deliver to
Developer, as soon as practical following the execution of this Agreement,
subject to the terms and conditions of the PSA, and subject to any applicable
confidentiality and similar agreements binding on Seller and/or the Timeshare
Property and/or the Complex, and to the extent within Seller’s custody and
control, all records and documents (or copies of such records and documents)
concerning the Timeshare Property, to the extent in the possession or control
of Seller and to the extent disclosure is not unauthorized, including but not
limited to the following:

 

(i)                                     Existing Permitting and Zoning Approvals and
project commitments that were required by governmental authorities in
connection with such Existing Permitting and Zoning Approvals; and

 

(ii)                                  All surveys in Seller’s possession and
control showing the boundaries of the Timeshare Property and any other matters
relating to the Timeshare Property; and

 

16

 

(iii)          All drawings, surveys, specifications, engineering reports, and all
reports, documents, analyses, memoranda, letters, summaries and work papers
relating to Environmental Matters concerning the Timeshare Property and
physical condition of the land and any improvements now existing on the
Timeshare Property, including any Environmental Assessments in Seller’s
possession and control relating to the Timeshare Property to the extent in
Seller’s possession and control; and

 

(iv)          Any and all documents in Seller’s possession and control relating to
the current status of the title to the Timeshare Property, including any
applicable Title Commitments and any known easements affecting the Timeshare
Property and copies of all documents to which a title insurer might take
exception, whether or not of record; and

 

(v)           Any reports in Seller’s possession and control providing the results of
pre-construction soil tests performed on the Timeshare Property; and

 

(vi)          All notices of assessment or reassessment in Seller’s possession and
control concerning real estate taxes for the Timeshare Property; and

 

(vii)         All leases, licenses, service agreements or other agreements in Seller’s
possession and control affecting the Timeshare Property; and

 

(viii)        The City Block Covenants; and

 

(ix)           All Senior Lender Agreements; such Senior Lender Agreements shall be
treated as documents which affect title for the purpose of the review and
evaluation provisions of Section 7;
and

 

(x)            All documents related to the Northwind
Property; and

 

(xi)           Any Environmental Assessment; and any updates arising from Seller’s
closing on the PSA; and

 

(xii)          Any existing Starwood Management Agreement applicable to the Complex; Developer
hereby Developer covenants that as long as this Agreement remains in effect
(and following its termination for any cause whatsoever), Developer (and
Developer’s affiliates) will hold in strict confidence all data and information
obtained by Developer concerning the Starwood Management Agreement and/or
Starwood and/or affiliates, in connection with this Agreement or otherwise; provided,
however, Developer may disclose such information to Developer’s attorneys,
outside consultants, lenders and bonding companies to the extent necessary to
Developer’s compliance with its obligations hereunder, so long as any such
recipients agree not to further disclose any such information; such Starwood
Management Agreement shall be treated as a document which affects title for the
purpose of the review and evaluation provisions of Section 7;
and

 

(xiii)         All existing plans and specifications for the Complex; and

 

(xiv)        Any updated/revised title and/or survey materials arising from Seller’s
closing on the PSA; and

 

17

 

(xv)                            Any of Seller’s occupancy projections
pertaining to the Hotel/Casino Property and the Timeshare Project to the extent
relevant to Developer’s financial and sales projections for the Timeshare
Project; and

 

(xvi)                         Any other documents reasonably requested by
Developer relating to the development, sale, rental or management of the
Timeshare Project.

 

Seller shall supplement each
such delivery of records and documents during the term of this Agreement within
a reasonable period following Developer’s request therefor in the event that
additional items arise or become available to Seller, or in the event that any
of the foregoing is amended or modified.

 

(e)                                  Pre-Closing Deliveries by Developer.  Developer shall deliver to
Seller, as soon as practical, but in any event prior to Closing hereunder, to
the extent within Developer’s custody and control, all records and documents
(or copies of such records and documents) concerning the Timeshare Property,
including but not limited to the following:

 

(i)                                   The results of Developer’s analysis and
investigation of the Timeshare Property and the feasibility of the Timeshare
Project, including but not limited to drawings, surveys, specifications,
engineering reports, and all reports, documents, analyses, memoranda, letters,
summaries and work papers relating to Environmental Matters concerning the
Timeshare Property and physical condition of the land and any improvements now
existing on the Timeshare Property; and

 

(ii)                                The Plans and Specifications and Development Schedule; and

 

(iii)                             Preliminary confirmation, in form and substance reasonably acceptable
to Seller, that Developer, by the time of Deed Delivery under Section 25(f) below, will have obtained and/or
will have available sufficient funds (e.g., debt and equity) to complete the
development and construction of the Timeshare Project (or, if applicable, the
first phase thereof) and to timely pay the Marketing Fees and other amounts
payable to Seller under or pursuant to the provisions of this Agreement and the
Marketing and Leasing Agreement; and

 

(iv)                            The form of Letter of Credit; and

 

(v)                                 All financial and sales projections
pertaining to the Timeshare Project; Developer’s projections pursuant to this
clause shall be without warranty or representation and are merely estimates; and

 

(vi)                              The Developer’s preferred form of Non-Disturbance
and Attornment Agreement described in Section 19;
and

 

(vii)                           Any other documents reasonably requested by
Seller relating to the development, sale, rental or management of the Timeshare
Project

 

Developer shall supplement
each such delivery of records and documents during the term of this Agreement
within a reasonable period following Seller’s request therefor in the event
that additional items arise or become available to Developer, or in the event
that any of the foregoing is amended or modified.

 

18

 

(f)                                    Evaluation by Developer; Access.

 

(i)                                     Following execution of this Agreement and
prior to Closing hereunder, Developer shall have the right to evaluate the
Timeshare Property, subject to the PSA (including but not limited to the
provisions of the PSA which govern Seller’s access to the Complex and any
portion thereof).  At a minimum Developer
shall obtain a Title Commitment (see Section 6
below) and a Survey (same) and also shall conduct an Environmental Assessment
and a Zoning and Land Use Assessment. 
Developer in its discretion may also evaluate, among other things,

 

(i)                                     suitability of physical characteristics of
the Timeshare Property; and

 

(ii)                                  results of Environmental Assessments of the
Timeshare Property; and

 

(iii)                               Title Commitments for the Timeshare Property,
and all title defects cited therein; and

 

(iv)                              each Survey of the Timeshare Property; and

 

(v)                                 the zoning and land use classification of the
Timeshare Property; and

 

(vi)                              title and other information regarding the Complex;
and

 

(vii)                           Prospects for approval of the Timeshare
Documents from the State of Nevada; and

 

(viii)                        Plans and Specifications and Development
Schedule; and

 

(ix)                                The impact of any other matters as disclosed
by the documents and materials required to be delivered by Seller pursuant to Subsection (d) above.

 

(ii)                                  Seller grants to the Developer and its
employees, representatives, agents and consultants having building or
construction related duties (and such other persons as Developer shall identify
to Seller in a notice) permission, with prior notice and subject to reasonable
Seller requirements, to access and enter on the Timeshare Property prior to Closing
hereunder for the purposes of physically inspecting the Timeshare Property and
performing such tests, surveys and investigations as Developer deems necessary
or appropriate, including, but not limited to, investigating the surface and
sub-surface soil and water conditions and conducting tests, core borings, and environmental
assessments and other site activities. 
Developer shall fill any and all wells, borings or other excavations
made by the Developer or any of its employees, representatives, agents or
consultants and shall return the Timeshare Property to Seller in substantially
the same condition as existed prior to the Developer’s entry on the Timeshare
Property.  Developer shall pay for any
and all tests and investigations which Developer and its employees,
representatives, agents and consultants conduct on the Timeshare Property and
indemnify and hold Seller and the Senior Lenders harmless from any claims for
liability or property damage arising from such inspections and any claim for
compensation by any contractor or subcontractor who conducts work or alleges to
have made improvements upon the Timeshare Property at the Developer’s
request.  Developer’s agreement to hold
Seller harmless shall include the cost of bonding off any applicable lien or
claim.  Developer shall advise Seller of
the names of the representatives, agents, and consultants employed by Developer
to perform such tests, surveys and inspections.

 

19

 

(g)                                 Any and all deliveries by Seller and
cooperation by Seller as provided in this Agreement are and shall be without
representation or warranty of any kind by Seller or any of its officers, agents,
employees and contractors, except as may be provided in Section 20
hereof.

 

6.                                      City Block Covenants &
Senior Lender Agreements;

Senior Lender Approvals; Access to Timeshare Property.

 

(a)                                  (1)                                  Notwithstanding anything to the contrary
herein or in any other document or agreement, this Agreement, the Seller’s
obligations to the Developer and the Developer’s rights under this Agreement
and/or under any other related document or agreement are subject to and limited
by the City Block Covenants.  The City
Block Covenants include but are not limited to a Reciprocal Easement Agreement
(as modified and/or affected by letter agreement dated June 20, 2003), a
Common Area Access Agreement and a Shared Parking Agreement (aka Parking Use
Agreement), all of which define, govern and limit access to the City Block
Properties and provide for payment by the owners of the City Block Properties
of common area maintenance (“CAM”) and
similar payments.  The City Block
Covenants also include agreements, binding on the City Block Properties and the
owners thereof, pertaining to use of and payment for utilities generated by the
utility plant on the Northwind Property, including payments designated to repay
debt incurred to acquire and build said utility plant.

 

(2)                                  It shall be a condition to Deed Delivery, as
provided in Section 25(a)(viii), that the
owner of the Mall Property, aka Desert Passage Shopping Center (aka/fka Aladdin
Bazaar) (Boulevard Investments), shall have given, in form and substance
satisfactory to Developer in its reasonable discretion, by the REA Approval
Deadline, as same may be extended, all necessary approvals required of said
owner pursuant to the Reciprocal Easement Agreement, as modified and/or
affected by letter agreement dated June 20, 2003, for the Timeshare
Project, except as provided in Paragraph (3) below.  For the purpose hereof, the “REA Approval Deadline” shall be the date which is the later
to occur of (i) April 1, 2005, or (ii) the date which is ninety
(90) days following the Closing Date; and Seller may extend the REA Approval
Deadline for successive periods of thirty (30) days, in which event each such
extension shall cause all corresponding deadlines applicable to Seller or
Developer to be extended for identical periods of time.

 

(3)                                  Notwithstanding Paragraph (2) above
or any other provision of this Agreement or of any other document or agreement,
it shall not be a condition to Deed
Delivery that Seller provide access through the Mall Property as described in Subsection (c) below or that the owner of the Mall
Property give any other approval related to said access, and any failure of
Developer to obtain said access or any other approval related to said access shall
not excuse any performance required of Developer hereunder.

 

(4)                                  If the owner of the Mall Property requires,
as a condition to one or more of the approvals described in Paragraph (2), modifications to the scope or scale of the
Timeshare Project as described herein, then Seller shall reimburse Developer
for the Developer’s actual costs in revising the Plans to accommodate such
required modifications.

 

(5)                                  If the owner of the Mall Property disapproves
Developer as the timeshare developer described in the letter agreement dated June 20,
2003 (see Paragraph (2) above); or if
the owner of the Mall Property disapproves construction of at least 800
Timeshare Units containing at least 1,600 “keys” in the Timeshare Project as
provided for in this Agreement; or if the owner of the Mall Property requires
changes in Developer’s plans and schedule for the Timeshare Project and/or
fails to give any required approval that, in either case, materially and

 

20

 

adversely affect(s)
Developer’s ability to finance the construction of the Timeshare Project,
Developer’s ability to obtain Clark County permits required for construction of
the Timeshare Project, Developer’s cost to construct the Timeshare Project,
Developer’s scheduling and/or phasing plans for the construction of the
Timeshare Project; or if the owner of the Mall Property proximately causes
Clark County to disapprove construction of at least 800 Timeshare Units containing
at least 1,600 “keys” in the Timeshare Project as provided for in this
Agreement – provided, in each case, that Developer in good faith diligently
pursues and exhausts all commercially reasonable efforts to obtain the
necessary approvals from the owner of the Mall Property and/or to develop commercially
reasonable alternative(s) – then a condition to Deed Delivery shall not have
been satisfied, in which event Developer shall not be liable for liquidated
damages under Section 26(c) for any breach,
violation, default or failure hereunder which arises proximately from Seller’s
said inability.

 

(6)                                  If
the Timeshare Project contains fewer than 1,000 Timeshare Units consisting of
at least 2,000 “keys” but does contain at least 800 Timeshare Units containing
at least 1,600 “keys” as a consequence of Paragraph (5)
above, then the provisions of this Agreement pertaining to Minimum Project
Density and pertaining to the second and any subsequent phase of the Timeshare
Project shall be adjusted to reflect the actual number of Timeshare Units and
“keys” in the Timeshare Project.

 

(b)                                 Notwithstanding anything to the contrary
herein or in any other document or agreement, the parties understand and
acknowledge that Seller is or may be required to obtain consents and approvals
from the Senior Lenders prior to and in connection with, among other things,
entering into this Agreement and/or granting any consent or approval to
Developer in connection with this Agreement or the Timeshare Project and/or
approving any Timeshare Development Agreement and/or any exhibit or schedule to
this Agreement.  Developer agrees to
cooperate with Seller’s reasonable requests and requirements arising from
Senior Lender considerations.

 

(c)                                  Seller shall make commercially reasonable
efforts to provide for vehicular and/or pedestrian access to the Timeshare
Property via the Mall Property, aka Desert Passage Shopping Center (aka/fka
Aladdin Bazaar) (Boulevard Investments), and/or via other routes, whether or
not now existing.  The configuration of
such access, and the Seller’s and Developer’s respective responsibilities with
respect thereto (including but not limited to rights of access and payment of
costs) shall be mutually agreed during the Design/Approval Process (or later if
applicable).  Developer acknowledges that
Seller’s initial actions to comply with its obligations in this Subsection (c) shall be solely pursuant to the
City Block Covenants.  In the event
Seller is unable to so comply solely pursuant to the City Block Covenants, then
Seller shall take commercially reasonable steps to so comply pursuant to other
mutually agreed means, with costs of compliance to be allocated as mutually
agreed between Seller and Developer.

 

(d)                                 (1)                                  Seller shall provide and make available to
the Developer those parking spaces to which Seller is entitled pursuant to the
City Block Covenants, including the Shared Parking Agreement (aka Parking Use
Agreement), after subtracting therefrom those parking spaces required by Seller
for its operations at the Hotel/Casino Property.  Seller shall pass through to Developer,
without fee or markup, and Developer shall pay, all costs and fees payable from
time to time for or in connection with the parking spaces so provided and made
available to the Developer as aforesaid (the “Parking Fee”).  Seller shall provide written confirmation, in
form and substance reasonably satisfactory to Developer, of the number of
parking spaces so provided pursuant to the City Block Covenants.

 

21

 

(2)                                  If Seller, after exhausting all commercially
reasonable efforts, is unable, pursuant to the City Block Covenants as
aforesaid, to provide and make available to Developer the entire number of
parking spaces required by Developer pursuant to applicable legal requirements
to develop the Timeshare Project (the “Parking Requirement”),
but if Seller is able to so provide and make available to Developer at least 600 parking spaces, then, to the extent of the
shortfall, Developer shall construct parking facilities serving the Timeshare
Project on the Timeshare Property at Developer’s cost, in which event Developer
shall be entitled to

 

(A)                              reimbursement
of allocable construction loan interest, as provided in Section
18(b), for parking facilities so constructed to meet said shortfall,
but said reimbursement shall be available only to the extent the Parking
Requirement does not exceed 800 parking spaces;
and

 

(B)                                a
monthly cost recovery payment for parking facilities so constructed to meet
said shortfall, provided that said cost recovery component (which cost recovery
component shall be treated as part of the Parking Fee for the purpose of the
definition of Operating Costs) shall be available only to the extent the
Parking Requirement does not exceed 800 parking spaces;
and provided further that the sum of said cost recovery component, plus the
reimbursement provided for in clause (A)
above, shall not exceed, in any event, the monthly Parking Fee described in Paragraph (d)(1) above;

 

provided, however, that the
aforesaid 800 parking space limitation shall be increased
to the extent (but only to the extent) that construction of the convention
center space, provided for in Section 9(h) of
this Agreement, causes the Parking Requirement to increase.

 

(3)                                  If Seller, after exhausting all commercially
reasonable efforts, is unable, pursuant to the City Block Covenants as
aforesaid, to provide and make available to Developer at least 600
parking spaces, as set forth in Paragraph (2) above,
then

 

(A)                              a condition to Deed Delivery shall not have
been satisfied, in which event Developer shall not be liable for liquidated
damages under Section 26(c) for any breach,
violation, default or failure hereunder which arises proximately from Seller’s
said inability; provided, however, that said
inability shall not be grounds for Developer to terminate its obligations under
this Agreement; and

 

(B)                                Seller shall reimburse Developer for the Developer’s actual costs in
revising the Plans to provide parking for the Timeshare Project to the extent
of the shortfall; and

 

(C)                                all corresponding deadlines applicable to Seller or Developer shall be
extended for such reasonable period of time as is necessary to accomplish said revision
of the Plans.

 

(4)                                  Notwithstanding anything to the contrary
herein, Developer in its sole discretion may elect not to utilize the parking
spaces provided and made available by Seller as provided above, in which event
Developer shall construct parking facilities serving the Timeshare Project on
the Timeshare Property at Developer’s sole cost, but Developer shall nevertheless
accept and, as provided herein, pay (or cause to be paid) the Parking Fee for
those parking spaces provided and made available by Seller as provided in Paragraph (1) above.

 

(e)                                  (1)                                  Seller shall provide to Developer, by the REA
Approval Deadline, as same may be extended, confirmation, in form and substance
satisfactory to the Developer in its

 

22

 

reasonable discretion, that,
subject to payment of applicable fees, costs and expenses, utilities generated
by the utility plant on the Northwind Property will be available to the
Timeshare Project.

 

(2)                                  If Seller, after exhausting all commercially
reasonable efforts, is unable to provide the utilities confirmation as
aforesaid by the REA Approval Deadline, as same may be extended, then, if
alternative means of providing utilities to the Timeshare Project are available
on commercially reasonable terms:

 

(A)                              Seller shall reimburse Developer for the Developer’s actual costs in
revising the Plans to provide alternatively for utilities serving the Timeshare
Project; and

 

(B)                                all corresponding deadlines applicable to Seller or Developer shall be
extended for such reasonable period of time as is necessary to accomplish said revision
of the Plans.

 

7.                                      Title and Survey Matters.

 

(a)                                  As an accommodation, at Developer’s expense,
Seller will make available to Developer, without representation or warranty,
copies of any Title Commitment and related materials in Seller’s possession or
control pertaining to the Timeshare Property. 
Within thirty (30) days after the date of
delivery of said items (but not, in any event, later than December 31,
2004), Developer shall obtain, at Developer’s sole cost and expense,
a Title Commitment for the Timeshare Property and such other title information
for the Complex and the Hotel/Casino Property as deemed reasonable by
Developer.

