Exhibit 10.1
 
THE INTERESTS ACQUIRED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS THEY HAVE BEEN REGISTERED UNDER SAID ACT OR
UNLESS REGISTRATION UNDER SAID ACT IS NOT REQUIRED. THERE ARE SUBSTANTIAL
RESTRICTIONS ON TRANSFER CONTAINED IN THIS AGREEMENT.
 
AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING
AGREEMENT
OF
LONG BEACH HOTEL PROPERTIES, LLC

 

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TABLE OF CONTENTS

              Page  
1. DEFINITIONS
    3  
 
       
1.1 Adjusted Capital Account
    3  
1.2 Affiliates
    3  
1.3 Applicable Law
    4  
1.4 Bankruptcy
    4  
1.5 Book Value
    4  
1.6 Capital Contribution
    5  
1.7 Capital Transaction
    5  
1.8 Capital Transaction Proceeds
    5  
1.9 Cash Reserves
    5  
1.10 CIGNA Buy/Sell Conditions
    5  
1.11 CIGNA Guarantee
    6  
1.12 Code
    6  
1.13 Company Minimum Gain
    6  
1.14 CPI
    6  
1.15 CW Parties
    6  
1.16 CWI
    6  
1.17 Depreciation
    6  
1.18 Distributable Cash from Operations
    7  
1.19 Distributable Cash from Subsidiary Operations
    7  
1.20 DSCR
    7  
1.21 DoubleTree Buy/Sell Conditions
    7  
1.22 Ensemble Parties
    8  
1.23 Existing Guarantees
    8  
1.24 Existing Loan Documents
    8  
1.25 Existing Loans
    8  
1.26 Fiscal Year
    8  
1.27 Governmental Authority
    8  
1.28 Hotel
    8  
1.29 Intangible Property
    8  
1.30 IRR
    9  
1.31 Lenders
    9  
1.32 Manager
    9  
1.33 Manager Party
    9  
1.34 Managing Member
    9  
1.35 Maya Mortgage Lender
    9  
1.36 Maya Mortgage Loan
    9  
1.37 Member
    10  
1.38 Member Nonrecourse Debt
    10  
1.39 Member Nonrecourse Debt Minimum Gain
    10  
1.40 Member Nonrecourse Deductions
    10  
1.41 Membership Interest
    10  
1.42 Nonrecourse Deductions
    10  

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TABLE OF CONTENTS
(continued)

              Page  
1.43 Nonrecourse Liability
    10  
1.44 Original Members
    10  
1.45 Participation Percentage
    10  
1.46 Passive Investment
    10  
1.47 Permit
    11  
1.48 Permitted Transferee
    11  
1.49 Person
    11  
1.50 Preservation Costs
    11  
1.51 Profits and Losses
    11  
1.52 Property
    12  
1.53 Qualified Real Estate Investor
    12  
1.54 Refinance Requirements
    12  
1.55 Regulations
    13  
1.56 Residence Mortgage Lender
    13  
1.57 Residence Mortgage Loan
    13  
1.58 Restricted Territory
    13  
1.59 Tax(es)
    13  
1.60 Tax Returns
    13  
1.61 Torrey Pines Guarantees
    13  
1.62 Total Value
    13  
1.63 Transfer
    14  
1.64 Uniform System
    14  
1.65 Unreturned Capital Contribution Account
    14  
1.66 Working Capital Shortfall
    14  
 
       
2. CONTINUATION OF LIMITED LIABILITY COMPANY AND ADMISSION OF MEMBERS
    17  
 
       
3. NAME AND PLACE OF BUSINESS
    17  
 
       
3.1 Name
    17  
3.2 Principal Place of Business
    17  
3.3 Members
    17  
 
       
4. PURPOSE
    18  
 
       
5. TERM OF COMPANY; RECORDINGS; AGENT FOR SERVICE OF PROCESS
    17  
 
       
5.1 Term
    17  
5.2 Filings
    17  
5.3 Agent for Service of Process
    18  
5.4 Considered a Partnership
    18  
5.5 Protection of REIT Status
    18  

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TABLE OF CONTENTS
(continued)

