8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)

July 15, 2004

GTA-IB, LLC

(Exact name of registrant as specified in its charter)

Florida	333-120538	05-0546226
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
10 North Adger’s Wharf, Charleston, SC 29401
(Address of principal executive offices) (Zip Code)

(843) 723-4653

Registrant’s telephone number, including area code

not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward-Looking Statements

When used in this Form 8-K/A and in future filings by GTA-IB, LLC (the “Company”) with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “pro forma,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. Such risks and uncertainties include, but are not limited to, the risk that cost savings and revenues resulting from taking title to the Westin Innisbrook Golf Resort (the “Resort”) and related legal entities may be lower than expected, the risk that liabilities incurred in connection with taking title to the Resort may prove greater than expected, industry cyclicality, fluctuations in customer demand and order patterns, the seasonal nature of the Company’s business, changes in pricing and general economic conditions, as well as other risks and uncertainties detailed in the Company’s other filings with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above and other factors could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

Item 2.01  Completion of Acquisition or Disposition of Assets.

The Company, along with Golf Trust of America, L.P. (“Lender”), an affiliate of the Company, entered into a Settlement Agreement dated July 15, 2004 (the “Settlement Agreement”) with Golf Host Resorts, Inc. (“Borrower”), Golf Hosts, Inc., Golf Host Management, Inc., Golf Host Condominium, Inc. and Golf Host Condominium, LLC relating to the settlement of a number of issues between the parties, including Borrower’s default under the $79 million loan made by Lender to the Borrower in June 1997.  Pursuant to the Settlement Agreement, the Company settled claims relating to the loan to the Borrower and took ownership of the Resort.  In connection with the Settlement Agreement, GTA-IB and Westin Management Company South (“Westin”) entered into a management agreement providing for Westin’s management of the Resort, and Westin and Troon Golf LLC entered into a facility management agreement providing for Troon Golf LLC’s management of the golf facilities at the Resort.  In addition, in connection with the Settlement Agreement and related agreements, Elk Funding, L.L.C., an entity affiliated with the Borrower, provided a $2 million loan to Lender to fund certain capital expenditures and operations of the Resort.  Lender and Borrower had previously entered into an agreement (the “Parcel F Development Agreement”) with the prospective purchaser of a parcel of undeveloped land within the Resort known as Parcel F. The Parcel F Development Agreement was executed on March 29, 2004 and held in escrow pending the closing of the transactions contemplated by the Settlement Agreement.  The Parcel F Development Agreement provides for the terms and conditions under which Parcel F may be developed, including restrictions to avoid interference with the operations of the Resort.

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Item 9.01  Financial Statements and Exhibits.

(a) and (b) The financial statements and pro forma financial information required as part of this item are being filed as Exhibit 99 to this Form 8-K as follows:

I.Company Pro Forma Financial Statements (Unaudited)

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2004

Pro Forma Condensed Consolidated Statement of Net Loss for the Six Months Ended June 30, 2004

Pro Forma Condensed Consolidated Statement of Net Loss for the Year Ended December 31, 2003

Notes to Pro Forma Condensed Consolidated Financial Statements

II.Golf Host Resorts, Inc. - Audited Financial Statements and Notes to Audited Financial Statements

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of December 31, 2003 and 2002

Consolidated Statements of Operations for the Three Years Ended December 31, 2003

Consolidated Statements of Financial Condition for the Years Ended December 31, 2003 and 2002

Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2003

Notes to the Consolidated Financial Statements

III.Golf Hosts Resorts, Inc. - Unaudited Financial Statements

Consolidated Balance Sheet as of June 30, 2004

Consolidated Statements of Loss for the Six Months Ended June 30, 2004

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003

Notes to Consolidated Financial Statements

(c) Exhibits.

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The following exhibits are part of this current report on Form 8-K and are numbered in accordance with Item 601 of Regulation S-K.

Exhibit No.	Description
10.1	Settlement Agreement dated July 15, 2004 by and among Golf Trust of America, L.P., GTA-IB, LLC, Golf Host Resorts, Inc., Golf Hosts, Inc., Golf Host Management, Inc., Golf Host Condominium, Inc. and Golf Host Condominium, LLC.
10.2	Defense and Escrow Agreement dated July 15, 2004 by and among Golf Host Resorts, Inc., GTA-IB, LLC, Golf Trust of America, L.P., Golf Trust of America, Inc. and Chicago Title Insurance Company.
10.3	Operational Benefits Agreement dated July 15, 2004 by and among Golf Host Resorts, Inc., Golf Hosts, Inc., GTA-IB, LLC, and Golf Trust of America, L.P.
10.4	Management Agreement dated July 15, 2004 by and between Westin Management Company South and GTA-IB, LLC.
10.5	Assignment, Consent, Subordination and Nondisturbance Agreement dated July 15, 2004 by and among GTA-IB, LLC, Golf Trust of America, L.P. and Westin Management Company South.
10.6	Facility Management Agreement dated July 15, 2004 by and between Troon Golf L.L.C., Westin Management Company South and GTA-IB, LLC.
10.7	Loan Agreement dated July 15, 2004 by and between Golf Trust of America, L.P. and Elk Funding, L.L.C. and related Notes A and B
10.8	Parcel F Development Agreement dated March 29, 2004 by and among Golf Hosts Resorts, Inc., Golf Trust of America, L.P. and Parcel F, LLC, formerly known as Innisbrook F, LLC, formerly known as Bayfair Innisbrook, L.L.C.
99	Pro forma financial statements and pro forma financial information required as part of this item

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GTA-IB, LLC
	(Registrant)
Date:  November 15, 2004	By:	/s/ W. Bradley Blair, II
		W. Bradley Blair, II
		President and Chief Executive Officer

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EXHIBIT INDEX

Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index immediately precedes the exhibits.

Exhibit No.	Description
10.1	Settlement Agreement dated July 15, 2004 by and among Golf Trust of America, L.P., GTA-IB, LLC, Golf Host Resorts, Inc., Golf Hosts, Inc., Golf Host Management, Inc., Golf Host Condominium, Inc. and Golf Host Condominium, LLC.
10.2	Defense and Escrow Agreement dated July 15, 2004 by and among Golf Host Resorts, Inc., GTA-IB, LLC, Golf Trust of America, L.P., Golf Trust of America, Inc. and Chicago Title Insurance Company.
10.3	Operational Benefits Agreement dated July 15, 2004 by and among Golf Host Resorts, Inc., Golf Hosts, Inc., GTA-IB, LLC, and Golf Trust of America, L.P.
10.4	Management Agreement dated July 15, 2004 by and between Westin Management Company South and GTA-IB, LLC.
10.5	Assignment, Consent, Subordination and Nondisturbance Agreement dated July 15, 2004 by and among GTA-IB, LLC, Golf Trust of America, L.P. and Westin Management Company South.
10.6	Facility Management Agreement dated July 15, 2004 by and between Troon Golf L.L.C., Westin Management Company South and GTA-IB, LLC.
10.7	Loan Agreement dated July 15, 2004 by and between Golf Trust of America, L.P. and Elk Funding, L.L.C. and related Notes A and B
10.8	Parcel F Development Agreement dated March 29, 2004 by and among Golf Hosts Resorts, Inc., Golf Trust of America, L.P. and Parcel F, LLC, formerly known as Innisbrook F, LLC, formerly known as Bayfair Innisbrook, L.L.C.
99	Financial statements and pro forma financial information.

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EX-10.1

EXHIBIT 10.1

SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT (this “Agreement”) is made as of this 15^th day of July, 2004 (the “Effective Date”), by and among (i) GOLF HOST RESORTS, INC., a Colorado corporation (“Borrower”), (ii) GOLF HOSTS, INC., a Florida corporation (“Guarantor”), (iii) GOLF HOST MANAGEMENT, INC., a Delaware corporation (“GH Management”), (iv) GOLF HOST CONDOMINIUM, INC., a Delaware corporation, (“Condo Inc.”), (v) GOLF HOST CONDOMINIUM, LLC, a Delaware limited liability company (“Condo LLC” and, together with Condo Inc., “Condo Owner”), (vi) GTA-IB, LLC, a Florida limited liability company (“GTA-IB”) and (vii) GOLF TRUST OF AMERICA, L.P., a Delaware limited partnership (“Lender”). GTA-IB, Lender and GTA Parent (defined below) shall be referred to collectively as “GTA” in this Agreement.

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understandings:

A.Borrower has executed that certain Promissory Note (as it may have been extended, amended, restated, consolidated or modified from time to time the “Note”), dated as of June 20, 1997, payable to the order of Lender in the original principal amount of Seventy-Eight Million Nine Hundred Seventy-Five Thousand Dollars ($78,975,000), bearing interest and being payable as therein provided, and maturing on June 19, 2027.

B.The loan (the “Loan”) evidenced by the Note is evidenced and secured by, among other things:

(1)that certain Loan Agreement between Lender and Borrower dated June 20, 1997 (as it may have been extended, amended, restated, consolidated or modified from time to time the “Loan Agreement”);

(2)that certain Mortgage, Security Agreement and Fixture Filing with Assignment of Rents (as it may have been extended, amended, restated, consolidated or modified from time to time, the “Mortgage”) dated as of June 20, 1997, recorded in the land records (the “Land Records”) of Pinellas County, Florida (“Pinellas County”), in Volume 9748 at Page 2292;

(3)that certain Security Agreement (as it may have been extended, amended, restated, consolidated or modified from time to time, the “Security Agreement”) dated as of June 20, 1997;

(4)those certain UCC-1 financing statements (as they may have been extended, amended, restated, consolidated or modified from time to time the “Financing Statements”) dated as of June 20, 1997, and filed (y) in the Land Records in Volume 9755 at Page 729, and (z) the offices of secretaries of state of Florida and Colorado;

(5)that certain Payment and Performance Guaranty (as it may have been extended, amended, restated, consolidated or modified from time to time, the “Guaranty”) dated as of June 20, 1997, from Guarantor, an affiliate of Borrower, in favor of Lender; and

(6)that certain Pledge Agreement (as it may have been extended, amended, restated, consolidated or modified from time to time, the “Pledge Agreement”) dated as of June 20, 1997, from Borrower in favor of Lender.

C.The Note, the Loan Agreement, the Mortgage, the Security Agreement, the Financing Statements, the Guaranty, the Pledge Agreement and any and all other documents executed in connection with the Loan are referred to herein collectively as the “Loan Documents”.

D.Condo Inc. is an affiliate of Borrower.  Condo LLC is an affiliate of the Borrower and is the owner of the Condo Property (as defined below), which Condo Property is subject to the lien of the Mortgage.

E.Troon Golf LLC, a Delaware limited liability company (“Troon”), is currently the exclusive managing agent of the Innisbrook Golf Courses (as defined below) pursuant to that certain Golf Course Management Agreement, dated June 20, 1997, by and between Troon and Guarantor, which is currently being extended on a month to month basis (“Current Troon Agreement”).  Simultaneously herewith, Troon, Westin Management Company South, a Delaware corporation (“Westin” or “Resort Manager”) and GTA-IB (for certain limited purposes) are entering into that certain Facility Management Agreement dated as of the date hereof, with respect to the management of the Innisbrook Golf Courses from and after the Effective Date (the “Troon Management Agreement”).

F.Westin is currently the managing agent of the Resort Property (as defined below) pursuant to that certain Management Contract dated as of May 7, 1997, by and between Westin Hotel Company, a Delaware corporation and an affiliate of Westin, and Borrower (“Current Management Contract”), which shall terminate on the effective date of the Westin Management Agreement (defined below).  Simultaneously herewith, Westin and GTA Innisbrook, LLC, a Delaware limited liability company and an affiliate of GTA-IB, are entering into that certain Management Agreement dated as of the date hereof with respect to the management of the Resort Property from and after the Effective Date (the “Westin Management Agreement”).

G.Borrower is in default of its obligations under the Loan, inter alia, by reason of Borrower’s failure to make the payments due under the Loan on November 1, 2001, and all notice and cure periods related thereto have expired.  Lender accelerated the Loan by letter dated March 8, 2002.  Lender has the unrestricted right to exercise its enforcement remedies with respect to the Loan and the Property (as defined below).

H.In order to avoid the expense and delay of a foreclosure and other legal proceedings by Lender, Lender and Borrower have agreed to attempt to settle all claims related to the Loan as provided in this Agreement, and Borrower has agreed to convey to GTA-IB, an affiliate of Lender, all of Borrower’s right, title and interest in and to the Property in accordance with the terms and conditions of this Agreement.

I.Borrower and Lender have agreed on the Closing Date to reduce the carrying value of the Property (including, without limitation, all tangible and intangible Property

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and associated goodwill) on their respective balance sheets to Forty Four Million Two Hundred Thousand Dollars ($44,200,000), and to record a corresponding expense or income item, subject to the terms of this Agreement and Lender’s receipt of the Deeds and the Property, as described below, and Borrower’s, Guarantor’s, GH Management’s and Condo Owner’s performance of such parties’ respective obligations under this Agreement; provided, however, that (i) the Closing Date (defined below) shall occur on or before October 15, 2004, and (ii) Lender’s carrying value for the personal property does not exceed Three Million Dollars ($3,000,000).

NOW THEREFORE, in consideration of the foregoing premises, the covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

Property

1.1.The Property.  Borrower, GH Management (to the extent applicable to the employment contracts), Condo Owner (to the extent applicable to the Condo Property), and Guarantor (to the extent applicable to the capital stock of Golf Host Securities, Inc., a Florida corporation (“GH Securities”)) agree to transfer, to GTA-IB or, at GTA-IB’s election at or prior to the closing, to any of its direct or indirect subsidiaries, and GTA-IB agrees to accept, or to cause such subsidiary to accept, as applicable, from Borrower, GH Management, Condo Owner and Guarantor, in accordance with the terms, covenants and conditions contained in this Agreement, all of the following property (collectively, the “Property”, and to the extent that any of the Property relates only to the Innisbrook Real Property (as defined below), and not to the Condo Property, then such Property shall herein be referred to as the “Resort Property”)

(a)the real property described on Exhibit A-1 hereto (including, without limitation, all right, title and interest to all strips and gores of land therein) (the “Innisbrook Real Property”);

(b)(i) those certain three (3) condominium properties located at the Innisbrook Resort and commonly known as Unit 301 in Building 15, Unit 104 in Building 20 and Unit 103 in Building 28 of the Innisbrook Condominium, (ii) that certain linen closet commonly described as Unit 115 in Building 28, each as more particularly described on Exhibit A-3 hereto and (iii) the right to all accrued but unpaid rental pool or other distributions relating to such units described in (i) (collectively, (i), (ii) and (iii) are referred to as the “Condo Property” and together with the Innisbrook Real Property, the “Real Property”);

(c)all of the buildings, fixtures and other improvements now or hereafter located on the Real Property and all appurtenances thereto as listed on Exhibit A-4 attached hereto (collectively, the “Improvements”);

(d)all tangible and intangible personal property and any and all warranties related thereto (collectively, the “Personal Property”) owned by Borrower, Guarantor, Condo Owner, or any of their affiliates or any person claiming by or through such parties and located at or used in connection with the maintenance, operation and/or management of the Real Property

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and the golf courses located thereon known as Copperhead, Island, and Highlands North and South Golf Courses (collectively, the “Innisbrook Golf Courses”);

(e)all right, title and interest of Borrower and Condo Owner in, to and under the contracts and agreements, including, without limitation, any and all employment contracts relating to the Property, the rental pool agreements and that certain Westin Management Agreement described on Schedule 1.1(e) attached hereto (collectively the “Contracts”) entered into by Borrower or Condo Owner in connection with the operation and management of the Real Property;

(f)all licenses (including, without limitation, liquor licenses), permits, certificates of occupancy and rights under permits, approvals, and allocations relating to the Real Property and the operation thereof and other similar documents described on Schedule 1.1(f) attached hereto (collectively, the “Permits”), as well as all keys, security codes, passwords and combinations to the Real Property, the Personal Property and the Improvements;

(g)all surveys, plans, maps, specifications, drawings and other similar documents, relating to the Real Property (the “Plans and Specifications”);

(h)all guarantees, permits and warranties issued in connection with (1) the construction, operation, use, improvement, alteration or repair of the Personal Property and the Improvements, and (2) the purchase or repair of any Personal Property or Improvements (the “Warranties and Guaranties”);

(i)all of Borrower’s and Condo Owner’s right, title and interest with respect to any and all insurance policies with respect to the Property, including any proceeds or premium refunds payable thereunder (the “Insurance Policies”), provided that neither Borrower nor Condo Owner shall have any obligation to maintain any insurance with respect to the Property after the Closing Date;

(j)all other rights and interests granted to Borrower or Condo Owner in connection with the Property, including, without limitation, any rights with respect to the name “Innisbrook” or “Innisbrook Resort,” including, without limitation, all trademarks, trade names, logos, or other intellectual property rights respecting such names  (the “Borrower Rights”);

(k)all leases of all or any portion of the Personal Property described on Schedule 1.1(k) attached hereto (the “Personal Property Leases”);

(l)all leases of any portion of the Real Property described on Schedule 1.1(l) attached hereto (the “Real Property Leases”);

(m)all of Borrower’s right, title and interest, and all of the right title and interest of certain affiliates of Borrower in those certain shares of common stock, limited partnership units and options to purchase common stock of Lender and Golf Trust of America, Inc., a Maryland corporation (the “GTA Parent”) described on Schedule 1.1(m) hereto (the “GTA Stock Interests”);

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(n)all of Guarantor’s and its affiliates’ direct or indirect ownership interest in GH Securities, as described on Schedule 1.1(n) hereto (the “GH Securities Stock Interests”), and in any other entity engaged in brokering the sale and re-sale of condominium units at the Property;

(o)at GTA-IB’s election (which shall be made in writing by GTA-IB on or prior to the Closing Date), all of Borrower’s, Condo Owner’s, GH Management’s, Guarantor’s, and their respective affiliates’, right, title and interest in and to any and all shares, partnership interests and/or membership interests in any entity (1) with any ownership interest in the Property, and/or (2) that participates in the operation or maintenance of the Property, including, without limitation, Borrower, Condo Owner and GH Management;

(p)all right, title and interest in and to that certain 0.6 acre Commercial Tract within Parcel J (sometimes called “Parcel J-4”) and contiguous to the Innisbrook Resort eastern gatehouse (such Commercial Tract, the “0.6 Acre”), subject to the terms of that certain lease (the “Parcel J-4 Lease”, a form of which is attached hereto as Exhibit A-5), which is to be entered into by and between Borrower and either: (i) Parcel F, L.L.C., a Florida limited liability corporation (“Bayfair”) (in which case, the Parcel J-4 Lease is hereby approved by Lender and GTA–IB pursuant to, and as part of, that certain Amended and Restated Agreement For Sale and Purchase of Real Property – Parcel F executed as of July 15, 2004, by and between Borrower and Bayfair, the “Original Bayfair Agreement”), or (ii) another purchaser of Parcel F (defined below) which purchaser meets the criteria set forth in Section 8.2(b) (in which case the Parcel J-4 Lease shall be approved by Lender and GTA-IB pursuant to an agreement for the purchase and sale of Parcel F entered into in accordance with this Agreement); such 0.6 Parcel is more particularly depicted on Exhibit A-6 attached hereto;

(q)all right, title and interest in and to any and all vested rights of Borrower, Guarantor, GH Management and/or Condo Owner with respect to the development of 139 residential units (or such greater number of units, if any, to which such parties have vested rights to develop, including, without limitation, that number of residential units which equals the difference between (i) 400 residential units and (ii) the actual number constructed) in the event that fewer than 400 residential units are developed on Parcel F (defined below) (the “Unused Parcel F Units”) on the Real Property, and as such rights are more particularly described on Schedule 1.1 (q) attached hereto (the “Vested Rights”), including, without limitation, all determinations, hearings, judgments and settlements made by Pinellas County or any other governmental agency, entity or court; provided, however, in no event shall Parcel F (or the current or any future owner thereof) obtain any of the Vested Rights whatsoever;

(r)all right, title and interest in and to any and all contractual, real property or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner or their respective affiliates that exist in any form relating to: (i) the Innisbrook Parcels J-1 and J-2 (as such properties are further described in that certain Agreement for Sale and Purchase of Real Property – Multi-Family Sites, last dated November 6, 2000 by and between Borrower and to CKT Development Co., a Florida corporation (“CKT”)) (“Parcels J-1 and J-2”), and (ii) the Innisbrook Parcel K (as such property is further described in that certain Agreement for Sale and Purchase of Real Property – Multi-Family Sites, dated June 19, 1998 by and between Borrower

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and CKT) (“Parcel K”), which contractual, real property or other rights or benefits are listed on Schedule 1.1(r) attached hereto (collectively, the “Parcel Rights”);

(s)all right, title and interest in and to any and all contracts, real property or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner or their respective affiliates that exist in any form relating to any portion of that certain real property owned by Pinellas County, as such real property is described more particularly on Schedule 1.1(s)-1 attached hereto (the “Pinellas County Land”), which contracts, real property or other rights or benefits are set forth on Schedule 1.1(s)-2, including, without limitation, those certain easements (including, without limitation, the exclusive easement to and for the benefit of Borrower for the purposes of enabling Borrower to construct, operate, maintain, repair and replace a nine-hole golf course) and other rights set forth in the Agreement for Effluent Disposal, dated April 30, 1973, between Borrower and Pinellas County, as amended and/or restated, and as more particularly described on Schedule 6.1(jj)-2 attached hereto (all such all right, title and interest, collectively, the “Pinellas County Rights”);

(t)all right, title and interest in and to any and all contracts, real property or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner or their respective affiliates that exist in any form relating to any portion of that certain real property which is owned (or previously owned) by Wall Springs Conservatory, Inc. and located adjacent to part of the Resort Property, as such real property is described more particularly on Schedule 1.1(t)-1 attached hereto (the “Wall Springs Land”), which contracts, real property or other rights or benefits are set forth on Schedule 1.1(t)-2, including, without limitation, those certain easements (including, without limitation, the easements over and across the Wall Springs Land relating to, among other matters, drainage matters, cart paths and utility installations) and other rights set forth in the Easements and Development Agreement dated February 11, 1997 by and between Golf Host Resorts Inc. and Wall Springs Conservatory, Inc., as amended and/or restated, and as more particularly described on Schedule 6.1(jj)-4 attached hereto (all such all right, title and interest, collectively, the “Wall Springs Rights”);

(u)all right, title and interest in and to any judgments, settlements, liens, recoveries, damages, moneys, property or other value received by Borrower, Guarantor, GH Management or Condo Owner, or their respective affiliates, resulting from any resolution, settlement, or dismissal of any of the “Klosterman Road” litigation more particularly described on Schedule 1.1(u)) attached hereto (“Klosterman Litigation”) or in any way resulting from the claims brought in connection with any of the Klosterman Litigation (such right, title and interest, collectively, the “Klosterman Litigation Interest”); and

(v)any other right, title and interest in and to any and all real or personal property or contract or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner, or their respective affiliates, in any way relating to the Property or the use of the Property.

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ARTICLE II

Releases

2.1.Releases.  On the Closing Date (as defined below), (i) GTA-IB shall deliver to Borrower and Guarantor a duly executed release by Lender in favor of Borrower and Guarantor in the form attached hereto as Exhibit B-1 (the “Borrower Release”), and (ii) Borrower, Guarantor and any other guarantors shall deliver to GTA-IB a release of Lender in the form attached hereto as Exhibit B-2 (the “Lender Release”; Borrower Release and the Lender Release, collectively the “Releases”).

ARTICLE III

Closing of Transfer; Conditions to Closing

3.1.Place and Date.  The closing under this Agreement and the transfer of the Property and other rights contemplated hereunder shall be completed in accordance with the terms and conditions contained in this Agreement and shall occur at the offices of O’Melveny & Myers LLP, 275 Battery Street, Suite 2600, San Francisco, California, or at the offices of GTA-IB’s local Florida counsel, as GTA-IB shall elect, on or before July 15, 2004, with an effective date of 12:01 a.m. (ET) on  July 15, 2004 (the “Closing Date”), as the Closing Date may be extended by the mutual written agreement of the parties hereto, but in no case may extend past July 15, 2004.  Until such time as the Closing Date has occurred and the transactions contemplated by this Agreement have closed (other than those that are, pursuant to the express terms hereof, to occur following the Closing Date), nothing contained in this Agreement shall in any way restrict or modify the rights or obligations of either Lender or Borrower, including, without limitation, Lender’s right or ability to pursue any and all judicial or non-judicial remedies and/or relief that may be available to Lender as a result of Borrower’s default under the Loan.  The parties understand for income tax purposes that this overall transaction will be treated as a deemed sale of the Property by the Borrower to the Lender in exchange for release of all amounts owed by the Borrower to the Lender under the Loan.

3.2.Failure of Conditions Precedent.  If, for any reason, except for such party’s breach of this Agreement, a condition precedent to a party’s obligation to close hereunder has not been satisfied on or before the Closing Date, then such party, in its sole discretion, may by written notice to the other party:  (i) waive such condition and proceed to close; (ii) extend the Closing Date to a date provided in such written notice; or (iii) terminate this Agreement.  In the event of a termination of this Agreement as provided above, Lender may proceed to exercise or renew the exercise of all of the rights and remedies held by Lender under the Loan Documents and applicable law.  Borrower hereby acknowledges and agrees that nothing contained in this Agreement shall be deemed a waiver of any of Lender’s rights or remedies against Borrower or Guarantor under the Loan Documents or under applicable law unless and until the consummation of the transactions contemplated by this Agreement in accordance with the terms of this Agreement (other than those transactions that, pursuant to the terms of this Agreement, are to occur after the Closing Date).

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3.3.GTA-IB’s Conditions to Closing.  GTA-IB and Lender’s respective obligations to consummate the transactions contemplated under this Agreement shall be conditioned upon the following:

(a)all of Borrower’s, Guarantor’s, GH Management’s and Condo Owner’s representations and warranties contained in this Agreement shall be true and correct as of the Effective Date and as of the Closing Date (as if made on the Closing Date);

(b)Borrower, Condo Owner and such other affiliates of Borrower as shall be necessary in order to transfer the GTA Stock Interests shall have executed and delivered to GTA-IB each of the Conveyance Documents (as defined below), as applicable to such party;

(c)Borrower and Guarantor shall have delivered to GTA-IB a true, correct and complete Closing Balance Sheet (as defined in Section 7.2), in form and substance satisfactory to GTA-IB, in its sole discretion;

(d)Borrower shall have executed and delivered to GTA-IB a certificate verifying that, as of the Closing Date: (i) the representations and warranties of Borrower, Guarantor, GH Management and Condo Owner in this Agreement are true, correct and complete, as if made on and as of the Closing Date, and each of Borrower, Guarantor, GH Management and Condo Owner has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) the Closing Date Balance Sheet is true, correct and complete in all respects, including, without limitation, with respect to the assets and liabilities of Borrower and the Property, other than with respect to minor, non-material adjustments not to exceed Twenty Thousand Dollars ($20,000) in the aggregate; and (iii) the amount of real property taxes and real property tax appeal consequences (including, without limitation, all related reasonably and actually incurred legal fees, penalties, interest and other directly related reasonably and actually incurred third-party costs, which amounts shall not exceed, in the aggregate, One Million Thirty Thousand Nine Hundred Dollars ($1,030,900) respecting the Property which have accrued or become payable as of the Closing Date;

(e)each of Guarantor, GH Management and Condo Owner shall have fully cooperated with GTA-IB, and/or its affiliates, in GTA-IB’s efforts to cause the NASD Regulation, Inc. to approve a notice and application for continuance in membership in relation to a proposed change in control of GH Securities (Guarantor currently owns 100% of GH Securities’ capital stock and intends to transfer its ownership interest to GTA-IB);

(f)Borrower, Guarantor and GH Securities, as applicable, shall have timely filed all required filings with the Securities and Exchange Commission or NASD Regulation, Inc., as applicable, up until the Closing Date (and shall have agreed to file all subsequent required filings with the Securities and Exchange Commission respecting any period prior to the Closing Date);

(g)Borrower shall have delivered (or shall have caused Guarantor, GH Management or Condo Owner to deliver, as applicable) to GTA-IB true, correct and complete originals or copies of each of the Equipment Leases, the Real Property Leases, the Contracts, the Plans and Specifications, the Warranties and Guaranties and the Insurance Policies, Permits,

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Parcel J and K Contracts (defined below), the Pinellas County Contracts and the Wall Springs Contracts (defined below) in the possession of Borrower, Guarantor, GH Management, Condo Owner or their respective affiliates, agents, consultants, directors, officers, employees or contractors, to which GTA-IB shall have full and unrestricted access;

(h)Borrower, Guarantor, GH Management and Condo Owner shall have timely fulfilled each of their respective other obligations under this Agreement that are required to be fulfilled on or prior to the Closing Date;

(i)Borrower shall have executed and delivered to Lender the Lender Release;

(j)Borrower shall have delivered (or shall have caused Guarantor, GH Management or Condo Owner to deliver, as applicable) to GTA-IB each of the following:

(i)all Personal Property;

(ii)copies of all pleadings, court documents, deposition transcripts, legal memoranda and settlement proposals in respect of the Lawsuits (as defined below) and in accordance with the Joint Defense Agreement (defined below), the Klosterman Litigation and the Litigation, to the extent that to do so would not waive attorney-client privilege (provided that Borrower shall inform GTA-IB and its counsel in writing when it asserts such attorney-client privilege);

(iii)any tax assessments, notices and statements received by Borrower relating to the Property;

(iv)income and expense statements, balance sheets and capital replacement and capital improvement data, each covering the operation of the Property for the calendar year 1997 through the Closing Date;

(v)originals or copies of all books and records pertaining to the Property and maintained by Borrower and/or its affiliates or agents, except for such books and records that are maintained by the Resort Manager at the Property and to which GTA-IB shall have full and unrestricted access;

(vi)an executed original of the Parcel F Memorandum of Agreement (as defined below);

(vii)any keys, security codes, passwords and combinations necessary to obtain full access to the Property that are in Borrower’s possession;

(viii)all cash located on the Property or in any accounts relating to the Property, as reflected in the Closing Date Balance Sheet (as defined in Section 7.2), whether or not such accounts are in the name of or for the benefit of Borrower or Guarantor or any of their affiliates or Resort Manager or any of Resort Manager’s affiliates;

(ix)a true, correct and complete copy of any executed purchase and sale agreement respecting Parcel F (defined below), which may or may not be effective, by and

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between Borrower, GTA-IB and Bayfair (or other purchaser), together with all schedules and exhibits ) (a “Parcel F Contract”);

(x)all instruments required by the Title Insurer as a condition precedent to the issuance of the Title Policy (as defined below);

(k)GTA-IB and Resort Manager shall have entered into the Westin Management Agreement, provided that it shall be in form and substance acceptable to GTA-IB in its sole discretion for the management of the Resort Property by Resort Manager from and after the Closing Date;

(l)Resort Manager and Troon shall have entered into the Troon Management Agreement, provided that it shall be in form and substance acceptable to GTA-IB in its sole discretion for the management of the Innisbrook Golf Courses by Troon from and after the Closing Date;

(m)Borrower and GTA-IB shall have agreed upon the Allocations (defined below);

(n)Borrower, GTA-IB and Escrow Agent shall have entered into a defense and escrow agreement in the form of Exhibit D attached hereto (the “Defense and Escrow Agreement”) with respect to that certain lawsuit being defended by Borrower and other entities, which was filed by William J. and Harriet J. Ball, et al., on behalf of themselves and other similarly situated parties, in the Circuit Court for the Sixth Judicial Circuit in Pinellas County, Florida, Case Numbers 99-7532-CI-007 and/or 01-008582-CI-015 (the “Ball Claims,” and with respect to other claims which are brought in the future, including such claims brought by intervenors (or could have been brought) against Borrower, and which derive from or relate to the same facts and circumstances as the Ball Claims (collectively, such additional claims are referred to as the “Related Claims,” and each such Claim is individually a “Related Claim”)) (collectively the Ball Claims and the Related Claims are referred to as the “Lawsuits”; and each of the Ball Claims and the Related Claims is individually a “Lawsuit”).  For purposes of this Agreement, the plaintiffs in the Lawsuits, and those who have intervened or seek to intervene in one or more Lawsuits, shall be collectively referred to as the “Plaintiffs” and each is individually a “Plaintiff”;

(o)Borrower shall have obtained (i) a release (the “Resort Manager Release”) from Resort Manager, and (ii) a release (the “Troon Release”), both in form and substance satisfactory to Borrower and GTA-IB;

(p)each of Borrower, Guarantor, GH Management and Condo Owner, and their respective affiliates, shall have assigned all of their right, title and interest to the Vested Rights (and such parties shall have executed and delivered to GTA-IB the Vested Rights Assignment (defined below)), the Parcel Rights, Pinellas County Rights and Contracts and Wall Springs Rights and Contracts to GTA-IB; any consents or other documents required for the assignment of the Parcel Rights, Pinellas County Rights and Contracts or Wall Springs Rights and Contracts to GTA-IB shall have been executed by the applicable parties and delivered to GTA-IB and recorded in the appropriate land records, if applicable; and any notices required to

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be delivered as a result of the assignment of the Parcel Rights, Pinellas County Rights and Contracts or Wall Springs Rights and Contracts to GTA-IB shall have been delivered to the applicable parties;

(q)Borrower shall have executed and delivered to Lender the Lender Release;

(r)Borrower and Guarantor shall have timely fulfilled each of their other obligations under this Agreement in all material respects;

(s)Borrower and Bayfair, or such other authorized purchaser of Parcel F pursuant to Section 8.2(b), shall have delivered to GTA-IB a true, correct and complete copy of the executed Parcel F Development Agreement (defined below); and

(t)Borrower shall have executed and delivered to GTA-IB a true, correct and complete copy of the Joint Defense Agreement (defined below); and

(u)Borrower and Guarantor shall have executed and delivered to GTA-IB a copy of the Operational Benefits Agreement.

3.4.Borrower’s Conditions to Closing.  Borrower’s obligation to consummate the transactions contemplated under this Agreement shall be conditioned upon the following:

(a)all of GTA-IB’s representations and warranties contained in this Agreement shall be true and correct as of the Effective Date and as of the Closing Date;

(b)GTA-IB shall have executed and delivered to Borrower, Condo Owner and Guarantor each of the Conveyance Documents, to the extent such Conveyance Documents require the signature of GTA-IB;

(c)GTA-IB and Lender shall have delivered to Borrower a true, correct and complete copy of the executed Parcel F Development Agreement, subject to Section 8.2(b) below;

(d)Lender shall have executed and delivered to Borrower the Borrower Release;

(e)GTA-IB shall have timely fulfilled each of its other obligations under this Agreement in all material respects;

(f)Borrower, Lender and Escrow Agent have entered into the Defense and Escrow Agreement;

(g)Borrower and GTA-IB shall have agreed upon the Allocations;

(h)Borrower shall have obtained the Resort Manager Release from Resort Manager, and the Troon Release from Troon both in form and substance satisfactory to Borrower and GTA-IB; and

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(i)Lender shall have executed and delivered to Borrower a copy of the Operational Benefits Agreement.

ARTICLE IV

Conveyance Documents

4.1.Real Property.  On the Closing Date, Borrower shall convey to GTA IB, absolutely and irrevocably, without reservation of any rights whatsoever, good and marketable fee simple absolute title to (i) the Innisbrook Real Property (including, without limitation, all right, title and interest to all strips and gores therein) and (ii) the 0.6 Acre, to GTA IB by duly executed and acknowledged warranty deed in the form attached hereto as Exhibit E-1, which is subject to the terms of the Parcel J-4 Lease.  On the Closing Date, Borrower and, to the extent applicable, Condo Inc., shall cause Condo LLC to convey, absolutely and irrevocably, without reservation of any rights whatsoever, good and marketable fee simple absolute title to the Condo Property to GTA-IB Condominium, LLC, a Florida limited liability company (“GTA-IB Condominium”), by duly executed and acknowledged warranty deed in the form attached hereto as Exhibit E-2.  The deeds used to convey the Real Property shall be referred to herein as the “Deeds”.  On the Closing Date, Borrower, Guarantor, GH Management, Condo Owner and their respective affiliates shall convey all right, title and interest in and to any and all contracts, real property or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner or their respective affiliates that exist in any form relating to any portion of the Pinellas County Land, including, without limitation, the Pinellas County Rights and the Pinellas County Contracts, by duly executed Assignment of Easement in the form attached hereto as Exhibit E-3.

4.2.Personal Property.  On the Closing Date, Borrower and Guarantor shall transfer, and shall cause Condo Owner and their applicable affiliates to transfer, good title to the Personal Property and the Improvements to GTA-IB by duly executed Bills of Sale in the form attached hereto as Exhibit F (the “Bills of Sale”).

4.3.Assignment of Contracts .  On the Closing Date, Borrower shall assign and, to the extent applicable, shall cause Condo Owner to assign, good and marketable title to Borrower’s and Condo Owner’s respective interest in the Contracts and the Equipment Leases to GTA-IB by a duly executed Assignment of Contracts in the form attached hereto as Exhibit G (the “Assignment of Contracts”).

4.4.Other.  On the Closing Date, Borrower shall assign and, to the extent applicable, shall cause Borrower, Guarantor, GM Management, Condo Owner, or their respective affiliates, to assign, all of their respective right, title and interest in and to the Parcel Rights, Pinellas County Rights and Contracts, Wall Springs Rights and Contracts, Permits, Plans and Specifications, Warranties and Guaranties, Insurance Policies, Borrower Rights, Equipment Leases, Real Property Leases, Leases and any Klosterman Litigation Interest to GTA-IB by duly executed General Assignment and Assignments of Leases in the form attached hereto as Exhibit H (the “General Assignment and Assignment of Leases”).

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4.5.Non-Foreign Affidavit.  On the Closing Date, Borrower and Condo Owner each shall execute and deliver an affidavit pursuant to the Foreign Investment and Real Property Tax Act, as amended, in the form attached hereto as Exhibit I (the “FIRPTA Affidavit”).

4.6.Stock Interests.

(a)On the Closing Date, Borrower shall assign, and shall cause its applicable affiliates to assign, to GTA-IB good and marketable title to the GTA Stock Interests by duly executed stock power certificate, stock transfer certificate and such other documents as may be necessary to cause such transfer of the GTA Stock Interests (collectively, the “GTA Stock Interest Transfer Documents”).  Borrower expressly consents to the unqualified exercise by Lender, on or after the Closing Date, of any and all stock powers relating to the GTA Stock Interests which are in Lender’s possession as of the Effective Date; and

(b)On the Closing Date, Guarantor shall assign, and shall cause its applicable affiliates to assign, to GTA-IB good and marketable title the GH Securities Stock Interests by duly executed stock power certificate, stock transfer certificate and such other documents as may be necessary to cause such transfer of the GTA Stock Interest (collectively, the “GH Securities Stock Interest Transfer Documents”).

The Deed, Bills of Sale, Assignment of Rights, Assignment of Contracts, General Assignment and Assignment of Leases, FIRPTA Affidavit, GTA Stock Interest Transfer Documents and GH Securities Stock Interest Transfer Documents are collectively referred to herein as the “Conveyance Documents.”

4.7.Possession.  On the Closing Date, Borrower, Guarantor and Condo Owner shall transfer exclusive possession of the Property to GTA-IB, subject only to the rights of tenants under the Leases.

4.8.Florida Stamp Taxes.  GTA-IB shall pay the costs and expenses associated with any and all conveyance, stamp, transfer, document and other similar taxes due in connection with or arising solely as a result of the transfer of the Real Property from each of Borrower and Condo Owner to GTA-IB.

4.9.Owner’s Title Insurance.  On the Closing Date, GTA-IB shall pay the premiums, costs and expenses relating to the Title Policy (as defined below).  For purposes hereof, the term “Title Policy” shall mean (i) an ALTA Owner’s form of extended coverage title insurance policy in an amount reasonably determined by GTA-IB insuring that fee simple to the Condo Property is vested in GTA-IB Condominium subject only to such exceptions to title as listed on Exhibit  J-1 attached hereto (the “Condo Property Permitted Exceptions”) and (ii) an ALTA Owner’s form of extended coverage title insurance policy in an amount reasonably determined by GTA-IB insuring that fee simple to the Innisbrook Real Property is vested in GTA-IB subject only to such exceptions to title as are listed on Exhibit J-2 attached hereto (the “Innisbrook Permitted Exceptions”).

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ARTICLE V

Other Closing Actions

5.1.Lawsuits.  Borrower and GTA-IB shall abide by the terms and conditions contained in the Defense and Escrow Agreement and Borrower, if any of the GTA Parties are joined as a party to one or more Lawsuits by one or more of the Plaintiffs, shall, only to the extent there are Net Proceeds (as such term is defined in the Defense and Escrow Agreement) after distributions are made pursuant to Section 5.2(v) (i.e., the “Fifth” level of the Net Proceeds waterfall), at its sole cost and expense, indemnify, defend and hold harmless each of Lender, the GTA Parent and GTA-IB, and their respective officers, directors, managers, shareholders, members, partners, employees, agents and their affiliates (collectively, the “GTA Parties”), from and against any and all cost, expense (including, without limitation, legal and investigatory fees, costs and expenses payable to Dechert LLP and/or Borrower’s Local Counsel (as such terms are defined in the Defense and Escrow Agreement), but specifically excluding any counsel retained by any of the GTA Parties, except as provided below or as provided in the Defense and Escrow Agreement), liability, claim, loss, judgment or damage of any kind or nature arising out of or in connection with the Lawsuits to the extent provided for in the Defense and Escrow Agreement; (provided, however, that the foregoing indemnity shall not apply in any manner whatsoever to any indirect or consequential damages incurred by any of the GTA Parties).  However, in the event any of the GTA Parties are joined as a party to the Lawsuits by one or more Plaintiffs (present or future), Borrower shall, subject to the availability of Net Proceeds in Section 5.2(ii)(b) of the Defense and Escrow Agreement, promptly reimburse such GTA Parties or their affiliates for their legal fees and costs incurred by such parties with respect to the Lawsuits, in accordance with the terms of the Defense and Escrow Agreement, subject to a maximum cap of Fifty Thousand Dollars ($50,000).  The obligation of Borrower to indemnify the GTA Parties as hereinabove set forth shall not apply with respect to any losses, costs or damages directly resulting from the final judicial determination of gross negligence or fraud by any of the GTA Parties solely in connection with the Lawsuits, occurring after the Closing Date.  Notwithstanding the foregoing, the aforesaid limit of Fifty Thousand Dollars ($50,000) in the event any of the GTA Parties are joined as a Party to a Lawsuit by one or more Plaintiffs, shall not be applicable in the event of a final judicial determination of a default under this Agreement by Borrower, Guarantor, GH Management or Condo Owner, provided that (i) the defaulting party shall have a period of up to ninety (90) days to cure such default from receipt of notice thereof from GTA-IB or Lender; and (ii) in the event such default is not so cured by the defaulting party within the aforesaid ninety (90) day period, such obligation of Borrower remains subject to the availability of Net Proceeds in Section 5.2(ii)(b) regarding the Fifty Thousand Dollars ($50,000) amount and Section 5.2(ii)(b)(v) regarding any amounts exceeding the Fifty Thousand Dollar ($50,000) amount of the Defense and Escrow Agreement and the One Million Five Hundred Thousand Dollars ($1,500,000) limitation of Section 10.3(c).

5.2.Employees.

(a)General. As of the Closing Date, GTA-IB shall offer employment to all of those Employees (as such term is defined in Section 6.1(s) hereof) (i) listed on Schedule 5.2.1 hereof, (ii) all replacements for such individuals, and (iii) all Employees who receive a salary of Fifty Thousand Dollars ($50,000) per year or less, regardless of whether listed on Schedule 5.2.1

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(the “Targeted Employees”); provided, however, that GTA-IB shall not assume any liabilities with respect to the Targeted Employees or any past employees of Borrower, or any of its affiliates, including, without limitation, Ian Baxter (collectively, the past employees of Borrower or any of its affiliates “Other Employees”) accruing on or before the Closing Date, except to the extent (i) such liability (including sick pay, severance and accrued vacation) is specifically set forth or accounted for on the Closing Date Balance Sheet or in the footnotes thereto, (ii) GTA-IB terminates or fails to employ the Targeted Employees, or (iii) as otherwise set forth on Schedule 5.2.2 attached hereto (the “Assumed Employer Liabilities”).  As of the Closing Date, in addition to the Assumed Employer Liabilities, GTA-IB shall assume any and all future liabilities relating to the Targeted Employees that have accepted employment with GTA-IB, including, without limitation, those liabilities arising on or after the Closing Date under any GHR Employee Plan (as defined herein) and any Retirement Account (as defined below) that has been provided to GTA-IB at least ten (10) days prior to the Closing Date and that remains in full force and effect.  Borrower shall bear any and all costs in connection with the termination of the Other Employees, including, without limitation, any severance payments, termination payments, payments for accrued vacation due and owing or claimed to be due and owing to the Other Employees and any and all other payments arising as a matter of contract or law (collectively, the “Termination Payments”), and Borrower shall indemnify, defend and hold harmless the GTA Parties from and against any and all cost, expense (including, without limitation legal and investigatory fees, costs and expenses), liability, claim, loss, judgment or damage of any kind or nature arising out of or in connection with the Termination Payments and with respect to any health or life insurance policies or plans, pension or profit-sharing plans or other employee benefit programs benefiting the Targeted Employees and the Other Employees at any time prior to the Closing Date, except (i) as to the Assumed Employer Liabilities, (ii) to the extent specifically set forth or accounted for in the Closing Date Balance Sheet or in the footnotes thereof, or (iii) arising out of the failure by GTA IB to offer employment to, or continue to employ, any of the Targeted Employees.  In order to facilitate the employment by GTA-IB of the Targeted Employees, Borrower and its employees, officers and affiliates shall cooperate with GTA-IB and shall encourage the Targeted Employees to agree to employment with GTA-IB, and neither Borrower nor its affiliates shall (i) solicit for employment any of the Targeted Employees for a period of three (3) years from the Closing Date, or (ii) employ any of the employees listed on Schedule 5.2.3 (the “Key Employees”) for a period of one year from the Closing Date.  Subject to the limitations provided herein, Borrower shall indemnify, defend and hold harmless the GTA Parties from and against any and all costs, expenses, liabilities, claims, losses, and actual, direct damages of any kind or nature arising out of or in connection with the Targeted Employees and the Other Employees and arising prior to the Closing Date (other than the Assumed Employer Liabilities). Except to the extent such liability, or compliance obligation, arises from GTA-IB’s failure to offer employment to, or termination of, the Targeted Employees, and only to the extent such compliance relates to periods prior to the Closing Date or arises in connection with the transactions contemplated herein (as opposed to actions of GTA-IB subsequent to the Closing Date or GTA-IB’s failure to meet any obligation, including those related to employment of the Targeted Employees, hereunder), Borrower shall, at its sole cost and expense, (i) comply with (a) the United States Worker Adjustment and Retraining Notification Act, as amended (which compliance shall include those matters set forth in Schedule 5.2.3), and with (b) any and all laws relating to the Targeted Employees and the Other Employees in connection with the transactions contemplated by this Agreement, and (ii)

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indemnify and hold the GTA Parties harmless from and against any and all liabilities relating thereto.  Following the Effective Date, neither Borrower nor its affiliates shall, without GTA-IB’s prior written consent, (a) increase the compensation or fringe benefits of any present or former director, officer or employee of Borrower, (b) grant any severance or termination pay to any present or former director, officer or employee of Borrower, (c) lend or advance any money or other property to any present or former director, officer or employee of Borrower, or (d) establish, adopt or enter into any GHR Employee Plan (as defined below) or any plan, agreement, program, policy, trust, fund or other arrangement that would be a GHR Employee Plan if it were in existence as of the Effective Date.

(b)From and after the Closing Date, neither GTA-IB nor any of the GTA Parties shall have any additional obligations or liabilities to the Employees (or any subset thereof) other than the Assumed Employer Liabilities or liabilities otherwise expressly assumed hereunder.

5.3.Transition of Ownership.  Borrower, at its sole cost and expense, from and after the Closing Date shall cooperate with Lender in all reasonable respects in order to efficiently transition ownership of the Property from Borrower, Guarantor, GH Management and Condo Owner, as applicable, to GTA-IB.  Such cooperation obligations shall include, without limitation:  (a) delivery of originals or copies of all books, records and other documents related to the operation of the Property held or maintained by Borrower or its agents or affiliates; (b) providing asset management services (the “Asset Management Services”) of Starwood Asset Management (“SAM”) for the period commencing on the Closing Date through and including the day that is the six (6) month anniversary thereof (the “SAM Assistance Expiration Date”), subject to GTA-IB’s right to terminate such arrangement prior to the SAM Assistance Expiration Date; and (c) making generally available to GTA-IB the following individuals: Merrick R. Kleeman and Robert Geimer (the “Key Executives”) to continue to cooperate in all reasonable respects with GTA-IB in the transition of ownership of the Property to GTA-IB pursuant to this Agreement, including, without limitation, executing and delivering to GTA-IB any further agreements, instruments, certificates and documents reasonably required for GTA-IB to effectively operate and maintain the Property.  In addition, to the extent that Keith Wilt’s employment relationship with Borrower terminates and he becomes an employee of GTA-IB, or any of its affiliates, GTA-IB shall make his services available to Borrower on a limited basis to respond to inquiries of Borrower directly related to the transition of ownership of the Property to GTA-IB pursuant to this Agreement and to the completion of Borrower’s financial reporting obligations for the year 2004; provided, however, that Borrower inform the GTA Parent’s Controller or other designee about all such inquiries. The Asset Management Services shall be provided primarily by Mr. Robert Geimer, currently an asset manager for SAM.  The parties hereto agree that (i) during the first three (3) months after the Closing Date, the first forty (40) hours per calendar month of Asset Management Services shall be at no cost to GTA-IB, and (ii) during the next three (3) months after the Closing Date, the first twenty (20) hours per calendar month of Asset Management Services shall be at no cost to GTA-IB; provided, however, in the event that for any calendar month, SAM provides Asset Management Services in excess of forty (40) hours for the first three (3) months after the Closing Date or twenty (20) hours for the next three (3) months after the Closing Date, then GTA-IB shall pay a fee to SAM for such excess Asset Management Services in an amount equal to One Hundred Dollars ($100) for each hour of Asset Management Services in excess of such limits (such amount to be

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prorated for partial hours) and provided, further, that the fees for such excess Asset Management Services shall not exceed Two Thousand Dollars ($2,000) on a monthly basis without GTA-IB’s prior written approval.  Such fee shall be payable by GTA-IB within thirty (30) days after written demand therefor from SAM.

5.4.Allocation of Property Transferred.  Attached hereto as Schedule 5.4 is the allocation of value by dollar amount or relative percentage of each item of Real Property, Personal Property and Contracts described in Sections 4.1, 4.2 and 4.3 above and any other transferred items in sufficient specificity to comply with Section 1060 of the Internal Revenue Code of 1986, as amended, as agreed to by Borrower and GTA-IB (the “Allocations”).  The parties shall not cause to be filed any tax return or tax report or otherwise take any position for Federal or State income tax purposes that is inconsistent with the Allocations.

5.5.Survival.  The terms, conditions and obligations under this Article V shall survive the closing of the transactions contemplated under this Agreement.

5.6.GH Securities Regulatory Approvals.

(a)The Guarantor shall, or shall cause GH Securities (i) to file an application for change of ownership with the National Association of Securities Dealers, Inc. (“NASD”) and (ii) diligently to pursue such application through all appropriate channels, including participating in any interviews requested by the NASD.  The Guarantor shall file, or cause GH Securities to file and diligently pursue, all applications and notifications relating to the change of ownership that may be required by the securities authorities of the State of Florida and any other state in which GH Securities is licensed as a securities broker and/or as a real estate broker.

(b)In light of NASD Rule 1017, which requires that the application for change of ownership to be filed no less than thirty (30) days before such change is effected, until the 31st day after the date on which such application is filed, title to the GH Securities Stock Interests shall remain in the name of the Guarantor, notwithstanding the Guarantor’s delivery of the GH Securities Stock Interest Transfer Documents to GTA-IB at the Closing Date.

(c)Upon receipt of NASD approval of such change of ownership, the Guarantor shall deliver to GTA-IB letters of resignation from all officers and directors of GH Securities other than Mr. Dominic Bengivengo, the current President thereof.

(d)In the event that NASD approval of such change of ownership has not been obtained within twelve (12) months of the Closing Date, GTA-IB shall have the right to cancel and rescind the transfer of the GH Securities Stock Interests contemplated by this Agreement, and upon exercise of such right, GTA-IB shall return the GH Securities Stock Interests Transfer Documents to Guarantor.  In that case, Guarantor agrees to own and operate GH Securities consistent with past practice for up to forty-eight (48) months (provided that the Guarantor shall not be obligated to invest any new capital in GH Securities), and to transfer the GH Securities Stock Interests for nominal consideration to any transferee designated by GTA-IB during such period.

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ARTICLE VI

Representations and Warranties

6.1.Borrower Representations.  Borrower represents, warrants, acknowledges, and agrees with GTA-IB that as of the Effective Date, after due inquiry and investigation:

(a)Borrower (i) is a duly organized and validly existing corporation in good standing under the laws of the state of Colorado, (ii) is duly qualified as a foreign entity in the jurisdiction in which the Property is located, (iii) has the requisite entity power and authority to carry on its business as now being conducted, and (iv) has the requisite entity power to execute and deliver, and perform its obligations hereunder.

(b)The execution and delivery by Borrower of this Agreement and the performance of its obligations hereunder and consummation of the transactions contemplated herein (i) have been duly authorized by all requisite corporate action on the part of Borrower, (ii) will not violate any provision of any applicable legal requirements, any order, writ, decree, injunction or demand of any court or other applicable governmental authority with jurisdiction over Borrower or the Property, any organizational document of Borrower or any indenture or agreement or other instrument to which Borrower is a party, or by which Borrower is bound, (iii) will not be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or result in the creation or imposition of any lien other than to Lender in connection with the Loan of any nature whatsoever upon any of the property or assets of Borrower pursuant to any indenture or agreement or instrument, and (iv) has been duly executed and delivered by Borrower.  This Agreement is enforceable against Borrower according to its terms.  Except for those mentioned in Section 5.6(a) and except for those obtained or filed on or prior to the date hereof, Borrower is not required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any governmental authority or other agency in connection with or as a condition to the execution, delivery or performance of this Agreement or consummate any of the transactions contemplated hereunder.

(c)Borrower owns a fee simple estate in and to the Innisbrook Real Property, subject only to Innisbrook Permitted Exceptions.

(d)Condo LLC owns a fee simple estate in and to the Condo Property, subject only to the Condo Property Permitted Exceptions.

(e)Borrower has full right, title and interest in and to the GTA Stock Interests and has not transferred, pledged or hypothecated the GTA Stock Interests other than pursuant to the Pledge Agreement.

(f)The Vested Rights (including, without limitation, the right to develop 139 residential units on the Resort Property or such greater number of units, if any, to which Borrower, Guarantor, GH Management and/or Condo Owner may have vested rights to develop, including, without limitation, the Unused Parcel F Units) shall be assigned to GTA-IB by Borrower, Guarantor, GH Management and Condo Owner, pursuant to that certain assignment agreement, a form of which is attached hereto as Exhibit J-3, (the “Vested Rights

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Assignment”), and none of Borrower, Guarantor, GH Management and Condo Owner, or their affiliates, shall impair or in any way diminish the Vested Rights, including, without limitation, GTA-IB’s legal standing, if any, to enforce the Vested Rights without qualification or condition.  Notwithstanding the foregoing, it shall not be considered an impairment or diminishment of the Vested Rights under this Agreement if the following occur: (i) if there is a final, non-appealable, judicially imposed reduction of the Vested Rights; or (ii) if the number of residential units permitted to be developed in connection with Vested Rights is decreased by ten percent (10%) or less (i.e., if the 139 units permitted to be developed is decreased by 13 or fewer units).

(g)To Borrower’s knowledge, there are no permits, approvals, and allocations relating to the Real Property or other similar documents other than the Permits.

(h)To Borrower’s knowledge, there exist no surveys, plans, maps, specifications, drawings and other similar documents, relating to the Real Property and owned by or in the possession of Borrower or its affiliates other than the Plans and Specifications.

(i)There exist no employment agreements, commitments, equipment leases, guarantees, contracts, undertakings, and arrangements entered into by Borrower or anyone on Borrower’s behalf, whether written and oral, relating to the Property other than the Contracts.

(j)To Borrower’s knowledge, there exist no rental agreements and leases entered into by Borrower or anyone on Borrower’s behalf, whether written and oral, relating to the Property other than the Leases.

(k)Borrower has delivered to Lender true, correct and complete originals or copies of all Contracts, Permits, Leases, Pinellas County Contracts, Wall Springs Contracts, Plans and Specifications, Warranties and Guaranties, and Insurance Policies in Borrower’s or its affiliates’, agents’, consultants’, employees’ or contractors’ possession.

(l)Borrower is not a party to any contract or agreement with Resort Manager or SAM, or any of their respective affiliates, other than the Current Management Contract or the Westin Management Agreement.

(m)The Closing Date Balance Sheet (as defined below) shall reflect a true, correct and complete presentation, in all material respects (i.e., material respects shall mean an amount exceeding Twenty Thousand Dollars ($20,000) in the aggregate), of the assets and liabilities relating to Borrower and the Property as of the Closing Date, including, without limitation, the amount of real property taxes and real property tax appeal consequences (including, without limitation, all related reasonably and actually incurred legal fees, penalties, interest and other directly related reasonably and actually incurred third-party costs, which amounts shall not exceed, in the aggregate, One Million Thirty Thousand Nine Hundred Dollars ($1,030,900) respecting the Property which have accrued or become payable as of the Closing Date.

(n)Borrower and Guarantor are represented by legal counsel of their choice, are fully aware of the terms contained in this Agreement, and have voluntarily and without coercion or duress entered into this Agreement and the documents executed in connection with this Agreement.

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(o)Neither Borrower nor Guarantor shall at any time solicit, directly or indirectly, any person or persons employed at the Property for a period of five (5) years after the Closing Date; provided, however, that if a sale or refinancing of the Innisbrook Real Property is being marketed or pending at the expiration of that period, the five (5) year period shall be automatically extended for an additional one (1) year.

(p)After giving effect to the Borrower Release and the Resort Manager Release and excluding any potential liability arising from the Lawsuits, the transfers of the Property and the GTA-Stock Interests to GTA-IB and the assumption of liabilities by GTA-IB will not render Borrower insolvent.