 

(b)                                 Developer shall pay the cost of all title
insurance charges, premiums and endorsements, including all search,
continuation and later-date fees and any and all title related closing fees,
attorney fees and expenses, and including the premium for title insurance
benefiting Seller in its capacity as holder of the reversionary interest
pursuant to Section 9(g) if such
title insurance is available, provided Seller shall not be responsible to pay
any additional title insurance premium due to the nature of the Seller’s
interest being other than that of a mortgagee.

 

(c)                                  If the Title Commitment reveals any Title
Objections, Developer shall notify Seller within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004).  Prior to Deed Delivery, Seller shall correct
any Title Objection which can be corrected solely by payment of money, such
that the Timeshare Property shall be free of monetary liens (other than
inchoate liens) as of the date of Deed Delivery (see also Section 25(e) which
pertains to adjustment and proration of certain items at Deed Delivery).  Subject to the PSA, Seller may, but shall
have no obligation to, correct any other Title Objections, and in such event
Seller shall pay all fees and expenses incurred in correcting any Title
Objections, but Seller shall not be obligated to bring suit to do so.  If Seller fails to correct any Title Objection,
or if Seller notifies Developer that Seller declines to correct any Title
Objection, Developer shall either

 

(i)                                     terminate this Agreement by giving notice to
Seller, upon which the parties shall have no further rights or obligations
hereunder other than as provided in Section 33;
or

 

(ii)                                  proceed to Closing, and deduct the cost to
correct (to be agreed upon by Seller and Developer) or (if no cost is incurred
to correct the Title Objection) the resulting diminution in value (to be agreed
upon by Seller and Developer), if any, from the Purchase Price by

 

23

 

deducting equal amounts from the first four
annual Timeshare Advance amounts (i.e., the monthly Timeshare Advance shall be
reduced by 1/48 of the aggregate amount of said deduction), in which case said
Title Objections shall constitute Permitted Title Matters.

 

If Developer fails to elect
either option (i) or option (ii) above in writing within ten (10) days of written notice from Seller, then the
right to elect shall belong to Seller, not Developer.

 

(d)                                 If Developer does not notify Seller of any
potential Title Objections within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004),
then all matters of title shall constitute Permitted Title Matters.

 

(e)                                  As an accommodation, at Developer’s expense,
Seller will make available to Developer, without representation or warranty,
copies of any survey and related materials in Seller’s possession or control
pertaining to the Timeshare Property. 
Within thirty (30) days after the date of
delivery of said items (but not, in any event, later than December 31,
2004), Developer shall have a Survey of the Timeshare Property
prepared by a Nevada licensed surveyor. 
Developer’s Survey shall be certified to the Title Company, the Seller,
the Developer and the Developer’s lender, if applicable, and shall be in such
form as the Developer and/or the Title Company may reasonably require or
approve.  The Survey shall show all
encroachments of any improvements onto adjoining properties, easements, set-back
lines or rights-of-way, and all encroachments of adjacent improvements onto the
Properties.  Developer shall pay the cost
of the Survey and all updates thereto required by Developer or the Title
Company.

 

(f)                                    If the Survey reveals any Survey Objections,
Developer shall notify Seller within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004).  Subject to the PSA, Seller may, but shall
have no obligation to, correct said Survey Objections, and in such event Seller
shall pay all fees and expenses incurred in correcting any Survey Objections,
but Seller shall not be obligated to bring suit to do so.  If Seller fails to correct any Survey
Objection, or if Seller notifies Developer that Seller declines to correct any
Survey Objection, Developer shall either

 

(i)                                     terminate this Agreement by giving notice to
Seller, upon which the parties shall have no further rights or obligations
hereunder other than as provided in Section 33;
or

 

 (ii)                               proceed to Closing, and deduct the cost to
correct (to be agreed upon by Seller and Developer) or (if no cost is incurred
to correct the Survey Objection) the resulting diminution in value (to be
agreed upon by Seller and Developer), if any, from the Purchase Price by
deducting equal amounts from the first four annual Timeshare Advance amounts
(i.e., the monthly Timeshare Advance shall be reduced by 1/48 of the aggregate
amount of said deduction), in which case said Survey Objections shall
constitute Permitted Survey Matters.

 

If Developer fails to elect
either option (i) or option (ii) above in writing within ten (10) days of written notice from Seller, then the right
to elect shall belong to Seller, not Developer.

 

(g)                                 If Developer does not notify Seller of any
potential Survey Objections within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004),
then all matters of survey shall constitute Permitted Survey Matters.

 

24

 

(h)                                 As the Timeshare Project is being completed
(or, if applicable, as each phase is being completed), Developer shall obtain an
updated “as built” Survey for the Timeshare Project or applicable phase in
order to enable the Title Company to insure the title to the Timeshare Property
(or applicable phase) without exceptions for matters of survey and in order to
provide final drawings for the timeshare regime.

 

8.                                      Environmental and Zoning Matters.

 

(a)                                  As an accommodation, at Developer’s expense,
Seller will make available to Developer, without representation or warranty,
copies of any environmental assessment and related materials in Seller’s
possession or control pertaining to the Timeshare Property.  Within thirty (30) days
after the date of delivery of said items (but not, in any event, later than December 31, 2004), Developer shall obtain and review
an Environmental Assessment of the Timeshare Property.  Such assessment shall be performed by a duly
licensed and reputable environmental engineering company selected by Developer
and shall expressly provide that it may be relied upon by Seller.  If Developer discovers any matters that
constitute Environmental Objections, Developer shall notify Seller within five (5) days following the end of the aforesaid thirty (30) day period (but not, in any event, later than December 31, 2004). 
Subject to the PSA, Seller may, but shall have no obligation to, correct
said Environmental Objections, and in such event Seller shall pay all fees and
expenses incurred in correcting any Environmental Objections, but Seller shall
not be obligated to bring suit to do so. 
If Seller fails to correct any Environmental Objection, or if Seller
notifies Developer that Seller declines to correct any Environmental Objection,
Developer shall either

 

(i)                                     terminate this Agreement by giving notice to
Seller, upon which the parties shall have no further rights or obligations
hereunder other than as provided in Section 33;
or

 

 (ii)                               proceed to Closing, and deduct the cost to
correct (to be agreed upon by Seller and Developer) or (if no cost is incurred
to correct the Environmental Objection) the resulting diminution in value (to
be agreed upon by Seller and Developer), if any, from the Purchase Price by
deducting equal amounts from the first four annual Timeshare Advance amounts
(i.e., the monthly Timeshare Advance shall be reduced by 1/48 of the aggregate
amount of said deduction), in which case said Environmental Objections shall
constitute Permitted Environmental Matters.

 

If Developer fails to elect
either option (i) or option (ii) above in writing within ten (10) days of written notice from Seller, then the
right to elect shall belong to Seller, not Developer.

 

(b)                                 If Developer does not notify Seller of any
potential Environmental Objections within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004),
then all Environmental Matters shall constitute Permitted Environmental
Matters.

 

(c)                                  During the thirty (30)
days following the Effective Date (but not, in any event, later than
December 31, 2004), Developer may
investigate the Existing Permitting and Zoning Approvals and may verify that
all applicable zoning and land use regulations permit the use of the Timeshare
Property for Developer’s Timeshare Project (with variances and exceptions, if
applicable).  If Developer discovers any
matters that constitute Zoning and Land Use Objections, Developer shall notify
Seller within five (5) days following the
end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004).  Subject to the PSA, Seller may, but shall
have no obligation to, correct said Zoning and Land Use Objections,

 

25

 

and in such event Seller
shall pay all fees and expenses incurred in correcting any Zoning and Land Use
Objections, but Seller shall not be obligated to bring suit to do so.  If Seller fails to correct any Zoning and
Land Use Objection, or if Seller notifies Developer that Seller declines to
correct any Zoning and Land Use Objection, Developer shall either

 

(i)                                     terminate this Agreement by giving notice to
Seller, upon which the parties shall have no further rights or obligations
hereunder other than as provided in Section 33;
or

 

(ii)                                  proceed to Closing, and deduct the cost to
correct (to be agreed upon by Seller and Developer) or (if no cost is incurred
to correct the Zoning and Land Use Objection) the resulting diminution in value
(to be agreed upon by Seller and Developer), if any, from the Purchase Price by
deducting equal amounts from the first four annual Timeshare Advance amounts
(i.e., the monthly Timeshare Advance shall be reduced by 1/48 of the aggregate
amount of said deduction), in which case said Zoning and Land Use Objections
shall constitute Permitted Zoning and Land Use Matters.

 

If Developer fails to elect
either option (i) or option (ii) above in writing within ten (10) days of written notice from Seller, then the
right to elect shall belong to Seller, not Developer.

 

(d)                                 If Developer does not notify Seller of any
potential Zoning and Land Use Objections within five (5) days
following the end of the aforesaid thirty (30) day
period (but not, in any event, later than December 31, 2004),
then all matters of zoning and land use shall constitute Permitted Zoning and
Land Use Matters.  The preceding sentence
applies only to the Timeshare Property as of the Effective Date, and shall not
affect the related provisions hereof concerning the Design/Approval Process, as
described in Section 5, and the Developer’s
conditions to closing and/or Deed Delivery, as provided in Section 25.

 

9.                                      Development of the Timeshare
Project.

 

(a)                                  Commencement &
Completion.

 

(1)                                  Developer shall commence the Design/Approval
Process described in Section 5(a) immediately
upon execution and delivery of this Agreement, subject to Section 5(b).  Immediately following delivery of the deed as
provided in Section 25, Developer shall
commence construction of the Timeshare Project as provided in this Agreement
and the final Complex Standards.

 

(2)                                  (A)                              Developer shall use commercially reasonable efforts to complete
construction of the Timeshare Project (or, if applicable, the first phase
thereof) no later than November 1, 2006,
and shall, in any event (subject to extension
or revision as provided below in this Paragraph (2)(A)),
complete construction of the Timeshare Project (or, if applicable, the first
phase thereof) no later than December 31, 2007.  The foregoing construction completion dates shall
be subject to extension or revision by mutual written agreement of Seller and
Developer (both acting in a commercially reasonable manner) as part of the
Design/Approval Process and as a result of contract terms between Developer and
its general contractor.

 

(B)                                If the Timeshare Project is built in phases
as provided in Subsection (f) below,
the Developer shall commence construction of the second and any subsequent
phases as and when (and no later than) provided in said Subsection (f),
and shall complete construction of the final phase of the Timeshare Project no
later than the date required in or pursuant to said Subsection (f) for
completion of the Timeshare Project.

 

26

 

(3)                                  To induce Seller to accept evidence of
delivery to the State of Nevada of the completion bond(s) and to accept the
Parent Guaranty, both of which are described in Section 9(n)
below, Developer agrees to commence all portions of Phase 1
of the Timeshare Project (including both towers, each containing at least 250
units and at least 500 keys) at the same time, to diligently pursue development
and construction of all such portions with equal diligence and in good faith,
and to complete construction of all such portions at the same time.

 

(4)                                  Assurance of completion acceptable to the
Seller, in the form of evidence of delivery to the State of Nevada of the
completion bond(s) and/or in the form of the Parent Guaranty, both of which are
described in Section 9(n) below, shall be
required for each phase of the Timeshare Project following the first
phase.  If the third and fourth buildings
of the Timeshare Project are commenced simultaneously, or are under
construction at the same time, both the completion bond(s) and the Parent
Guaranty, as aforesaid, shall be required. 
Only a completion bond(s) as aforesaid shall be required during any time
that only one of such buildings is under construction.

 

(b)                                  Quality.  The
theming, design, trade dress and operation of the Timeshare Project will be
subject to Seller’s approval, will be of a first class nature, will be in
keeping with the Complex Standards, and will be of a quality and specification
equal to or better than a “five stars”
standard as established by Interval International.

 

(c)                                  The Timeshare Project.  The
Timeshare Project shall be a timeshare project, constructed in accordance with
this Agreement and the final Complex Standards, consisting of no fewer than one thousand (1,000) Timeshare Units, and no fewer than two thousand (2,000) keys, in one-, two-, three- and/or
four-bedroom “lockout” units, located in not more than four (4) buildings,
each containing at least fifteen (15) stories and no fewer than five hundred
(500) keys, in one-, two-, three- and/or four-bedroom “lockout” units, and with
amenities for all of the aforesaid.  The
Timeshare Project may also include other facilities customarily contained in a
timeshare development, but, with the exception of check-in facilities and
swimming pool, which Developer may in its discretion construct at its cost as
part of the Timeshare Project for use by occupants of the Timeshare Project,
and except as otherwise provided in this Agreement, such other facilities at
the Timeshare Project shall not include any amenities offered by Seller at the
Hotel/Casino Property, including but not limited to gaming, conventions, hotel
use (including facilities developed for hotel use as well as hotel use of
Timeshare Units as provided herein), food and beverage, retail, entertainment
(live or otherwise) and other recreational facilities.

 

(d)                                  Construction Personnel.  As
part of the construction process, Developer agrees to engage one or more
qualified construction personnel with extensive experience in high rise
construction of multi-residential buildings.

 

(e)                                  Seller’s Approval of Development
Plan and Plans & Specifications and Development Schedule.  The
Developer shall submit to Seller, contemporaneously with submission to any
governmental or quasi-governmental agency or official and/or with submission to
any lender or other provider of funds and/or upon reasonable request by Seller,
the Developer’s development plan for the Timeshare Project and its Plans and Specifications
and Development Schedule for the Timeshare Project and any and all
addenda, updates, modifications, supplements and amendments thereto.  Developer shall not proceed with
implementation of any work provided for in any of the foregoing without Seller’s
prior approval, not to be unreasonably withheld.

 

27

 

(f)                                    Phases; Buildings.

 

(i)                                     If, after Developer has exhausted all
commercially reasonable efforts, to the extent that construction financing
relative to a one phase Timeshare Project consisting of not fewer than 1,000 Timeshare Units and not fewer than 2,000 keys is unavailable, Developer shall construct the
Timeshare Project in two or more phases, the first phase consisting of not
fewer than five hundred (500) Timeshare Units
and not fewer than 1,000 keys, in
accordance with the Unit Count Example.  The
Developer may in its discretion construct the Timeshare Units in multiple
buildings within each phase, and may increase the number of Timeshare Units and
number of keys in the first phase; provided, however,
in any event there shall be no more than four (4) buildings
in total for the Timeshare Project and any one building can contain no fewer
than two hundred fifty (250) Timeshare Units and no fewer than 500 keys, in
accordance with the Unit Count Example.

 

(ii)                                  In the event that the Timeshare Project is to
be completed in more than one phase as contemplated by this Subsection,
Developer agrees that, subject to the conditions set forth herein, Developer
shall immediately commence construction of the first phase and, thereafter
(following satisfaction of and subject to the conditions set forth in Paragraph (iii) below), immediately commence
construction of the second phase (and any subsequent phases) once the revenue
generated from the unsold Timeshare Units within such previously commenced phase(s)
exceeds:

 

(A)                              the maintenance fees owed in connection therewith; and

 

(B)                                Operating Costs; and

 

(C)                                the current interest expense then due on any construction financing
owed by Developer relative thereto

 

and in any event shall
commence construction of the final phase not less than four (4) years
from the required date of completion of construction of the first phase of the
Timeshare Project.

 

(iii)                               The Seller and/or the Developer, as
applicable, shall in writing notify the other party or parties to this
Agreement when the revenue threshold described in Subparagraph (ii) above
has been crossed.  Developer shall
commence construction of the next phase(s) not later than the date which is ninety (90) days following transmission of each such notice.

 

(g)                                 Reversion or Perpetual Easement.

 

(i)                                     If the Timeshare Project is developed in
phases in accordance with this Agreement, and if Developer does not timely commence
construction of the second and any subsequent phases in accordance with this
Agreement (including but not limited to the requirement to provide assurance of
completion in accordance with Subsection (n)
below), then all portions of the Timeshare Project other than the portion upon
which Developer has timely commenced construction (the “Reversion
Property”) shall revert to the Seller, or, in the alternative, at
Seller’s election, a perpetual easement upon the Reversion Property shall be
granted to Seller, in either event at no cost to Seller; and, in either event,
at the election of Seller, in order to complete construction of the Timeshare
Project, Seller shall have full right, title and authority to receive, retain,
use and modify any and/or all of Developer’s plans, and shall have all of the
rights of Developer in and to any and all construction contracts, subcontracts,
architect

 

28

 

agreements and similar and related documents and
agreements pertinent to the Timeshare Project or any part thereof.

 

(ii)                                  Upon timely commencement by Developer of construction
of the second and any subsequent phase of the Timeshare Project in accordance with
this Agreement (including but not limited to the requirement to provide
assurance of completion in accordance with Subsection (n)
below), then the reversionary rights and/or easement rights described above
shall immediately terminate with respect to the applicable portion of the
Timeshare Project.  For the purpose
hereof, “timely commencement” means Developer
shall have commenced construction of the final phase of the Timeshare Project
not later than the date for commencement specified in or pursuant to Section 9(f)(ii) above and shall have provided assurance
of completion in accordance with Subsection (n)
below.

 

(iii)                               The reversionary rights and/or easement
rights described in this Subsection (g) shall
terminate as provided below:

 

(A)                              As to Phase One of the Timeshare Project, consisting of two (2) buildings,
each containing at least 250 Timeshare Units and at least 500 keys, said
reversionary rights and/or easement rights shall terminate with respect to said
Phase One at such time as the Developer has provided evidence of delivery
to the State of Nevada of the completion bond(s) and has provided the Parent
Guaranty, as provided in Section 9(n)
hereof with respect to said Phase One, and has commenced construction of and
is contractually obligated to complete simultaneously both of the two buildings
of said Phase One.

 

(B)                                If Phase Two of the Timeshare Project consists of at least 500
Timeshare Units in two (2) buildings and thereby completes Developer’s
construction obligations concerning the Timeshare Project, including the
Minimum Project Density, said reversionary rights and/or easement rights shall
terminate with respect to said Phase Two at such time as the Developer has
provided evidence of delivery to the State of Nevada of the completion bond(s)
and has provided the Parent Guaranty,, as provided in Section 9(n)
hereof with respect to said Phase Two, and has commenced construction of and
is contractually obligated to complete simultaneously both of the two buildings
of said Phase Two.

 

(C)                                If Phase Two of the Timeshare Project consists of at least 250
Timeshare Units in one (1) building, said reversionary rights and/or
easement rights shall terminate with respect to said Phase Two at such
time as the Developer has provided evidence of delivery to the State of Nevada
of the completion bond(s) as provided in Section 9(n)
hereof with respect to said Phase Two, and has commenced construction of and
is contractually obligated to complete said Phase Two.