              Page  
5.6 Dispute Resolution Regarding REIT Compliance
    20  
5.7 Sarbanes-Oxley Compliance
    20  
 
       
6. CONTRIBUTIONS AND LOANS
    21  
 
       
6.1 Initial Contributions
    21  
6.2 Use of Funds
    21  
6.3 Additional Contributions or Losses
    21  
6.4 Interest on Contributions
    22  
6.5 Return of Contributions
    23  
 
       
7. ALLOCATIONS
    23  
 
       
7.1 Capital Accounts
    23  
7.2 Allocation of Profits and Losses
    24  
7.3 Other Allocation Rules
    24  
7.4 Tax Allocations
    25  
 
       
8. DISTRIBUTIONS
    26  
 
       
8.1 Distribution of Distributable Cash (Other than From Capital Transactions)
    26  
8.2 Distribution of Cash From Capital Transactions
    27  
8.3 Offset
    27  
8.4 To Whom Distributions Are Made
    28  
 
       
9. MANAGEMENT
    28  
 
       
9.1 Managing Member
    28  
9.2 Manager
    29  
9.3 Duties and Responsibilities of Manager
    30  
9.4 Approval by Managing Member
    33  
9.5 Approval by Members
    36  
9.6 Hotel Maya
    37  
9.7 Remuneration of Manager and the Members
    37  
9.8 Member Approval
    38  
9.9 Liquor License
    38  
9.10 Marina Project
    38  
9.11 Guarantees; Refinancing
    39  
9.12 Pre-Existing Obligations of Ensemble Member
    40  
9.13 Dispute Resolution
    42  
9.14 Execution of Documents
    43  
9.15 Other Ensemble Member Liability
    43  
9.16 Liability/Indemnification
    44  

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TABLE OF CONTENTS
(continued)

              Page  
10. RESTRICTIONS ON TRANSFER; NEW MEMBERS
    47  
 
       
10.1 Limitations on Transfers
    47  
10.2 Permitted Transfers
    47  
10.3 Right of First Refusal on Transfer
    48  
10.4 Impasse; Forced Sale and Buy/Sell
    48  
10.5 Further Assurances
    53  
10.6 Representations and Warranties of the Members
    54  
10.7 No Dissolution
    54  
 
       
11. DISSOLUTION AND WINDING UP OF THE COMPANY
    54  
 
       
11.1 Dissolution of Company
    54  
11.2 Winding Up of the Company
    55  
 
       
12. BOOKS AND RECORDS; EXPENSES
    56  
 
       
12.1 Books of Account
    56  
12.2 Reports
    56  
12.3 Audited Financial Statements
    56  
12.4 Tax Returns; Tax Elections
    57  
12.5 Bank Accounts
    58  
12.6 Insurance
    58  
12.7 Accountants
    58  

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TABLE OF CONTENTS
(continued)

              Page  
13. ADJUSTMENT OF BASIS ELECTION
    58  
 
       
14. WAIVER OF ACTION FOR PARTITION
    58  
 
       
15. AMENDMENTS
    59  
 
       
16. EQUITABLE RELIEF
    59  
 
       
17. NOTICES
    59  
 
       
18. LEGAL REPRESENTATION
    60  
 
       
19. ATTORNEYS’ FEES
    61  
 
       
20. INDEPENDENT ACTIVITIES OF MEMBERS
    61  
 
       
21. INVESTMENT REPRESENTATIONS OF THE MEMBERS
    62  
 
       
22. MISCELLANEOUS
    64  
 
       
22.1 Governing Law
    64  
22.2 Severability
    64  
22.3 Further Assurances
    64  
22.4 Successors and Assigns
    64  
22.5 Number and Gender
    64  
22.6 Entire Agreement
    64  
22.7 Waiver
    64  
22.8 Counterparts
    64  
22.9 Interpretation
    64  
22.10 Parties in Interest
    64  
22.11 No Authority
    65  