(q)Borrower has made adequate provision for the payment of all liabilities of Borrower (including, without limitation, the liabilities of Borrower to Resort Manager) other than its liabilities to Lender and those liabilities to be assumed by GTA-IB pursuant to the terms of this Agreement.

(r)Neither Borrower nor Guarantor have entered into this transaction to provide preferential treatment to Lender, GTA-IB or any other creditor of Borrower or Guarantor in anticipation of seeking relief under the Bankruptcy Code, as amended.

(s)The only individuals employed by Borrower and Condo Owner and their affiliates with respect to the Property (including the officers of Borrower and Condo Owner and those individuals on leave of absence or layoff status) are those listed on Schedule 6.1(s) attached hereto (the “Employees”).

(t)Other than those rights and benefits listed on Schedule 1.1(r), there are no other contractual, real property or other rights or benefits of Borrower or Guarantor or their respective affiliates that exist in any form respecting Parcels J-1, J-2 or K.  Other than those consents and notices listed on Schedule 6.1(t)-1, there are no Consents or Notices (defined below) required to be executed or delivered in connection with an assignment of any Property to GTA-IB.  Other than those agreements and contracts set forth in Schedule 6.1(t)-2, there are no other agreements or contracts or understandings, written or otherwise, relating to the sale of Parcels J-1, J-2 and K by Borrower (the “Parcel J and K Contracts”).  For the purposes of this paragraph, “Consents and Notices” shall mean those consents and notices required under those certain contracts, agreements or understandings, excepting those contracts, agreements or understandings which:  (i) shall have a commercial value or cost of less than Ten Thousand Dollars ($10,000) individually, provided that the collective commercial value or cost of all such contracts, agreements and understandings meeting the aforesaid monetary criterion shall not exceed Fifty Thousand Dollars ($50,000) in the aggregate; or (ii) may be terminated at any time with no cost or penalty; or (iii) have a term of less than thirty (30) days and may be cancelled without cost or penalty at the expiration of that period.  Notwithstanding anything contained in this Section 6.1(t), in no event shall Borrower have any liability with respect to any contract or obligation which requires a Consent or Notice if GTA-IB does not terminate or attempt to terminate such contract or obligation.

(u)All amounts required to be funded to the retirement accounts relating to the Targeted Employees and Other Employees (the “Retirement Accounts”) are fully funded

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and no Retirement Account or amount contained there has been pledged, encumbered or hypothecated.

(v)Any Parcel F Contract delivered to GTA-IB on or prior to the Closing Date, (together with true, correct and complete copies of all attachments thereto) is (1) a true, correct and complete original thereof, enforceable against the parties thereto, and (2) no side letters or other modifications thereto exist.

(w)There is no action, suit or proceeding, or any governmental investigation or any arbitration, in each case pending or, to the knowledge of Borrower, threatened against Borrower, GH Securities or the Property before any governmental or administrative body, agency or official which if adversely determined would affect the use and operation of the Property or the business, financial condition or results of operations of Borrower, GH Securities or the Property except for the Klosterman Litigation or as set forth on Schedule 6.1(w) hereof.  In addition, none of Borrower, Guarantor, GH Securities, GH Management or the Condo Owner, nor their respective affiliates, are aware of any right to commence, have commenced, or intend to commence any legal action, administrative proceeding, arbitration, or mediation before any governmental or administrative body, agency or official in any way relating to the Property or the business, financial condition or results of operations of the Property, except for the Klosterman Litigation or as set forth on Schedule 6.1(w) hereof (all such matters listed on Schedule 6.1(w) are collectively the “Litigation”). Any future legal actions, administrative proceedings, arbitrations, or mediations commenced by such parties in any way relating to the Property or the business, financial condition or results of operations of the Property shall be referred to as the “Future Litigation.”  Borrower has delivered true, correct and complete copies of all existing pleadings, court documents, deposition transcripts, legal memoranda and settlement proposals in respect of the Lawsuits, the Klosterman Litigation and the Litigation to GTA-IB and its counsel, unless such delivery would waive attorney-client privilege (and Borrower has informed GTA-IB and its counsel in writing when it has asserted such attorney-client privilege).

(x)Borrower is not aware of any payments in the nature of Termination Payments which Borrower has not disclosed in writing to Lender, and such writing shall make specific reference to this Agreement.

(y)The Current Troon Agreement (i) is the only agreement relating to the management and/or operation of the Innisbrook Golf Courses, other than the Troon Management Agreement, (ii) has not been modified or amended, and (iii) has not been extended or renewed by Borrower, except insofar as it is currently being extended on a month to month basis.

(z)Neither Borrower nor Resort Manager has, since January 1, 2001, applied any revenues, assets and/or credit capacities of the Resort Property other than to costs, expenses and improvements specifically relating to the Resort Property.

(aa)As of the Effective Date, Schedule 6.1(aa)-1 attached hereto is a true, correct and complete description of the job titles, employment dates and aggregate annual cash compensation (all such information shall be accurate as of the Effective date) for each of the Employees.  As of the Effective Date, except as specifically set forth on Schedule 6.1(aa)-1

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attached hereto, (a) Borrower does not have any outstanding loan from or to any affiliate, or any agent or Employee, and (b) no material representations, warranties or covenants have been made to, or agreements have been reached with, any Employee in material variance with the provisions of the employee manual with respect to their employment, compensation or benefits.  No Employee has given written notice as of the Effective Date of their plans to terminate employment with Borrower during the twelve (12) months subsequent to the Effective Date.  Schedule 6.1(aa)-2 attached hereto sets forth a list of each Employee who has a management, employment or bonus contract, or contract for personal services with Borrower.

(bb)Schedule 6.1(bb) attached hereto contains a true, correct and complete list of all employee benefit, bonus, auto allowance, consulting, change in control, fringe benefit plans and collective bargaining, employment or severance agreements or other similar arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not, under which any Employee or Other Employee has any present or future right to benefits sponsored or maintained by Borrower or to which Borrower is a party, is required to make any contribution, or by which any of them is bound, or with respect to which any of them has any liability or obligation, including, without limitation, (i) any profit-sharing, deferred compensation, bonus, stock option, stock purchase, or other equity-based compensation, pension, retainer, consulting, retirement, severance, plant closing, loan or loan guarantee, change in control, welfare or incentive plan, agreement or arrangement, (ii) any plan, agreement or arrangement providing for “fringe benefits” or perquisites to any Employee or Other Employee officers, directors or agents, including, without limitation, benefits relating to automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave, medical, dental, hospitalization, life insurance and other types of insurance, (iii) any written employment agreement, or (iv) any other “employee benefit plan” (within the meaning of Sections 3(3) and 3(37) of ERISA, including, without limitation, multiemployer plans) (each, a “GHR Employee Plan,” and collectively, the “GHR Employee Plans”).  There has been no amendment to the GHR Employee Plans since January 1, 2001, which is the date on which Borrower delivered copies of the GHR Employee Plans to GTA-IB. Other than those rights and obligations contained in the GHR Employee Plans as of the Closing Date, notwithstanding anything to the contrary, nothing in this Agreement or otherwise shall create any additional rights (or expand any existing rights) of any person or beneficiary in connection with the GHR Employee Plans.

(cc)Borrower has made available to Lender true, correct and complete copies of (i) all material documents and existing written summary plan descriptions (and written descriptions of any oral GHR Employee Plans) with respect to the plans, agreements and arrangements listed on Schedule 6.1(cc), (ii) each trust agreement, annuity or insurance contract, or other funding instrument, if any, pertaining to each GHR Employee Plan, (iii) the most recent annual report (IRS Form 5500 Series), including all schedules to such reports, if applicable, filed with respect to each GHR Employee Plan for which such a filing is required, (iv) the most recent determination letter, if applicable, and (v) the most recent plan audits, financial statements, and accountant’s opinion (with footnotes) for each GHR Employee Plan.

(dd)With respect to each current GHR Employee Plan maintained, or contributed to by any entity which either is currently or was previously under common control

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with any Borrower as determined under Section 414 of the Code or Section 3(5) of ERISA, to Borrower’s knowledge, no event has occurred and no condition exists that after the Effective Date could reasonably subject GTA-IB or Lender, directly or indirectly, by reason of their affiliation with any member of their controlled group to any tax, fine, lien, penalty or other liability (including liability under any indemnification agreement) under applicable laws, rules and regulations imposed by ERISA.

(ee)To Borrower’s knowledge, (a) all material contributions and material payments to or with respect to each GHR Employee Plan have been timely made, and (b) Borrower made adequate provision for reserves to satisfy all contributions and payments that have not been made because they are not yet due under the terms of such GHR Employee Plan or related arrangement, document or applicable law.

(ff)To Borrower’s knowledge, no GHR Employee Plan provides for any accelerated payments, deemed satisfaction of goals or conditions, new or increased benefits, forgiveness or modification of loans or vesting conditioned in whole or in part upon a change in control of Borrower, or otherwise as a result of the execution of this Agreement or the transactions contemplated by this Agreement.

(gg)No agreement, commitment or obligation exists to increase any benefits under any GHR Employee Plan or to adopt any new GHR Employee Plan.

(hh)No GHR Employee Plan shall have any unfunded accrued benefits that are not fully reflected in the Closing Date Balance Sheet (including, without limitation, any accruals or reserves or other provisions for any liabilities that may be triggered upon any change in control of Borrower) and, to Borrower’s knowledge, no “reportable event” (as such term is defined in ERISA section 4043) or “accumulated funding deficiency” (as such term is defined in ERISA section 302 and Code section 412 (whether or not waived)) has occurred with respect to any GHR Employee Plan.

(ii)GH Securities (i) is a duly organized and validly existing corporation in good standing under the laws of the state of Florida, (ii) is duly qualified as a foreign entity in each other jurisdiction in which its business is conducted, if any, (iii) has the requisite entity power and authority to carry on its business as now being conducted.  Guarantor has full right, title and interest in and to the GH Securities Stock Interests and has not transferred pledged or hypothecated the GH Securities Stock Interests.  Guarantor has the requisite entity power to execute and deliver, and perform its obligations hereunder.  The GH Securities Stock Interests constitute 100% of the capital stock of GH Securities, and there are no outstanding options to purchase, or securities convertible into, equity interests in GH Securities, nor any obligation to issue any of the foregoing.  Delivery of the GH Securities Stock Interest Transfer Documents will transfer to GTA-IB good and valid title to the GH Securities Stock Interests, free and clear of all liens and encumbrances, except as created by this Agreement.  As of the Closing Date, Borrower, Guarantor and GH Securities, as applicable, shall have timely filed all required filings with the Securities and Exchange Commission (and shall have agreed to file all subsequent required filings with the Securities and Exchange Commission or NASD, as applicable, respecting any period prior to the Closing Date), including the notice to be provided to the

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NASD which Lender shall provide to Borrower, or its affiliates, for Borrower, or its affiliates, to provide to the NASD;

(jj)Other than those rights and benefits listed on Schedule 1.1(s)-2, there are no other contractual, real property or other rights or benefits of Borrower or Guarantor, or their respective affiliates, that exist in any form respecting the Pinellas County Land. Other than those consents and notices listed on Schedule 6.1(jj)-1, there are no consents or notices required to be executed or delivered in connection with an assignment of any Pinellas County Rights to GTA-IB.  Other than those agreements and contracts set forth in Schedule 6.1(jj)-2, there are no other agreements or contracts or understandings, written or otherwise, relating to the Pinellas County Rights (the “Pinellas County Contracts”).  Other than those rights and benefits listed on Schedule 1.1(t)-2, there are no other contractual, real property or other rights or benefits of Borrower or Guarantor, or their respective affiliates, that exist in any form respecting the Wall Springs Land. Other than those consents and notices listed on Schedule 6.1(jj)-3, there are no consents or notices required to be executed or delivered in connection with an assignment of any Wall Springs Rights to GTA-IB.  Other than those agreements and contracts set forth in Schedule 6.1(jj)-4, there are no other agreements or contracts or understandings, written or otherwise, relating to the Wall Springs Rights (the “Wall Springs Contracts”).

(kk)None of Borrower, Guarantor, GH Management or Condo Owner, or their respective affiliates, have made or entered into any agreements, side letters or understandings, written or otherwise, that conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under this Agreement, the Defense and Escrow Agreement or that certain Operational Benefits Agreement which Borrower, Guarantor, GTA-IB and Lender intend to enter into concurrently with the execution of this Agreement, providing that it shall be in form and substance acceptable to such parties (“Operational Benefits Agreement”).

(ll)Other than the Property, there exists no other right, title and interest in and to any and all real or personal property or contracts or other rights or benefits of Borrower, Guarantor, GH Management, Condo Owner, or their respective affiliates, in any way relating to the Property, or its operation or use.

(mm)Each of the Equipment Leases, the Real Property Leases, the Contracts, the Plans and Specifications, the Warranties and Guaranties and the Insurance Policies, Permits, Parcel J and K Contracts, Pinellas County Contracts and Wall Springs Contracts delivered to GTA-IB in connection with this Agreement, are true, correct and complete copies of such documents.

6.2.GTA-IB Representations.  GTA-IB represents, warrants, acknowledges, and agrees with Borrower that as of the Effective Date:

(a)GTA-IB (i) is a duly organized and validly existing limited liability company in good standing under the laws of the state of its formation, (ii) is duly qualified as a foreign entity in each jurisdiction, if any, in which the nature of its business, or the location of the Property makes such qualification necessary or desirable, (iii) has the requisite entity power and authority to carry on its business as now being conducted, and (iv) has the requisite entity power to execute and deliver, and perform its obligations hereunder.

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(b)The execution and delivery by GTA-IB of this Agreement and the performance of its obligations hereunder (i) have been duly authorized by all requisite entity action on the part of GTA-IB, (ii) will not violate any provision of any applicable legal requirements, any order, writ, decree, injunction or demand of any court or other applicable governmental authority with jurisdiction over GTA-IB or the Property, any organizational document of GTA-IB or any indenture or agreement or other instrument to which GTA-IB, or by which GTA-IB is bound, (iii) will not be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or result in the creation or imposition of any lien of any nature whatsoever upon any of the property or assets of GTA-IB pursuant to any indenture or agreement or instrument, and (iv) has been duly executed and delivered by GTA-IB.  The Agreement is enforceable against GTA-IB according to its terms.  Except for those obtained or filed on or prior to the date hereof, GTA-IB is not required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any governmental authority or other agency in connection with or as a condition to the execution, delivery or performance of this Agreement.

(c)Lender is the owner and title holder of the Loan, the Note, the Mortgage, the Guaranty and the other Loan Documents.

6.3.Definition of Knowledge.  For the purposes of this Agreement, the phrase “To Borrower’s knowledge” and phrases and terms of similar import shall be limited to the actual knowledge of Keith Wilt, Merrick R. Kleeman and Robert Geimer.

6.4.Survival.  All of Borrower’s and GTA-IB’s representations and warranties in this Agreement shall be deemed given as of the Effective Date, and shall be deemed to have been remade as of the Closing Date.  All of the aforesaid representations and warranties shall survive the Closing Date for a period of one year therefrom, and any and all claims for indemnification resulting from any misrepresentation or breach of such representations or warranties shall be deemed to have been waived unless the party making such claim delivers written notice thereof to the other party within such one-year period; provided, however that the representation and warranty respecting real property tax matters in appeal as of the Closing Date and set forth in Section 6.1(m) above shall survive the Closing Date without limitation.

ARTICLE VII

Covenants

7.1.No Defenses, etc.  Borrower for itself and its respective successors and assigns, and by its execution hereof, hereby acknowledges, admits and agrees that, as of the Effective Date, there are no defenses, counterclaims or offsets relating to their respective obligations under or in respect of the Loan Documents or to the enforcement or exercise by Lender of any of its rights, powers or remedies under or in respect of the Loan Documents.

7.2.Balance Sheet.

(a)On the Closing Date, Borrower shall deliver to GTA-IB a balance sheet of Borrower to be dated as of the Closing Date, and which shall have been approved in writing by

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GTA-IB in its sole discretion, (and attached to this Agreement as Schedule 7.2(a)) reflecting, in all material respects (i.e., material respects shall mean an amount exceeding Twenty Thousand Dollars ($20,000) in the aggregate), the assets and liabilities of Borrower related to the Property, including, without limitation, all real property taxes and real property tax appeal consequences (including, without limitation, all related reasonably and actually incurred legal fees) that have accrued or become payable with respect to the period prior to the Closing Date, and which contains detailed schedules of the line items shown thereon as of the Closing Date (together with all footnotes and schedules thereto, as approved in writing by GTA-IB in its sole discretion, the “Closing Date Balance Sheet”).  The Closing Date Balance Sheet shall reflect the then current assets and liabilities.  It shall be a condition of Lender’s obligations to consummate the transactions set forth in this Agreement and to execute and deliver the Conveyance Documents that (i) all cash flow generated from the operation of the Property from and after May 31, 2002 shall have been used by Borrower and Resort Manager, subject to Section 7.2(b) hereof, for the benefit of the Property or Lender, (ii) Borrower shall deliver to Lender on the Closing Date the Closing Date Balance Sheet of Borrower dated as of the Closing Date which (A) accurately reflects, in all material respects, the financial condition of the Property as of the Closing Date, (B) has been approved by GTA-IB, in its sole, reasonable discretion, on or before the Closing Date, and (C) which has been countersigned by an authorized representative of each of the parties hereto, (iii) the Closing Date Balance Sheet shall reflect that the amount due and payable to Resort Manager shall not exceed Four Hundred Thirty-Four Thousand Dollars ($434,000) (i.e., the amount accruing prior to January 1, 2002, and unpaid as of the Closing Date) and any then earned fees and unpaid amounts owed to the Resort Manager, (iv) the Closing Date Balance Sheet shall state that the then current amount owed by Borrower to Resort Manager pursuant to that certain Agreement Re Guaranty of Funds dated as of May 7, 1997 between Borrower and Resort Manager (the “Resort Manager Guaranty”) equals no more than Ten Million Two Hundred Sixty-Five Thousand Dollars ($10,265,000) (which shall include amounts advanced by Resort Manager as described in Section 7.2 (b) (ii)).  Furthermore, if any real property taxes and/or real property tax appeal consequences (including, without limitation, all related reasonably and actually incurred legal fees) related to the period from January 1, 1998 through May 31, 2002, inclusive, accrue or become payable before or after the Closing Date (the “Real Property Taxes and Consequences”), subject to the Indemnified Amount limitation described in Section 10.3(c), Borrower and Guarantor shall be jointly and severally obligated to pay the same and shall jointly and severally indemnify, defend and hold harmless each of the GTA Parties, from and against any and all such Real Property Taxes and Consequences, including, without limitation, penalties, fines, interest, legal fees, etc., and any other related costs, expenses (including, without limitation, legal fees, penalties, interest and other directly related reasonably and actually incurred third-party costs, which amounts shall not exceed, in the aggregate, One Million Thirty Thousand Nine Hundred Dollars ($1,030,900) (collectively, the “Indemnified Tax Amount”).

(b)Lender recognizes, acknowledges, agrees and consents that in order for Borrower to meet the requirements of Section 7.2 (a), (i) until the Closing Date, Borrower shall direct and permit Resort Manager to apply cash flow from the Resort Property to the payment of amounts that are due and owing from Borrower to Resort Manager for services rendered by the Resort Manager with respect to the Resort Property only and payable pursuant to the express terms of the Management Contract (other than amounts due Resort Manager arising from payments by Resort Manager under the Resort Manager Guaranty) and (ii) Resort Manager shall,

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during 2002, have advanced One Million Two Hundred Fifty Thousand Dollars ($1,250,000) pursuant to the Resort Manager Guaranty, which amount is reflected on the Closing Date Balance Sheet as having been applied to pay a portion of the amounts due and owing to Resort Manager.

(c)Upon closing hereunder, (i) Borrower shall have no liability with respect to (i) any obligations arising on or after the Closing Date in connection with the ownership and operation of the Property, and (ii) those liabilities set forth or provided for on the Closing Date Balance Sheet or otherwise in this Agreement.  Nothing contained in this Agreement or in the Defense and Escrow Agreement shall be deemed an assumption by GTA-IB of any liabilities relating to the ownership, operation or maintenance of the Property prior to the Closing Date other than with respect to those that are expressly included or provided for on the Closing Date Balance Sheet pursuant to Section 7.2(a) hereof or otherwise in this Agreement.

7.3.Property Operations.  Until the Closing Date occurs, Borrower shall cause the Resort Manager to operate the Property in substantially the manner as the Property is being operated as of the Effective Date.  In connection therewith, notwithstanding anything to the contrary contained in the Loan Documents, from the Effective Date until the Closing Date, Borrower shall not be obligated to make payments of principal and interest under the Note to Lender, but instead, Borrower shall have the right to use, and to permit Resort Manager to use, (a) proceeds from the operation of the Resort Property only to pay third-party costs and expenses of operating the Property in the ordinary course and to reduce the current liabilities as described in Section 7.2(b) above and (b) following the delivery to Lender of written notice thereof, make capital expenditures for the benefit of the Resort Property in the ordinary course, utilizing amounts in the capital expenditure reserve; provided, however, that Borrower shall not permit Resort Manager to make capital expenditures in excess of $20,000 in the aggregate without GTA-IB’s prior written consent which may be withheld or denied in GTA-IB’s sole discretion.  Borrower agrees that it shall not and it shall not permit the Resort Manager to enter into any contracts or agreements with respect to the Resort Property which entail expenditures by Borrower and/or the Resort Manager of amounts in excess of $20,000, in the aggregate, without GTA-IB’s prior written consent in each instance.  Proceeds from the operation of the Property shall not be paid to Borrower or its affiliates.

7.4.Amendments of Agreements.  Borrower shall not, without GTA-IB’s prior written consent in each instance, amend or modify or consent to any amendment or modification of the Defense and Escrow Agreement, the Troon Management Agreement (or the Current Troon Agreement), the Westin Management Agreement (or the Current Westin Management Contract), or any of the other Contracts, Leases, Permits, Plans and Specifications, Warranties and Guaranties or Insurance Policies; provided, however that Borrower may (i) amend the Original Bayfair Agreement, or (ii) enter into an agreement for the sale of Parcel F in lieu of the Original Bayfair Agreement in accordance with the terms of this Agreement.  Furthermore, Borrower may terminate the Original Bayfair Agreement pursuant to the terms thereof at its sole discretion, and Borrower shall provide written notice thereof to GTA-IB and its counsel as soon as reasonably practicable thereafter.  Borrower specifically agrees not to extend or renew the Current Troon Agreement (except to the extent that it is currently being extended on a month-to-month basis) and that the accrued balance due to Troon as of May 31, 2002 will not be paid without GTA-IB’s prior written consent.

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7.5.Lawsuits, Klosterman Litigation, Litigation and Future Litigation.

(a)From and after the Effective Date, Borrower shall provide GTA-IB and its counsel with copies of all pleadings, court documents, deposition transcripts, legal memoranda and settlement proposals in respect of the Lawsuits, the Klosterman Litigation, the Litigation and Future Litigation, to the extent that to do so would not waive attorney-client privilege (provided that Borrower shall inform GTA-IB and its counsel in writing when it asserts such attorney-client privilege), and shall assign (or cause Guarantor, GH Management, Condo Owner or their affiliates, as applicable, to assign) the Klosterman Litigation Interest to GTA-IB.  To the extent that GTA-IB (or one or more of its affiliates) is substituted as plaintiff under any of the Klosterman Litigation or Litigation, Borrower, Guarantor, GH Management and Condo Owner and their respective affiliates shall reasonably cooperate with GTA-IB and/or its affiliates and its counsel in the Klosterman Litigation or the Litigation, and provide GTA-IB and its counsel with documents or information which may be reasonably required by GTA-IB to enable, or assist in, the Klosterman Litigation or the Litigation.

(b)Borrower shall use commercially reasonable efforts to enter into a joint defense agreement with GTA-IB and Lender (“Joint Defense Agreement”) to allow GTA-IB, Lender and their respective counsel to receive all copies of all pleadings, court documents, deposition transcripts, legal memoranda, settlement proposals and other information or documentation related to the Lawsuits, including all such privileged information and documentation.

(c)All right, title and interest in and to any judgments, settlements, liens, recoveries, damages, moneys, property or other value received by Borrower, Guarantor, GH Management or Condo Owner, or their respective affiliates, resulting from any resolution, settlement, or dismissal of any of the Litigation or in any way resulting from the claims brought in connection with any of the Litigation or Future Litigation (such right, title and interest, collectively, the “Litigation Interest”), shall be included in the definition of Net Proceeds (as defined in the Defense and Escrow Agreement) and dispersed in accordance with the Net Proceeds waterfall provided in the Defense and Escrow Agreement.  For the purposes of clarity under this Agreement and the Defense and Escrow Agreement, the Klosterman Litigation Interest shall not form part of the Litigation Interest.

7.6.Post Closing Cooperation.  From and after the Effective Date and the Closing Date, Borrower and Guarantor shall fully cooperate with GTA-IB to assign any of such parties’ rights, title and interest in and to any and all contracts, real or personal property or other rights or benefits related to the Property or the use and operation of the Property (including, without limitation, permits, licenses, etc.).

7.7.No Transfer or Assignment.  Except as provided in this Agreement, including, without limitation, the provisions of Section 8.1, Borrower shall not (i) transfer or assign any of its rights or assets, including, without limitation, any of its rights in or to Parcel F or the Proceeds or Net Proceeds, or (ii) transfer or assign any ownership interest in Borrower.

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7.8.Indebtedness.  Borrower shall not directly or indirectly incur any indebtedness without GTA-IB’s prior written approval, in each instance, which GTA-IB may grant or deny in its sole discretion; provided, however, that Borrower may:

(a)secure Parcel F with a mortgage for an aggregate amount equal to up to Four Million Dollars ($4,000,000), to provide for settlement costs with Plaintiffs in the Lawsuits; provided, however, that if the mortgagor is affiliated with any Borrower Parties, such mortgage shall be subordinated to any obligation to GTA-IB or any affiliate thereof; and

(b)incur indebtedness solely in the ordinary course of Borrower’s business for purposes of operations at the Resort Property only so long as such indebtedness shall (i) not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate, (ii) shall be repayable within thirty (30) days of incurring the same, and (iii) not be secured by any of the Property or any of Borrower’s assets, other than as described in (a) above (provided, however, that if the mortgagor is affiliated with any Borrower Parties, such mortgage shall be subordinated to any obligation to GTA-IB or any affiliate thereof).

Notwithstanding anything to the contrary, Borrower shall not encumber the Property or any of Borrower’s assets with any mortgage, lien, pledge, security interest or any other device intended to create an interest in property as security, (i) except as otherwise provided in this Agreement, and (ii) except that Parcel F may be encumbered by a mortgage for the benefit of Borrower in connection with the sale of Parcel F to a third party in accordance with this Agreement.

7.9.Amendments.  From and after the Effective Date, none of Borrower, Guarantor, GH Management, Condo Owner, or their respective affiliates, shall amend, or agree to amend, any of the Equipment Leases, the Real Property Leases, the Contracts, the Plans and Specifications, the Warranties and Guaranties and the Insurance Policies, Permits, Parcel J and K Contracts, Pinellas County Contracts, except with the prior written consent of GTA-IB, and except that Borrower may (i) amend the Original Bayfair Agreement, or (ii) enter into an agreement for the sale of Parcel F in lieu of the Original Bayfair Agreement in accordance with the terms of this Agreement and Borrower shall provide written notice thereof to GTA-IB and its counsel as soon as reasonably practicable thereafter.  Furthermore, Borrower may terminate the Original Bayfair Agreement pursuant to the terms thereof at its sole discretion, provided that Borrower shall provide written notice thereof to GTA-IB and its counsel as soon as reasonably practicable thereafter.

7.10.Other Agreements. From and after the Effective Date, none of Borrower, Guarantor, GH Management or Condo Owner, or their respective affiliates, shall make or enter into any agreements, side letters or understandings, written or otherwise, that conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under this Agreement, the Defense and Escrow Agreement or the Operational Benefits Agreement.

7.11.Vested Rights. None of Borrower, Guarantor, GH Management and Condo Owner, or their affiliates, shall impair or in any way diminish the Vested Rights, including, without limitation, GTA-IB’s legal standing, if any, to enforce the Vested Rights without qualification or condition.  Notwithstanding the foregoing, it shall not be considered an

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impairment or diminishment of the Vested Rights under this Agreement if the following occur: (i) if there is a final, non-appealable, judicially imposed reduction of the Vested Rights; or (ii) if the number of residential units permitted to be developed in connection with Vested Rights is decreased by ten percent (10%) or less (i.e., if the 139 units permitted to be developed is decreased by 13 or fewer units).

7.12.Master Lease Agreement.  To the extent that, and at the time that, GTA-IB, Lender or any successor owner of the Property (a “Successor Property Owner”) derives a cash savings under the Rental Pool Agreement (i.e., a liquidated reduction in a liquidated financial obligation of GTA-IB) from the settlement or final adjudication of the Ball Claims and, to the extent that Successor Property Owner is not obligated to pay participants in the rental pool pursuant to the terms of that certain Innisbrook Rental Pool Master Lease Agreement effective as of January , 2002 (as amended from time to time) (including, without limitation, by that First Addendum effective January 1, 2002; that certain Second Addendum dated December 2001; and by those certain Annual Lease Agreements executed by certain lessors to adopt the benefits and burdens of the Innisbrook Rental Pool Master Lease Agreement for the relevant forthcoming year), then any amounts that the GTA Parties are otherwise entitled to under Article 5.2 of the Defense and Escrow Agreement shall be offset against the GTA Parties and allocated to Borrower by an amount which represents thirty percent (30%) of such cash savings (i.e., a liquidated reduction in a liquidated financial obligation of GTA-IB) as amended or adjusted and to the extent that it is actually realized.

7.13.Survival. The terms, covenants and obligations contained in this Article VII shall survive the Closing Date.

ARTICLE VIII

Parcel F

8.1.Sale of Parcel F.

(a)GTA-IB acknowledges that Borrower desires that the real property known as Parcel F and described on Exhibit L hereto (“Parcel F”) be sold to a third party.  Parcel F is immediately adjacent to, and surrounded by, the Real Property.  Borrower shall manage and conduct the sale of Parcel F on behalf of Borrower and Lender and all deposits and proceeds from the sale of Parcel F shall be deposited with and/or remitted directly to Chicago Title Insurance Company (the “Escrow Agent”) and shall be held and disbursed by the Escrow Agent strictly in accordance with the Defense and Escrow Agreement.  Subject to the terms of this Agreement, including, without limitation, Sections 8.2(b) and 8.5, and the Defense and Escrow Agreement, Borrower shall have the right to enter into any agreement for the sale of Parcel F with any purchaser.  Borrower and GTA-IB agree that on the Closing Date, Borrower shall cause a memorandum of agreement between Borrower and GTA-IB in the form attached hereto as Exhibit K-1 (the “Parcel F Memorandum of Agreement”) to be recorded against Parcel F.

(b)If at any time after the Effective Date, Borrower desires to sell Parcel F to a bona fide, unaffiliated, creditworthy third-party for a price less than Six Million Nine Hundred Thousand Dollars ($6,900,000) (an “Asset Sale”), Borrower (in, and only in, such case of a sale

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for a price less than Six Million Nine Hundred Thousand Dollars ($6,900,000)) shall have the right to consummate the sale thereof at that price provided Borrower shall first give to GTA written notice thereof (an “Offer Notice”), which Offer Notice shall set forth the cash price (the “ROFO Price”), Borrower would be willing to accept to consummate such sale.  The Offer Notice shall also set forth the following information with respect to the terms Borrower would be willing to accept to consummate such sale (the “Other Terms”):  (i) the anticipated closing date; (ii) the amount, if any, Borrower would be willing to finance (i.e., purchase money financing in the form of a promissory note secured by Parcel F); (iii) a form of deed which is substantially in the form which Borrower would provide with respect to such sale; and (iv) the terms regarding the obligation (as between Borrower and potential buyer) to pay the following closing costs:  title insurance stamp/transfer taxes.  Within sixty (60) days of receipt of an Offer Notice (the “Exercise Period”), GTA shall have the right to offer to purchase Parcel F at the ROFO Price and subject to the Other Terms (except as regards the closing date which is set forth in the Offer Notice only for informational purposes), by giving written notice of such election within the Exercise Period (the “ROFO Election”), which offer shall be irrevocable and accompanied by a non-refundable deposit equal to five percent (5%) of the ROFO Price, subject to Borrower’s performance.

(c)If GTA does not timely make a ROFO Election, GTA shall be deemed to have elected not to purchase Parcel F.  If no timely ROFO Election is made by GTA, Borrower shall be free to initiate and consummate the Asset Sale within one hundred eighty (180) days after the expiration of the Exercise Period at a price determined by Borrower, but which price must in no event be less than ninety-five percent (95%) of the ROFO Price and, except as set forth herein, subject to the Other Terms.  The parties hereto agree that the amount of financing, if any, provided by Borrower as well as the terms regarding the obligation to pay the closing costs (title insurance and stamp/transfer taxes) may differ by five percent (5%) from that set forth in the Other Terms without any obligation of Borrower, or right of GTA, triggered by virtue of such deviations from the Other Terms.  Such Asset Sale shall be consummated within nine (9) months after the expiration of the Exercise Period.

(d)If GTA has timely delivered a ROFO Election, Borrower shall accept such offer at the ROFO Price and subject to the Other Terms set forth in the Offer Notice.  Borrower and GTA shall consummate the ROFO Sale on an “as is” and “where is” basis, except for materially, but not necessarily exactly, the warranties, if any, contained in the form of deed which is part of the Other Terms, within ninety (90) days after the date of the ROFO Election.  If GTA has timely delivered a ROFO Election, but thereafter the sale contemplated thereby fails to close within a sixty (60) day period by reason of GTA’s sole default (and not any default by Borrower), then GTA shall be in material default under this provision hereof (and no others) and the five percent (5%) deposit shall be forfeited as Borrower’s sole remedy and as GTA’s sole liability.  In the event of GTA’s material default hereunder as aforesaid, which GTA has not substantially cured after written notice from Borrower and the passage of a cure period of not to exceed ten (10) business days, without limiting any of the rights of Borrower or GTA hereunder, at law or in equity, Borrower shall have the right to consummate the ROFO Sale described in the Offer Notice to non-affiliated third parties for a cash price determined by Borrower (without regard to the ROFO Price) and on such other terms and conditions as Borrower reasonably determines, and shall have a nine (9) month period to consummate such or any other ROFO Sale.

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Further, GTA shall not thereafter be entitled to give a ROFO Election and Borrower shall have no further obligations whatsoever under this provision.

(e)Promptly after the execution of a contract for an Asset Sale, Borrower shall deliver to GTA a true, correct and complete copy of the contract therefor (including all exhibits and schedules).

(f)If an Asset Sale is not initiated or consummated within the nine (9) month period described above, the rights of GTA under this Section 8.1, provided it has not defaulted hereunder (and such default has not been cured), shall be fully restored and reinstated.

(g)Subject to GTA’s rights set forth herein and otherwise, with respect to an Asset Sale, Borrower shall have the right to execute customary contracts, agreements or certifications to effectuate the consummation of the Asset Sale.

8.2.Execution of Certain Documents.

(a)In order to permit the sale of Parcel F, Borrower, Lender and Innisbrook F, LLC (formerly known as Bayfair Innisbrook, L.L.C.), entered into that certain Parcel F development agreement, dated March 29, 2004 (the “Parcel F Development Agreement”), which, among other matters, (i) describes certain cross easement rights and obligations between the Innisbrook Real Property and Parcel F and the terms and conditions pursuant to which Innisbrook F, LLC, or a replacement buyer shall perform construction on Parcel F, and (ii) sets forth the covenants, conditions and restrictions describing the rights and relationships among lot owners and the to-be-formed association with respect to Parcel F.  Notwithstanding anything to the contrary, the Parcel F Development Agreement shall not be modified without the consent of Lender, subject to the provisions of Section 8.3.  Borrower shall provide Lender with a true, correct and complete list of all members (and the constituent members thereof) of Innisbrook F, LLC, as the same may change from time to time.

(b)Notwithstanding anything to the contrary, but subject to Section 8.3, none of GTA-IB, Lender or their respective affiliates shall be obligated or required in any way to negotiate or enter into the Parcel F Development Agreement, or any similar agreement respecting Parcel F, if Borrower enters into an agreement for the purchase and sale of Parcel F and such agreement materially and adversely modifies the terms of the Original Bayfair Agreement in the sole discretion of GTA-IB or its affiliates. As used in this Section, “materially and adversely” shall mean, (i) any violation by Borrower of the provisions of Section 8.3; (ii) Borrower agrees to sell Parcel F to a purchaser other than one with a good business reputation in real estate development, reasonable experience in real estate development for the type of project being considered, and good credit; or (iii) in the event that any of GTA-IB or Lender’s rights are materially diminished or obligations materially increased.  Subject to the terms of the Original Bayfair Agreement, the parties hereto shall not object to Bayfair Properties, Inc. (to the extent it is controlled and majority owned by J. Michael Morris) or another entity controlled and majority owned by J. Michael Morris, as a purchaser of Parcel F, absent any materially and adversely changed circumstances.

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8.3.Further Cooperation.  Subject to the provisions of this Agreement, including without limitation, Section 8.2 above, in addition to executing and/or causing Lender to execute the documents described in Section 8.2 above, as appropriate, from and after the Closing Date, GTA-IB shall, at Borrower’s sole cost and expense, reasonably take such actions (including execution of documents):

(a)to cause any reasonable changes to the foregoing agreements that do not, when compared to the effect of the documents described in Section 8.2 have an adverse effect on the Property (including, without limitation, any cost to GTA-IB or contingent liabilities or future obligations of GTA-IB), the use and operation thereof and the related golf experience, including, without limitation, the health and safety matters affecting the golf course, golfers and contiguous property owner; the playability of the golf course; and the physical and visual quality of the golf experience, and are not inconsistent with any currently existing agreements or undertakings to current or future members of the Innisbrook Resort that may be requested by a future purchaser of Parcel F;

(b)to assist Borrower at Borrower’s expense in its attempt to renew and obtain entitlements to permit the development of Parcel F by any potential buyer, provided that such entitlements do not:

(i)have an adverse effect on the development contemplated in the documents described in Section 8.2 (when compared to the effect of the permissible terms of the agreements described in Section 8.2);

(ii)adversely affect the Innisbrook Golf Courses (when compared to the permissible terms of the agreements described in Section 8.2); or

(iii)contradict the terms and provisions of (x) any and all agreements between Lender, Borrower and/or GTA-IB, including, without limitation, this Agreement, (y) all other existing agreements applicable to the Property, including, without limitation, existing undertakings to existing members, and/or (z) the terms of Section 7.11 hereof; and

(c)revise the Parcel F Development Agreement to name a different purchaser of Parcel F, subject to the provisions of Section 8.2 above.

Nothing contained in this Agreement shall (i) affect any notice or consent rights of Lender pursuant to any of the Loan Documents, (ii) require Lender and/or GTA-IB to consent to any modification to the Parcel F Development Agreementwhich shall adversely affect or modify the nature, character, use or development of the Property, or (ii) adversely affect or modify the Vested Rights or alter the density rights at the Property.

8.4.Proceeds of Sale of Parcel F.  In consideration of GTA-IB’s entering into this Agreement and accepting the Conveyance Documents and cooperating with the sale of Parcel F as provided in this Article VIII, all amounts received from the sale of Parcel F, if any, shall be distributed to Borrower and Lender by the Escrow Agent as described in the Defense and Escrow Agreement.

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8.5.Restated Bayfair Agreement.  Notwithstanding the provisions of Sections 8.1 and 8.2 above, Borrower shall use commercially reasonable efforts to enter into and to cause Bayfair Properties, Inc. to enter into an amended and restated version of the Original Bayfair Agreement with Bayfair, which agreement contains the same terms for the sale of Parcel F as the Original Bayfair Agreement (together with any amendments thereto) (the “Restated Bayfair Agreement”).

8.6.Survival.  The terms, covenants and obligations contained in this Article VIII shall survive the consummation of the transactions contemplated in this Agreement.

ARTICLE IX

Merger

9.1.Present Conveyance; No Merger.  Borrower and GTA-IB agree that the delivery of the Conveyance Documents in accordance with the terms hereof constitutes a present and absolute conveyance of the Property not subject to a condition subsequent (except as otherwise provided herein).  It is Borrower, GTA-IB and Lender’s intent that such delivery shall (a) constitute and be deemed a present conveyance, (b) not be construed as a security interest in or lien upon the Property, and (c) not be deemed to merge the interest of GTA-IB, as owner of the Property under the Deed, with the interest of Lender, as mortgagee under the Mortgage.  Borrower represents that it has sought the advice of counsel in connection with this transaction has explored various alternatives to the transactions contemplated hereby and determined that it is in its interest to enter into this transaction, and understands that by entering into this Agreement Borrower may be relinquishing certain rights or remedies it may otherwise have under the Loan Documents or under Florida law.

9.2.Mortgage Lien to Continue.  Notwithstanding the fact that GTA-IB, by virtue of recording the Deed, will obtain title to the Property, the Mortgage and all other applicable loan documents evidencing, relating to or securing the Loan shall remain liens against the Property, shall remain in full force and effect, and unmodified hereby, and no merger of the interests of GTA-IB, as owner under the Deed, and its affiliate, Lender, as mortgagee under the Mortgage, shall occur.  GTA-IB’s acceptance of the Conveyance Documents will not constitute a full or partial satisfaction or release of the obligations under the Loan Documents, which obligations shall survive as an encumbrance on the Property; provided, however, that Borrower and any existing guarantors of the Loan shall have no further liability with respect to all such obligations.  Lender does not waive any existing event of default under the Loan Documents and shall continue to have all of the rights and remedies to which it is entitled under the Loan Documents, subject to the terms of this Agreement.

9.3.Intentionally Deleted.

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ARTICLE X

General

10.1.Notices.  All notices required hereunder shall be addressed to each party at the respective addresses set forth in the first paragraph hereof, and shall be in writing and delivered or mailed (by registered or certified mail, return receipt requested and postage prepaid), addressed to the respective parties as set forth below:

If to GTA-IB:

Golf Trust of America, L.P.

14 North Adger’s Wharf

Charleston, South Carolina  29401

Tel.:(803) 723-4653

Fax:(803) 723-0479

Attn:Mr. W. Bradley Blair, II

Copy to:

O’Melveny & Myers LLP

Embarcadero Center West

275 Battery Street, Suite 2600

San Francisco, California  94111

Attn:Peter T. Healy, Esq.

Tel.:(415) 984-8833

Fax:(415) 984-8701

If to Borrower:

Golf Host Resorts, Inc.

591 West Putnam Avenue

Greenwich, Connecticut  06830

Attn:Mr. Merrick R. Kleeman

Tel.:(203) 422-7710

Fax:(203) 422-7810

Copies to:

Dechert LLP

90 State House Square

Hartford, Connecticut  06103

Attn:John J. Gillies, Jr., Esq.

Tel.:(860) 524-3938

Fax:(860) 524-3930

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and

Rinaldi, Finkelstein & Franklin

591 West Putnam Avenue

Greenwich, Connecticut  06830

Attn:Steven Finkelstein, Esq.

Tel.:(203) 422-7767

Fax:(203) 422-7867

10.2.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made and performed in such State and without regard to conflicts of law doctrines; provided, however, that any action or proceeding arising from or relating to this Agreement must be brought in the State of Delaware, and each party to this Agreement irrevocably submits to the jurisdiction and venue of any such court in any such action or proceeding.

10.3.Indemnity.

(a)Borrower shall indemnify, defend and hold harmless the GTA Parties from and against any and all claims, demands, causes of action, losses, damages, liabilities, judgments, taxes (including, without limitation, all real property taxes and real property tax appeal consequences), costs and expenses (including attorneys’ fees and court costs, whether suit is instituted or not) and all Operational Benefits (as defined in the Operational Benefits Agreement), subject to the terms of the Operational Benefits Agreement (collectively, “Losses”), asserted against the GTA Parties, or any of them, by reason of or arising out of a breach of any provision or any representation, warranty, covenant or undertaking of Borrower and/or its affiliates contained in this Agreement, the Defense and Escrow Agreement or the Operational Benefits Agreement.

(b)GTA-IB shall defend, indemnify and hold harmless Borrower from and against any and all Losses asserted against Borrower by reason of or arising out of a breach of any provision or any representation, warranty, covenant or undertaking of GTA-IB or Lender contained in this Agreement or the Defense and Escrow Agreement.

(c)The indemnity obligations of each of Borrower, GTA-IB and Lender, and their respective affiliates, under this Agreement, the Parcel F Development Agreement, the Operational Benefits Agreement, the Joint Defense Agreement and the Defense and Escrow Agreement (including both Losses under this Section 10.3 and including the indemnity regarding the Lawsuits) shall be payable solely from such party’s respective share of Net Proceeds (defined in the Defense and Escrow Agreement) pursuant to Section 5.2(vii) (i.e., the “Seventh” level of the Net Proceeds waterfall). Furthermore Borrower’s indemnity obligations under this Agreement (except for its indemnity obligations respecting Losses arising from the Lawsuits) shall be limited to an amount which equals One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate (the “Indemnified Amount”).  The parties acknowledge that Borrower has paid certain property taxes in the amount of One Million Thirty Thousand Dollars ($1,030,000) and such payment shall reduce the Indemnified Amount correspondingly.  Subject to the Indemnified Amount limitation, the only indemnity obligation set forth in this Agreement

36

which is not subject to the availability of Net Proceeds is the Indemnified Tax Amount described in Section 7.2(a) above.  Borrower hereby grants to GTA-IB a first-lien security interest in all funds payable to Borrower under the Defense and Escrow Agreement.  Borrower shall promptly perform any and all acts requested by GTA-IB from time to time to assure that GTA-IB may perfect such security interest.

(d)This Section 10.3 shall terminate upon the termination of the Defense and Escrow Agreement.

10.4.No Personal Liability.  In no event, and notwithstanding anything contained herein or elsewhere, shall any of the respective past, present or future officers, directors, managers, partners, members, stockholders, employees, representatives, trustees, advisors, attorneys or other agents of each of Borrower, Guarantor, GH Management, Condo Owner, GTA-IB, Lender and the GTA Parent (or any of their respective affiliates) be personally liable under or in connection with this Agreement, the Defense and Escrow Agreement or the Operational Benefits Agreement whatsoever. Each of the parties to this Agreement, the Defense and Escrow Agreement or the Operational Benefits Agreement, and each of such parties’ respective successors and assigns does hereby waive any such personal liability or any right to make such a claim against any of the others.

10.5.Construction.  Borrower and GTA-IB acknowledge that each party and its counsel have reviewed and revised this Agreement, and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any document executed and delivered by either party in connection with the transactions contemplated by this Agreement.  The captions in this Agreement are for convenience or reference only and shall not be used to interpret this Agreement.

10.6.Terms Generally.  The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, corporations, partnerships, trusts, other legal entities, organizations and associations, and any government or governmental agency or authority.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “approval,” “consent” and “notice” shall be deemed to be preceded by the word “written.”

10.7.Confidentiality.  For so long as no party is in default under the terms of this Agreement, the parties to this Agreement shall keep the existence of, and the terms and conditions of this Agreement and its exhibits, schedules and all attachments, strictly confidential, except as follows: (i) such disclosures as are necessary to consummate the transactions contemplated hereunder, including, without limitation, the recording of the Conveyance Documents; (ii) such internal disclosures, disclosures to attorneys, accountants, advisors and servicers, and disclosures to investors and rating agencies as are required by the respective parties’ operating policies and procedures and as may be required by the Securities and Exchange Commission; and (iii) such disclosures as are required by law, including pursuant to the service of judicial process.  The parties acknowledge and agree for the purposes of this

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Section, that the terms and conditions of this Agreement and its exhibits, schedules and all attachments shall only be disclosed to Troon and/or its counsel, after GTA-IB publicly discloses in a filing with the Securities and Exchange Commission the Agreement and its exhibits, schedules and all attachments.  The parties also acknowledge and agree that this provision constitutes material consideration for the parties’ obligations hereunder, and the breach thereof may result in irreparable injury to a party, entitling such party to specific performance of the terms hereof.

10.8.Waivers.  No waiver of any provision of this Agreement or any breach of this Agreement shall be effective unless such waiver is in writing and signed by the waiving party, and any such waiver shall not be deemed a waiver of any other provision of this Agreement or any other or subsequent breach of this Agreement.

10.9.Remedies.  The parties hereto agree that money damages would not be an adequate remedy for any actual or threatened breach of this Agreement by a non-defaulting party and that each non-defaulting party shall be entitled as a non-exclusive remedy to equitable relief, including, without limitation, injunctions (temporary and permanent) and specific performance, as a remedy for any such breach and the defaulting party or parties hereby agree to waive any requirement for the securing or posting of any bond in connection with the non-defaulting parties’ pursuit of any of such remedies.  Such remedies shall not be deemed to be the exclusive remedies for a breach by a non-defaulting party of this Agreement (or any part thereof) but shall be in addition to all other rights and remedies otherwise available at law or equity to a non-defaulting party.  If, in the event of litigation relating to this Agreement among the parties, a court of competent jurisdiction determines in a final, non-appealable order that this Agreement has been breached by any party, then the breaching party or parties shall be liable for and pay to the non-breaching party or parties its costs and expenses (including, without limitation, the reasonable legal fees and expenses) incurred in connection with all such litigation.

10.10.Miscellaneous.  The Exhibits and Schedules attached to this Agreement are hereby made a part of this Agreement.  This Agreement shall benefit and bind Borrower and GTA-IB and their respective representatives, successors and assigns.  Time is of the essence of this Agreement.  This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same Agreement.  This Agreement may not be amended or modified except by a written instrument signed by Borrower and GTA-IB.  This Agreement, including the Exhibits hereto and the Releases described herein, constitute the entire and integrated agreement between Borrower and GTA-IB relating to the conveyance of the Property and supersedes all prior agreements, understandings, offers and negotiations, oral or written, with respect to the conveyance of the Property.

[Signatures commence on the following page]

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IN WITNESS WHEREOF, the following parties have executed this Agreement as of the Effective Date.

“BORROWER”
GOLF HOST RESORTS, INC.,
a Colorado corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GUARANTOR”
GOLF HOSTS, INC.,
a Florida corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GH MANAGEMENT”
GOLF HOST MANAGEMENT, INC.,
a Delaware corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“CONDO INC.”
GOLF HOST CONDOMINIUM, INC.,
a Delaware corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President

S-1

“CONDO LLC”
GOLF HOST CONDOMINIUM, LLC,
a Delaware limited liability company
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GTA-IB”
GTA-IB LLC,
a Florida limited liability company
By:	/s/ W. Bradley Blair, II
	By:		/s/ W. Bradley Blair, II
			Name: W. Bradley Blair, II
			Title: President
“LENDER”
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By:		GTA GP, Inc., a Maryland corporation, its general partner
	By:		/s/ W. Bradley Blair, II
			Name: W. Bradley Blair, II
			Title: President

S-2

EX-10.2

EXHIBIT 10.2

DEFENSE AND ESCROW AGREEMENT

THIS DEFENSE AND ESCROW AGREEMENT (this “Agreement”) is made as of this 15^th day of July , 2004 (the “Effective Date”), by and among (i) GOLF HOST RESORTS, INC., a Colorado corporation (“Borrower”), (ii) GTA-IB, LLC, a Florida limited liability company (“GTA-IB”), (iii) GOLF TRUST OF AMERICA, L.P., a Delaware limited partnership (“Lender”), (iv) GOLF TRUST OF AMERICA, INC., a Maryland corporation (“GTA Parent”), and (v) Chicago Title Insurance Company (“Escrow Agent”). GTA-IB, Lender and GTA Parent shall be referred to collectively as “GTA” in this Agreement.

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understandings:

A.Simultaneously herewith, Borrower, GTA-IB, Lender and certain other parties are entering into a Settlement Agreement, dated as of the date hereof (the “Settlement Agreement”) which, among other things, sets forth the respective rights and obligations of Borrower and GTA-IB relating to (i) certain real and personal property (as more particularly described in the Settlement Agreement, the “Property”), (ii) Borrower’s obligations to Lender, regarding Borrower’s obligations to Lender in connection with that certain loan in the original principal amount of Seventy-Eight Million Nine Hundred Seventy-Five Thousand Dollars ($78,975,000), and maturing on June 19, 2027 (the “Loan”), and (iii) such other matters as more specifically set forth therein.  Capitalized terms used, but not otherwise defined herein, shall have the meanings set forth in the Settlement Agreement.

B.Borrower and other entities are currently defending that certain lawsuits filed by William J. and Harriet J. Ball, et al., on behalf of themselves and other similarly situated parties, in the Circuit Court for the Sixth Judicial Circuit in Pinellas County, Florida, Case Numbers 99-7532-CI-007 and/or 01-008582-CI-015 (the “Ball Claims”), and may in the future defend other claims which are brought (or could have been brought) against Borrower, and which derive from or relate to the same facts and circumstances as the Ball Claims (collectively, such additional claims are referred to as the “Related Claims,” each such claim is individually a “Related Claim”) (collectively the Ball Claims and the Related Claims and any appeals thereof are referred to as the “Lawsuits;” and each of the Ball Claims and the Related Claims (any an appeal thereof) is individually a “Lawsuit”).  The settlement of the Lawsuits may require, among other things, the granting of certain operational benefits to those plaintiffs in the Lawsuits (or to those who have intervened or seek to intervene in one or more Lawsuits) (collectively, such plaintiffs and intervenors are referred to as the “Plaintiffs;” and each is individually a “Plaintiff”), subject to the settlement of the Lawsuits.

C.Borrower also owns a parcel of real property commonly known as “Parcel F” and which is more particularly described on Exhibit A attached hereto (“Parcel F”).

D.As a condition to GTA-IB’s and Lender’s execution of the Settlement Agreement, GTA has required (i) that Borrower and GTA agree upon their respective rights and liabilities with respect to the Lawsuits and the defense thereof, and (ii) that certain of the proceeds from any sale of Parcel F by Borrower (or any affiliate thereof) be held in escrow pending distribution in accordance with this Agreement.

E.Borrower and GTA desire to enter into this Agreement to establish their respective rights and obligations with respect to (i) the defense of the Lawsuits, and (ii) the use and distribution of proceeds from any sale of Parcel F by Borrower.

NOW THEREFORE, in consideration of the foregoing premises, the covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, GTA and Escrow Agent hereby agree as follows:

1.Appointment of Escrow Agent.  Escrow Agent is hereby appointed to act as escrow agent in accordance with the terms of this Agreement, and Escrow Agent hereby accepts such appointment.  Escrow Agent shall have all the rights, powers, duties and obligations set forth in this Agreement and no others.

2.Defense of the Lawsuits; Participation by GTA.  Subject to the terms of the Settlement Agreement and that certain operational benefits agreement dated July 15, 2004, by and among Borrower, GTA-IB, Lender and Golf Hosts, Inc., a Florida corporation (the “Operational Benefits Agreement”), Borrower shall conduct, control and be responsible for the defense and potential settlement of the Lawsuits.  GTA-IB shall have the right to consult with Borrower regarding the Lawsuits and Borrower be obligated to keep GTA-IB regularly informed on a current basis on the status of the Lawsuits, including, without limitation, providing GTA-IB (and its counsel) with copies of all pleadings filed and received, and deposition transcripts produced in connection therewith, and Borrower and its counsel shall be generally available to answer all questions of GTA-IB and its counsel relating to the Lawsuits.  Further, Borrower acknowledges and agrees that it shall cause its counsel of record with respect to the Lawsuits, as well as any other counsel engaged by Borrower with respect to the defense of the Lawsuits (together, “Borrower’s Counsel”) to promptly and regularly (i) inform Peter T. Healy, Esq. and/or Michael Tubach, Esq. of O’Melveny & Myers LLP, counsel to GTA (“OMM”) on a current basis on the status of the Lawsuits and any negotiations regarding the settlement thereof, and (ii) provide to OMM copies of all settlement proposals, correspondence and documents related thereto and to the Lawsuits.  Borrower shall also give GTA-IB, Lender and OMM prior notice of all settlement discussions relating to the Lawsuits and allow GTA-IB, Lender and their counsel to observe (and participate in from time to time as is reasonably practicable) all such settlement discussions. GTA-IB shall cooperate (at no economic cost to it or its affiliates) and shall cause Lender to cooperate (at no economic cost to Lender or its affiliates) in all reasonable respects in seeking to settle the Lawsuits, which may include, in GTA-IB’s discretion, the offering of certain rights, or the offering to alter certain existing rights, to use the Innisbrook Golf Course, as provided in the Operational Benefits Agreement.  No such grants shall be made to a Plaintiff, except in the event that Borrower and such Plaintiff execute and deliver a complete and final settlement agreement, which provides for (i) the unconditional dismissal of such Plaintiff’s Lawsuit or Lawsuits, any and all claims raised in or related to such Plaintiff’s Lawsuit, with prejudice, and (ii) the unconditional release of each of Guarantor, Borrower, GTA-IB, Lender, GTA Parent and their respective affiliates, officers, directors, shareholders, partners, members, successors, employees, and agents from any and all liability for claims raised in or related to such Plaintiff’s Lawsuit (each such settlement agreement, a “Lawsuit Settlement Agreement”), and subject to the further conditions set forth in Section 5.2 below.  Furthermore, such settlements may include a waiver of rights of Borrower to offset any sums owed to the

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originally named Plaintiffs under the Innisbrook Rental Pool Master Lease Agreement effective January 1, 2002, as amended.

3.Proceeds from the Sale of Parcel F.  The parties to this Agreement agree that any and all amounts received in respect of any deposit, purchase price or purchase money mortgage payments in connection with the sale or transfer or the proposed sale or transfer of Parcel F (including, without limitation, any funds received from GTA in the event it purchases Parcel F or purchaser reimbursement of sums advanced by Borrower pursuant to Section 5.1(iii)), less:  all of Borrower’s reasonably and actually incurred third-party costs and expenses incurred solely in connection with such sale, including, without limitation, all documentary, filing, recording, conveyance, transfer and intangible taxes/fees; all charges for or in connection with the recording and filing of any instrument or document to be recorded or filed; costs and expenses of or related to the issuance of the policies of title insurance; the premiums for the same and the costs of any preliminary title reports and surveys required in connection with the same; Borrower’s closing attorneys’ fees payable solely in connection with services related to the sale and conveyance of title to Parcel F; Borrower’s brokerage and conveyance fees payable to Lochmere Realty, Inc. (which fees payable to Lockmere Realty, Inc. shall not exceed 6.87% of net cash proceeds of the sale of Parcel F as and when paid by the purchaser of Parcel F); and the buyer’s agent/broker’s acquisition fee/brokerage fee, not to exceed Two Hundred Thousand Dollars ($200,000) in the aggregate (such sale proceeds less all such costs and expenses deducted therefrom, are hereinafter referred to as the “Proceeds”) shall be deposited directly into the Escrow Account (as hereinafter defined), without demand, deduction, offset or delay, and shall be disbursed only in accordance with the terms of this Agreement, without demand, deduction, offset or delay.  Borrower shall not make or seek to cause any disbursement from the Escrow Account to be made, directly or indirectly, except as expressly permitted by this Agreement and only upon five (5) days’ prior written notice thereof to Lender, in each instance, together with all relevant detail. 

