Affiliation Agreement

THIS AFFILIATION AGREEMENT (this "Agreement") is made and entered into as of the 15th day of September, 1997, by and between PGA GOLF PROPERTIES, INC., a Florida corporation, hereinafter referred to as "PGA"; and VISTANA, INC., a Florida corporation, hereinafter referred to as "Vistana."


RECITALS


A. PGA and its Affiliates (as defined herein), among other things, engage in (i) the promotion of the game of golf and (ii) the acquisition, development, operation and management of golf courses, golf training programs and related facilities and amenities ("PGA Golf Facilities").


B. Vistana and its Affiliates engage in the acquisition, development, operation, management and sale of Vacation Resorts (as defined herein) under the name "Vistana," under brand names owned by others, and under brand names used jointly with others.


C. The parties desire to establish an affiliation ("Affiliation") pursuant to which Vistana will have the exclusive right to acquire, develop, manage, market and sell Vacation Resorts in the Territory (as defined herein) under the PGA name, initials and logo.


D. Certain PGA Affiliates presently operate the PGA Golf Facilities located in St. Lucie County consisting of two public golf courses at the Reserve, one semi-private golf course at St. Lucie West, a proposed PGA learning center at the Reserve and a proposed third golf course near the Reserve (collectively, the "PGA St. Lucie Golf Facilities"). PGA Golf Development, Inc. ("PGD") and Vistana PSL, Inc. ("VSL") have entered into a Purchase and Sale Agreement (the "Land Agreement") pursuant to which VSL will acquire certain real property located adjacent to the PGA St. Lucie Golf Facilities at the Reserve for the purpose of developing the first Vacation Resort pursuant to this Affiliation.


E. Contemporaneously with the closing of the Land Agreement, PGD and VSL will enter into a Marketing and Promotion Agreement and a Golf Course Access Agreement (both as defined in the Land Agreement).


NOW, THEREFORE, IN CONSIDERATION OF the mutual agreements and undertakings herein set forth and other valuable considerations, the receipt and sufficiency of which are hereby acknowledged, PGA and Vistana hereby agree as follows:


I. Defined Terms. The following terms shall have the meanings described below:


"Affiliate": any entity controlling, controlled by or under common control with such person or entity.


"Affiliation": as defined in Recital C.


"Claims": as defined in paragraph 13(a).


"Golf Course Access Agreement": as defined in Recital E.


"Initial Closing": as defined in paragraph 3.


"Initial Resort": the Vacation Resort to be developed by VSL on the St. Lucie Property.


"Land Agreement": as defined in Recital D.


"Licensed VOI's: Vacation Ownership Interests at a PGA Vacation Resort.


"Marketing and Promotion Agreement": as defined in Recital E.


"PGA": as defined in the Preamble.


"PGA Golf Facilities": as defined in Recital A.


"PGA Indemnities": as defined in paragraph 13(b).


"PGA St. Lucie Golf Facilities": as defined in Recital D.


"PGA Vacation Club": shall mean an internal exchange opportunity which may be created by Vistana among owners of Vacation Ownership Interests at the PGA Vacation Resorts.


"PGD": as defined in Recital D.


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"Performance Criteria": shall mean those Performance Criteria listed on Attachment II to the Marketing and Promotion Agreement.


"Related Agreements": the Land Agreement, the Marketing and Promotion Agreement and the Golf Course Access Agreement.


"St. Lucie Property": the property to be acquired by VSL from PGD or Callaway Land & Cattle Co. Limited Partnership pursuant to the Land Agreement.


"Term": as defined in paragraph 2.


"Territory": the United States, its Territories and Possessions.


"Vacation Ownership Interests" or "VOI's": vacation ownership interests, interval ownership interests, timeshare estates, timeshare licenses, fractional ownership, vacation club, right-to-use or any other form of vacation ownership program.


"Vacation Resort": shall mean any resort property having Vacation Ownership Interests.


"Vistana": as defined in the Preamble.


"Vistana Indemnities": as defined in paragraph 13(a).


"VSL": as defined in Recital D.


II. Term. The term (the "Term") of this Agreement shall commence on the date hereof and shall terminate on the tenth anniversary of the date hereof; provided, however, that if Vistana and PGA shall each have determined in its reasonable judgment that the Performance Criteria have been satisfied, then Vistana shall have the right to extend the term of this Agreement for an additional period of up to ten (10) years by providing written notice of such extension to PGA at least one hundred eighty (180) days prior to the end of the initial term. The termination of this Agreement whether by lapse of time, acceleration, mutual agreement or otherwise shall not terminate or otherwise affect the Marketing and Promotion Agreement or Golf Course Access Agreement for the Initial Resort or any other marketing and promotion agreement or golf course access agreement entered into with respect to any other PGA Vacation Resort.


III. Initial Resort. The Initial Resort to be developed pursuant to this Agreement shall be acquired and developed by VSL in accordance with the terms of the Land Agreement. The name of the Initial Resort shall be the "PGA Vacation Resort by Vistana" or such other name as Vistana shall determine and PGA shall approve, which name may or may not include the name "Vistana" and may or may not include a location identifier (such as "at the


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Reserve"). Contemporaneously with the initial acquisition of a portion of the St. Lucie Property pursuant to the Land Agreement (the "Initial Closing"), PGD and VSL will enter into the Marketing and Promotion Agreement and Golf Course Access Agreement.