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING
AGREEMENT OF LONG BEACH HOTEL PROPERTIES, LLC
RECITALS
     THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
LONG BEACH HOTEL PROPERTIES, LLC, a California limited liability company, is
made and entered into as of May 2, 2011 (the “Effective Date”), by and between
CWI LONG BEACH HOTELS, LLC, a Delaware limited liability company (“CW Member”),
and LBHP-ENSEMBLE PARTNERS, LLC, a California limited liability company
(“Ensemble Member”) (this “Agreement”). CW Member and Ensemble Member are
sometimes referred to collectively in this Agreement as the “Members” and
individually as a “Member”.
     A. Long Beach Hotel Properties, LLC, a California limited liability company
(the “Company”), was formed as a limited liability company pursuant to and in
accordance with the Beverly-Killea Limited Liability Company Act, codified in
Sections 17000 et seq. of the Corporations Code of the State of California, in
effect as of the date thereof (and as amended from time to time, the “Act”), by
causing the filing of the Articles of Organization with the Secretary of State
of California on June 26, 2007 (the “Articles of Organization”) and entering
into that certain Limited Liability Company Operating Agreement dated as of
October 1, 2007.
     B. The Company currently owns a one hundred percent (100%) membership
interest in and is the sole member and manager of (i) Queensbay Hotel, LLC, a
Delaware limited liability company (“Queensbay LLC”); (ii) Portside Partners
LLC, a California limited liability company (“Portside LLC”); and (iii) Long
Beach Hotel Operator, Inc., a Delaware corporation (“TRS”).
     C. The City of Long Beach, a municipal corporation and trust grantee of the
State of California of certain tide and submerged land within said City (“Ground
Lessor”), has granted a leasehold interest (the “Queensbay Leasehold Estate”) in
the underlying real property more particularly described on Exhibit “B-1”
attached hereto and made a part hereof (the “Queensbay Land”) pursuant to that
certain Amended and Restated Hotel Lease between Ground Lessor and QW Land
Holding Company, LLC, a Delaware limited liability company (“QW Holdco”), dated
November 17, 2006, as assigned pursuant to that certain Assignment of Ground
Lease, Acceptance of Assignment and Assumption of Ground Lease and Consent to
Assignment and Assumption of Ground Lease dated January 1, 2011, by and among QW
Holdco, as assignor, Queensbay LLC, as assignee, and Ground Lessor, collectively
with all amendments, assignments, supplements and modifications thereto (the
“Queensbay Ground Lease”).
     D. Queensbay LLC has entered into that certain Operating Lease dated as of
the date hereof (the “Maya Operating Lease”) between Queensbay LLC, as operating
lessor, and TRS, as operating lessee, for the operation and ownership of that
certain hotel located at 700 Queensway Drive, Long Beach, California, operated
as the “Hotel Maya — a DoubleTree by Hilton Hotel” (the “Hotel Maya”) pursuant
to the terms and conditions of that certain Franchise License Agreement
(“DoubleTree Franchise Agreement”) dated as of August 18, 2010 between Queensbay
LLC, as franchisee, and DoubleTree Franchise LLC, a Delaware limited liability
company, as franchisor (“DoubleTree”); and assigned pursuant to that certain
Assignment and