3.1The Escrow Account.  Escrow Agent shall establish a collateral account, upon the availability of clear funds to be distributed pursuant to this Agreement, in Borrower’s name at Bank of America, National Association, which account shall be denominated “Bank of America Golf Host Resorts, Inc. by Chicago Title Insurance Company as Escrow Agent” for the benefit of Borrower and GTA (the “Escrow Account”).  Borrower shall (i) pay on a regular and current basis any and all fees and expenses incurred in connection with the maintenance and the administration of the Escrow Account, and (ii) advise GTA on a regular and current basis of Borrower’s satisfaction of such obligations.

3.2Control of Escrow Account.  Escrow Agent shall administer the Escrow Account, shall be the sole signatory on the Escrow Account and shall disburse the Proceeds only in accordance with the terms of this Agreement and only upon five (5) days’ prior written notice thereof to Lender, in each instance, together with all relevant detail. Borrower shall have no right or ability to effect withdrawals from the Escrow Account and shall have no right to exercise dominion or control over the Escrow Account.

3.3Notice to GTA.  Prior to making any distribution under this Agreement, including, without limitation, under Sections 3 and 5, Escrow Agent shall notify GTA and its counsel in writing of such intended distribution, in accordance with this Section 3, allowing GTA reasonable opportunity to object to any such distribution.

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4.Proceeds Held in Escrow.

4.1Investment of Proceeds.  Funds in the Escrow Account shall be invested and/or reinvested by Escrow Agent exclusively in Permitted Investments.  As used herein, “Permitted Investments” shall mean any of the following liquid secondary market investments of excess cash with a maximum life of any one security not to exceed one year:  (a) marketable securities issued by the United States of America and agencies thereof or guaranteed by the United States of America; (b) marketable securities issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality with a minimum rating of A1/P1;AA/Aa2 or MIG-1, VMIG1; (c) certificates of deposit and time deposits issued by commercial banks organized under the laws of the United States of America or any state thereof or by any other domestic depository institution if such certificates of deposit are fully insured by the Federal Deposit Insurance Corporation; (d) commercial paper maturing not more than one year from the date of issue, and rated not lower than “P-1” or the then-equivalent rating by Moody’s Investors Service, “A-1” or the then-equivalent rating by Standard & Poor’s Corporation, or the then equivalent rating by Fitch or Duff & Phelps; (e) repurchase agreements with financial institutions organized under the laws of the United States of America or any state thereof, provided that, such institution is rated not lower than A1/P1; (f) auction rate products provided that such products are rated not lower than A1/P1; (g) collateralized mortgage obligations and asset backed securities provided that such obligations or securities are rated not lower than A1/P1; (h) corporate debt obligations , provided that such obligations are rated not lower than double A (Aa) (AA) or equivalent; and (i) shares of money market funds that have at least ninety-five percent (95%) of their assets invested continuously in the types of investments referred to in clauses (a) through (h) above.  Any income earned on the Escrow Account shall be held in the Escrow Account and shall constitute and be added to the Proceeds, and all income taxes and other taxes thereon shall be allocated to and shall be payable by Borrower in a prompt and timely manner.  To the extent that Borrower actually and unconditionally pays such taxes, the amounts of Proceeds it receives shall be increased in an amount sufficient to compensate Borrower (“grossed-up”) for such taxes paid, provided that such amount shall not exceed the total amount of interest earned on the Escrow Account.

5.Use and Disposition of Proceeds.

5.1Closing Date Disbursements.  On the date of the sale of Parcel F to a third party (the “Closing Date”) pursuant to a purchase and sale agreement (the “Purchase Agreement”), Escrow Agent shall disburse a portion of the Proceeds as follows:

(i)FIRST, One Hundred Thousand Dollars ($100,000) to GTA-IB (or GTA-IB’s designee), in respect of fees and related costs, including, without limitation, attorneys’ fees, incurred by GTA-IB in connection with GTA-IB’s negotiation, preparation and review of any iteration of a Parcel F Development Agreement, whether incurred before or after the Effective Date (the “Parcel F Development Agreement”), by and among GTA-IB, Borrower and Bayfair Innisbrook, L.L.C., a Florida limited liability corporation or any other purchaser (subject to the provisions of Section 8.2(b) of the Settlement Agreement) to be consented to by Lender in writing, and all other documents attached thereto, regardless whether such agreement is ultimately executed or is effective;

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(ii)SECOND, One Million Dollars ($1,000,000) distributed 70% to Lender and 30% to Borrower; and

(iii)THIRD, to Borrower (or Borrower’s designee), (a) an amount respecting the reasonable and actually incurred attorneys’ fees and related costs paid or payable to Borrower’s Counsel in connection with the defense of the Lawsuits, which amount shall not  exceed Two Million Four Hundred Thousand Dollars ($2,400,000) in the aggregate for such attorneys’ fees and related costs incurred for the period from June 30, 2002 through the Effective Date (the “Maximum Amount”); and (b) any reasonable and actually incurred attorneys’ fees and related costs paid or payable to Borrower’s Counsel in connection with the defense of the Lawsuits which are incurred after the Effective Date, which amount (as described in this subpart (b) of Section 5.1(iii) shall not be subject to any maximum limitation.  Notwithstanding anything to the contrary in this Agreement, the Settlement Agreement or the Operational Benefits Agreement, in the event that Borrower (or its affiliates) recover attorneys’ fees and related costs (or a portion thereof) from the Plaintiffs of the Lawsuits, such recovered amount shall be fully disclosed to GTA-IB and shall automatically reduce the Maximum Amount dollar for dollar to the extent received.

5.2Disbursement of Net Proceeds.  The Proceeds remaining after the disbursement of the amounts set forth in Section 5.1 above (such remaining proceeds, together with any amounts received by Borrower or Grantor relating to the Litigation Interest (as defined in the Settlement Agreement), without offset, are collectively referred to as the “Net Proceeds”) shall continue to be held in the Escrow Account by Escrow Agent and shall be disbursed to the persons set forth below in the order of priority set forth immediately below within five (5) days after the date upon which GTA notifies Escrow Agent in writing (the “Release Notice”) that it has received evidence satisfactory to GTA, in its reasonable discretion, that a Lawsuit has been settled by the parties thereto pursuant to a fully executed settlement agreement and a properly filed dismissal with prejudice, wherein GTA and its affiliates, agents, employees, officers, directors and members or partners have been unconditionally released with prejudice with respect to the Lawsuit and any and all claims or potential claims relating to the subject matter thereof), or that the Lawsuit has been fully and finally adjudicated (with no possibility of further appeal) (collectively, such settlement or full and final adjudication are herein referred to as a “Final Lawsuit Resolution”).  GTA shall deliver the Release Notice in a reasonably prompt manner upon GTA’s receipt of a Final Lawsuit Resolution.  Upon Escrow Agent’s receipt of a Release Notice, Escrow Agent shall promptly disburse a portion of the Net Proceeds (without demand, deduction, offset or delay) as shall be reasonably determined in good faith by Borrower, to the extent available (provided, however, that Borrower shall have (i) first considered reasonably and in good faith (and taking into account such relevant facts and circumstances in making its determination) all the relevant facts and circumstances, including, without limitation, the best interests of GTA, Borrower and Borrower’s affiliates, and shall expressly not act in the sole best interests of Borrower or Borrower’s affiliates, and (ii) given prompt written notice of such determination to GTA-IB) in the amounts and in the order set forth immediately below (together with concurrent written notice to Lender):

(i)FIRST, to Escrow Agent for any amounts due and payable to Escrow Agent under this Agreement;

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(ii)SECOND,

(a)  to Borrower, (i) an amount up to One Hundred Thousand Dollars ($100,000) to reimburse Borrower those certain engineering costs actually incurred by Borrower in connection with the sale of Parcel F and not otherwise reimbursed, and (ii) an amount up to Two Hundred Thousand Dollars ($200,000) to reimburse Borrower for its reasonable legal fees incurred after Borrower’s filing of that certain Parcel F Final Site Plan with Pinellas County, Florida, to the extent not otherwise reimbursed; and then,

(b)  in the event any of the GTA Parties (as defined in the Settlement Agreement) are joined as parties to the Lawsuits by one or more of the Plaintiffs to the Lawsuits, an amount for the GTA Parties’ third party legal fees and costs incurred with respect to the Lawsuits, subject to a maximum aggregate amount of Fifty Thousand Dollars ($50,000);

(iii)THIRD, to the Plaintiffs in a Lawsuit (or to Borrower to the extent that Borrower has actually and unconditionally paid such amount to Plaintiffs in a Lawsuit and has received and filed a dismissal with prejudice with respect thereto) an amount reasonably determined by Borrowerin good faith to be paid pursuant to the Lawsuit Settlement Agreement;

(iv)FOURTH, subject to the provisions of Section 5.2 of this Agreement, to the GTA Parties, all amounts which represent the costs and expenses incurred by GTA and/or the GTA Parties, including, without limitation, attorneys’ fees, other than in relation to the Lawsuits, which Borrower and/or Guarantor are required to pay to the GTA Parties pursuant to the indemnification provisions of Sections 5.1, 5.2 and 7.2(a) of the Settlement Agreement, provided that such amount when added to Borrower’s Tax Payment shall not exceed the Indemnified Amount (as defined in Section 10.3(c) of the Settlement Agreement);

(v)FIFTH, subject to the provisions of Section 5.2 of this Agreement, to the GTA Parties, an amount equal to any and all costs, expenses (including, without limitation, legal and investigatory fees, costs and expenses payable to Dechert LLP and/or Borrower’s Local Counsel, but specifically excluding any counsel retained by any of the GTA Parties (unless Dechert LLP shall not agree to defend, or is not able to defend for ethical or other reasons, the GTA Parties and except as provided below), liability, claim, loss, judgment or damage of any kind or nature arising out of or in connection with the Lawsuits, not including any indirect or consequential damages incurred by any of the GTA Parties;

(vi)SIXTH, subject to the provisions of Section 5.2 of this Agreement, to the GTA Parties, all amounts which Borrower and/or Guarantor are required to pay to the GTA Parties pursuant to the indemnification provisions of this Agreement, the Parcel F Development Agreement, the Operational Benefits Agreement and that certain Joint Defense Agreement by and among Borrower, Guarantor, GTA-IB, the GTA Parent and certain other parties to the extent not otherwise paid to the GTA Parties; provided that such amount paid under this Section 5.2(vi) when added to the amounts, if any, distributed under Section 5.2(v) and the Borrower’s Tax Payment shall not exceed the Indemnified Amount (excluding from the Indemnified Amount Losses arising from the Lawsuits); and

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(vii)SEVENTH, subject to the provisions of Section 5.2 of this Agreement, after any and all claims have been satisfied and/or contingent or threatened claims have been reserved for in the reasonable judgment of GTA and Borrower, Escrow Agent shall pay all remaining Net Proceeds as follows:  (1) seventy percent (70%) of such remaining amount to GTA, and (2) thirty percent (30%) to Borrower; provided, however, that if the amount paid under paragraph (iii) of this Section 5.2 is less than Three Million Two Hundred Fifty Thousand Dollars ($3,250,000), then, prior to distributing the remaining Net Proceeds as earlier provided in this paragraph (vii), Escrow Agent shall first distribute a dollar amount which equals the difference between (a) Three Million Two Hundred Fifty Thousand Dollars ($3,250,000), and (b) the amounts paid under paragraph (iii) of this Section 5.2 as follows:  (1) fifty percent (50%) of such amount to Borrower, and (2) fifty percent (50%) to GTA.

5.3Promissory Notes.  In the event that any portion of the Parcel F sales price shall be paid in the form of a promissory note (any “Parcel F Note”) in favor of Borrower, Lender shall have the right to (i) review the proposed Parcel F Note, the credit and collateral securing the same, and other loan documents, and (ii) provide commercially reasonable comments thereto regarding the terms and conditions contained in such documents (the “GTA Financing Comments”), and Borrower shall, in a writing signed by the purchaser of Parcel F,  endorse to GTA-IB the Parcel F Note (and assign all security and other legal instruments to GTA-IB) and deliver the Parcel F Note (and the security and other legal instruments) to Escrow Agent.  GTA-IB and Borrower shall direct the payor under the Parcel F Note to deliver all payments to Escrow Agent, which sums, for purposes of this Agreement, shall be considered Proceeds.  Borrower shall in good faith use commercially reasonable efforts to incorporate the GTA Financing Comments into the Parcel F Note and shall, prior to finalizing the Parcel F Note (and the security and other legal instruments related thereto), notify Lender of which, if any, of the GTA Financing Comments were not agreed to by the Parcel F buyer on a good faith, commercially reasonable basis, and Lender shall have an additional opportunity to provide its commercially reasonable comments to the revised draft Parcel F Note and the security and other legal instruments (the “Revised GTA Financing Comments”).  Borrower shall be entitled to disbursements from the Net Proceeds being held in the Escrow Account, any and all reasonable and customary costs and expenses actually incurred by Borrower in connection with the collection of any obligations under the Parcel F Note, including, without limitation, reasonable attorneys’ fees and related costs.  It is understood and agreed that Borrower shall have sole responsibility for collecting amounts due under any Parcel F Note (and/or under the security and other legal instruments related thereto) and shall remit such collections to the Escrow Account; provided, however, Borrower shall use diligent, good faith efforts to collect all sums due under any Parcel F Note (and/or under the security and other legal instruments related thereto) on or before the later of (i) two (2) years after the closing of the sale of Parcel F, and (ii) December 31, 2005.  GTA-IB shall reasonably cooperate and provide Borrower with documents which may be reasonably required by Borrower to enable or assist Borrower in collecting sums due under any Parcel F Note (and/or under the security and other legal instruments related thereto), which shall expressly not include a power of attorney.  Borrower shall have no liability to Lender for failure to collect any amounts due under any Parcel F Note (and/or under the security and other legal instruments related thereto), except to the extent resulting from Borrower’s failure to diligently and in good faith seek to collect the same in a commercially reasonable manner, gross negligence, self-dealing, any willful misconduct or fraud of Borrower.

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6.Other Liens, Encumbrances or Agreements.

6.1.Grants of Rights. Except as otherwise provided in the Settlement Agreement, Borrower shall not directly or indirectly grant or agree to grant any person (i) any lien or any other right in the Proceeds or Net Proceeds, or (ii) any right in or to Borrower or any assets of Borrower.  Notwithstanding anything contained in this Agreement or in the Settlement Agreement, Borrower may enter into that certain purchase agreement for the sale of Parcel F, which is more particularly described on Exhibit B attached hereto.

6.2.Intentionally deleted.

6.3.Sale of Parcel F.

(a)If at any time after the Effective Date, Borrower desires to sell Parcel F to a bona fide, unaffiliated, creditworthy third-party for a price less than Six Million Nine Hundred Thousand Dollars ($6,900,000) (an “Asset Sale”), Borrower (in, and only in, such case of a sale for a price less than Six Million Nine Hundred Thousand Dollars ($6,900,000)) shall have the right to consummate the sale thereof at that price provided Borrower shall first give to GTA written notice thereof (an “Offer Notice”), which Offer Notice shall set forth the cash price (the “ROFO Price”), Borrower would be willing to accept to consummate such sale.  The Offer Notice shall also set forth the following information with respect to the terms Borrower would be willing to accept to consummate such sale (the “Other Terms”):  (i) the anticipated closing date; (ii) the amount, if any, Borrower would be willing to finance (i.e., purchase money financing in the form of a promissory note secured by Parcel F); (iii) a form of deed which is substantially in the form which Borrower would provide with respect to such sale; and (iv) the terms regarding the obligation (as between Borrower and potential buyer) to pay the following closing costs:  title insurance stamp/transfer taxes.  Within sixty (60) days of receipt of an Offer Notice (the “Exercise Period”), GTA shall have the right to offer to purchase Parcel F at the ROFO Price and subject to the Other Terms (except as regards the closing date which is set forth in the Offer Notice only for informational purposes), by giving written notice of such election within the Exercise Period (the “ROFO Election”), which offer shall be irrevocable and accompanied by a non-refundable deposit equal to five percent (5%) of the ROFO Price, subject to Borrower’s performance.

(b)If GTA does not timely make a ROFO Election, GTA shall be deemed to have elected not to purchase Parcel F.  If no timely ROFO Election is made by GTA, Borrower shall be free to initiate and consummate the Asset Sale within one hundred eighty (180) days after the expiration of the Exercise Period at a price determined by Borrower, but which price must in no event be less than ninety-five percent (95%) of the ROFO Price and, except as set forth herein, subject to the Other Terms.  The parties hereto agree that the amount of financing, if any, provided by Borrower as well as the terms regarding the obligation to pay the closing costs (title insurance and stamp/transfer taxes) may differ by five percent (5%) from that set forth in the Other Terms without any obligation of Borrower, or right of GTA, triggered by virtue of such deviations from the Other Terms.  Such Asset Sale shall be consummated within nine (9) months after the expiration of the Exercise Period.

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(c)If GTA has timely delivered a ROFO Election, Borrower shall accept such offer at the ROFO Price and subject to the Other Terms set forth in the Offer Notice.  Borrower and GTA shall consummate the ROFO Sale on an “as is” and “where is” basis, except for materially, but not necessarily exactly, the warranties, if any, contained in the form of deed which is part of the Other Terms, within ninety (90) days after the date of the ROFO Election.  If GTA has timely delivered a ROFO Election, but thereafter the sale contemplated thereby fails to close within a sixty (60) day period by reason of GTA’s sole default (and not any default by Borrower), then GTA shall be in material default under this provision hereof (and no others) and the five percent (5%) deposit shall be forfeited as Borrower’s sole remedy and as GTA’s sole liability.  In the event of GTA’s material default hereunder as aforesaid, which GTA has not substantially cured after written notice from Borrower and the passage of a cure period of not to exceed ten (10) business days, without limiting any of the rights of Borrower or GTA hereunder, at law or in equity, Borrower shall have the right to consummate the ROFO Sale described in the Offer Notice to non-affiliated third parties for a cash price determined by Borrower (without regard to the ROFO Price) and on such other terms and conditions as Borrower reasonably determines, and shall have a nine (9) month period to consummate such or any other ROFO Sale.  Further, GTA shall not thereafter be entitled to give a ROFO Election and Borrower shall have no further obligations whatsoever under this provision.

(d)Promptly after the execution of a contract for an Asset Sale, Borrower shall deliver to GTA a true, correct and complete copy of the contract therefor (including all exhibits and schedules).

(e)If an Asset Sale is not initiated or consummated within the nine (9) month period described above, the rights of GTA under this Section 6.3, provided it has not defaulted hereunder (and such default has not been cured), shall be fully restored and reinstated.

(f)Subject to GTA’s rights set forth herein and otherwise, with respect to an Asset Sale, Borrower shall have the right to execute customary contracts, agreements or certifications to effectuate the consummation of the Asset Sale.

6.4.Original Bayfair Agreement. Borrower represents and warrants that (a) it has provided a true, correct and complete copy of the Original Bayfair Agreement to GTA-IB, (b) the Original Bayfair Agreement, as amended and restated as of June 29, 2004, remains in full force and effect, and has not been amended, (c) there exists no default (and no event or existing condition that, with the passage of time, would be considered a default) under the Original Bayfair Agreement, (d) except for the Original Bayfair Agreement and the agreements provided for therein, Borrower has not entered into any other agreement, side letter, or understanding, in writing or otherwise, with respect to the sale of Parcel F, and (e) it shall provide true, correct and complete copies of all amendments to the Original Bayfair Agreement to GTA-IB promptly upon execution.

7.Books, Records, and Statements.  Escrow Agent shall at all times during the term of this Agreement keep and maintain true, correct, complete and current books and records with respect to the Escrow Account, and all investments thereof, earnings thereon and disbursements therefrom.  Escrow Agent shall provide monthly statements to Borrower and GTA showing the balance of the Escrow Account, the earnings thereof and the disposition of earnings.

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8.Expenses.  All fees and expenses of Escrow Agent, including its reasonable and actually incurred attorneys’ fees and related costs as may be incurred by Escrow Agent in connection with the administration of the Escrow Account and this Agreement, any amendment, modification, interpretation, collection, enforcement of this Agreement and the investment of the Net Proceeds, shall be payable to Escrow Agent as provided in Section 5 above.

9.Hold Harmless.  Borrower and GTA, jointly and severally, hereby agree to indemnify, protect, save and hold harmless Escrow Agent, and its successors and assigns, pursuant to this Agreement, from any and all liabilities, obligations, losses, damages, claims, actions, suits, costs or expenses (including, without limitation, reasonable attorneys’ fees) of whatsoever kind or nature imposed on, incurred by or asserted against Escrow Agent which in any way relate to or arise out of the execution and delivery of this Agreement and any action taken under this Agreement; provided, however, that neither Borrower nor GTA shall have any such obligation to indemnify, protect, save and hold harmless Escrow Agent or its successors or assigns, from or against any liability incurred by, imposed upon or established against Escrow Agent for its own willful misconduct, gross negligence or fraud.

10.Security Interest.  Borrower hereby grants to GTA (and/or GTA’s designee) a first priority security interest in the Escrow Account equal to one hundred twenty percent (120%) of GTA’s interest in the Net Proceeds described in Section 5.2 above, and Borrower agrees that it shall take any and all further actions, including, without limitation, executing security agreements, account control agreements and/or UCC financing statements as may be reasonably required and prepared by GTA to effect the foregoing or in furtherance of implementing the same.

11.Relationship.  Borrower agrees that none of GTA or any of its officers, directors, managers, partners, shareholders, members, employees or agents, shall have any fiduciary obligations or trust obligations with respect to the Proceeds or Net Proceeds or other amounts received or with respect to the sale of Parcel F.  GTA agrees that none of Borrower, Guarantor or any of their respective officers, directors, managers, partners, shareholders, members, employees or agents, shall have any fiduciary obligations or trust obligations with respect to the Proceeds or Net Proceeds or other amounts received or with respect to the sale of Parcel F.  This Agreement does not constitute a partnership agreement, or any other association between GTA and Borrower.

12.Notices.  All notices required hereunder shall be in writing and delivered or mailed (by registered or certified mail, return receipt requested and postage prepaid), addressed to the respective parties as set forth below:

If to GTA:
Golf Trust of America, L.P.
14 North Adger’s Wharf
Charleston, South Carolina  29401
Tel.:	(803) 723-4653
Fax:	(803) 723-0479
Attn:	Mr. W. Bradley Blair, II

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Copy to:
O’Melveny & Myers LLP
Embarcadero Center West
275 Battery Street, Suite 2600
San Francisco, California  94111
Attn:	Peter T. Healy, Esq.
Tel.:	(415) 984-8833
Fax:	(415) 984-8701
If to Borrower:
Golf Host Resorts, Inc.
591 West Putnam Avenue
Greenwich, Connecticut  06830
Attn:	Mr. Merrick R. Kleeman
Tel.:	(203) 422-7710
Fax:	(203) 422-7810
Copies to:
Dechert LLP
90 State House Square
Hartford, Connecticut  06103
Attn:	John J. Gillies, Jr., Esq.
Tel.:	(860) 524-3938
Fax:	(860) 524-3930
	and
Rinaldi, Finkelstein & Franklin
591 West Putnam Avenue
Greenwich, Connecticut  06830
Attn:	Steven Finkelstein, Esq.
Tel.:	(203) 422-7767
Fax:	(203) 422-7867
If to Escrow Agent:
Chicago Title Insurance Company South Florida Business Center
2701 Gateway Drive, Pompano Beach,
Florida 33069
Attn:	Earline Woods, Escrow Manager
Tel.:	(954) 971-2200
Fax:	(954) 971-4111

11

13.Termination of Escrow.  This Agreement, and the Escrow Account provided for in this Agreement, shall automatically terminate upon (a) disbursement by Escrow Agent of all of the Net Proceeds pursuant to Section 5 hereof, excepting in the event of any pending or threatened litigation pertaining to any of the issues herein or with respect to this Agreement, or (b) receipt by Escrow Agent of joint written instructions by Borrower and GTA indicating both parties’ election to terminate this Agreement.

14.No Personal Liability.  In no event, and notwithstanding anything contained herein or elsewhere, shall any of the respective past, present or future officers, directors, managers, partners, members, stockholders, employees, representatives, trustees, advisors, attorneys or other agents of each of Borrower, Guarantor, GTA-IB, Lender and the GTA Parent (or any of their respective affiliates) be personally liable under or in connection with this Agreement, the Settlement Agreement or the Operational Benefits Agreement whatsoever. Each of the parties to this Agreement, the Settlement Agreement or the Operational Benefits Agreement and each of such parties’ respective successors and assigns does hereby waive any such personal liability or any right to make such a claim against any of the others.

15.Construction.  Borrower and GTA acknowledge that each such party and its counsel have reviewed and revised this Agreement, and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any document executed and delivered by either party in connection with the transactions contemplated by this Agreement.  The captions in this Agreement are for convenience or reference only and shall not be used to interpret this Agreement.

16.Terms Generally.  The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, corporations, partnerships, trusts, other legal entities, organizations and associations, and any government or governmental agency or authority.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “approval,” “consent” and “notice” shall be deemed to be preceded by the word “written.”

17.Confidentiality.  For so long as no party under this Agreement is in default under the terms of this Agreement, GTA, Borrower and Escrow Agent shall keep the existence of, the terms and conditions of this Agreement and the information or documentation provided in connection with this Agreement, the Settlement Agreement and the Operational Benefits Agreement, strictly confidential, except as follows: (i) such disclosures as are necessary to consummate the transactions contemplated hereunder; (ii) such internal disclosures, disclosures to attorneys, accountants, advisors and servicers, and disclosures to investors and rating agencies as are required by the respective parties’ operating policies and procedures and as may be required by the Securities and Exchange Commission; and (iii) such disclosures as are required by law, including pursuant to the service of judicial process.  The parties acknowledge that this provision constitutes material consideration for their respective obligations hereunder, and the breach thereof may result in irreparable injury to a party, entitling such party to specific performance of the terms hereof.

12

18.Waivers.  No waiver of any provision of this Agreement or any breach of this Agreement shall be effective unless such waiver is in writing and signed by the waiving party, and any such waiver shall not be deemed a waiver of any other provision of this Agreement or any other or subsequent breach of this Agreement.

19.Applicable Law.  This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware. Any action or proceeding arising from or relating to this Agreement shall be brought in the State of Delaware, and each party irrevocably submits to the jurisdiction and venue of any such court in any such action or proceeding.

20.Severability.  If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect.

21.Entire Agreement.  This Agreement constitutes the entire and final agreement among the parties with respect to the terms of the Escrow Account and there are no agreements, understandings, warranties, or representations among the parties with respect thereto except as set forth herein.

22.Miscellaneous.  The Exhibits attached to this Agreement are hereby made a part of this Agreement.  This Agreement shall benefit and bind Borrower, GTA and Escrow Agent and their respective representatives, successors and assigns.  This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same Agreement.  This Agreement may not be amended or modified except by a written instrument signed by Borrower, GTA and Escrow Agent.

23.Attorneys’ Fees and Costs.  In the event of any dispute between the parties hereto in connection with this Agreement, the prevailing party in any judicial action shall be entitled to reasonable attorneys’ fees and costs.

[Signatures commence on the following page]

13

IN WITNESS WHEREOF, Borrower, GTA and Escrow Agent have executed this Agreement as of the Effective Date.

“BORROWER”
GOLF HOST RESORTS, INC.,
a Colorado corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GTA-IB”
GTA-IB, LLC,
a Florida limited liability company
By:	/s/ W. Bradley Blair, II
By:		/s/ W. Bradley Blair, II
		Name: W. Bradley Blair, II
		Title: President
“LENDER”
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By:	GTA GP, Inc., a Maryland corporation, its general partner
By:		/s/ W. Bradley Blair, II
		Name: W. Bradley Blair, II
		Title: President

S-1

“GTA Parent”
GOLF TRUST OF AMERICA, INC., a Maryland corporation
By:	/s/ W. Bradley Blair, II
	Name: W. Bradley Blair, II
	Title: President and Chief Executive Officer
“ESCROW AGENT”
CHICAGO TITLE INSURANCE COMPANY
By:	/s/ Earline Woods
	Name: Earline Woods
	Title: Escrow Manager

S-2

EX-10.3

EXHIBIT 10.3

OPERATIONAL BENEFITS AGREEMENT

THIS OPERATIONAL BENEFITS AGREEMENT (this “Agreement”) is made as of July 15, 2004 (the “Effective Date”), by and among (i) Golf Host Resorts, Inc., a Colorado corporation (“Borrower”), (ii) Golf Hosts, Inc., a Florida corporation (“Guarantor”), (iii) GTA-IB, LLC, a Florida limited liability company (“GTA-IB”), and (iv) Golf Trust of America, L.P., a Delaware limited partnership (“Lender”).  Borrower, Guarantor, GTA-IB and Lender shall collectively be referred to as the “Parties” or each individually, as a “Party”.

THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of the following facts, intentions and understanding:

A.On the Effective Date, the Parties and certain other parties, shall enter into a settlement agreement to resolve certain outstanding matters by and among such persons, as more particularly set forth therein (the “Settlement Agreement”);

B.On the Effective Date, Borrower, GTA-IB, Chicago Title Insurance Company (the “Escrow Agent”) and certain other parties shall enter into a defense and escrow agreement, to establish Borrower and GTA-IB’s respective rights and obligations with respect to (i) the defense of the Lawsuits (defined below), and (ii) the use and distribution of proceeds from any sale of certain real property by Borrower, as more particularly set forth in such agreement (the “Defense and Escrow Agreement”) in conjunction with the Settlement Agreement;

C.Borrower and other entities are currently defending those certain lawsuits filed by William J. and Harriet J. Ball, et al., on behalf of themselves and other similarly situated parties, in the Circuit Court for the Sixth Judicial Circuit in Pinellas County, Florida, Case Numbers 99-7532-CI-007 and/or 01-008582-CI-015 (the “Ball Claims”), and may in the future defend other claims which are brought (or could have been brought) against Borrower (including claims brought by intervenors in the same Lawsuit), and which derive from or relate to the same facts and circumstances as the Ball Claims (collectively, such additional claims are referred to as the “Related Claims,” each such claim is individually a “Related Claim”) (collectively the Ball Claims and the Related Claims, and any appeals thereof, are referred to as the “Lawsuits;” and each of the Ball Claims and the Related Claims, and any appeal thereof, is individually a “Lawsuit”);

D.The settlement of the Lawsuits may require, among other things, the granting of certain operational benefits to those plaintiffs in the Lawsuits (or to those who have intervened or seek to intervene in one or more Lawsuits) (collectively, such plaintiffs and intervenors are referred to as the “Plaintiffs;” and each is individually a “Plaintiff”), subject to the settlement of the Lawsuits; and

E.The items set forth on Attachment 1 attached hereto, together with the reasonable related costs associated with the granting of such items, are together defined as the “Operational Benefits.”

NOW THEREFORE, in consideration of the foregoing premises, the covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.Operational Benefits.

1.1Subject to the terms and conditions of this Agreement, including, without limitation, the provisions of Sections 2 and 4 below, Borrower shall have the right to grant the Operational Benefits to a Plaintiff solely in the event that Borrower and a Plaintiff execute a complete and final settlement agreement, which provides for (i) the unconditional dismissal of a Lawsuit, any and all claims raised in or related to a Lawsuit, with prejudice, and (ii) the unconditional release of each of Guarantor, Borrower, GTA-IB, Lender, Golf Trust of America, Inc. (the “GTA Parent”) and their respective affiliates, officers, directors, shareholders, partners, members, successors, employees, and agents from any and all liability for claims raised in or related to a Lawsuit (such a settlement agreement, a “Lawsuit Settlement Agreement”).  Borrower may vary, in its good faith, reasonable discretion, which  of Operational Benefit 3, 4, 6, and/or 9 (as such Operational Benefits are defined in Attachment 1 hereto) are granted to each Plaintiff.  Borrower must offer to all Plaintiffs Operational Benefits 2, 5, 7 and 1 if its offers any of such Operational Benefits to any Plaintiff; provided, however, that with respect to Operational Benefit 1, Borrower shall use its good faith, reasonable efforts to only grant such benefit as may be necessary after diligent negotiations to finally conclude a Settlement Agreement.

1.2The Operational Benefits granted by Borrower in accordance with the terms and conditions of this Agreement shall not:

(i)    be considered “Losses” under Section 10.3 of the Settlement Agreement as such term is defined therein;

(ii)   trigger any indemnity obligations of Borrower, including, without limitation, the obligations set forth in Section 5.1 of the Settlement Agreement;

(iii)   be considered an “economic cost” to GTA-IB or its affiliates under Section 2 (Defense of the Lawsuits; Participation by GTA) of the Defense and Escrow Agreement; and

(iv)  be taken into account, or in any way considered to be part of, any sums due or potentially due to GTA-IB (or/to GTA-IB’s designees) under Section 5 (Use and Disposition of Proceeds) of the Defense and Escrow Agreement.

1.3For the purposes of calculating GTA-IB’s interest in the “Net Proceeds” under Section 5 of the Defense and Escrow Agreement, no amount shall be added to, or included in, GTA-IB’s interest in such Net Proceeds, by virtue of the Operational Benefits granted in accordance with the terms and conditions of this Agreement.

1.4Notwithstanding anything to the contrary, GTA-IB and Lender shall have the right to decline to grant or revoke any Operational Benefit upon a judicial determination in accordance with Section 8 below: (i) that the grant of such Operational Benefit was granted by Borrower in violation of this Agreement; or (ii) in the event of a breach of the Settlement

Agreement and/or the Defense and Escrow Agreement by Borrower; provided, however, that Borrower shall have ten (10) days from receipt of notice from GTA-IB or Lender of such violation in (i) or breach in (ii) above to cure such violation or breach. This Section 1.4 shall survive the termination of this Agreement.

2.Covenants of Borrower.

2.1Notwithstanding anything to the contrary, Borrower (i) shall use its commercially reasonable good faith efforts to negotiate one or more complete and final settlements of the Lawsuits as described in Section 1.1 of this Agreement, requiring as few as possible Operational Benefits to be granted to the Plaintiffs with the most limited scope and extent as is reasonably practicable in the good faith, reasonable judgment of Borrower, and (ii) shall thoroughly consider in good faith the views of GTA-IB, Lender and their counsel regarding the granting (and the scope and extent of the grant) of any such Operational Benefits.

2.2Borrower shall, to the extent that to do so would not waive an attorney-client privilege:

2.2.1keep GTA-IB regularly informed on a current basis on the status of the Lawsuits, including, without limitation, promptly providing GTA-IB (and its counsel) with copies of all pleadings filed or received and deposition transcripts produced in connection therewith and Borrower and its counsel shall be available to answer all questions of GTA-IB and its counsel relating to the Lawsuits;

2.2.2cause its counsel of record with respect to the Lawsuits, as well as any other counsel engaged by Borrower with respect to the defense of the Lawsuits to promptly and regularly (i) inform Peter T. Healy, Esq. and/or Michael Tubach, Esq. of O’Melveny & Myers LLP, counsel to GTA-IB (“OMM”) on a current basis on the status of the Lawsuits and any negotiations regarding the settlement thereof, and (ii) provide to OMM copies of all settlement proposals, correspondence and documents related thereto;

2.2.3give GTA-IB, Lender and OMM monthly written status reports regarding settlement discussions relating to the Lawsuits and allow GTA-IB, Lender and their counsel to observe (from time to time as is reasonably practicable) all such settlement discussions; and

2.2.4use commercially reasonable good faith efforts to enter into a joint defense agreement with GTA-IB and Lender in form and substance reasonably acceptable to such Parties to allow GTA-IB, Lender and their respective counsel to receive all copies of all pleadings, court documents, deposition transcripts, legal memoranda, settlement proposals and other information or documentation related to the Lawsuits, including, without limitation, all such privileged and work product information and documentation.

2.3With respect to the provisions of Section 2.2 above, Borrower shall inform GTA-IB and its counsel in writing when it asserts such attorney-client privilege.

2.4Borrower shall only grant, or have the power to grant, pursuant to this Agreement or otherwise, Operational Benefits contemporaneously with and subject to the Plaintiffs’ execution of a Lawsuit Settlement Agreement.

3.Covenants of GTA-IB and Lender.  GTA-IB and Lender, at no cost to such Parties, shall reasonably cooperate and provide Borrower with documents necessary to the granting of the Operational Benefits in accordance with the terms and conditions in this Agreement.

4.Conditions to GTA-IB’s and Lender’s Obligations; Suspension or Termination of Obligations.

4.1Conditions to GTA-IB’s and Lender’s Obligations. GTA-IB’s and Lender’s requirement to consummate their respective obligations under this Agreement, and Borrower’s right to grant any Operational Benefits under this Agreement, shall be conditioned upon the following:

4.1.1each of Borrower, Guarantor, GH Management and Condo Owner (as defined in the Settlement Agreement), as applicable, shall have timely fulfilled their respective obligations under this Agreement, the Settlement Agreement and the Defense and Escrow Agreement, to the extent such obligations are then due;

4.1.2none of Borrower, Guarantor, GH Management or Condo Owner, as applicable, shall be in default under this Agreement, the Settlement Agreement or the Defense and Escrow Agreement (in each case, as determined in a final judicial determination); and

4.1.3GTA-IB and Lender shall have received a Lawsuit Settlement Agreement, executed by each of Borrower and a Plaintiff.

4.2Suspension or Termination of Obligations. GTA-IB and Lender’s obligations under this Agreement shall be suspended and/or terminated upon the occurrence of the following:

4.2.1if, at any time, any of the conditions set forth in Section 4.1 above relating to monetary obligations of Borrower, Guarantor, GH Management and/or Condo Owner have not been met (or alleged not to have been met), in GTA-IB’s and/or Lender’s good faith, reasonable judgment and is asserted in writing to Borrower; or

4.2.2upon a final judicial determination that any of the conditions set forth in Section 4.1 above relating to non-monetary obligations of Borrower, Guarantor, GH Management and/or Condo Owner have not been met.

5.Events of Default.  Each of the following shall be an event of default under this Agreement (each, an “Event of Default”):

5.1if a Party to this Agreement fails to perform any of its obligations under this Agreement, and such Party fails to cure such default for a period of ten (10) days after a non-defaulting Party notifies the defaulting Party of such failure in writing; and

5.2if any Party to this Agreement, GH Management or Condo Owner is in default under the Settlement Agreement and/or the Defense and Escrow Agreement.

6.Termination.  This Agreement shall automatically terminate on the occurrence of any of the following:  (a) upon the disbursement by Escrow Agent of all of the Net Proceeds pursuant to Section 5 of the Defense and Escrow Agreement; (b) upon the termination of the Defense and Escrow Agreement; (c) upon the termination of the Settlement Agreement; or (d) upon an Event of Default; providedthat the Lawsuits have been settled at such time.  However, in the case of an Event of Default by Borrower, GTA-IB and/or Lender may terminate this Agreement, subject to the procedures set forth in Sections 4.2 and 5 of this Agreement.

7.Limits of Responsibility; Indemnity.

7.1Indemnified Parties.  None of GTA-IB, Lender, the GTA Parent or any of their respective past, present or future partners, members, stockholders, officers, directors, employees, agents, attorneys, contractors, representatives, successors and assigns or any subsidiary, affiliate or parent of any of them, or any of their predecessors in interest (collectively, the “Indemnified Parties”) shall have any responsibility under this Agreement other than as specifically set forth in this Agreement, including, without limitation, any obligation to offer and/or grant any Operational Benefits or other right or benefits to any person or entity.  Notwithstanding anything to the contrary (including, without limitation, the provisions of the Settlement Agreement and Defense and Escrow Agreement), Borrower and Guarantor shall jointly and severally defend, reimburse, indemnify and hold harmless the Indemnified Parties from and against any and all expenses, losses, costs, damages, liabilities, demands, charges and claims of any nature whatsoever, actual or threatened (including, without limitation, reasonable attorneys’ fees), arising from or in respect of (i) any breach of this Agreement by Borrower or Guarantor, or (ii) any Operational Benefits offered or granted by (or on behalf of) Borrower in violation of the terms and/or conditions of this Agreement. This Section shall survive the termination of this Agreement.  Additionally, the Indemnified Parties shall indemnify and hold Borrower and Guarantor harmless from and against any and all expenses, losses, costs, damages, liabilities, demands and claims of any nature whatsoever, actual or threatened (including, without limitation, reasonable attorneys’ fees) arising from any breach of this Agreement by the Indemnified Parties.

7.2Indemnity Limitation.  The indemnity obligations of the parties hereto and their respective affiliates shall solely be payable out of each Party’s respective share of Net Proceeds under Section 5.2(vii) “Seventh” of the Defense and Escrow Agreement.

8.Remedies.  The Parties hereto agree that money damages would not be an adequate remedy for any actual or threatened breach of this Agreement by a non-defaulting Party and that each non-defaulting Party shall be entitled as a non-exclusive remedy to equitable relief, including, without limitation, injunctions (temporary and permanent) and specific performance, as a remedy for any such breach and the defaulting Party or Parties hereby agree to waive any requirement for the securing or posting of any bond in connection with the non-defaulting Parties’ pursuit of any of such remedies.  Such remedies shall not be deemed to be the exclusive remedies for a breach by a non-defaulting Party of this Agreement (or any part thereof) but shall be in addition to all other rights and remedies otherwise available at law or equity to a non-

defaulting Party.  If, in the event of litigation relating to this Agreement among the Parties, a court of competent jurisdiction determines in a final, non-appealable order that this Agreement has been breached by any Party, then the breaching Party or Parties shall be liable for and pay to the non-breaching Party or Parties its costs and expenses (including, without limitation, the reasonable legal fees and expenses) incurred in connection with all such litigation.

9.Notices.  All notices required hereunder shall be in writing and delivered or mailed (by registered or certified mail, return receipt requested and postage prepaid), addressed to the respective Parties as set forth below:

If to Lender and/or GTA-IB:

Golf Trust of America, L.P.

14 North Adger’s Wharf

Charleston, South Carolina  29401

Tel.:(803) 723-4653

Fax:(803) 723-0479

Attn:Mr. W. Bradley Blair, II

Copy to:

O’Melveny & Myers LLP

Embarcadero Center West

275 Battery Street, Suite 2600

San Francisco, California  94111

Attn:Peter T. Healy, Esq.

Tel.:(415) 984-8833

Fax:(415) 984-8701

If to Borrower and/or Guarantor:

Golf Host Resorts, Inc.

591 West Putnam Avenue

Greenwich, Connecticut  06830

Attn:Mr. Merrick R. Kleeman

Tel.:(203) 422-7710

Fax:(203) 422-7810

Copies to:

Dechert LLP

90 State House Square

Hartford, Connecticut  06103

Attn:John J. Gillies, Jr., Esq.

Tel.:(860) 524-3938

Fax:(860) 524-3930

and

Rinaldi, Finkelstein & Franklin

591 West Putnam Avenue

Greenwich, Connecticut  06830

Attn:Steven Finkelstein, Esq.

Tel.:(203) 422-7767

Fax:(203) 422-7867

10.Construction.  The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement, and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement or any document executed and delivered by either Party in connection with the transactions contemplated by this Agreement.  The captions in this Agreement are for convenience or reference only and shall not be used to interpret this Agreement.

11.Terms Generally.  The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, corporations, partnerships, trusts, other legal entities, organizations and associations, and any government or governmental agency or authority.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “approval,” “consent” and “notice” shall be deemed to be preceded by the word “written.”

12.Confidentiality.  Except with respect to Section 19, the Parties shall keep the existence of, and the terms and conditions of this Agreement, strictly confidential, except as follows: (i) such disclosures as are necessary to consummate the transactions (including negotiations and discussions with respect to the settlement of the Lawsuits) contemplated hereunder; (ii) such internal disclosures, disclosures to attorneys, accountants, advisors and servicers, and disclosures to investors and rating agencies as are required by the respective Parties’ operating policies and procedures and as may be required by the Securities and Exchange Commission; and (iii) such disclosures as are required by law, including pursuant to the service of judicial process.  The Parties acknowledge that this provision constitutes material consideration for their respective obligations hereunder, and the breach thereof may result in irreparable injury to a Party, entitling such Party to specific performance of the terms hereof.

13.Waivers.  No waiver of any provision of this Agreement or any breach of this Agreement shall be effective unless such waiver is in writing and signed by the waiving Party, and any such waiver shall not be deemed a waiver of any other provision of this Agreement or any other or subsequent breach of this Agreement.

14.Applicable Law.  This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware, without regard to conflicts of law doctrines.  Any action or proceeding arising from or relating to this Agreement shall be brought

in the State of Delaware, and each party irrevocably submits to the jurisdiction and venue of any such court in any such action or proceeding.

15.No Personal Liability.  In no event, and notwithstanding anything contained herein or elsewhere, shall any of the respective past, present or future officers, directors, managers, partners, members, stockholders, employees, representatives, trustees, advisors, attorneys or other agents of each of Borrower, Guarantor, GTA-IB, Lender and/or the GTA Parent (or any of their respective affiliates) be personally liable under or in connection with this Agreement, the Defense and Escrow Agreement the Joint Defense Agreement or the Settlement Agreement whatsoever.  Each of the parties to this Agreement, the Defense and Escrow Agreement or the Settlement Agreement, and each of such parties’ respective successors and assigns does hereby waive any such personal liability or any right to make such a claim against any of the others.

16.Severability.  If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect.

17.Entire Agreement.  This Agreement constitutes the entire and final agreement among the Parties with respect to matters set forth herein and there are no agreements, understandings, warranties, or representations among the Parties, with respect thereto except as set forth herein.

18.Miscellaneous.  Attachment 1 to this Agreement is hereby incorporated by reference in this Agreement in its entirety.  In addition, this Agreement (i) shall benefit and bind the Parties and their respective representatives, successors and assigns, (ii) may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same Agreement, and (iii) may not be amended or modified except by a written instrument signed by all the Parties hereto.

19.Attorneys’ Fees and Costs.  In the event of any dispute between the Parties hereto in connection with this Agreement, the prevailing Party or Parties in any judicial action or arbitration shall be entitled to reasonable attorneys’ fees and costs.

20.Further Assurances.  The Parties hereto agree that they shall take such actions as the other may reasonably request from time to time in order to implement the specific provisions of this Agreement; provided, however, nothing herein shall expand or modify the obligations of any of the Parties hereto.

[Signatures commence on the following page]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

“BORROWER”
GOLF HOST RESORTS, INC.,
a Colorado corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GUARANTOR”
GOLF HOSTS, INC.,
a Florida corporation
By:	/s/ Merrick Kleeman
	Name: Merrick Kleeman
	Title: President
“GTA-IB”
GTA-IB, LLC,
a Florida limited liability company
By:	/s/ W. Bradley Blair, II
	By:	/s/ W. Bradley Blair, II
		Name: W. Bradley Blair, II
		Title: President
“LENDER”
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By:	GTA GP, Inc., a Maryland corporation, its general partner
By:	/s/ W. Bradley Blair, II
	Name: W. Bradley Blair, II
	Title: President

EX-10.4

EXHIBIT 10.4

MANAGEMENT AGREEMENT

(Innisbrook Resort)

WESTIN:	WESTIN MANAGEMENT COMPANY SOUTH, a Delaware corporation
OWNER:	GTA-IB, LLC, a Florida limited liability company
EFFECTIVE DATE:	July 15, 2004

MANAGEMENT AGREEMENT

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

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

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

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

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

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

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

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

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

1.INTERPRETATION, DEFINITIONS, AND REPRESENTATIONS
AND WARRANTIES

1.1Interpretation.

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

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

1.1.3  The use of the terms “including,” “include,” and “includes” followed by one or more examples is intended to be illustrative and shall not be deemed or construed to limit the scope of the classification or category to the examples listed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.2.33  Golf Facility - as defined in Recital C above.

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

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

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

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

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

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

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

(c)receipts from Taking awards or sales or other transfers in lieu of or under the threat of Taking, and other receipts in connection with any Taking, but only to the extent that such amounts are specifically identified as compensation for alterations or physical damage to the Golf Facility;

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

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

(f)discounts, rebates or credits of a similar nature (not including charge or credit card discounts paid to credit card companies, which shall not constitute a reduction from revenues in determining Golf Operating Revenues);

(g)any credit for individual or business development-related complimentary golf (e.g., there shall be no credit toward Golf Operating Revenue for any complimentary golf); and

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

To the extent applicable and not inconsistent with this Section 1.2.37, Golf Operating Revenue shall be calculated (and isolated from gross revenue for the rest of the Resort) according to the Uniform System of Accounts for Hotels, 9th Revised Edition, or such later editions as may be adopted by the International Association of Hospitality Accountants.

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

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

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

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

(c)receipts from awards or sales in connection with any Taking, from other transfers in lieu of and under the threat of any Taking, and other receipts in connection with any Taking, but only to the extent that such amounts are specifically identified as compensation for alterations or physical damage to the Resort;

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

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

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

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

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

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

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

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

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

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1.2.46  Included Asset Management Personnel – as defined in Section 3.5.4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.2.69  Resort - as defined in Recital B above.

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

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

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

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

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

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

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

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

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

1.2.79  Termination Fee - as defined in Section 4.4.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2.GENERAL MANAGEMENT AND OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2.3Operating Plan and Budget.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2.6.5  Westin agrees to use reasonable efforts to ensure that any individual selected by Westin for the position of General Manager, Director of Operations, Controller, Director of Golf Sales, Director of Sales and Marketing, Superintendent of Golf for the Resort intends to remain employed at the Resort for a period of at least twenty-four (24) months from the date of such individual’s appointment to such position.  Westin shall not, without the consent of Owner, propose a transfer to, solicit the transfer of, terminate and re-hire, terminate and permit an Affiliate to re-hire, or permit a transfer of any individual in the position of General Manager, Director of Operations, Controller, Director of Sales and Marketing, Director of Golf

25

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

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

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

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

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

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

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

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

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

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

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

26

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

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

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

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

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

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

2.9Purchasing.

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

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

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

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

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

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

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

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

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

3.MARKETING FEES AND EXPENSES; MANAGEMENT
FEE AND REIMBURSABLE EXPENSES

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

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

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

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

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

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

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

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

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

3.2Management Fee.

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

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

plus

(b)an Incentive Fee calculated as follows:

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

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

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

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

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

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

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

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

3.3Reimbursement of Expenses.

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

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

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

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

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

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

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

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

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

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

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

3.4Place and Means of Payment.

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

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

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

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

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

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

3.5Operating Accounts and Working Capital.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.TERM AND TERMINATION

4.1Term of Agreement.

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

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

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

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

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

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

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

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

4.3Termination for Failure to Achieve Performance Test.

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

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

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

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

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

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

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

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

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

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

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

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

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

4.5.5  Westin shall assign and transfer to Owner:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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5.INSURANCE

5.1Insurance by Westin.

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

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

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

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

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

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

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

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

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5.3Property/Casualty Insurance.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5.5Evidence of Insurance.

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

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

5.6Reports by Westin.  Westin shall promptly:

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

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

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

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

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

6.MORTGAGES

6.1Owner’s Right to Mortgage.

6.1.1  In addition to the GTA Mortgage, Owner shall have the right to encumber all of the assets that comprise the Resort, any part thereof, or any interest therein, including, without limitation, the real estate on which the Resort is to be constructed, the Resort building and all improvements thereto, all receivables relating to the Resort (provided that any Mortgagee shall recognize Westin’s right to collect and apply such receivables in accordance with this Agreement) and all FF&E and hotel equipment and operating supplies placed in or used in connection with the operation of the Resort as contemplated in any Mortgage that is entered into

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

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

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

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

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

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

6.3Estoppel Certificates.  On request at any time and from time to time during the term of this Agreement.  Westin shall execute, acknowledge, and deliver to Owner or any Mortgagee within thirty (30) days following Westin’s receipt of written request therefor, a certificate: (i) certifying that this Agreement has not been modified and is in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and specifying the modifications); (ii) stating whether, to the best knowledge of the signatory of such certificate, any default exists, including any Event of Default, and if so, specifying each default of which the signatory may have knowledge; and (iii) providing any additional information reasonably requested by Owner or a Mortgagee; provided, however, that in no event shall Westin be required to agree to any modifications or waivers with respect to this Agreement or other agreements in effect between the parties.  On similar notice, Westin shall be entitled to a similar certificate from Owner, any Mortgagee (with respect to any Mortgage), or any ground lessor (with respect to any ground lease).

7.DESTRUCTION; TAKING

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

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

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(a)	(b)
50%	five
40%	four
30%	three
20%	two
10%	one

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

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

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

7.5Permanent Taking.

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

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

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

7.6Taking for Temporary Use.

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

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

7.7Effect of Termination.

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

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

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

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

8.BUSINESS INTERRUPTION

8.1Business Interruption.

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

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

8.2Proceeds of Business Interruption Insurance.

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

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

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

9.ASSIGNMENTS

9.1Intentionally deleted.

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

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

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

9.3.2  meets the following criteria:

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

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

(c)is not generally recognized in the community as being of ill repute; and

(d)has assumed and agreed to be bound by all of the terms of this Agreement.

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

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

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

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

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10.DISPUTES

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

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

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

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

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

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

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

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

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

11.TRADEMARKS AND OTHER PROPRIETARY MATERIALS

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

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

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

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

11.2.2  Westin retains the sole right and discretion to:

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

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

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

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

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

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

11.4Obligations of Owner.

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

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

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

12.MISCELLANEOUS

12.1Limitation on Scope of Westin’s Services.

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

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

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

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

12.3The Committee.

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

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

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

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

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

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

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

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

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

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

If to Westin:

Westin Management Company South

c/o Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, New York  10604

Attention:  General Counsel

Fax:  (914) 640-8260

with a copy, to the same address, marked:

Attention:  President, North America Division

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and with a copy to:

Heller Ehrman White & McAuliffe LLP

333 Bush Street

San Francisco, California  94104

Attention:  Judith C. Miles, Esq.

Fax:  (415) 772-6268

If to Owner:

GTA-IB, LLC

c/o Golf Trust of America, Inc.

14 North Adger’s Wharf

Charleston, South Carolina  29401

Attention:  Mr. W. Bradley Blair, II

Fax:  (843) 723-0479

with a copy to:

O’Melveny & Myers LLP

Embarcadero Center West

275 Battery Street

San Francisco, California  94111

Attention:  Peter T. Healy, Esq.

Fax:  (415) 984-8701

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

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

12.10Indemnification.

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

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

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

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

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

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

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

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

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

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

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

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

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

12.17Confidentiality.  The parties agree that the matters set forth in this Agreement are strictly confidential.  In addition, the parties agree to keep strictly confidential all information of a proprietary or confidential nature about or belonging to a party to which the other party gains or has access by virtue of the relationship between the parties.

Except as disclosure may be required to obtain the advice of professionals or consultants, or financing for the Resort from an institutional lender, or in furtherance of a permitted assignment of this Agreement, or as may be required by law or by the order of any government, governmental unit or tribunal, including, without limitation, the Securities and Exchange Commission (and the rules and regulations promulgated thereunder or thereby) each party shall use reasonable efforts to ensure that such information is not disclosed to the press or to any other third person or entity without the prior consent of the other party.  The obligations set forth in this Section 12.17 shall survive any termination of this Agreement.  The parties shall coordinate with one another on all public statements whether written or oral and no matter how disseminated, regarding their contractual relationship as set forth in this Agreement, or the performance by either of them of their respective obligations under this Agreement.

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

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

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

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

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

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

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

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

12.21Mutual Release of Claims.

12.21.1  Mutual Release.

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

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

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

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

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

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

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

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

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

“WESTIN”
WESTIN MANAGEMENT COMPANY SOUTH
By:	/s/ Nadine Greenwood
	Name: Nadine Greenwood
	Title: Authorized Signatory
“OWNER”
GTA-IB, LLC
By:	/s/ W. Bradley Blair, II
	Name: W. Bradley Blair, II
	Title: President

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EX-10.5

EXHIBIT 10.5

When Recorded Return To:

O’Melveny & Myers LLP

Embarcadero Center West

275 Battery Street, Suite 2600

San Francisco, California 94111

Attention:  Peter T. Healy, Esq.

ASSIGNMENT, CONSENT, SUBORDINATION AND NONDISTURBANCE
AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[signature pages attached]

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

“WESTIN”
WESTIN MANAGEMENT COMPANY SOUTH, a Delaware corporation
By:	/s/ Nadine Greenwood
	Name:				Nadine Greenwood
	Title:			Authorized Signatory
“OWNER”
GTA-IB, LLC, a Florida limited liability company
By:	/s/ W. Bradley Blair, II
	Name:				W. Bradley Blair, II
	Title:			President
“LENDER”
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its General Partner
By:	/s/ W. Bradley Blair, II
Name:			W. Bradley Blair, II
Title:		President

STATE OF FLORIDA

COUNTY OF PINELLAS

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

/s/ Todd R. Matthews

Notary Public

Todd R. Matthews

Printed Name of Notary

My Commission Expires: April 30, 2007

STATE OF SOUTH CAROLINA

COUNTY OF CHARLESTON

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

/s/ Lorraine McKenna

Notary Public

Lorraine McKenna

Printed Name of Notary

My Commission Expires: July 29, 2012

STATE OF SOUTH CAROLINA

COUNTY OF CHARLESTON

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

/s/ Lorraine McKenna

Notary Public

Lorraine McKenna

Printed Name of Notary

My Commission Expires: July 29, 2012

EX-10.6

EXHIBIT 10.6

FACILITY MANAGEMENT AGREEMENT

FOR THE WESTIN INNISBROOK GOLF RESORT

THIS FACILITY MANAGEMENT AGREEMENT FOR THE WESTIN INNISBROOK GOLF RESORT (this “Golf Agreement”) is entered into and effective as of July 15, 2004 (the “Effective Date”), by and among (i) WESTIN MANAGEMENT COMPANY SOUTH, a Delaware corporation (“Hotel Manager”), (ii) TROON GOLF L.L.C., a Delaware limited liability company (“Golf Manager”) (each, a “Party” and together, the “Parties”), and (iii) for the limited purposes described below, GTA-IB, LLC, a Florida limited liability company (“Owner”).

