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Joint Development Agreement Dated January 16, 1998

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JOINT DEVELOPMENT AGREEMENT
---------------------------


This is a JOINT DEVELOPMENT AGREEMENT, dated as of January 16, 1998 (this "Agreement"), between WESTIN HOTEL COMPANY ("Westin"), a Delaware corporation and SIGNATURE RESORTS, INC. ("SRI"), a Maryland corporation.


RECITALS
--------


WHEREAS, W&S Hotel L.L.C. ("W&S") and Argosy/KOAR Group, Inc. ("Argosy") executed and delivered a letter agreement dated May 3, 1996 (the "Letter Agreement"), with respect to an arrangement (the "Arrangement") pursuant to which Westin and SRI would, on an exclusive and joint basis as described in the Letter Agreement, co-develop timeshare properties, which may be integrated with hotels having or using the Westin brand name, to be operated and marketed as part of a vacation club system ("Westin Vacation Club"); and


WHEREAS, SRI is the successor to Argosy pursuant to a merger and consolidation transaction; and


WHEREAS, Westin has been acquired by Starwood Lodging Trust and Starwood Lodging Corporation (collectively, "Starwood"); and


WHEREAS, Westin and SRI desire to modify the Letter Agreement and the Arrangement and to enter into this Agreement (which shall wholly supersede the Letter Agreement), to govern their continuing co-development, on a non-exclusive basis, of Westin Vacation Club Component Sites (hereinafter defined) in St. John, U.S. Virgin Islands and Rancho Mirage, California and any additional Component Sites that Westin and SRI may, in the future, agree to pursue.


NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I
---------
PURPOSES AND TERM OF AGREEMENT


Section 1.1 General Purposes. The general business purpose of this
---------------- Agreement is to establish the terms, conditions and qualifications pursuant to which Westin and SRI, through separate, individual entities to be formed, may acquire, own, develop (or continue to develop), improve, maintain, manage, operate, sell, mortgage and otherwise dispose of timeshare resorts to be located adjacent to or integrated with Westin hotels including the Virgin Grand Villas - St. John Condominium located in St. John, United States Virgin Islands (the "St. John Project") and the Mission Hills Villas located in Rancho Mirage, California (the "Rancho Mirage Project"). The parties do not intend, separate and apart from the distinct, limited liability companies or other entities to be formed by them on a project-by-project basis ("Development Entities"), to jointly conduct or undertake or carry out business operations, generate any income or losses, or own any real or personal property.


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Section 1.2 Specific Purposes and Objectives. In furtherance of the
-------------------------------- foregoing general purposes, pursuant to this Agreement the parties may create, establish, manage and operate, through the Development Entities, high quality, luxury resort timeshare projects, carrying the WESTIN VACATION CLUB brand name. Any timeshare projects developed by Development Entities pursuant to this Agreement, including the St. John Project and the Rancho Mirage Project, shall be located adjacent to or otherwise integrated with Westin hotels (which shall continue to be owned and/or managed by Westin and not subject to this Agreement), some of which projects the parties anticipate will be existing hotels to be acquired and converted, in whole or in part, to timeshare projects, while others will be completely new construction ("Component Sites"). Westin shall create and maintain a membership system to be called the "Westin Vacation Club" (or another name of Westin's choice, so long as the Westin name is included), which will link the Component Sites to a system of reciprocal exchange services, travel services, information systems and other member benefits. The parties contemplate that the Westin Vacation Club will provide purchasers of Intervals (hereinafter defined) at the Component Sites ("Purchasers") with additional use options through internal exchange arrangements, as well as an expectation of consistency of quality of the Component Sites within the Westin Vacation Club system by reason of the WESTIN VACATION CLUB brand name, and Westin's management experience, standards of operation and standards for construction and design.


Section 1.3 Fulfillment of Purposes. The parties intend to fulfill
----------------------- their business purposes by combining the brand name, financial strength, management experience, marketing experience and operations expertise of Westin with the timeshare development expertise, and marketing and sales experience of SRI.


Section 1.4 Term. Other than with respect to the St. John Project
---- and the Rancho Mirage Project, the term of this Agreement commenced as of the effective date hereof, and shall continue unless and until terminated in accordance with Article VIII hereof (the "Term"). With respect to the St. John Project and the Rancho Mirage Project, this Agreement shall be deemed to have commenced as of the date the parties commenced discussions concerning the possible acquisition and development of those properties, and shall continue for so long as Westin and SRI, or their Affiliates, have an ownership interest in either the St. John Project or the Rancho Mirage Project. Upon expiration of the Term, the parties shall have no further rights or obligations pursuant to this Agreement, other than as specifically stated herein to survive termination or as set forth in the documents governing the Development Entities formed pursuant to this Agreement.