1

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Assumption Agreement dated as of the date hereof by and among Queensbay LLC, as
assignor, TRS, as assignee, and Ground Lessor and managed by an Affiliate of the
Company pursuant to the terms and conditions of that certain Hotel Management
Agreement dated as of the date hereof between TRS, as operator, and EHP, as
manager (the “Maya Management Agreement”).
     E. Queensbay LLC is the sole holder of the Queensbay Leasehold Estate and
all right, title and interest created by the Queensbay Leasehold Estate for the
Queensbay Land, together with Queensbay LLC’s fee interest in the structures,
buildings and improvements situated on the Queensbay Land (including, without
limitation, all right, title and interest of Queensbay LLC in and to all
fixtures, plants, appliances, furnaces, boilers, machinery, equipment and
apparatus of every kind now affixed or attached to any such structures,
buildings or improvements) and comprising the Hotel Maya.
     F. Ground Lessor has granted a leasehold interest (the “Portside Leasehold
Estate”) in the underlying real property more particularly described on Exhibit
“B-2” attached hereto and made a part hereof (the “Portside Land”) pursuant to
that certain Amended and Restated Hotel Lease between Ground Lessor and LBH Land
Holding Company, LLC, a California limited liability company (“LBH Holdco”),
dated October 1, 2005, as assigned pursuant to that certain Assignment of Ground
Lease, Acceptance of Assignment and Assumption of Ground Lease and Consent to
Assignment and Assumption of Ground Lease dated November 21, 2006, by and among
LBH Holdco, as assignor, QW Holdco, as assignee, and Ground Lessor, and as
further assigned pursuant to that certain Assignment of Ground Lease, Acceptance
of Assignment and Assumption of Ground Lease and Consent to Assignment and
Assumption of Ground Lease dated as of the date hereof, by and among QW Holdco,
as assignor, Portside LLC, as assignee, and Ground Lessor, collectively with all
amendments, assignments, supplements and modifications thereto (the “Portside
Ground Lease”).
     G. Portside LLC has entered into that certain Operating Lease dated as of
the date hereof between Portside LLC, as operating lessor, and TRS, as operating
lessee, for the operation and ownership of that certain hotel located at 600
Queensway Drive, Long Beach, California operated as the Residence Inn by
Marriott (the “Residence Inn”) pursuant to the terms and conditions of that
certain Management Agreement dated May 11, 2007, by and between Portside LLC, as
owner, and Residence Inn by Marriott, LLC, a Delaware limited liability company,
as manager (“Marriott”), as amended by that certain Amendment to Management
Agreement dated March 23, 2009; and as assigned pursuant to that certain
Assignment and Assumption Agreement dated as of the date hereof by and among
Portside LLC, as assignor, TRS, as assignee, and Marriott (“Marriott Management
Agreement”).
     H. The Company, QW Holdco, Ensemble Hotel Partners, LLC, a California
limited liability company (“EHP”), Portside LLC and Queensbay LLC entered into
that certain QW Contribution Agreement dated as of December 31, 2010, pursuant
to which QW Holdco agreed to assign the Queensbay Ground Lease to Queensbay LLC
and the Portside Ground Lease to Portside LLC in exchange for a membership
interest in the Company.
     I. Portside LLC is the sole holder of the Portside Leasehold Estate and all
right, title and interest created by the Portside Ground Lease for the Portside
Land, together with Portside LLC’s fee interest in the structures, buildings and
improvements situated on the Portside Land

2

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(including, without limitation, all right, title and interest of Portside LLC in
and to all fixtures, plants, appliances, furnaces, boilers, machinery, equipment
and apparatus of every kind now affixed or attached to any such structures,
buildings or improvements) and comprising the Residence Inn.
     J. As of the Effective Date, CW Member has made a contribution to the
Company in consideration for a forty-nine percent (49%) interest in the capital
of, as well as the profits and losses of, the Company.
     K. Immediately after CW Member’s acquisition of a forty-nine percent (49%)
interest in the capital of, as well as the profits and losses of, the Company,
the Original Members formed Ensemble Member and contributed their respective
membership interests in the Company to Ensemble Member in consideration for a
pro rata interest in Ensemble Member in proportion to each Original Member’s
prior membership interest in the Company.
     L. The Members desire to amend and restate the Original LLC Agreement in
its entirety and to admit CW Member and Ensemble Member as members of the
Company.
     NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Members hereby
agree as follows:
     1. DEFINITIONS. When used in this Agreement, the following terms shall have
the meanings set forth below:
          1.1 Adjusted Capital Account. “Adjusted Capital Account” means for
each Member, an amount equal to the balance of such Member’s Capital Account as
of the end of the relevant Fiscal Year or as of any other relevant determination
date, after giving effect to the following adjustments:
               (a) credit to such Capital Account of any amounts which such
Member is obligated to restore (pursuant to the terms of this Agreement or
otherwise) or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Section 1.704-2(g)(1) and Regulations
Section 1.704-2(i)(5) after taking into account any net decrease in a Member’s
share of Company Minimum Gain or Member Nonrecourse Debt Minimum Gain that has
occurred as of the relevant determination date; and
               (b) debit to such Capital Account of the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
          1.2 Affiliates. “Affiliates” means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person. For purposes hereof, the term “control” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of any Person, or the power to veto
major policy decisions of such Person, whether through the ownership of voting