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

A.Golf Manager is knowledgeable and experienced in managing first-class, championship golf facilities, including golf course operations, and has adequate time, energy, resources and qualified personnel in order to perform and complete its obligations under this Golf Agreement.

B.Hotel Manager and Owner are parties to a management agreement dated as of the Effective Date (as such agreement may from time to time be amended in a written agreement between Hotel Manager and Owner, the “Resort Management Agreement”), pursuant to which Hotel Manager manages that certain first-class resort property located in Tarpon Springs, Florida, commonly known as “The Westin Innisbrook Golf Resort” (the “Resort”), and operates the Golf Facilities (as defined below) located at the Resort.  A copy of the Resort Management Agreement is attached hereto as Exhibit A.

C.As of the Effective Date, the Resort’s golf facilities consist of the following components: (i) 72 holes of championship golf (the “Golf Course”); (ii) two (2) practice ranges; (iii) three (3) clubhouses and pro shops (including retail sales items), office space, locker room, cart storage and bag storage (but excluding food and beverage operations which will be managed by Hotel Manager); and (iv) various buildings and related facilities used for storage of golf course maintenance equipment, golf carts, and other golf course-related supplies, all as generally shown on Exhibit B attached hereto (collectively, the “Golf Facilities”).

D.Pursuant to the Resort Management Agreement, Hotel Manager operates the Resort, including the Golf Facilities, at a first-class standard and in accordance with the standards set forth in the Resort Management Agreement (collectively, the “Resort Standard,” a copy of which is attached hereto as Exhibit C (the capitalized terms used but not defined therein shall have the meaning ascribed to such terms in the Resort Management Agreement)).

E.Subject to Owner’s approval (as evidenced by the Owner Consent and Agreement to Certain Provisions attached hereto), Hotel Manager desires to engage Golf Manager on behalf of Owner to operate the Golf Facilities (subject to Article 3.01 herein), and Golf Manager has agreed to operate the Golf Facilities (subject to Article 3.01 herein), in accordance with the Resort Standard and the terms of the Resort Management Agreement  (provided that Golf

Manager and Owner are apprised and approve, in writing, such standards and terms (collectively, the “Golf Course Standard”)), and in accordance with the terms, provisions and limitations set forth in this Golf Agreement, including, without limitation, the Golf Facilities Annual Plan (as defined below), which Golf Facilities Annual Plan shall be subject to the prior written approval of Hotel Manager and Owner.

F.Golf Manager acknowledges that to operate the Golf Facilities properly as an integral component of the Resort it must adhere to the Golf Course Standard, including, without limitation, balancing the respective interests of the Resort’s overnight guests, patrons, and invitees (the “Resort Guests”) and, as permitted, the general public allowed to use the Golf Facilities and other Resort facilities, in accordance with the Resort Management Agreement.

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

ARTICLE I
INTERPRETATION, CONSTRUCTION AND DEFINITIONS

1.01Interpretation.

(a)The foregoing Recitals A through F, inclusive, are hereby incorporated in and made a part of this Golf Agreement.

(b)Unless the language specifies or the context implies that a term of this Golf Agreement is a condition, all of the terms of this Golf Agreement shall be deemed and construed to be covenants to be performed by the designated Party.  “Shall” means “covenants to” whenever the context permits.

(c)Unless expressly stated otherwise in this Golf Agreement, whenever a matter is submitted to a Party for approval or consent pursuant to the terms of this Golf Agreement, that Party has a duty to act reasonably in rendering a decision on the matter, which shall include not unreasonably withholding, delaying, or conditioning its approval.

(d)“According to law” means in strict compliance with applicable statutes, ordinances, and regulations of any governmental authority having jurisdiction.

(e)All exhibits attached hereto and/or referred to herein are incorporated into this Golf Agreement as if set forth fully in this Golf Agreement.

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1.02Construction.  The use of the terms “including”, “include”, and “includes” followed by one or more examples is intended to be illustrative and shall not be deemed or construed to limit the scope of the classification or category to just the examples listed.

1.03Definitions.  Capitalized terms used in this Golf Agreement are defined as follows:

Definition	Recital or Article
Affiliated Facilities	Article 4.01(w)
Affiliation Marks	Article 13.01(b)
Base Management Fee	Article 7.01
Centralized Services	Article 4.01(w)
Centralized Services Fee	Article 4.01(w)
Claims	Article 5.01(a)
Cross Marketing Program	Article 14.01
Director – Golf Operations	Article 4.01(b)
Effective Date	Introductory Paragraph
Events of Default	Article 9.01
Executive Employees	Article 4.01(b)
GAAP	Article 7.04(a)
Golf Agreement	Introductory Paragraph
Golf Course	Recital C
Golf Course Standard	Recital E
Golf Facilities	Recital C
Golf Facilities Annual Plan	Article 4.01(g)
Golf Facilities Employees	Article 4.01(b)
Golf Operating Revenue	Article 7.04(a)
Golf Facilities Parties	Article 5.01(b)
Golf Manager	Introductory Paragraph
Hotel and Owner Parties	Article 5.01(a)
Hotel Manager	Introductory Paragraph
Key Employees	Article 12.01(a)
Lease	Article 8.03
Monthly Operating Report	Article 4.01(u)
National Marketing Services	Article 4.01(y)
National Marketing Services Fee	Article 4.01(y)
On-Course Food and Beverage Operations	Article 4.01(t)
Operating Expenses	Article 7.04(b)
Operating Plan and Budget	Article 4.01(g)
Owner	Introductory Paragraph
Party or Parties	Introductory Paragraph
Proposed Golf Facilities Annual Plan	Article 4.01(g)
Purchasing Policy	Article 4.01(d)
Repairs	Article 4.01(p)
Resort	Recital B

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Resort Guests	Recital F
Resort Management Agreement	Recital B
Resort Standard	Recital D
Revenue Management Policy	Article 4.01(c)(i)
Sheraton Marks	Article 13.01(b)
Starwood Marks	Article 13.01(b)
Supplemental Fee	Article 7.01
Taking	Article 10.02
Term	Article 8.01
Termination Fee	Article 8.02
Troon Marks	Article 13.02(b)(i)
USGA	Article 4.01(i)
Westin Marks	Article 13.01(b)

Exhibits:

Resort Management Agreement – Exhibit A

Golf Facilities – Exhibit B

Specific Resort Standard Requirements – Exhibit C

Management of Hourly Employees – Exhibit D

Revenue Management Policy – Exhibit E

Purchasing Policy – Exhibit F

Specimen Golf Facilities Annual Plan – Exhibit G

Golf Manager’s Benefit Policies – Exhibit H

Starwood Marks – Exhibit I

Westin Marks – Exhibit J

Current Location Troon Institute – Exhibit K

Relocation Area Troon Institute – Exhibit L

Form of Subordination, Non-Disturbance and Attornment Agreement – Exhibit M

Section 3.5.4 of Resort Management Agreement – Exhibit N

ARTICLE II
REPRESENTATIONS AND WARRANTIES

2.01Representations and Warranties of Hotel Manager.  Hotel Manager represents and warrants to Golf Manager and Owner that as of the Effective Date:

(a)Hotel Manager is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business as a corporation in Florida.

(b)Hotel Manager has full power, authority and legal right to execute, perform and timely observe all of the provisions of this Golf Agreement.  Hotel Manager’s execution, delivery and performance of this Golf Agreement have been duly authorized.

(c)This Golf Agreement constitutes a valid and binding obligation of Hotel Manager and does not and will not constitute a material breach of or material default under the

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charter documents or bylaws of Hotel Manager or the terms, conditions or provisions of any law, order, rule, regulation, judgment decree, agreement, or instrument to which Hotel Manager is a party or by which it or any of its assets is bound or affected.

(d)To Hotel Manager’s knowledge, Hotel Manager has all licenses and permits that are necessary or required by law to perform its duties and obligations under this Golf Agreement.

(e)During the term of this Golf Agreement, Hotel Manager shall, at its own expense, obtain and keep in full force and effect its existence as a corporation and the rights required for it to observe and comply with all of the terms and conditions of this Golf Agreement.

2.02Representations and Warranties of Golf Manager.  Golf Manager represents and warrants to Hotel Manager and Owner as follows as of the Effective Date:

(a)Golf Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business as a foreign limited liability company in Florida.

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

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

(d)Golf Manager has all licenses and permits that are necessary or required by law to perform its duties and obligations under this Golf Agreement.

(e)During the term of this Golf Agreement, Golf Manager shall, at its own expense, obtain and keep in full force and effect its existence as a limited liability company and the rights required for it to observe and comply with all of the terms and conditions of this Golf Agreement.

2.03Representations and Warranties of Hotel Manager and Golf Manager.  Hotel Manager and Golf Manager each represent and warrant to the other and to Owner as follows:

(a)Neither execution and delivery of this Golf Agreement nor performance by it of the transactions contemplated hereby nor compliance by it with any provision hereof shall conflict with or violate or constitute a default under or a breach of (i) its articles of incorporation (or equivalent), by-laws or other organizational documents, (ii) any provision of any written contract, lease, mortgage, indenture, agreement or other instrument or obligation to which it is a party or by which it or any of its properties or assets are bound, the violation of

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which would adversely affect in any material respect the transactions contemplated hereby, (iii) any provision of applicable law the violation of which would adversely affect in any material respect the transactions contemplated hereby, or (iv) any judgment, decree, writ, injunction or order of any court or administrative or governmental authority or any arbitration board to which it is a party or by which it or any of its properties or assets are bound, the violation of which would adversely affect in any material respect the transactions contemplated hereby.

(b)Except as contemplated by this Golf Agreement, no consent or approval by, nor notification of or filing with, any person or entity (governmental or otherwise) is required in connection with the execution and delivery by it of this Golf Agreement or the performance by it of the transactions contemplated hereby.

ARTICLE III
APPOINTMENT OF GOLF MANAGER; AUTHORITY & CONTROLS

3.01Appointment of Golf Manager; Limitation of Hotel Manager’s Responsibility.  With the consent of Owner, Hotel Manager hereby appoints Golf Manager as its exclusive manager and limited agent (and limited subagent of Owner)  to supervise, direct, and control the management, operation, and promotion of the Golf Facilities pursuant to the terms and conditions of, and as set forth in, this Golf Agreement, and Golf Manager hereby accepts the relationship of trust and confidence included in the appointment and agrees to perform its duties in accordance with, and subject to, the provisions of this Golf Agreement.  This appointment is effective as of the Effective Date.  Everything undertaken or done by Golf Manager under this Golf Agreement shall be done as an independent contractor under Hotel Manager and not as an employee or partner of Hotel Manager or Owner.  Golf Manager acknowledges and agrees that the scope of Golf Manager’s agency and subagency shall be strictly limited to the authority granted to Golf Manager under the express terms of this Golf Agreement.  Except for the limited matters specifically set forth herein, nothing contained in this Golf Agreement shall be deemed or construed as an appointment by Owner of any party hereto as Owner’s agent.  As an integral part of the Resort, the Golf Facilities shall be managed and operated by Golf Manager to promote the Resort’s overall best interests as determined by Hotel Manager (subject to the provisions set forth in the Resort Management Agreement).  Notwithstanding anything to the contrary in this Golf Agreement, Hotel Manager shall have no personal (corporate) liability for the payment of any Resort or Golf Facilities expenses, or for the payment of any fees, costs and other amounts due Golf Manager hereunder (excepting to the extent Golf Manager’s fees are a part of Hotel Manager’s fees and Hotel Manager actually receives payment of the corresponding fee due Hotel Manager), and Owner is solely responsible therefor.  All references herein to “Hotel Manager shall pay” expenses or fees, or similar words or expressions, shall be expressly deemed modified by this limitation for all purposes, to avoid repeating this limitation throughout the document.

3.02Authority and Controls.

(a)Golf Manager shall have no authority to execute any contract or incur any liability on behalf of Hotel Manager or Owner or the Resort unless specifically authorized in the Purchasing Policy (described in Article 4.01(d) below) or the approved Golf Facilities Annual Plan or unless specifically approved in writing by Hotel Manager (in accordance with the

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provisions set forth in the Resort Management Agreement).  Except as specifically stated in the Purchasing Policy, Hotel Manager shall sign all contracts for services and all documents establishing any liability with respect to any work performed in connection with the Golf Facilities.  Golf Manager’s authority to act for or bind Hotel Manager or Owner is expressly limited to the authority set forth in this Golf Agreement.  Golf Manager shall not be required to make any advance or payment to or for the account of Hotel Manager or Owner, or the Golf Facilities, and Golf Manager shall not be obligated to incur any liability or obligation for Hotel Manager’s or Owner’s account, or the Golf Facilities’ account, without assurances that Owner shall provide all necessary funds for the discharge thereof.

(b)Golf Manager shall deposit all revenues from the operation of the Golf Facilities with the Resort cashier in accordance with the Revenue Management Policy described in Article 4.01(c).

(c)Subject to the third paragraph of Article 4.01(g) below, Golf Manager shall have no authority to and shall not do anything, take any actions or incur any obligations that would violate or contravene and extend beyond the Golf Facilities Annual Plan, without obtaining Hotel Manager’s and Owner’s prior written consent.  If Golf Manager is unable to perform any of its obligations under this Golf Agreement because of the failure on the part of Hotel Manager or Owner to provide the funds in accordance with the terms of this Golf Agreement, then, to the extent that such failure to perform is a result of the Hotel Manager’s failure to provide funds, such failure of performance on the part of Golf Manager shall not be deemed a default on the part of Golf Manager and shall not give rise to any right to termination, damages or any other remedy against Golf Manager, provided that Golf Manager provides prompt written notice thereof to Hotel Manager and Owner.

(d)The Parties hereto agree that this Golf Agreement and all rights, powers and actions of Golf Manager under and pursuant to this Golf Agreement are expressly subject to the Resort Management Agreement, provided Golf Manager is provided a copy thereof.  Golf Manager acknowledges having received and thoroughly reviewed the Resort Management Agreement as it relates, or may relate, to Golf Manager or Golf Manager’s duties or performance under this Golf Agreement, and in the event of any conflict between the Resort Management Agreement and this Golf Agreement, the Resort Management Agreement shall control.  Within five (5) days of execution of any amendment or supplement to the Resort Management Agreement (which Hotel Manager and Owner have approved in writing), Hotel Manager shall provide a complete copy thereof to Golf Manager; provided, however, Owner and Hotel Manager hereby agree that the performance termination right set forth in Article 4.3 of the Resort Management Agreement shall not be amended without the prior written consent of Golf Manager, which consent shall not be unreasonably withheld or delayed by Golf Manager.  Any amendment in violation of the preceding sentence shall be null and void as it may pertain to Golf Manager.  Golf Manager will maintain the strict confidentiality of the Resort Management Agreement Article 16.01(o) below.

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ARTICLE IV
OPERATIONAL DUTIES OF GOLF MANAGER

4.01Golf Manager’s Operational Duties.  Except as specifically identified in this Golf Agreement as being the responsibility of Golf Manager, Hotel Manager shall be responsible for all Resort operations, including, without limitation, all Resort food and beverage operations other than the On-Course Food and Beverage Operations (as defined in Article 4.01(t) below).  Golf Manager shall perform all duties necessary to operate, maintain and manage the Golf Facilities at the Resort in accordance with the Golf Course Standard and for the overall best interests of the Resort, each of which shall be an expense of the Resort and provided for in the Golf Facilities Annual Plan (as the same may be amended from time to time upon Owner’s prior written approval thereof).  Such duties shall include, but shall not be limited to:

(a)General.  Golf Manager shall supervise and administer daily operations and act as general manager for all functions relating to or in connection with the Golf Facilities, such as the operation and promotion of the Golf Facilities, including the golf course, golf bag storage facilities, golf shop sales and services, cart rentals, locker room, golf course maintenance, but specifically excluding (i) any general Resort security services to be provided by Hotel Manager (however, Hotel Manager does not make any representations to Golf Manager concerning whether any particular security services will be provided, or the nature or extent thereof), (ii) accounting services, and (iii) personnel training provided by Hotel Manager to Golf Facilities Employees under Article 4.01(b)(iii).  The services described in clauses (i) through (iii) hereof shall be provided by Hotel Manager with respect to the Resort and Golf Facilities as a whole.  The cost of such services shall be operating expenses of the Resort and shall be equitably allocated in writing by Hotel Manager between those portions of the Resort covered by this Golf Agreement (which portion shall be Operating Expenses) and those not so covered, as further provided in Article 7.04(c).

(b)Employees.  Subject to the following requirements of this Article 4.01(b), the approved Golf Facilities Annual Plan and all limitations in this Golf Agreement, Golf Manager shall hire, train (except as provided in Article 4.01(b)(iii)), discipline, supervise, compensate (subject to Hotel Manager’s written approval thereof in accordance with the provisions of the Resort Management Agreement and the provisions of Section 4.01(g) hereof), promote, direct and terminate all employees, including an individual to act as the manager of the Golf Facilities (the “Director – Golf Operations”), necessary or advisable for the operation of the Golf Facilities in accordance with Article 4.  The identity of the Director – Golf Operations shall be subject to the prior approval of Hotel Manager and Owner.  All employees at the Golf Facilities (collectively, the “Golf Facilities Employees”) shall be employed by Owner or an Affiliate of Owner, provided that Golf Manager shall be the employer of certain key personnel (including the Director – Golf Operations, senior golf professional, and the golf superintendent (collectively, the “Executive Employees”)); provided, further, that if Golf Manager does not elect to employ such Executive Employees (and provides prior written notice thereof to Owner and Hotel Manager), Owner may elect, in Owner’s sole discretion, to employ such Executive Employees directly.  All employees at the Golf Facilities, other than the Executive Employees will be under the direction of, and supervised by, the Executive Employees for all operational purposes under this Golf Agreement, subject to the limitations and requirements set forth herein, including on Exhibit D attached hereto.  The Executive Employees will be under the direction of,

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and shall report to, the general manager of the Resort; provided, however, that the Golf Manager shall concurrently provide to Owner copies of any written reports Golf Manager provides to Hotel Manager from time to time and any other material verbal reports Golf Manager provides to Hotel Manager from time to time; and provided, further, Owner shall have access to all of Golf Manager’s and Hotel Manager’s records regarding the subject of this Golf Agreement during regular business hours upon prior notice to Golf Manager or Hotel Manager, as applicable.

(i)All costs associated with the employment of the Golf Facilities Employees (including salaries, fringe benefits, bonuses, relocation costs, employment related legal costs and costs incurred in connection with governmental laws and regulations and insurance rules, but not penalties and interest arising from a failure to pay the same where such expenses have been approved) shall be an expense of the Golf Facilities, and shall be payable from revenue of the Golf Facilities or reimbursed by Owner to Golf Manager, in all cases pursuant to the Golf Facilities Annual Plan (as defined below) approved by Hotel Manager and Owner.  To the extent benefit costs were paid by Hotel Manager for Owner and the Resort, benefit plan forfeitures of non-vested employees shall be credited back to Owner and the Resort, resulting in a credit against Operating Expenses, consistent with applicable law.

(ii)All direct expenses of the Golf Facilities Employees shall also be expenses reimbursable to Golf Manager to the extent such expenses are contained in the Golf Facilities Annual Plan approved by the Hotel Manager and Owner.  Such direct expenses shall include to the extent set forth in the Golf Facilities Annual Plan the following: continuing education seminars; out-of-pocket travel expenses to and from the Golf Facilities for Golf Manager’s home office employees who directly advise Golf Manager on the operation of the Golf Facilities; and expenses for promotion of the Golf Facilities.  To the extent that any Golf Facilities Employees are not employed or engaged exclusively at the Golf Facility, the expenses of such Golf Facilities Employees that are reimbursable to the Golf Manager under this Golf Agreement shall be reduced in proportion to the amount of time such Golf Facilities Employees are employed or engaged other than with respect to the Golf Facility.

(iii)Golf Manager shall at all times abide by all local, state and federal employment laws and regulations (including, without limitation, worker’s compensation, social security, unemployment insurance, legal status, hours of labor, wages, working conditions, and employment nondiscrimination) and ensure that all Golf Facilities Employees are properly trained and licensed, as necessary, for the responsibilities assigned to and performed by them, including the use of pesticides, herbicides and other chemicals.  All Golf Facilities Employees who may have interaction with Resort Guests shall be provided general guest service training consistent with Hotel Manager’s guest service training generally as described in Article 4.01(a) above along with any employee training provided by Golf Manager and Hotel Manager shall determine whether such persons meet the applicable standards.  Golf Manager and Hotel Manager shall identify Golf Facilities Employees for whom sales and marketing training is appropriate and shall provide such training consistent with Hotel Manager’s sales and marketing training generally as described in Article 4.01(a) above.  Such general guest training and sales and marketing training shall be provided to Golf Facilities Employees on substantially the same terms as Hotel Manager provides such programs to its employees.

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(iv)Subject to the terms of this Article 4.01(b) and Exhibit D, Golf Manager shall establish the terms of compensation, benefits, human resources policies and procedures (including, without limitation drug testing policies and procedures to the extent deemed necessary or advisable by any one of Golf Manager, Hotel Manager or Owner), and performance standards for Golf Facilities Employees and directly control and supervise the time and manner of work performed by Golf Facilities Employees, subject to the following provisions.  Golf Manager shall be responsible for, and use commercially reasonable efforts to hire only, capable and qualified personnel with appropriate experience and no criminal records or other problems in their employment history, and shall require, to the extent deemed necessary or advisable by any one of Golf Manager, Hotel Manager or Owner, all Golf Facilities Employees submit to and pass mandatory drug testing, and to adhere to the standards of conduct, grooming, quality and service consistent with those established for Hotel Manager’s employees.  Golf Manager shall remove from employment at the Resort any Golf Facilities Employee against whom Hotel Manager or Owner reasonably objects.  With respect to the Executive Employees, Golf Manager shall pay salaries and make available bonuses on a discretionary basis only.  Golf Manager may establish its own reasonable methods of establishing eligibility for and payment of discretionary bonuses, but the criteria to earn bonuses and the available amounts thereof may not be less favorable than the policies in effect immediately prior to the date hereof; the foregoing shall be subject to the prior written approval of Hotel Manager and Owner.

(v)Unless expressly consented to in writing in advance by Owner and Hotel Manager, all Golf Facilities Employees shall be employed exclusively with respect to the Resort.

(vi)Owner and Hotel Manager reserve the right to interview and approve the selection of the Executive Employees.  Golf Manager shall propose to Owner and Hotel Manager any replacement for any such position and, thereafter, shall seek the appropriate approvals for any such person.  When Golf Manager wishes or is required to propose the appointment of a person to fill any such position, Golf Manager shall submit such proposal with a written summary of such individual’s professional experience and qualifications and Golf Manager’s reasons for recommending the appointment of such individual to this position, and shall offer Hotel Manager and Owner the opportunity to interview such individual at the Golf Facilities or another mutually acceptable location and to disapprove such person.  Owner and Hotel Manager will forego their right to interview any such individual if Owner or Hotel Manager (as the case may be) is unwilling or unable to arrange for an authorized representative to participate in the interview within seven (7) business days following Golf Manager’s offer.  If such person is otherwise qualified based on Golf Manager’s review, Owner and Hotel Manager shall not have standing to disapprove the appointment of any such individual unless Owner or Hotel Manager, as the case may be, delivers notice of its disapproval of such appointment within ten (10) business days after Owner’s and Hotel Manager’s receipt of the aforementioned written summary and offer to interview.  Owner or Hotel Manager may disapprove any individual proposed by Golf Manager for any reason or for no reason whatsoever, in Owner’s or Hotel Manager’s sole and absolute discretion, as the case may be, and whether or not the Owner or Hotel Manager conducted or failed to conduct an interview of such candidate; provided, however, if Owner or Hotel Manager disapprove three (3) consecutive qualified candidates for a single particular Executive Employee position (who have relevant and reputable industry experience for such Executive Employee position) within any twelve (12) month period, then

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(and only then) shall Golf Manager shall have the right to appoint a qualified person to such particular Executive Employee position within ten (10) days after Golf Manager complies with all of the other aforesaid conditions.  Nothing contained in this Article 4.01(b)(v) shall be deemed to require Hotel Manager’s or Owner’s consent to Golf Manager’s termination of the employment of any Golf Facilities Employee, including those subject to this paragraph.

Golf Manager agrees to use reasonable efforts to ensure that any individual selected by Golf Manager (and approved by Hotel Manager and Owner) as an Executive Employee is prepared to remain employed at the Resort for a period of at least twenty-four (24) months from the date of such individual’s appointment to such position.  Moreover, Golf Manager agrees that it shall not, without the written consent of Hotel Manager and Owner, propose a transfer to, solicit the transfer of, terminate and re-hire, terminate and permit an Affiliate to rehire, or permit a transfer of any individual in an Executive Employee position for a period of twenty-four (24) months from the Effective Date.  The foregoing restrictions shall not apply to prohibit Golf Manager from approving a transfer requested by an Executive Employee primarily for family or other personal reasons (as distinct from Golf Manager’s approval of a transfer requested by an employee primarily for career-motivated reasons); provided, however, Owner expects this exception to be used on a limited basis only.  Further, Golf Manager shall not solicit for employment or permit any of its Affiliates to solicit for employment any employee of Owner or Hotel Manager at the Resort.  For purposes of this Article 4.01(b), the term “Affiliate” as it relates to Golf Manager shall mean Troon Golf, L.L.C. (“Troon Golf”), and any entity which Troon Golf controls.  In no event shall Putnam Golf, L.L.C., Putnam Golf II, L.L.C., Whitehall Street Real Estate Limited Partnership XI, a Delaware limited partnership, or WXI/TRO, L.L.C., a Delaware limited liability company, or any of their respective affiliates be considered an Affiliate of Troon.

(c)Revenue and Expenses of Golf Facilities

(i)Golf Manager shall comply with the policies and procedures for control of and accounting for all cash receipts and other revenue related to operation of the Golf Facilities as provided in the attached Exhibit E (hereinafter referred to as “Revenue Management Policy”) and as such policies and procedures may be amended from time to time by Hotel Manager for the Resort and Golf Facilities as a whole.  Any amendment to the Revenue Management Policy shall be provided to Golf Manager and Owner on a prompt and timely basis.

(ii)As stated in the Revenue Management Policy, on behalf of Owner, Hotel Manager shall pay, from Resort revenues, all expenses relating to ownership and operation of the Golf Facilities which have been incurred pursuant to the Golf Facilities Annual Plan approved by the Hotel Manager and Owner.  Hotel Manager will not pay (nor will Golf Manager be entitled to reimbursement for) general expenses for or on the account of Golf Manager not directly related to operation of the Golf Facilities, such as for the maintenance of Golf Manager’s business, general corporate licenses for the Golf Manager, meals for Golf Facilities Employees (as defined in Article 4.01(b)(i) above), travel to and from the Resort by Golf Manager’s corporate personnel (except as provided in the approved Golf Facilities Annual Plan or Article 4.01(w)), and insurance (except that insurance required under Article 6.02(b) – (d)).  The amounts to be paid by Hotel Manager on behalf of Owner shall include the charges of Golf Manager for Centralized Services of Golf Manager under Article 4.01(w) below and National

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Marketing Services under Article 4.01(y) below and any other charges or expenses incurred by Golf Manager included in the then applicable approved Golf Facilities Annual Plan, but shall exclude any other home office, regional office or other offsite charges, expenses or costs of any kind or nature incurred or sustained by Golf Manager (except as otherwise provided in the approved Golf Facilities Annual Plan or Article 4.01(w)) and Golf Manager shall not be entitled to reimbursement therefor.  To facilitate the timely and orderly payment of expenses, Golf Manager will (a) deliver all invoices or bills received by Golf Manager to Hotel Manager in the manner reasonably specified by Hotel Manager and (b) either approve and recommend payment of all invoices and bills related to the Golf Facilities and code them for purposes of comparison to the Golf Facilities Annual Plan, or state the basis for Golf Manager’s objections thereto and recommendations concerning the same, with all such actions to occur in a reasonable timeframe specified by Hotel Manager to accommodate its processing requirements.

In addition, commencing on the Effective Date and continuing throughout the remainder of the Term, Hotel Manager shall deposit, or shall request that Owner deposit, into Golf Manager’s separate payroll account (which Golf Manager represents and warrants shall be solely used for approved payroll expenses), at least two (2) days before a payroll is to be paid by Golf Manager for Golf Manager’s Employees for the Golf Facilities, an amount equal to such payroll as set forth in a detailed payroll request certified by Golf Manager as being correct and in compliance with the Golf Facilities Annual Plan, provided such certified payroll request is delivered to Hotel Manager at least ten (10) days before the payroll is to be paid.  In addition, Hotel Manager or Owner shall deposit in the same manner and subject to the same requirements the benefits costs incurred by Golf Manager for the Golf Facilities Employees at the Golf Facilities, less any forfeitures described in Article 4.01(b)(i).

(d)Purchasing Policy.  Golf Manager shall comply with the policies and procedures for purchasing of merchandise for the Golf Facilities, including controls and reports, as provided in the “Purchasing Policy” attached hereto as Exhibit F, and as such policies and procedures may be amended from time to time (provided that any such amendment is provided to Golf Manager and does not materially and adversely affect the ability of Golf Manager to operate the Golf Facilities) by Hotel Manager for the Resort and Golf Facilities as a whole.  Pursuant to the Purchasing Policy, but subject to the Golf Facilities Annual Plan, as an Operating Expense of the Golf Facilities, Golf Manager shall establish and maintain inventory levels and ensure the distribution of first quality merchandise and supplies to assigned departments of the Golf Facilities, including sufficient inventories for retail sale throughout the Golf Facilities and shall prepare and submit to Hotel Manager and Owner (on a basis reasonably determined by Hotel Manager) purchase, sale and use reports concerning inventory, merchandise and supplies.  The Parties agree to develop an inventory of materials, supplies, inventory and equipment to be used or managed by Golf Manager pursuant to this Golf Agreement.  All property purchased with Resort, Owner or Hotel Manager funds shall be property of the Resort, Owner or Hotel Manager, and not Golf Manager.

In the performance of such obligations, Golf Manager may elect to purchase items described therein under vendor contracts negotiated by Golf Manager under its vendor contracts and national purchasing programs, subject to the following provisions.  In respect of purchases made under Golf Manager’s vendor contracts, Hotel Manager and Owner acknowledge that Golf Manager may receive and retain certain payments, rebates or administrative fees from vendors,

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and that Golf Manager and/or its Affiliates may have investments in such vendors; and, provided, further, any price discounts achieved under such contracts for items purchased for the Golf Facilities shall be passed on to the Golf Facilities.  Upon Hotel Manager’s or Owner’s request, Golf Manager shall disclose in writing to Hotel Manager and/or Owner (as the case may be) in a reasonably detailed writing any applicable arrangements for Golf Manager to receive payments, rebates, concessions or administrative fees.  In any event, Golf Manager shall prepare a quarterly written report for delivery to Hotel Manager and Owner, which report shall fully and fairly disclose all rebates, concessions, and administrative fees Golf Manager (or its Affiliates) may have received (or direct that others should receive) from any vendor relating to purchases made on behalf of the Resort.  Notwithstanding any contrary provisions of this Article 4.01(d), it is the intention of the Parties that the net cost (including, without limitation, rebates, concessions, payment terms, service policies, return policies and the like) of using Golf Manager’s national purchasing program shall not be greater than if a third party purchasing agent or Hotel Manager or Owner purchased the same items.  Accordingly, if Hotel Manager or Owner is able to identify vendors to Golf Manager from which the Golf Facilities can purchase items of the same quality, and same brand (for those items where brand is a differentiating feature), as those available through vendors recommended by Golf Manager, but at lower prices than the prices available through vendors recommended by Golf Manager, at Hotel Manager’s direction, Golf Manager shall purchase the goods and services in question from the vendors identified by Hotel Manager or Owner.  Notwithstanding the foregoing, upon at least thirty (30) days’ prior written notice to Golf Manager, Hotel Manager or Owner shall have the right to opt out of any purchasing program in respect of all purchases or such items as Hotel Manager or Owner may designate in such notice.

(e)Changes in Policies.  Golf Manager shall coordinate with Hotel Manager with respect to any proposed changes to the Purchasing Policy, the Revenue Management Policy and other policies, rules and regulations of the Resort applicable to the Golf Facilities (and promptly disclose the same to Owner in writing) and, in coordination with Hotel Manager, review, re-establish and interpret the same from time to time as is appropriate for operation of the Golf Facilities according to this Golf Agreement.  Hotel Manager and Owner shall have the right to approve in writing all amendments to such policies, rules and regulations proposed by Golf Manager that would have a material effect on golf operations, prior to the issuance or implementation of such amendments.  If a circumstance arises where Golf Manager believes its obligations under this Golf Agreement conflict with the requirements of the Revenue Management Policy, the Purchasing Policy or an express directive from Hotel Manager or Owner, Golf Manager shall promptly notify Hotel Manager and Owner in writing of the conflict and shall follow Hotel Manager’s direction regarding resolution of the conflict, provided that such direction does not materially conflict with the provisions of the Resort Management Agreement or this Golf Agreement relating to compensation and costs and expenses payable and reimbursable to Golf Manager under this Golf Agreement.

(f)Weekly Meetings.  Unless otherwise agreed, the Director - Golf Operations, or his designee, shall hold weekly meetings with Hotel Manager’s general manager (or his designee) and Owner’s designee (if Owner so elects from time to time) to review revenue management and accounts payable as well as to discuss operational issues related to the Golf Facilities (including course maintenance projects with potential impact on Resort operations, such as green and fairway aeration), and shall hold monthly meetings with Hotel Manager’s

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general manager and Golf Manager’s executive personnel responsible for general supervision of the Golf Facilities.

(g)Preparation and Approval of and Compliance with Golf Facilities Annual Plan.  On or before September 1 of each calendar year, Golf Manager shall prepare and submit to Hotel Manager and Owner for written approval a proposed operating and capital plan and budget (the “Proposed Golf Facilities Annual Plan,” a specimen of which is attached hereto as Exhibit G) of anticipated revenues and expenses and capitalized expenditures for the forthcoming calendar year.  The deadline for Golf Manager’s submission of the Proposed Golf Facilities Annual Plan to Hotel Manager and Owner shall be subject to change from time to time upon at least sixty (60) days prior written notice from Hotel Manager to Golf Manager (provided that no extension of such deadline shall be effective without the prior written approval of Owner).  The Proposed Golf Facilities Annual Plan proposed by Golf Manager each year shall set forth in reasonable detail the assumptions underlying the plan, the projected revenues and expenses on a monthly basis, and a schedule for capital projects and costs, and shall be in a format, form and scope reasonably determined by Hotel Manager (and in satisfaction of any requirements set forth in the Resort Management Agreement).  In addition, the Proposed Golf Facilities Annual Plan shall include any proposed modifications to the published schedule of golf fees (including the greens fees for Resort Guests and/or the general public, shotgun start fees, golf cart rental and use of the driving range) and all fees for other services and activities available at the Golf Facilities (e.g., private lessons, locker space and bag storage).  Hotel Manager and Golf Manager shall cooperate with one another to prepare any additional or special elements of the Golf Facilities Annual Plan as may be required or imposed from time to time by Owner.

Hotel Manager and Owner shall review the Proposed Golf Facilities Annual Plan with Golf Manager prior to the commencement of the forthcoming calendar year and shall provide preliminary approval of or comments to Golf Manager within sixty (60) days of Hotel Manager’s receipt of the Proposed Golf Facilities Annual Plan.  Within ten (10) business days of Golf Manager’s receipt of Hotel Manager’s and Owner’s comments to the Proposed Golf Facilities Annual Plan, if any, Golf Manager shall make appropriate modifications of the Proposed Golf Facilities Annual Plan to comply with such comments provided that would not result in a breach of or express inconsistency with any provision of this Golf Agreement, and resubmit the same to Hotel Manager and Owner for preliminary approval or comments by Hotel Manager and Owner.  This process shall be repeated as necessary until each of Hotel Manager and Owner has finally approved the Proposed Golf Facilities Annual Plan but the Parties will use their best effort to conclude this process not later than January 1 of the year in question.  Golf Manager understands and agrees that the Proposed Golf Facilities Annual Plan, as preliminarily approved by the Hotel Manager and Owner, shall become an element of the Resort’s annual plan and budget, including its Capital Budget submitted by Hotel Manager to Owner for review and final approval (the “Operating Plan and Budget”), which approval may be given after the beginning of the calendar year for which the plan was originally proposed.  Upon final approval of the Proposed Golf Facilities Annual Plan by Hotel Manager and Owner the same shall be the “Golf Facilities Annual Plan” for the year in question.

Hotel Manager and Owner may require modification of the Golf Facilities Annual Plan during the calendar year subject to the Plan to reflect a Resort-wide expense reduction program expressed on a uniform percentage or other uniform basis.  Further, the Parties agree

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that failure to achieve, during any operating year, the budgeted operating profit of the Golf Facilities, as approved by Hotel Manager and Owner in any Golf Facilities Annual Plan, may result, upon the mutual written agreement of the Parties and Owner or at the joint direction of Hotel Manager and Owner, in cancellation or modification of expense and/or capital projects previously approved in the Golf Facilities Annual Plan.

Golf Manager agrees to use diligent efforts to ensure that the actual costs of maintaining and operating the Golf Facilities shall not exceed the approved Golf Facilities Annual Plan, either in total or in any one category.  Notwithstanding the foregoing, Golf Manager may elect to reapply savings within any particular budget categories of the Golf Facilities Annual Plan to other categories provided that (i) no single reapplication of savings shall exceed the lesser of $50,000 or 10% of the budget category from which savings are realized, (ii) the total of all reapplied savings in any operating year shall not exceed 5% of the total expenses reflected in the applicable Golf Facilities Annual Plan, and (iii) the Hotel Manager’s prior written approval shall in all events be required for expenditures in the capital expenditures budget category that are in excess of the amounts authorized therefore in the most recent Golf Facilities Annual Plan.  Golf Manager agrees to immediately inform Hotel Manager and Owner in writing of any actual or anticipated increase in costs and/or expenses for items that were reflected in such approved budget prior to such expenditure obtain Hotel Manager’s and Owner’s written approval of such change and otherwise comply with Article 3.02(c).

(h)Allocation of Tee Times; Tournaments; Public Play.  Subject to the rights of members, Golf Manager shall schedule golf course usage for Resort Guests, tournament (including, without limitation, members’ tournaments) and permitted outside play to maximize cost effective and profitable operation of the Golf Facilities and the Resort, taking into consideration the priority of Resort Guest use and the overall best interests of the Resort (including its profitability) as determined by Hotel Manager (subject to Hotel Manager’s obligations to Owner under the Resort Management Agreement).  No tournament shall be scheduled without obtaining the prior written approval of Hotel Manager and Owner in each case, in their sole discretion.  Hotel Manager shall provide group coordinators to manage tournaments booked by the Golf Manager and the Hotel Manager.  In order to maximize the potential for booking group (defined as 16 or more players for purposes of this Golf Agreement) business at the Resort, requests for golf bookings and shotgun starts by groups not staying at the Resort (e.g., staying at another hotel and playing golf at the Resort or locally-based groups) shall be confirmed and approved in advance in writing by Hotel Manager.  Approval shall take into consideration whether Hotel Manager is pursuing the group for the same business, and whether Hotel Manager reasonably believes the tee times the group would utilize would be needed for group or other Resort business.  The general manager of the Resort and the Director-Golf Operations shall meet and/or communicate periodically concerning policies and procedures for tee time allocation and booking, always recognizing the need for priority of Resort Guests as determined by Hotel Manager.

(i)Special Functions and Events.  Golf Manager shall coordinate, plan and promote various functions that shall generate operating revenues for and develop a strong community awareness of the Golf Facilities and that are consistent with parameters mutually approved by Golf Manager, Hotel Manager and Owner in the Golf Facilities Annual Plan or that are otherwise specifically approved by each of Hotel Manager, Golf Manager and Owner.  This

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shall include cooperating with any organization designated by Hotel Manager and Owner for the use of the Golf Facilities for special events, including, without limitation, any one-time, periodic or annual event sponsored by the any reputable golf association.  In connection with any such reputable golf association event, the Golf Manager and the Hotel Manager shall also coordinate and cooperate with any event manager appointed by the such reputable golf association; provided, however, that such cooperation shall not extend beyond the duties and obligations contained in this Agreement without Hotel Manager’s and Owner’s prior written consent in each instance.  Golf Manager shall abide by any and all agreements entered into by Hotel Manager in connection with such special events, including group bookings, subject to Article 7.05 below.

(j)Public Relations.  Golf Manager shall coordinate and communicate with local news media, business firms, hotels, civic organizations and other entities to promote an increased public interest in golf at the Golf Facilities, with expenses, if any, to be subject to the Golf Facilities Annual Plan.  All promotional programs and public relations efforts shall be subject to the prior written approval of Hotel Manager and Owner.

(k)Promotional Materials.  Golf Manager shall supervise the publishing and distribution of informational and promotional literature on the Golf Facilities, which shall be subject to the prior written approval of Hotel Manager and Owner and subject to the Golf Facilities Annual Plan.

(l)Licenses and Permits.  Golf Manager shall, in consultation with Hotel Manager, maintain and acquire, as necessary, in the name of Owner (or Hotel Manager to the extent so required by applicable law), or in such other names as may be required by Owner and permitted by applicable law, all licenses and permits required by law for the operation of the Golf Facilities.

(m)Compliance with Laws and Covenants.  In accordance with Article 16.02, Golf Manager shall cause Golf Manager’s performance of its duties hereunder, and the operation of the Golf Facilities generally, to be in compliance with (i) any and all applicable ordinances, laws, codes, rules and regulations, and guidelines of all governmental authorities with jurisdiction over the Golf Facilities, including, but not limited to, the U. S. Environmental Protection Agency, and the applicable state and local departments and divisions, and (ii) any covenants, conditions or restrictions that the Golf Facilities are, or may become, subject (including, without limitation, the terms of any credit facility), so long as Hotel Manager or Owner has provided Golf Manager with notice of any such covenants, conditions or restrictions, and (iii) orders of the local Board of Fire Underwriters or any other body that may have similar functions.  Golf Manager shall give Hotel Manager and Owner prompt written notice of any actual or potential non-compliance with the requirements or standards identified in this Article 4.01(m) of which Golf Manager has actual knowledge.  Golf Manager shall be deemed to have notice of all matters recorded against the title of the Resort, to the extent copies thereof are provided to Golf Manager.

(n)Golf Lessons.  Golf Manager shall offer private and group lessons to patrons of the Golf Facilities at rates approved in writing by Hotel Manager.

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(o)Coordinate with Resort Insurance.  Golf Manager shall coordinate with Hotel Manager’s personnel to make additions, changes, and deletions to Hotel Manager’s insurance policies as necessary or desirable in light of the business and operations of the Golf Facilities, and assist as requested with respect to any claims made that affect or relate to the Golf Facilities or the operation thereof.

(p)Repairs.  Subject to complying with the Golf Facilities Annual Plan or obtaining the prior approval from Hotel Manager and Owner (if or to the extent not set forth in the Golf Facilities Annual Plan), and to the limitations in Article 3.02 above, Golf Manager shall at all times make or cause to be made all necessary repairs, alterations, additions, maintenance and improvements (collectively “Repairs”) to the Golf Facilities and supervise the same so that all Repairs are diligently completed in a good and workmanlike manner, purchase all necessary supplies and materials, and do all other things necessary to maintain the Golf Facilities to comply with the Golf Course Standard.  Golf Manager shall use diligent efforts to cause (including the imposition of contractual obligations) ensure that all contractors performing work on the Golf Facilities to maintain insurance consistent with the requirements imposed on other contractors working at the Resort who perform similar services.  Any Repairs shall be the property of Owner and shall remain at the Golf Facilities upon any termination of this Golf Agreement.  The administration (including coordination of payment and pursuit of mechanics’ lien waivers in all instances) of the contracts of such contractors shall be performed by Hotel Manager.  However, Golf Manager shall assist Hotel Manager, as requested, in obtaining all necessary receipts, releases, waivers, discharges and assurances necessary to keep, and shall keep the Golf Facilities free from mechanics’ and materialmen’s liens and other claims and liens, all of which documentation shall be in form and content as reasonably required by Hotel Manager and Owner;  provided, however, in all events the form and documentation thereof shall be in a form, in a content and sufficiently timely to cause all such releases, waivers, discharges, assurances, mechanics’ and materialmen’s liens to be legally effective.

(q)Books and Records.  Golf Manager shall establish and maintain complete and orderly files (in written, electronic and electronically readable form) containing correspondence, maintenance, service contracts, payroll records, receipts, unpaid bills, vouchers and all other documents and papers pertaining to the Golf Facilities and the management and operation thereof, all of which shall be and shall remain the property of Owner, shall be subject to the requirements of Hotel Manager’s and Owner’s records retention policy, and shall be available to Hotel Manager and Owner, and their respective representatives, for inspection, wherever located, at any time during regular business hours.

(r)Inspections and Inspection Reports.  Subject to compliance with the Golf Facilities Annual Plan, Golf Manager shall inspect the Golf Facilities each week (or more often if Hotel Manager so requests or if Golf Manager deems prudent in light of its duties hereunder) during the term of this Golf Agreement and provide to Hotel Manager and Owner a written report in reasonable detail any material issues discovered with respect to the physical condition of the Golf Facilities, such report to be included in the monthly reports provided to Hotel Manager and Owner, or separately reported if in Golf Manager’s reasonable judgment a report is required before the issuance of such monthly reports.

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(s)Taxes and Assessments; Condemnation Awards; Litigation.  Golf Manager shall cooperate with and assist Hotel Manager and Hotel Manager’s accountants in preparing and filing (only after review and approval by Hotel Manager, and, if requested by Owner, after review and approval by Owner) on behalf of Hotel Manager or Owner any tax returns (other than income or real estate tax returns) relating to the Golf Facilities; render advice and assistance to Hotel Manager and Owner in the negotiation and prosecution of all claims for the abatement or reduction of taxes and assessments affecting the Golf Facilities and for awards for complete or partial takings of the Golf Facilities by eminent domain; and render its advice and assistance to Hotel Manager and Owner with respect to any litigation, administrative proceedings or other legal proceedings of any kind or nature affecting the Golf Facilities, provided that all assessment, taxation, condemnation and litigation matters shall be at all times within the control and direction of Hotel Manager (subject to any approval rights of Owner provided in the Resort Management Agreement) and that any reasonable costs and expenses incurred by Golf Manager after Owner’s approval thereof in connection with such assistance shall be reimbursed to Golf Manager, provided the same are reimbursable expenses expressly permitted by the Resort Management Agreement.  Golf Manager shall have no authority to retain any attorneys, accountants or other professionals or to participate in any litigation, arbitration, legal negotiations or settlement proceedings of any kind or nature unless expressly agreed to in writing by Hotel Manager and Owner and subject to the limits of Section 2.2.14 of the Resort Management Agreement.  Golf Manager acknowledges and agrees that Owner has final authority over all decision-making regarding litigation matters, arbitration matters and settlement proceedings for which the amount in dispute exceeds the limits set forth in Section 2.2.14 of the Resort Management Agreement.

(t)Food and Beverage Operations.  Golf Manager shall cooperate and assist Hotel Manager in coordinating the operation of the food and beverage facilities at the Resort and other aspects of the Resort with the Golf Facilities. Hotel Manager shall operate the Golf Course clubhouse food and beverage operations in accordance with the Resort Management Agreement.  If requested by Hotel Manager, Golf Manager shall manage the on-golf course food and beverage operations (i.e., any “snack bar” located on the golf course and the roaming food and beverage carts) (the “On-Course Food and Beverage Operations”) Hotel Manager and Golf Manager will consult and agree as to the products, services and frequency of services to be offered on-course, however, Hotel Manager in its sole discretion may designate periods and/or events during which alcohol will not be served. All liquor licenses shall be maintained by Hotel Manager or its designees and Golf Manager shall fully cooperate with Hotel Manager and its designees in obtaining and maintaining all such licenses in good standing to the extent of liquor provided through the Golf Facilities and/or the Golf Facilities Employees.  Golf Manager shall enter into a sub-management agreement with the holder of the applicable license providing for provision of liquor through Golf Facilities Employees which agreement shall contain customary terms.  Golf Manager shall ensure that all appropriate Golf Facilities Employees are properly trained in the serving of alcoholic beverages and provide supervision thereof.

(u)Monthly Operating Reports.  Golf Manager shall provide to Hotel Manager and Owner a reasonably detailed monthly operating report, based on information available to Golf Manager, that reflects operational results of the Golf Facilities for each month of the calendar year (the “Monthly Operating Report”).  Golf Manager shall provide the Monthly Operating Report within the time-frames requested by Hotel Manager and Owner to

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enable Hotel Manager to prepare its monthly reports for the whole Resort promptly upon the conclusion of each month of the calendar year, and in all events within the time-frames required to satisfy Hotel Manager’s obligations to Owner under the Resort Management Agreement (provided that Hotel Manager apprises Golf Manager of the relevant deadlines).  The Monthly Operating Report shall utilize a format reasonably designated by Hotel Manager and using a medium designated by Hotel Manager, which may include electronic transmission in an approved electronic format.  To the extent not provided in the ordinary course of business, Golf Manager shall also provide all necessary information to enable Hotel Manager and Owner to prepare its annual reports and to enable the Resort’s accountants to prepare audited financial statements, with such material to be provided in a format and using a medium designated by Hotel Manager.  Golf Manager shall advise Hotel Manager of variances that have occurred and that are anticipated to occur between the applicable Golf Facilities Annual Plan and actual results by giving Hotel Manager a monthly and year to date variance report (along with the information mentioned above).

(v)General Operations and Care of the Golf Facilities.  Golf Manager shall perform any other services reasonably necessary (and/or reasonably requested by Hotel Manager or Owner) and generally consistent with the express terms of this Golf Agreement for the care, protection, maintenance and efficient operation of the Golf Facilities and the prevention of waste, nuisance, trespass, damage or injury thereto.  Golf Manager agrees to operate the Golf Facilities in a good and businesslike fashion consistent with the Golf Course Standard, including the Resort Standard (provided that the Hotel Manager keeps Golf Manager apprised of relevant standards incorporated in the Resort Standard).  Subject to the terms of this Golf Agreement, Golf Manager shall operate the Golf Facilities on a continuous basis throughout the Term of this Golf Agreement and shall keep the Golf Facilities open to Resort Guests during the times established by Hotel Manager.  Golf Manager shall operate all areas of the Golf Facilities during such times and on such days of each calendar year as approved in writing by the Hotel Manager and Owner.

(w)Centralized Services.  Golf Manager shall cause to be furnished to the Golf Facilities certain services (“Centralized Services”) which are furnished generally on a central or regional basis to other “Affiliated Facilities,” which are other golf facilities owned, leased or managed by Golf Manager or affiliates.  Centralized Services shall include the following categories of services:

(i)“Facility Training, Recruiting, and Standards,” which includes recruitment materials and seminars, personnel training programs and associated materials, and the preparation and maintenance of operating standards manuals, materials, and programs;

(ii)To the extent requested by Hotel Manager and Owner, “Payroll Processing”;

(iii)To the extent requested by Hotel Manager and Owner, “Employee and Benefits Administration,” which includes administration of employee benefits, such as COBRA, new hire paperwork, FMLA leaves, vacation balances and termination issues; and

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(iv)To the extent required by Hotel Manager and Owner, “EPL/Fraud Insurance,” which includes the cost of insurance for the Employers Practices Liability insurance and the Crime Coverage Policy.

Golf Manager may from time to time propose that additional central or regional services be furnished and included as part of Centralized Services for the benefit of the Affiliated Facilities or in substitution for services now performed at the Golf Facilities which may be more efficiently performed on a group basis.  Any modification to the foregoing list of Centralized Services shall be made by Golf Manager in conjunction with the Golf Facilities Annual Plan and subject to Hotel Manager’s and Owner’s approval in advance for the Golf Facilities to participate therein.

Centralized Services costs and expenses shall consist of the actual cost of the services without mark-up or profit to Golf Manager or any Affiliate of Golf Manager, but shall include salary and employee benefit costs, and appropriate depreciation/amortization cost of equipment used in performing such services; provided, however, that any costs attributed to corporate office accounting for Golf Manager or any affiliate of Golf Manager shall not be included.

Costs and expenses incurred in the providing of Centralized Services for Affiliated Facilities shall be allocated by Golf Manager and its affiliates on a fair and equitable basis, consistently applied, among all Affiliated Facilities receiving such services (the “Centralized Services Fee”); provided, however, that the allocation methodology applied to the Golf Facilities shall be no less favorable to the Resort than the allocation methodology applied to any other Affiliated Facilities, taking into account the time at which a facility became part of the portfolio of Affiliated Facilities during the year of the assessment; and provided, further, Golf Manager shall provide to Hotel Manager and Owner all back-up or supporting information bearing on the allocation.  If equipment is installed and maintained at the Golf Facilities solely in connection with the rendering of any Centralized Services therefor, all costs thereof shall be charged to the operation of the Golf Facilities either as a current expense or capitalized over a period of years, as determined in accordance with generally accepted accounting principles consistently applied, and shall belong to Owner upon full payment or depreciation thereof.

As of the date hereof, Centralized Services are allocated to the Golf Facilities in accordance with the following respective allocation methods:

(i)“Facility Training, Recruiting, and Standards” costs shall be allocated among Affiliated Facilities on a per hole basis.

(ii)“Payroll Processing” costs (if applicable) shall be allocated among Affiliated Facilities on the basis of the number of employees for which the payroll is processed by Golf Manager at each of the Affiliated Facilities.

(iii)“Employee and Benefits Administration” costs (if applicable) shall be allocated among Affiliated Facilities on the basis of the number of employees at each of the Affiliated Facilities.

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(iv)“EPL/Fraud Insurance” costs shall be allocated among Affiliated Facilities on a per Affiliated Facility basis.

Such allocation methodology may be amended in an equitable fashion from time to time by Golf Manager, provided that the allocation methodology applied to the Golf Facilities shall be no less favorable to the Resort than the allocation methodology applied to any other Affiliated Facility.

Costs of Centralized Services shall be payable monthly as an Operating Expense and shall be included as a line item in the Golf Facilities Annual Plan.  At its sole cost and expense, Hotel Manager and/or Owner may at any reasonable time review or audit the records of Golf Manager pertaining to such charges to confirm Golf Manager’s compliance with the foregoing.  In the event that such review or audit reveals that Golf Manager has not complied with the foregoing, such noncompliance shall be an Event of Default hereunder.

Notwithstanding the foregoing, Hotel Manager may elect to provide or have a third party provide services in lieu of any particular portion of Centralized Services provided or proposed to be provided by Golf Manager, upon giving reasonable prior written notice to Golf Manager.

Without limiting the foregoing, the parties agree that Golf Manager employs regional or area managers and senior agronomists to provide overall supervision of golf operations at multiple projects (including projects not under common ownership with the Resort).  With the exception of any employee holding such title as of the date hereof, Golf Manager shall not employ any regional or area manager or senior agronomist at the Golf Facilities without the prior written consent of Hotel Manager and Owner.  Travel for Golf Facilities Employees at the Golf Facilities and/or travel of home office or regional employees to and from the Golf Facilities shall be reimbursable to Golf Manager provided the same is included in the Golf Facilities Annual Plan and travel is by coach airline tickets and otherwise complies with Hotel Manager’s policies limiting travel expenses.

(x)Golf Experience Standards.  Hotel Manager intends to employ an outside service (to be selected by Hotel Manager and Owner and engaged at Owner’s expense) to evaluate the golf experience at the Golf Facilities to create a baseline evaluation thereof and thereafter to monitor changes and progress.  Through the evaluation process, Hotel Manager intends to develop golf experience standards to apply to the Golf Facilities and Golf Manager’s operation thereof.  Golf Manager agrees to comply with all such standards developed and implemented from time to time by Hotel Manager; provided, however, that Hotel Manager shall consult with Golf Manager concerning the development, change and implementation of any such golf experience standards and provided that Golf Manager is provided a reasonable period and resources necessary to adjust operations of the Golf Facilities to comply with such standards.  An appropriately allocated portion of the costs of the auditor or other party performing an evaluation, and all costs of Golf Manager to comply with golf experience standards, as set forth in the Golf Facilities Annual Plan, shall be Operating Expenses for purposes of Article 7 below.

(y)National Marketing Services.  Golf Manager shall provide national services (the “National Marketing Services”) to the Golf Facilities which shall include:

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(i)coordination of local marketing activities, including the development of an overall Golf Facilities marketing plan, development and design of a Golf Facilities specific advertisement campaign in conjunction with the Hotel Manager and development and design of collateral marketing materials;

(ii)communication with local news media, including Golf Facilities specific press releases, business firms, golf courses, civic organizations and other entities to promote an increased local interest in golf at the Golf Facilities;

(iii)assistance in the development and sales of golf products (e.g., golf leagues, coupon programs, instructional schools, etc.);

(iv)system-wide sales and marketing activities, including inclusion of the Golf Facilities and the Resort in national advertising collateral material, for the Golf Facilities and all Affiliated Facilities, including national and international advertising, group sales promotion, public relations and direct selling efforts for the benefit of the Golf Facilities and the collective business development at all Affiliated Facilities;

(v)participation in the Golf Manager’s Troon brand central reservation system which provides a regional, national and international toll-free system for inquiries regarding customer bookings and for making, changing and canceling reservations at the Golf Facilities and/or Affiliated Facilities;

(vi)representation at golf industry sales and trade shows;

(vii)inclusion on, and a hyperlink from, Golf Manager’s Troon world wide web site to the Golf Facilities world wide web site; and

(viii)such other additional sales and marketing services as Golf Manager may determine may benefit the Golf Facilities and the Affiliated Facilities or develop and promote further the Golf Facilities or the Golf Manager’s Troon brand, subject to approval of the Hotel Manager and the coordination with any golf-related marketing and promotional activities Hotel Manager may undertake.

Golf Manager agrees to strictly comply with the terms and provisions of Section 2.7.3 of the Resort Management Agreement in connection with its performance of the National Marketing Services and its operations generally.

As part of the Golf Facilities Annual Plan, the Owner shall pay an assessment to reimburse the Golf Manager for a portion of Golf Manager’s costs for Golf Manager’s provision, and/or arranging for the provision of the National Marketing Services (the “National Marketing Services Fee”) which shall not exceed:  $55,000 per annum for the first thirty-six (36) months after the Effective Date; and an increase of not more than 10% per annum over the aforesaid sum for the next twenty-four (24) months. The National Marketing Services Fee shall be in addition to the “Marketing Fee” payable by Owner to Hotel Manager under section 3.1.1 of the Resort Management Agreement.  National Marketing Services costs and expenses shall consist of the actual cost of the services without markup or profit to Golf Manager or any affiliate of Golf Manager, but shall include salary and employee benefit costs, and appropriate

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depreciation/amortization cost of equipment used in performing such services; provided, however, that any costs attributed to corporate office accounting for Golf Manager and any affiliate of Golf Manager shall not be included.  The National Marketing Services Fee shall be allocated by Golf Manager and its affiliates on a fair and equitable basis, consistently applied, among all affiliated facilities receiving such services; provided, however, that the allocation methodology applied to the Golf Facilities shall be no less favorable to the Resort than the allocation methodology applied to any other Affiliated Facility and back-up or supporting documentation thereof shall be provided to the Hotel Manager and Owner on an annual basis.