 

(D)                               If Phase Three of the Timeshare Project consists of at least 250
Timeshare Units in one (1) building and thereby completes Developer’s
construction obligations concerning the Timeshare Project, including the
Minimum Project Density, said reversionary rights and/or easement rights shall
terminate with respect to said Phase Three at such time as the Developer
has provided evidence of delivery to the State of Nevada of the completion
bond(s) as provided in Section 9(n)
hereof with respect to said Phase Three, and has commenced construction of
and is contractually obligated to complete said Phase Three.

 

29

 

(iv)                              In order to prevent a reversion or easement as
contemplated herein, Developer’s rights to develop the Timeshare Property (or
applicable portion) may be assigned, such assignment and assignee subject to
the prior approval of the Seller in its reasonable discretion, such approval
not to be unreasonably withheld, conditioned or delayed.  In the event of an assignment pursuant to
this Paragraph (iv),

 

(A)                              The assignee shall in writing assume all of the obligations of the
Developer under this Agreement, the Timeshare Development Agreements and all
other applicable documents and agreements; and, with respect to the portion of
the Timeshare Property so assigned, Seller shall remain bound by all applicable
provisions of this Agreement, including but not limited to provisions
concerning marketing locations, exclusivity, management rentals and easements;
and

 

(B)                                Developer shall be and remain liable for any and all acts and
omissions, and all events and circumstances, occurring or arising on or prior
to the effective date of the assignment; and

 

(C)                                With respect to the portion of the Timeshare Property so assigned, the
assignee shall be liable for any and all acts and omissions, and all events and
circumstances, occurring or arising after the effective date of the assignment;
and

 

(D)                               With respect to this Agreement and the other Timeshare Development
Documents, including but not limited to the Marketing and Leasing Agreement,

 

(1)                                  the Developer and the assignee, to the extent
of their respective interests in the Timeshare Property, shall be severally
responsible for compliance with all applicable obligations owed to the Seller, pro
rata in accordance with their respective interests in the Timeshare Property,
or on such other basis as may agreed upon in writing among the Developer, the
assignee and the Seller; and

 

(2)                                  all of the Seller’s applicable obligations
shall be owed to both the Developer and the assignee, pro rata in accordance
with their respective interests in the Timeshare Property, or on such other
basis as may agreed upon in writing among the Developer, the assignee and the
Seller; and

 

(E)                                 Thereupon, the Developer shall be released
from liability hereunder with respect to the interests so assigned, subject to clause (B) above.

 

(v)                                 In the event of a reversion or easement as
contemplated herein, and if construction of the first phase was completed as required
herein, then

 

(A)                              Until the occurrence of a Fully Sold Project to the extent of Timeshare
Units in the portion of the Timeshare Project actually completed by Developer,

 

(1)                                  the second and any subsequent phase shall not
be developed or marketed as timeshares, and appropriate provisions shall be
mutually negotiated relating to non-competition and interference with Developer’s
timeshare sales and marketing efforts in the portion of the Timeshare Project
actually constructed by Developer; and

 

30

 

(2)                                  all applicable provisions of this Agreement –
including but not limited to provisions concerning marketing fees, marketing locations,
exclusivity, Vacation Rentals, Maintenance Agreements and easements – shall
continue in full force and effect;

 

provided that the foregoing shall not limit
or otherwise affect Seller’s activities with respect to anything other than
Timeshare Intervals; and

 

(B)                                After occurrence of a Fully Sold Project to the extent of Timeshare
Units in the portion of the Timeshare Project actually completed by Developer,
Seller may develop and/or sell the second and any subsequent phases of the
Timeshare Project without regard to the aforesaid limitations, including but
not limited to a competing timeshare project and/or a competing timeshare
developer.

 

(vi)                              See also Section 26(d) for
reversion provisions effective in the event of certain defaults by
Developer.  Said reversion provisions are
incorporated by reference into this Subsection (g) as
if fully restated.

 

(vii)                           If a reversion event occurs as provided
herein, all right, title and interest of Developer with respect to the
Reversion Property under this Agreement, and all right, title and interest of
Developer with respect to the Reversion Property under all other applicable
Timeshare Development Documents, shall immediately terminate; and Developer
shall execute, seal, acknowledge and deliver such instruments of conveyance and
such other documents and agreements as may be necessary or appropriate to confirm
said termination and complete said reverter.

 

(h)                                 Convention Center Space.  In
addition to the foregoing, the Timeshare Project shall, at Seller’s option,
subject to the Design/Approval Process, include up to 75,000
square feet of convention center space for the exclusive use of
Seller, in accordance with the following:

 

(1)                                  The location, design and layout, and plans
and specifications for the convention center space shall be mutually agreed by
Seller and Developer prior to commencement of construction.  It is currently anticipated that Phase One of
the Timeshare Project shall include approximately half of the convention center
space, and that Phase Two of the Timeshare Project shall include approximately
half of the convention center space.

 

(2)                                  The Seller and Developer shall enter into a
triple-net lease for the convention center space on mutually agreed commercially
reasonable terms and conditions prior to or as of Deed Delivery.  Said lease shall provide for an initial term
of 25 years, with multiple successive
automatic 5-year renewals unless Seller by
written notice declines to renew at least 180 days prior to the then-current
expiration date.  Said lease, and the
Maintenance Agreement, shall both provide that termination or expiration of
said lease shall automatically effect a termination of the Maintenance
Agreement, and that termination or expiration of the Maintenance Agreement
shall automatically effect a termination of said lease.  Further, said lease, and the Maintenance
Agreement, shall both provide that a non-defaulting party’s remedies for
default shall include the right to terminate both said lease and the
Maintenance Agreement, but not the right to terminate only one of such
agreements.

 

(3)                                  Developer agrees that its “all-in” construction
costs related to the convention center space shall not exceed $15,000,000 and shall be amortized pursuant to one or the
other

 

31

 

of the following two (2) alternatives,
such choice to be made by Developer at least six (6) months
prior to the mutually agreed date of opening of the first portion of
the convention center space:

 

(A)                              Fixed rent for the initial lease term in amount equal in each year to ten percent (10%) of Developer’s “all-in” construction costs
related to the convention center space; in such event, any and all allocable
revenue from the convention center space (determined as provided in subparagraph (D) below) shall accrue to Seller
only and not to Developer; or

 

(B)                                Rent for the initial lease term in amount equal in each year to the sum of

 

(i)                                     five percent (5%) of Developer’s “all-in” construction costs
related to the convention center space; plus

 

(ii)                                  allocation and payment to Developer of a portion of the
net profits from operation of the convention center space, to be calculated,
allocated and paid annually, in accordance with the following:

 

(a)                                  first, to Developer, from net profits, an
amount equal to five percent (5%) of Developer’s “all-in”
construction costs related to the convention center space; and

 

(b)                                 second, to Seller, from net profits, an
amount equal to the amount paid to Developer in accordance with clause (a) above; and

 

(c)                                  thereafter, said net profits shall be allocated and
paid 50 percent to the Developer and 50 percent to the Seller.

 

(C)                                Rent for renewal lease terms to be mutually agreed and in accordance
with market rates.

 

(D)                               Seller and Developer shall mutually agree upon a method of determining
and accounting for convention center revenue.

 

(4)                                  If Developer commences construction of
convention center space in Phase Two, and if convention center space
construction is commenced simultaneously with commencement of construction of
the Timeshare Units in Phase Two in accordance with this Agreement, then said
commencement of construction shall effect termination of the possibility of
reversion as to the land upon which said construction is commenced.

 

(5)                                  If and to the extent Seller elects that
Developer develop and build the convention center space as aforesaid, the
Parent Guaranty shall apply to such convention center space, effective (a) upon
commencement of construction of the convention center space; or (b) if the
convention center space is phased as provided in Paragraph (1) above,
as to each such phased portion of the convention center space, upon the earlier
to occur of commencement of construction of the applicable phase of the
Timeshare Project or commencement of construction of the applicable portion of
the convention center space.

 

(i)                                    General Construction Standards. The configuration, location, materials, design
and all construction drawings and specifications of all buildings and permanent
improvements

 

32

 

(including
all Timeshare Units and Furnishings) comprising the Timeshare Project are or
are to be shown in the Plans and Specifications and Development Schedule and
shall comply in all respects with the Complex Standards.  If Developer desires to materially
modify the Plans and Specifications and Development Schedule for
the Timeshare Project or for any Phase, the Developer shall deliver complete
documentation of each such change to Seller. 
Seller shall have ten (10) days
following such complete documentation within which to give its approval or
disapproval.   If Seller does not advise
Developer in writing within such period of any matters to which Seller objects,
Seller shall be deemed to have approved the Plans
and Specifications and Development Schedule so submitted for Seller’s
approval.

 

(j)                                    Material Changes in Scope of
Construction.  Following approval of the Plans and Specifications
and Development Schedule, any design or construction changes made by Developer
from the Plans and Specifications and Development Schedule for such Phase
that – (i) materially alter the structural components of a building, or (ii) materially
alter the exterior of a building, or (iii) alter the number of Timeshare
Units or parking spaces, or (iv) change the general character of the
Timeshare Project, or (v) reduce the fair market value of the proposed
improvements below its fair market value prior to the proposed change – will
require Seller’s prior written approval, which approval shall not be
unreasonably withheld or delayed.  Seller
shall be deemed to have approved a request for approval under this Subsection (j) if Seller has not sent a written
disapproval within ten (10) days
following receipt of a written request for approval pursuant to this Subsection (j).

 

(k)                                Responsibility for Design and
Construction.  Seller shall have the right to approve the
following items within ten (10) days
after receipt of a notice from Developer identifying such items or a change in
such items previously approved and if not approved or disapproved within such
period, such items or change in such items will be deemed
approved:

 

(i)                                     the general contractor for construction of the Timeshare Project and/or
any/each Phase, and

 

(ii)                                  all major subcontractors, and

 

(iii)                               the length and scope of warranties of construction (not including
manufacturer’s warranties) (which shall be no less than two years from issuance
of the final and unconditional certificate of occupancy upon completion of
construction).

 

(l)                                    Inspections.  
Seller and its agents or employees shall have the right to inspect the
construction work at reasonable intervals during construction and after
construction is substantially complete to ensure that the construction is
consistent with the approved Plans and Specifications and Development Schedule for
such improvements and in conformance with the Complex Standards.  If Seller determines that any portion of the
Timeshare Project is not in compliance with this Agreement and/or the
applicable construction documents and/or Complex Standards, Developer at its
expense shall promptly correct any such non-compliance to Seller’s reasonable
satisfaction.

 

(m)                              Developer/Builder Warranty.  
Developer shall obtain, from its general contractor and all major
subcontractors, warranties of materials and workmanship and that the
construction performed is done in a good and workmanlike manner free from
defects.  Such warranties shall extend
for two years from the issuance of the final and unconditional certificate of
occupancy for the portion of the improvements covered by such certificate and
shall be expressly enforceable by, inter alia, Developer and Seller and their
successors and assigns.

 

33

 

(n)                                 Assurance of Completion; Completion
Bond(s); Parent Guaranty.

 

(i)                                     With respect to the first of two towers (each
containing at least 250 units and at least 500 keys) in Phase 1 of the
Timeshare Project, Developer, as a condition to Deed Delivery, shall obtain,
and deliver to the Seller affirmative evidence of, performance, completion and
payment bond(s), from sureties reasonably acceptable to Seller, for all
construction on said first of two towers in Phase 1 of the Timeshare
Project.  Such bond(s) shall name the
State of Nevada as obligee thereunder, and shall be in form reasonably
satisfactory to Seller.  The amount of each
such bond(s) shall be for one hundred percent (100%) of all amounts required to
be paid for the design and construction of said first of two towers in
Phase 1 of the Timeshare Project. 
The bond(s) provided for in this Paragraph (i) shall
apply to the first tower only; see Paragraph (ii) below
for assurance of completion for the second tower in the first phase of the
Timeshare Project.

 

(ii)                                  With respect to the second of two towers
(each containing at least 250 units and at least 500 keys) in Phase 1 of
the Timeshare Project, Developer, as a condition to Deed Delivery, shall cause Westgate Resorts, Ltd. to guarantee all of Developer’s design,
construction, completion and other performance obligations, pursuant to a written
guaranty (the “Parent Guaranty”) in form and
substance satisfactory to Seller.  The
Parent Guaranty shall include a covenant to maintain a net worth of at least $250,000,000, and the undertakings under the Parent Guaranty
may not be delegated or assigned to any other entity or individual.  The principals of Westgate
Resorts, Ltd. shall agree, individually, to not cause or permit Westgate Resorts, Ltd. to violate the aforesaid net worth
and financial capacity covenants and tests or to assign or delegate its
undertakings under the Parent Guaranty to any other entity or individual.  The form and substance of the Parent Guaranty
is (or shall be, in accordance with the Documentation Schedule) attached hereto
as Exhibit N and incorporated herein
by reference.

 

(iii)                               With respect to the second and any subsequent
phase of the Timeshare Project, Developer shall provide assurance of completion
as follows:  If the third and fourth
buildings of the Timeshare Project are commenced simultaneously, or are under
construction at the same time, both evidence of delivery to the State of Nevada
of a completion bond(s), and delivery of a Parent Guaranty, both in form and
substance as provided above in this Subsection (n),
shall be required.  Only evidence of
delivery to the State of Nevada of a completion bond(s) in form and substance as
provided above in this Subsection (n)
shall be required during any time that only one of such buildings is under
construction

 

(o)                                  Construction Insurance. 
Throughout the entire construction period, Developer shall carry and/or
shall cause Developer’s General Contractor to carry a general liability policy
of insurance insuring Seller (as an additional insured) against any liability
whatsoever occasioned by accident on or about the Timeshare Property or any
appurtenances thereto in connection with all construction and demolition work
on the Timeshare Property.  Such policy
or policies shall be issued by an insurer qualified to do business in Nevada and
shall be in form, substance, and amounts in compliance with the standards of
Developer’s institutional lender (subject to review and approval by Seller in
its reasonable discretion).  The original
policy, or a true copy thereof, or a certificate in the form of an Acord 28, shall be delivered to Seller prior to the
commencement of work in, on or about the Timeshare Property.  Developer shall also obtain, or require its
contractor(s) to furnish, worker’s compensation insurance in the amounts
required by law, and Developer shall provide proof thereof to Seller.

 

(p)                                  Cost of Improvements and
Compliance with Laws and Codes.  Developer hereby covenants and agrees that
the cost of all design and construction of all improvements in

 

34

 

connection with the construction of the Timeshare
Project shall be the sole responsibility of Developer.  Developer further represents and covenants
that all improvements of any nature whatsoever placed, installed or constructed
on the Timeshare Property shall be constructed in compliance with all
applicable laws, codes, rules, regulations and ordinances of all governmental
and quasi governmental boards, agencies, and authorities having jurisdiction
over the Properties or such improvements.

 

(q)                                  Development and Construction
Financing.   Developer shall provide, from time to time,
confirmation, in form and substance reasonably acceptable to Seller, that
Developer has obtained and has or will have available sufficient funds (e.g.,
debt and equity) to complete the development and construction of the Timeshare
Project (or applicable phase) and to timely pay the Marketing Fees and other
amounts payable to Seller under or pursuant to the provisions of this Agreement
and the Marketing and Leasing Agreement. 
Such confirmation shall be required, at a minimum, (i) at and as a
condition precedent to Closing (preliminary), (ii) prior to Deed Delivery
pursuant to Section 25(f) below, and
(iii) prior to commencement of each phase if applicable.

 

(r)                                  Express Conditions.  In
addition to any other conditions, the Developer’s development and construction
obligations hereunder shall be expressly contingent upon the following:

 

(i)                                     Seller and Developer shall have mutually
approved all of the Plans and Specifications and Development Schedule for
the Timeshare Project; and

 

(ii)                                  The Developer shall have received all
applicable planning and development approvals for the Timeshare Project from
Clark County and all other applicable governmental agencies (e.g., state and/or
regional planning agencies and/or water allocation bodies and/or school
districts)

 

– provided that
Developer in good faith diligently pursues and exhausts all commercially
reasonable efforts to obtain the foregoing approvals.

 

10.                               Licensing and Branding.

 

(a)                                  At Closing under this Agreement, Developer
and Planet Hollywood International, Inc. (“PHII”)
shall enter into a PHII Licensing and Memorabilia Agreement (the “PHII Licensing and Memorabilia Agreement”) pursuant to
which, and subject to the provisions of which, Developer shall be granted a
license to use and shall use the name “Planet Hollywood Vacation
Club by Westgate” (or such other name as may be mutually agreed) for
the Timeshare Project.  Developer’s right
to use said name for the Timeshare Project shall be perpetual and irrevocable,
subject to the overriding interests of the owner of the “Planet
Hollywood” name and license and related intellectual property.  The form and substance of the PHII Licensing
and Memorabilia Agreement is (or shall be, in accordance with the Documentation
Schedule) attached hereto as Exhibit K
and incorporated herein by reference.

 

(b)                                 Seller and Developer agree to negotiate in
good faith for the development of additional timeshare projects utilizing the “Planet Hollywood Vacation Club” name and theme.

 

(c)                                  Seller agrees to endeavor in good faith to
enable Developer to acquire from PHII subject to the reasonable approval rights
of PHII, a license to Developer to incorporate PHII’s trade name, trade mark
and intellectual property in connection with any mutually agreed

 

35

 

theming of the Timeshare Project (a “PHII License”).  As
part of the PHII License, PHII shall provide Developer the exclusive right to
the marketing of the Timeshare Project from PHII’s restaurant locations, unless
it is prohibited by contract or lease or by law, and Developer shall pay to
PHII a lead generation fee equal to the greater of (i) fifty
dollars ($50) per vacation package tour generated from such restaurant
locations or (ii) lead generation fees Developer pays to any other person
or party in similar or related circumstances. 
As part of the PHII License, PHII shall agree to work with Developer to
develop mutually beneficial marketing programs such as a “Planet
Hollywood Timeshare Sales Premium Club Card” for restaurant access
and/or other “perks” to enhance traffic flow to restaurants and to the
Timeshare Project.

 

(d)                                 In exchange for the PHII License, during the
term of the PHII Licensing and Memorabilia Agreement and for so long thereafter
as the Timeshare Project or any portion thereof is benefitting from the PHII
License, PHII shall be paid a fee (the “PHII License  Fee”) equal to the following amounts:

 

(1)                                  Until 100 Percent Sell-Out, the PHII License
Fee shall be equal to the sum of

 

(A)                              one percent (1%) of
Net Interval Sales plus

 

(B)                                so long as the Maintenance Agreement (see Section 17)
is in effect, one percent (1%) of Rental
Income (defined in Section 18);
and

 

(2)                                  After 100 Percent Sell-Out, the PHII License
Fee shall be equal to the sum of

 

(A)                              one percent (1%) of
budgeted Operating Costs as per the timeshare owners association’s Operating
Budget; plus

 

(B)                                so long as the Maintenance Agreement (see Section 17)
is in effect, one percent (1%) of Rental
Income (defined in Section 18).