3

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securities, by agreement, or otherwise. Notwithstanding the foregoing, (i) EHP
and Ensemble Investments, LLC shall be deemed “Affiliates” of Ensemble Member
for all purposes under this Agreement; and (ii) W.P. Carey & Co., LLC, CWI and
Watermark Capital Partners, LLC or any entity managed or advised by W.P. Carey &
Co., LLC, CWI and Watermark Capital Partners, LLC or any subsidiary of any such
entities (and without regard to the percentage of equity ownership any of them
may have in such entity), shall be deemed “Affiliates” of CW Member for all
purposes under this Agreement.
          1.3 Applicable Law. “Applicable Law” means, collectively, all Federal,
state and local laws, statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, permits, licenses, authorizations,
directions and requirements of and agreements with all courts and governmental
authorities, foreseen and unforeseen, ordinary or extraordinary.
          1.4 Bankruptcy. “Bankruptcy” means:
               (a) The commencement of any voluntary proceedings under Federal
or state bankruptcy laws;
               (b) The failure to terminate any involuntary proceeding under
Federal or state bankruptcy laws within thirty (30) days after the commencement
thereof;
               (c) A general assignment for the benefit of creditors; or
               (d) The issuance of a charging order against the interest of any
Person without the removal thereof within thirty (30) days after issuance.
          1.5 Book Value. “Book Value” means for any asset the asset’s adjusted
basis for Federal income tax purposes, except as follows:
               (a) The initial Book Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset, as determined
by Managing Member;
               (b) The Book Values of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by Managing
Member, as of the following times: (i) the acquisition of an additional
Membership Interest in the Company by any new or existing Member in exchange for
more than a de minimis capital contribution if Managing Member reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the Members in the Company; (ii) the distribution
by the Company to a Member of more than a de minimis amount of Company property
as consideration for a Membership Interest in the Company if Managing Member
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Members in the Company; and
(iii) the liquidation of the Company within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g);
               (c) The Book Value of any Company asset distributed to any Member
shall be the gross fair market value of such asset on the date of distribution,
as determined by Managing Member;

4

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               (d) The Book Values of Company assets shall be increased (or
decreased) to reflect any adjustment to the adjusted basis of such assets
pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
Book Values shall not be adjusted pursuant to this subparagraph to the extent
Managing Member determines that an adjustment pursuant to subparagraph (b) of
this Section is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph; and
               (e) If the Book Value of an asset has been determined or adjusted
pursuant to subparagraphs (a), (b) or (d) of this Section, such Book Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
          1.6 Capital Contribution. “Capital Contribution” means collectively,
the CW Initial Contribution, all Mandatory Capital Contributions and all other
contributions in cash and the Book Value of other property contributed to the
capital of the Company.
          1.7 Capital Transaction. “Capital Transaction” means (i) the
refinancing of the Property; (ii) the sale, exchange or other disposition of any
material part of the Property or all or substantially all of the Property
(including the condemnation of the Property); (iii) the dissolution of the
Company; or (iv) any transaction not in the ordinary course of business which
results in the Company’s receipt of cash or other consideration (other than
Capital Contributions), including, without limitation, proceeds of sales,
exchanges, or other dispositions of assets not in the ordinary course of
business, condemnations, recoveries of damage awards, and insurance proceeds.
          1.8 Capital Transaction Proceeds. “Capital Transaction Proceeds” means
all proceeds from a Capital Transaction less the sum of (i) any escrow or
reserve required in connection with, or costs and expenses of the Company
attributable to, such Capital Transaction, including, without limitation, any
holdback escrow (or similar closing reserve or escrow, provided that, in each
instance, all such reserves shall be deemed Capital Transaction Proceeds upon
their subsequent release), Taxes, prepayment fees or penalties, brokerage fees,
escrow fees, title costs and expenses, appraisal fees, consultant fees, audit
and tax costs, closing costs and expenses including attorneys’ fees (but
excluding amounts paid from the Company’s reserves or funds provided by Capital
Contributions and paid during such Fiscal Year (or portion thereof) for such
costs and expenses); and (ii) reasonable reserves needed for the Company’s
business for the remainder of such Fiscal Year and future periods based on the
Initial Budget or any subsequent Approved Annual Budget or otherwise approved by
the Members.
          1.9 Cash Reserves. “Cash Reserves” means such amounts as may be
required pursuant to the terms of the DoubleTree Franchise Agreement, the Maya
Management Agreement, the Marriott Management Agreement and/or the Existing Loan
Documents.
          1.10 CIGNA Buy/Sell Conditions. “CIGNA Buy/Sell Conditions” means the
following conditions required by Residence Mortgage Lender: (i) CW Member meets
the requirements of a Qualified Real Estate Investor; (ii) the Residence
Mortgage Loan has a debt