No new National Marketing Services for which Owner is to be charged will be provided without Hotel Manager’s and Owner’s approval.

At the sole cost and expense of Hotel Manager or Owner, Hotel Manager or Owner may at any reasonable time review or audit the records of Golf Manager pertaining to the National Marketing Services Fee under this provision to confirm Golf Manager’s compliance with the foregoing.  In the event that such review or audit reveals that Golf Manager has not complied with the foregoing, such noncompliance shall be an Event of Default hereunder.

If any time Hotel Manager determines (subject to Owner’s approval rights set forth in the Resort Management Agreement) that any or all National Marketing Services provided by Golf Manager are not in the best interests of the Resort or are duplicative of services provided by Hotel Manager or others, Hotel Manager may elect to withdraw the Resort from the program therefor and the National Marketing Services Fee shall be adjusted accordingly.

ARTICLE V
INDEMNIFICATION

5.01Indemnification.  The following provisions shall apply with respect to any Claims (as defined below) that may arise from the operation or condition of the Golf Facilities, but only to the extent that such Claims are not actually paid by insurance or by any indemnity payments by Owner under the Resort Management Agreement:

(a)At its own expense, Golf Manager shall indemnify, defend (with counsel reasonably acceptable to Hotel Manager or Owner, as the case may be) and hold harmless Owner and Hotel Manager, and each of their respective parent and subsidiary entities, agents, officers, directors, shareholders, members, managers, partners, trustees and employees, and each of their successors and assigns (the “Hotel and Owner Parties”), from and against any and all demands, claims, actions, penalties, suits, losses, expenses, liabilities of any kind or nature to persons or property, injunctions, damages and costs (including reasonable attorneys’ fees and costs) (collectively, the “Claims”) of any nature whatsoever alleged, made against or incurred by Hotel and Owner Parties arising out of (i) the negligent or intentional acts or omissions of Golf Manager (including the failure to properly supervise the Golf Facilities Employees and contractors) and Golf Facilities Employees, agents and contractors, (ii) any Golf Facilities Employee’s failure to adhere to, or any Golf Facilities Employee’s breach of, the terms of this Golf Agreement, or (iii) any violation by Golf Manager or the Golf Facilities Employees, agents and contractors of any governmental laws or regulations.  This indemnity shall survive the termination of this Golf Agreement.  When Golf Manager is providing Hotel and Owner Parties

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with defense and/or indemnification pursuant to this Article 5.01, Hotel and Owner Parties may participate, at their own expense, in the defense of such matter, including the selection of legal counsel.  Golf Manager shall keep Hotel and Owner Parties apprised of the status of any such matter and shall not settle any such matter without the prior written consent of Hotel Manager and Owner.

(b)Hotel Manager, shall indemnify, defend (with counsel reasonably acceptable to Golf Manager) and hold harmless Golf Manager and Owner, and its parent and subsidiary entities, agents, officers, directors shareholders, members, managers, partners, trustees and employees (the “Golf Facilities Parties”), from and against any and all Claims of any nature whatsoever that the Golf Facilities Parties may have alleged against, incur, become responsible for, or pay out that are caused in whole or in part by, arise out of or are related to (i) the negligent acts or omissions of Hotel Manager or its officers, directors or employees, including Hotel Manager’s failure to properly supervise the personnel at the Resort that are not Golf Facilities Employees or contractors under the control of Golf Manager, (ii) Hotel Manager’s failure to adhere to, or Hotel Manager’s breach of, the terms of this Golf Agreement, or (iii) any violation by Hotel Manager of any governmental laws or regulations.  This indemnity shall survive the termination of this Golf Agreement.  When Hotel Manager is providing the Golf Facilities Parties with defense and/or indemnification pursuant to this Article 5.01, Golf Manager may participate, at its own expense, in the defense of such matter, including the selection of counsel.  Hotel Manager shall keep Golf Manager apprised of the status of such matter and shall not settle any such matter without the prior written consent of Golf Manager.  Golf Manager acknowledges and agrees that Hotel Manager’s indemnification obligation to Golf Manager under this Section 5.01(b) shall be limited to acts or omissions in its capacity as agent for Owner, and for which Owner is obligated to indemnify Hotel Manager at Owner’s sole cost and expense under the Hotel Management Agreement.  Nothing in this Section 5.01(b) shall be deemed to modify Owner’s indemnification obligations (or the limitations therein) under the Resort Management Agreement, or limit Hotel Manager’s right to enforce such obligations under the Resort Management Agreement (subject to the limitations therein and procedures required thereby).

ARTICLE VI

6.01Hotel Manager’s Insurance.  At all times during the Term commencing not later than the date Golf Manager commences its on-site services hereunder, Hotel Manager shall provide and maintain, as an Operating Expense, the insurance policies described in Article 5 of the Resort Management Agreement.

6.02Golf Manager’s Insurance.  From the Effective Date and thereafter at all times during the Term, Golf Manager shall provide and maintain, as an Operating Expense, the following insurance:

(a)Property insurance covering all of Golf Manager’s personal property used in the Golf Manager’s business at the Golf Facilities.  The Property insurance required herein shall be written on an “all risk” or equivalent basis (including earthquake and boiler/machinery) at 100% Replacement Cost.

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(b)Workers’ Compensation insurance providing statutory Workers’ Compensation coverage and Employer’s Liability insurance with limits of not less than $500,000 bodily injury and $500,000 bodily injury disease for all Golf Facilities Employees.

(c)Employment Practices insurance with minimum limits of $1,000,000 per claim/$2,000,000 aggregate per policy period.

(d)Commercial Crime insurance including coverage for employee dishonesty, loss inside the Premises, loss outside the Premises, money orders, counterfeit currency and depositor’s forgery.  The limit for each of these coverages shall be not less than $250,000 per occurrence and $500,000 in the aggregate.

The Golf Facilities’ reasonable allocated cost of such insurance shall be reimbursable as part of the Centralized Services Fee, and included in Operating Expenses.

6.03General.  The cost of any or all of the insurance policies required by this Golf Agreement or actually provided by Owner with respect to the Golf Facilities shall be paid by Hotel Manager, from Resort revenues, on behalf of Owner, as an Operating Expense.  All insurance coverage required by Golf Manager shall include Hotel Manager (together with each partner or member in Hotel Manager as applicable), Owner, the holder of any superior lease, and any mortgagee and Golf Manager as additional insureds and shall be placed with reputable insurance companies reasonably acceptable to Hotel Manager and Owner.  All insurance policies shall contain an express waiver of subrogation against Hotel Manager, Owner or Golf Manager to the extent they are not an insured thereunder.  Any insurance required by Hotel Manager or Golf Manager hereunder may be provided under blanket policies of insurance.

Contemporaneously with execution of this Golf Agreement, each Party shall provide the other with certificates of insurance for the insurance provided by such Party, which certificates shall name the other Party as an additional insured as its interests appear with respect to the insurance required in this Article 6.  At least thirty (30) days prior to expiration of any insurance policy, the Party required to provide the same shall provide a replacement certificate evidencing that such insurance has been renewed or replaced in accordance with the requirements of this Article.  Each certificate shall provide the certificate holder with at least thirty (30) days notice of any nonrenewal or cancellation and in the event such notice is issued, the Party required to provide such insurance shall provide a replacement certificate satisfying the requirements of this Article within ten (10) days.  In the event of noncompliance by a Party with the foregoing requirements, in addition to all other rights and remedies that the other Party may have under this Golf Agreement, the other Party may provide the required coverage and obtain reimbursement, as appropriate, for the cost thereof from the noncomplying Party.

ARTICLE VII
GOLF MANAGER’S COMPENSATION

7.01Base Management Fee and Supplemental Fee.  In consideration of the performance of its management duties and obligations hereunder, and in addition to the amounts reimbursable to Golf Manager pursuant to Article 4.01 above, Hotel Manager or Owner shall pay to Golf Manager throughout the Term a “Base Management Fee” and a “Supplemental Fee”,

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provided in Articles 7.02 and 7.03 below.  Both the Base Management Fee and the Supplemental Fee are to be paid by Hotel Manager, on behalf of Owner, out of Resort revenues, or, if Resort revenues are insufficient, directly by Owner.  Hotel Manager shall have no personal obligation to pay such amounts to Golf Manager.  The Base Management Fee, but not the Supplemental Fee, shall be an Operating Expense under the Resort Management Agreement.

7.02Base Management Fee.  From and after the Effective Date, Golf Manager shall receive a Base Management Fee equal to two percent (2%) of Golf Operating Revenue, payable within fifteen (15) days after the end of each calendar month for the preceding calendar month (subject to annual adjustment upon submission of the Monthly Operating Report, including year-end financial information and audited financial statements) pursuant to Article 4.01(u).

7.03Supplemental Fee.  From and after the Effective Date, Golf Manager shall receive a Supplemental Fee equal to $800,000, payable as follows, without interest accruing thereon, until such time as the Supplemental Fee has been paid in full:

(i)From the Effective Date through the first anniversary date of the Effective Date, an amount equal to 0.5% of Golf Operating Revenue;

(ii)From the first anniversary date of the Effective Date through the remainder of the Term, an amount equal to 0.75% of Golf Operating Revenue; and

(iii)Commencing with the calendar year beginning January 1, 2005, if the Golf Operating Revenue during any calendar year during the Term is greater than $14,000,000, then Golf Manager shall be entitled to receive towards payment of the Supplemental Fee an amount equal to the following:  (A) 15% of any amount of Golf Operating Revenue between $14,000,000 and $14,499,999; (b) 17.5% of any amount of Golf Operating Revenue between $14,500,000 and $14,999,999; and (C) 20% of any Golf Operating Revenue in excess of $15,000,000.

The Hotel Manager shall pay, on behalf of Owner, the Supplemental Fee as soon as the items described in clauses (a) through (f) of Section 3.5.4 of the Resort Management Agreement have been paid, but before the items described in clauses (h) through (j) have been paid, as provided in the document attached hereto as Exhibit N (the capitalized terms used but not defined therein shall have the meaning ascribed to such terms in the Resort Management Agreement).  The Supplemental Fee payable with respect to subsections (i) and (ii) above shall be payable within thirty (30) days after the end of each calendar month for the preceding calendar month (subject to annual adjustment upon submission of the Monthly Operating Report, including year-end financial information and audited financial statements) pursuant to Article 4.01(u) after the Owner’s receipt thereof.  The Supplemental Fee payable with respect to subsection (iii) above shall be computed annually, based upon cumulative Golf Operating Revenue for the calendar year, and payment shall be made to Golf Manager within thirty (30) calendar days after the receipt by Owner of audited financial statements for such calendar year.

Except as otherwise provided in this Article 7.03, Article 8.03, and Article 8.04, upon the earlier of (i) April 30, 2010, or (ii) expiration or earlier termination of this Golf Agreement for any reason, including upon a termination of the Resort Management Agreement (and as a condition to any such expiration or earlier termination of this Golf Agreement), Owner

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shall pay to Golf Manager on April 30, 2010 or the expiration date or the effective date of such termination, as applicable, an amount equal to any amount remaining outstanding on the Supplemental Fee (i.e., the Supplemental Fee less any amounts previously paid to Golf Manager pursuant to this Article 7.03 prior to the expiration date or effective date of termination); provided, however, if this Golf Agreement is terminated as a result of an Event of Default on the part of Golf Manager in accordance with the terms of Article 15, neither Hotel Manager nor Owner shall be obligated to deliver to Golf Manager any amount remaining outstanding on the Supplemental Fee (except for any amounts that have been earned pursuant to this Article 7.03 but that remain unpaid as of the effective date of termination).

In addition, in the event Owner sells the Golf Facilities or the Resort (which shall include any “change in control” of Owner), subject to the following proviso, Owner shall pay to Golf Manager on the effective date of such sale (or “change in control”) any amount remaining outstanding on the Supplemental Fee; provided, however, no amounts shall be due from Owner in respect thereof if the transferee of the Golf Facilities or the Resort, as the case may be:  (a) agrees in writing to assume Owner’s obligations with respect to the Supplemental Fee; (b) has financial resources sufficient to enable it to satisfy the Owner’s obligations with respect to the Supplemental Fee; (c) is not generally recognized in the community as being of ill repute; and (d) has assumed and agreed to be bound by all of the terms of this Golf Agreement with respect to the obligations thereunder accruing from and after the effective date of Owner’s transfer of its obligations under this Golf Agreement to the transferee.  For purposes of this Article 7.03, a “change in control” is evidenced by the transfer of power to direct or cause the direction of the management and policies of Owner, whether through the direct or indirect ownership of more than 50% of the outstanding voting interests or securities of Owner, by contract or credit agreement or otherwise.  Notwithstanding anything in this Golf Agreement to the contrary, no change of control shall be deemed to have occurred in the event that Owner (or any of its Affiliates) causes a transfer to occur consistent with its formation of a liquidating trust.

In connection with the determination of the Management Fee and the Supplemental Fee payable to Golf Manager with respect to the Golf Facilities, Hotel Manager and Owner shall provide to Golf Manager such records and information with respect to the Golf Facilities as may be reasonably necessary for Golf Manager to calculate the Base Management Fee and Supplemental Fee.  In addition, Golf Manager shall have the right, at its sole cost and expense, to retain independent public accountants to consult with Hotel Manager’s or Owner’s independent public accountants (or its internal accounting department) to confirm the accuracy of the information related to the Management Fee and the Supplemental Fee.  In the event that, as a result of such examination, it is discovered that the Management Fee or Supplemental Fee has been overpaid or underpaid then the affected party shall return such overpayment, or pay such underpayment, as the case may be, within ten (10) calendar days after such delivery.

7.04Definitions.

(a)For purposes hereof, “Golf Operating Revenue” shall mean revenue and income of any kind derived from the following operations at the Golf Facilities: greens fees, cart fees, pro shop sales, club rental fees, member dues and initiation fees, lesson fees (only the portion received by the Golf Facilities, if services are provided by independent contractors), and revenues derived from On-Course Food and Beverage Operations (provided that and for so long

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as Golf Manager is responsible for on-course food and beverage operations), and determined in accordance with generally accepted accounting principles consistently applied (“GAAP”) which are properly attributable to the period under consideration, and specifically excluding the following, without limitation:

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

(ii)receipts from the financing, refinancing, sale, master lease or other disposition of capital assets or any portion of the Golf Facilities;

(iii)receipts from Taking awards or sales or other transfers in lieu of or under the threat of Taking, and other receipts in connection with any Taking, but only to the extent that such amounts are specifically identified as compensation for alterations or physical damage to the Golf Facilities;

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

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

(vi)discounts, rebates or credits of a similar nature (not including charge or credit card discounts paid to credit card companies, which shall not constitute a reduction from revenues in determining Golf Operating Revenue);

(vii)any credit for individual or business development-related complimentary golf (e.g., there shall be no credit toward Golf Operating Revenue for any complimentary golf); and

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

To the extent applicable, Golf Operating Revenue shall be calculated (and isolated from gross revenue for the rest of the Resort) according to the Uniform System of Accounts for Hotels, 9th Revised Edition, or such later editions as may be adopted by the International Association of Hospitality Accountants.

(b)For purposes hereof, “Operating Expenses” shall have the meaning provided in the Resort Management Agreement.  No such change to the definition of Operating Expenses in the Resort Management Agreement, shall occur which is materially prejudicial to Golf Manager without Golf Manager’s prior written approval, which approval may not be unreasonably withheld or delayed.

7.05Allocation of Revenue and Costs for Resort/Golf Packages.  The Parties acknowledge that Hotel Manager, Golf Manager and/or third parties from time to time

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arrange group bookings, special promotions and other “packaged” resort programs that include a combination of Resort accommodations and use of Resort facilities, including the Golf Facilities, at discounted prices.  To the extent the allocation of such revenues was not addressed in the Golf Facilities Annual Plan process, the Parties agree to allocate the revenues for such Resort packages, together with related commissions and other costs, on a case-by-case basis between the Golf Facilities and the Resort based upon market conditions and operations at the Resort and the Golf Facilities as a whole.  If there is a fundamental change in the way that Hotel Manager conducts its business with respect to the utilization of the Golf Facilities, or individual circumstances require a change, such that it is advantageous to the Resort and the Golf Facilities as a whole to allocate revenues between the Resort and the Golf Facilities in a way that was not contemplated in the Golf Facilities Annual Plan, and such allocation negatively impacts the Base Management Fee or the Supplemental Fee, then Hotel Manager and Golf Manager shall negotiate in good faith to modify the Golf Operating Revenue by providing a “credit” to Golf Operating Revenue that takes into account such change for purposes of calculating the Management Fee.

ARTICLE VIII
TERM OF GOLF AGREEMENT, POST-TERMINATION PROCEDURES, AND TERMINATION RIGHTS

8.01Term.  This Golf Agreement shall commence as of the Effective Date and shall continue in full force and effect, unless earlier terminated in accordance with its terms (including any termination under Article 9 below), until the fifth anniversary of the Effective Date (the “Term”).

8.02Without Cause Termination. At any time during the Term of this Golf Agreement,  Hotel Manager shall have the right, without cause, to terminate this Golf Agreement on not less than one hundred twenty (120) calendar days’ prior written notice; provided, however, in no event shall such termination occur without Owner’s prior written approval, which Owner may grant or not in its sole discretion.  As a condition to any termination pursuant to this Article 8.02, Owner shall pay to Golf Manager on the effective date of such termination, a lump sum termination fee (the “Termination Fee”) equal to (i) $50,000, plus any amount remaining outstanding on the Supplemental Fee, if the effective date of the termination occurs on or before December 31, 2005; or (ii) any amount remaining outstanding on the Supplemental Fee, if the effective date of the termination occurs after December 31, 2005.  The receipt of the Termination Fee, together with any amount due and owing Golf Manager pursuant to Article 8.04 below, shall be the sole and exclusive remedy available to Golf Manager against Hotel Manager and Owner (and their respective Affiliates) upon any termination of this Golf Agreement by Hotel Manager (and Owner’s prior written approval thereof) pursuant to this Article 8.02.  Nothing in this Article 8.02 shall be deemed to impair any right of Hotel Manager to terminate this Golf Agreement in accordance with the terms of Article 9.01.

8.03Deleted.

8.04Termination of Resort Management Agreement.

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(a)If Owner terminates the Resort Management Agreement pursuant to any of (i) Sections 4.3 (Termination for Failure to Achieve Performance Test), (ii) 7.2 (Termination after Substantial Insured Casualty), (iii) 7.3 (Substantial Uninsured Casualty – Owner’s Option to Terminate or Restore), (iv) 7.5 (Permanent Taking), or (v) 7.6 (Taking for Temporary Use) of the Resort Management Agreement, this Golf Agreement shall automatically terminate upon the effective date of the termination of the Resort Management Agreement.

(b)If the Resort Management Agreement is terminated pursuant to Section 4.2 (Event of Default) of the Resort Management Agreement, or for any reason other than as set forth in Article 8.04(a) above, this Golf Agreement shall automatically terminate unless Owner, within ten (10) days of the termination of the Resort Management Agreement for such reason(s), notifies Golf Manager that Owner has elected to succeed to all of the rights of the Hotel Manager hereunder, in which event Golf Manager shall attorn to the Owner and recognize Owner as successor to Hotel Manager hereunder, and Golf Manager shall execute any documents which Owner may require to effectuate the provisions of this Article 8.04(b).

(c)In the event of a termination of this Golf Agreement pursuant to Article 8.04(a)(i) above or as a result of an termination of the Resort Management Agreement pursuant to Section 4.3 of the Resort Management Agreement, neither Owner nor Hotel Manager shall be obligated to deliver to Golf Manager any amount remaining outstanding on the Supplemental Fee (except for any amounts that have been earned pursuant to Article 7.03 but that remain unpaid as of the effective date of termination) or any Termination Fee.  If the Resort Management Agreement is terminated for any reason other than as set forth in the immediately preceding sentence and the Golf Agreement is concurrently terminated, then Owner shall, upon the effective date of such termination of the Resort Management Agreement, deliver to Golf Manager any amount remaining outstanding on the Supplemental Fee.

8.05Termination of this Agreement.  If this Golf Agreement is terminated as a result of a taking pursuant to Article 10.02, or as a result of an Event of Default of Golf Manager under Article 9.01, neither Owner nor Hotel Manager shall be obligated to deliver to Golf Manager any amount remaining outstanding on the Supplemental Fee (except for any amounts that have been earned pursuant to Article 7.03 but that remain unpaid as of the effective date of termination) or any Termination Fee.

8.06Post-Termination Procedures.  On the effective date of any termination of this Golf Agreement, for any reason, Golf Manager shall immediately turn over to Hotel Manager (in the event the Resort Management Agreement has not been terminated)  all funds held for the Golf Facilities, all equipment, inventory, supplies and materials, and all originals of all books, records, permits, plans, leases, licenses, contracts and other documents and records in whatever form maintained (e.g., ledgers, computer files) relating to the Golf Facilities subject to the immediately following sentence, any other property of Hotel Manager or Owner or acquired with the funds of either or Operating Expenses, and such authorizations and letters of direction addressed to other persons as Hotel Manager may reasonably require; and Golf Manager shall fully cooperate with Hotel Manager in the transfer of management responsibilities to Hotel Manager or Owner, as directed, or their respective designee.  Upon the expiration, or earlier termination for any reason, of this Golf Agreement, Golf Manager may remove any documents that are proprietary to Golf Manager (e.g., copies of manuals, copies of software programs that

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can be removed without disruption of the continuous operation of the Golf Facilities and copies of internal correspondence of a proprietary nature).

Upon the expiration or earlier termination of this Golf Agreement, for any reason, Hotel Manager shall pay to Golf Manager (out of funds from the operation of the Resort or as may otherwise be provided by Owner) in addition to any other amounts due pursuant to this Golf Agreement, (i) its reasonable out-of-pocket costs (as may be approved by Owner in advance) incurred by reason of requests by Hotel Manager for assistance after termination or expiration of this Golf Agreement not otherwise required under this Golf Agreement or expected of Golf Manager in the orderly termination of its operations at the Golf Facilities, (ii) subject to the limitations contained in Articles 8.04 and 8.05 hereof, any unpaid fees and other charges and reimbursements then actually due Golf Manager under this Golf Agreement, and (iii) to the extent reasonable and consistent with Golf Manager’s standard practices and (subject to Hotel Manager’s reasonable approval) industry standards, termination related employee expenses, including sick, vacation, pension, bonus and termination payments to employees less any forfeitures of benefits previously paid for.  Golf Manager’s current policies related to these matters are attached hereto as Exhibit H and the same shall not be materially changed with respect to the Golf Facilities without prior written consent of Hotel Manager and Owner.

At the request of Hotel Manager, Golf Manager will cooperate to transition all or certain employees at the Golf Facilities to the employment of Hotel Manager or another golf manager selected and, to the extent feasible and legally permissible, the assumption of benefit obligations.  The Parties will comply with all applicable laws and legal requirements related to these matters, including, but not limited to, compliance with the WARN Act, in a manner that avoids any disruption of operation of the Golf Facilities.

To effectuate a smooth transition, at Hotel Manager’s cost, Golf Manager will further fully cooperate with Hotel Manager with respect to any open purchase orders; required or advisable insurance notifications; required or advisable credit card company notifications; pending litigation; required or advisable vendor and employee communications; removal of Golf Manager trademarks; public relations, publications, promotional materials and related items; transition of information technology; transition of telecommunication systems; transition of sales and marketing programs; transfer to Hotel Manager of any liquor licenses related to On-Course Food and Beverage Operations; and any other matters reasonably required by Hotel Manager.

This Article 8.06 shall survive the expiration or termination of this Golf Agreement.

ARTICLE IX
EVENTS OF DEFAULT

9.01Events of Default.  At any time during the Term of this Golf Agreement, if any of the following events (the “Events of Default”) occur and continue beyond the applicable grace period for curing such Event of Default (if any, as specified below), the non-defaulting Party may, at its option, terminate this Golf Agreement by giving notice to the defaulting Party specifying an effective date of such termination of not less than thirty (30) days after the date of such notice; provided, however, that in the case of termination by Golf Manager,

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the effective date of termination shall not be less than ninety (90) days unless Owner is willing to accept any lesser period of time.  Upon the occurrence of any Event of Default not subject to any grace period for curing such Event of Default, and at any time while such Event of Default is continuing, the Party not in default may declare this Golf Agreement to be immediately terminated.  Upon any termination pursuant to this Article 9.01, Golf Manager shall immediately vacate the Golf Facilities, subject to the post-termination procedures provided in Article 8.06 above.  Notwithstanding the foregoing, Hotel Manager may not terminate this Golf Agreement without the prior written consent of Owner.

(a)Any default by a Party in the payment of money due under this Golf Agreement that is not cured within thirty (30) days following notice thereof by the non-defaulting Party;

(b)Any breach by a Party of any representation, warranty or covenant contained in this Golf Agreement (including, without limitation, the provisions of Section 4.01(g) relating to compliance with the Golf Facilities Annual Plan), or any failure by a Party to perform or observe any of the provisions of this Golf Agreement (other than any obligations expressly excluded) if such failure either (i) cannot be remedied, (ii) can be remedied within thirty (30) days, following written notice by prompt and diligent action, but continues unremedied for a period of thirty (30) days after notice thereof to such Party, or (iii) can be remedied, although not within thirty (30) days even by prompt and diligent action, but such remedy is not commenced within fifteen (15) days after notice thereof to such Party or is not diligently prosecuted to completion within a total of ninety (90) days from the date of such notice;

(c)The filing by a Party or its parent corporation or company (or by any general partner of such Party or its general partner) of any proceeding under the federal bankruptcy laws now or hereafter existing or any other similar statute now or hereafter in effect (or against a party to which the Party acquiesces or that is not dismissed within forty-five (45) days after the filing thereof); the entry of an order for relief under such laws with respect to a Party; or the appointment of a receiver, trustee, custodian or conservator of all or any part of the assets of a Party;

(d)The insolvency of a Party or its parent corporation or company (or of any general partner of such Party or its general partner); or the execution by a Party of an assignment for the benefit of creditors; or the convening by a Party of a meeting of its creditors; or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts;

(e)The admission in writing by a Party that it is unable to pay its debts as they mature or that it is generally not paying its debts as they mature;

(f)Any attachment or garnishment of, or the existence or filing of any lien or encumbrance against, any portion of the Resort caused by Golf Manager that is not removed or released within forty-five (45) days after its creation, unless Golf Manager is contesting such lien or encumbrance in good faith and has posted bonds or other appropriate security in amounts sufficient to ensure that such liens or encumbrances shall not impair Owner’s title to or Hotel Manager’s interest in any portion of the Resort;

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(g)The institution of any legal action or proceedings to enforce any lien or encumbrance upon any portion of the Resort caused by Golf Manager that, is not dismissed within forty-five (45) days after its institution, unless (in the case of any action or proceedings as to which no judgment has yet been rendered Golf Manager is contesting such legal action or proceedings in good faith and has provided security satisfactory to Hotel Manager and Owner to ensure that neither Hotel Manager nor Owner, nor Owner’s title to or Hotel Manager’s interest in, the Resort shall be adversely affected by such legal action or proceedings in the sole judgment of Owner and Hotel Manager;

(h)The abandonment by Golf Manager of all or any part of the Golf Facilities.

(i)The Golf Manager transfers this Golf Agreement or subcontracts the performance of its duties hereunder in breach of Article 12.01(a) hereof.

(j)The failure of the Golf Manager to comply with the covenant not to compete set forth in Article 14.07 herein.

9.02Remedies and Enforcement.  In addition to any remedies provided herein for an Event of Default, the non-defaulting Party shall have all other legal or equitable remedies allowed under applicable law, except that each Party voluntarily waives and relinquishes any right or ability to obtain punitive or exemplary damages.  No failure on the part of a Party to exercise any of its rights hereunder arising on any Event of Default shall prejudice its rights on the occurrence of any other or subsequent Event of Default.  No delay on the part of a Party in exercising any such rights shall preclude it from the exercise thereof at any time while that Event of Default is continuing.  A Party may enforce any one or more remedies or rights hereunder successively or concurrently.  By accepting late performance of any of the obligations, a Party shall not thereby waive the agreement contained herein that time is of the essence, nor shall a Party waive either its right to require prompt future performance or its right to consider the failure to so perform an Event of Default.  ANYTHING HEREIN CONTAINED, AND ANYTHING AT LAW, TO THE CONTRARY NOTWITHSTANDING, IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES (INCLUDING, WITHOUT LIMITATION, ANY ARBITRATION PROCEEDING) ARISING UNDER OR WITH RESPECT TO THIS GOLF AGREEMENT OR IN ANY MANNER PERTAINING TO THE GOLF FACILITIES, EACH PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES AND RELEASES ANY RIGHT, POWER OR PRIVILEGE EITHER MAY HAVE TO CLAIM OR RECEIVE FROM THE OTHER PARTY HERETO ANY PUNITIVE OR EXEMPLARY DAMAGES, EACH PARTY ACKNOWLEDGING AND AGREEING THAT THE REMEDIES HEREIN PROVIDED, AND OTHER REMEDIES AT LAW AND IN EQUITY, WILL IN ALL CIRCUMSTANCES BE ADEQUATE.  THE FOREGOING WAIVER AND RELEASE SHALL APPLY IN ALL ACTIONS OR PROCEEDINGS BETWEEN THE PARTIES UNDER OR RELATING TO THIS GOLF AGREEMENT AND FOR ALL CAUSES OF ACTION OR THEORIES OF LIABILITY FOR BREACH OF THIS GOLF AGREEMENT OR BASED UPON THE RELATIONSHIP OF THE PARTIES CREATED HEREBY.  BOTH PARTIES FURTHER ACKNOWLEDGE THAT THEY ARE

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EXPERIENCED IN NEGOTIATING AGREEMENTS OF THIS SORT, HAVE HAD THE ADVICE OF COUNSEL IN CONNECTION HEREWITH, AND HAVE BEEN ADVISED AS TO, AND FULLY UNDERSTAND, THE NATURE OF THE WAIVERS HEREIN CONTAINED.

ARTICLE X
DAMAGE OR DESTRUCTION; EMINENT DOMAIN

10.01Damage or Destruction.  Golf Manager shall promptly notify Hotel Manager and Owner upon learning of any potential or actual damage to or destruction of the Golf Facilities.  If any part of the Golf Facilities is damaged or destroyed, at Owner’s option, Golf Manager, in addition to the other duties enumerated herein, shall cause such damage to be repaired at Owner’s expense according to Golf Manager’s discussions with and instructions of Hotel Manager and Owner (including an approved budget therefore) and as provided in this Golf Agreement.  Alternatively, Owner may conduct such repairs with the full cooperation of Golf Manager, or Owner may determine not to perform such repairs, to rebuild in a manner different from pre-existing improvements or some combination thereof, pursuant to the Resort Management Agreement.

In the event Golf Manager is to proceed with repairs, Golf Manager, in coordination with Owner’s consultants, contractors, architects and other consultants, shall inspect, monitor and supervise all reconstruction or repair work on a periodic basis to ensure that the Golf Facilities is being repaired orderly, efficiently, and all in a manner approved in writing in advance by Hotel Manager, and Golf Manager shall advise and consult with Hotel Manager at such times as Hotel Manager shall request with respect to such reconstruction or repair.  The fees payable to Golf Manager for such activity shall be determined in an agreement between Owner and Golf Manager and shall not be included in the determination of “Operating Expenses” under the Resort Management Agreement.

Golf Manager acknowledges and agrees that the Owner has the right, in certain circumstances, to terminate the Resort Management Agreement following damage to or destruction of the Golf Facilities and that, pursuant to Section 8.04 hereof, such termination of the Resort Management Agreement will operate to automatically terminate this Golf Agreement.

10.02Eminent Domain.  After June 30, 2005, this Golf Agreement may be terminated by either Party on the date of a taking (no grace period shall apply) of either a fee interest in or a perpetual easement on, or a temporary use of for more than sixty (60) consecutive days, all or any part of the Golf Facilities that results in the Golf Facilities having less than eighteen (18) holes.  For purposes of this Golf Agreement, the term “Taking” shall mean a taking as a result of condemnation or eminent domain, or a conveyance by Owner in lieu thereof, of all or part of the Golf Facilities.  Golf Manager acknowledges and agrees that the Owner has the right, in certain circumstances, to terminate the Resort Management Agreement following a “Taking” (as defined therein) of the Golf Facilities and that, pursuant to Section 8.05 hereof, such termination of the Resort Management Agreement will operate to automatically terminate this Golf Agreement.

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ARTICLE XI
COMMUNICATIONS FROM THIRD PERSONS

11.01Communications From Third Persons.  Golf Manager shall advise Hotel Manager and Owner immediately in person, by telephone, facsimile or hand delivery, with prompt confirmation by mail (including the sending of the document received by Golf Manager) of the service on Golf Manager of any summons, subpoena or similar legal document, or of the receipt by Golf Manager of any notices, letters or other communications setting forth or claiming any (i) actual or alleged potential criminal activity of Hotel Manager, Owner, or the Golf Facilities, or (ii) actual or alleged potential civil liability of Hotel Manager, Owner or the Golf Facilities in excess of Five Thousand Dollars ($5,000).  All other notices, letters or other communications related to any actual or potential liability shall be brought to the attention of the Hotel Manager’s general manager by Golf Manager no less often than weekly, together with concurrent copies to Owner.  At Hotel Manager’s option and upon reasonable notice to Golf Manager, any or all of these items shall be required to be brought to the attention of another representative of Hotel Manager, in lieu or in addition to the general manager.

ARTICLE XII
ASSIGNMENT

12.01Assignment by Golf Manager.

(a)This Golf Agreement is personal to Golf Manager, and Golf Manager agrees that, except as provided in this Article 12.01, it shall not transfer this Golf Agreement or subcontract the performance of its duties hereunder, either voluntarily or by operation of law, without the advance written consent of Owner and Hotel Manager, which consent may be withheld in Owner’s or Hotel Manager’s sole discretion.  A “transfer” shall include a change in control of Golf Manager as evidenced by the transfer of the power to direct or cause the direction of the management and policies of Golf Manager, whether through the direct or indirect ownership of more than 50% of the outstanding voting interests or securities of Golf Manager, by contract or credit arrangement or otherwise, but shall exclude a public offering by Golf Manager of its securities pursuant to the Securities Act of 1933, as amended or any successor statutory provision.  Golf Manager shall have the right, without the consent (but upon written notice to, together with all legal documents) of Owner or Hotel Manager, to assign this Golf Agreement, whether by operation of law or otherwise,

(i)to any wholly owned subsidiary of Golf Manager, or

(ii)in connection with the sale of Golf Manager (whether by sale of substantially all of Golf Manager’s assets, a change in control of Golf Manager resulting from a transfer or issuance of member interest, partnership interest or stock, a merger, a consolidation or otherwise),

provided, however, that in any such case the assignee/transferee thereafter (i) continues to operate the golf course and club management business of Golf Manager; (ii) has, on a pro forma basis, for the twelve months ending immediately prior to the assignment a net worth that equals or exceeds the average of Golf Manager’s net worth at the end of its preceding two (2) calendar

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years, and (iii) retains and employs not less than two thirds (2/3) of Golf Manager’s Key Employees, and, in addition (but included in such two thirds (2/3) calculation), at least one of the chief executive officer or chief operating officer, for at least twelve (12) months following the assignment or transfer, such Key Employees remaining in positions of authority and responsibility comparable to the positions held by such individuals prior to Golf Manager undertaking the negotiations that led to the assignment or transfer.  For the purposes hereof, “Key Employees” shall mean the corporate employees of Golf Manager holding the title of Senior Vice President or higher.  Hotel Manager shall have the right to terminate this Golf Agreement if any of conditions (i), (ii) or (iii) above are not satisfied continually or for the stated period.

(b)As a condition precedent to an assignment, any assignee shall assume and agree in an Assignment and Assumption reasonably acceptable to Hotel Manager to be bound by all of the terms and provisions of this Golf Agreement for the benefit of Owner and Hotel Manager.  No Assignment and Assumption shall constitute or result in a release of Golf Manager from continuing responsibility and liability hereunder, jointly and severally with the assignee.  In the event Golf Manager is required under the terms of this Article 12.01 to seek the consent of Owner to a transfer in connection with a change of control, Golf Manager shall give to Owner and/or Hotel Manager written notice seeking such consent and Owner and Hotel Manager shall have sixty (60) days within in which to respond to such notice. In the event Golf Manager seeks such consent and Owner or Hotel Manager declines to so consent, if Golf Manager elects to proceed with such transfer, then Owner and Hotel Manager shall have the right to terminate this Golf Agreement.  Owner and Hotel Manager may exercise such right to terminate by sending written notice to Golf Manager to terminate at any time on or before the date that is ninety (90) days after Golf Manager’s and Owner’s receipt of notification from the Golf Manager regarding the consummation of such transfer.  The notice of election to terminate shall specify the effective date of the termination.  In the event Golf Manager attempts or completes an assignment that does not comply with this Article 12.01, such assignment or subcontracting shall be void, and Golf Manager shall be deemed to have committed a non-curable breach of this Golf Agreement.

12.02Assignment by Hotel Manager.  In the event Hotel Manager assigns its rights and obligations under the Resort Management Agreement to a third party in accordance with the provisions of Section 9.2 of the Resort Management Agreement, Hotel Manager shall have the right to concurrently assign its rights and obligations under this Golf Agreement to such assignee, subject to satisfaction of the terms and conditions set forth in Section 9.2 of the Resort Management Agreement.

12.03Assignment by Owner.  Owner may assign its rights under this Golf Agreement by contract, operation of law or otherwise, to any assignee of Owner’s rights under the Resort Management Agreement; provided that such assignee is a permitted assignee/transferee under Section 9.3 of the Resort Management Agreement.  Golf Manager and Hotel Manager shall recognize any such assignee of or successor to Owner as “Owner” under this Golf Agreement with all of the rights afforded to Owner hereunder, and will execute, within fifteen (15) days after recent, any documents which such assignee or successor to Owner may require to effectuate the provisions of this Article 12.03.  Notwithstanding the foregoing, upon the occurrence of (i) a transfer of (but not independent of) all or substantially all of Owner’s interest in the Golf Facilities or the Resort, or (ii) a “change in control” (as defined in Section

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7.03 above), Owner shall pay to Golf Manager any amount remaining outstanding on the Supplemental Fee (as defined in Section 7.03 above); provided, however, no amounts shall be due from Owner in respect thereof if the transferee of the Golf Facilities or the Resort, as the case may be:  (a) agrees in writing to assume Owner’s obligations with respect to the Supplemental Fee; (b) has financial resources sufficient to enable it to satisfy the Owner’s obligations with respect to the Supplemental Fee; (c) is not generally recognized in the community as being of ill repute; and (d) has assumed and agreed to be bound by any of Owner’s then applicable obligations under this Golf Agreement with respect to the obligations thereunder accruing from and after the effective date of Owner’s transfer of its obligations under this Golf Agreement to the transferee.

12.04Effect of Permitted Assignment.  Any consent to a permitted assignment pursuant to this Article XII  shall not be deemed to be a consent to any future assignment or waiver of the requirement that consent be obtained for any further assignment.  Upon the completion of any permitted assignment hereunder , the assigning party shall be relieved of all liabilities and obligations under this Golf Agreement based on acts or omissions occurring on or after the effective date of the assignment; provided that no permitted assignment shall relieve the assigning party from its liabilities or obligations under this Golf Agreement based on acts or omissions occurring  prior to the effective date of the assignment .

ARTICLE XIII
TRADEMARKS

13.01Hotel Manager Trademarks.

(a)The Resort, including the Golf Facilities, is to be operated under the name “The Westin Innisbrook Golf Resort” and Hotel Manager approves the same and represents that it has the power and authority to do so.  Accordingly, Golf Manager shall market and operate the Golf Facilities under the name “The Westin Innisbrook Golf Resort” and shall use the “Troon” name in connection with the Golf Facilities only in connection with Golf Manager’s corporate marketing as described in Article 4.01(y) above, or as expressly permitted by Hotel Manager, as provided in this Article 13.

(b)Hotel Manager and/or an affiliate represent and warrant that they are the owner or licensee of the trade names, trademarks, service marks and copyrights associated with the names “WESTIN”, “STARWOOD HOTELS & RESORTS WORLDWIDE, INC.”, “STARWOOD HOTELS”, and other Starwood trademarks and logos (the “Starwood Marks”), including, but not limited to (x) the Westin trademarks and logos (the “Westin Marks”) and (y) the Sheraton trademarks and logos (the “Sheraton Marks”), all of which marks are referred to collectively as the “Affiliation Marks.”  Hotel Manager hereby grants to Golf Manager the right to use the Starwood Marks and the Westin Marks in the operation of the Golf Facilities and the conduct of business therein subject to the terms and conditions set forth in this Golf Agreement and for so long as the Resort Management Agreement exists.  Golf Manager shall not have the right to use the Starwood Marks or the Westin Marks in any other way, and shall have no right to use any of the other Affiliation Marks.  The standards for use and reproduction of the Starwood Marks and the Westin Marks are attached as Exhibit I and Exhibit J, respectively.

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(c)Golf Manager shall maintain the quality of the services provided in conjunction with the Affiliation Marks at a level which is satisfactory to Hotel Manager and at all times in compliance with the specifications furnished by Hotel Manager, which level and specifications shall be reasonably consistent with those ordinarily observed by, and imposed upon, other operations at the Resort and other first-class resorts with golf facilities in the Tarpon Springs, Florida area.  Hotel Manager shall have the right to enter the Golf Facilities at any time during normal business hours for the purpose of ensuring that Golf Manager is in fact complying with the requirements of this Golf Agreement.

(d)The rights granted to Golf Manager in this Article 13 shall be non-assignable and, upon any assignment or attempted assignment of such rights by Golf Manager, all of the Golf Manager’s rights under this Article 13 shall be immediately forfeited and terminated.

(e)Golf Manager acknowledges that Hotel Manager is the owner or licensee of all right, title and interest in and to the Affiliation Marks and the good will associated therewith, and Golf Manager agrees never to contest Hotel Manager’s title thereto or the validity of any service mark, trademark or trade name application for registration therefor filed or registration therefor obtained by Hotel Manager.  Golf Manager agrees to execute any and all documents necessary to maintain all of Hotel Manager’s rights in the Affiliation Marks and to complete any other actions necessary to perfect Hotel Manager’s rights in the Affiliation Marks.  All use of the Affiliation Marks by the Golf Manager shall inure to the benefit of Hotel Manager.  Golf Manager acknowledges that Golf Manager shall acquire no ownership rights in the Affiliation Marks through the use thereof and that any and all rights that may arise through Golf Manager’s use of the Affiliation Marks are the sole and exclusive property of Hotel Manager.

(f)Hotel Manager shall have the exclusive right to determine the existence of infringement of the Affiliation Marks and Golf Manager shall have no right whatsoever to file or maintain a suit for infringement of the Affiliation Marks.

(g)Hotel Manager may require Golf Manager to use the Hotel Manager’s designated trademark or copyright notation either on or, as appropriate, adjacent to the Affiliation Marks and on all advertising or promotional literature upon which the Affiliation Marks appear.

(h)Golf Manager shall not use any Affiliation Marks, or make any reference to the existence or terms of this Golf Agreement, in any publicity or advertising without the prior approval of Hotel Manager, which approval may be withheld in Hotel Manager’s sole discretion.

(i)Upon termination of the Golf Agreement, Golf Manager agrees to immediately discontinue all use of the Affiliation Marks and to refrain from using any trade name, trademark or service mark confusingly similar to the Affiliation Marks.

13.02Golf Manager Trademarks.

(a)Except as described in Article 4.01(y) or as expressly approved by Hotel Manager, Golf Manager shall not use the name “Troon” or any other trademark or logo owned by Golf Manager in connection with the identification, promotion or operation of the Golf

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Facilities, nor shall Golf Manager include merchandise with the “Troon” logo in the inventory of the retail facilities within the Golf Facilities, it being understood, as provided above, that the Golf Facilities are to be marketed and operated under the name “The Westin Innisbrook Golf Resort.”  Subject to Hotel Manager’s consent, in its sole discretion, Golf Manager’s “Troon” logo may be included in an approved secondary location and size on apparel sold at the Golf Facilities.

(b)In the event Hotel Manager consents to any use of the “Troon” name in any manner in connection with the identification, promotion, or operation of the Golf Facilities, the following general provisions shall apply:

(i)Hotel Manager acknowledges that Golf Manager is the owner or licensee of all right, title and interest in and to or is the licensee of the trademark Troon®, and others (the “Troon Marks”) and the good will associated therewith, and Hotel Manager agrees never to contest Golf Manager’s title thereto or the validity of any service mark, trademark or trade name application for registration therefor filed or registration therefor obtained by Golf Manager.  Hotel Manager agrees to execute any and all documents necessary to maintain all of Golf Manager’s rights in the Troon Marks and to complete any other actions necessary to perfect Golf Manager’s rights in the Troon Marks.  All use of the Troon Marks by the Hotel Manager shall inure to the benefit of Golf Manager.  Hotel Manager acknowledges that Hotel Manager shall acquire no ownership rights in the Troon Marks through the use thereof and that any and all rights that may arise through Hotel Manager’s use of the Troon Marks are the sole and exclusive property of Golf Manager.

(ii)Golf Manager shall have the exclusive right to determine the existence of infringement of the Troon Marks and Hotel Manager shall have no right whatsoever to file or maintain a suit for infringement of the Troon Marks.

(iii)Hotel Manager shall not use any Troon Marks, or make any reference to the existence or terms of this Golf Agreement, in any publicity or advertising without the prior approval of Golf Manager, which approval may be withheld in Golf Manager’s sole discretion.

(iv)Upon termination of the Golf Agreement, Hotel Manager agrees to immediately discontinue all use of the Troon Marks and to refrain from using any trade name, trademark or service mark confusingly similar to the Troon Marks.

13.03Trademarks.  Golf Manager shall comply with the terms and provisions of Article 11 of the Resort Management Agreement with respect to the “The Westin Innisbrook Golf Resort” name.

ARTICLE XIV
OTHER AGREEMENTS

14.01Customer Lists.  Hotel Manager and Owner has unlimited access to guest information relating directly to the Golf Facilities and Resort, and may use such information for any purpose.  Golf Manager shall make available to Hotel Manager and Owner its guest

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information relating to the Golf Facilities for use as determined by Hotel Manager as Owner, as the case may be.

Golf Manager shall have access to and may use lists of Golf Facilities patrons to perform its obligations under this Golf Agreement, but in no event may Golf Manager use such information to promote Affiliated Facilities or the preferred customer program operated by Golf Manager, except as expressly authorized below, or make such lists or related data available to third parties.  Hotel Manager may specifically authorize Golf Manager to use such information, and/or Hotel Manager may provide access to Golf Manager to guest information relating to the Resort for persons who do not use the Golf Facilities, and/or guest information from other projects managed by Hotel Manager or affiliates, pursuant to the express written terms of a Cross Marketing Program.  Golf Manager and its affiliates shall make no use of and shall have no rights to such data after the completion of the specific Cross Marketing Program, and in no event may such data or any derivative data be used by Golf Manager and its affiliates after expiration or termination of the Term except to the extent that such persons have responded to such a Cross Marketing Program.

Golf Manager may provide access to its customer data relating to other properties pursuant to the express terms of a Cross Marketing Program; provided, however, that Hotel Manager and its affiliates shall make no use of and shall have no rights to such data after the completion of the specific Cross Marketing Program and in no event may such data or any derivative data be used by Hotel Manager and its affiliates after expiration or termination of the Term except to the extent that such persons have responded to such a Cross Marketing Program.

For purposes of this Article 14.01, “Cross Marketing Program” shall mean advertising and other promotional efforts conducted on a one-time basis or conducted over time, conducted in each instance pursuant to parameters agreed to in advance in writing by Hotel Manager and Golf Manager.  Either party may at any time withdraw approval for future advertising or other promotional efforts under a cross marketing program or require changes thereto.

With respect to data for which access is terminated as provided above, the Party required to terminate access thereto shall provide reasonable notice of such termination to the other Party.

14.02Estoppel Certificates.  On request at any time, and from time to time, during the term of this Golf Agreement, either Party shall execute, acknowledge, and deliver to the other Party or any mortgagee of the Golf Facilities, within five days following such Party’s receipt of written request therefor, a certificate:(i) certifying that this contract has not been modified and is in full force and effect, (or, if there have been modifications, that the same is in full force and effect as modified and specifying the modification); (ii) stating whether, to the best knowledge of the signatory of such certificate, any default exists, including any Event of Default, and if so specifying each default of which the signatory may have knowledge; and (iii) providing any additional information reasonably requested by such Party or Owner or a mortgagee; provided, however, in no event shall any Party be required to agree to any modifications or waivers with respect to the Golf Agreement or other agreements then in effect between Hotel Manager and Golf Manager.

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14.03Course Closure.  In order to coordinate use of the Golf Facilities, the Golf Manager and Hotel Manager shall agree as long as possible in advance on the period when each golf course shall be closed for seeding or other necessary purposes.

14.04Use of Golf Facilities by Hotel Manager.  Hotel Manager’s executive staff (general manager, operations manager, director of sales and marketing, controller, and their guests) and Owner’s board of directors, executives, staff and their guests, shall be able to play golf without charge for greens and cart fees at times when tee times are available.  Hotel Manager’s sales and marketing staff and their sales prospects and convention and event planners shall be able to play golf without charge for greens and cart fees in connection with a legitimate business development effort when approved in writing by the director of sales and marketing, the general manager or the operations manager, and when tee times are available.

14.05Unrecovered Charges.  Unrecovered charges (i.e., unpaid Guest bills) shall be proportionately allocated back to the sources of the charges.  In addition, Hotel Manager, including Hotel Manager’s customer service staff, shall have the authority to resolve Guest-related complaints involving the Golf Facilities without the consent of the Golf Manager, including by refunding or discounting Golf Facilities (greens and cart fees) charges and other reparations.  Golf Manager will fully cooperate with Hotel Manager, including providing required information to enable Hotel Manager to resolve complaints consistent with Hotel Manager’s policies and determinations.  The Golf Facilities will proportionately participate in Hotel Manager’s internal charges for addressing complaints by a charge to Operating Expenses, based on the Golf Facilities’ relative share of charges subject to the complaint.

14.06Relocation of Troon Institute.  In the event that portion of the Resort known as “Parcel F” is sold during the Term of this Agreement, Golf Manager agrees that it shall cooperate in any request from Owner or Hotel Manager to relocate the Troon Golf Institute from its current location as shown on Exhibit K attached hereto to the location shown on Exhibit L attached hereto at Owner’s expense and on terms and conditions to be agreed upon by Golf Manager, Hotel Manager and Owner.

14.07Non-Competition.  Golf Manager shall not, during the Term of this Golf Agreement, without Owner’s prior written approval in each instance, which may be withheld in Owner’s sole and absolute discretion, enter into any new management or consulting agreements for or relating to, or make any new investment in, any “golf destination resort” located within a fifty (50) mile radius of the Resort (the “Radius Restriction”), along with any of the following golf destination resorts:  (i) PGA National Golf Resort, (ii) Saddlebrook Resort, (iii) Marriott Sawgrass Resort, (iv) Grand Cypress Resort, and (v) PGA Village, Port St. Lucie (regardless of whether such resorts fall inside or outside of the Radius Restriction); provided, however, the sole exception to the prohibition against Golf Manager entering into a management or consulting agreement for or at any golf destination resorts subject to the Radius Restriction or with respect to the aforesaid five (5) golf destination resorts shall be with respect to any of the aforesaid golf destination resorts during the period that they may be owned by either of Starwood Hotels & Resorts Worldwide, Inc. or Goldman Sachs & Co., or entities controlled by either or both of such persons.  In the event Golf Manager obtains and proceeds to enter into any such management or consulting agreement, Golf Manager shall pay to Owner within thirty (30) days after Golf Manager’s actual receipt thereof (without demand, deduction, offset or delay) a royalty equal to

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20% of the management fee or consulting fee income received by Golf Manager from such management or consulting agreement during the Term of this Golf Agreement.  The Parties acknowledge and agree that any breach by Golf Manager of this Article 14.07 may result in irreparable injury to Owner and, therefore, Golf Manager agrees and consents that, in addition to any other remedies that may be available to it at law or equity (which shall include, without limitation, the right to seek monetary damages (including, without limitation, the right to seek damages related to lost profits at the Resort) which may be greater than the amount paid by Hotel Manager to Golf Manager under this Golf Agreement), as well as the termination of this Golf Agreement, Hotel Manager or Owner shall be entitled to a temporary restraining order and a permanent injunction to prevent a breach or contemplated breach of this Article 14.07.  For the purposes hereof, a “golf destination resort” shall mean a golf course or courses physically integrated with a lodging component (which shall include transient lodging (e.g., a traditional hotel) along with rental pool, timeshare or interval ownership, facilities) and that are together marketed as a golf destination, and at which guests of the lodging component, utilize more than 40% of the tee times (determined on a historical basis at an existing golf facility and on the developer’s development pro forma for a golf facility under construction) available at such golf facility in any year.  Notwithstanding anything to the contrary in the foregoing, this Article 14.07 shall not be applicable to golf facilities that are exclusively private clubs (i.e., golf facilities that have neither a resort play or other public play component). Golf Manager agrees that the terms of this Article 14.07 (including, without limitation, the duration and the Radius Restriction) are reasonable and that any breach of or default by Golf Manager of this Section 14.07 will cause damage to Hotel Manager and Owner in an amount difficult to ascertain.  Accordingly, notwithstanding anything to the contrary herein, in addition to any other relief to which Hotel Manager and Owner may be entitled, Hotel Manager and/or Owner shall be entitled, without proof of actual damages, to such injunctive relief as may be ordered by any court of competent jurisdiction, including, without limitation, any injunction restraining any violation of this Section 14.07.

14.08Mortgage.  Golf Manager acknowledges thatOwner shall have the right to encumber all of the assets that comprise the Resort, any part thereof, or any interest therein, including the real estate on which the Resort is to be constructed, the Resort building and all improvements thereto, all receivables relating to the Resort and all FF&E and hotel equipment and operating supplies placed in or used in connection with the operation of the Resort as contemplated in any mortgage that is entered into by Owner, and to assign to any mortgagee as collateral security for any loan secured by the mortgage, all of Owner’s right, title, and interest in and to this Golf Agreement.

14.09SNDAs.  Golf Manager agrees that, upon request of Owner, Golf Manager shall execute one or more subordination, non-disturbance and attornment agreement(s) in the form attached hereto as Exhibit M.

ARTICLE XV
DISPUTE RESOLUTION

15.01Alternative Dispute Resolution Required.  Except as otherwise permitted under Article 14.07, the Parties shall resolve any dispute that may arise in connection with this Golf Agreement through a two-step resolution process administered by

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J.A.M.S./Endispute, Inc. or its successors and according to the procedures set forth in Article 10 of the Resort Management Agreement.

ARTICLE XVI
MISCELLANEOUS PROVISIONS

16.01Miscellaneous.

(a)Benefit of Owner.  The Parties understand and agree that each of the representations and warranties of each of the Parties set forth herein are for the benefit of Owner and that Owner is relying on the truth, accuracy and completeness of such representations and warranties in its execution and delivery of this Golf Agreement.  The Parties further agree that Owner is a third party beneficiary of this Golf Agreement, and the Parties shall not amend, restate, modify, terminate or waive any provision hereof without Owner’s prior written consent in each instance, which consent may be denied in Owner’s sole and absolute discretion.

(b)Unenforceability.  Unenforceability for any reason of any provision of this Golf Agreement shall not limit or impair the operation or validity of any other provision of this Golf Agreement; provided, however, that in lieu of such unenforceable provision, there shall be added automatically as a part of this Golf Agreement a provision as similar in terms to such unenforceable provision as may be possible and be enforceable.

(c)Counterparts.  This Golf Agreement may be executed in any number of counterparts, and by each Party hereto in separate counterparts, each of which when executed shall be deemed to be an original instrument, but all of which together shall constitute one and the same instrument.

(d)Cooperation.  The Parties shall cooperate with each other to execute and deliver such instruments and documents and take such actions as may be required, or as a party may reasonably deem desirable, to effectuate the provisions and intent of this Golf Agreement.  The Parties agree to cooperate with each other in the management of the Golf Facilities as provided herein, and each Party shall endeavor, in good faith, to promptly resolve any conflicts or issues that arise under this Golf Agreement.  Golf Manager’s duty to cooperate shall extend to cooperating with Hotel Manager in any disputes with Owner concerning the operation of the Golf Facilities and may require Golf Manager to participate in mediation or arbitration, but any costs or expenses incurred by Golf Manager in connection with its participation in such disputes or proceedings at the request of Hotel Manager shall be reimbursed to Golf Manager by Hotel Manager or Owner.

(e)Non-Waiver.  Failure of either Party to exercise any right hereunder or to enforce any breach hereof shall not operate as a waiver of such right or breach or of any other right or breach.  Failure on the part of either Party to notify the other Party of any breach or default hereunder, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights or remedies under this Golf Agreement.

(f)Entire Agreement.  This Golf Agreement represents the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings of the Parties concerning the same.  No provision of this Golf Agreement

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shall be waived or altered or otherwise amended except pursuant to an instrument in writing signed by the Party to be charged and no consent to any departure by any Party from the provisions of this Golf Agreement shall be effective except pursuant to an instrument in writing signed by the party who is claimed to have so consented and then such consent shall be effective only in the specific instance and for the specific purpose for which given.

(g)Attorneys’ Fees.  In the event suit is brought or an attorney is retained by either Party to this Golf Agreement to enforce the terms of this Golf Agreement or to collect for the breach hereof or for the interpretation of any provision herein in dispute, the prevailing Party shall be entitled to recover, in addition to any other remedy, reasonable attorneys’ fees, court costs, costs of investigation and other related expenses incurred in connection therewith.  If suit is commenced, attorneys’ fees shall be fixed by the court.

(h)Interpretation.  This Golf Agreement shall be construed according to its fair meaning and neither for nor against either Party hereto irrespective of which Party caused the same to be drafted.  Each of the Parties acknowledges that it has been, or has had the opportunity to be, represented by an attorney in connection with the preparation and execution of this Golf Agreement.  The section headings in this Golf Agreement shall not affect its interpretation.