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ARTICLE II
----------


DEFINITIONS AND TERMS
---------------------


Section 2.1 Definitions. For purposes of this Agreement, unless the
----------- context indicates otherwise, the terms defined herein shall have the meanings assigned to them in this Article II.


(a) "Affiliate" has the meaning given to it pursuant to Rule 12b-2 of
--------- the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.


(b) "Affiliation Agreement" means the agreement to be executed by and
--------------------- among the Club Manager, each Development Entity, each Owners Association and WVMC pursuant to which each Component Site will be affiliated with the Westin Vacation Club.


(c) "A Brand" means any property, hotel or brand that is generally
------- recognized by the hotel rating industry as being "Four Star" or higher quality, including all of the brands listed on Schedule 2.1(b) attached hereto, specifically excluding lower end "sub-brands" of such brands (e.g., Marriott Courtyard), and Four Star casino-only brands such as Harrah's, Mirage and Excalibur.


(d) "B Brand" means any property, hotel or brand that is generally
------- recognized by the hotel rating industry as being "Three Star" quality, including all of the brands listed on Schedule 2.1(c) attached hereto, and all Three Star casino-only brands.


(e) "C Brand" means any property, hotel or brand that is generally
------- recognized by the hotel rating industry as being Two Star or lower quality, including all of the brands listed on Schedule 2.1(d) attached hereto, and brands owned by HFS or Promus on the effective date of this Agreement (other than Harrah's, which is an A Brand) and all Two Star or lower quality casino- only brands.


(f) "Change of Control" means a merger between SRI or Westin, on the
----------------- one hand, and any third party, on the other hand or one or a series of related transactions (other than an initial public offering of voting securities) that results in a change of the Persons, either alone or pursuant to an arrangement or understanding with one or more other Persons, who (i) own, control or have the power to vote (including by proxy) greater than fifty percent (50%) of any class of voting securities of an entity or who determine in any manner the election or appointment of a majority of the directors (if such entity is a corporation), managers (if such entity is a limited liability company) or general partners (if such entity is a partnership) thereof, or (ii) have the power or practical ability to exercise controlling influence over the management or policies of an entity or an entity's parent company, from that existing on the date immediately prior to the Change of Control, or (iii) own all or substantially all of the assets theretofore owned by a Person. For purposes of this paragraph, (A) a transaction solely with an Affiliate of a Person shall not be deemed to cause a Change of Control; and (B) a Change of Control involving a Person that is a public company must involve a transaction with a single acquiror or related group of acquirors acting in concert, as opposed to a series of unrelated transactions by unrelated parties, not acting in concert, over a period of time which result in a Change of Control of the public company.


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(g) "Component Site" has the meaning given in Section 1.2 of this
-------------- Agreement.


(h) "Consumer Price Index" means the Consumer Price Index for all
-------------------- urban consumers, U.S. city average, 1982-1984 = 100.


(i) "Development Entity" has the meaning given in Section 1.1.
------------------


(j) "Executive Committee" has the meaning given in Section
------------------- 7.1(a).


(k) "Expression of Interest" means a preliminary, written
---------------------- description of a WVC Opportunity presented by a Proposing Party to a Receiving Party, which contains a description of the proposed site, its zoning, the number of units proposed to be acquired or constructed, the purchase price, an evaluation of the competition in the geographic area, a ninety (90) day budget of the expenses expected to be incurred and shared by the parties in the pursuit of such WVC Opportunity ("Transaction Budget"), a statement as to the continuing truth, accuracy and completeness of the representations and warranties given by the Proposing Party as set forth in Article III of this Agreement and the disclosure of any restrictive covenants and area restrictions to which the proposing party is bound and which may be impacted by the proposed WVC Opportunity.


(l) "Final Notice to Proceed" means a Receiving Party's written
----------------------- response to a Proposal, indicating the Receiving Party's willingness to continue to jointly proceed with and pursue the consummation of the transaction described in the Proposal and to pay or reimburse the Proposing Party for fifty percent (50%) of all costs incurred in such pursuit to the extent set forth in or contemplated by the Transaction Budget included in the Proposal.


(m) "Flagged" means to be operated using the trademark,
------- tradename, corporate name, logo and/or fictitious name of a Person.


(n) "Force Majeure" means any of the following events: Acts of
------------- God, strikes, lockouts, labor difficulty, explosion, sabotage, accident, riot or civil commotion, acts of war, fire or other casualty, delays caused by the other party and any causes beyond the reasonable power and control of a party, excluding general economic decline.


(o) "Four Star" means (i) A Brands and (ii) any property or hotel
--------- Westin is willing to Flag as a "Westin" (but not as a sub-brand of Westin).


(p) "Holding Period" has the meaning given in Section 7.1(d).
--------------


(q) "Intervals" means ownership interests in Component Sites sold
--------- or marketed to Purchasers.