 

The portion of the PHII
License Fee described in paragraph (1)(A) above
shall be payable monthly, in the same manner as payments of the Marketing Fee
and/or Timeshare Advances; and the portion of the PHII License Fee described in
paragraph (1)(B) and in paragraph (2) above shall be payable as provided
in Section 18 below.  PHII shall be responsible for obtaining all
licenses and/or permits as may be required under applicable law to receive the
PHII License Fee as outlined above.

 

(e)                                  The PHII Licensing and Memorabilia Agreement
shall also govern subleasing and/or sublicensing of Planet Hollywood
memorabilia at and/or in connection with the Timeshare Project.

 

(f)                                    In the event that Seller shall cease
utilizing the “Planet Hollywood” brand as the
dominant theme within the Complex, Developer shall have the right, but not the
obligation, to change the name and theming of the Timeshare Project to
correspond with Seller’s dominant theme, provided that such change is made in
accordance with the terms and conditions of this Agreement.

 

(g)                                 Westgate Resorts, Ltd. shall also be paid a fee (the “Westgate License Fee”) equal to 1% of Rental Income (defined
in Section 18), payable monthly, in
the same manner as payments of the PHII License Fee, until 100 Percent Sell-Out
and thereafter until termination of the Maintenance Agreement (see Section 17).  Westgate
Resorts, Ltd. and/or affiliates shall be

 

36

 

responsible for obtaining all licenses and/or permits as
may be required under applicable law to receive the Westgate License Fee as
outlined above.

 

11.                               Timeshare Registration; Timeshare
Sales.

 

(a)                                  As part of the Design/Approval Process (see Section 5 above), Developer

 

(i)                                     shall commence preparation of registration materials on or prior to the
Effective Date; and

 

(ii)                                  shall use best efforts to submit or cause to
be submitted, as soon as possible following the Effective Date, complete and
correct applications for registration of the Timeshare Project in the State of
Nevada and for all other governmental approvals required by the State of Nevada in connection with marketing the Timeshare
Project in Nevada; and

 

(iii)                               in any and all events, shall, prior to the date (the “Filing Date”) which is 180 days
following the Effective Date, submit or cause to be submitted complete and
correct applications for registration of the Timeshare Project in the State of
Nevada and for all other governmental approvals required by the State of Nevada in connection with marketing the Timeshare
Project in Nevada.

 

(b)                                 In addition, Developer shall use commercially
reasonable efforts to cause the Timeshare Project to be registered for
timeshare sales in such other jurisdictions (collectively, together with the
State of Nevada, the “Critical Jurisdictions”)
as appropriate from time to time, in Developer’s sole discretion, to maximize sales
velocity of Timeshare Intervals in the Timeshare Project.

 

(c)                                  Developer shall complete the Nevada timeshare
registration and shall commence sales of Timeshare Intervals in the Timeshare
Project as soon as reasonably practicable following Closing on the Timeshare
Property and the receipt of all applicable governmental authorizations
necessary relative to the sale of the Timeshare Project; and, in any event,
Developer shall complete the Nevada timeshare registration and shall commence sales
of Timeshare Intervals in the Timeshare Project on or before the date (the “PH Sales Commencement Date”) which is the earliest to occur of

 

(A)                              the date which is 180 days following
the earliest to occur of (i) the Filing Date or (ii) the date of submission
of the State of Nevada registration application(s) pursuant to Subsection (a) above; or

 

(B)                                the date of approval by the State of Nevada for marketing the Timeshare
Project in Nevada.

 

12.                               Marketing and Leasing Agreement.

 

(a)                                  At or prior to Closing hereunder, Seller and
Developer shall enter into a mutually acceptable Marketing and Leasing
Agreement (the “Marketing and Leasing Agreement”)
which will provide Developer the exclusive right as to the marketing and/or
sale of timeshare/vacation ownership products within the Complex, to include,
but not necessarily be limited to,

 

37

 

(i)                                     display advertising and/or collateral material and/or preview invitations as
part of the Hotel guest check-in packages;

 

(ii)                                  place advertising and/or collateral material at the Hotel concierge;

 

(iii)                               place advertising and/or collateral material in the Hotel guestrooms and in
other areas of the Hotel;

 

(iv)                              broadcast on a continuous play in-house channel, not less
than 5 min. per hour, an in-room TV video for the Timeshare Project;

 

(v)                                 to the extent not expressly prohibited or
otherwise restricted by the Management Agreement between Seller and Starwood
(or other operator/manager of the Hotel/Casino Property), utilize the guest
information generated by Seller with respect to the Hotel/Casino for use in
marketing the Timeshare Intervals in the Timeshare Project;

 

(vi)                              Seller shall use commercially reasonable efforts, to the extent not
expressly prohibited or otherwise restricted by the Management Agreement
between Seller and Starwood (or other operator/manager of the Hotel/Casino
Property), to provide mutually agreed specialized concierge and check-in
services to guests (this opportunity applies only to in-house marketing rather
than normal guest check-in and is subject to revocation or modification if, in
the reasonable opinion of Seller, these services are causing a material and adverse
impact on guest experience in the Complex); and

 

(vii)                           Seller shall use commercially reasonable efforts, to the extent
permitted by the Management Agreement between Seller and Starwood (or other
operator/manager of the Hotel/Casino Property), to obtain all past registration
cards and future reservations listing for purposes of soliciting timeshare
tours.

 

The form and substance of
the Marketing and Leasing Agreement is (or shall be, in accordance with the
Documentation Schedule) attached hereto as Exhibit D.  The materials identified in clauses (i)-(iv) above
shall be subject to Seller’s prior written approval which approval shall not be
unreasonably withheld.

 

(b)                                 The stated term of the Marketing and Leasing
Agreement shall commence on the “Marketing Commencement
Date”, which shall be as soon as reasonably possible after the
Effective Date of this Agreement, as specified by Seller and Developer in a
joint writing, but in no event later than the Closing Date, and shall run until
the occurrence of the Fully Sold Project.

 

(c)                                  Developer will commence operations under the Marketing
and Leasing Agreement on the Marketing Commencement Date.  To the extent Developer has not obtained
required Nevada approvals to commence marketing or sale of interests in the
Timeshare Project as of the Marketing Commencement Date, Developer and/or
related or affiliated entities shall be entitled to commence marketing in the Complex
of Developer’s other existing timeshare projects, subject to payment, with
respect to such other existing timeshare projects, of Marketing Fees with
respect to such alternative timeshare marketing equal to the greater
of

 

(1)                                  Monthly payments, each in an amount equal to ten percent (10%) of all “Net Interval Sales” of such other
existing timeshare projects, calculated in the manner provided herein for
payment of Marketing Fees, as if such other existing timeshare projects

 

38

 

marketed and sold from the Complex were Timeshare
Intervals in the Timeshare Project; or

 

(2)                                  $100,000 per month.

 

Such
marketing of other existing timeshare projects shall cease upon the occurrence
of the PH Sales Commencement Date.

 

(d)                                 Other than the Westgate Flamingo Bay Resort
(to the extent owned by Developer and/or its related and/or affiliated
entities), Developer shall not, in or near or with respect to Las Vegas,
actively promote, or permit the distribution of (to the extent it may legally
prohibit same) or distribute marketing or other solicitation materials relating
to, competitors of the businesses operated in the Complex, including other Las
Vegas timeshare projects.  Materials and
procedures related to marketing or solicitation concerning the Westgate Flamingo
Bay Resort at the Timeshare Property shall be subject to Seller’s prior written
approval.  Any permitted marketing or
solicitation concerning the Westgate Flamingo Bay Resort, and/or any timeshare
property other than the Timeshare Project, shall cease on the PH Sales
Commencement Date.  Notwithstanding the
foregoing, Developer, at or prior to the time of closing on the sale of
Timeshare Intervals, may provide to timeshare purchasers “owner kits” which
mention Westgate timeshare properties other than the Timeshare Project,
provided Seller shall have previously approved in writing such materials, which
approval shall not be unreasonably withheld, delayed or conditioned and shall not require further approval unless
subsequent revisions to such materials are not substantially similar to the approved
materials.

 

(e)                                  Seller shall have the right to display in the
Timeshare Units, and at the Timeshare Property, advertising and/or collateral
materials for the Hotel/Casino Property and other businesses operated in the Complex
provided: (i) Developer shall have
previously approved in writing such materials, which approval shall not be
unreasonably withheld, delayed or conditioned and shall not require further approval unless subsequent revisions to
such materials are not substantially similar to the approved materials;
and (ii) Developer is not otherwise prohibited by law from providing such
rights to Seller.

 

(f)                                    All marketing and solicitation and related
activity by or on behalf of Developer at or in connection with the Complex
and/or the City Block shall at all times comply with the highest standards of
decorum and professionalism and shall at all times be consistent with the
Complex Standards and the ownership and operation by or on behalf of Seller of
the Hotel/Casino Property.

 

13.                               Marketing & Use Leases
and/or Easements.   At closing hereunder Developer will purchase
and Seller will sell, subject to the reversion/easement provisions of Section 9(g) above, and subject to the City Block
Covenants and Senior Lender Agreements, the following leases and easements
related to the purchase of the Timeshare Property and the Timeshare Project of
the Timeshare Project:

 

 (1)                               Marketing and Solicitation Leases (Kiosks). 
Subject to the existing Lease and Concession Agreement, dated December 28,
2000 (the “Existing Paramount Lease”), by and
between Aladdin Gaming, LLC and Paramount Marketing Consultants, Inc.
(which expires May 15, 2004 and continues thereafter on a month-to-month
basis, terminable upon 30 days notice
to lessee), Seller, pursuant to the Marketing and Leasing Agreement, shall
lease to Developer (which shall become effective on termination of the Existing
Paramount Lease and continue thereafter until the Closing (but which may also

 

39

 

require Developer pay rent
substantially similar to the Existing Paramount Lease) for the use by Developer
of four (4) kiosks measuring
approximately 12 feet by 12 feet located within the Complex in substantially
the same locations as those currently used (the “Kiosks”)
for timeshare marketing purposes including the exclusive right to offer for
sale timeshare or other vacation ownership products within the Complex.

 

From and after the Closing,
Seller shall cause the Kiosks to be provided to Developer rent free.

 

From and after the Closing,
to the extent that Developer can demonstrate to Seller, acting reasonably, that
additional kiosks will be required by Developer to generate sufficient sales
relative to the Timeshare Project, the parties shall mutually agree on
additional kiosks for use by Developer.

 

All such leases will
terminate upon the sooner to occur of (A) one year following the Fully
Sold Project, or (B) following the Fully Sold Project, the date at which
Developer no longer exclusively sells Timeshare Intervals in the Timeshare
Project; provided however that at the time of the termination of such leases,
Seller and the Developer shall negotiate at Developer’s option a rental
arrangement for the areas under lease at the then fair market rental rate.

 

(2)                                  Resort and Amenities Access
Easement/Agreement.  Seller shall grant a perpetual easement in
favor of the Developer and any subsequent owner or owners and their respective
guests and invitees of the Timeshare Project (including owners of Timeshare
Intervals in the Timeshare Project) permitting such owners, and their tenants
and guests, access to and use of the Hotel/Casino Property, including but not
limited to gaming, food and beverage, retail, entertainment (live or otherwise)
and other recreational facilities (swimming pools, health club, etc.), existing
from time to time, on the same terms as are generally available to guests of
the Hotel (the “Resort and Amenities Access
Easement/Agreement”).  Seller
shall receive, from owners of Timeshare Intervals in the Timeshare Project,
reimbursement for Seller’s pro-rata share of Operating Costs (such that
timeshare owners or guests shall have the same access rights as patrons and
guests of the Hotel/Casino guests) for the amenities listed above, which reimbursement
shall apply only to the swimming pool and the health club subsidy and shall not
apply to any other hotel amenities, unless Developer and Seller elect to include
the cost of any additional amenities in the annual operating/maintenance fees
charged to owners.  The rate of
reimbursement shall be based upon the number of Timeshare Units constructed as
a percentage of the total number of hotel and Timeshare Units in the
aggregate.  It is understood that these
costs will be paid out of annual operating/maintenance fees charged to owners
of Timeshare Intervals in the Timeshare Project.  The form and substance of the Resort and
Amenities Access Easement/Agreement is (or shall be, in accordance with the
Documentation Schedule) attached hereto as Exhibit F.

 

(3)                                  Other Easements.  Such
other easements and access rights relating to the Complex as shall be
reasonably requested by Developer to permit the Timeshare Project and operation
of the Timeshare Project in a physically integrated manner with the Hotel, as
the same may be altered from time to time, provided such easements and access
rights do not impair or otherwise adversely affect the current operation or
value of the portion of the Complex burdened thereby or its intended manner of
operation following the renovation thereof.

 

40

 

14.                               Sales Center Lease.

 

(a)                                  The Marketing and Leasing Agreement executed
and delivered at Closing under this Agreement shall include provisions
implementing the substance of a Sales Center Lease (“Sales Center
Lease”) for a minimum of 10,000 square feet of non-prime space
within the Complex (such location, configuration and maximum size as determined
by Seller in its sole discretion) for use as a sales center for the Timeshare
Project (“Sales Center”).  The Sales Center shall be provided to
Developer rent-free; provided that Developer shall pay Operating Costs (other
than rent and CAM charges) including utilities and housekeeping.  Developer will be responsible for all tenant
improvements relative to the Sales Center and Seller will have no obligation
for such improvements.  The Sales Center
Lease will terminate upon the sooner to occur of (1) one year following
Fully Sold Project, and (2) following the Fully Sold Project, the date at
which Developer no longer exclusively sells Timeshare Intervals in the
Timeshare Project; provided,
however that at the time of the termination of such Sales Center Lease, Seller
and the Developer shall in good faith negotiate at Developer’s option a rental
arrangement for the area under Sales Center Lease at the then fair market
rental rate.

 

(b)                                 The parties acknowledge that temporary space
on the mezzanine level of the Hotel/Casino Property has been identified for use
by Developer as a sales center hereunder until the permanent sales center has
been built out.

 

15.                               Timeshare Sales Premiums.

 

(a)                                  All premiums offered to prospective
purchasers of Timeshare Intervals in the Timeshare Project as an incentive to
take tours of the Timeshare Project or attend timeshare sales presentations
pertaining to the Timeshare Project (collectively, “Timeshare
Sales Premiums”) shall be purchased from the Seller or Seller’s
designee, from the Casino, or from designated food and beverage, retail or
entertainment outlets owned, operated or controlled by Seller and located in
the Complex (including, for these purposes, any outlet subsequently leased or
sold by Seller).  Timeshare Sales Premiums
shall be purchased in initial increments in an amount to be mutually agreed but
in any event no less than $65 and up to $75 (it being agreed by Seller that if
Developer agrees to initial increments of $75, Seller shall ensure that the
total retail value of such premiums shall be $100) (the “Base
Timeshare Sales Premium Price”), which may be increased in
increments of $25 if used in conjunction with a Timeshare Sales Premium
purchased at the Base Timeshare Sales Premium Price.  Except for the following discounts, all
Timeshare Sales Premiums shall be purchased at face value:

 

(i)                                     Casino match-play vouchers may be purchased
at a 50% discount to face value; provided, however, Seller reserves the right
to substitute a substantially similar benefit for match-play vouchers for
inclusion in premiums.

 

(ii)                                  Seller shall use commercially reasonable
efforts to cause show tickets to be made available to Developer for purchase at
a 25% discount to face value; provided, however,
should Seller institute a policy (as opposed to one-off events or limited
promotions) to offer a discount rate to the general public or single or
otherwise unbundled ticket sales to other third parties with respect to a
particular show, the parties agree to negotiate in good faith an appropriate
further discount to face value with respect to such show tickets which discount
shall exceed the discount being provided to the general public or such third
party, as the case may be; and provided, further,
however, that, in the event Seller is unable to provide discounted show
tickets as contemplated by this paragraph, Seller shall use commercially reasonable
efforts to provide substitute

 

41

 

premiums reasonably satisfactory to Developer such
as (but not limited to) food and beverage vouchers, other entertainment events,
discounts on nightclub access, match play, or comparable premiums; provided, further, however, that if Seller is unable to
provide substitute premiums reasonably satisfactory to Developer as aforesaid,
then, during such time as Seller is unable to provide substitute premiums as
aforesaid, Developer shall be entitled to increase its ability to use Off-Site
Timeshare Sales Premiums (defined below) such that the number of Off-Site
Timeshare Sales Premiums during such period shall not exceed 25% of the total
number of all Timeshare Sales Premiums utilized by Developer during any such
period.

 

(iii)                               Merchandise and Food & Beverage
vouchers may be purchased at a 25% discount to face value.

 

(b)                                 Subject to Developer’s ability to provide
show tickets to Developer for purchase at a 25% discount to face value as set
forth in Subsection (a)(ii) above, not
less than 70% (by number) of the Timeshare Sales Premiums purchased by
Developer shall consist of show tickets and/or casino match-play vouchers.

 

(c)                                  Developer shall have the right to utilize
Timeshare Sales Premiums, obtained independently by Developer, and which are
not redeemable at the Complex (“Off-Site Timeshare Sales
Premiums”), provided that the number of Off-Site Timeshare Sales
Premiums in any twelve month period shall not exceed 1% of the total number of
all Timeshare Sales Premiums purchased by Developer during that period;
provided, however, in the event that Developer is able to demonstrate to
Seller, acting reasonably, that the above limitation on Off-Site Timeshare
Sales Premiums is materially impacting tour sales, the parties shall in good
faith negotiate appropriate revisions to the above limitations, in any event
not to exceed five percent (5%) in total.

 

(d)                                 The parties’ agreements concerning Timeshare
Sales Premiums shall be included in the Marketing and Leasing Agreement.

 

16.                               Vacation Packages; Room Block
Agreement.

 

(a)                                  Seller shall, at Developer’s option, make
available to Developer 200 hotel rooms (or such greater number as may be
mutually agreed) per day in the Hotel/Casino Property on the following terms
for use solely by Developer in its vacation packages for promoting sales of
Timeshare Intervals and not for resale (“Room Blocks”).  The location and finish of the Room Blocks
available for such purpose on any given day shall vary according to the
operating requirements of the Seller.