(i)Binding Effect.  This Golf Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns.  Except as expressly provided herein, no person or entity other than the Parties hereto shall obtain any rights or benefits under or by virtue of this Golf Agreement.

(j)Controlling Law.  This Golf Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina without regard to its choice of law principles.

(k)Capacity.  Each person signing below represents and warrants that he or she is fully authorized to execute and deliver this Golf Agreement in the capacity set forth beneath his or her signature.

(l)Owner’s Approval.  In any instance where Owner’s prior written approval is required under this Golf Agreement, Golf Manager may accept Hotel Manager’s representation that such Owner’s approval has been obtained by Hotel Manager unless Owner advises Golf Manager in writing to the contrary, excepting, however, in the case of the provisions in Sections 4.01(g), 4.01(s), 5.01, 8.02, 8.03, 9.01, 10.01, 12.01 and Article XXIV, and in the case of any amendment or termination of this Golf Management Agreement, Owner’s actual, direct written approval shall be required.

(m)Telecopy Signatures.  Signatures to this Golf Agreement transmitted by telecopy shall be valid and effective to bind the Party so signing; provided, however, that such party shall thereafter promptly deliver an execution original of this Golf Agreement with its actual signature.  Each party to this Golf Agreement agrees to be bound by its own telecopied signature and to accept the telecopied signature of the other Party to this Golf Agreement.

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(n)Notices.  Unless otherwise expressly provided in this Golf Agreement, all consents, approvals, notices or other communications provided for in this Golf Agreement shall be in writing and shall be delivered personally during normal business hours, or sent by a nationally recognized overnight delivery service (such as FedEx) as follows:

If to Hotel Manager:	With a copy to:
Westin Management Company South	Starwood Hotels & Resorts Worldwide, Inc.
c/o Starwood Hotels and Resorts Worldwide, Inc.	1111 Westchester Avenue
1111 Westchester Avenue	White Plains, New York 10604
White Plains, New York 10604	Fax (914) 640-8260
Fax (914) 640-8260	Attention: General Counsel
Attention: General Manager
If to Golf Manager:	With a copy to:
Troon Golf L.L.C.	Troon Golf L.L.C.
15044 North Scottsdale Road, Suite 300	15044 North Scottsdale Road, Suite 300
Scottsdale, Arizona 85254	Scottsdale, Arizona  85254
Tel: (480) 606-1000	Tel: (480) 606-1000
Fax: (480) 606- 1010	Fax: (480) 606-1010
Attention:  President	Attention:  Mr. Timothy S. Schantz
If to Owner:
GTA-IB LLC	With a copy to:
c/o Golf Trust of America, Inc.	O’Melveny & Myers LLP
14 North Adgers Wharf	275 Battery Street, Suite 2600
Charleston, South Carolina 29401	San Francisco, California 94111-3305
Tel: (843) 723-4653	Tel: (415) 984-8833
Fax: (843) 723-0479	Fax: (415) 984-8701
Attention: Mr. W. Bradley Blair, II	Attention: Peter T. Healy, Esq.

or at such other addresses (and facsimile numbers) as from time to time are designated by notice to the other Party.  Any notice personally delivered shall be deemed given on the date of delivery or refusal.  Any notice sent by overnight delivery service shall be deemed given upon the date such notice was properly deposited and prepaid, with the overnight delivery service for delivery the following business day; provided, however, the time period within which a response to any such notice must be given shall not commence to run until the following business day.  A copy of any such notice shall, concurrently with such delivery or sending, be transmitted by facsimile to the receiving Party at the facsimile number indicated.  Upon request, a Party shall send copies of any notice or communication by ordinary mail as instructed by the other Party.

(o)Confidentiality.  Owner and the Parties agree that the matters set forth in this Golf Agreement are strictly confidential.  In addition, Owner and the Parties agree to keep strictly confidential all information of a proprietary or confidential nature about or belonging to a

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party to which the other party gains or has access by virtue of the relationship between the parties.

Except as disclosure may be required to obtain the advice of professionals or consultants, or financing for the Resort from an institutional lender, or in furtherance of a permitted assignment of this Golf Agreement, or as may be required by law or by the order of any government, governmental unit or tribunal including, without limitation, the Securities and Exchange Commission (and the rules and regulations promulgated thereunder or thereby), each party shall make every effort to ensure that such information is not disclosed to the press or to any other third person or entity without the prior consent of the other Party.  The obligations set forth in this Section 16.01 shall survive any termination of this Golf Agreement.  The Parties shall coordinate with one another on all public statements whether written or oral and no matter how disseminated, regarding their contractual relationship as set forth in this Golf Agreement, or the performance by either of them of their respective obligations under this Golf Agreement.

16.02Compliance with Laws.  Owner, Hotel Manager and Golf Manager shall, as an expense of the Golf Facilities, and to the extent of their respective responsibilities under this Golf Agreement, endeavor to assure that the business being conducted at the Golf Facilities shall comply with all statutes, ordinances, laws, rules and regulations, orders and requirements of any federal, state and local government or department having jurisdiction with respect to the use, ownership or operation of the Resort, including orders of the local Board of Fire Underwriters or any other body that may have similar functions.

16.03No Partnership.  Nothing contained in this Golf Agreement is intended to give rise to nor shall be construed to give rise to or create a partnership, joint venture, or lease between Hotel Manager and Golf Manager.

16.04Jurisdiction and Venue.  The Parties agree that the appropriate state or federal court with subject matter jurisdiction in South Carolina is the exclusive venue for any litigation between the Parties concerning this Golf Agreement.  Each Party hereby waives any right to transfer or change venue of any litigation brought in any court of competent jurisdiction by any other Party to enforce its rights under this Golf Agreement.

16.05Due Diligence.  Golf Manager has inspected the Golf Facilities and is satisfied as to the present condition of the Golf Facilities and its ability to manage the Golf Facilities in a manner fully consistent with the terms of this Golf Agreement.

[Remainder Of This Page Has Been Intentionally Left Blank]

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IN WITNESS WHEREOF, this instrument has been duly executed as of the Effective Date.

“Hotel Manager”
WESTIN MANAGEMENT COMPANY SOUTH,
a Delaware Corporation
By	/s/ Nadine Greenwood
	Its	Authorized Signatory
“Golf Manager”
TROON GOLF L.L.C., a Delaware limited liability company
By	/s/ Timothy S. Schantz
	Its	Executive Vice President

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OWNER CONSENT AND AGREEMENT TO CERTAIN PROVISIONS

The undersigned, being the Owner identified in the foregoing Golf Agreement, hereby consents to the execution of the Golf Agreement and agrees that execution and performance of the Golf Agreement shall not be interpreted to be inconsistent with or in violation of the Resort Management Agreement between the undersigned Owner and Hotel Manager.  Owner agrees and acknowledges that (a) Hotel Manager is executing the Golf Agreement as agent for and on behalf of Owner, (b) Owner is responsible for all monies due Golf Manager pursuant to the express terms of the Golf Agreement, including the Base Management Fee, the Supplemental Fee and all other fees and expenses payable or reimbursable to Golf Manager, and for all other obligations due Golf Manager under the Golf Agreement, such that if and to the extent Hotel Manager does not pay or perform any such item, Owner is fully responsible therefore, and (c) Owner hereby approves the terms and provisions of the Golf Agreement.  Owner acknowledges this Golf Agreement is entered into pursuant to an affiliation relationship between Golf Manager and an affiliate of Hotel Manager, relating to various golf courses at Hotel Manager’s and its affiliates’ resorts.  However, Owner acknowledges that all terms, provisions and financial matters related to management and operation of the Golf Facilities are set forth in the Golf Agreement.  Owner shall not be bound by any modification of the Golf Agreement unless or until it approves the same in writing.

Dated this 15^th day of July, 2004.

GTA-IB, LLC, a Florida limited liability company
By:	/s/ W. Bradley Blair, II
	Its	President

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EX-10.7

Exhibit 10.7

LOAN AGREEMENT

Elk Funding, L.L.C.

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

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as the “Lender”)

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina  29401

(Individually and collectively “Borrower”)

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

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

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

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

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

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

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

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

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

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

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

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

GOLF TRUST OF AMERICA, L.P.
By: GTA GP, Inc., its general partner
By:		/s/  W. Bradley Blair, II	(SEAL)
Name: W. Bradley Blair, II
Title: President and CEO
ELK FUNDING, L.L.C.
By:	/s/  Jerome Silvey
Its:	EVP

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PROMISSORY NOTE A

(Non-Recourse)

$700,000.00

July 15, 2004

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina  29401

(Hereinafter referred to as “Borrower”)

Elk Funding, L.L.C.

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

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as “Lender”)

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

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

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

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

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

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

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

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

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

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

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

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

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

5

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

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

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

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

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

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

6

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

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

7

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

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

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

Taxpayer Identification Number:  58-22888961
GOLF TRUST OF AMERICA, L.P.
By: GTA GP, Inc., its general partner
By:	/s/  W. Bradley Blair, II
Name:  W. Bradley Blair, II
Title: President and CEO

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SCHEDULE A

Carve-Out Acts

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

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

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

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

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

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

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

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

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PROMISSORY NOTE B

$1,300,000.00

July 15, 2004

Golf Trust of America, L.P.

14 N. Adger’s Wharf

Charleston, South Carolina  29401

(Hereinafter referred to as “Borrower”)

Elk Funding, L.L.C.

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

591 West Putnam Avenue

Greenwich, CT  06830

(Hereinafter referred to as “Lender”)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Taxpayer Identification Number:  58-22888961
GOLF TRUST OF AMERICA, L.P.
By: GTA GP, Inc., its general partner
By:	/s/  W. Bradley Blair, II
Name:  W. Bradley Blair, II
Title: President and CEO

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EX-10.8

Exhibit 10.8

PARCEL F DEVELOPMENT AGREEMENT

THIS PARCEL F DEVELOPMENT AGREEMENT (this “Agreement”) is made as of the 29th day of March, 2004, by and among, INNISBROOK F, LLC, a Florida limited liability company, formerly known as Bayfair Innisbrook, L.L.C. (“Parcel F Purchaser”) and GOLF HOST RESORTS, INC., a Colorado corporation (“Golf Host”), and is consented to by GOLF TRUST OF AMERICA, L.P., a Delaware limited partnership (“GTA”).

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

A.Golf Host is the owner of the real property more particularly described on Exhibit A-1 attached hereto (the “Golf Course Parcel”) located within the community commonly known as “Innisbrook” upon which golf courses and other facilities are located (collectively, the “Club Facilities”).  GTA is the holder of the GTA Mortgage encumbering the Golf Course Parcel.

B.Golf Host is also the owner of the real property more particularly described on Exhibit A-2 attached hereto (“Parcel F”) located within Innisbrook and adjacent to holes 8 through 14 of the 18 hole “Island” golf course located within the Golf Course Parcel (the “Island Course”).

C.Golf Host intends to sell to Parcel F Purchaser, and Parcel F Purchaser intends to purchase from Golf Host, Parcel F pursuant to and in accordance with that certain Agreement For Sale and Purchase of Real Property – Parcel F by and between Golf Host and Parcel F Purchaser, dated as of July 13, 2001 (as amended, the “Purchase Agreement”).

D.Parcel F Purchaser intends to develop Parcel F as a residential community pursuant to this Agreement containing common areas and a mixture of product types and not more than 400 residential units, as more particularly described in the Plans (as defined below) as the Plans may be modified pursuant to this Agreement and such Parcel F development shall include without limitation the development of the Parcel F Access Road in accordance with the terms of this Agreement (collectively, the “Parcel F Development”).

E.Subject to the usual and customary noise and other unavoidable impacts directly associated with the development of the Parcel F Development, Parcel F Purchaser agrees (A) to undertake the Parcel F Development in accordance with the Plans and in such a manner so as to (i) avoid any unnecessary and/or avoidable disruption to the Club Facilities to the fullest extent practicable, (ii) comply with the limitations set forth in this Agreement including Exhibit N to this Agreement, and (iii) comply with all applicable laws, rules and regulations, and (B) to require purchasers of residential units located on Parcel F to promptly join the Innisbrook Resort and Golf Club (the “Club”).

F.Golf Host agrees to operate and maintain the Island Course primarily as a golf course and recreational facility, grant the Easements (as defined below) over, across and/or under certain portions of the Golf Course Parcel, grant the Memberships, and comply with its obligations as expressly set forth herein.

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
RECITALS; DEFINITIONS

1.1Recitals.  The party making the respective foregoing Recitals represents that the respective Recitals are true and correct.  The Recitals are incorporated into this Agreement by reference as binding provisions on the parties.

1.2Definitions.  Unless the context expressly requires otherwise, the terms listed in this Article I shall have the following meanings, whenever used in this Agreement:

1.2.1“Bee Pond Road” means the public right of way with the same name extending from Alternate U.S. 19 and running contiguous to and past Parcel F.

1.2.2“Benefitted Parcel” means Parcel F and Parcel F Access Road Parcel.

1.2.3“Directional Sign Easement Parcel” means the real property described on Exhibit B attached hereto.

1.2.4“Drainage and Conservation Easement Parcel” means the real property described on Exhibit C attached hereto.

1.2.5“Easement Parcels” means: (a) the Drainage and Conservation Easement Parcel; (b) Sanitary Sewer and Water Distribution Easement Parcel; (c) Stormwater and Utility Easement Parcel A; (d) Stormwater and Utility Easement Parcel B; (e) Wetland Mitigation Easement Parcel; (f) Mill Ridge Road; (g) Parcel F Access Road Parcel; (h) Upland Preservation and Stormwater Drainage Easement Parcel; (i) Entry Sign Easement Parcel; and (j) the Directional Sign Easement Parcel.

1.2.6“Entry Sign Easement Parcel” means the median in Old Post Road closest to U.S. Highway 19 and, to the extent of Golf Host’s existing rights set forth in (and not in violation of the provisions of) the Signage Easement Agreement (as defined below), the median in Old Post Road closest to Belcher Road and the Easement Parcels, as defined in the “Signage Easement Agreement” recorded in O.R. Book 11355, Page 1265 of the Public Records of Pinellas County, Florida.

1.2.7“Golf Cart Path Parcel” means the real property described on Exhibit D attached hereto.

1.2.8“GTA Mortgage” means that certain Mortgage, Security Agreement and Fixture Filing with Assignment of Rents, executed by Golf Host Resorts, Inc. in favor of GTA, dated June 20, 1997, and recorded in the Official Records Book 9748, page 2292, in the public records of Pinellas County, Florida, UCC-1 Financing Statement recorded in Official Records Book 9755, page 729, in the public records of Pinellas County, Florida, and that certain UCC-1 Financing Statement filed in the office of the Secretary of State of the State of Florida on June 27, 1997, under filing number 970000141314-1, together with any other collateral documents which create liens or security interests on any property to secure the indebtedness secured by the GTA Mortgage.

1.2.9“Golf Course Owner” means any Person that at the time in question owns a portion or all of the Golf Course Parcel.

1.2.10“Harbour Bay Town Homes”  means the existing residential community built in Tampa, Florida by Parcel F Purchaser and located on Harbour Island.

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1.2.11“Master Parcel F Developer”  has the meaning set forth in Section 3.6 below.

1.2.12“Mill Ridge Road” means the existing, paved private road known as Mill Ridge Road, which runs across the Golf Course Parcel between Old Post Road and Klosterman Road, and as generally described on the map attached hereto as Exhibit E.

1.2.13“Owners’ Association” means the master property association to be created by the Parcel F Owner.

1.2.14“Parcel F Owner” means any Person that at the time in question owns a portion or all of Parcel F, including, without limitation, the Owner’s Association, but excluding a Parcel F Unit Owner.

1.2.15“Parcel F Access Road Parcel” means the real property described on Exhibit F attached hereto.

1.2.16“Parcel F Unit Owner” means any Person who at any time owns fee simple title to any platted lot or residential unit within Parcel F.

1.2.17“Person” means any natural person, corporation, limited liability company, association, general partnership, limited partnership or other entity having legal capacity.

1.2.18“Phase 1 of the Parcel F Development” means the infrastructure development for the portion of the Parcel F Development identified as phase 1 in the Plans.

1.2.19“Sanitary Sewer and Water Distribution Easement Parcel” means the real property described on Exhibit G attached hereto.

1.2.20“Stormwater and Utility Easement Parcel A” means the real property described on Exhibit H attached hereto.

1.2.21“Stormwater and Utility Easement Parcel B” means the real property described on Exhibit I attached hereto.

1.2.22“Upland Preservation and Stormwater Drainage Easement Parcel” means the real property described on Exhibit J attached hereto.

1.2.23“Wetland Mitigation Easement Parcel” means the real property described on Exhibit K attached hereto.

ARTICLE II
EASEMENTS

2.1Sanitary Sewer and Water Distribution Easement.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Sanitary Sewer and Water Distribution Easement”) over and across the Sanitary Sewer and Water Distribution Easement Parcel in favor of Parcel F Owner for the sole and exclusive purposes of Parcel F Owner’s construction, maintenance, repair and use of (a) underground sanitary sewer facilities, (b) underground potable water facilities, (c) underground irrigation water facilities, and (d) other underground utilities.  Nothing herein shall preclude Golf Course Owner from utilizing

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the utilities and facilities described in this Section 2.1 provided that the Golf Course Owner does so at its own expense and in accordance with governmental regulations.

2.2Drainage and Conservation Easement.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Drainage and Conservation Easement”) over and across the Drainage and Conservation Easement Parcel in favor of Parcel F Owner for the sole and exclusive purposes of (a) construction, maintenance, repair and use of underground pipes, lines and other facilities to convey surface water from Parcel F and from the Parcel F Access Road Parcel, (b) draining surface water from Parcel F and the Parcel F Access Road Parcel into the Drainage and Conservation Easement Parcel, and (c) maintaining the Drainage and Conservation Easement Parcel in its current condition.

2.3Stormwater and Utility Easement.  Golf Course Owner hereby grants and declares (a) a non-exclusive easement (“Stormwater Easement A”) over and across Stormwater and Utility Easement Parcel  A in favor of Parcel F Owner for the sole and exclusive purpose of Parcel F Owner’s construction, maintenance, repair and use of underground sanitary sewer, potable water, irrigation water and other utility facilities and  underground pipes, lines and other facilities to convey surface water from Parcel F and the Parcel F Access Road Parcel; and (b) a non-exclusive easement (“Stormwater Easement B”) over and across Stormwater and Utility Easement Parcel B in favor of the Parcel F Owner for the sole and exclusive purpose of Parcel F Owner’s construction, maintenance, repair and use of underground sanitary sewer, potable water, irrigation water and other utility facilities and underground pipes, lines and other facilities to convey surface water from Parcel F.  Nothing herein shall preclude Golf Course Owner from utilizing the utilities and facilities described in this Section 2.3 provided that the Golf Course Owner does so at its own expense and in accordance with governmental regulations.

2.4Mill Ridge Road and Parcel F Access Road Easements.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Mill Ridge Road Easement”) over and across the existing Mill Ridge Road (the improvement of which by the Parcel F Owner is not contemplated by this Agreement) in favor of the Parcel F Owner for the lawful use by Parcel F Owner and the guests and invitees of Parcel F Owner and the Parcel F Unit Owners and for the sole and exclusive purpose of providing legally permissible pedestrian and vehicular ingress and egress over and across Mill Ridge Road.  Golf Course Owner also hereby grants and declares a non-exclusive easement (the “Parcel F Access Road Easement”) over, across and under Parcel F Access Road Parcel in favor of Parcel F Owner for the lawful use by Parcel F Owner and the guests and invitees of Parcel F Owner and the Parcel F Unit Owners and for the sole purpose of Parcel F Owner’s construction, maintenance, repair and use of a roadway, drainage infrastructure, entry improvements, landscaping, street lighting and related improvements and underground utilities to serve Parcel F and to provide pedestrian and vehicular ingress and egress to Parcel F, subject to the Golf Course Owner’s rules and regulations applied at the time in question to Mill Ridge Road and Old Post Road.  The easement for access over and across the Parcel F Access Road Parcel (but not the easement over and across the Old Post Road Parcel and the Relocated Road Parcel) created pursuant to paragraph 2.1 of the Declaration of Easements, Spread of Mortgage Lien, and Subordination of Mortgages and Partial Release of Mortgages recorded in O. R. Book 11310, Page 138 of the Public Records of Pinellas County, is hereby terminated and of no further force or effect.  The

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Parcel F Access Easement, as defined in the aforesaid paragraph 2.1, may be used on a non-exclusive basis by Parcel F Owner to the extent allowed for in this Agreement.

2.5Wetland Mitigation Easement.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Wetland Mitigation Easement”) over and across the Wetland Mitigation Easement Parcel in favor of Parcel F Owner to the extent required by and in accordance with Permit No. 44017498.005 issued by Southwest Florida Water Management District dated March 28, 2003, and any subsequent permit related thereto, for the sole and exclusive purposes of Parcel F Owner’s construction and installation of all mitigation of wetland impacts (“Wetland Mitigation”) arising from or in connection with the development and improvement of Parcel F Access Road, and undertaking all monitoring, maintenance, and all other governmental requirements relating to such Wetland Mitigation, together with an easement for ingress and egress to and from the Wetland Mitigation Easement Parcel  over and across property specified by Golf Course Owner in its sole discretion, that is located in the Golf Course Parcel.  Notwithstanding the foregoing, Parcel F Owner, at its sole cost and expense, shall be solely responsible for the construction, installation, monitoring, maintenance, repair, use and all other activities, including, without limitation, complying with any governmental requirements (except for the procurement of any and all necessary permits for the Wetland Mitigation, which shall be the responsibility of Golf Course Owner, at Golf Course Owner’s sole cost and expense), relating to Wetland Mitigation constructed by Parcel F Owner on the Wetland Mitigation Easement Parcel or in any other area(s) of the Golf Course Parcel as approved by Golf Course Owner.

2.6Upland Preservation and Stormwater Drainage Easement.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Upland Preservation and Stormwater Drainage Easement”) over and across the Upland Preservation and Stormwater Drainage Easement Parcel in favor of Parcel F Owner for the sole and exclusive purpose of Parcel F Owner’s provision of upland preservation as required by (but only if required by), and for the benefit of, regulatory agencies with proper jurisdiction (including, without limitation, Pinellas County) in connection with the permitting for and development of Parcel F and Parcel F Access Road and the installation, use, maintenance and repair of underground pipe, lines and other facilities to convey surface water.  The Upland Preservation and Stormwater Drainage Easement may be assigned by Parcel F Owner to one or more governmental agencies in connection with the development permits for Parcel F.  Golf Course Owner shall have no responsibility whatsoever for Parcel F Owner’s compliance with the requirements of any such regulatory agency.

2.7Signs.  Golf Course Owner hereby grants and declares a non-exclusive easement (the “Sign Easement”) over and across (a) the Directional Sign Easement Parcel in favor of Parcel F Owner for the sole and exclusive purpose of Parcel F Owner’s installation of directional signs, and (b) to the extent of Golf Course Owner’s existing rights, if any, the Entry Sign Easement Parcel, for the sole and exclusive purpose of Parcel F Owner’s installation of not more than two (2) project identification signs for the Parcel F Development.  The actual number of the directional signs that are installed by Parcel F Owner pursuant to the Sign Easement shall not exceed the number of such signs that are specified in Exhibit B for the Directional Sign Easement Parcel.  There shall be no more than three (3) project identification signs for the Parcel F Development, which signs shall be limited in number and located as follows: (i) a total of not more than two (2) project identification signs in the Entry Sign

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Easement Parcel (i.e., not more than one (1) project identification sign at the median in Old Post Road closest to U.S. Highway 19 and not more than one (1) project identification sign at the median in Old Post Road closest to Belcher Road and the Easement Parcels (as defined in the Signage Easement Agreement)), and (ii) a total of not more than one (1) project identification sign located at the portion of the Parcel F Access Road adjacent to the tennis courts.  The size, content, placement and all other aspects of the directional signs and the project identification signs shall be subject to Golf Course Owner’s prior written approval, which approval shall not be unreasonably withheld or delayed.  Parcel F Owner agrees that the directional signs and the project identification signs shall be consistent in all respects with the then existing signage within Innisbrook.  Once the last residential unit within Parcel F has been initially conveyed to a Retail Purchaser (as defined below), the Sign Easement shall automatically terminate and be of no further force or effect, and upon such termination, Parcel F Owner, at its sole expense, shall (A) promptly remove and discard all such directional signs and the project identification sign from the Golf Course Parcel, and (B) promptly repair and restore the Directional Sign Easement Parcel and the Entry Sign Easement Parcel (including all improvements thereon) to the same or better condition as existed before the installation of such signs.

2.8Other Provisions Applicable to the Easements.  The Sanitary Sewer and Water Distribution Easement, the Drainage and Conservation Easement, Stormwater and Utility Easement A, Stormwater and Utility Easement B, the Wetland Mitigation Easement, the Mill Ridge Road Easement, the Parcel F Access Road Easement, the Upland Preservation and Stormwater Drainage Easement and the Sign Easement shall be collectively referred to herein as the “Easements.”  With respect to each of the Easements and subject to the following conditions, Golf Course Owner hereby grants a “Temporary Construction Easement” over and across such portion of the Golf Course Parcel immediately adjacent to each of the Easements in favor of Parcel F Owner for the sole and exclusive purpose of Parcel F Owner’s construction of the improvements permitted by each of the Easements, which Temporary Construction Easement shall be subject to any and all requirements designated by Golf Course Owner including, without limitation, the size, location, and duration of such easement and the  times construction may be undertaken.  Any and all work shall be performed in a good workmanlike manner so as to minimize the disruption to, and maintain the playability and quality of, the Club Facilities.  Each of the Easements (except for the Sign Easement which shall automatically terminate in accordance with Section 2.7 of this Agreement) shall continue in effect, in perpetuity, unless and until such Easement is amended in accordance with Section 6.2 of this Agreement.  Each of the Easements shall be an easement appurtenant to, and run with the title to, Parcel F and the Parcel F Access Road.  All construction, installation, monitoring, maintenance, repair, use and all other activities (including, without limitation, the procurement of any and all necessary permits and complying with any governmental requirements) with respect to each and every one of the Easements (and the Temporary Construction Easement) shall be performed in a professional, high-quality manner and promptly and diligently completed once commenced by Parcel F Owner at Parcel F Owner’s sole cost and expense.  Golf Course Owner shall bear no such costs and expenses except in the event and to the extent expressly set forth herein.  Each and all of the Easements are being granted (and the Temporary Construction Easement which shall be granted pursuant to and subject to the terms of this Agreement) on a non-exclusive basis and Golf Course Owner may use, or cause or allow others to use one or more of the Easements (and the Temporary Construction Easement) at Golf

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Course Owner’s sole election.  Golf Course Owner reserves all of its rights to use the Easement Parcels, including, without limitation, the right to construct, maintain and use improvements over, across and under the Easement Parcels.  Notwithstanding the foregoing, Golf Course Owner’s use of the Easement Parcels shall not unreasonably interfere with the use of the Easements by Parcel F Owner as specified in this Agreement.  Prior to conducting any permitted activities on any of the Easement Parcels pursuant to any right granted in any of the Easements, Parcel F Owner shall, not less than thirty (30) days before commencing such permitted activities on any of the Easement Parcels, deliver written notice to Golf Course Owner of the specifics of such permitted activities, including, without limitation, copies of plans and specifications for such permitted activities, and the names of each contractor who will be performing any portion of such permitted activities.  Parcel F Owner shall, at its sole cost and expense: promptly replace any sod or other landscaping or other improvements (including, without limitation, irrigation and power lines, utility lines, pumphouse and equipment) disturbed by the activities of Parcel F Owner (or its agents or contractors), and upon completion, promptly repair and restore the Easement Parcels (including all improvements thereon) and such portion of the Golf Course Parcel that is utilized by Parcel F Owner as a Temporary Construction Easement (including all improvements thereon) to the same or better condition as existed before such permitted activities of Parcel F Owner (or its agents or contractors) on the Easement Parcels and the Temporary Construction Easement; and promptly repair any damage to the Easement Parcels and the Golf Course Parcel, and any improvements located thereon, caused by the operation or malfunction of any pipes, lines or other equipment or improvements installed, constructed, or placed in, under or adjacent to any of the Easement Parcels by Parcel F Owner (or its agents or contractors). Subject to the usual and customary noise and other unavoidable impacts directly associated with the development of the Parcel F Development in accordance with the Plans, Parcel F Owner (a) shall conduct all of its activities in connection with the Easements and the Temporary Construction Easement in a manner so as to avoid any unnecessary and/or avoidable disruption to the Club Facilities and the operations thereon to the fullest extent practicable and to protect the quiet enjoyment of the employees, guests, members, licensees and invitees of Golf Course Owner, and (b) shall cooperate with Golf Course Owner with respect to the timing, sequencing, organizing and supervising of any such permitted activities on the Easement Parcels and the Temporary Construction Easement, so as to maintain the playability and quality of the Club Facilities.

2.9Declaration of Easement for Golf Cart Path.  Parcel F Owner hereby declares and grants, a non-exclusive perpetual easement (the “Golf Cart Path Easement”) (a) over and across the Golf Cart Path Parcel in favor of the Golf Course Owner for the sole and exclusive purpose of providing golf cart and maintenance equipment, and pedestrian access between the portions of the Golf Course Parcel lying on either side of the Golf Cart Path Parcel to facilitate use of the Golf Course Parcel by employees, guests, members, licensees and invitees of the Golf Course Owner, and (b) under the Golf Cart Path Parcel in favor of  the Golf Course Owner for the purpose of the Golf Course Owner’s construction, maintenance, repair and use, at the Golf Course Owner’s sole cost and expense, of new utility lines (including, without limitation, irrigation and power lines) and other improvements to be located under the Golf Cart Path Parcel; provided, however, that all costs and expenses related to the relocation of any existing improvements (e.g., tee boxes or utility lines, including, without limitation, irrigation and power lines) on either the Golf Course Parcel or Parcel F due to the construction of a new private road that will be built subject to the Golf Cart Path Easement and pursuant to and in

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accordance with the Plans shall be completed and performed at Parcel F Owner’s sole cost and expense.  The Golf Cart Path Easement shall be an easement appurtenant to the Golf Course Parcel.  In the event that the Golf Course Owner determines that, because of grade issues, the best location for the redesigned cart path near the 11^th tee box is outside of the boundaries of the Golf Cart Path Easement, then Parcel F Owner agrees to amend the Golf Cart Path Easement to accommodate the relocation of the golf cart path.  The Golf Cart Path Easement shall be non-exclusive of other uses of Parcel F Owner, and Parcel F Owner reserves the right to use the Golf Cart Path Easement, including, without limitation, the right to construct, maintain and use improvements over, across and under the Golf Cart Path Parcel.  Notwithstanding the foregoing, Parcel F Owner’s use of the Golf Cart Path Easement shall not unreasonably interfere with the use of the Golf Cart Path Easement by the Golf Course Owner as specified in this Section 2.9.  The easement for the Golf Cart Path Easement created pursuant to paragraph 2.3 of the Declaration of Easements, Spread of Mortgage Lien, and Subordination of Mortgages and Partial Release of Mortgages recorded in O. R. Book 11310, Page 138 of the Public Records of Pinellas County, is hereby terminated and of no further force or effect.

ARTICLE III

OTHER RIGHTS AND SUBORDINATION

3.1“Innisbrook” Name and Mark.  Golf Course Owner hereby quitclaims to Parcel F Owner a royalty free, non-exclusive license to use the name “Innisbrook” (“Name”) and the design attached hereto as Exhibit L (“Logo”), solely in connection with Parcel F Owner’s marketing, development and operation of the Parcel F Development and for no other use, but only to the extent of Golf Course Owner’s rights to the Name and Logo (together, the “Mark”), if any.  Golf Course Owner and GTA make no representations, warranties or covenants with respect to any ownership or other possessory rights in the Mark.  To the extent of Golf Course Owner’s rights to the Mark, if any, Parcel F Owner may use the Mark only in connection with the name(s) of the Parcel F Development in combination with at least two (2) other words keeping with the Scottish theme of Innisbrook. The full name(s) of the Parcel F Development shall be approved in advance in writing by Golf Course Owner, and shall not include the words “Westin”, “Golf Trust,” “Golf Trust of America” or “Troon”, and shall specifically exclude any other hotel or product names.  Parcel F Owner shall provide Golf Course Owner, for Golf Course Owner’s prior written approval, plans for all signage used by Parcel F Owner that uses the Mark, together with representative samples of all advertising and other literature prepared by Parcel F Owner which uses the Mark.  Parcel F Owner shall not use the Mark in any sign, advertising or other literature which has not been approved in advance and in writing by Golf Course Owner, which approval shall not be unreasonably withheld or delayed.  In addition to any other reason that Golf Course Owner may have for disapproving any proposed use of the Mark, Golf Course Owner shall not have any duty or obligation to approve any use of the Mark in any such sign, advertising or other literature which contains any photographs, narratives or statements (either in part or in whole) that may be determined by Golf Course Owner as being misleading, untrue or inaccurate in any respect or that may be determined by Golf Course Owner as obligating Golf Course Owner or GTA to anything whatsoever.  When using the Mark under this Agreement, Parcel F Owner undertakes to comply, at its sole cost and expense, with all laws pertaining to trademarks and service marks in force at any time in the State of Florida.  Golf Course Owner shall have no liability under this Agreement to Parcel F Owner or to any other party because of any challenge to or failure of Golf Course Owner’s ownership of or right to use or license the use of the Mark or Parcel F

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Owner’s right to use the Mark pursuant to this Agreement, whether or not Golf Course Owner approves Parcel F Owner’s use thereof.  To the best of Golf Course Owner’s actual knowledge, Golf Course Owner has not granted any license or entered into any other agreement with respect to the Mark which would prevent or prohibit the use of the Mark by Parcel F Owner pursuant to this Agreement; Golf Course Owner has not undertaken any search of legal rights in the U.S. Patent and Trademark Office or otherwise and Parcel F Owner understands and acknowledges that fact.  During the entire time this Agreement and the rights, if any, quitclaimed to Parcel F Owner under this Section 3.1 shall be in effect, Golf Course Owner agrees that it will not in the future grant any license or enter into any other agreement with respect to the Mark which would be inconsistent with the rights, if any, quitclaimed to Parcel F Owner pursuant to this Agreement.

3.2Operation and Maintenance.  Parcel F Owner agrees that all improvements constructed on Parcel F shall be operated and maintained in a first-class, premier condition consistent with a high quality residential community and such restriction shall run in favor of the Golf Course Owner.  The Golf Course Owner shall operate and maintain the Island Course primarily as a golf course and recreational facility and shall operate and maintain the Island Course in substantially the same condition as it is currently being operated; provided, however, the Golf Course Owner shall only be so obligated for so long as the Parcel F Development exists pursuant to the Plans.

3.3Golf Club Memberships.  The Code (as defined below) provides for different types of memberships in the Club.  A “Golf Membership” has greater privileges than the other types of memberships (e.g., clubhouse membership) in the Club.  Golf Course Owner hereby grants and assigns to Parcel F Owner, for its benefit and the benefit of the parties who have received a written assignment of a membership executed by Parcel F Owner, up to: (i) 320 fully paid initiation fee Memberships of any type (including a Golf Membership) (“Unrestricted Memberships”); and (ii) 80 fully paid initiation fee Memberships of any type (other than a Golf Membership) (“Restricted Memberships”) (individually, a “Membership” and, collectively, the “Memberships”).  The Restricted Memberships may in no event be upgraded to a Golf Membership without Golf Course Owner’s prior written approval in each instance.  Each of the Memberships shall be associated with a separate residential unit to be located within Parcel F (but no more than one (1) Membership shall be associated with a particular residential unit to be located within Parcel F) and the holder of the Membership shall have certain rights in the Club solely pursuant to (a) the Code of Regulations of the Club (“Code”), which Golf Course Owner may amend from time to time pursuant to the Code, and (b) this Agreement.  In addition, each of the Memberships shall be freely transferable to an assignee of Parcel F Owner who may own all or a portion of Parcel F, and/or to the first bonafide third-party retail purchaser of a residential unit within Parcel F (“Retail Purchaser”), pursuant to a written assignment of such Membership executed by Parcel F Owner. All applicable Membership dues, assessments and other charges that accrue after such date of assignment to a Retail Purchaser shall be paid to the Club by such Retail Purchaser.  Parcel F Owner shall not assign (partially or fully) a Membership to a Retail Purchaser until such time that the purchase contract for the respective residential unit within Parcel F has been fully performed and the transaction has closed.  Each of the Memberships will not be subject to any dues, assessments or other charges until such Membership is transferred to a Retail Purchaser of a residential unit within Parcel F, but in no event shall any initiation fee otherwise required pursuant to the Code (as the same may be amended from time to time) be due and payable in connection with such Memberships

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that are initially acquired by each Retail Purchaser, unless such Memberships are not acquired within ten (10) years from the date of this Agreement (in which case, such Memberships shall only be transferred to a Retail Purchaser thereafter upon payment by such Retail Purchaser of the then currently applicable initiation fee to the Club).  Each and every owner of a residential unit within Parcel F is required to join the Club at least as a clubhouse member pursuant to the Code (as the same may be amended from time-to-time) at the closing of a residential unit and shall (1) pay in a timely manner the applicable dues and other charges that accrue for such Membership on and after such closing, and (2) maintain such clubhouse membership or another type of Membership with greater privileges (including paying in a timely manner the applicable dues and other charges that accrue with respect to that Membership) for so long as such owner owns the residential unit within Parcel F.  The first Retail Purchaser of a residential unit may upgrade its Membership to another class of Membership with greater privileges pursuant to the Code by acquiring such upgraded Membership from, and paying the additional initiation fee (i.e., the difference between the then current initiation fee for such upgraded Membership and the initiation fee specified for the type of Membership acquired by such Retail Purchaser at the time of its acquisition by such Retail Purchaser) to, the Club; provided, however, that (x) only an Unrestricted Membership may be upgraded to a Golf Membership, (y) there are not more than 320 Golf Memberships in total acquired by Retail Purchasers that have Unrestricted Memberships, and (z) in the event that such Retail Purchaser upgrades its Membership within two (2) years after such Retail Purchaser’s closing date on its residential unit within Parcel F, then such Retail Purchaser may upgrade its Membership to another class of Membership with greater privileges pursuant to the Code by acquiring such upgraded Membership from Parcel F Owner pursuant to and in accordance with terms established by Parcel F Owner, which terms shall provide an economic incentive for such Retail Purchaser to upgrade their Membership as soon as possible within such two (2) year period after such Retail Purchaser’s closing date on its residential unit within Parcel F and shall provide that Golf Course Owner shall receive at the time of such upgrade the difference between the dues that would have been paid for such upgraded membership less the dues actually paid.  Golf Course Owner shall have the right to review and approve the foregoing terms established by Parcel F Owner, which approval shall not be unreasonably withheld.  The Membership dues for such upgraded Memberships that accrue with respect to that Membership after such upgrade shall be paid in a timely manner by such member to the Club in accordance with the Code (as the same may be amended from time to time).  Subsequent Retail Purchaser’s of a residential unit (e.g., a purchaser who acquires a residential unit from a person who acquired such unit from Parcel F Owner) shall have the right to join the Club, pursuant to the terms of the Code (as the same may be amended from time to time), including payment in a timely manner of initiation fee and dues.  At no time may the number of Memberships available to and/or held by the Parcel F Unit Owners and acquired from Parcel F Owner exceed the number of residential units actually built or under construction on Parcel F and no more than eighty percent (80%) of the total Memberships shall be Unrestricted Memberships.

3.4Subordination of GTA Mortgage.  GTA (is, as of the date of this Agreement, the mortgagee pursuant to the GTA Mortgage.  GTA hereby subordinates its lien and rights under the GTA Mortgage to this Agreement and GTA will not foreclose or cancel any rights or interests of Golf Course Owner or Parcel F Owner or otherwise pursuant to this Agreement.

3.5Amendment of Purchase Agreement; Survival Rights.  No amendment, modification or assignment of the Purchase Agreement which adversely affects the Golf Course

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Parcel, GTA’s interest as mortgagee of the Golf Course Parcel, or GTA or any of its affiliates’ interest in the sale of Parcel F shall be deemed to be effective without the prior written consent of the Golf Course Owner.  Additionally, upon the termination of the Purchase Agreement or Parcel F Purchaser’s interest in the Purchase Agreement, Parcel F Purchaser shall have no further rights under this Agreement.

3.6Master Parcel F Developer.  The Master Parcel F Developer shall mean Golf Host, and in the event Golf Host conveys Parcel F to Parcel F Purchaser or any other Person, the Master Parcel F Developer shall mean the initial purchaser of Parcel F from Golf Host (the “Master Parcel F Developer”).  The Master Parcel F Developer agrees that in the event the Master F Parcel Developer conveys any portion or portions of Parcel F to one or more builders or developers and the builder or developer fails to comply with any of the obligations of the Parcel F Owner as described in this Agreement or in the Declaration, the Master Parcel F Developer shall diligently attempt to enforce the obligation against the breaching Parcel F Owner, which shall include filing a lawsuit against the breaching Parcel F Owner for an injunction or for monetary damages at Golf Course Owner’s discretion; provided, however, Golf Course Owner agrees to select legal counsel and pay for such representation.  In that regard, the Master Parcel F Developer agrees that in its sale documentation with such a builder or developer, such sale documentation shall include the builder or developer’s agreement to comply with all obligations of the Parcel F Owner as described in this Agreement and the Declaration, and such sale documentation shall include a “prevailing parties” provision which reward attorneys’ fees and expenses to the prevailing party in any litigation.  Such attorneys’ fees and expenses would be paid by the non-prevailing party to Golf Course Owner in the event such fees and expenses were awarded to the Master Parcel F Developer.  In the event that all residential units are constructed and sold in Parcel F to residential Parcel F Unit Owners, then this Section 3.6 shall no longer be effective.

ARTICLE IV
INSURANCE AND MAINTENANCE

4.1Insurance By Parcel F Owner.  Parcel F Owner, at its sole cost and expense, shall obtain and maintain during the entire time that this Agreement shall be in effect, a commercial general liability policy (occurrence form) (general/public and products; completed operations, automobile and excess umbrella) for personal injury, bodily injury and property damage occurring to or on the Easements, the Temporary Construction Easement and/or Parcel F (excluding residential units owned by Retail Purchasers) or as a result of Parcel F Owner’s development of Parcel F (including any property damage occurring to the Golf Course Parcel and any improvements thereon), with coverage for premises and operations liability, contractual liability, completed operations coverage, products liability and liability for claims brought against Golf Course Owner (and GTA, or any affiliate thereof, as long as it is the mortgagee pursuant to the GTA Mortgage (or any subsequent mortgage)), which claims result and/or arise from the negligent acts or omissions of Parcel F Owner or of the contractors, agents, servants, employees, licensees, guests and invitees of Parcel F Owner, which shall name Golf Course Owner (and GTA, as long as it is the mortgagee pursuant to the GTA Mortgage (or any subsequent mortgage)) as an additional insured (collectively, the “Parcel F Owner Insurance”).  The Parcel F Owner Insurance shall have limits of coverage of not less than $2,000,000.00 per occurrence and $5,000,000.00 in the aggregate.  Parcel F Owner shall not

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reduce or terminate the Parcel F Owner Insurance without the prior written consent of Golf Course Owner and Golf Course Owner shall receive not less than forty five (45) days prior written notice of any reduction or termination of the Parcel F Owner Insurance by Parcel F Owner.  Any reduction or termination of the Parcel F Owner Insurance made by Parcel F Owner without the consent of Golf Course Owner shall be deemed a default under this Agreement.

4.2Maintenance and Repair.  Parcel F Owner, at its sole cost and expense, shall promptly repair, maintain and complete all work in connection with the Easements and the Temporary Construction Easement, including, without limitation, performing all such work in accordance with all applicable laws and regulations, and promptly pay any and all fees and penalties for any violations with respect thereto, during the entire time that any one or more of this Agreement, the Easements and the Temporary Construction Easement granted under this Agreement shall be in effect without limitation on any of Golf Course Owner’s rights or remedies under this Agreement or at law.  Golf Course Owner shall have the right at any time and from time to time to post and maintain upon the Golf Course Parcel and/or Parcel F such notices as may be necessary to protect Golf Course Owner’s interest from mechanics’ liens, materialmen’s liens or liens of a similar nature.

4.3Insurance By Parcel F Owner’s Contractors.  Parcel F Owner shall require its general contractor to maintain the same insurance that is required to be maintained by Parcel F Owner pursuant to Section 4.1 above and to specify Golf Course Owner (and GTA as long as it is the mortgagee pursuant to the GTA Mortgage (or any subsequent mortgage)) as an additional insured.

ARTICLE V
DEVELOPMENT

5.1Zoning.  Parcel F and the Golf Course Parcel are subject to, and development of Parcel F shall be governed by, the Revised RPD Overall Development Plan, Plan 1050, prepared by King Engineering Associates dated April 10, 2001 (together with any other applicable zoning regulations, the “Zoning Regulations”).  Golf Course Owner reserves the right and authority to amend the Zoning Regulations pertaining to the Golf Course Parcel as it may deem to be prudent, but Golf Course Owner shall not amend the Zoning Regulations if such amendment will have a material adverse effect on the use, development or value of Parcel F or Parcel F Owner’s Development.  Golf Course Owner grants Parcel F Owner the right and authority to amend the Zoning Regulations pertaining to Parcel F as it may deem to be prudent, but Parcel F Owner shall not amend the Zoning Regulations if such amendment will have a material adverse effect on the use, development or value of the Golf Course Parcel and Club Facilities, decrease the number of dwelling units, or modify the building height requirements or current setback requirements permitted by the Zoning Regulations on the Golf Course Parcel. Each of the parties hereto shall comply with the requirements of the Zoning Regulations pertaining to its property.

5.2Construction.  Except as provided below, all ingress and egress to and from Parcel F or the Parcel F Access Road Parcel in connection with Parcel F Owner’s construction of the Parcel F Development shall only be made by Parcel F Owner via Bee Pond Road from Alternate U.S. Highway 19, and shall not be made through the Golf Course Parcel.  Parcel F

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Owner shall be, at its sole cost and expense, solely responsible for any and all improvements (including securing and obtaining all applicable permits) to Bee Pond Road as required for such use, and for assuring that all contractors, subcontractors and material suppliers, and their employees, seeking access to Parcel F or Parcel F Access Road Parcel in connection with the Parcel F Development comply with this requirement.  Notwithstanding the foregoing, if Parcel F Owner is prohibited by law or by applicable governmental authorities or is unable due to any reason outside of Parcel F Owner’s reasonable control from utilizing Bee Pond Road for construction traffic, and Parcel F Owner uses  and continues to use its best efforts to challenge the prohibition to use Bee Pond Road for construction traffic, including without limitation, the filing and diligent prosecution of a lawsuit at Parcel F Owner’s sole cost and expense to challenge the prohibition, Parcel F Owner shall have the right (but only during such period that Parcel F Owner’s use is prohibited or is unable to utilize Bee Pond Road) to utilize the portion of Old Post Road that is east of the intersection of Old Post Road and the west boundary of Parcel F Access Road Parcel or at Golf Course Owner’s election, Mill Ridge Road and the portion of Old Post Road between Parcel F and Mill Ridge Road for construction traffic to and from U.S. Highway 19 or Klosterman Road and Parcel F, provided that during the period of time that Parcel F Owner is using the alternative ingress described above, Parcel F Owner continues to make a good faith and diligent effort to challenge the prohibition to use Bee Pond Road at its sole cost and expense.  Parcel F Owner, at its sole cost and expense, shall (i) be responsible for any necessary improvements to the portion of Old Post Road or Mill Ridge Road adjacent to the guard houses so that Parcel F Owner can so utilize Old Post Road or Mill Ridge Road for construction traffic, (ii) promptly repair, maintain, wash down, clean and provide security in connection with its use of Old Post Road or Mill Ridge Road for construction traffic, and (iii) limit the hours that heavy infrastructure equipment utilizes Old Post or Old Mill Ridge Roads so as to minimize the impact to the Golf Course Parcel and Club Facilities to the fullest extent practicable, the times to be agreed upon by Golf Course Owner and Parcel F Owner.  Parcel F Owner shall be responsible, at its sole cost and expense, for maintaining restricted security controlled construction access to Parcel F from Bee Pond Road.  During the period of any construction of or at the Parcel F Development, but not including repairs and maintenance to individually owned residential units within Parcel F after the completion of the Parcel F Development by or on behalf of Retail Purchasers, Parcel F Owner shall, at its sole cost and expense, restrict vehicular access of all contractors, subcontractors, material suppliers and their employees so that they can not drive onto Old Post Road from the Parcel F Access Road, unless expressly authorized to do so pursuant to the foregoing provisions; except that upon request by Parcel F Owner, Golf Course Owner shall allow Parcel F Owner, for a short period of time (less than one week), with such timeframe to be determined by Golf Course Owner in its reasonable discretion and convenience, the right to move its site work equipment, contractors, subcontractors, material supplies and their employees on to Parcel F by utilizing, at Golf Course Owner’s election, either (i) the portion of Old Post Road that is east of the intersection of Old Post Road and the west boundary of Parcel F Access Road Parcel, (ii) Mill Ridge Road and the portion of Old Post Road between Parcel F and Mill Ridge Road for access to and from U.S. Highway 19 or Klosterman Road and Parcel F, or (iii) Bee Pond Road; and by further utilizing access across the Golf Course Parcel to Parcel F at a location to be chosen by Golf Course Owner in its sole discretion.  Parcel F Owner, at its sole cost and expense, shall, and shall require all contractors, subcontractors and material suppliers, and their employees to, comply with construction regulations implemented by Parcel F Owner,

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copies of which shall be promptly delivered to Golf Course Owner by Parcel F Owner.  Such regulations shall include (and where applicable, at the sole cost and expense of Parcel F Owner): (a) a prohibition of construction on the Golf Course Parcel during the Active Golf Season (as defined below); (b) during the entire year, a prohibition of construction for the Parcel F Development on Sundays, whether such construction occurs on the Golf Course Parcel, on Parcel F, or on the Parcel F Access Road; (c) a prohibition on the use of radios and other unnecessary noise; (d) a requirement to wear shirts at all times; (e) a requirement that parking be only in designated areas; (f) a requirement that all construction sites be maintained in a clean and neat manner; (g) a requirement that construction start no sooner than 7:00 a.m. and be completed no later than 6:00 p.m. (or 7:00 p.m. during daylight savings time); (h) a prohibition against access to Parcel F except as expressly set forth in this Section 5.2; (i) a speed limit of 12 mph for all vehicular traffic; (j) a requirement that, subject to the usual and customary noise and other unavoidable impacts directly associated with the development of the Parcel F Development in accordance with the Plans, Parcel F Owner shall not cause or allow to be caused at anytime any unnecessary and/or avoidable disruption to the Club Facilities to the fullest extent practicable; (k) a requirement that all work shall be performed at Parcel F Owner’s sole cost and expense in accordance with all applicable governmental permits, approvals, laws, regulations and ordinances (including, without limitation, all health and safety rules and procedures), provided Parcel F Owner shall have fifteen (15) calendar days to comply with any notice of deficiency, unless a shorter time period to comply with such notice of deficiency is required, in which case Parcel F Owner shall comply with such shorter time period; (l) a requirement that Parcel F Owner cause all construction and improvement activities in connection with Phase 1 of the Parcel F Development (as determined by Parcel F Owner) to be conducted and completed as soon as reasonably practicable, but in no event later than 24 months within Parcel F Owner’s receipt of the requisite permits for such construction; (m) a requirement that all hazardous waste, chemicals, paint and the like and all garbage and debris shall be timely and properly disposed of by Parcel F Owner and all of its employees, contractors, subcontractors and material suppliers (without the use of any Golf Course Parcel receptacles, garbage containers and the like) in accordance with all applicable laws, rules and regulations; (n) a prohibition against the use of Golf Course Parcel bathrooms; (o) a requirement that there will be no construction on the Golf Course Parcel, Parcel F, or Parcel F Access Road that causes the irrigation system to be unavailable to any portion of the Golf Course Parcel for more than one time in any seven-day period and for more than 24 consecutive hours at a time, and Golf Course Owner agrees to reasonably cooperate with Parcel F Owner to allow Parcel F Owner access to relevant portions of the Golf Course Parcel to construct above ground temporary water lines (for each set of water lines, for a period not to exceed 10 days) to accomplish the foregoing provided Parcel F Owner complies with applicable governmental laws and regulations; and (p) Parcel F Owner’s agreement that work performed on the Golf Course Parcel shall be scheduled in a manner so that all construction sites on the Golf Course Parcel are cleaned and returned to their original or retrofitted condition so that the Island Golf Course is open for full play at the start of the Active Golf Season (as described below); provided, however, notwithstanding anything to the contrary contained in this Agreement, during (and with respect to) the “Active Golf Season” (i.e., the period October 1 through May 1) of any year, for any construction on land other than the Golf Course Parcel, Parcel F Owner shall also comply with the following: (1) Parcel F Owner shall provide to Golf Course Owner for its review and comment, on or before August 31 of each and every year that

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the site construction of the Parcel F Development is in progress (but excluding times when residential  vertical construction is the only construction), a detailed and accurate summary of (i) Parcel F Owner’s proposed site work plans (including the respective project timeline) (“Proposed Site Work Plans”) which Proposed Site Work Plans shall include any and all site work to be performed in Parcel F during the Active Golf Season which site work may reasonably be determined by Parcel F Owner to cause any disruption or other impacts on the Island Course, (ii) Parcel F Owner’s proposed mitigation plan (“Proposed Mitigation Plan”) to minimize and mitigate any and all disruption or other impacts on the Island Course which may be caused by the site work contained in the Proposed Site Work Plans, which Proposed Mitigation Plan shall include, without limitation, dust and noise control management and the timing and scheduling of work in critical areas of the Island Course, (2) Parcel F Owner shall use its good faith efforts to properly revise the Proposed Site Work Plans and Proposed Mitigation Plan to accommodate Golf Course Owner’s comments; and (3) Parcel F Owner shall use its good faith efforts to complete the Proposed Site Work Plans and Proposed Mitigation Plan (each as revised to reflect any and all of Golf Course Owner’s comments) in accordance with their respective terms.

5.3Improvements.  Parcel F Owner shall be solely responsible for all fees, costs and expenses of improvements (including, without limitation, securing all permits and other governmental approvals required in connection with the improvements described in this Section 5.3) on (a) the Golf Course Parcel constructed by Golf Course Owner pursuant to this Agreement in accordance with Exhibit Q attached hereto, and (b) Parcel F and the Parcel F Access Road Parcel necessary to construct the Parcel F Development, including, without limitation, items which are contained in Exhibit Q and the roadway to be constructed upon Parcel F Access Road Parcel in (1) substantial accordance with and as described in the construction plans for the Parcel F Access Road prepared by King Engineering Associates dated July 23, 2001, SP# 1050.071, job number 1218-006-000, a true, correct and complete copy of which Parcel F Owner agrees it has provided to Golf Course Owner and GTA, and (2) accordance with all applicable governmental permits, approvals, laws and ordinances, and all drainage and wetland mitigation required in connection therewith.  At anytime after Parcel F Owner’s completion of Parcel F Access Road and all infrastructure improvements in connection therewith, upon receiving Golf Course Owner’s written request Parcel F Owner shall promptly execute and deliver a lien free bill of sale to Golf Course Owner, at Parcel F Owner’s sole cost and expense, for all such improvements and all such improvements shall belong to and be the sole and exclusive property of Golf Course Owner with no rights vested in any other Person, including, without limitation, Parcel F Owner; provided, however, that Parcel F Owner shall have the right to use such improvements to the extent of the Easements granted to Parcel F Owner by Golf Course Owner under this Agreement or other rights of Parcel F Owner.  Parcel F Owner, at its sole cost and expense, agrees that any and all necessary maintenance, repair and all other activities necessary to satisfy and comply with any governmental requirements with respect to Parcel F Access Road shall be the sole responsibility of Parcel F Owner and shall be performed by Parcel F Owner in a professional, high-quality manner and promptly and diligently completed once commenced by Parcel F Owner.  If the Plans are modified in any way and the Golf Course Owner reasonably determines that the Golf Course Parcel is adversely impacted by such modification, in addition to those improvements described in Exhibit Q, then Parcel F Owner shall either pay for or promptly reimburse Golf Course Owner for the cost of such additional improvements that are

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necessary, in Golf Course Owner’s reasonable opinion, because of such changes.  Parcel F Owner agrees that the scheduling of Parcel F Development construction that impacts the Golf Course Parcel improvements shall be reasonably coordinated with the construction of improvements to the Golf Course Parcel made in accordance with Exhibit Q in order to take into account optimum time frames for sodding, reseeding and overseeding of turf and other agronomic issues.  Golf Course Owner may elect, by notifying Parcel F Owner within one hundred eighty (180) days after the Effective Date of this Agreement, to shift the location of the Parcel F Access Road approximately 15 to 25 feet further away from hole 18 of the Island Golf Course.  In the event Golf Course Owner makes such election, Parcel F Owner shall be required to (a) obtain, at Parcel F Owner’s cost, all governmental permits and approvals necessary in order to construct the Parcel F Access Road in such new location, and (b) pay for the additional cost of construction, if any, of the Parcel F Access Road due to such new location above and beyond the cost of construction in the prior location.  Golf Course Owner and Parcel F Owner agree to cooperate in undertaking such permitting immediately after Golf Course Owner exercises such election and Golf Course Owner and Parcel F Owner agree to proceed with all reasonable due diligence to obtain all permits and approvals.  If such permitting is approved, Parcel F Owner and Golf Course Owner agree to adjust the location of the Parcel F Access Road Parcel and corresponding easement to accommodate the final approved location of the road.

5.4Utilities.  Parcel F Owner shall secure its potable water source and sanitary sewer service, at its sole cost and expense, directly from Pinellas County.  Parcel F Owner shall not be permitted to connect any improvements now or hereafter constructed on Parcel F or on Parcel F Access Road Parcel to Golf Course Owner’s potable water or sanitary sewer lines or facilities.