5

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coverage ratio (as determined by Residence Mortgage Lender) of no less than
1.35:1.0 for the trailing twelve (12) month period immediately prior to the date
CW Member notifies Residence Mortgage Lender of its intent to exercise its
rights under Section 10.4; (iii) the ratio of the then outstanding principal
balance of the Residence Mortgage Loan compared to the currently appraised value
of the Residence Inn (as demonstrated to Residence Mortgage Lender’s reasonable
satisfaction) is seventy-five percent (75%) or less; (iv) the obligations under
the CIGNA Guarantee have expired; and (v) any other conditions imposed by
Residence Mortgage Lender as a condition to CW Member exercising its rights
under Section 10.4 and assuming the Residence Mortgage Loan that would not be
automatically imposed on Ensemble Member in the event that Ensemble Member was
the purchasing Member under Section 10.4.
          1.11 CIGNA Guarantee. “CIGNA Guarantee” means that certain Completion
and Payment Guaranty dated August 10, 2007 by Ensemble Investments, LLC, an
Arizona limited liability company, for the benefit of Residence Mortgage Lender.
          1.12 Code. “Code” means the Internal Revenue Code of 1986, as amended
from time to time.
          1.13 Company Minimum Gain. “Company Minimum Gain” means “partnership
minimum gain,” as defined in the Regulations promulgated under Section 704(b) of
the Code.
          1.14 CPI. “CPI” means the Consumer Price Index (All Cities — All
Items) (1982-84 = 100) or if such index is discontinued, the most comparable
index of the prevailing rate of inflation for the jurisdiction in which the
Hotels are situated as determined by the relevant Governmental Authority
responsible for official economic statistics;
          1.15 CW Parties. “CW Parties” means, collectively, CW Member and its
Affiliates, and each of their respective members, partners, shareholders, other
principals, directors or officers.
          1.16 CWI. “CWI” means Carey Watermark Investors Incorporated, a
Delaware corporation.
          1.17 Depreciation. “Depreciation” means, with respect to any asset of
the Company, and/or any Company Subsidiary, as applicable, for each Fiscal Year
or other period, the amount of depreciation, amortization or other cost recovery
deduction allowable with respect to such asset for such Fiscal Year or other
period, except that (i) if the Book Value of an asset differs from its adjusted
basis for Federal income tax purposes at the beginning of any such Fiscal Year
or other period, Depreciation with respect to such asset for such Fiscal Year or
other period shall be an amount which bears the same ratio to such beginning
Book Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such Fiscal Year or period bears to such beginning
adjusted tax basis; and (ii) if an asset has a zero adjusted basis for Federal
income tax purposes, Depreciation shall be determined under any reasonable
method selected by Managing Member which is in accord with Federal income tax
accounting principles applicable to assets of similar character having a
positive adjusted basis for Federal income tax purposes.