 

(b)                                 Provided that the ADR for Room Blocks
within the Timeshare Project are equal to or less than the ADR for rooms within
the Hotel/Casino, as determined by the Seller, once the first phase of the
Timeshare Project is completed, Developer shall be entitled to use Timeshare
Units in the Timeshare Project, subject to mutually agreeable advance notice and
subject to payment by Developer of the Reimbursement Rate defined below, in
lieu of all or part of the Room Blocks. 
The foregoing shall not preclude Developer from booking additional Room Blocks
in the hotel at the rates set forth herein subject to availability.

 

42

 

(c)                                  Developer shall release Room Blocks into
Seller’s hotel-use inventory as follows:

 

(i)                                     If Developer has not booked at least 50 Room Blocks for vacation packages at least 45 days prior to the date of the proposed stay, then
Developer shall release to Seller Room Blocks in amount equal to the
difference between 50 and the number of Room Blocks so booked; and

 

(ii)                                  If Developer has not booked at least 100 Room Blocks (including any bookings recognized in Paragraph (i) immediately above) for vacation
packages at least 30 days
prior to the date of the proposed stay, then Developer shall release to Seller Room Blocks
in amount equal to the difference between 100 and the sum of
(A) the Room Blocks released pursuant to Paragraph (i) immediately
above and (B) the number of Room Blocks so booked; and

 

(iii)                               If Developer has not booked at least 150 Room Blocks (including any bookings recognized in Paragraphs (i) and (ii) immediately above)
for vacation packages at least 15 days
prior to the date of the proposed stay, then Developer shall release to Seller Room Blocks
in amount equal to the difference between 150 and the sum of
(A) the Room Blocks released pursuant to Paragraph (i) and
(ii) immediately above and (B) the number of Room Blocks
so booked; and

 

(iv)                              If Developer has not booked at least 175 Room Blocks (including any bookings recognized in Paragraphs (i), (ii) and (iii) immediately
above) for vacation packages at least 7 days
prior to the date of the proposed stay, then Developer shall release to Seller Room Blocks
in amount equal to the difference between 175 and the sum of
(A) the Room Blocks released pursuant to Paragraphs (i),
(ii) and (iii) immediately above and (B) the number
of Room Blocks so booked; and

 

(v)                                 If Developer has not booked all Room Blocks (including any bookings recognized in Paragraphs (i), (ii), (iii) and (iv) immediately
above) for vacation packages at least 3 days
prior to the date of the proposed stay, then Developer shall release to Seller
all remaining unbooked Room Blocks.

 

Developer
may retain any Room Blocks not booked in accordance with the foregoing
release schedule, in which event Developer shall be required to pay Seller
therefor as if said retained Room Blocks had been booked as provided in
this Section, and in which event said retained Room Blocks shall be
treated as booked for the purpose of the foregoing release schedule.  The foregoing release schedule shall be
adjusted if the parties agree upon Room Blocks greater than or fewer than
200, as provided in Subsection (a).

 

(d)                                 Except as provided below, Developer shall
first offer to Seller all bookings for Vacation Package Rooms (as defined
below).  The rate payable to Seller for
Vacation Package Rooms in the Hotel reserved through Developer (or units in the
Timeshare Project, if applicable, in accordance with Subsection (c) above)
shall be the Reimbursement Rate (as defined below).  Developer and Seller shall negotiate in good
faith to establish working protocols consistent with industry standards for the
management of room reservation requests and cancellations.  For purposes hereof:

 

(i)                                     “Vacation Package Room”
shall mean a room package sold to a potential Timeshare Interval purchaser that
requires a tour of the Timeshare Property as part of the package or an unhooked
vacation package in states where Developer is not registered; provided

 

43

 

that unhooked vacation packages shall not exceed
20% of the total rooms booked by Developer; and

 

(ii)                                  “Reimbursement Rate”
shall mean

 

(A)                              for the twelve month period commencing on the Marketing
Commencement Date (the “Initial Rate Period”),
the lower of

 

(1)                                  25% off the Lowest Published Rate, or

 

(2)                                  $85 for room nights falling
on Sunday through Thursday and $120 for room
nights falling on Friday and Saturday – except that, when Monday is a holiday,
$120 for the immediately preceding Sunday.

 

For the purpose hereof, the phrase “Lowest Published Rate” shall mean the advertised room rate
for that particular time of week (e.g., weekend versus weekday) for a room
available to the general public and specifically excluding one-off events and
limited promotions; and

 

(B)                                upon the expiration of the Initial Rate
Period, and for each succeeding twelve month period thereafter (each a “Rate Period”), the Reimbursement Rate shall be adjusted
upward by the increase (if any) in the Consumer Price Index for the Las Vegas,
Nevada standard metropolitan statistical area as published by the U.S. Bureau
of Labor Statistics (the “CPI”) between
the CPI published for the third month preceding the month in which the Initial
Rate Period or the Rate Period then expiring, as applicable, commenced and the
CPI published for the third month preceding the month in which the Initial Rate
Period or the Rate Period then expiring, as applicable ended (as so adjusted
from time to time, the “Adjusted RR”).

 

If
Seller desires to charge a Reimbursement Rate for any Rate Period following the
Initial Rate Period in excess of the Adjusted RR determined as set forth above
for such Rate Period, Seller may do so and shall so notify Developer thereof in
writing specifying the rate to be so charged (provided that such rate shall not
apply with respect to any Vacation Package Rooms sold prior to the date which
is thirty (30) days after the date of such
notice), in which event, Developer shall be permitted for the remainder of such
Rate Period to sell Vacation Package Rooms at any other hotel in Las Vegas,
Nevada without first offering such bookings to Seller.

 

(e)                                  The parties’ agreements concerning Vacation
Packages and Room Blocks shall be included in the Marketing and Leasing
Agreement.

 

17.                               Maintenance Agreement.

 

(a)                                  Developer and its affiliated management agent
will enter into a Master Maintenance Agreement (satisfactory to Seller and
Developer in their reasonable discretion) pursuant to which Developer’s
affiliated management agent will manage the Timeshare Project.  Developer’s affiliated management agent will,
in turn, subcontract with Seller (who may in turn subcontract with Starwood or
another approved manager) and enter into a mutually acceptable agreement (the “Maintenance Agreement”), in form and substance as is to be
agreed upon prior to Deed Delivery and is (or shall be, in accordance with the
Documentation Schedule) attached hereto as Exhibit H,
whereby Seller, subject to the aforesaid Master Maintenance

 

44

 

Agreement, shall be
responsible for the direct operation and maintenance of the Timeshare Project
(or portions thereof as may be mutually agreed by Seller and Developer acting
in a commercially reasonable manner), including both Timeshare Unit Vacancies
and Timeshare Units which are occupied by purchasers of Timeshare Intervals or
their guests or designees; provided, however,
it is agreed by the parties hereto that the direct operating expenses,
replacement reserves and other customary and appropriate expenses of the
Timeshare Project shall be allocated to each Timeshare Interval in the
Timeshare Project as a maintenance fee pursuant to an annual operating budget
for the Timeshare Project, to be mutually agreed by Seller and Developer (the “Operating Budget”). 
For purposes of the Maintenance Agreement, direct operating expenses
shall expressly exclude any direct or indirect costs or expenses relating to
the sale of Timeshare Units.  The
Maintenance Agreement shall have an initial term of 25 years, with
multiple successive automatic 5-year
renewals unless Seller by written notice declines to renew at least 180 days
prior to the then-current expiration date. 
The Maintenance Agreement, and the convention center lease (see Section 9(h) above), shall both provide that
termination or expiration of said lease shall automatically effect a
termination of the Maintenance Agreement, and that termination or expiration of
the Maintenance Agreement shall automatically effect a termination of said lease.  Further, the Maintenance Agreement, and the
said lease, shall both provide that a non-defaulting party’s remedies for
default shall include the right to terminate both the Maintenance Agreement and
said lease, but not the right to terminate only one of such agreements.

 

(b)                                 Notwithstanding the Master Maintenance
Agreement or the Maintenance Agreement, Developer, and not Seller or Starwood,
shall be responsible for and shall separately accomplish (1) Reservations
made by Timeshare Interval owners for occupancy in the Timeshare Project; (2) Check-in
by Timeshare Interval owners and/or their guests; and (3) Repairs at the
Timeshare Project.

 

(c)                                  Maintenance fees established pursuant to the
Operating Budget shall be applied in part to fees payable under the Maintenance
Agreement and in part to fees payable to the Developer for its services provided
pursuant to Subsection (b), all of which
shall be deemed to be Operating Costs for all purposes hereunder.  Developer shall collect all such fees, which
shall not exceed, in the aggregate, the market-standard fee payable for such
combined services for other comparable properties in Las Vegas, Nevada.  Developer, pursuant to the Operating Budget
as mutually agreed and as modified from time to time, shall allocate and pay
said fees as to be agreed mutually between Seller and Developer (in connection
with approving the Operating Budget) to fees and expenses of management and
maintenance of the Timeshare Project.  This
Subsection (c) is subject to
confirmation as the Maintenance Agreement is finalized prior to Closing

 

(d)                                 Notwithstanding anything herein to the
contrary, it is acknowledged and agreed that Developer has approved Starwood
and Seller to act as approved manager(s) pursuant to the Maintenance Agreement.  In the event neither Starwood nor Seller
continues to act as manager(s) pursuant to the Maintenance Agreement, any
replacement or substitute manager shall be subject to the approval of the
Developer, not to be unreasonably withheld, provided the replacement or
substitute is not a substantial competitor to Westgate in Las Vegas or other
markets.

 

18.                               Timeshare Unit Vacancies; Vacancy
Rentals.

 

(a)                                  Developer agrees that during the term of the
Maintenance Agreement Seller shall have exclusive operational control of all
Timeshare Unit Vacancies and Seller shall offer, under

 

45

 

exclusive license, the
rental, management and maintenance of all such Timeshare Unit Vacancies (“Vacancy Rentals”) at rates and terms to be determined by
Seller, acting reasonably, it being agreed by the parties that Seller may, from
time to time, utilize a management company for Vacancy Rentals substantially
similar to the manner in which Seller may utilize a management company in
connection with the Hotel/Casino Property.

 

(b)                                 As consideration for providing the Vacancy
Rentals, the parties agree as follows:

 

(A)                              Gross rental income arising from Vacancy Rentals
(“Rental Income”), plus

 

(B)                                Gross income arising from the maintenance
fees established on all Timeshare Units

 

(collectively “Gross Rent and Maintenance
Fee Income”), shall be collected by Seller and shall be distributed
as follows:

 

(i)                                     First, to pay the PHII License Fee, the Westgate
License Fee and any fee occasioned by any third-party management company (e.g.,
Starwood); and

 

(ii)                                  Second, to the Seller and/or the Developer, as
applicable, in the amount of Shore Up or shortfall paid in prior periods by
Developer and/or Seller pursuant to Subsection (c) below,
or to the extent payment thereof is attributable to Seller or Developer,
respectively; and

 

(iii)                               Third, to the payment of all Operating Costs incurred
in connection with the Project (to the extent not paid as part of the first
distribution provided for above); and

 

(iv)                              Fourth, provided that the Timeshare Project is
constructed as required pursuant to Section 9,
or, in the event the Timeshare Project is developed in phases, provided the
Developer has complied with its obligation to complete construction of each
phase as and when required pursuant to, and as described in, Section 9(a) and Section 9(f),
to the payment (or reimbursement to Developer) of

 

(a)                                  one-half (1/2) (i.e., 50%) of all interest on any construction loan(s) attributable
to Timeshare Intervals accruing prior to completion of the first phase of the
Timeshare Project provided for in Section 9; plus one-half
(1/2) (i.e., 50%) of all interest on any construction loan(s) attributable
to construction of parking to meet the Parking Requirement as provided in Section 6, but said payment or reimbursement shall be
available only to the extent the Parking Requirement does not exceed 800 parking spaces; provided, however, that Seller’s
reimbursement obligation shall not exceed $2,700,000 for
all such construction interest accruing prior to completion of said first
phase; and

 

(b)                                 after completion of the first phase of the
Timeshare Project as described in clause (a) immediately
above, all (i.e., 100%) of all interest on any
construction loan(s) attributable to Timeshare Intervals in the Timeshare
Project (including said first phase as well as the second and any subsequent
phase) accruing after said completion of said first phase; plus all
(i.e., 100%) of all interest on any construction loan(s) attributable
to construction of parking to meet the Parking Requirement as provided in Section 6 accruing after said completion of said first
phase, but said payment or reimbursement shall be available only to the extent
the Parking Requirement does not exceed 800 parking spaces;

 

46

 

provided,
however, that, in all events, all principal of all such
construction loan(s) shall be allocated to all Timeshare Intervals in the
Timeshare Project or applicable phase (whether or not such Timeshare Intervals
have actually been added to the Timeshare Plan), and, upon sale of each
Timeshare Interval, the allocated portion of principal shall be applied to
reduce the outstanding principal balance of the applicable construction
loan(s); and provided, further, however, that
the aforesaid 800 parking space limitation shall
be increased to the extent (but only to the extent) that construction of the
convention center space, provided for in Section 9(h) of
this Agreement, causes the Parking Requirement to increase.

 

(v)                                 Fifth, to the payment to Seller of an amount equal
to the payment to Developer as set forth in the fourth distribution provided
for above (in the event of any shortfall, such amounts shall accrue until fully
paid); and

 

(vi)                              Sixth, to be distributed between Developer and
Seller on a 50/50 basis.

 

(c)                                  In the event that the Operating Costs of the
Timeshare Project exceed the Gross Rent and Maintenance Fee Income, any
shortfall (except to the extent representing profit or general overhead or
other amounts not actually paid by Developer as direct costs of Developer’s
management or maintenance of the Timeshare Project) shall be covered by

 

(i)                                     The Seller, at any time that both (A) the Timeshare Project or (applicable phase)
has been constructed as contemplated herein such that Minimum Project Density (or
applicable portion) has been achieved by Developer, as provided in Section 9(a), Section 9(f) and other
applicable provisions of this Agreement; and (B) the Maintenance Agreement
has not expired without renewal or has not been terminated due to breach,
violation or default by Developer; and

 

(ii)                                  The Developer, if the conditions in clause (i) above have not been met.

 

The obligation of the Seller
or the Developer, as the case may be, to cover the shortfall as aforesaid is
sometimes referred to in this Agreement as the “Shore-Up”
obligation.

 

(d)                                 Notwithstanding anything contained herein to
the contrary, all maintenance fee payments must be credited and posted on the
applicable homeowner association books and records as required by law.

 

(e)                                  It is the expectation of the parties hereto
that Developer’s construction of Timeshare Units will initially exceed realized
demand for the Timeshare Units as Timeshare Intervals, so that, initially, a
relatively larger number of Timeshare Units will be treated as Timeshare Unit
Vacancies available for Vacancy Rental under this Section.  It is further the expectation of the parties
that the timing of release of Timeshare Unit Vacancies for submission to the
timeshare regime and for sale as Timeshare Intervals will correspond generally
to the rate at which sales of Timeshare Intervals “catch up” with the inventory
of completed Timeshare Units.  For the
purpose of the Shore Up obligations in this Agreement, a completed Timeshare
Unit will be treated as a hotel suite for any applicable period, and Developer
shall not be responsible for maintenance fees for said Timeshare Unit for said period,
if and to the extent that Developer has released said Timeshare Unit for
Vacancy Rental not later than thirty (30) days prior
to the commencement of said period.  The
foregoing is subject to confirmation as the Maintenance Agreement is finalized
prior to Closing.

 

47

 

(f)                                    The reporting, audit and related provisions
of Section 4(f) shall apply to
Vacancy Rentals.

 

(g)                                 The parties’ agreements concerning Vacancy
Rentals shall be included in the Marketing and Leasing Agreement.

 

19.                               Pre-Timeshare Activities.  Seller and Developer shall jointly commence and diligently pursue good
faith negotiations to:

 

(i)                                     develop a plan for the coordination of the development
of the Timeshare Project with the renovation of the Hotel (as defined in the
PSA) intended to facilitate the physical integration of the Hotel renovation
and development of the Timeshare Project;

 

(ii)                                  identify and assess the interrelationships
between the Timeshare Project, Hotel, Casino (as defined in the PSA) and Mall
Property, aka Desert Passage Shopping Center (aka/fka Aladdin Bazaar)
(Boulevard Investments), and determine appropriate and reasonable cost
allocations amongst the Timeshare Property, the remainder of the Complex and Mall
Property (Desert Passage Shopping Center) of the costs and expenses required to
be paid under the City Block Covenants, including but not limited to the Shared
Parking Agreement (aka Parking Use Agreement), REA, Northwind Utility Agreement
and Harmon Avenue Intersection Plan (as the same are defined in the PSA);
and

 

(iii)                               identify and enter into any required ingress, egress
construction and utility easements, parking rights and easements (or applicable
amendments to existing parking agreements and easements) or other access and
use rights reasonably necessary to (a) comply with applicable legal
requirements or (b) permit the efficient Timeshare Project of the
Timeshare Project

 

(collectively, the “Pre-Timeshare Project
Activities”); and

 

(iv)                              enter into agreements to create mutually
agreed discounts for owners of Timeshare Units within the Timeshare Project
with discounts to include gaming promotions, food and beverage, retail,
entertainment (live or otherwise) and other recreational facilities (swimming
pools, health club, etc.), and other items which may be mutually agreed upon to
enhance the ownership experience and value.

 

In
conjunction therewith, Developer and Seller (to the extent necessary) shall
cause to be prepared such preliminary design studies regarding the Timeshare
Project and the Hotel renovation, respectively, as shall be reasonably required
to pursue the Pre-Timeshare Project Activities. 
Developer shall have the right, and shall make available a
representative of Developer, to participate in all negotiations with the owner
of the Mall Property aka Desert Passage Shopping Center (aka/fka Aladdin
Bazaar) (Boulevard Investments) regarding the foregoing.  It is expressly understood that the obligations
of Seller and its related and affiliated entities including, but not limited
to, all marketing rights, rental agreement easements, shall be binding upon its
successors, assigns, and subsequent property owners, except as may be otherwise
required by the Senior Lenders.

 

In addition, and as a condition precedent to
Closing, Seller shall obtain a nondisturbance and attornment agreement and/or
similar coordination and cooperation undertakings, from the Senior Lenders,
with respect to the Senior Lender Agreements and the Senior Lenders’ rights

 

48

 

with respect to the Complex, all in form and substance satisfactory to
Developer, acting reasonably.  Developer’s
proposed form of nondisturbance and attornment agreement is (or shall be, in
accordance with the Documentation Schedule) attached hereto as Exhibit B.