IV. Official Designation. Vistana (and any Affiliate of Vistana designated by Vistana) is hereby designated as the exclusive vacation ownership development company of the PGA and will have the right to identify itself as the "Official Vacation Ownership Developer of the PGA." Vistana acknowledges that the PGA and its Affiliates reserve the right to enter into "official" agreements with other companies respecting goods and services in all categories other than Vacation Resorts and Vacation Ownership Interests. PGA hereby grants to Vistana the exclusive, indivisible and non-transferable right and license to utilize the Trademarks (as defined in the Marketing and Promotion Agreement) within the Territory (as defined in the Marketing and Promotion Agreement) in connection with promoting Vistana's affiliation with the PGA and the PGA Vacation Club in the Territory during the term of this Agreement. The terms and conditions of Vistana's use of the Trademarks shall be identical the terms and conditions of Section 2 of the Marketing and Promotion Agreement (other than the first paragraph of such Section 2), including without limitation the indemnification provisions of such Section 2.


V. Exclusivity. PGA hereby agrees that during the Term, Vistana shall have the exclusive right to develop Vacation Resorts within St. Lucie County, Florida using the PGA name, initials and logo. In addition, PGA hereby agrees that during the Term, Vistana shall have the exclusive right to develop Vacation Resorts and PGA Vacation Clubs within the Territory using the PGA name, initials and logo, subject, however, to the provisions of Section 6 and Section 7 below with respect to Vacation Resorts. PGA further agrees that neither PGA nor its Affiliates will enter into any agreement with any person or entity selling, marketing, developing, operating or managing a Vacation Resort (other than Vistana, its Affiliates or an unrelated developer of a Proposed Project (as defined below) in the event Vistana elects not to proceed with such Proposed Project as provided in paragraph 6 below) which agreement would allow such person or entity to offer or sell any Vacation Resort or any Vacation Ownership Interests using the PGA "Mailing Lists" and/or the "Member Access" described in the Marketing and Promotion Agreement. The foregoing restriction shall expire on the earlier of (i) the fifth anniversary of the recordation of the first deed for a Vacation Ownership Interest at the Initial Resort or (ii) on the date upon which not less than 80% of the Vacation Ownership Interests at the Initial Resort have been sold; provided however, that if any Proposed Project being developed or to be developed by Vistana or its Affiliates under the terms of this Agreement shall be pending at such time as the foregoing restriction would otherwise expire, then the restriction shall continue in effect and expire on the earlier of (x) the fifth anniversary of the recordation of the first deed for a VOI at such pending Proposed Resort or (y) on the date upon which not less than 80% of the Vacation Ownership Interests at such pending Proposed Resort have been sold.

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VI. Right of First Offer. It is the intent of the parties that additional PGA Vacation Resorts will be developed at other properties identified by PGA for development by PGA or its Affiliates as PGA Golf Facilities. PGA hereby grants to Vistana a right of first offer to be the developer of a Vacation Resort with respect to any PGA Golf Facility hereafter developed, licensed or operated by PGA or any PGA Affiliate. PGA shall provide written notice to Vistana of any property or project (a "Proposed Project") under consideration for development, licensure or operation by PGA or any PGA Affiliate within thirty (30) days after the Proposed Project is identified. Such written notice shall include the location of the Proposed Project, the type of PGA Golf Facility under consideration and such other information as is available at that time. Each of PGA and Vistana will undertake at their own expense such investigations of the Proposed Project as each party determines is necessary or desirable in evaluating the Proposed Project. If PGA shall determine that it does not intend to pursue the Proposed Project, PGA shall give written notice of such determination to Vistana whereupon Vistana shall be permitted, but not obligated, to develop such Proposed Project in such manner as Vistana determines appropriate for Vistana's own account and not as a PGA Vacation Resort. If Vistana shall determine that it does not intend to pursue the Proposed Project, Vistana shall give written notice of such determination to PGA whereupon PGA shall be permitted, but not obligated, to develop, or cause to be developed, such Proposed Project in such manner as PGA determines appropriate, including any Vacation Ownership Interest component thereof; provided, however, that such Vacation Ownership Interest component shall not be permitted to use the name "Professional Golfers Association," "PGA" or any similar name or the PGA logo except in connection with a location identifier (such as "Holiday Vacation Ownership Resort at PGA Grand Development" or "Holiday Vacation Ownership Resort at PGA Golf Course") for any Vacation Resort. If the parties both elect to pursue the Proposed Project, then the parties, or the appropriate Affiliates thereof, shall enter into agreements in form and substance similar to the Land Agreement, Marketing and Promotion Agreement, Golf Course Access Agreement and such other agreements as are entered into with respect to the Initial Resort, with such adjustments as are reasonably necessary given the particular circumstances of the Proposed Project. Any future PGA Vacation Resort shall include in its name "PGA Vacation Resort by Vistana" u ...