5.5Development of Parcel F.  Parcel F Owner has prepared and submitted to Golf Course Owner and GTA, and Golf Course Owner and GTA have approved, a preliminary site plan, conceptual elevations, architectural renderings, sketches and preliminary floor plans for some but not all of the dwelling units, which are all more particularly described on Exhibit M attached hereto (together with any other plans subsequently approved by Golf Course Owner in accordance with this Section 5.5, the “Plans”).  The Plans shall comply with all applicable laws, rules and regulations, including, without limitation, all zoning regulations.  The Plans are preliminary and conceptual in nature and will be refined and modified.  Such refined and modified plans shall be submitted to Golf Course Owner for review and approval, which approval shall not be unreasonably withheld or delayed (“Plan Approval”).  If no objection is received by Parcel F Owner within fifteen (15) days after delivery of a complete set of the modified Plans to Golf Course Owner, such modified Plans will be deemed approved by Golf Course Owner.  Any modified Plans shall be approved by Golf Course Owner so long as the modified Plans do not have a materially adverse greater impact on the Island Golf Course than the prior Plans.  In all cases, the Plans may not be modified without Golf Course Owner’s consent if such modifications include an increase in project density, reduction of any setbacks, or increase of any building height.  In the event that Golf Course Owner does not provide to Parcel F Owner the Plan Approval, Golf Course Owner shall provide Parcel F Owner with a written notice of its specific reasons for withholding the Plan Approval.  After Parcel F Owner’s receipt of such written notice of Golf Course Owner’s specific reasons for withholding the Plan Approval, Parcel F Owner may either (1) resubmit to Golf Course Owner for its review and Plan Approval a revised copy of the proposed modified or new Plans, or (2)

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initiate arbitration proceedings by providing Golf Course Owner and with written notice of Parcel F Owner’s intention to initiate arbitration to resolve its objection to Golf Course Owner’s decision to withhold the Plan Approval, which arbitration shall be conducted in accordance with Section 6.11 of this Agreement.  Notwithstanding the foregoing, modifications to the Plan proposed by Parcel F Owner, or any change required by a governmental agency, may be made with prior written notice (including copies of all of the governmental agency documentation related thereto) to Golf Course Owner but without the written approval of Golf Course Owner.  In the event that Golf Course Owner believes that some or all of such modifications to the Plans cause a materially greater adverse impact to the Island Golf Course and Golf Course Owner provides Parcel F Owner with written notice of Golf Course Owner’s objection to the same together with a written summary of such objections, then Parcel F Owner shall elect either option (1) or (2) above.  Golf Course Owner shall have twenty (20) days after receipt of any revised or new Plans to deliver notice of its objection of the same to Parcel F Owner together with the specifics reasons for such objections or such proposed modified or new Plans shall be deemed approved.  Parcel F Owner agrees to develop Parcel F and construct improvements on Parcel F generally consistent with the quality of construction and appearance of the improvements at the Harbour Bay Town Homes.

5.6Common Expenses.  Golf Course Owner will incur certain expenses in connection with landscaping (including irrigation), lighting, maintenance and repair of Old Post Road and Mill Ridge Road (which roads are hereinafter referred to together as the “Roads”), and providing private security services for the Golf Course Parcel and possibly portions of Parcel F, including guard gates, and which expenses are reasonably incurred by Golf Course Owner.  Golf Course Owner shall use reasonable efforts to maintain the Roads and other items for which Parcel F Owner is paying Shared Expenses in generally the same condition as the Roads and such other items have historically been maintained.  The Owners’ Association shall be obligated to contribute on a calendar quarterly basis to the expenses (the “Shared Expenses”) as set forth below for: (a) landscaping (including irrigation) and lighting of the Roads and the common areas adjacent to the Roads; and (b) maintenance and repair of the Roads.  Any expenses which directly and solely benefit Parcel F, such as expenses for private security guards, shall be borne solely by the Parcel F Owner.  The portion of the Shared Expenses to be borne by the Owners’ Association shall be equal to two-thirds (2/3) of the Shared Expenses multiplied by a fraction the numerator of which is the number of residential units located on Parcel F that have received certificates of occupancy as of the beginning of the calendar quarter during which the Shared Expenses in question were incurred, and the denominator of which is the total number of residential units located within Innisbrook that have received certificates of occupancy as of the beginning of the calendar quarter during which the Shared Expenses in question were incurred.  For example, if (i) the Shared Expenses for a particular period of time was $500,000.00, and (ii) the number of residential units that have received certificates of occupancy from the beginning of such period and located on Parcel F was 271 units, and (iii) the total number of residential units located within Innisbrook that have received certificates of occupancy as of the beginning of such period was 1,209 units, then the portion of the Shared Expenses to be borne by the Owners’ Association would be $74,717.36, or $275.71 per unit (2/3 x $500,000.00 x 271/1,209 = $74,717.36; $74,717.36 divided by 271 units = $275.71 per unit).  The portion of the Shared Expenses to be borne by the Owners’ Association under this Section 5.6 shall be billed to, and paid by, the Owners’ Association to Golf Course Owner within thirty (30) days after the accrual of the same on a quarterly basis.

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5.7Declaration of Restrictions.  Parcel F Owner shall prepare a declaration of covenants, conditions and restrictions governing the Parcel F Development (as amended, the “Parcel F Owner Declaration”.  The Parcel F Owner Declaration shall be subject to Golf Course Owner’s prior written approval, in order that Golf Course Owner may ensure that the Parcel F Owner Declaration complies with this Agreement.  No modification to the Parcel F Owner Declaration which adversely affects the Golf Course Parcel shall be deemed to be effective without the prior written consent of the Golf Course Owner.  The Parcel F Owner Declaration shall be consistent with the restrictions in Exhibit N attached hereto.  The Parcel F Owner Declaration shall be recorded in the public records of Pinellas County, Florida prior to the conveyance of the first residential unit within Parcel F to a Retail Purchaser.  The Parcel F Owner Declaration shall provide that in the event of a breach by Parcel F Owner or any other obligor including, without limitation, the Owners’ Association under this Agreement or the Parcel F Owner Declaration and such breach has not been cured within thirty (30) days after receipt of a written demand from Golf Course Owner, Golf Course Owner shall have the right, but not the obligation and not as an exclusive remedy, to initiate arbitration proceedings by providing the breaching party with written notice of Golf Course Owner’s intention to initiate arbitration proceedings to enforce Golf Course Owner’s rights under this Agreement, including, without limitation, the right to require (1) the breaching party to pay any amounts owed to and damages incurred by Golf Course Owner in connection with such breach, and (2) the Owners’ Association to issue a Special Assessment to provide funds to satisfy a judgment or arbitration award in favor of Golf Course Owner, which arbitration shall be conducted in accordance with Section 6.11 of this Agreement.  To the extent any terms or provisions of the Parcel F Owner Declaration conflict with the terms and provisions of this Agreement, the terms and provisions of this Agreement shall control.  Notwithstanding the foregoing, Golf Course Owner is a third party beneficiary of the provisions of the Parcel F Owner Declaration specified on Exhibit N and has independent standing, without the necessity of initiating arbitration proceedings to enforce such provisions of the Parcel F Owner Declaration including the right to seek an injunction and/or money damages against any parties violating one or more provisions contained in the Parcel F Owner Declaration if in the reasonable opinion of the Golf Course Owner, such a violation is adversely affecting the Golf Course Parcel.  In that regard, the Parcel F Owner Declaration will include a “prevailing party” provision which obligates a non-prevailing party to pay the legal fees and expenses of the prevailing party in the event the prevailing party is successful in obtaining an injunction or recovers money damages against the non-prevailing party.

5.8Sales Office; Marketing; Code.  Parcel F Owner anticipates creating a sales office within the real property more particularly described in Exhibit O (“Parcel J-4”) by virtue of a leasehold interest provided for in the Purchase Agreement, which sales office will be adjacent to the front secured entrance gate to the Golf Course Parcel and Innisbrook.  Before any contemplated use of Parcel J-4, Parcel F Owner will comply with Golf Course Owner’s reasonable requirements with respect to (a) ingress and egress to and from Parcel J-4, including, without limitation, security matters, and (b) Plan and landscaping matters affecting Parcel J-4.  Before Parcel F Owner begins any sales or marketing activities of residential units within Parcel F, Parcel F Owner shall execute a mutually acceptable sales and marketing agreement with Golf Course Owner and/or Golf Course Owner’s separate residential sales and marketing entity.  Golf Course Owner and Parcel F Owner shall reasonably cooperate so that telephone calls received by one of such parties intended for the other party can be directly

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transferred to the other party’s sales office.  Golf Course Owner and Parcel F Owner shall provide a link to the other party’s website so long as such party maintains a web site.  On or prior to Parcel F Owner’s commencement of construction of the Parcel F Development, Golf Course Owner shall initiate and use reasonable diligence to complete the process of amending the Code to provide that (a) all residential units, whether in the condominium form of ownership or not, qualify for full golf memberships in the Club and (b) to modify Article II, Section 4 of the Code to be consistent with the transferability of the Club Memberships pursuant to Section 3.3 hereof.

5.9Shared Stormwater Management System.  Golf Course Owner and Parcel F Owner agree to reasonably cooperate with one another regarding a shared stormwater management system (the “System”).  The System will accommodate a certain amount of drainage from Parcel F and the Golf Course Parcel adjacent to Parcel F and the System will be located within Parcel F and also within a portion of the Golf Course Parcel located adjacent to Parcel F, as more particularly set forth on Exhibit P attached hereto (“Stormwater Management Parcel”); provided, however, the design and location of the Stormwater Management Parcel has not been finalized and Exhibit P attached hereto may be modified by Golf Course Owner and Parcel F Owner.  Golf Course Owner and Parcel F Owner agree to reasonably cooperate with one another to finalize the design and location of the Stormwater Management Parcel and Exhibit P; provided, however, that such finalized Stormwater Management Parcel and Exhibit P shall not cause any greater material adverse impact on the Golf Course Parcel than prior to such modification.  Golf Course Owner and Parcel F Owner hereby grant each other, a non-exclusive easement over and across the Stormwater Management Parcel and other parts of the Golf Course Parcel and Parcel F as necessary for implementing the permitted design, for the sole and exclusive purposes of construction, maintenance, repair and use of the System.  The stormwater management easement described in this Section 5.9 shall be included in the definition of “Easements,” and the Stormwater Management Parcel shall be included in the definition of “Easement Parcels,” as used throughout this Agreement.  The cost of the design and construction of the System, professional fees, governmental permit fees and all other costs related thereto, shall be the sole cost and expense of Parcel F Owner; provided, however, that any cost or expense that is pre-approved by Parcel F Owner and incurred by Golf Course Owner with respect to the foregoing shall be promptly reimbursed by Parcel F Owner.  The cost of maintaining the System after the approval and construction of the same shall be the sole responsibility of Parcel F Owner.

5.10Parcel F Access Road; Disclaimer.  Golf Course Owner shall reasonably cooperate with Parcel F Owner so that Parcel F Owner, at its sole cost and expense, may (i) recommend for Golf Course Owner’s consideration a name for Parcel F Access Road (provided Golf Course Owner shall have no obligation hereunder to follow such recommendation whatsoever), and (ii) install and maintain landscaping and other entry improvements (including one (1) project identification sign, as described in Section 2.7 of this Agreement) adjacent to the portion of the Parcel F Access Road adjacent to the tennis courts.  The Parcel F Owner Declaration, Parcel F Owner’s form purchase and sale agreement, and Parcel F Owner’s form deed for the sale of residential units shall include a conspicuous disclaimer and release of the Parcel F Owner and Golf Course Owner by all Parcel F Unit Owners (and their invitees and guests) in the event that they or their property is struck by a golf ball.  The provision contained in the purchase and sale agreement shall survive the closing.  The provision in the deed shall require the purchaser’s written acknowledgment of the disclaimer and release.

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5.11Improvements, Landscaping and Structures.  Golf Course Owner shall have the right, to install, construct, modify and maintain any and all improvements, landscaping and structures for, or contained in, the Golf Course Parcel. Such improvements, landscaping or structures shall not be installed, constructed or modified with the purpose and intention of materially blocking a Parcel F Unit Owner’s view from his or her residential unit located in Parcel F of the Golf Course Parcel, however, such improvements, landscaping or structures may be installed, constructed modified and maintained for the purpose of improving the golf course by Golf Course Owner.

5.12Maintenance Easement.  Parcel F Owner hereby declares and grants a non-exclusive easement (“Maintenance Easement”) appurtenant to the Golf Course Parcel for the lawful use by Golf Course Owner and the employees, licensees and invitees of Golf Course Owner over and across such portions of Parcel F that are not improved with vertical improvements (a) in order to provide access to the System and the drainage pipes and other drainage facilities that operate as part of the System (collectively, the “Drainage Facilities”), and those portions of Parcel F adjacent to the Drainage Facilities, for the purpose of  maintenance and repair of the Drainage Facilities in the event Parcel F Owner does not maintain the Drainage Facilities as required pursuant to this Agreement, and (b) designated by Parcel F Owner and that provide reasonable access for the Golf Course Parcel maintenance equipment to traverse between holes 9 and 10 and holes 10 and 14 of the Island Course.  The Maintenance Easement (i) shall continue in effect, in perpetuity, unless and until such Maintenance Easement is amended in accordance with Section 6.2 of this Agreement, (ii) shall be an easement appurtenant to the Golf Course Parcel, and (iii) is being granted on a non-exclusive basis.  Parcel F Owner reserves all of its rights to use the Maintenance Easement, including, without limitation, the right to construct, maintain and use improvements over, across and under the Maintenance Easement.  Notwithstanding the foregoing, such use of the Maintenance Easement shall not unreasonably interfere with the use of the Maintenance Easement by the Golf Course Owner.  Golf Course Owner, at its sole cost and expense, shall obtain and maintain during the entire time this Agreement and the Maintenance Easement granted under this Agreement shall be in effect, a commercial general liability policy (occurrence form) (“GTA Insurance”) for personal injury, bodily injury and property damage occurring to or on the Maintenance Easement and/or Parcel F (except to the extent such personal injury, bodily injury or property damage arises as a result of any negligent acts or omissions or willful misconduct of Parcel F Owner or its guests and invitees) directly as a result of Golf Course Owner’s use of the Maintenance Easement, which policy shall name Parcel F Owner as an additional insured.

5.13Special Assessment.  Notwithstanding anything to the contrary contained in this Agreement, the Owners’ Association shall, in accordance with the Parcel F Owner Declaration (as approved by Golf Course Owner), promptly issue a legally effective special assessment (“Special Assessment”) against each Parcel F Unit Owner for such Parcel F Unit Owner’s proportionate share of any judgment or arbitration award in favor of the Golf Course Owner.  Each of the Parcel F Unit Owners shall be obligated to promptly pay any such Special Assessment; provided, however, that in the event that the Owners’ Association does not promptly issue such Special Assessment (or the Owners’ Association issues such Special Assessment and any or all of the Parcel F Unit Owners do not promptly pay any such Special Assessment) and such breach has not been cured within thirty (30) days after receipt of a written demand from Golf Course Owner.  Golf Course Owner shall have the right, but not the

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obligation and not as an exclusive remedy, to initiate arbitration proceedings by providing such breaching party with written notice of Golf Course Owner’s intention to initiate arbitration proceedings to enforce Golf Course Owner’s rights under this Agreement, including, without limitation, the right to require such breaching party to pay any amounts owed to and damages incurred by Golf Course Owner under this Agreement in connection with such Special Assessment, which arbitration shall be conducted in accordance with Section 6.11 of this Agreement, and in the event a judgment for money damages is awarded to Golf Course Owner may directly file, or cause the filing of, a lien against all property owned by such breaching party, including, without limitation all improvements thereon.

ARTICLE VI

GENERAL PROVISIONS

6.1Severability.  Invalidation of any particular provision of this Agreement by judgment or court order will not affect any other provision, all of which will remain in full force and effect.

6.2Amendment.  This Agreement may be amended only by a written amendment executed by Golf Course Owner and Parcel F Owner and recorded in the Public Records of Pinellas County, Florida.

6.3Interpretation.  Unless the context expressly requires otherwise, (a) the use of the singular includes the plural, and vice versa; (b) the use of the term “including” or “include” is without limitation; and (c) the words of “must”, “will” and “should” have the same legal effect as the word “shall”.  Notwithstanding that the legend on the first page states that this Agreement was prepared by a particular party, this Agreement has been extensively negotiated between the parties hereto and was prepared pursuant to the combined effort of all of the parties and their attorneys.  This Agreement shall not be construed more strictly against one party or the other. Except as otherwise expressly stated in this Agreement, Golf Course Owner and Parcel F Owner shall reasonably cooperate with one another with respect to each of the parties hereto satisfying their respective obligations under this Agreement.

6.4Permission.  When any act by any party affected by this Agreement requires, pursuant to the terms of this Agreement, the permission, consent or joinder of any party, such permission, consent or joinder unless otherwise limited in this Agreement shall not be unreasonably withheld, but shall only be deemed given when it is in written form, executed by such party or if a written objection is not received by the submitting party within fifteen (15) days after receipt of the request by the other party.

6.5Runs with Land; Cooperation; Estoppel.  All of the respective rights (other than the Memberships), duties and the obligations pursuant to this Agreement shall be binding upon the owners of, and shall run with the title to, the Golf Course Parcel and Parcel F.  A prior title owner shall not have any obligations or liability for defaults caused by a subsequent title owner; however, the transfer of title to a subsequent title owner will not relieve any liabilities or obligations of the transferring title owner incurred by or which were the responsibility of the transferring title owner while such a party was the owner.  Notwithstanding the foregoing, Parcel F Owner shall reasonably cooperate with Golf Course Owner at no cost to  Parcel F Owner, to attempt to resolve defaults by subsequent owners (including, without limitation, the Owner’s Association and any Parcel F Unit Owner) for a period of two years after the

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conveyance by Parcel F Owner to such subsequent owner.  Within five (5) days written notice from the requesting party, the responding party shall supply to the requesting party from time to time an estoppel certificate, which estoppel certificate shall confirm to the requesting party as of a certain date that the requesting party is not, to the actual knowledge of the responding party, in default hereunder.  In the event that the responding party is unable to confirm to the requesting party as aforesaid, then within five (5) days of receiving the written request to provide such estoppel certificate the responding party shall provide to the requesting party a statement of facts setting forth why the responding party cannot supply such estoppel certificate to the requesting party.

6.6Title.  Parcel F Owner shall rely on title insurance with respect to the status of title to the portions of the Golf Course Parcel affected by the Easements.

6.7Liability.  Except as otherwise required by law, no present, former or future director, officer or employee of Golf Course Owner or GTA shall be personally liable to Parcel F Owner or to any other third party in connection with, directly or indirectly, the duties and obligations of Golf Course Owner and GTA hereunder, and that Golf Course Owner and/or GTA, as applicable, shall be held solely responsible and liable with respect to the same.  Except as otherwise required by law, no present, former or future director, officer or employee of Parcel F Owner shall be personally liable to Golf Course Owner or GTA or to any other third party in connection with, directly or indirectly, the duties and obligations of Parcel F Owner hereunder, and that Parcel F Owner shall be held solely responsible and liable with respect to the same.

6.8Default, Cure Period.  If either party fails to comply fully with its duties or obligations pursuant to this Agreement by the due date thereof (“Defaulting Party”) and has not cured the same within thirty (30) days after receipt of a written demand from the other party (the “Non-Defaulting Party”), the Non-Defaulting Party may satisfy or elect to satisfy such obligation and the Defaulting Party shall reimburse the Non-Defaulting Party or pay directly the reasonable costs paid or incurred by the Non-Defaulting Party to cure such failure to comply within thirty (30) days of receiving an itemized list of all such costs, together with interest at the highest rate permitted by law until such amounts are paid.  In addition to the immediately foregoing remedies, in the event that the Defaulting Party has not cured its failure to comply fully with its duties and obligations under this Agreement within thirty (30) days after receipt of a written demand from the Non-Defaulting Party, the Non-Defaulting Party shall have the right, but not the obligation and not as an exclusive remedy, to initiate arbitration proceedings by providing the Defaulting Party with written notice of the Non-Defaulting Party’s intention to initiate arbitration proceedings to enforce the Non-Defaulting Party’s rights under this Agreement, including, without limitation, the right to require the Defaulting Party to pay any amounts owed to and damages incurred by the Non-Defaulting Party under this Agreement, which arbitration shall be conducted in accordance with Section 6.11 of this Agreement and in the event that a judgment is awarded for money damages, the Non-Defaulting Party may directly file or cause the filing of a lien against all property owned by the Defaulting Party including, without limitation, all improvements thereon.  Additionally, in the event of a breach of Section 5.7, whereby Golf Course Owner’s consent is not obtained prior to the recordation of the Declaration (or modification thereof), and Golf Course Owner and shall have the right to seek injunctive relief against the Parcel F Owner in order to enforce the Parcel F Owner to comply with its obligations under Section 5.7 of this Agreement.  Additionally, the

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Golf Course Owner shall have the right to seek injunctive relief or monetary damages against the Parcel F Owner, the Owner’s Association, or a Parcel F Unit Owner in order to enforce one or more of those parties to comply with its obligations under Section 5.7 of this Agreement without resorting to arbitration as described in Section 5.7, and in the event a party obtains injunctive relief or monetary damages, the non-prevailing party shall pay for the prevailing party’s legal fees and expenses.

6.9Indemnification.  Parcel F Owner and Golf Course Owner shall indemnify each other against any claims, litigation, losses, costs, damages, penalties, liabilities and expenses including reasonable attorneys fees and costs resulting from the other party’s breach of this Agreement. 

6.10Governing Law.  This Agreement shall be governed in all respects by the laws of the State of Florida.  In the event of a default pursuant to this Agreement, each party shall have the remedies available pursuant to Florida law and the remedies specified in this Agreement.  Notwithstanding the foregoing, in the event of a default pursuant to Section 3.2 hereof, each party’s sole remedy shall be specific performance and neither party shall have the right to receive damages (including consequential damages or any other form of damages) from the breach of Section 3.2.

6.11Arbitration.  In the event, and only in the event, that a provision in this Agreement expressly provides that a party hereto has the right to initiate arbitration proceedings with respect to a claim or dispute under this Agreement, then such claim or dispute shall be determined by binding arbitration under the American Arbitration Association Rules for the Real Estate Industry (“AAA Rules”) in effect on the date of this Agreement, which AAA Rules to the extent not in conflict with the terms and conditions of this Agreement shall be deemed to be incorporated by reference into this Agreement for purposes of this Section 6.11.  The number of arbitrators shall be one (1) and the arbitrator (who shall be an attorney with at least fifteen (15) years real estate law and development experience, including substantial golf resort development and construction experience) shall be independent of each of the parties hereto (the “Arbitrator”).  The parties hereto shall mutually designate the Arbitrator within ten (10) business days after the commencement of the arbitration, with or without the assistance of the American Arbitration Association’s administrator (the “Administrator”).  When such designation is made, the parties hereto shall notify the Administrator so that notice of the appointment can be communicated to the Arbitrator, together with a copy of AAA Rules.  If within ten (10) business days after the commencement of the arbitration, the parties hereto have not designated an Arbitrator, the Administrator shall, at the written request of either party, appoint the Arbitrator within ten (10) business days after such written request.  In making such an appointment, the Administrator, after inviting consultation from the parties hereto, shall select the Arbitrator.  The place of arbitration shall be at Innisbrook.  The Arbitrator shall hold the hearing within forty five (45) days of the initial demand for arbitration, and shall conclude the hearing within ten (10) days thereafter and issue a written decision within ten (10) days after such conclusion of the arbitration hearing.  The foregoing time limits are not jurisdictional, and the Arbitrator may for good cause permit reasonable extensions or delays.  The Arbitrator shall apply the substantive laws of the State of Florida.  The Arbitrator’s decision shall be final and binding and enforceable in any court of competent jurisdiction.  The parties to this Agreement hereby waive any right they may have to appeal the Arbitrator’s decision.Notwithstanding anything else contained in this Agreement,

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the parties understand and agree (and represent and covenant that it shall not contest in any way the following) that in the event that the Arbitrator’s decision includes an award and such award is not promptly satisfied, then with respect to such award the prevailing party shall have the right, but not the obligation and not as an exclusive remedy, to (a) file and record a memorandum of award against all property owned by the non-prevailing party, including, without limitation, all improvements thereon, (b) directly file, or cause the filing of, a lien against all property owned by the non-prevailing party, including, without limitation, all improvements thereon, and (c) in the case of an award in favor of Golf Course Owner, the Owners’ Association shall promptly issue a Special Assessment against each of the Parcel F Unit Owners for their proportionate share of such obligation (if any).  Additionally, the Golf Course Owner shall have the remedies more particularly described in Section 5.7 in order to enforce the Parcel F Owner, the Owner’s Association, or a Parcel F Unit Owner to comply with its obligations under Section 5.7 of this Agreement without resorting to arbitration as described in Section 5.7.

6.12Effectiveness.  This Agreement is immediately effective and shall remain effective and shall bind and benefit the owners of the Golf Course Parcel and Parcel F whether or not Parcel F Owner acquires Parcel F.

6.13Attorneys’ Fees.  In the event of any controversy, claim or dispute relating to this Agreement or the breach thereof, the prevailing party shall be entitled to recover from the losing party its reasonable attorneys’ fees and costs as may be awarded by the court or arbitration.

6.14Legal Authority.  Each of the parties hereto represent and covenant that: (i) it has the legal authority and right to enter into this Agreement; (ii) the person executing this Agreement has the authority to enter into this Agreement on behalf of such party; and (iii) subject to Section 6.7 of this Agreement, to the best of its knowledge it has no obligation to any other party which is in conflict with its obligations under this Agreement.

6.15Headings.  All headings contained in this Agreement appear only for convenience and reference.  They do not define, limit, extend, or describe the scope of this Agreement or the intent of any of its provisions.

6.16Counterparts.  This Agreement may be executed in counterparts, each of which shall be considered an original, and when taken together shall be considered one instrument.

6.17Notice.  Any notice required or permitted hereunder shall be in writing and shall be deemed given as of the date it is (a) delivered by hand or (b) received by registered or certified mail, postage prepaid, return receipt requested, or (c) sent by facsimile so long as written confirmation of receipt is retained by the sender, and addressed to the party to receive such notice at the address and facsimile number set forth below, or such other address or facsimile number as it subsequently specified in writing.

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If to Parcel F Owner:	Innisbrook F, LLC
	One Tampa City Center, Suite 2600
	Tampa, FL  33602
	Attention:  Mr. Steven M. Samaha
	Fax: (813) 228-8091
With a copy to:	Williams Schifino Mangione & Steady, P.A.
	One Tampa City Center, Suite 2600
	Tampa, Florida  33602
	Attention:  Lee E. Nelson, Esq.
	Fax: (813) 221-7335
If to Golf Course Owner:	Golf Host Resorts, Inc.
	591 West Putnam Avenue
	Greenwich, Connecticut 06830
	Attention:  Mr. Merrick R. Kleeman
	Fax: (203) 861-2101
With a copy to:	Rinaldi, Finkelstein and Franklin, LLC
	591 West Putnam Avenue
	Greenwich, Connecticut 06830
	Attention:  Steve Finkelstein, Esq.
	Fax: (203) 861-2101
If to GTA	Golf Trust of America, L.P.
	14 North Adgers Wharf
	Charleston, South Carolina 29401
	Attention:  Mr. W. Bradley Blair, II
	Fax:  (843) 723-0479
With a copy to:	O’Melveny & Myers LLP
	275 Battery Street, Suite 2600
	San Francisco, California 94118
	Attention: Peter T. Healy, Esq.
	Fax: (415) 984-8701
and:	Parker Poe Adams & Bernstein, L.L.P.
	200 Meeting Street, Suite 301
	Charleston, South Carolina 29401
	Attn: Matthew J. Norton, Esq.
	Fax: (843) 720-8993 or (843) 727-2680

6.18Entire Agreement.  This Agreement, together with the exhibits attached hereto, contain the full understanding of the parties with respect to the matters set forth in this Agreement, and supersedes all existing agreements and all other oral, written or other communications between the parties concerning the subject matter hereof.

25

6.19Rights of GTA.So long as GTA (or any successor or assign) holds a mortgage encumbering the Golf Course Parcel, all rights of Golf Course Owner as the Golf Course Owner pursuant to this Agreement (including, for example, rights of amendment, consent or approval) shall also run to the benefit of GTA (or its successor or assign).

26

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

PARCEL F, LLC, formerly known as Bayfair Innisbrook, L.L.C., a Florida limited liability corporation
By:		/s/ STEVE SAMAHA
Name:					STEVE SAMAHA
Its:			Member
GOLF HOST RESORTS, INC., a Colorado corporation
By:				/s/ ROBERT GEIMER
Name:					ROBERT GEIMER
Its:	Vice President

27

The undersigned hereby consents to this Agreement, subject to and in accordance with, the terms of this Agreement and all of the exhibits thereto.

GOLF TRUST OF AMERICA, L.P., a Delaware limited partnership
By:		GTA GP, INC., a Maryland corporation
By:	/s/  W. BRADLEY BLAIR II
Name: W. Bradley Blair, II
Its:  President and CEO

28

EX-99

Exhibit 99

GTA –IB, LLC

UNAUDITED PRO FORMA  CONDENSED CONSOLIDATED

BALANCE SHEET AS OF JUNE 30, 2004

(in thousands)

	Historical							Pro Forma
	GTA-IB, LLC	Resort operations			Adjustments			Combined Amounts
ASSETS
Current Assets	$	$	6,527		$	1,960	(1)(2)	$	8,492
Intangibles – net		11,171			7,366		(3)	18,537
Property and equipment – net		36,838			(7,988		)(3)	28,850
Other assets		5,757			(3,303		)(3)	2,454
Total assets		60,293			(1,965		)	58,333
LIABILITIES
Debt		78,975			(78,975		)(4)
Accounts payable and other liabilities		8,228			(118		)(5)	8,110
Accrued interest		28,312			(28,312		)(4)
Due to related parties					2,000		(1)
					39,240		(4)
		2,398			(2,398		)(6)	41,240
Other long-term liabilities		10,265			(5,913		)(7)	4,352
Long-term refurbishment		6,961			(2,330		)(8)	4,631
Deferred incomes taxes		1,255			(1,255		)(10)
Total liabilities		136,394			(78,061		)	58,333
Commitments and contingencies
Shareholder’s/member’s equity(deficit)
Common stock, $1 par, 5,000 shares authorized, issued and outstanding		4,582			(4,582		)(9)
Paid-in capital		(8,711		)	8,711		(9)
Accumulated deficit		(71,972		)	71,972		(1-10)
Total shareholder’s/member’s (deficit) retained earnings		(76,101		)	76,101
Total liabilities and shareholder’s/member’s deficit	$	$	60,293		$	(1,960	)	$	58,333

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

1

GTA — IB, LLC

UNAUDITED PRO FORMA  CONDENSED CONSOLIDATED

STATEMENT OF NET LOSS

FOR THE SIX MONTHS ENDED JUNE 30, 2004

(in thousands)

	Historical							Pro forma
	GTA-IB, LLC	Resort operations			Adjustments			Combined Amounts
Revenues
Resort facilities	$	$	6,447		$			$	6,447
Food and beverage		5,696						5,696
Golf		6,869						6,869
Other		2,865						2,865
Total revenues		21,877						21,877
Costs and Operating Expenses
Resort facilities		5,280						5,280
Food and beverage		4,379						4,379
Golf.		3,850						3,850
Other		4,577						4,577
General & administrative		2,632			161		(1)	2,793
					2,298		(2)
Depreciation and amortization		1,495			(1,495		)(2)	2,298
Total expenses		22,213			964			23,177
Operating loss		(336		)	(964		)	(1,300		)
Other expense
					(4,561		)(3)
Interest expense		4,735			460		(4)	634
Net loss	$	$	(5,071	)	$	3,137		$	(1,934	)

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

2

GTA – IB, LLC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF NET LOSS

FOR THE YEAR ENDED DECEMBER 31, 2003

(in thousands)

	Historical							Pro forma
	GTA-IB, LLC	Resort operations			Adjustments			Combined Amounts
Revenues
Resort facilities	$	$	11,786		$			$	11,786
Food and beverage		11,214						11,214
Golf		10,874						10,874
Other		5,062						5,062
Total revenues		38,936						38,936
Costs and Operating Expenses
Resort facilities		10,169						10,169
Food and beverage		8,037						8,037
Golf		7,157						7,157
Other		8,284						8,284
General & administrative		4,640			234		(1)	4,874
					3,976		(2)	3,976
Depreciation and amortization		2,998			(2,998		)(2)
Total expenses		41,285			1,212			42,340
Operating loss		(2,349		)	(1,212		)	(3,561		)
Other expenses
					(9,116		)(3)
Interest expense		9,116			753		(4)	753
Net loss	$	$	(11,465	)	$	7,151		$	(4,314	)

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

3

GTA – IB, LLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA

FINANCIAL STATEMENTS

I.BASIS OF PRESENTATION

GTA-IB, LLC (the “Company”) was formed as a wholly-owned subsidiary of the Golf Trust of America, Inc. (“GTA”) for the purpose of completing the transactions described in Item 2.01 herein.  On July 15, 2004 the Company took title to the Westin Innisbrook Golf Resort (the “Resort”) through a negotiated settlement agreement (the “Settlement Agreement”) resolving a default on a participating mortgage loan under which the Company’s affiliate Golf Trust of America, L.P. (the “GTA Operating Partnership”) was the lender. Before the Settlement Agreement, the Resort was owned by Golf Host Resorts, Inc. and served as collateral under this participating mortgage loan.  The accompanying historical financial statements at June 30, 2004 are presented in accordance with the basis of the predecessor owner (the borrower under the participating mortgage loan).

The accompanying unaudited pro forma  balance sheet as of June 30, 2004 gives effect to the acquisition of the Resort and related operations, as described in Item 2.01 herein, as if the acquisition had occurred on that date. The accompanying unaudited pro forma  statements of net loss for the six months ended June 30, 2004 and the year ended December 31, 2003 give effect to the acquisition of the Resort and its related operations, as described in Item 2.01, as if it had occurred on January 1, 2003.

The Company preliminarily determined the estimated fair values of the assets and liabilities using the methods of accounting consistent with Financial Accounting Statement 141 for purchase accounting.  The unaudited pro forma  financial statements are subject to a number of estimates, assumptions and other uncertainties, including the allocation of the purchase price, and do not purport to be indicative of the actual financial position or results of operations or changes in net assets that would have occurred had the transaction reflected therein in fact occurred on the dates specified, nor do such financial statements purport to be indicative of the results of operations or financial condition that may be achieved in the future.

4

II.UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2004

The unaudited pro forma condensed consolidated condensed balance sheet gives effect to the transaction as if it occurred on June 30, 2004.

(1)Reflects the loan from Elk Funding, L.L.C. of $2.0 million to the GTA Operating Partnership that was provided to fund the Resort concurrently with the closing of the Settlement Agreement.  The loan was made to the GTA Operating Partnership, which then funded the Company.

(2)Reflects the elimination of approximately $35,000 in certain prepaid expenses paid by the predecessor owner that have no continuing  value to the Company.

(3)Reflects the adjustment to the predecessor owner’s carrying amounts of the property, plant and equipment and the intangible assets of the Resort including the predecesor owner’s investment in the refurbishment of the individually owned condominium rental pool units at the Resort to reflect these assets at their estimated fair value. The adjustment to Other Assets also reflects $2,200,000 representing the contingent asset that the Company acquired in the Settlement Agreement related to sharing rights in the proceeds from the sale of Parcel F and the elimination of approximately $873,000 in GTA common stock held by the borrower and cancelled pursuant to the Settlement Agreement. The adjustment to Other Assets also reflects $2,200,000 representing the contingent asset that the Company acquired in the settlement related to sharing rights in the proceeds from the sale of Parcel F.  The following is a table summarizing the estimated fair values of the identifiable intangibles acquired and the expected amortization periods for such intangibles:

Intangible Assets	Estimated Fair Value		Amortization Period
Water Contract	$	2,300,000	N/A, renewable in to perpetuity
Rental Pool	8,237,000		89.5 months
Guest Bookings	1,100,000		Less than 24 months
Club Memberships	4,400,000		144 months
Trade Name	2,500,000		N/A, renewable in to perpetuity
Total Intangible Assets	$	18,537,000

(4)Reflects the elimination of the predecessor owner’s carrying amounts as of June 30, 2004 of  the participating mortgage loan and related accrued interest for which the Resort was pledged as collateral and replaces such carrying amounts with the estimated fair value of the participating mortgage loan assumed by the Company payable to the GTA Operating Partnership at its estimated fair value based current facts and circumstances including, among others, recent valuations and appraisals.  Pursuant to the terms of an amendment to the participating mortgage loan, the loan now outstanding between the Company and the GTA Operating Partnership (as of July 15, 2004) is $39.240 million. The loan is now non-interest bearing.

(5)Reflects the adjustment to the predecessor owner’s carrying value of the accounts payable due to Troon Golf L.L.C. (“Troon”) to reflect this liability at the estimated fair value using a net present value calculation.   This liability represents the liability for unpaid management fees from prior periods.

(6)Reflects the adjustment of related-party amounts related to the prior owner and its affiliates which are not an obligation of the Company.

(7)Reflects the adjustment to the carrying value of the accounts payable due to Westin Management Company South (“Westin”) based on the settlement reached with Westin pursuant to a management agreement with Westin (the “Management Agreement”), and to reflect this liability at the estimated fair value using a net present value calculation.   This liability represents the termination rights fee that will be due to Westin upon termination by the Company of the Management Agreement, attached to this Current Report on Form 8-K as Exhibit 10.4, pursuant to its terms.

5

(8)Reflects the adjustment to the carrying value of the accounts payable due to certain condominium owners who participate in the rental pool to reflect this liability at the estimated fair value using a net present value calculation.   This liability represents the estimated fair value of the reimbursement payable to certain condominium owners for expenses related to the refurbishment of their rental pool condominium units pursuant to the master lease agreement.

(9)Reflects the elimination of the capital accounts of the predecessor owner.

(10)Reflects reversal of the predecessor owner’s deferred income tax liability which are not assumed by the Company.

III.UNAUDITED PRO FORMA CONDENSED CONSOLDATED STATEMENTS OF NET LOSS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND FOR THE YEAR ENDED  DECEMBER 31, 2003

(1)Reflects the revised management fees pursuant to the Management Agreement and the facility management agreement with Troon, attached to this Current Report on Form 8-K as Management Agreement and the facility Exhibits 10.4 and 10.6, respectively.

(2)Reflects the reversal of the predecessor owner’s depreciation and amortization on the assets of the Resort and reflects the Company’s depreciation and amortization of the assets based on their estimated fair value.  See note II.3 above for further discussion.

(3)Reflects the reversal of the  interest expense on the predecessor owner’s participating mortgage loan.  See note II.4 above for further discussion.

(4)Reflects accretion expense for the Westin, Troon and Refurbishment liabilities based on their estimated  fair value.   These liabilities are recorded at their estimated fair value determined using a net present value calculation.

6

Golf Host Resorts, Inc. and Subsidiary

Financial Statements

December 31, 2003 and 2002

Report of Independent Certified Public Accountants

To the Shareholder and Board of Directors of

Golf Host Resorts, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholder’s deficit and of cash flows present fairly, in all material respects, the financial position of Golf Host Resorts, Inc. and subsidiary at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended  December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 of the notes to the consolidated financial statements, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit that raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also discussed in Note 1 and 6.  Additionally, as described in Notes 6 and 9, the Company has defaulted under the terms of its debt agreement and its parent, Golf Host, Inc., is a defendant to a class action lawsuit wherein the plaintiffs allege breaches of contract by the Company.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ PricewaterhouseCoopers, LLP

Tampa, Florida

March 30, 2004

2

Golf Host Resorts, Inc. and Subsidiary

Consolidated Balance Sheets

December 31, 2003 and 2002

	2003			2002
Assets
Current assets
Cash	$	—		$	—
Restricted cash	2,489,761			2,520,849
Accounts receivable, net	1,578,294			2,069,962
Other receivables	120,966			61,554
Inventories and supplies	1,348,526			1,157,792
Prepaid expenses and other assets	350,161			514,493
	5,887,708			6,324,650
Intangibles, net	11,602,195			12,463,987
Property and equipment, net	37,164,124			38,025,063
Other assets	6,279,340			5,701,950
Total assets	$	60,933,367		$	62,515,650
Liabilities and Shareholder’s Deficit
Current liabilities
Cash overdrafts	$	—		$	69,846
Debt due within one year	78,975,000			79,003,552
Accounts payable	4,501,132			4,973,036
Accrued payroll costs	885,531			893,224
Accrued interest	23,751,133			14,538,319
Other payables and accrued expenses	2,541,365			2,721,823
Deposits and deferred revenue	1,867,326			2,003,938
Due to related parties	832,774			198,802
	113,354,261			104,402,540
Other long-term liabilities	10,265,009			10,265,009
Long-term refurbishment	6,960,748			5,548,514
Deferred income taxes	1,255,000			1,255,000
Total liabilities	131,835,018			121,471,063
Shareholder’s deficit
Common stock, $1 par, 5,000 shares authorized, issued and outstanding	5,000			5,000
5.6% cumulative preferred stock, $1 par, 4,577,000 shares authorized, issued and outstanding	4,577,000			4,577,000
Paid-in capital	(8,487,323		)	(8,487,323		)
Shareholders’ receivable	(223,709		)
Accumulated deficit	(66,772,619		)	(55,050,090		)
Total shareholder’s deficit	(70,901,651		)	(58,955,413		)
Total liabilities and shareholder’s deficit	$	60,933,367		$	62,515,650

The accompanying notes are an integral part of these financial statements.

3

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Operations

For the year ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Revenues
Resort facilities	$	11,785,522		$	12,156,198		$	16,286,752
Food and beverage	11,213,597			11,335,921			12,965,848
Golf	10,873,605			11,528,611			13,320,099
Other	5,061,906			5,575,210			5,146,238
	38,934,630			40,595,940			47,718,937
Costs and operating expenses
Resort facilities	10,168,879			9,659,301			11,810,655
Food and beverage	8,036,799			7,974,357			9,034,212
Golf	7,157,362			6,186,797			6,570,304
Other	8,284,514			8,527,711			9,342,146
General and administrative	4,640,210			4,728,215			5,226,262
Depreciation and amortization	2,997,546			3,597,040			3,886,360
Provision for intangible impairment	—			—			3,000,000
	41,285,310			40,673,421			48,869,939
Loss before loss on assets held for
sale and leased asset	(2,350,680		)	(77,481		)	(1,151,002		)
Loss on assets held for sale and leased asset	—			—			455,729
Operating loss	(2,350,680		)	(77,481		)	(1,606,731		)
Interest expense, net	9,115,537			9,100,748			9,263,315
Loss before income tax benefit	(11,466,217		)	(9,178,229		)	(10,870,046		)
Income tax benefit	—			—			515,467
Net loss	(11,466,217		)	(9,178,229		)	(10,354,579		)
Dividend requirements on preferred stock	256,312			256,312			256,312
Net loss attributable to common shareholder	$	(11,722,529	)	$	(9,434,541	)	$	(10,610,891	)

The accompanying notes are an integral part of these financial statements.

4

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Financial Condition

For the year ended December 31, 2003 and 2002

	$ 1 Par Value Common Stock			5.6% Cumulative Preferred Stock			Paid-in			Shareholder’s			Accumulated			Total Shareholder’s
	Shares	Amount		Shares	Amount		Capital			Receivable			Deficit			Deficit
Balance, December 31, 2001	5,000	$	5,000	4,577,000	$	4,577,000	$	(8,487,323	)	$	—		$	(45,615,549	)	$	(49,520,872	)
Net loss available to common shareholder	—	—		—	—		—			—			(9,434,541		)	(9,434,541		)
Balance, December 31, 2002	5,000	5,000		4,577,000	4,577,000		(8,487,323		)	—			(55,050,090		)	(58,955,413		)
Shareholder’s receivable	—	—		—	—		—			(223,709		)	—			(223,709		)
Net loss available to common shareholder	—	—		—	—		—			—			(11,722,529		)	(11,722,529		)
Balance, December 31, 2003	5,000	$	5,000	4,577,000	$	4,577,000	$	(8,487,323	)	$	(223,709	)	$	(66,772,619	)	$	(70,901,651	)

The accompanying notes are an integral part of these financial statements.

5

Golf Host Resorts, Inc. and Subsidiary

Consolidated Statements of Cash Flows

For the years ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Cash flows from operating activities
Net loss	$	(11,466,217	)	$	(9,178,229	)	$	(10,354,579	)
Adjustments to reconcile net loss to net cash provided by operating activities
Provision for bad debts	30,000			37,057			126,442
Depreciation and amortization	2,997,546			3,597,040			3,886,360
Provision for intangible impairment	—			—			3,000,000
Gain on disposition of capital lease	(28,552		)	(294,821		)	—
Amortization of refurbishment costs	860,111			407,015			—
Affiliate asset contribution	—			(425,688		)	—
Gain on sale of asset held for sale	—			—			(1,164,911		)
Income tax benefit	—			—			(515,467		)
Changes in operating assets and liabilities
(Increases) decreases in
Restricted cash	31,088			(1,107,523		)	(194,037		)
Accounts receivable and other receivables	402,256			(74,811		)	3,189,054
Inventories and supplies	(190,734		)	(87,512		)	536,655
Prepaid expenses and other assets	164,332			99,469			(416,563		)
Increases (decreases) in
Cash overdraft	(69,846		)	69,846			—
Accounts payable	(471,904		)	(1,113,573		)	(851,882		)
Accrued payroll costs	(7,693		)	120,928			(57,776		)
Accrued interest	9,212,814			9,084,962			4,636,310
Other payables and accrued expenses	(180,458		)	(53,203		)	(301,828		)
Deposits and deferred revenue	(136,612		)	(691,335		)	(766,510		)
Due to related parties	377,661			(105,938		)	1,289,103
Cash provided by operating activities	1,523,792			283,684			2,040,371
Cash flows from investing activities
Increases in other assets	(25,268		)	(51,236		)	(25,427		)
Purchases of property and equipment	(1,225,273		)	(714,668		)	(1,526,163		)
(Increase) decrease in assets held for sale	—			—			(47,624		)
Proceeds from sale of asset held for sale	—			—			3,928,635
Cash (used in) provided by investing activities	(1,250,541		)	(765,904		)	2,329,421
Cash flows from financing activities
Repayment of existing debt	(49,542		)	(183,182		)	(3,487,386		)
Advances to GHI	(223,709		)	—			—
Repayments on line of credit	—			—			(667,141		)
Distribution to shareholder	—			—			(3,928,335		)
Contribution from shareholder	—			—			2,667,921
Increases in other long-term liabilities	—			—			1,145,151
Cash (used in) provided by financing activities	(273,251		)	(183,182		)	(4,269,790		)
Net (decrease) increase in cash	—			(665,402		)	100,002
Cash, beginning of period	—			665,402			565,400
Cash, end of period	$	—		$	—		$	665,402
Noncash financing and investing activities
Satisfaction of preferred stock dividend requirement through the intercompany account	$	256,312		$	256,312		$	256,312
Capital lease obligation	49,542			—			—
Forgiveness of operating deficits	—			—			5,069,677
Transfer of fixed assets to asset held for sale	—			—			281,100
Refurbishment program	1,412,234			5,548,514			—
Other information
Interest paid in cash	$	—		$	129,151		$	7,781,358

The accompanying notes are an integral part of these financial statements.

6

Golf Host Resorts, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2003 and 2002

1.Organization, Business and Liquidity

Golf Host Resorts, Inc. (the “Company”) is a wholly owned subsidiary of Golf Host, Inc. (“GHI”) and owns The Westin Innisbrook Golf Resort (“Innisbrook”) in Tarpon Springs, Florida and, through November 18, 2001, owned and operated the Sheraton Tamarron Resort (“Tamarron”) in Durango, Colorado (the “Resorts”).  The Resorts offer championship quality golf facilities, restaurant and conference facilities, and related resort facilities.  A majority of the condominium apartment owners at the Resorts provide their units as resort accommodations under rental pool lease operations.

On June 23, 1997, TM Golf Hosts, Inc. acquired the Company (the “Acquisition”).  The purchase price was approximately $66,333,000, including assumption of certain liabilities.  For financial statement purposes, the Acquisition was accounted for as a purchase and accordingly, the purchase price was allocated based upon the fair value of assets and liabilities acquired.

During 2000, the Company distributed the assets and liabilities of Tamarron of approximately $6,200,000, net, to GHI, who contributed them to Golf Host II, Inc., a wholly owned subsidiary of GHI.  Concurrently with the dividend of Tamarron, the Company entered into a lease agreement whereby Golf Host II, Inc. (“GH II”) leased Tamarron to the Company.  Rent was payable in the amount of $1 per annum and the Company assumed responsibility for Tamarron’s net income (loss), as defined by the lease agreement.  Effective November 19, 2001, Tamarron was sold and the Company has no remaining responsibility under the lease and related rental pool agreements (Note 9).

During 2000, the previous owners were released from all continuing claims under the Acquisition and the previous owners amended and restated their mortgage note from $4,418,000 to $3,168,000.  The write-down under the terms of the amended mortgage note, net of balances due from the previous owners was approximately $655,000, which was recorded as a reduction of intangible assets.  On November 19, 2001, the Tamarron property was sold and the remaining balance of the mortgage note was paid in full (Note 6).

Golf Host Condominium, Inc. (“GHC”), a wholly owned subsidiary of the Company, was formed on December 1, 1997.  GHC’s assets consist of three Innisbrook condominiums and a linen room within condominium lodge number 28.  These condominiums serve as collateral for the GTA debt noted in Note 6 of the financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has negative working capital at December 31, 2003 of approximately $107,467,000 and has incurred operating losses for each of the periods since the Acquisition.  Additionally, as described in Note 6, the Company failed to make scheduled interest payments beginning with October 2001, has defaulted under the terms of its debt agreement, and GHI is a defendant to a class action lawsuit the basis of which relates to alleged actions by the Company (Note 9).

Management is seeking to negotiate a settlement agreement with its lender (Note 6).  In addition, management has developed and implemented sales and marketing plans to increase total Resort revenues through targeting guests likely to utilize more Resort amenities and continues to review its operating costs to determine where cost savings can be achieved.  The Company has an

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agreement with Westin Hotel Company (“Westin”) whereby cash deficiencies, as limited and defined by the agreement, arising from the Innisbrook operation are temporarily funded by Westin (Note 10).

As a result of the preceding matters, substantial doubt exists about the Company’s ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

2.Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Golf Host Resorts, Inc. and Golf Host Condominium, Inc.  All significant intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

Preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions, which affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term highly liquid investments with a purchased maturity of three months or less to be cash equivalents.

At December 31, 2003 and 2002, the balance in restricted cash of approximately $2,490,000 and $2,521,000, respectively, primarily represents cash restricted for capital improvements pursuant to the Company’s loan agreement with Golf Trust of America (“GTA”).  Of this amount, approximately $1,304,000 and $2,274,000 at December 31, 2003 and 2002, respectively, was set aside in a capital replacement fund.  The Company is using the remaining restricted cash to fund operations. The Company is required to maintain, as defined under the Westin Management Agreement (Note 10), a capital replacement fund for future capital improvements.

Accounts Receivable

Accounts receivable represents amounts due from Resort guests and is net of allowances of approximately $30,000 and $160,000 for doubtful accounts at December 31, 2003 and 2002, respectively.

Inventories and Supplies

The Company records inventories and supplies at the lower cost, on a first-in, first-out basis, or market.

Assets Held for Sale

On May 4, 2001, the Company sold the remaining land parcel at Innisbrook included in assets held for sale for $4,578,000.  Net proceeds of $3,928,000 were distributed by the Company to its shareholder.

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Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization.  Costs of maintenance and repairs of property and equipment used in operations are charged to expense as incurred, while renewals and betterments are capitalized.  When property and equipment are replaced, retired or otherwise disposed of, the costs are deducted from the asset and accumulated depreciation accounts.  Gains or losses on sales or retirements of buildings, vehicles and certain golf course and recreational facilities are recorded in income.

Depreciation is recorded using the straight-line unit method for buildings, vehicles and certain golf course and recreational facilities, and the straight-line composite method for the other components.  Estimates of useful lives used in computing annual depreciation are as follows:

	Estimated useful life in years
Land improvements	28 - 30
Buildings	40
Recreational facilities	30
Machinery and equipment	10 - 15

Other Assets

Other assets consist of costs incurred in conjunction with refurbishment of condominium units provided as Resort accommodations under the rental pool lease operations.  In accordance with the revised MLA (Note 9), the Company will reimburse 50% of the costs incurred by individual condominium owners for the completion of the refurbishment program.  The Company is amortizing the refurbishment program costs on a straight-line basis through 2009, the term of the revised MLA.

Long-Lived Assets

Statement of Financial Accounting Standards (“FAS”) No. 144 (“FAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, requires the Company to review long-lived assets to be held and used for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset.  If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value.  The Company has performed an evaluation of the long-term resort assets and related intangibles.  Based upon that analysis, gross cash flows exceed the carrying value of property and equipment and the related intangibles.  However, the fair value is significantly less than the carrying value of collateralized debt and past due interest.

Parent Company Allocations and Advances

The Company reimburses GHI for administrative and other expenses based on estimated time and expenses incurred.  Amounts charged were approximately $384,000, $384,000 and $293,000, for the years ended December 31, 2003, 2002 and 2001, respectively.  The Company also receives cash advances from GHI to fund cash flow shortages.   At December 31, 2003 and 2002, $1,212,000 and $793,000, respectively, were payable to GHI for cash advances and other expenses.

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Shareholder’s Receivable

At December 31, 2003 shareholder’s receivable represents expenses funded by the Company on behalf of GHI for the Class Action Lawsuit (Note 9).  There are no formal terms for repayment and the obligation is non-interest bearing.

Preferred Stock

At December 31, 2003 and 2002, the Company had 4,577,000 shares of $1 par value, 5.6% cumulative preferred stock.  The annual dividend requirement on the preferred stock of approximately $256,000 has been recorded as a charge against accumulated deficit as the Company has no paid-in capital.  At December 31, 2003 and 2002, cumulative dividends in arrears of approximately $1,573,000 (or approximately $0.34 per share) and $1,317,000 (or approximately $0.29 per share), respectively, are included in due to related parties in the accompanying balance sheets.

Revenue

Revenue from Resort operations is recognized as the related service is performed.  Revenue includes rental revenues generated from condominium units owned by third parties participating in the rental pool lease operations.  If these rental units were owned by the Company, normal costs associated with ownership such as depreciation, interest, real estate taxes and maintenance would have been incurred.  Instead, costs and operating expenses include distributions of approximately $4,656,000, $4,475,000 and $6,322,000 for the years ended December 31, 2003, 2002 and 2001, respectively, to the rental pool participants.

Interest Expense, Net

The Company’s cash management policy is to utilize cash resources to minimize net interest expense, through either temporary cash investments or reductions in existing interest-bearing obligations.  Accordingly, temporary cash investments and interest income vary from period to period.  Interest expense is net of interest income of approximately $11,900, $43,000 and $35,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Employee Benefit Plans

GHI maintains a defined contribution Employee Thrift and Investment Plan (the “Plan”), which provides retirement benefits for all eligible employees who have elected to participate.  Employees must fulfill a 90-day service requirement to be eligible.  The Company currently matches one half of the first 6% of an employee’s contribution.  Company contributions approximated $167,000, $173,000 and $209,000, for the years ended December 31, 2003, 2002 and 2001, respectively, and are fully funded.

Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation (“FIN”) No. 45. “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN No. 45”).”  FIN No. 45 elaborates on the disclosures to be made by a guarantor in its annual financial statements about its obligations under certain guarantees that is has issued.  FIN No. 45 requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligations undertaken in issuing the guarantee.  The disclosure provisions of FIN No. 45 were effective for financial statements for periods ending after December 15, 2002.  Additionally, the recognition of a guarantor’s obligation was to be applied on a prospective basis to guarantees issued after December 31, 2002.  The adoption of the disclosure and recognition provisions of FIN No. 45 had no effect on the Company’s consolidated financial statements.

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In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.”   In December 2003, the FASB issued FIN No. 46 (Revised) (“FIN 46-R”) to address certain FIN No.46 implementation issues and clarify the application of Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements for companies that have interests in entities that are Variable Interest Entities (“VIE”), as defined under FIN No. 46.  According to this interpretation, if a company has an interest in a VIE and is at risk for a majority of the VIE’s expected losses or receives a majority of the VIE’s expected gains it shall consolidate the VIE.  This interpretation is effective no later than the end of the reporting period ending after March 15, 2004.  The adoption of the provisions of this interpretation is not expected to have an effect on the Company’s consolidated financial statements.

In April 2003, the FASB issued FAS No. 149, “Amendments of Statement 133 on Derivative Instruments and Hedging Activities (“FAS No. 149”).”  FAS No. 149 amends and clarifies accounting for derivative instruments embedded in other contracts and for hedging activities under FAS No. 133.  FAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.  The adoption of the provisions of FAS No. 149 had no effect on the Company’s consolidated financial statements.

In May 2003, the FASB issued FAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.”  FAS No. 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in the statements of financial position.  Previously, many of these financial instruments were classified as equity.  FAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning for the first reporting period beginning after June 15, 2003.  The adoption of the provisions of FAS No. 150 did not have a material effect on the Company’s consolidated financial statements.

Reclassifications

Certain prior year balances have been reclassified to conform to the current year presentation.

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3.Property and Equipment

Property and equipment as of December 31 consists of the following:

	2003			2002
Land and land improvements	$	6,513,584		$	6,432,158
Buildings	12,397,352			12,299,872
Golf courses and recreational facilities	18,606,014			18,635,580
Machinery and equipment	12,100,569			11,480,190
Construction in progress	110,211			240,945
	49,727,730			49,088,745
Less accumulated depreciation	(12,563,606		)	(11,063,682		)
	$	37,164,124		$	38,025,063

Construction in progress (“CIP”) consists of costs incurred while constructing Resort amenities.  The construction projects that were underway during the year ended December 31, 2003 were short term in nature and did not qualify for the capitalization of interest.

Depreciation expense of approximately $2,485,000, $2,737,000 and $2,833,000 was recorded for the years ended December 31, 2003, 2002 and 2001, respectively.

The Company leases equipment under operating leases.  Lease expense amounts to $399,200, $344,400, and $341,500 for the years ended December 31, 2003, 2002, and 2001, respectively.  Future minimum lease payments under operating leases in excess of one year are as follows.

Year	Amount
2004	$	421,400
2005	543,700
2006	319,800
2007	291,200
2008	244,500
Thereafter	122,200
	$	1,942,800

4.Intangible Assets

Resulting from the Acquisition, a Resort intangible of approximately $30,400,000, relating to acquiring an operating Resort property with an existing rental pool agreement, was recorded and is being amortized on a straight-line basis over 20 years.  In accordance with FASB Statement No. 142, Goodwill and Other Intangible Assets, the Company’s intangible asset has been specifically identified and will continue to be amortized over its remaining useful life.  Amortization expense for all intangible assets was approximately $860,000, $860,000 and $1,053,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

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During the year ended December 31, 2000, the Company recorded a provision for intangible impairment of approximately $7,441,000.  The Company experienced significant changes in business and market conditions, which led to declines in the results of operations and the number of participants in the rental pool.  Due to these changes, the Company concluded that impairment had occurred.  An impairment charge was required because the Company had determined that the estimated fair value of the intangible was less than its carrying value.

