Minutes from the 53rd Annual Meeting of Island Inn Shareholders:

Monday, January 11, 2010Kimball Lodge Lounge

Please mark your calendars for the 54th meeting: Monday January 10, 2011.

The Mission of the Island Inn Company is to operate a resort reminiscent of early Sanibel hospitality and to preserve the natural beauty and ambiance its unique island setting provides.

Chairman Joe Orndorff called the meeting to order at 10:04 AM and welcomed everyone to the meeting. He recognized new shareholders: Steven Kropp and Rich and Nancy Latta. Rich was in attendance. The following names have been added to existing shares: Courtney Whitt and Tim Ryan (Orndorff), Rachel Buhse (Bushe/Bose), Betsey Mickler (Mickler).

Joe shared with us the passing of the following shareholders since the last annual meeting: Mrs. Jack Foote, Claire Conner, Bob Atkinson, Eric Stroh and Alice Mickler.

Nancy Leeming was appointed Parliamentarian.

Jack Rushworth, chair of the Proxy Committee, announced that there were 95 [60 by proxy and 33 present] shareholders represented either by proxy or in person. The minutes were presented by Pat Yankus and were accepted by acclamation.

Election of Board of Directors: Al Paladino announced nominees: Burke Wood and Mead Treadwell - 1st term ending in 2013; Pat Yankus, 2nd term ending in 2013. Burke and Mead were introduced. Additional nominations were asked from the floor. None came forward. Bob Stouten moved that nominations be closed, Ann Treadwell seconded the motion. The slate was approved.

CHAIRMAN’S REPORT – Joe Orndorff introduced the Board of Directors.Joe reviewed the importance of adding names to stock certificates. The Shareholder Directory will be published every two years. The next directory will be issued at the Monday, January 10, 2011 meeting.

Kimball Lodge and the Kimball Lodge Condominium Association (KLCA):

Joe reviewed the history of Kimball Lodge and the KLCA. There are 31 units, 22 units or 53.55% are owned by the Island Inn Company and 9 units or 46.45% are owned by private owners. All owners make up the KLCA. KLCA is a non-profit corporation incorporated in the state of Florida and governed by a board of directors. It is legally separate from the Island Inn Company. The present condominium document determines the way the two bodies work together. Recently, Florida law changed and the current document is being revised to include any new requirements mandated by the State.In the past Kimball Lodge insurance has been commingled with the Island Inn. Chris Salerno and Courtney Kane have worked on this and have separated the policies and coverage so that the KLCA is covered by its own policy—the units owned by the Island Inn are covered by this policy.

Until recently, the Island Inn prepaid all the bills for the KLCA and was reimbursed several months later. A review was conducted to determine how other condominiums paid bills etc. KLCA and Island Inn agreed that all owners be assessed quarterly and in advance so that bills could be paid in a timely manner. The Island Inn, as owner of 22 units, will pay quarterly assessments and the KLCA will be responsible for all KLCA expenses—water, sewage, electricity, taxes, insurance, etc. Checks to each other will be exchanged concurrently so there is a paper trail for each transaction.

As the KLCA and Company move forward with the new condominium document, a clearly articulated business relationship will be mapped out for all to follow. Robin Obetz, current chair of the KLCA, thanked the Island Inn and Joe for all their work and looks forward to the future.Chris Salerno said the KLCA was current in reimbursements to the Island Inn and will complete the additional reimbursement payback over the next year.Tom Blanton stated that most residential condo have a minimum of a week’s rents. Joe explained that we, the Island Inn, operating as a hotel are grandfathered under Sanibel law to rent our units on a daily basis.

PRESIDENT’S REPORT:Pegge indicated that last year was a disappointing and difficult for the Island Inn and the financial impact of Charley and the recent the economic crisis continues to impact our sales.We are in a tough battle for every dollar we can take away from our competition. She noted that the Inn invested $900,000 to quick start the post Hurricane Charley recovery—recovery that benefitted the Inn and the KLCA. She indicated that dining room losses were reduced by opening Traditions later in the year and discontinuing lunch during the winter season. In addition to fine dining, the menu became more flexible and offered lower priced meals and salads reflecting new dietary expectations. We hope to reduce costs and increase the number of diners. The dining room manager position was eliminated and the kitchen staff was cut by 3 persons and closed on Sunday nights, following the Sunday buffet.

Health care programs were adjusted as were deductible amounts. The Inn has petitioned the Lee County Property Tax authority to review the 22 condominium units in Kimball Lodge. The hearing is January 25th.

The Inn has made a decision to reduce our print advertising and focus more on the social media of today….

Blog….face book….twitter….fan page…HD video of rooms and property…increase the internet exposure.We are very fortunate to have two Board members, Mead Treadwell and Burke Wood, who know and understand today’s communication needs for our success on the net. Depending when you arrived at the Inn, you may have seen some filming being done on our property. A California based company was retained by the Lee County Visitors and Convention Bureau to produce a commercial for Lee County and their crew stayed at the Inn contributing to room and restaurant sales.We have recently teamed up with the Sanibel Conservation Foundation to be the destination for the Thursday beach walks from now until April.

Pegge announced that the Island Inn was voted the best Inn/Hotel on Sanibel and Captiva Islands for 2009.

TREASURER’S REPORT:

The budget for 2010 was distributed. Evan Stouten reported that if all goes according to the budget we will end the fiscal year with a small surplus. The budget reflects changes in the dining room in terms of hours of operation and staffing. The KLCA repayment to the Island Inn is current.

GOVERNANCE REPORT:

Dick Notebaert reported that new shareholder certificates will be mailed soon. If they do not reflect the proper information, contact the Inn immediately. It is important to name people as it could have inheritance tax implications. There is no cost to adding names at this time, but there will be in the future. Nate Whiteside asked if more names could be added to shares and it was explained that the precedent was to have only three names per share, but the board will review that custom.

Dick Notebaert presented Joe with a glass bowl with gratitude for his work on behalf of the Island Inn.There was a unanimous vote of thanks to Joe.

Meeting adjourned at 11:30 AM.

Respectfully submitted,

Patricia L. Yankus

Secretary

1