 

20.                               Representations. Covenants and Warranties of the Seller.  All representations, covenants, and warranties set forth in this Section and
other applicable Sections of this Agreement, and liability for breach thereof,
shall survive the Closing and any subsequent delivery of the deed unless
otherwise indicated.  Seller hereby
represents and warrants to Developer as to the following matters, each of which
is so represented and warranted to be materially true and correct both as of
the Effective Date (unless otherwise noted) and through and as of the Closing
Date.  The continued truth of each of the
representations and warranties as of the Closing Date shall be a condition
precedent to Developer’s obligation to close.

 

(i)                                     Due Organization and
Qualification.  Seller is a duly organized limited liability
company, validly existing and in good standing in the state of Nevada, and has
the power and authority to enter into and perform all of its obligations under
this Agreement.

 

(ii)                                  Litigation.   To the Seller’s knowledge after reasonable
inquiry, and other than the litigation identified on Schedule 20,
there are no pending or threatened matters of litigation, administrative action
or arbitration pending against the Seller or the Timeshare Property, or any
pending or threatened eminent domain, expropriation, condemnation or other
governmental proceedings involving a taking of the Timeshare Property or any
part thereof or affecting the Timeshare Property which can or will materially
and adversely affect Seller’s ability to perform its obligations under this
Agreement or which will materially and adversely impair Developer’s intended
use of the Timeshare Property.  To the
Seller’s knowledge, no attachments, execution proceedings, assignments,
insolvency, bankruptcy or reorganization proceedings are pending or threatened
or available against, or contemplated by, the Seller.

 

(iii)                               Certain Information.   Seller has no reason to believe that all
records and other documents which have been, or are to be, delivered by the
Seller under this Agreement are, or in the case of future deliveries, will be,
true, accurate and complete, and fairly present the information set forth
therein in a manner which is not misleading; provided, however, that any
financial projections, marketing analyses and similar deliveries are provided
for information only and without representation or warranty of any kind.

 

(iv)                              Authority to Enter into and Consummate the
Agreement.  Seller’s execution of, and performance under,
this Agreement is contracted through its authorized officer.  By virtue of the execution of this Agreement,
the Seller represents that it has the right and authority to enter into this
Agreement and that the Seller has the ability to perform all of its obligations
hereunder without any consents from any public or private parties other than
pursuant to the PSA and the City Block Covenants and the Senior Lender
Agreements.  The execution and delivery
of this Agreement, and the performance of Seller’s
obligations hereunder, have been duly and validly authorized by all necessary
corporate action on the part of the Seller. 
This Agreement constitutes a legal, valid and binding obligation of the
Seller, which is enforceable against the Seller in accordance with its terms,
subject to enforceability, bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors’ rights generally and to
general equitable principles.  To the
Seller’s knowledge after reasonable inquiry, neither the execution nor delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will conflict with or result in a breach under any agreement or
instrument by

 

49

 

which the Seller or the Timeshare Property is
bound, subject to applicable consents required
under or in connection with the PSA and the City Block Covenants and the Senior
Lender Agreements, as listed on Schedule 20
attached hereto (or to be attached hereto, in accordance with the Documentation
Schedule), and will not constitute a violation of any applicable law, rule,
regulation, judgment, writ, order or decree of any governmental entity or court
to which the Seller or the Timeshare Property is subject.  Seller is not a party to, and to the Seller’s
knowledge the Timeshare Property is not subject to, any contract, understanding
or agreement, written or oral, other than this Agreement and the agreements listed
in Schedule 20.

 

(v)                                 No Known Breaches or Violations.  Seller has received no written
notice of any breach of any zoning or land use requirements.  Seller has not received written notice
pertaining to the Timeshare Property regarding any violations of any state,
local, federal or other law, statute, regulation, code, ordinance, decree or
order.

 

(vi)                              Access.  To
Seller’s knowledge after reasonable inquiry, subject to the applicable City
Block Covenants, the Timeshare Property abuts, and has direct, permanent and
unobstructed access for purposes of ingress and egress to, public roads or
streets sufficient to satisfy all zoning, building and land use codes,
restrictions and regulations.

 

(vii)                           Title.   Seller is contract purchaser of the
Timeshare Property.  To Seller’s
knowledge, no other agreements, options or rights of first offer or refusal
exist to purchase or use the Timeshare Property or any portion thereof.  To Seller’s knowledge, no other party is in
possession of any portion of or has any claim or right to possession of the
Timeshare Property.

 

(viii)                        Certain Tax Matters.  The Seller is a “United States Person” within
the meaning of Section 1545(f)(3) of the
Internal Revenue Code of 1986, as amended, and shall execute and deliver to the
Developer, at closing, an “Entity Transferor” certification.

 

21.                               Limitation. 
Notwithstanding anything to the contrary herein or in any other document
or agreement, Developer acknowledges that

 

(A)                              Seller is acquiring the Complex, including the Timeshare Property, from
Aladdin Gaming, L.L.C. pursuant to the PSA; and

 

(B)                                Closing under this Agreement is to occur no sooner than simultaneously
with closing under the PSA, and

 

(C)                                Seller is relying upon the representations and warranties of Aladdin
Gaming, L.L.C. in and pursuant to the PSA; and

 

(D)                               any representations and/or warranties and/or covenants and/or agreements
of Seller in this Agreement pertaining in any way to the Timeshare Property are
derived from and limited by the corresponding representations and/or warranties
and/or covenants and/or agreements of Aladdin Gaming LLC in the PSA.

 

Seller represents that after
reasonable inquiry, Seller has no knowledge of facts and circumstances that
would make any matter described in this Section 21
inconsistent with any of Seller’s representations and warranties in Section 20.

 

50

 

22.                               Covenants of the Seller. 
Seller hereby covenants with the Developer, from and after the Effective
Date and through the Closing Date (or such other specified date), that Seller
will faithfully perform its obligations under this Agreement.  Seller shall also reasonably and promptly
cooperate with the Developer in the Developer’s efforts to obtain approval from
governmental entities and others for the Developer’s Timeshare Documents
including, without limitation, executing applications, consents and
authorizations for the Developer to proceed which the Developer shall prepare
at its cost and expense.

 

23.                               Covenants of the Developer.  
Developer hereby covenants with the Seller, from and after the Effective
Date and through the Closing Date (or such other specified date), that
Developer will faithfully perform its obligations under this Agreement.

 

24.                               Representations and Warranties of
the Developer.  All representations and warranties set forth
in this Section shall survive the Closing and any subsequent delivery of
the deed unless otherwise indicated. Developer hereby represents and warrants
to the Seller as to the following matters, each of which is so represented and
warranted to be materially true and correct both as of the Effective Date and
through and as of the Closing Date. The continued truth of each of the
representations and warranties as of the Closing Date shall be a condition
precedent to Seller’s obligation to close.

 

(i)                                     Due Organization and
Qualification.  Developer is a duly organized limited
partnership, validly existing and in good standing in the State of Florida, and
qualified to do business in the State of Nevada, and has the power and
authority to own the Timeshare Property or the interest therein to be acquired
pursuant to this Agreement and enter into and perform its obligations under
this Agreement.

 

(ii)                                  Authority to Enter into and Consummate the Agreement. 
Developer’s execution of, and performance under, this Agreement is
contracted through its authorized officer. 
By virtue of the execution of this Agreement, the Developer represents
that it has the right and authority to enter into this Agreement and that the
Developer has the ability to perform all of its obligations hereunder without
any consents from any public or private parties.  The execution and delivery of this Agreement, and the performance of Developer’s obligations
hereunder, have been duly and validly authorized by all necessary corporate and
partnership action on the part of the Developer and its constituents.  This Agreement constitutes a legal, valid and
binding obligation of the Developer, which is enforceable against the Developer
in accordance with its terms, subject to enforceability, bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors’
rights generally and to general equitable principles.  Neither the execution nor delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
conflict with or result in a breach under any agreement or instrument by which
the Developer is bound, and will not constitute a violation of any applicable
law, rule, regulation, judgment, writ, order or decree of any governmental
entity or court to which the Developer is subject.  Developer is not a party to any contract,
understanding or agreement, written or oral, other than this Agreement and the
agreements listed in Schedule 24 attached
hereto (or to be attached hereto, in accordance with the Documentation
Schedule).

 

25.                               Closing and Deed Delivery.

 

(a)                                  Developer’s Conditions Precedent
to Closing.  The obligations of the Developer to effect
the transactions contemplated by this Agreement shall be subject to

 

51

 

satisfaction of all of the following conditions precedent
unless waived in writing by the Developer, in its sole discretion:

 

(i)                                     All representations and warranties of the
Seller shall be true and correct in all material respects as of the Effective
Date and the Closing Date and, if applicable, as of the date of delivery of the
deed in accordance with Subsection (f) below;
and the Seller shall have delivered an officer’s certificate, dated the Closing
Date, and, if applicable, as of the date of delivery of the deed as aforesaid,
to such effect; and

 

(ii)                                  All Title Objections, Survey Objections,
Environmental Objections and Zoning and Land Use Objections, if any, shall have
been resolved to the Developer’s reasonable satisfaction or waived; and

 

(iii)                               As of the Closing Date and, if applicable, as of the date of delivery
of the deed in accordance with Subsection (f) below,
Seller shall not be (i) subject to any order, decree, judgment or
injunction of a court or governmental body of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated herein nor (ii) a
party to any pending action, suit or proceeding before any court or
governmental agency of competent jurisdiction which seeks to enjoin or prohibit
the consummation of the transactions contemplated hereby, or to cause any of
the transactions contemplated hereby to be rescinded following their
consummation, or which materially and adversely affects the Timeshare Property
or the use of the Timeshare Property in accordance with the Developer’s
intended use; and

 

(iv)                              Seller shall have performed all material obligations and complied with
all material covenants and obtained all necessary approvals and consents required
or contemplated by this Agreement; and

 

(v)                                 The parties shall have concluded and executed
all applicable Timeshare Development Agreements; and

 

(vi)                              Seller shall have closed under the PSA and/or shall close under the PSA
simultaneously with Closing under this Agreement; and

 

(vii)                           The Senior Lenders shall have given all required consents to the
Closing of the transaction and shall have executed the nondisturbance and
attornment agreement as provided in Section 19
above; and

 

(viii)                        All other consents and approvals, including but not limited to those
referred to in Section 6, Section 9, Section 20(iv),
Schedule 20, Section 32(c) and Section 37, to
the extent then applicable, shall have been obtained.

 

(b)                                 Seller’s Conditions Precedent to
Closing.  The obligations of Seller to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions precedent at or prior to the Closing Date for each
Phase unless waived in writing by Seller, at its sole discretion:

 

(i)                                     Closing shall have occurred under the PSA to
the satisfaction of the Seller; and

 

(ii)                                  The representations and warranties of the
Developer shall be true and correct in all material respects as of the
Effective Date and the Closing Date; and

 

52

 

(iii)                               All Title Objections, Survey Objections, Environmental Objections and Zoning
and Land Use Objections, if any, shall have been resolved to the Seller’s
reasonable satisfaction or waived; and

 

(iv)                              Developer shall not be (i) subject to any order, decree, judgment
or injunction of a court or governmental body of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated herein nor (ii) a
party to any pending action, suit or proceeding before any court or
governmental agency of competent jurisdiction which seeks to enjoin or prohibit
the consummation of the transactions contemplated hereby, or to cause any of
the transactions contemplated hereby to be rescinded following their consummation,
or which materially and adversely affects the Timeshare Property or the use of
the Timeshare Property in accordance with the Developer’s intended use; and

 

(v)                                 Developer shall have performed all material
obligations and complied with all material covenants and obtained all necessary
approvals and consents required or contemplated by this Agreement; and

 

(vi)                              The parties shall have concluded and executed all applicable Timeshare
Development Agreements; and

 

(vii)                           The Senior Lenders shall have given all required consents to the
Closing of the transaction; and

 

(viii)                        The satisfaction or waiver of all of the Developer’s Conditions
Precedent to Closing as provided in Section 25(a); and

 

(ix)                                All consents and approvals, including but not limited to those referred
to in Section 20(iv) and Schedule 20, shall have been obtained.

 

(c)                                  Closing Date and Location. 
Subject to the other provisions of this Agreement, the date of Closing hereunder (the “Closing Date”) shall
be no later than December 31, 2004.  The Closing shall occur in Las Vegas, Nevada
at a location to be designated by Seller, with consent of Developer, not to be
unreasonably withheld, or by mail/overnight courier service (if the Developer
and Seller so elect), on or as of the Closing Date.

 

(d)                                 Closing Documents.  At
the Closing, (i) Seller shall execute and deliver, or shall cause to be
executed and delivered, to Developer (or other applicable person), such title
affidavits and related items as may be reasonably requested by the Title
Company handling settlement, including but not limited to a settlement
statement and a FIRPTA affidavit; and (ii) Developer shall execute and
deliver, or shall cause to be executed and delivered, to Seller (or other
applicable person), an insured closing protection letter from the parent of the
Title Company and such title affidavits and related items as may be reasonably
requested by the Title Company handling settlement, including but not limited
to a settlement statement; and (iii) Seller and Developer shall execute
and deliver, or shall cause to be executed and delivered, all such other
applicable documents and agreements, including but not limited to all
applicable Timeshare Development Agreements, and other items as shall be
necessary or appropriate to effect the Closing in accordance with this
Agreement.

 

53

 

(e)                                  Prorations and Closing Costs.

 

(1)                                  Taxes, utilities and related items shall be
prorated as of the date of Deed Delivery, and any bills or invoices dated or
delivered to or received by Developer with respect thereto following the
Closing Date shall be the responsibility of Developer to pay.  If exact amounts for any prorated items are
not available on the date of Deed Delivery, such items shall be prorated on the
basis of the most recent information available, and shall be re-prorated when
more accurate information becomes available.

 

(2)                                  Seller shall pay for (i) half of the
transfer and recordation taxes on the transfer deed; (ii) all transfer and
recordation taxes and all other recording fees and costs for all title curative
instruments, if any; and (iii) its own attorney’s fees.  Developer shall pay for all other closing and
recordation taxes, fees, costs and expenses, including but not limited to (1) the
title insurance premiums for all title insurance policies provided for herein
and/or required by Developer’s providers of funds; (2) half of the
transfer and recordation taxes, and all other recording fees and costs, for the
transfer deed and for all other documents and instruments to be recorded and/or
filed in any applicable land records and/or in any applicable governmental
records; (3) all fees, charges, costs and expenses of any and all
contractors, agents, consultants and professionals engaged to perform due
diligence or other services with respect to the Timeshare Property; and (4) its
own attorney’s fees.

 

(f)                                    Deed Delivery.

 

(1)                                  Notwithstanding occurrence of Closing as
provided herein, the Special Warranty Deed, with Reversion, in form and
substance as set forth in Exhibit I
attached hereto (or to be attached hereto, in accordance with the Documentation
Schedule) and incorporated herein by reference, and the Bill of Sale in form
and substance as set forth in Exhibit J
attached hereto (or to be attached hereto, in accordance with the Documentation
Schedule) and incorporated herein by reference, shall not be required from
Seller, and shall not be delivered or recorded without Seller’s approval in
Seller’s sole discretion, unless and until

 

(i)                                     Developer shall have delivered to Seller
confirmation, in form and substance reasonably acceptable to Seller, as
provided in Section 9(q), that Developer
has obtained and/or will have available sufficient funds (e.g., debt and
equity) to complete the development and construction of the Timeshare Project
(or, if applicable, the first phase thereof) and to timely pay the Marketing
Fees and other amounts payable to Seller under or pursuant to the provisions of
this Agreement and the Marketing and Leasing Agreement;

 

(ii)                                  The Developer shall have obtained and
delivered to Seller the assurances of completion in accordance with Section 9(n), including but not limited to evidence of
delivery to the State of Nevada of the completion bond(s) and to the Parent
Guaranty described in said Section 9(n),
for the construction of at least the first phase of the Timeshare Project,
described herein; and

 

(iii)                               Seller and Developer shall have mutually approved all of the Plans and
Specifications and Development Schedule for the Timeshare Project; and

 

(iv)                              The Developer shall have received all applicable planning and
development approvals for the Timeshare Project from Clark County and all other
applicable governmental agencies (e.g., state and/or regional planning agencies
and/or water allocation bodies and/or school districts); and

 

54

 

(v)                                 The Developer shall have received
registration approval from the applicable State of Nevada timeshare regulatory
agency concerning Phase 1 of the Timeshare Project.

 

On the date of delivery of
the Special Warranty Deed, with Reversion, the Timeshare Property shall be
conveyed free of all Title Objections, Survey Objections, Environmental
Objections and Zoning and Land Use Objections, other than those resolved as
provided in this Agreement.

 

(2)                                  Developer shall satisfy all conditions for
delivery of the deed as provided above (“Deed Delivery”)
not later than the PH Sales Commencement Date.

 

(3)                                  In addition to any other conditions, the
Developer’s development and construction obligations hereunder and under the
Timeshare Development Agreements shall be expressly contingent upon the
following:

 

(i)                                     Seller and Developer shall have mutually
approved all of the Plans and Specifications and Development Schedule for
the Timeshare Project; and

 

(ii)                                  The Developer shall have received all
applicable planning and development approvals for the Timeshare Project from
Clark County and all other applicable governmental agencies (e.g., state and/or
regional planning agencies and/or water allocation bodies and/or school
districts)

 

– provided that
Developer in good faith diligently pursues and exhausts all commercially
reasonable efforts to obtain the foregoing approvals.  In the event these conditions (subject to
said proviso) in this Paragraph (3) are
not satisfied prior to the date of Deed Delivery set forth herein, the
Developer shall have no further liability for development and construction
hereunder and under the Timeshare Development Agreements.

 

26.                               Breach; Remedies.

 

(a)                                  Breach (other than failure to
close or failure to satisfy conditions to Deed Delivery) and Opportunity to
Cure.

 

In the event that either
party is in breach of its representations, warranties, covenants or other
obligations under this Agreement other than the obligation to close, the non-breaching
party shall give notice to such effect, specifying the nature of such breach,
in which event the breaching party shall have thirty (30)
days following the receipt of such notice to cure such breach. If
such breach is not cured within such period, the non-breaching party shall have
the rights (i) to enforce the terms of this Agreement by seeking a
judicial decree of specific performance or other equitable remedy and/or (ii) to
pursue such other relief (including damages) as may be available at law or in
equity.

 

(b)                                 Seller’s Failure to Close or
Deliver the Deed.  In the event of Seller’s failure to close on
the sale of the Timeshare Property or to deliver the deed when required to do
so in accordance with this Agreement, Developer may enforce the requirement to
close or to deliver the deed by seeking a judicial decree of specific
performance or other equitable remedy.