During 2001, the Company continued to experience significant declines in business associated both with its corporate and transient customers.  Advance bookings for 2002 and subsequent years continued to lag behind the Company’s historical results and from all indications, did not appear to indicate a significant reversal of that trend in the foreseeable future.  As a result, the Company again had to evaluate its carrying value of the intangible asset.  Pro forma cash flow estimates were developed based upon expected business levels, which indicated that further impairment of the intangible had occurred.  Consequently, the Company recognized an additional $3,000,000 impairment of the intangible asset during 2001.

During the years ended December 31, 2003 and 2002, the Company reviewed the carrying value of the intangible asset and determined that further impairment had not occurred.  Advance bookings and rental pool participation had stabilized from a historical perspective, and the pro forma cash flows, based upon advance bookings indicate that no further deterioration in the carrying value should be recognized in 2003.

5.Other Payables and Accrued Expenses

Other payables and accrued expenses as of December 31 consists of the following:

	2003		2002
Rental pool lease distribution	$	1,040,282	$	727,891
Taxes, other than income taxes	1,173,129		1,507,970
Other	327,954		485,962
	$	2,541,365	$	2,721,823

6.Line of Credit and Notes Payable

	2003			2002
Notes payable
Participating mortgage note at varying pay rates maturing in 2027 (in default)	$	69,975,000		$	69,975,000
$9,000,000 participating mortgage note credit facility maturing in 2027 (in default)	9,000,000			9,000,000
Capital leases ranging from 1.89% to 17.37%	—			28,552
	78,975,000			79,003,552
Less current maturities	(78,975,000		)	(79,003,552		)
	$	—		$	—

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Concurrent with the Acquisition, the Company obtained a $78,975,000 note payable from GTA.  The note payable has two components: a $69,975,000 participating mortgage note and a $9,000,000 credit facility.  The note payable is guaranteed by GHI and collateralized by substantially all assets other than the Company’s accounts receivable and approximately 38 acres of undeveloped land.

The note payable agreement stipulates that Additional Collateral is to be released when the ratio of the Innisbrook Resorts Net Operating Income equals or exceeds a coverage ratio to Debt Service, as defined.  The coverage ratio was not met for the three years ended December 31, 2003.  The agreement defines un-pledged GTA shares and/or the proceeds of the sale of these shares as Additional Collateral.

The participating mortgage note was used to finance the Company’s Acquisition and purchase of GTA stock.  The participating mortgage note calls for initial annual interest payments of $6,739,063 with an annual 5% increase in the interest payment, prorated for partial years, commencing January 1, 1998 and continuing each year through 2002.  Interest, payable monthly, has been recorded using the effective interest method.  The effective interest rate is approximately 11.5%, as defined in the loan agreement, over the life of the note payable.  In addition, the participating mortgage note calls for participation payments based upon levels of revenue, as defined, of the Innisbrook property (“Participating Interest”).  No participating interest has been incurred for the three years ending December 31, 2003.

Principal on the GTA note payable is due at maturity on June 23, 2027.  Upon expiration or earlier termination of the participating mortgage note, GTA has the option to purchase Innisbrook at fair market value.

The $9,000,000 credit facility bears interest initially at a 9.75% fixed rate with an annual 5% interest escalator commencing January 1, 1998 (effectively 11.94%, 11.94% and 11.37% for the years ended December 31, 2003, 2002 and 2001, respectively) and continuing each year through 2002.  As of December 31, 2003, the Company has drawn the full $9,000,000 available under this facility.

The Company was informed by GTA on November 29, 2001 that the Company is in default on the $78,975,000 note payable arising from the Company’s failure to pay the October 2001 interest payment and all subsequent principal and interest payments, which have not been made.  GTA has asserted its right to accelerate payment of the total outstanding principal and interest amounts.

As of April 2004, the Company is seeking to negotiate a Settlement Agreement with GTA. In connection with the proposed Settlement Agreement, the Company would transfer to GTA the Resort property, three condominium units and linen room located at the Innisbrook Resort, the acquired interest in GTA stock and operations held by the parent, and all rights, title and interests of the Company under existing contracts and agreements.  In addition, the Company would provide a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims, losses, judgments or damages arising out of or in connection with a lawsuit known as the Class Action Lawsuit, as well as liabilities accruing on or before the closing date relating to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA.  In return, it is anticipated that GTA will deliver to the Company a duly executed release.  A Settlement Agreement has yet to be signed and no terms are definite.  Neither GTA nor any of its affiliates is under any obligation to continue negotiating with the Company or to execute the Settlement Agreement, and could initiate foreclosure proceedings and pursue its other remedies at any time.

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The Company incurred interest expense of approximately $9,121,000, $9,120,000 and $9,070,000 on the GTA note payable during the years ended December 31, 2003, 2002 and 2001, respectively, of which $23,751,000 and $14,538,000 was payable at December 31, 2003 and 2002.  Accrued interest is classified as current as a result of the default on the GTA loan.

As a condition under the note payable agreement with GTA, the Company acquired 159,326 common shares of Golf Trust of America, Inc. (the 100% owner of GTA) and 274,000 Operating Partnership Units (“OPUs”) in GTA for $8,975,000 with an option to acquire for $26 per unit 150,000 additional OPUs.  The note payable agreement restricts the Company’s ability to sell its investments in GTA until certain Company operating results, as defined, are attained.  The Company distributed its GTA investment to its parent upon acquisition.

The Company obtained a $5,000,000 mortgage note on June 20, 1997, collateralized by certain assets at Innisbrook, from the previous owners as a part of the acquisition.  The note bore interest at a fixed rate of 6.34% with interest payable quarterly.  The Company incurred interest expense of $162,000 for the year ended December 31, 2001.  This note was paid in full on November 19, 2001, commensurate with the sale of the Tamarron property (Note 8).

7.Income Taxes

On April 17, 1998, the Company filed an election with the Internal Revenue Service to change its tax status to a Qualified Subchapter S Subsidiary effective February 3, 1998.  As a result of this election, no provision for income taxes has been included in the accompanying consolidated financial statements for any federal, state or local taxes since any income (loss) is passed through to its shareholder.  The remaining deferred tax liability represents the estimated liability for taxes to be paid on built-in gains associated with the sale of assets within the statutory 10-year period from Acquisition.  During 2001, certain of these assets were sold, resulting in an income tax benefit of $515,000.

No valuation allowance is provided on deferred tax assets as management believes it is more likely than not that such assets will be realized upon sale of its assets or settlement with GTA.  Under the Internal Revenue Code, if certain substantial changes in the Company’s ownership occur, there are annual limitations on utilization of loss carry-forwards.

	2003			2002
Deferred income taxes consist of the following
Deferred income tax asset
Net operating loss	$	331,875		$	331,875
Deferred income tax liability
Basis difference in property and intangible assets	(1,586,875		)	(1,586,875		)
Total deferred income tax liability	$	(1,255,000	)	$	(1,255,000	)

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8.Tamarron’s Result of Operations

The Company assumed responsibility for the Net loss, as defined, of Tamarron under the terms of the lease agreement between the Company and GH II, for the period of lease inception through November 18, 2001.  The net loss is included in loss on assets held for sale and leased asset in the statements of operations:

	For the period ending November 18, 2001
Revenue
Hotel	$	2,843,360
Food and beverage	1,926,520
Golf	1,753,375
Other	1,815,138
	8,338,393
Cost & operating expense
Hotel	1,106,787
Food and beverage	1,392,295
Golf	824,233
Other	2,701,941
General and administrative	3,751,385
Interest expense	100,108
	9,876,749
Net loss	$	(1,538,356	)

On November 19, 2001, GH II, an affiliated company and lessor of Tamarron, sold Tamarron to an unrelated entity.  A portion of the proceeds were used to settle the remaining balance due under the $5,000,000 mortgage note from the previous owners (Note 6), which has been accounted for as a capital contribution to the Company.  In conjunction with the sale, the accumulation of operating deficits not funded by the Company was forgiven by GH II.  The unfunded accumulated operating deficits totaled $5,070,000 and were recorded as an adjustment to paid-in-capital.

9.Commitments and Contingencies

Rental Pool Distribution

The Company offered, effective January 1, 1998 and amended and restated effective January 1, 2000, a separate Guaranteed Distribution Master Lease Agreement (“GMLA”) to Innisbrook participants.  Among other things, the GMLA provides for an equal sharing between the Company and Innisbrook participants of Adjusted Gross Revenues, and includes as deductions from the Gross Income Distribution, as defined, a 5.5% Management Fee and a 3% Marketing Fee.  The Company also guaranteed that distributions would not be less than an amount which approximates the 1996 Gross Income Distribution on an individual unit basis, as prorated based upon Weighted Days Pool Participation, as defined.  For the year ended December 31, 2003, the Company was obligated to pay the GMLA participants less than $1,000 and the obligation for the year ended

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December 31, 2002 was less than $1,600.  No amounts were required to be paid under the guarantee for the year ended December 31, 2001 and 2000.  The GMLA has a non-cancelable term through 2011 with an annual rental pool participation election by individual unit owners.  As of December 31, 2003, one unit owner actively participated in the rental pool pursuant to the GMLA.

A new MLA (“NMLA”) was effective January 1, 2002.  On an annual basis, beginning in 2002, each condominium owner may elect to participate in either the NMLA or the GMLA.  If an owner elects to participate in the NMLA, the owner is prohibited from returning to the GMLA.  The NMLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook rental pool participants and 60% to the Company.  In addition, the Company has agreed, as part of the NMLA, to reimburse rental pool participants in the NMLA for up to 50% of actual unit refurbishment costs beginning in 2005 through 2009, so long as the rental pool participation threshold, as defined, is maintained.  In addition, the Company has agreed to pay the participants interest at 5% on the unpaid 50% of the refurbishment costs, beginning in 2002 so long as the participation threshold is maintained.  Interest in the amount of approximately $314,000 and $159,000 was incurred under this agreement for the years ended December 31, 2003 and 2002, respectively.  Should the Company elect to terminate the NMLA before its expiration in 2011, all unpaid balances of refurbishment costs and related interest would be due and payable to the Participants.  If the Company proves unsuccessful in its defenses in the class-action lawsuit described below, any rental pool participant who elected to participate in the Class Action Lawsuit, subject to the NMLA, will forego reimbursement by the Company for renovations equal to their pro-rata amount of the class-action settlement proceeds.  The net liability for the Company’s share of the estimated cost of the refurbishments completed as of December 31, 2003 is approximately $6,691,000 and is included in long-term refurbishments on the consolidated balance sheet.  The corresponding asset is included in other assets and is being amortized on a straight line basis over the period from the time each phase of the refurbishment is placed in service through the completion of payment in 2009.  The amortization expense for the years ended December 31, 2003 and 2002 is approximately $860,000 and $407,000, respectively, and is included in resort facilities expense.

Legal

The Company, in the normal course of operations, is also subject to claims and lawsuits.  The Company does not believe that the ultimate resolution of these matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.

GHI has been named as a defendant in a consolidated class action lawsuit (the “Class Action Lawsuit”) whereby the plaintiffs allege breaches of contract, including breaches in connection with the Rental Pool Master Lease Agreement.  The plaintiff’s are seeking damages and declaratory judgment stating the plaintiffs are entitled to participate in the rental pool if one exists, a limitation of the total number of club memberships and a limitation of golf course access to persons who are either condominium owners who are members, their accompanied guest, or guest of the resort. Deposition of class members and others, including depositions of prior executives of Golf Host Resorts, have been taken and additional discovery remains.  The court had postponed the previously scheduled trial date of February 3, 2003; a new trial date has not yet been set.  As of December 31, 2003, the court decertified the class and denied the plaintiff’s subsequent motion to permit additional owners to intervene in the lawsuit.  In addition, the plaintiffs filed a complaint seeking to “pierce the corporate veil”.  The court dismissed the veil piercing complaint with prejudice.  The plaintiffs appealed the decertification of the class; the denial to intervene and the veil piercing dismissal to the Florida Court of Appeals, Second District.  The Court of Appeals has

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affirmed the lower court’s de-certification of the class and has affirmed the lower court’s dismissal with prejudice of the veil piercing case.  No decision on the intervention appeal has been made. As this litigation is still in progress, the Company is not yet able to determine whether the resolution of this matter will have a material adverse effect on the Company’s financial condition or results of operations.  However, the Company believes GHI has successful defenses based upon consultations with legal counsel and intends to vigorously defend this action.

10.Westin Agreements

Westin became manager of Innisbrook effective July 15, 1997, for a 20-year term unless terminated earlier as provided for in the agreement.  Westin receives annual management fees, based on revenues of Innisbrook, and certain cost reimbursements.  Westin’s management fee amounted to $576,000, $584,000 and $716,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

The Westin management agreement requires the Company to maintain a capital replacement fund based on an amount calculated as the greater of 3% of gross revenues or a minimum threshold amount as defined in the agreement, calculated on a monthly basis.  The Company contributed $2,403,000, $2,125,000 and $1,845,000 for the years ended December 31, 2003, 2002 and 2001, respectively, and an additional $1,665,000, $862,000 and $366,000 is required to be segregated at December 31, 2003, 2002 and 2001, respectively.  At December 31, 2003 and 2002, the capital replacement fund had a balance of approximately $1,304,000 and $1,394,000, respectively, and is included in restricted cash in the accompanying consolidated balance sheets.

In April 1998, the Company signed an agreement, under which Westin will provide 50% of the funding for approved capital expenditures incurred subsequent to the Acquisition in excess of the annual capital replacement fund requirements, defined above, in addition to providing 50% of the funding for the initial capital requirements over $6,000,000, as defined.  During the year ended December 31, 2002, Westin and the Company agreed that the amount due under the agreement was approximately $426,000.  This amount was offset against unpaid management fees and reimbursable expenses due Westin under the management agreement and is included in other income for the year ended December 31, 2002.  At December 31, 2003, there are no amounts due under the agreement.

Additionally, under the terms of the Innisbrook management agreement, Westin guaranteed a minimum cash flow to Innisbrook.  The agreement provided that if Incentive Cash Flow, as defined, is less than the Minimum Annual Payment, as defined, for the operating year, then Westin will fund a non-interest bearing advance to Innisbrook for the shortage up to $2,500,000, with the advance being repayable when the Company has Available Cash, as defined.  As of December 31, 2003 and 2002, $10,265,000 and $10,265,000 had been advanced to the Company and are included in other long-term liabilities.

Amounts payable to Westin of $1,134,000 and $1,750,000 at December 31, 2003 and 2002, respectively, include management fees and certain cost reimbursements and are included in accounts payable at December 31, 2003 and 2002, respectively.

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Report of Independent Certified Public Accountants

To Golf Host Resorts, Inc. and the Lessors of the

Innisbrook Rental Pool Lease Operation

In our opinion, the accompanying balance sheets and the related statements of operations and of changes in participants’ fund balance present fairly, in all material respects, the financial position of the Innisbrook Rental Pool Lease Operation at December 31, 2003 and 2002, and the results of its operations and the changes in participants’ fund balance for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the rental pool’s operators; our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 of the notes to financial statements, the Innisbrook Rental Pool Lease Operation is party to lease agreements with an affiliated entity, whose ability to continue as a going concern is in substantial doubt.

/s/ PricewaterhouseCoopers, LLP

Tampa, Florida

March 30, 2004

19

Innisbrook Rental Pool Lease Operation

Balance Sheets – Distribution Fund

December 31, 2003 and 2002

	2003		2002
Assets
Receivable from Golf Host Resorts, Inc. for distribution	$	1,040,282	$	727,891
Interest receivable from Maintenance Escrow Fund	6,489		12,929
	$	1,046,771	$	740,820
Liabilities and Participants’ Fund Balance
Due to participants for distribution	$	788,162	$	544,636
Due to Maintenance Escrow Fund	258,609		196,184
	$	1,046,771	$	740,820

The accompanying notes are an integral part of these financial statements.

20

Innisbrook Rental Pool Lease Operation

Balance Sheets – Maintenance Escrow Fund

December 31, 2003 and 2002

	2003		2002
Assets
Cash and cash equivalents	$	246,192	$	1,266,304
Short-term investments	1,330,000		1,990,000
Construction in progress	535		7,774
Receivable from Distribution Fund	258,609		196,184
Carpet care receivable	—		21,162
Interest receivable	15,858		21,110
	$	1,851,194	$	3,502,534
Liabilities and Participants’ Fund Balance
Accounts payable	$	43,590	$	3,902
Construction retainage	5,389		41,422
Interest payable to Distribution Fund	6,489		12,929
Carpet care payable	4,137		—
Participants’ fund balance	1,791,589		3,444,281
	$	1,851,194	$	3,502,534

The accompanying notes are an integral part of these financial statements.

21

Innisbrook Rental Pool Lease Operation

Statements of Operations – Distribution Fund

For the years ended December 31, 2003. 2002 and 2001

	2003			2002			2001
Gross revenues	$	11,590,540		$	11,956,378		$	15,835,503
Deductions
Agents’ commissions	478,603			493,479			680,868
Credit card fees	278,906			282,947			184,577
Audit fees	28,150			16,000			14,500
Uncollectible room rents	2,119			26,666			—
Linen Replacement	130,122			150,214			—
Rental Pool complimentary fees	4,428			4,914			—
	922,328			974,220			879,945
Adjusted gross revenues	10,668,212			10,982,158			14,955,558
Management fee	(6,399,246		)	(6,584,394		)	(7,453,477		)
Gross income distribution	4,268,966			4,397,764			7,502,081
Adjustments to gross income distribution:
Management fee	(1,006		)	(2,889		)	(824,353		)
Marketing fee	(548		)	(1,577		)	(449,648		)
General pooled expenses	(9,439		)	(12,355		)	—
Miscellaneous pooled expenses	(45		)	(236		)	(61,930		)
Corporate complimentary occupancy fees	18,418			20,158			39,372
GMLA guaranteed payment	2,008			—			—
Interest income/(expense)	(12,732		)	145,803			—
Westin Associate room fees	67,080			73,549			92,150
Occupancy fees	(1,101,651		)	(1,132,811		)	(1,382,734		)
Advisory Committee expenses	(209,755		)	(211,178		)	(181,065		)
Life-safety settlement	(201,233		)	—			—
Net income distribution	2,820,063			3,276,228			4,733,873
Adjustments to net income distribution
Occupancy fees	1,101,651			1,132,811			1,382,734
Hospitality suite fees	7,002			5,776			—
Life-safety interest	2,890			—			—
Greens fees	—			—			8,023
Additional participation credits	—			—			2,730
Amount available for distribution to participants	$	3,931,606		$	4,414,815		$	6,127,360

The accompanying notes are an integral part of these financial statements.

22

Innisbrook Rental Pool Lease Operation

Statements of Change in Participants Fund Balance – Distribution Fund

For the years ended December 31, 2003. 2002 and 2001

	For the years ended December 31,
	2003			2002			2001
Balance, beginning of year	$	—		$	—		$	—
Additions:
Amounts available for distribution to participants	3,931,606			4,414,815			6,127,360
Interest earned from Maintenance Escrow Fund	39,483			69,950			87,635
Reductions:
Amounts withheld for Maintenance Escrow Fund	(992,018		)	(1,029,963		)	(1,233,501		)
Amounts accrued or paid to participants	(2,979,431		)	(3,454,802		)	(4,981,494		)
Balance, end of year	$	—		$	—		$	—

The accompanying notes are an integral part of these financial statements.

23

Innisbrook Rental Pool Lease Operation

Statements of Changes in Participants’ Fund Balance – Maintenance Escrow Fund

For the years ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Balance, beginning of year	$	3,444,280		$	2,726,458		$	1,929,901
Additions
Amounts withheld from occupancy fees	992,018			1,029,963			1,233,501
Interest earned	39,843			69,950			87,635
Other cost reimbursement	—			—			397,412
Charges to participants to establish or restore escrow balances	1,972,633			5,646,865			313,553
Reductions
Maintenance charges	(841,340		)	(654,261		)	(545,432		)
Refurbishment costs	(3,415,429		)	(4,527,523		)	—
Carpet care reserve deposit	(60,378		)	(53,603		)	(20,842		)
Interest accrued or paid to Distribution Fund	(39,843		)	(69,950		)	(87,635		)
Refunds to participants due under Lease Agreements	(300,195		)	(723,619		)	(581,635		)
Balance, end of year	$	1,791,589		$	3,444,280		$	2,726,458

The accompanying notes are an integral part of these financial statements.

24

Innisbrook Rental Pool Lease Operation

Notes to Financial Statements

December 31, 2003 and 2002

1.Rental Pool Lease Operation and Rental Pool Lease Agreements

Organization and Operations

The Innisbrook Rental Pool Lease Operation (the “Rental Pool”) consists of condominiums at the Westin Innisbrook Resort (“Innisbrook”), which are provided as resort accommodations by their owners.  The condominium owners (“Participants”) have entered into Annual Rental Pool Lease Agreements (“ALAs”) and either a Master Lease Agreement (“MLA”) or, effective January 1, 1998 and amended and restated MLA effective January 1, 2000, a Guaranteed Distribution Master Lease Agreement (“GMLA”), which define the terms and conditions related to each ALA with Golf Host Resorts, Inc. (“GHR”), the lessee of the Rental Pool.  The ALAs expire at the end of each calendar year, and the MLA and GMLA remain in effect through December 31, 2001 and December 31, 2011, respectively.

Effective January 1, 2002, the Company and the participants replaced the MLA, which expired on December 31, 2001, with a new Master Lease Agreement (“NMLA”).  The NMLA provides for Adjusted Gross Revenues, as defined, to be divided 40% to the Innisbrook Rental Pool Participants and 60% to the Company.  In addition, the Company has agreed, as part of the NMLA, to reimburse rental pool participants in the NMLA for up to 50% of the actual unit refurbishment costs, plus interest at 5% of the 50% of the refurbishment costs, beginning in 2002, so long as the minimum participation threshold as defined, is maintained. The MLA, GMLA, NMLA and ALAs are referred to collectively as the “Agreements.”

The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund.  The Distribution Fund balance sheets primarily reflect amounts receivable from GHR for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund.  The operations of the Distribution Fund reflect Participants’ earnings in the Rental Pool.  The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations.  It consists primarily of amounts escrowed by Participants or due from the Distribution Fund to meet escrow requirements, fund the carpet care reserve and maintain the interior of the unit.

GHR has experienced recurring net losses and working capital deficiencies, which create substantial doubt about GHR’s ability to continue as a going concern. The continuation and success of the Rental Pool is contingent upon the continuation of operations of Innisbrook.  In turn, the success of the Innisbrook operations is contingent upon the continued participation of condominium owners in the rental pool.  Items related to the continuation of Innisbrook as a going concern include such issues as: the ultimate resolution of the lawsuit know as the Class Action Lawsuit of Golf Hosts, Inc. (“GHI”), GHR’s parent company, wherein the plaintiffs have alleged breaches of contract and are seeking a declaratory judgment stating the plaintiffs are entitled to participate in the Rental Pool if one exists, a limitation of the total number of Club memberships and a restriction of golf course access to members, guest of members, resort guests or guests of resort guests, the sale of condominium units which do not participate in the Rental Pool or through a sale are removed from the Rental Pool, owners of units opting to live in their units, owners renting their units outside of the Rental Pool, and general economic conditions related to the destination resort industry.

Computation and Allocation of Earnings

Under the MLA, which expired on December 31, 2001, Participants and GHR shared Adjusted Gross Revenues in accordance with the terms of the Agreement.  Adjusted Gross Revenues consist of revenues earned from the rental of condominiums, net of agents’ commissions, credit card fees and audit fees.  GHR receives a Management Fee equal to 47% of Adjusted Gross Revenues.  Each Participant receives

25

a fixed Occupancy Fee, based on apartment size, for each day of occupancy.  After allocation of Occupancy Fees, the balance of Adjusted Gross Revenues, net of the Management Fee and adjustments, is allocated proportionately to Participants, based on the Participation Factor as defined in the Agreement.

Under the GMLA, Participants and GHR shared equally in Adjusted Gross Revenues, while GHR received as deductions from the Gross Income Distribution a 5.5% Management Fee, a 3% Marketing Fee and Miscellaneous Pooled Expenses comprised of linen and other pooled expenses.  The GMLA guaranteed Rent (Net Income Distribution plus Occupancy and Hospitality Suite Fees) would not be less than an amount, which approximates the 1996 Gross Income Distribution on an individual per unit basis, as prorated based upon Unit Weighted Days Pool Participation, as defined.  In 1996, the distribution was $21.67. In 2003, the Unit Weighted Days distribution was $18.32, and the amount the Company was obligated to pay the GMLA participants for the year ended December 31, 2003 was less than $1,000.  In 2002, the Unit Weighted Days distribution was $20.02, and the amount the Company is obligated to pay the GMLA participants was less than $1,600.  In 2001, no amount was paid under the guarantee, as the Average Daily Distribution was $25.73. The GMLA also guarantees that it cannot be terminated before its expiration date and includes a provision for an annual election to participate.  As of January 1, 2004, there are no longer any condominium owners participating under the GMLA agreement.

Under the NMLA, which became effective January 1, 2002, Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the agreement.  Adjusted Gross Revenues are defined as Gross Revenues less agent’s commissions, audit fees, occupancy fees when the unit is used by GHR for non-rental purposes, linen replacements and credit card fees.   GHR receives a management fee of 60% of Adjusted Gross Revenues.  Each Participant receives a fixed occupancy fee, based upon apartment size, for each day of unit specific occupancy.  After allocation of occupancy fees and the payment of general rental pool expenses, the balance is allocated proportionally to the Participants, based on the Participation Factor as defined in the Agreement.  The Agreement also provides for GHR to reimburse 50% of the refurbishment costs on each unit associated with the current refurbishment program.  Rental pool participants also receive interest calculated as 5% of the unpaid refurbishment costs.  Interest was payable beginning in 2002, and is conditional upon the continued participation of the unit in the rental pool and is so long as the minimum aggregate participation threshold, as defined, is maintained.  Principal repayments are to begin in 2005 and continue through 2009.  Should GHR elect to terminate the NMLA before its expiration in 2011, all unpaid balances of refurbishment costs and related interest would be due and payable to the Participants. The net interest earned during the years ended December 31, 2003 and 2002 was approximately $314,000 and $146,000 respectively.  Interest earned on the refurbishment program is paid directly to participants and is not recorded in the Rental Pool financial statements for the years ended December 31, 2003 and December 31, 2002.

Corporate complimentary occupancy fees are rental fees paid by GHR to the Participants for complimentary rooms unrelated to Rental Pool operations.  Westin Associate Room Fees represent total room revenues earned from the rental of condominiums by Westin employees passed through to the Rental Pool.

Owners who purchased units prior to January 1, 1991 and who participate in the Rental Pool under the MLA for at least 50% of the year or 50% of the time they own their unit receive Additional Participation Credits.  Participation in greens fees is restricted to original condominium owners participating in the MLA who executed purchase agreements for certain units prior to April 13, 1972.  Greens fees and Additional Participation Credits are requirements of agreements other than the current

26

Agreements; these amounts are included in Adjustments to Net Income Distribution of the Rental Pool as this treatment is consistent with the method utilized by GHR to pay such amounts to the applicable Participants.

Maintenance Escrow Fund Accounts

The MLA, GMLA and NMLA provide that 75%, 90% and 90%, respectively, of the Occupancy Fees earned by each Participant are deposited in the Participant’s Maintenance Escrow Fund account.  This account provides funds for payment of amounts that are due from Participants under the Agreements for maintenance and refurbishment services.  Under the MLA, when the balance of the Participant’s Maintenance Escrow Fund account exceeds 75% of the defined furniture replacement value, the excess is refunded to the Participant upon their election.  Should a Participant’s balance fall below that necessary to provide adequate funds for maintenance and replacements, the Participant is required to restore the escrow balance to an adequate level.  The GMLA provides for an Occupancy Fee deposit into the Participant’s Maintenance Escrow Fund account until the balance in the account equals the total anticipated charges for maintenance, repair and refurbishing of the condominium.  The NMLA provides for specific fund balances to be maintained, by unit type, size and age of refurbishment, as defined in the Agreement.

Under the MLA, GMLA and NMLA, a percentage of the Occupancy Fees are deposited into the carpet care reserve in the Maintenance Escrow Fund, which bears the expenses of carpet cleaning for all Participants.  This percentage is estimated to provide the amount necessary to fund carpet cleaning expenses and may be adjusted annually.  The amounts expended for carpet care were approximately $35,000, $61,000, and $45,000 for 2003, 2002, and 2001, respectively.  For the years 2002 and 2001, these expenditures were in excess of the carpet care reserve by  $21,000 and $14,000, respectively.  For the year ended December 31, 2003, the expenditures did not exceed the reserve.

The Lessors’ Advisory Committee invests the maintenance escrow funds on behalf of the Participants and in compliance with restrictions in the Agreements.  The Lessors’ Advisory Committee consists of nine Participants elected to advise GHR in Rental Pool matters and negotiate amendments to the lease agreement.  Income earned on these investments is allocated proportionately to Participants’ Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund.  Included in cash and cash equivalents at December 31, 2003 are certificates of deposit of $1,330,000, maturing between January,  2004 and May,  2003, and bearing interest at rates from 1.20% to 1.85%.  Included in cash and cash equivalents at December 31, 2002 are certificates of deposit of $1,900,000, maturing between January 2003 and February 2003, and bearing interest at rates from 1.2% to 1.7%.  At December 31, 2003 and 2002, cost of these investments approximates fair value.

Construction in progress and refurbishment includes costs incurred in conjunction with the condominium refurbishment project authorized by the Participants of the Rental Pool.  The third and final phase of the refurbishment project was completed in September of 2003.

2.Summary of Significant Accounting Policies

Basis of Accounting

The accounting records of the funds are maintained on the accrual basis of accounting.

Use of Estimates

Preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions which affect

27

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Income Taxes

No federal or state taxes have been reflected in the accompanying financial statements as the tax effect of fund activities accrue to the Participants and shareholder of GHR.

3.Affiliate Owned Condominiums

Golf Host Condominium, Inc., a wholly owned subsidiary of GHR, owns three condominiums.  Its condominiums participated in the Rental Pool under the NMLA in the same manner as all others.

4.Commitments and Contingencies

Hilton Hotels Corporation (“HHC”) managed Innisbrook from April 1993 to July 15, 1997, at which time the management was changed to Westin Hotel Company.  In connection with the HHC agreement, HHC funded certain special projects and property improvements, including installation of life-safety equipment in condominium units participating in the Rental Pool and related common areas.  Separately, the Rental Pool agreed to reimburse GHR the cost of installing the life-safety equipment, including reimbursements to condominium apartment owners for previously installed equipment, in an amount equal to $1,779,000, plus interest at 7.75% per annum for no more than five years on each related draw there under.  Payments were required for years in which the Amount Available for Distribution to Participants exceeded $7,375,000 in an amount equal to 50% of such excess. Participants withdrawing from the Rental Pool for any reason, other than a sale, before the obligation to GHR had been fully repaid were required to immediately pay their proportionate share of the unpaid balance.  In l996 and 1995, repayment requirements of $362,593 and $150,036, respectively, resulted, yielding a balance of $1,591,341.  Under the terms of the related agreement, the Rental Pool was not obligated to reimburse GHR if the management agreement between HHC and GHR was terminated.  Therefore, effective with the July 15, 1997 change in management, the obligation of the Rental Pool to continue to make reimbursements ceased.  The former shareholders of GHR retained all notes receivable, including the amount due from the Rental Pool, and have disputed the termination and initiated a lawsuit.  As of December 31, 2002, GHR was holding approximately $226,000 in escrow as potential payment to the former shareholders pending resolution of this matter.  On December 26, 2002, the parties to the lawsuit reached a settlement agreement, which provides for a cash settlement of $420,000 plus interest.  The settlement payment will be funded by the escrow funds held by GHR at December 31, 2002, and the Rental Pool Participants will fund the remainder during 2003.  Contemporaneously with the December 31, 2003 rental pool distribution on February 15, 2004, final payment of the settlement agreement was made.

28

Report of Independent Certified Public Accountants

To Golf Host Resorts, Inc. and the Lessors of the

Tamarron Rental Pool Lease Operation

In our opinion, the accompanying balance sheet and the related statements of operations and of changes in participants’ fund balance present fairly, in all material respects, the financial position of the Tamarron Rental Pool Lease Operation at November 18, 2001, and the results of its operations and the changes in participants’ fund balance for each of the 322 day period ending November 18, 2001 in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the rental pool’s operators; our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1, the Sheraton Tamarron Resort was sold on November 19, 2001 to an unaffiliated entity who assumed all responsibility under the Tamarron Rental Pool Lease Operation.

/s/ PricewaterhouseCoopers, L.L.P.
	Tampa, FL
	September 13, 2002

29

Tamarron Rental Pool Lease Operation

Balance Sheet – Distribution Fund

November 18. 2001

Assets
Cash	$	1,000
Receivable from Golf Host Resorts, Inc. for distribution	39,828
Interest receivable from Maintenance Escrow Fund		235
	$	41,063
Liabilities and Participants’ Fund Balance
Due to participants for distribution	$	42
Due to Maintenance Escrow Fund		41,021
	$	41,063

The accompanying notes are an integral part of these financial statements.

30

Tamarron Rental Pool Lease Operation

Balance Sheet – Maintenance Escrow Fund

November 18. 2001

Assets
Cash and cash equivalents	$			200,869
Due from Distribution Fund	41,021
Inventory:
Linen	51,900
Materials and supplies	13,090
Deposits	4,467
	$		311,347
Liabilities and Participants’ Fund Balance
Accounts payable	$		259
Interest payable to Distribution Fund	235
Participants’ fund balance	310,853
	$	311,347

The accompanying notes are an integral part of these financial statements.

31

Tamarron Rental Pool Lease Operation

Statement of Changes in Participant's Fund Balance – Distribution Fund

For the 322 days period ended November 18. 2001

Gross revenues	$	2,629,193
Deductions
Agents’ commissions	64,569
Sales and marketing expenses	197,189
Audit fees	11,501
	273,259
Adjusted gross revenues	2,355,934
Management fee	(1,299,441		)
Gross income distribution	1,056,493
Adjustments to gross income distribution
Corporate complimentary occupancy fees	3,494
Occupancy fees	(348,874		)
Designated items	(76,919		)
Advisory Committee expenses	(10,497		)
Pooled income	623,697
Adjustments to pooled income Occupancy fees	348,874
Amounts available for distribution to participants	$	972,571

The accompanying notes are an integral part of these financial statements.

32

Tamarron Rental Pool Lease Operation

Statement of Changes in Participant’s Fund Balance – Maintenance Escrow Fund

For the 322 days period ended November 18. 2001

Balance, beginning of year	$	—
Additions
Amounts available for distribution to participants	972,571
Interest earned from Maintenance Escrow Fund	3,092
Reductions
Amounts withheld for Maintenance Escrow Fund	(174,437				)
Amounts accrued or paid to participants	(801,226				)
Balance, end of year	$	—
Balance, beginning of year	$		174,714
Additions
Amounts withheld from occupancy fees	174,437
Interest earned	3,092
Reimbursement of designated items	76,920
Charges to participants to establish or restore escrow balances	156,305
Reductions
Maintenance and inventory charges	(164,467			)
Refurbishing charges	—
Interest accrued or paid to Distribution Fund	(3,092			)
Designated items	(76,919			)
Refunds to participants as prescribed by Master Lease Agreement	(30,137			)
Balance, end of year	$	310,853

The accompanying notes are an integral part of these financial statements.

33

Tamarron Rental Pool Lease Operation

Notes to Financial Statements

November 18. 2001

1.Rental Pool Lease Operation and Rental Pool Lease Agreement

Organization and Operations

The Tamarron Rental Pool Lease Operation (the “Rental Pool”) consists of condominiums at Sheraton Tamarron Resort, which are provided as resort accommodations by their owners.  The condominium owners (“Participants”) had entered into Annual Rental Pool Lease Agreements (“ALAs”) and a Master Lease Agreement (“MLA”), which defined the terms and conditions related to each ALA, with Golf Host Resorts, Inc. (“GHR”), the lessee of the Rental Pool.  The MLA and ALAs are referred to collectively as the “Agreements.”  The ALAs expire at the end of each calendar year and the MLA will remain in effect through December 31, 2003.

The Rental Pool consists of two funds: the Distribution Fund and the Maintenance Escrow Fund.  The Distribution Fund balance sheets primarily reflect amounts due from GHR for the Rental Pool distribution payable to Participants and amounts due to the Maintenance Escrow Fund.  The operations of the Distribution Fund reflect Participants’ earnings in the Rental Pool.  The Maintenance Escrow Fund reflects the accounting for certain escrowed assets of the Participants and, therefore, has no operations.  It consists primarily of amounts escrowed by Participants or due from the Distribution Fund to meet escrow requirements, maintain the interior of the unit and purchase adequate inventory items, as defined.

Funding of the estimated amounts receivable from GHR for distribution is due at least weekly to the extent that borrowings available to GHR under its various lines of credit are less than amounts due to the Distribution Fund.

During 2000, GHR dividended the assets and liabilities of Tamarron to its parent, Golf Host, Inc., who contributed them to Golf Host II, Inc. (“GH II”), a wholly-owned subsidiary of GHI.  On November 19, 2001, GH II sold Tamarron to a third-party who assumed responsibility under the Agreements.  As a result, GHR has no remaining responsibility under the terms of the Agreements.

Computation and Allocation of Earnings

Participants and GHR share Adjusted Gross Revenues in accordance with the terms of the Agreements.  Adjusted Gross Revenues consist of revenues earned from rental of condominiums, net of Sales and Marketing expenses (limited to 7.5% of Gross Revenues), agents’ commissions (not to exceed 5.5% of Gross Revenues) and audit fees.  GHR receives a Management Fee equal to 50% of Adjusted Gross Revenues.

Each Participant receives a fixed Occupancy Fee, based on apartment size, for each day of occupancy.  After allocation of Occupancy Fees, the balance of Adjusted Gross Revenues, net of the Management Fee adjustments, is allocated proportionately to Participants based on the Participation Factor as defined in the Agreements.

Corporate complimentary occupancy fees are rental fees paid by GHR for complimentary rooms unrelated to Rental Pool operations.  Designated items are purchases of supplies to maintain the interior of the units, as defined in the Agreements.

Maintenance Escrow Fund Accounts

The Agreements provide that 50% of the Occupancy Fees earned by each Participant is deposited in the Participant’s Maintenance Escrow Fund account.  This account provides funds for payment of amounts that are due from the Participants under the Agreements for maintenance and

34

refurbishment services.  When the balance of the Participant’s Maintenance Escrow Fund account exceeds the maximum specified in the Agreements, the excess is refunded to the Participant, as provided in the Agreements.  Should a Participant’s balance fall below that necessary to provide adequate funds for maintenance and replacements, the Participant is required to restore the escrow balance to an adequate level.

Funds deposited in the Maintenance Escrow Fund are invested on behalf of the Participants.  Income earned on these investments is allocated proportionately to Participants’ Maintenance Escrow Fund accounts and paid quarterly through the Distribution Fund.  Cash and cash equivalents at November 18, 2001 consists of an interest bearing demand account.

2.Summary of Significant Accounting Policies

Basis of Accounting

The accounting records of the funds are maintained on the accrual basis of accounting.

Use of Estimates

Preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions which affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Income Taxes

No federal or state taxes have been reflected in the accompanying financial statements as the tax effect of fund activities accrued to the Participants and the shareholder of GHR.

3.Linen and Materials and Supplies Inventory

Linen amortization and the cost of Participants’ actual usage of certain supplies, collectively referred to as Designated Items, are charged to all Participants as a group and allocated to Participants based upon their Participation Factors.  Linen inventory is stated at cost, less accumulated amortization of $50,000 at November 18, 2001.  Linen amortization is computed on the straight-line method over an estimated useful life of 24 months.

Materials and supplies inventories consist primarily of minor apartment furnishings and appliances carried at cost, determined on a first-in, first-out basis.  The costs of such items, not considered Designated Items, are charged to Participants’ individual Maintenance Escrow Fund accounts based on actual usage.

35

PART I - FINANCIAL INFORMATION

GOLF HOST RESORTS, INC. AND SUBSIDIARY

(a wholly owned subsidiary of Golf Hosts, Inc.)

CONSOLIDATED BALANCE SHEETS

ASSETS

(Substantially all pledged)

	June 30, 2004		December 31, 2003
	(unaudited)
CURRENT ASSETS:
Cash	$	—	$	—
Restricted cash	3,283,223		2,489,761
Accounts receivable, net	1,411,859		1,578,294
Other receivables	128,877		120,966
Inventories and supplies	1,134,514		1,348,526
Prepaid expenses and other assets	568,527		350,161
Total current assets	6,527,000		5,887,708
INTANGIBLES, net	11,171,299		11,602,195
PROPERTY AND EQUIPMENT, net	36,838,251		37,164,124
OTHER ASSETS	5,756,519		6,279,340
	$	60,293,069	$	60,933,367

The accompanying notes are an integral part of these consolidated financial statements.

1

GOLF HOST RESORTS, INC. AND SUBSIDIARY

(a wholly owned subsidiary of Golf Hosts, Inc.)

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDER’S DEFICIT

	June 30, 2004			December 31, 2003
	(unaudited)
CURRENT LIABILITIES:
Debt due within one year	$	78,975,000		$	78,975,000
Cash overdrafts	116,632			—
Accounts payable	3,606,580			4,501,132
Accrued payroll costs	990,632			885,531
Accrued interest	28,312,136			23,751,133
Other payables and accrued expenses	1,729,136			2,541,365
Deposits and deferred revenues	1,784,896			1,867,326
Due to related parties	2,398,097			832,774
Total current liabilities	117,913,109			113,354,261
OTHER LONG-TERM LIABILITIES	10,265,009			10,265,009
LONG TERM REFURBISHMENT	6,960,748			6,960,748
DEFERRED INCOME TAXES	1,255,000			1,255,000
Total liabilities	136,393,866			131,835,018
SHAREHOLDER’S DEFICIT
Common stock, $1 par, 5,000 shares authorized, issued, and outstanding	5,000			5,000
5.6% cumulative preferred stock, $1 par, 4,577,000 shares authorized, issued, and outstanding	4,577,000			4,577,000
Paid-in capital	(8,487,323		)	(8,487,323		)
Shareholder receivable	(223,709		)	(223,709		)
Accumulated deficit	(71,971,765		)	(66,772,619		)
Total shareholder’s deficit	(76,100,797		)	(70,901,651		)
Total liabilities and shareholder’s deficit	$	60,293,069		$	60,933,367

The accompanying notes are an integral part of these consolidated financial statements.

2

GOLF HOST RESORTS, INC. AND SUBSIDIARY

(a wholly owned subsidiary of Golf Hosts, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Quarter ended June 30.						Six months ended June 30,
	2004			2003			2004			2003
	(unaudited)						(unaudited)
REVENUES:
Resort facilities	$	2,696,928		$	2,537,629		$	6,447,144		$	6,613,206
Food and beverage	2,471,455			2,871,574			5,696,248			6,297,775
Golf	2,897,568			2,869,517			6,868,855			6,630,710
Other	1,369,718			1,189,196			2,864,688			2,620,929
	9,435,669			9,467,916			21,876,935			22,162,620
COST AND OPERATION EXPENSES:
Resort facilities	2,492,501			2,146,932			5,280,318			5,243,711
Food and beverage	2,061,601			2,041,635			4,378,596			4,301,900
Golf	1,977,147			1,747,929			3,850,192			3,453,462
Other	2,232,431			2,238,575			4,577,016			4,579,995
General and administrative	1,304,946			1,065,098			2,632,134			2,296,634
Depreciation and amortization	702,198			747,198			1,494,396			1,494,396
	10,770,824			9,987,367			22,212,652			21,370,098
OPERATING (LOSS)/INCOME	(1,335,155		)	(519,451		)	(335,717		)	792,522
INTEREST EXPENSE, NET	2,351,421			2,338,834			4,735,275			4,568,293
LOSS BEFORE PREFERRED STOCK DIVIDEND	(3,686,576		)	(2,858,285		)	(5,070,992		)	(3,775,771		)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK	64,077			64,077			128,154			128,154
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDER	$	(3,750,653	)	$	(2,922,362	)	$	(5,199,146	)	$	(3,903,925	)

The accompanying notes are an integral part of these consolidated financial statements.

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GOLF HOST RESORTS, INC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S DEFICIT

(unaudited)

	$1 Par Value Common Stock			5.6% Cumulative Preferred Stock			Paid-In Capital			Shareholder’s Receivable			Accumulated Deficit			Total Shareholder’s Deficit
	Shares	Amount		Shares	Amount
Balance, December 31, 2003	5,000	$	5,000	4,577,000	$	4,577,000	$	(8,487,323	)	$	(223,709	)	$	(66,772,619	)	$	(70,901,651	)
Loss attributable to common shareholder (unaudited)	—	—		—	—		—			—			(5,199,146		)	(5,199,146		)
Balance, June 30, 2004	5,000	$	5,000	4,577,000	$	4,577,000	$	(8,487,323	)	$	(223,709	)	$	(71,971,765	)	$	(76,100,797	)

The accompanying notes are an integral part of these consolidated financial statements.

4

GOLF HOST RESORTS, INC. AND SUBSIDIARY

(a wholly owned subsidiary of Golf Hosts, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30,

(unaudited)

	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before dividend requirements on preferred stock	$	(5,070,992	)	$	(3,775,771	)
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	1,494,396			1,494,396
Provision for bad debts	54,052			(75,520		)
Amortization of refurbishment costs	522,831			390,919
Gain on disposal of capital lease	—			(27,739		)
Changes in operating working capital	3,737,343			2,807,375
Cash provided by operations	737,630			813,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in other assets	—			3,369
Purchases of property and equipment	(737,630		)	(627,492		)
Cash used in investing activities	(737,630		)	(624,123		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of existing debt	—			(62,245		)
Additional borrowings on existing debt	—			132,600
Cash used in financing activities	—			70,355
NET INCREASE IN CASH	—			259,892
CASH, BEGINNING OF PERIOD	—			—
CASH, END OF PERIOD	$	—		$	259,892
NONCASH FINANCING AND INVESTING ACTIVITIES:
The Company satisfied its preferred stock dividend liability to GHI through the intercompany account	$	128,154		$	128,154

The accompanying notes are an integral part of these consolidated financial statements.

5

GOLF HOST RESORTS, INC. AND SUBSIDIARY

(a wholly owned subsidiary of Golf Hosts, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1)BASIS OF PRESENTATION

The financial statements for December 31, 2003 were prepared assuming the Company will continue as a going concern.  As discussed in the notes to consolidated financial statements on Form 10-K dated December 31, 2003, the Company has suffered recurring losses from operations, has negative working capital and has a shareholder’s deficit. These issues raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also discussed in the footnotes. Additionally, as described in Note 6 of the notes to consolidated financial statements on Form 10-K, the Company has defaulted under the terms of its debt agreement and Golf Host, Inc. (“GHI”) (the Company’s parent company) is a defendant to a class action lawsuit.  These financial statements do not include any adjustments that might result from the outcome of the uncertainties.

These financial statements and related notes are presented for interim periods in accordance with the requirements of Form 10-Q and, consequently, do not include all disclosures normally provided in the Company’s Annual Report on Form 10-K.  Accordingly, these financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

The accompanying consolidated balance sheets for June 30, 2004, and consolidated statements of operations and cash flows for the periods ended June 30, 2004 and 2003, are unaudited but reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.  All such adjustments are of a normal recurring nature.  Certain reclassifications have been made to the June 30, 2003 financial statements to conform to June 30, 2004 presentation.

The Company’s business is seasonal.  Therefore, the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the entire fiscal year.

2)INTANGIBLE ASSETS

The Company recorded at closing in 1997, a resort intangible asset of approximately $30,400,000.  This intangible related to the purchase of the Innisbrook Resort, which contained an existing rental pool agreement and a recently executed management agreement with Westin Hotels.  The intangible is being amortized over twenty years on a straight-line basis.  Amortization expense for all intangible assets was approximately $431,000 and $431,000 for the six months ended June 30, 2004 and June 30, 2003, respectively.

6

During the six months ended June 30, 2004, the Company reviewed the carrying value of the intangible asset and determined that further impairment had not occurred.  Advance bookings and rental pool participation had stabilized from a historical perspective, and the pro-forma cash flows, based upon advance bookings indicate that no further deterioration in the carrying value needs to be recognized in 2004.

(3)DEBT

Debt consists of the following:

	June 30, 2004			December 31, 2003
Participating mortgage note at varying pay rates maturing in 2027 (in default)	$	69,975,000		$	69,975,000
$ 9,000,000 participating mortgage note credit facility maturing in 2007 (in default)	9,000,000			9,000,000
	78,975,000			78,975,000
Less current maturities	(78,975,000		)	(78,975,000		)
	$	—		$	—

(4)CONTINGENCIES

The Company, in the normal course of operations, is subject to claims and lawsuits.  The Company does not believe that the ultimate resolution of such matters will materially impair operations or have an adverse effect on the Company’s financial position and results of operations.

GHI was named as a defendant in a consolidated class action lawsuit (“class action lawsuit”) whereby the plaintiffs allege breaches of contract, including breaches in connection with the Rental Pool Master Lease Agreement.  The plaintiffs are seeking unspecified damages and declaratory judgment stating that the plaintiffs are entitled to participate in the rental pool if one exists, a limitation of the total number of club memberships and a limitation of golf course access to persons who are either condominium owners who are members, their accompanied guests, or guests of the resort.  Depositions of class members and others, including depositions of prior executives of the Company, have been taken and additional discovery remains.  The Court has postponed the previously scheduled trial date of February 3, 2003; a new trial date has not yet been set.  As of December 31, 2003, the Court had decertified the class and denied the plaintiffs’ subsequent motion to permit additional owners to intervene in the lawsuit.  In addition, the plaintiffs filed a complaint seeking to “pierce the corporate veil”.  The court dismissed the veil piercing complaint with prejudice.  The plaintiffs appealed the

7

decertification of the class; the denial to intervene and the veil piercing dismissal to the Florida Court of Appeals, Second District.  The Court of Appeals has affirmed the lower court’s decertification of the class and has affirmed the lower court’s dismissal with prejudice of the veil piercing case.  On July 29, 2004, the Circuit Court for the Sixth Judicial Court entered an order granting defendant’s motion for summary judgment.  No decision on the intervention appeal has been made.  The Company does not believe the resolution of this matter will have a material adverse effect on the Company’s financial condition or results of operations.

The Company has recorded a liability and related asset in the approximate amount of $6,961,000, in recognition of the Master Lease Agreement refurbishment reimbursement program.  The liability will be settled in accordance with the terms of the agreement and the asset is being amortized on a straight line basis over the period from the time each phase of the refurbishment is placed is service through the completion of payment in 2009.  The amortization expense for the period ending June 30, 2004 and 2003 was approximately $523,000 and $391,000, respectively.

As noted in the Company’s 10-K filed as of December 31, 2003, the Company has defaulted on its primary mortgage with Golf Trust of America (“GTA”).  On July 15, 2004, the Company and GTA entered into a Settlement Agreement wherein the Resort property, three condominiums and a linen room located at the Innisbrook Resort, the acquired interest in common stock and operating units of GTA held by the parent and all rights, title and interests of the Company under existing contracts and agreements were transferred to GTA.  In addition, the Company provided a limited indemnity to defend and hold harmless GTA (and its affiliates) from and against any and all costs, liabilities, claims losses, judgments, or damages arising out of or in connection with the lawsuit know as the Class Action Lawsuit as well as liabilities accruing on or before the closing date relating to employee benefits and liabilities for contracts or agreements not disclosed by the Company to GTA.  In return, GTA delivered a duly executed release.

8

RENTAL POOL LEASE OPERATION

The following unaudited financial statements of the Innisbrook Rental Pool Lease Operation (the “Rental Pool”) are for the quarters ended June 30, 2004 and 2003

The operation of the Rental Pool is tied closely to that of Golf Host Resorts, Inc. (the “Company”), and provides for distribution of a percentage of the Company’s room revenues, as defined in the Rental Pool Master Lease Agreements, to participating condominium owners (“Participants”).

The Innisbrook Rental Pool Operation is party to lease agreements with an affiliated entity, whose ability to continue as a going concern is in substantial doubt.

The operation of the Rental Pool is more fully discussed in Form 10-K for the fiscal year ended December 31, 2003 (file No. 2-64309).

9

INNISBROOK RENTAL POOL LEASE OPERATION

BALANCE SHEETS

DISTRIBUTION FUND

	June 30, 2004		December 31, 2003
	(unaudited)
ASSETS
RECEIVABLE FROM GOLF HOST RESORTS, INC. FOR DISTRIBUTION	$	975,210	$	1,040,282
INTEREST RECEIVABLE FROM MAINTENANCE ESCROW FUND	4,654		6,489
	$	979,864	$	1,046,771
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
DUE TO PARTICIPANTS FOR DISTRIBUTION	$	725,395	$	788,162
DUE TO MAINTENANCE ESCROW FUND	254,469		258,609
	$	979,864	$	1,046,771

MAINTENANCE ESCROW FUND

ASSETS
CASH AND CASH EQUIVALENTS	$	125,623	$	246,192
SHORT TERM INVESTMENTS	1,520,000		1,330,000
INVENTORY	4,494		535
RECEIVABLE FROM DISTRIBUTION FUND	254,469		258,609
INTEREST RECEIVABLE	4,716		15,858
	$	1,909,302	$	1,851,194
LIABILITIES AND PARTICIPANTS’ FUND BALANCES
ACCOUNTS PAYABLE	$	3,542	$	43,590
CONSTRUCTION RETAINAGE	5,344		5,389
INTEREST PAYABLE TO DISTRIBUTION FUND	4,654		6,489
CARPET CARE PAYABLE	18,796		4,137
PARTICIPANTS’ FUND BALANCES	1,876,966		1,791,589
	$	1,909,302	$	1,851,194

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operators, include all adjustments which are necessary for a fair presentation.

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INNISBROOK RENTAL POOL LEASE OPERATION

STATEMENTS OF OPERATIONS

FOR THE QUARTERS ENDED JUNE 30, 2004 AND 2003

DISTRIBUTION FUND

(unaudited)

	Current quarter						Year-to-Date
	2004			2003			2004			2003
GROSS REVENUES	$	2,636,067		$	2,485,774		$	6,325,161		$	6,498,035
DEDUCTIONS:
Agents’ commissions	122,967			82,033			271,597			260,468
Credit card fees	62,182			58,723			151,854			153,920
Audit fees	6,250			5,387			12,500			10,774
Uncollectable room rents	390			—			2,459			2,119
Linen replacements	16,877			21,290			74,679			74,197
Rental pool complimentary fees	1,183			654			2,634			1,629
	209,849			168,087			515,723			503,107
ADJUSTED GROSS REVENUES	2,426,218			2,317,687			5,809,438			5,994,928
MANAGEMENT FEE	(1,455,730		)	(1,390,575		)	(3,485,662		)	(3,596,867		)
GROSS INCOME DISTRIBUTION	970,488			927,112			2,323,776			2,398,061
ADJUSTMENTS TO GROSS INCOME DISTRIBUTION:
General pooled expense	(1,195		)	(21		)	(3,240		)	(45		)
Corporate complimentary occupancy fees	5,470			5,040			9,340			7,802
Interest expense	(3,183		)	(3,183		)	(6,366		)	(6,366		)
Gtd MLA guaranteed payment	—			—			—			1,592
Occupancy fees	(279,601		)	(264,162		)	(575,551		)	(571,531		)
Advisory Committee expenses	(43,585		)	(54,143		)	(94,503		)	(101,537		)
Life-safety reimbursement	—			(46,284		)	—			(134,827		)
NET INCOME DISTRIBUTION	648,394			564,359			1,653,456			1,593,149
ADJUSTMENTS TO NET INCOME DISTRIBUTION:
Occupancy fees	279,601			264,162			575,191			571,531
Hospitality suite fees	2,282			2,424			4,207			3,864
Westin Associate room fees	44,933			15,288			80,409			39,444
Interest	—			—			—			2,890
AMOUNT AVAILABLE FOR DISTRIBUTION TO PARTICIPANTS	$	975,210		$	846,233		$	2,313,263		$	2,210,878

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operators, include all adjustments which are necessary for a fair presentation.

11

INNISBROOK RENTAL POOL LEASE OPERATION

STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCES

FOR THE QUARTERS ENDED JUNE 30, 2004 AND 2003

DISTRIBUTION FUND

(unaudited)

	Current Quarter						Year-to-date
	2004			2003			2004			2003
BALANCE, beginning of period	$	—		$	—		$	—		$	—
ADDITIONS:
Amount available for distribution	975,210			846,233			2,313,623			2,210,878
Interest received or receivable from Maintenance Escrow Fund	4,654			14,068			9,655			25,040
REDUCTIONS:
Amounts withheld for Maintenance Escrow Fund	(254,469		)	(237,746		)	(520,825		)	(514,698		)
Amounts accrued or paid to participants	(725,395		)	(622,555		)	(1,802,453		)	(1,721,220		)
BALANCE, end of period	$	—		$	—		$	—		$	—
MAINTENANCE ESCROW FUND
BALANCE, beginning of period	$	1,831,463		$	4,568,662		1,791,589			3,444,280
ADDITIONS:
Amounts withheld from occupancy fees	254,469			237,746			520,825			514,698
Interest earned	4,654			14,068			9,655			25,040
Charges to participants to establish or restore escrow balances	103,578			249,203			123,603			1,788,521
REDUCTIONS:
Maintenance charges	(261,606		)	(188,829		)	(472,699		)	(438,815		)
Refurbishment Phase II	—			(1,611,768		)	—			(2,012,025		)
Carpet care reserve deposit	(16,964		)	(13,208		)	(34,720		)	(28,576		)
Interest accrued or paid to Distribution Fund	(4,654		)	(14,068		)	(9,655		)	(25,040		)
Refunds to participants as prescribed by the master lease agreements	(33,974		)	(161,819		)	(51,632		)	(188,096		)
BALANCE, end of period	$	1,876,966		$	3,079,987		$	1,876,966		$	3,079,987

These statements were prepared from the books and records of the Rental Pool without audit and, in the opinion of the Rental Pool Operators, include all adjustments which are necessary for a fair presentation.

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