(r) "Major Decisions" has the meaning given in Section 7.1(a).
---------------


(s) "Manager" has the meaning given in Section 7.1(a).
-------


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(t) "Non-Qualified Person" means a Person (i) who, directly or
-------------------- indirectly, owns an interest in or is otherwise engaged in (whether as a principal, agent, employee, officer, director or otherwise) a Four Star or higher quality timeshare or Interval ownership business (including timeshare development, timeshare marketing, timeshare resort management, or the operation or sale for timeshare purposes of any kind of interest, including timeshare licenses, timeshare estates or vacation clubs as such terms are defined in Chapter 721 of the Florida Statutes) other than through ownership through an interest in Westin, SRI, or any of their Affiliates; (ii) who directly or indirectly, owns an interest in or is otherwise engaged in (whether as a principal, agent, employee, officer, director or otherwise) a Four Star or higher quality hotel ownership, management or franchising business, other than through Westin, SRI, or any of their Affiliates; (iii) who is an Affiliate of any person described in clause (i) or (ii) above; or (iv) whose character or reputation would, in the reasonable opinion of either of the parties, jeopardize the authority or ability of a Development Entity to conduct any aspect of its business or would otherwise adversely affect the goodwill or business reputation of the Development Entity or either of the parties.


(u) "Owners Association" means the condominium and/or timeshare owners
------------------ association in which all Interval owners at a Component Site are members, formed for the purpose of owning common elements in, managing, maintaining and operating the Component Site for and on behalf of the Interval owners.


(v) "Pass" means the decision of a Receiving Party to decline, in its
---- sole discretion, to proceed with the development and operation of a WVC Opportunity presented to it by a Proposing Party. A Receiving Party is deemed to have "passed" on a WVC Opportunity if the terms and conditions thereof were set forth in an Expression of Interest or a Proposal delivered in accordance with this Agreement and the Receiving Party failed, in writing, to deliver a Preliminary Notice to Proceed or Final Notice to Proceed, as applicable, within fifteen (15) days after such delivery.


(w) "Person" means an individual, partnership, limited liability
------ company, limited liability partnership, corporation, trust and any other association or legal entity.


(x) "Preliminary Notice to Proceed" means a Receiving Party's written
----------------------------- response to an Expression of Interest, indicating the Receiving Party's willingness to continue to evaluate, explore and pursue the WVC Opportunity, to pay or reimburse the Proposing Party for fifty percent (50%) of all costs incurred in the pursuit of the WVC Opportunity to the extent set forth in or contemplated by the Transaction Budget, certifying to the continuing truth, accuracy and completeness of the representations and warranties given by the Receiving Party as set forth in Article III of this Agreement and setting forth any restrictive covenants or area restrictions which are applicable to the Receiving Party and that may be impacted by the proposed WVC Opportunity.


(y) "Proposal" means a detailed, written description of a WVC
-------- Opportunity presented by a Proposing Party to a Receiving Party, which contains the name of the current owner of the property, a detailed description of the site, an updated ninety (90) day Transaction Budget, a pro forma construction budget, a pro forma resort operating budget, five-year financial projections, a market analysis, a description of the resort, including the number of units to be constructed or renovated and the amenities to be included, and such other information as is


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available to the Proposing Party and which would help the Receiving Party's board of directors effectively evaluate the WVC Opportunity.


(z) "Proposing Party" means a party to this Agreement that is
--------------- presenting a WVC Opportunity to the other party pursuant to an Expression of Interest or Proposal.


(aa) "Purchaser" has the meaning given in Section 1.2 of this
--------- Agreement.
(ab) "Qualified Person" means a Person, other than a Non-Qualified
---------------- Person, who has the financial ability to consummate the purchase of an interest of either of the parties in a Development Entity as described in an offer presented pursuant to Section 7.1(d) and whose character or reputation would not jeopardize the authority or ability of the Development Entity to conduct any aspect of its business or not otherwise adversely affect the goodwill or business reputation of the Development Entity or either of the parties hereto.


(ac) "Receiving Party" means a party to this Agreement that has
--------------- received an Expression of Interest or Proposal from a Proposing Party.


(ad) "Sales Period" means the period during which Intervals in a
------------ Component Site are being marketed and sold to Purchasers.


(ae) "Sell-Out" has the meaning given in Section 5.2 of this
-------- Agreement.


(af) "Transfer" means any disposition of an ownership interest in a
-------- Development Entity (including, by gift, sale, assignment, pledge, encumbrance, bequest and all other dispositions) whether voluntary or involuntary, or by court order or operation of law.


(ag) "Unbranded Property" means any property, hotel or resort that is
------------------ not Flagged with a brand name of a nationally or regionally recognized hotel, resort or casino operator or franchisor.


(ah) "Westin Standards" means the standards of quality and customer
---------------- service established by Westin for all Component Sites.