 

(c)                                  Developer’s Failure to Close or
Satisfy Conditions.  In the
event of Developer’s failure to close on the purchase of the Timeshare Property
or to satisfy the conditions to Closing or Deed Delivery when required to do so
in accordance with this Agreement and/or in accordance with any applicable
deadline, and in the event same

 

55

 

constitutes a default by Developer hereunder,
Seller may enforce the requirement to close or to satisfy said conditions by
seeking a judicial decree of specific performance, and Seller may also seek and
prove and collect consequential, actual and any other damages available at law
or in equity; provided, however,

 

(1)                                  if Developer’s failure to close or to satisfy
conditions to Closing or Deed Delivery is due solely to

 

(A)                              Developer’s inability, after good faith diligent
pursuit and exhaustion of all commercially reasonable efforts, to obtain

 

(i)                                     all applicable planning and development approvals (assuming that the
conditions set forth in Section 25(f)(3)(i) have
been satisfied) for the Timeshare Project from Clark County and all other
applicable governmental agencies (e.g., state and/or regional planning agencies
and/or water allocation bodies and/or school districts); or

 

(ii)                                  registration approval from the applicable State of Nevada
timeshare regulatory agency concerning Phase 1 of the Timeshare Project;
or

 

(B)                                acts of God or labor actions which make it
impossible, in the exercise of commercially reasonable efforts, to develop and
build the Timeshare Project as contemplated herein (after reasonable
accommodation by Seller); or

 

(C)                                act of war or terrorism (identified as such
by the United States Government under the USA Patriot Act and/or subject to the
benefits of the Terrorism Risk Insurance Act) which directly, materially and
adversely affects tourism in Las Vegas, Nevada for a period of at least four (4) consecutive
months; or

 

(D)                               the death or incapacity of David Siegel; or

 

(E)                                 Disapproval or other adverse action by the
owner of the Mall Property to the extent occurring as described in and subject
to the provisions of Section 6(a)(5) above;
or

 

(F)                                 Seller’s inability, good faith diligent
pursuit and exhaustion of all commercially reasonable efforts, to obtain
confirmation of utilities as and to the extent provided in and subject to the
provisions of Section 6(e) above;

 

and
is not (and does not arise from) a default by Developer hereunder, then this
Agreement shall be terminated, subject to Developer’s continuing duties to
Seller concerning confidential and/or proprietary information and any and all
other provisions hereof which survive termination of this Agreement, and Seller
shall have no remedy under this Section 26
for Developer’s failure to close or satisfy conditions; and

 

(2)                                  Following Closing (assuming that the
conditions set forth in Section 25(f)(3)(i) have been satisfied), if Developer’s
failure to satisfy conditions to Deed Delivery is due solely to

 

56

 

(A)                              Developer’s inability, after good faith diligent
pursuit and exhaustion of all commercially reasonable efforts, to obtain
construction financing for the development and construction of the first phase
of the Timeshare Project, or

 

(B)                                Developer’s inability, after good faith diligent
pursuit and exhaustion of all commercially reasonable efforts, to obtain and
deliver to the Seller evidence of the completion bond(s) described in Section 9(n);

 

then,
whether or not same constitutes a default hereunder, Developer shall be liable
to Seller for $7,000,000 as liquidated
damages, and upon payment thereof this Agreement shall be
terminated, subject to Developer’s continuing duties to Seller concerning
confidential and/or proprietary information and any and all other provisions
hereof which survive termination of this Agreement, and Seller shall have no
further remedy under this Section 26
for Seller’s failure to satisfy conditions to Deed Delivery, the parties
agreeing hereby that, in such event, liquidated damages is a reasonable remedy
under the circumstances.

 

Whatever the reason or remedy for Developer’s failure to close,
Developer shall deliver to Seller any and all information and all books,
records, documents and other items delivered to or obtained by or generated by
Developer in any way related to the Timeshare Property and/or the Complex.

 

(d)                                 Specific Developer Defaults.  If
Developer shall fail to:

 

(i)                                     commence and diligently prosecute in good
faith the Design/Approval activities as required herein, or

 

(ii)                                  commence sales of Timeshare Intervals in
Phase 1 of the Timeshare Project on or prior to the PH Sales
Commencement Date, and such failure shall continue for thirty (30)
days following written notice thereof from Seller, or

 

(iii)                               pay the Timeshare Advances or Marketing Fee
when due,

 

when required pursuant to applicable
provisions of this Agreement, subject to applicable conditions, then:

 

(A)                              if Deed Delivery has not occurred hereunder,
Seller may terminate this Agreement by giving notice to Developer, upon which
the parties shall have no further rights or obligations hereunder other than as
provided in Section 33 and Section 26(c); and

 

(B)                                if Deed Delivery has occurred hereunder,

 

(1)                                  Seller may terminate Developer’s rights under
any and/or all applicable Timeshare Development Agreements – including (but not
limited to) the Marketing and Leasing Agreement, and the Maintenance Agreement
– and may draw upon the Letter of Credit; and Developer shall no longer have
the right to pursue development of the Timeshare Project; and

 

57

 

(2)                                  Notwithstanding clause (1) above,

 

(a)                                  the Resort and Amenities Access Easement/
Agreement shall not terminate to the extent applicable to any portion of the Timeshare
Project as to which (i) the possibility of reversion, as provided in Section 9(g), has expired; and (ii) sale of
Timeshare Intervals has commenced in accordance with this Agreement and there
is outstanding (or consummated) at least one contract with a bona fide third-party
consumer to purchase a Timeshare Interval; and

 

(b)                                 until the occurrence of a Fully Sold Project
to the extent of Timeshare Units in the portions of the Timeshare Project as to
which the possibility of reversion has terminated as provided herein, and so
long as the Developer is not in breach of its obligations pursuant to Section 9(a) and Section9(f) with
respect to such portions not subject to reversion, all applicable provisions of
this Agreement – including but not limited to provisions concerning marketing fees,
marketing locations, exclusivity, management rentals and easements – and the
Sales Center Lease, shall continue in full force and effect with respect to
such portions not subject to reversion; provided that
the foregoing shall not limit or otherwise affect Seller’s activities with
respect to anything other than Timeshare Intervals; and

 

(c)                                  after the occurrence of a Fully Sold Project
to the extent of Timeshare Units in the portions of the Timeshare Project as to
which the possibility of reversion has terminated as provided herein, and so
long as the Developer is not in breach of its obligations pursuant to Section 9(a) and Section 9(f) with
respect to such portions not subject to reversion, Seller may develop and/or
sell the second and any subsequent phases of the Timeshare Property without
regard to the aforesaid limitations, including but not limited to a competing
timeshare project and/or a competing timeshare developer; and the Sales Center
Lease shall be terminated; and

 

(3)                                  The Timeshare Property, or applicable portion
(see Section 9(g) above), shall
revert to Seller, and Developer shall execute, seal, acknowledge and deliver
such instruments of conveyance and such other documents and agreements as may
be necessary or appropriate to complete said reverter and vest in Seller good
and marketable fee simple title to all of the Timeshare Property (or applicable
portion), real, personal and mixed, and to relieve Developer to the extent
applicable of liability to Seller under the Timeshare Development Documents with
respect to the Reversion Property; and

 

(4)                                  If requested by Seller, Developer will
transfer to Seller (or its designee) all design information and other work
product related to the construction of the Timeshare Project other than
information proprietary to Developer’s timeshare business; and

 

(5)                                  Subject to any applicable duty to mitigate, Seller
shall be entitled to such other remedies as may be available hereunder and/or
at law and/or in equity.

 

58

 

Any design information or other work product
transferred to Seller shall be used by Seller only in connection with the
Timeshare Project on the Timeshare Property.

 

(e)                                  Other.  The
rights and remedies provided in the preceding subsections of this Section shall
be the sole and exclusive rights and remedies of the parties hereto with
respect to the breaches identified therein. 
Nothing herein contained, however, shall be deemed to limit any rights
or remedies of the parties following the Closing for any misrepresentation,
breach of covenant, breach of warranty or other matter thereafter asserted by
the parties hereto.  Each of the parties
acknowledges that the remedies stated herein have been negotiated and provide
mutual, satisfactory and adequate and proper compensation and consideration to
each of the parties and that such remedies take into account the peculiar risks
of each of the parties.  Each party
waives any right to assert the defense of lack of mutuality of remedy.  Any and all remedies provided for herein
and/or available at law or in equity shall survive Closing hereunder.

 

(f)                                    Reversion. 
Notwithstanding anything contained in this Agreement to the contrary,
once a reversion as set forth in this Agreement has occurred, and except with
respect to the Developer’s potential liability for liquidated damages as set
forth in Subsection (c) above, any
remedies available to Seller hereunder or under other applicable Timeshare
Agreements, or at law or in equity, shall be limited to remedies pertinent to
only the portion of the Timeshare Project as to which the possibility of
reversion has terminated.

 

27.                               Notices.   All notices hereunder shall be in writing and sent to the recipients
thereof through the use of any one of (a) a recognized national commercial
delivery service providing regular overnight delivery service, (b) hand
delivery or (c) certified mail, return receipt requested, and shall be
deemed properly delivered when and if delivered to the recipient’s office by
any of such service, as evidenced by the delivery receipt obtained by such
service from the recipient’s office (or if no such receipt is returned to the
sender, then two (2) Business Days after
the delivery service acknowledges receipt of the notice for delivery) or evidence
of the recipient’s refusal of such notice, such notices to be delivered to the
parties at the addresses set forth below:

 

	
  If to the Developer:

  	
   

  	
  Westgate Resorts, Ltd.

  
	
   

  	
   

  	
  5601 Windhover Drive

  
	
   

  	
   

  	
  Orlando, Florida 32819

  
	
   

  	
   

  	
  Attn:

  	
  David A. Siegel

  
	
   

  	
   

  	
  Attn:

  	
  David Crabtree

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
  Greenspoon, Marder, Hirschfeld ,

  
	
   

  	
   

  	
     Rafkin, Ross & Berger, P.A.

  
	
   

  	
   

  	
  201 East Pine Street, Suite 500

  
	
   

  	
   

  	
  Orlando, Florida 32801

  
	
   

  	
   

  	
  Attn:

  	
  Michael E. Marder, Esq.

  
	
   

  	
   

  	
   

  
	
  If to the Seller:

  	
   

  	
  OpBiz, L.L.C.

  
	
   

  	
   

  	
  3667 Las Vegas Blvd. South

  
	
   

  	
   

  	
  Las Vegas, Nevada 89109

  
	
   

  	
   

  	
  Attn:

  	
  Mark S. Helm, Esq.

  

 

59

 

	
  with copy to:

  	
   

  	
  Holland & Knight LLP

  
	
   

  	
   

  	
  2099 Pennsylvania Ave., N.W.

  
	
   

  	
   

  	
  Washington, D.C. 20006

  
	
   

  	
   

  	
  Attn:

  	
  Robert M. Chasnow, Esq.

  

 

Either party may change the
person and/or address required for proper notice by giving the other party
written notice of such modification in the manner described in this Section.

 

A duplicate notice may be
also sent by facsimile (fax) as an accommodation but notice shall be effective
only if delivered by method (a), (b) or (c) listed above.

 

28.                               Brokers.   Each of the Developer and the Seller warrants that no broker has been
involved in connection with this transaction. 
The parties agree to indemnify, defend and hold each other harmless
against the commission claims of any brokers with whom the indemnifying party
is claimed to have dealt, and further from and against any loss, cost
(including reasonable attorney fees), damage, claim, demand or liability
relating to broker claims which may be asserted against the indemnified party
and which arises by, through or under the indemnifying party.

 

29.                               Applicable Law.  This
Agreement and all questions of interpretation, construction and enforcement
hereof, and all controversies hereunder, shall be governed by the applicable
statutory and common law of the State of Nevada without regard to conflict of
law principles.

 

30.                               Partial Invalidity.  In
the event any term or provision of this Agreement shall be held illegal, unenforceable
or inoperative as a matter of law, the remaining terms and provisions of this
Agreement shall not be affected thereby, but each such term and provision shall
be valid and shall remain in full force and effect if the deletion of the
invalid provision shall not destroy the clear intent and purpose of this
Agreement (or deprive either party of a material benefit contemplated by this
Agreement).

 

31.                               Good Faith.  Each party agrees to take all actions respectively required of it or
otherwise contemplated hereunder promptly and in good faith.

 

32.                               Assignment.

 

(a)                                  This Agreement shall be binding upon and
shall inure to the benefit of the successors and permitted assigns of the
parties hereto.

 

(b)                                 Seller in its sole discretion may permit
Developer to assign and delegate its rights and obligations hereunder to a
single-purpose entity wholly owned and controlled by Developer, in which event
Developer shall remain fully responsible for all payment and performance
obligations of Developer hereunder and under all other related documents and
agreements.

 

(c)                                  Developer may collaterally assign its rights
hereunder and/or under any of the other Timeshare Development Agreements as
security for its construction financing for the Timeshare Project and/or in
connection with receivables financing pertinent to the Timeshare Project; provided that any such collateral assignment assigns only
the rights of Developer pursuant to the Timeshare Development Agreements and
does not modify any of the Developer’s obligations thereunder or modify or
adversely affect any of the Seller’s rights and obligations thereunder; and provided further that any exercise of
remedies by a lender or other

 

60

 

holder of any such
collateral assignment, and any acquisition of assets or exercise of rights
under any such collateral assignment, shall be subject to all applicable
provisions of this Agreement and the other applicable Timeshare Development
Agreements; it is understood and acknowledged that any lender foreclosing
pursuant to the aforesaid assignment(s), or any purchaser at such foreclosure,
shall also be entitled to any benefits available otherwise to Developer
hereunder.  Seller acknowledges that
Developer requires financing, secured by collateral assignments of Developer’s
rights hereunder and/or under other Timeshare Development Agreements, in order
to complete Developer’s obligations under this Agreement.

 

(d)                                 To comply with requirements of its lenders,
and/or for other reasons, Seller, without notice to or consent from Developer, may
assign and/or delegate its rights and responsibilities hereunder and/or under
the other Timeshare Development Agreements, provided any such assignee and/or
delegee shall assume all applicable responsibilities of Seller; and/or may
cause a parent, subsidiary or other affiliate to transfer the Timeshare
Property to Developer at Deed Delivery and/or to otherwise fulfill Seller’s
undertakings herein.  It is currently
contemplated that a parent, subsidiary or other affiliate named or colloquially
known as MezzCo will be said transferor.  Any and all references herein to Seller shall
be read and understood in the context of this Section.

 

(e)                                  Seller may collaterally assign its rights hereunder
and/or under any of the other Timeshare Development Agreements as security for
loans and other financial accommodations, without any requirement for approval by
Developer, provided that Seller shall provide notice to Developer of the
material terms of any such collateral assignment.

 

(f)                                    This Section shall not limit the ability
of Developer to assign its development rights as provided in (but subject to
compliance with) Section 9(g) in order to
avoid the application of the reversionary provisions of said Section.

 

(g)                                 Except as provided above in this Section,
neither party may assign any of its rights or obligations under this Agreement
in whole or in part without the prior written consent of the other party.

 

33.                               Non-Merger; Survival.  The provisions of all Sections of this Agreement (and the
representations and warranties set forth herein), including but not limited to
the default and remedy provisions herein, shall survive the Closing and shall
not be merged into the documents of conveyance from Seller to Developer at or
in connection with Closing or any Timeshare Development Agreement or any other
applicable document or agreement, unless and to the extent expressly indicated
otherwise.

 

34.                               Entire Agreement.  This Agreement embodies the entire understanding between the parties,
and supersedes any and all prior agreements and understandings, written or
oral, formal or informal.

 

35.                               Number, Gender etc.  All pronouns and nouns and variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the context and
identity of the parties may require.

 

36.                               Construction of Agreement.  This Agreement shall not be construed more strictly against one party
than the other merely by virtue of the fact that it may have been prepared by
counsel for one of the parties.  The
headings of various Sections in this Agreement are for convenience only and are
not to be utilized in construing the content or meaning of the

 

61

 

substantive provisions
hereof.  Each party acknowledges and
waives any claim contesting the existence and the adequacy of the consideration
given by the other in entering into this Agreement.  All recitals, exhibits, schedules and similar
items referred to herein and attached or intended to be attached hereto are
incorporated into this Agreement by reference as integral parts of this
Agreement.

 

37.                               Missing Exhibits, Schedules, etc.;
Documentation Schedule.  If and to the extent that any exhibits and/or
schedules is/are not attached hereto as an exhibit(s) and/or schedule(s) on the
Effective Date of this Agreement, the form and substance thereof shall be
negotiated in good faith between the parties hereto and shall be agreed upon
and so attached on or before the date which is set forth below:

 

	
  Exhibit, Schedule, etc.

  	
   

  	
  To be Agreed Upon and Attached

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Timeshare Property

  	
   

  	
  Attached hereto

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Developer’s Form of SNDA

  	
   

  	
  30 days following Effective Date*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Letter of Credit

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Marketing and Leasing Agreement

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Reserved

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Resort & Amenities Access Easement

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Reserved

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  Maintenance Agreement

  	
   

  	
  Deed Delivery

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  Special Warranty Deed, with Reversion

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit J

  	
   

  	
  Bill of Sale & General Assignment

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit K

  	
   

  	
  PHII Licensing & Memorabilia Agreement

  	
   

  	
  30 Days following Effective Date*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit L

  	
   

  	
  Statement Format

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit M

  	
   

  	
  Reserved

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit N

  	
   

  	
  Parent Guaranty (Westgate)

  	
   

  	
  30 Days following Effective Date*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit O

  	
   

  	
  Escrow Agreement

  	
   

  	
  Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit P

  	
   

  	
  Reserved

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 20

  	
   

  	
  Seller Disclosures

  	
   

  	
  30 Days following Effective Date*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 24

  	
   

  	
  Developer Disclosures

  	
   

  	
  30 Days following Effective Date*

  	
   

  

 

38.                               Waivers; Extensions.  No waiver of any breach of any agreement or provisions herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof or of
any other agreement or provisions herein contained.  No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for performance of
any other obligations or acts.

 

*                                         but
not, in any event, later than December 31, 2004.

 

62

 

39.                               Time.  Time is of the essence with respect to this Agreement.  Whenever the time for performance of any act
hereunder falls on a Saturday or Sunday or a legal holiday in Orlando, Florida
or Las Vegas, Nevada, such time shall be ipso facto
extended to the next Business Day.

 

40.                               Counterparts; Faxed Signatures;
etc.  This Agreement may be executed in counterparts and/or via use of
multiple signature pages, each of which shall be deemed an original.  It shall not be necessary that all signatures
of all parties, or that all signatures necessary to bind any party, appear on
the same counterpart or signature page. 
Signatures hereon transmitted via telefacsimile (fax) or similar means,
in accordance with Section 27,
shall be valid and binding on all parties so transmitting.

 

41.                               Modifications.  This Agreement may not be modified orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.

 

42.                               Attorney Fees and Expenses.  Should either party institute legal proceedings founded upon a breach
of this Agreement, except as any party’s remedies or recoveries may be
otherwise expressly limited hereunder, the prevailing party shall be entitled
to recover from the other party its reasonable attorneys’ and paralegal fees
and expenses incurred in connection with trial court proceedings, on appeal and
in bankruptcy or administrative proceedings which interpret or enforce such
party’s rights under this Agreement.

 

43.                               Further Assurances.  Each party, at any time, and from time to time, shall deliver to the
other party such additional and other documents and agreements, and shall do
and perform such other matters, as the other party may reasonably request, to
fully effect the purposes of this Agreement.

 

44.                               Force Majeure.  If a cause of delay is not due to the willful act or neglect of such
party, then except where the provisions of this Agreement clearly provide to
the contrary, neither Seller nor Developer shall be deemed in default with
respect to the performance of any of the terms, covenants and conditions of
this Agreement if such failure shall be due to any strike, lockout, civil
commotion, war-like operation, invasion, rebellion, hostilities, military or
usurped power, sabotage, governmental regulations or controls, inability to
obtain any materials for reasons beyond Seller’s control, Act of God or other
casualty or cause beyond the reasonable control of such party. In any such
event, except where expressly noted in this Agreement, the time for performance
of such obligations) shall be extended one day for each day such party is
prevented from performing its obligations) under this Agreement by such force
majeure.  This provision shall not limit
or support any delay in Developer’s obligation to pay Timeshare Advances timely
in accordance with this Agreement.

 

45.                               No Third Party Beneficiary.  Neither party intends that the purchasers of timeshare interests in the
Timeshare Project or that any other individual or entity (other than the Senior
Lenders to the extent of their interests in the Seller and the Complex) will
have the status of a third party beneficiary of any provision of this Agreement
for the purpose of enforcing such provision. 
The foregoing shall not adversely affect the ability of purchasers of
Timeshare Intervals to enforce their rights under applicable Timeshare
Development Agreements or the ability of collateral assignees (see Section 32) to enforce their rights under their
applicable security instruments.

 

63

 

46.                               Confidentiality.  Developer covenants that as long as this Agreement remains in effect
(and following its termination for any cause whatsoever), Developer (and
Developer’s affiliates) will hold in strict confidence all data and information
obtained by Developer concerning the Timeshare Property and/or the Complex
and/or the Seller, in connection with this Agreement or otherwise, except that
Developer may disclose information concerning the Timeshare Property to those
individuals and entities assisting Developer in connection with the
Design/Approval Process and, if appropriate, to Developer’s lender, sureties
and such governmental agencies and authorities as may be required by law.

 

47.                               Exclusivity.   Until the first to occur of – (i) 100 Percent Sell-Out; (ii) the
exercise by Seller of its termination right in Section 26(d),
(iii) any uncured default by Seller or its related or affiliated entities
pursuant to the various agreements contemplated hereunder (collectively, the “Termination Events”) – Developer and its affiliates will not
market, sell or contract for marketing or sale of timeshare interests in a
Westgate or any other timeshare product located on Las Vegas Boulevard.  The parties agree that the foregoing
restriction specifically excludes Westgate Flamingo Bay (to the extent owned by
Developer and/or its related and/or affiliated entities) (but the foregoing
exclusion does not affect or modify any other provisions of this Agreement
pertaining to Westgate Flamingo Bay; see Section 12).  The parties further agree that the foregoing
restriction shall be suspended for each year (see Section 4(d))
following any year in which Developer achieves Net Interval Sales exceeding
$100,000,000, as verified by Seller in accordance with Section 4(f) (periodic
reports, audits, etc.) and related provisions hereof.

 

[END OF PAGE.]

 

64

 

IN
WITNESS WHEREOF, the
parties have executed this Agreement, effective for all purposes as of the
Effective Date set forth on the first page hereof.

 

	
   

  	
  Seller:

  
	
   

  	
   

  
	
   

  	
  OPBIZ, L.L.C.,

  
	
   

  	
  a
  Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Developer:

  
	
   

  	
   

  
	
   

  	
  WESTGATE RESORTS, LTD.,

  
	
   

  	
  a
  Florida limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

The undersigned joins in the
foregoing Agreement solely for the purpose of agreeing to execute and deliver
the Deed and other applicable documents if, as and when required pursuant
thereto.

 

	
   

  	
  MEZZCO LLC,

  a Nevada limited liability
  company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

Exhibits & Schedules:

 

	
  Exhibit A

  	
  Timeshare Property

  
	
  Exhibit B

  	
  Nondisturbance and
  Attornment Agreement protecting Developer’s access to Complex

  
	
  Exhibit C

  	
  Guaranty/Security for
  Timeshare Advances and Marketing Fees

  
	
  Exhibit D

  	
  Marketing and Leasing
  Agreement

  
	
  Exhibit E

  	
  Reserved

  
	
  Exhibit F

  	
  Resort and Amenities
  Access Easement/Agreement

  
	
  Exhibit G

  	
  Reserved

  
	
  Exhibit H

  	
  Maintenance Agreement

  
	
  Exhibit I

  	
  Special Warranty Deed,
  with Reversion

  
	
  Exhibit J

  	
  Bill of Sale

  
	
  Exhibit K

  	
  PHII Licensing and
  Memorabilia Agreement

  
	
  Exhibit L

  	
  Monthly Itemized
  Statement –
  Marketing Fee Calculation & Net Timeshare Intervals

  
	
  Exhibit M

  	
  Reserved

  
	
  Exhibit N

  	
  Parent Guaranty

  
	
  Exhibit O

  	
  Escrow Agreement

  
	
  Exhibit P

  	
  Reserved

  
	
  Schedule 20

  	
  Seller Disclosures

  
	
  Schedule 24

  	
  Developer Disclosures

  

 

 

65

 

Exhibit A

 

Timeshare Property

 

[TO BE CONFIRMED]

 

PARCEL ONE (1):

 

EXPLANATION:

 

THIS
LEGAL DESCRIBES PARCEL NC AS SHOWN IN FILE 111, PAGE 84 OF SURVEYS ON FILE AT
THE CLARK COUNTY, NEVADA RECORDER’S OFFICE.

 

LEGAL
DESCRIPTION

 

PARCEL
NC

 

A
PORTION OF LOT 1 OF AS SHOWN IN THAT CERTAIN FINAL MAP ENTITLED “THE ALADDIN
COMMERCIAL SUBDIVISION” AS RECORDED IN BOOK 96, PAGE 33 OF PLATS ON FILE AT THE
CLARK COUNTY, NEVADA RECORDER’S OFFICE AND LYING WITHIN A PORTION OF THE
NORTHWEST QUARTER (NW 1/4) OF SECTION 21, TOWNSHIP 21 SOUTH, RANGE 61 EAST
M.D.M., CLARK COUNTY, NEVADA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

COMMENCING
AT THE SOUTHWEST CORNER OF THE NORTHWEST QUARTER (NW 1/4) OF SAID SECTION 21
BEING ON THE CENTERLINE OF HARMON AVENUE; THENCE ALONG THE SOUTH LINE OF THE
NORTHWEST QUARTER (NW 1/4) OF SAID SECTION 21, AND THE CENTERLINE OF SAID
HARMON AVENUE, NORTH 89°31’10” EAST, 904.20 FEET; THENCE DEPARTING SAID SOUTH
LINE AND STREET CENTERLINE, NORTH 00°28’50” WEST, 93.28 FEET TO THE NORTHERLY
RIGHT OF WAY OF SAID HARMON AVENUE TO THE POINT OF BEGINNING; THENCE DEPARTING
SAID NORTHERLY RIGHT-OF-WAY, NORTH 00°36’40” WEST, 142.49 FEET TO THE BEGINNING
OF A CURVE, CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 130.00 FEET; THENCE
NORTHEASTERLY ALONG SAID CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 90°00’00”,
AN ARC LENGTH OF 204.20 FEET TO A POINT OF TANGENCY; THENCE NORTH 89°23’20”
EAST, 511.60 FEET TO THE WESTERLY RIGHT-OF-WAY OF AUDRIE LANE; THENCE ALONG
SAID WESTERLY RIGHT-OF-WAY, SOUTH 00°36’40” EAST, 282.16 FEET TO THE BEGINNING
OF A CURVE, CONCAVE NORTHWESTERLY AND HAVING A RADIUS OF 30.00 FEET; THENCE
SOUTHWESTERLY ALONG SAID CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 90°07’50”,
AN ARC LENGTH OF 47.19 FEET TO THE NORTHERLY RIGHT-OF-WAY OF SAID HARMON
AVENUE; THENCE ALONG SAID NORTHERLY RIGHT-OF-WAY, THE FOLLOWING SEVEN (7) COURSES:
(1) SOUTH 89°31’10” WEST, 72.93 FEET TO THE BEGINNING OF A CURVE, CONCAVE
NORTHERLY AND HAVING A RADIUS OF 25.00 FEET; THENCE (2) WESTERLY ALONG
SAID CURVE TO THE RIGHT THROUGH A CENTRAL ANGLE OF 09°27’42”, AN ARC LENGTH OF
4.13 FEET; THENCE (3) NORTH 81°01’08” WEST, 68.86 FEET TO THE BEGINNING OF
A CURVE, CONCAVE SOUTHERLY AND HAVING A RADIUS OF 25.00 FEET; THENCE (4) WESTERLY
ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 09°27’42”, AN ARC LENGTH OF 4.13
FEET; THENCE (5) SOUTH 89°31’10” WEST, 396.66 FEET TO THE BEGINNING OF A
CURVE, CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 30.00 FEET; THENCE (6) NORTHWESTERLY
ALONG SAID CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 93°33’45”, AN ARC
LENGTH OF 48.99 FEET TO A POINT OF NON-TANGENCY, A RADIAL

 

 

LINE
TO SAID POINT BEARS NORTH 86°55’05” WEST; THENCE (7) SOUTH 80°41’11” WEST,
36.38 FEET TO THE POINT OF BEGINNING.

 

CONTAINS
188,792 SQUARE FEET (4.33 ACRES), MORE OR LESS. PARCEL NC HAS AN UPPER
ELEVATION OF INFINITY.

 

EXCEPTING
THEREFROM THE FOLLOWING DESCRIBED AREA:

 

COMMENCING
AT THE AFOREMENTIONED POINT “A”; THENCE NORTH 00°36’40” WEST, 132.97 FEET TO
THE POINT OF BEGINNING; THENCE CONTINUING NORTH 00°36’40” WEST, 9.51 FEET TO
THE BEGINNING OF A CURVE, CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 130.00
FEET; THENCE NORTHEASTERLY ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL
ANGLE OF 90°00’00”, AN ARC LENGTH OF 204.20 FEET; THENCE NORTH 89°23’20” EAST,
105.35 FEET; THENCE SOUTH 44°22’41” WEST, 101.35 FEET; THENCE SOUTH 89°21’45”
WEST, 101.25 FEET; THENCE SOUTH 00°25’39” EAST, 67.78 FEET; THENCE SOUTH 89°22’54”
WEST, 62.23 FEET TO THE POINT OF BEGINNING.

 

THIS
PARCEL HAS A LOWER PLANE ELEVATION OF 2117.29 FEET AND AN UPPER PLANE ELEVATION
OF 2144.29 FEET.

 

FURTHER
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED AREA:

 

PARCEL
NB11 AS SHOWN IN FILE 111, PAGE 83 OF SURVEYS ON FILE AT THE CLARK COUNTY,
NEVADA RECORDER’S OFFICE DESCRIBED AS FOLLOWS;

 

COMMENCING
AT THE AFOREMENTIONED POINT “A”; THENCE NORTH 00°36’40” WEST, 132.97 FEET TO
THE POINT OF BEGINNING; THENCE CONTINUING NORTH 00°36’40” WEST, 9.51 FEET TO
THE BEGINNING OF A CURVE, CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 130.00
FEET; THENCE NORTHEASTERLY ALONG SAID CURVE TO THE RIGHT THROUGH A CENTRAL
ANGLE OF 90°00’00”, AN ARC LENGTH OF 204.20 FEET; THENCE NORTH 89°23’20” EAST,
105.35 FEET; THENCE SOUTH 44°22’41” WEST, 101.35 FEET; THENCE SOUTH 89°21’45”
WEST, 101.25 FEET; THENCE SOUTH 00°25’39” EAST, 67.78 FEET; THENCE SOUTH 89°22’54”
WEST, 62.23 FEET TO THE POINT OF BEGINNING.

 

CONTAINS
14,906 SQUARE FEET, MORE OR LESS.

 

PARCEL
NB 11 HAS A LOWER PLANE ELEVATION OF 2144.29 FEET AND AN UPPER PLANE ELEVATION
OF 2173.00 FEET.

 

FURTHER
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED AREA:

 

PARCEL
NB7 AS SHOWN IN FILE 111, PAGE 82 OF SURVEYS ON FILE AT THE CLARK COUNTY,
NEVADA RECORDER’S OFFICE DESCRIBED AS FOLLOWS;

 

BEGINNING
AT THE AFOREMENTIONED POINT “A”; THENCE NORTH 00°36’40” WEST, 132.97 FEET;
THENCE NORTH 89°22’54” EAST, 62.23 FEET; THENCE SOUTH 00°25’39” EAST, 159.12
FEET TO THE NORTHERLY RIGHT-OF-WAY OF SAID HARMON AVENUE AND BEING A POINT ON A
NON-TANGENT CURVE, CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 30.00 FEET,
FROM WHICH THE RADIUS BEARS NORTH 07°23’15” EAST; THENCE NORTHWESTERLY ALONG
SAID RIGHT-OF-WAY AND CURVE, THROUGH A CENTRAL ANGLE OF 85°41’41”, AN ARC
LENGTH OF 44.87 FEET TO A POINT OF NON-TANGENCY, A

 

2

 

RADIAL
LINE TO SAID POINT BEARS NORTH 86°55’05” WEST; THENCE ALONG A NON-TANGENT LINE,
SOUTH 80°41’11” WEST, 36.38 FEET TO THE POINT OF BEGINNING.

 

CONTAINS
8,639 SQUARE FEET, MORE OR LESS.

 

PARCEL
NB7 HAS A LOWER PLANE ELEVATION OF 2117.29 FEET AND AN UPPER ELEVATION OF
INFINITY.

 

PARCEL TWO (2):

 

A
NON EXCLUSIVE EASEMENT FOR PEDESTRIAN AND VEHICULAR INGRESS, EGRESS, PARKING,
UTILITIES, MAINTENANCE AND OTHER USES AS PROVIDED FOR IN THAT CERTAIN “CONSTRUCTION
OPERATION AND RECIPROCAL EASEMENT AGREEMENT” BY AND BETWEEN ALADDIN GAMING,
LLC, ALADDIN BAZAAR, LLC AND ALADDIN MUSIC HOLDINGS, LLC RECORDED MARCH 2,
1998 IN BOOK 980302 AS INSTRUMENT NO. 00003 AND RE-RECORDED MARCH 24, 1998
IN BOOK 980324 AS INSTRUMENT NO. 01111 AND RE-RECORDED MAY 29, 1998 IN
BOOK 980529 AS INSTRUMENT NO. 02358 AND RE-RECORDED OCTOBER 22, 1998 IN
BOOK 981022 AS INSTRUMENT NO. 00509 AS AMENDED BY MEMORANDUM OF AMENDMENT AND
RATIFICATION OF REA RECORDED NOVEMBER 20, 2000 IN BOOK 20001120 AS
INSTRUMENT NO. 00858, AS AMENDED BY SECOND AMENDMENT OF CONSTRUCTION, OPERATION
RECIPROCAL EASEMENT AGREEMENT RECORDED MARCH 31, 2003 IN BOOK 20030331 AS
INSTRUMENT NO. 04875, AS FURTHER AFFECTED BY MEMORANDUM OF SETTLEMENT AGREEMENT
DATED AUGUST 19, 2003 RECORDED AUGUST 25, 2003 IN BOOK 20030825 AS
INSTRUMENT NO. 01005 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

 

PARCEL THREE (3):

 

A
NON EXCLUSIVE RIGHT TO USE THAT CERTAIN MULTI-LEVEL PARKING STRUCTURE AND
SURFACE-LEVEL PARKING FACILITIES AS PROVIDED FOR IN THAT CERTAIN “MEMORANDUM OF
COMMON PARKING AREA USE AGREEMENT” BY AND BETWEEN ALADDIN GAMING, LLC AND
ALADDIN BAZAAR, LLC RECORDED MARCH 2, 1998 IN BOOK 980302 AS INSTRUMENT
NO. 00005 AND RE-RECORDED MAY 29,1998 IN BOOK 980529 AS INSTRUMENT NO.
02360 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

 

3

 

Exhibit B

 

Nondisturbance and Attornment Agreement

 

 

Exhibit C

 

Guaranty/Security for Timeshare Advances and Marketing Fees

 

 

Exhibit D

 

Marketing and Leasing Agreement

 

 

Exhibit E

 

Reserved

 

 

Exhibit F

 

Resort and Amenities Access Easement/Agreement

 

 

Exhibit G

 

Reserved

 

 

Exhibit H

 

Maintenance Agreement

 

 

Exhibit I

 

Special Warranty Deed, with Reversion

 

 

Exhibit J

 

Bill of Sale

 

 

Exhibit K

 

PHII Licensing and Memorabilia Agreement

 

 

Exhibit L

 

Monthly Itemized Statement

 

Marketing Fee Calculation & Net Timeshare Intervals

 

 

Exhibit M

 

Reserved

 

 

Exhibit N

 

Parent Guaranty

 

 

Exhibit P

 

Reserved

 

 

Schedule 20

 

Seller Disclosures

 

 

City
Block Covenants:  Documents and agreements binding upon the
properties in the city block (the “City Block”) in
which the Complex is located – including the Northwind Property, the Mall Property
and the Complex (which includes the Hotel/Casino Property and the Timeshare
Property (collectively, the “City Block Properties”)
– and the owners of said properties.  See
Section 19.

 

Seller’s
Environmental Assessment:  That certain Environmental Assessment
dated                   
prepared by                                       .

 

Seller’s
Survey:  That certain ALTA Survey dated March 24,
2003 by Horigan Survey for the Complex.

 

Seller’s
Title Report:   That certain Preliminary Title Report
dated March 14, 2003 prepared by United Title of Nevada.

 

Senior
Lender Agreements:   Amended and Restated Loan and Facilities
Agreement dated as of                     
among the Seller and the Senior Lenders, together with all documents and
agreements related thereto, all of which affect the Seller and the Complex
including the Timeshare Property.

 

 

Consents
and Approvals required under the PSA:

 

 

Consents
and Approvals required under the City Block Covenants:

 

 

Consents
and Approvals required under the Senior Lender Agreements:

 

 

Schedule 22

 

Developer Disclosures

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