(ai) "Westin Vacation Club" has the meaning given in the Recitals
-------------------- and Section 1.2 of this Agreement.


(aj) "WVC Opportunities" means any and all Four Star or B Brand
----------------- timeshare vacation ownership opportunities of which either of the parties becomes aware, but shall not include resort condominium/hotels.


(ak) "WVMC" means Westin Vacation Management Company.
----


Section 2.2 Terms Generally. For all purposes of this Agreement,
--------------- except as otherwise expressly provided or unless the context otherwise requires:


(a) All pronouns and all variations thereof refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or entity may require.


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(b) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and


(c) The words "including" and "include" and other words of similar import denote illustrations and examples and are not establishing the exclusive set of particulars.


ARTICLE III
-----------


REPRESENTATIONS AND WARRANTIES
------------------------------


Section 3.1 Representations and Warranties of Westin. Westin
---------------------------------------- represents and warrants to SRI, as of the effective date of this Agreement and continuing through the date of execution of this Agreement, as follows:


(a) Westin is a corporation, duly organized, validity existing and in good standing under the laws of the State of Delaware and is duly qualified and in good standing in each jurisdiction in which the failure to so qualify would materially and adversely affect its ability to perform its obligations under this Agreement.


(b) Westin has the full corporate power and authority to execute, deliver and perform this Agreement and such execution, delivery and performance has been duly authorized by all necessary corporate action on the part of Westin. This Agreement has been duly executed by Westin and constitutes the legal, valid and binding obligation of Westin, enforceable in accordance with its terms, except if such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditor's rights generally.


(c) Neither the execution, delivery nor performance by Westin of this Agreement or any of the agreements contemplated to be executed by it pursuant to this Agreement, will (i) conflict with or result in a violation of the Certificate of Incorporation or Bylaws of Westin, (ii) conflict with or result in a violation of any law, statute, regulation, judgment, decree or other determination of governmental authority applicable to Westin, or (iii) require any consent, authorization or filing with, or any other act by or in respect of, any governmental authority.


(d) Westin owns, has obtained or otherwise has the lawful right to use or is in possession of all licenses, permits, consents, registrations, approvals or authorizations necessary for the conduct of its business and the performance of its obligations under this Agreement.


(e) There are no actions, proceedings, claims or judgments pending, or to Westin's knowledge threatened, against Westin that might have a material adverse effect on its financial condition or its ability to perform its obligations under this Agreement or any of the agreements contemplated to be executed by it by this Agreement.


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Section 3.2 Representations of SRI. SRI represents and warrants to
---------------------- Westin, as of the effective date of this Agreement and continuing through the date of execution of this Agreement, as follows:


(a) SRI is a corporation, duly organized, validity existing and in good standing under the laws of the State of Maryland and is duly qualified and in good standing in each jurisdiction in which the failure to so qualify would materially and adversely effect its ability to perform its obligations under this Agreement.


(b) SRI has the full corporate power and authority to execute, deliver and perform this Agreement and such execution, delivery and performance has been duly authorized by all necessary corporate action on the part of SRI. This Agreement has been duly executed by SRI and constitutes the legal, valid and binding obligation of SRI, enforceable in accordance with its terms, except if such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditor's rights generally.


(c) Neither the execution, delivery nor performance by SRI of this Agreement or any of the Agreements contemplated to be executed by it pursuant to this Agreement, will (i) conflict with or result in a violation of the Certificate of Incorporation or Bylaws of SRI, (ii) conflict with or result in a violation of any law, statute, regulation, judgment, decree or other determination of governmental authority applicable to SRI, or (iii) require any consent, authorization or filing with, or any other act by or in respect of, any governmental authority.


(d) SRI owns, has obtained or otherwise has the lawful right to use or is in possession of all licenses, permits, consents, registrations, approvals or authorizations necessary for the conduct of its business and the performance of its obligations under this Agreement.


(e) There are no actions, proceedings, claims or judgments pending, or to SRI's knowledge threatened, against SRI that might have a material adverse effect on its financial condition or its ability to perform its obligations under this Agreement or any of the agreements contemplated to be executed by it by this Agreement.


ARTICLE IV
----------


CO-DEVELOPMENT OF WESTIN VACATION CLUB COMPONENT SITES
------------------------------------------------------


Section 4.1 Joint Development of Westin Vacation Club Component
--------------------------------------------------- Sites. Subject to the terms and conditions of this Agreement, SRI and Westin - ----- (on a project-by-project basis through separate Development Entities) may from time to time jointly acquire, develop, invest in, operate, sell and finance Westin Vacation Club Component Sites. Other than the St. John Project and the Rancho Mirage Project, all properties that Westin and SRI elect to develop shall be selected on a case by case basis with each party's participation being purely voluntary and discretionary.


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Section 4.2 Presentation by SRI of Development Opportunities to Westin.
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