6

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          1.18 Distributable Cash from Operations. “Distributable Cash from
Operations” shall mean, for any Fiscal Year, or portion thereof, revenues of the
Company received in cash during such Fiscal Year, or portion thereof, and
Company reserves set aside out of revenues during prior periods that are no
longer needed for the Company’s business, including, without limitation, all
Distributable Cash from Subsidiary Operations, less the sum of (i) operating and
administrative expenses of the Company including, without limitation, Taxes,
consultant fees and/or audit costs (but excluding amounts paid from the
Company’s reserves or funds provided by Capital Contributions and paid during
such Fiscal Year (or portion thereof) for such costs and expenses); (ii) debt
service and partnership costs (as set forth in the Initial Budget or any
subsequent Approved Annual Budget); and (iii) reasonable reserves needed for the
Company’s business for the remainder of such Fiscal Year and future periods
based on the Initial Budget or any subsequent Approved Annual Budget or
otherwise approved by the Members (i.e., all Cash Reserves).
          1.19 Distributable Cash from Subsidiary Operations. “Distributable
Cash from Subsidiary Operations” shall mean, for any Fiscal Year, or portion
thereof, revenues of the applicable Subsidiary received in cash during such
Fiscal Year, or portion thereof, and reserves set aside out of revenues during
prior periods and no longer needed for the such Subsidiary’s business, less the
sum of (i) operating and administrative expenses of the applicable Company
Subsidiary including, without limitation, Taxes, consultant fees and/or audit
costs (but excluding amounts paid from the Company’s reserves or funds provided
by Capital Contributions and paid during such Fiscal Year (or portion thereof)
for such costs and expenses); (ii) debt service and partnership costs (as set
forth in the Initial Budget or any subsequent Approved Annual Budget); and
(iii) reasonable reserves needed for the Company’s business for the remainder of
such Fiscal Year and future periods based on the Initial Budget or any
subsequent Approved Annual Budget or otherwise approved by the Members (i.e.,
all Cash Reserves).
          1.20 DSCR. “DSCR” means the ratio of (i) net operating income from the
Hotel in question for the applicable period of time to (ii) the aggregate debt
service payments based on a thirty (30) year amortization schedule for the
respective loan equal to the balance of the principal amount thereof, calculated
for the applicable time period.
          1.21 DoubleTree Buy/Sell Conditions. “DoubleTree Buy/Sell Conditions”
means that DoubleTree has agreed, in writing, to treat both CW Member and
Ensemble Member the same in the event that either Member elects to exercise
their respective rights under Section 10.4 (i.e., no conditions and/or
obligations have been imposed on one Member that would not be automatically
imposed on the other Member in the event that either was the purchasing Member
under Section 10.4). For example, and without limitation, (i) if CW Member would
be required to pay any development services fees and/or undertake any new
property improvement plan obligations under the DoubleTree Franchise Agreement,
but Ensemble Member would not have such obligation if it were the purchasing
Member under Section 10.4; (ii) if CW Member was required to execute a new
franchise agreement with DoubleTree, but Ensemble Member would not; or (iii) if
CW Member was required to take any actions or omit to take any material actions
which Ensemble Member would not otherwise be required to take under the existing
DoubleTree Franchise Agreement.

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          1.22 Ensemble Parties. “Ensemble Parties” means, collectively,
Ensemble Member and its respective Affiliates, members, partners, shareholders,
other principals, directors or officers.
          1.23 Existing Guarantees. “Existing Guarantees” means, collectively,
the Torrey Pines Guarantees and that certain (i) Guaranty (Nehorai) dated
January 24, 2011 by Nouri Alex Nehorai, an individual, in favor of Maya Mortgage
Lender; (ii) Guaranty (Zarabi) dated January 24, 2011 by Frank Zarabi, an
individual, and Frank Zarabi and Desiree Zarabi, as trustees of the Zarabi
Family Trust dated September 3, 1992, in favor of Maya Mortgage Lender;
(iii) Guaranty (Babaoff) dated January 24, 2011 by Kambiz Babaoff, an
individual, and Kambiz Babaoff, as trustee of the Babaoff Family Trust (2004
Restatement), in favor of Maya Mortgage Lender; (iv) Guaranty (EHP) dated
January 24, 2011 by EHP in favor of Maya Mortgage Lender; (v) Limited Guaranty
(Molayem) dated January 24, 2011 by Daryoosh Molayem, an individual, and
Daryoosh Molayem and Rebecca Molayem, as trustees of the Molayem Family Trust
dated September 15, 1999, in favor of Maya Mortgage Lender; (vi) Limited
Guaranty (Tavangarian) dated January 24, 2011 by Ardeshir Ardie Tavangarian, an
individual, and Ardeshir Ardie Tavangarian and Tania Tavangarian, as trustees of
the Tavangarian Revocable Trust dated June 10, 2002, in favor of Maya Mortgage
Lender; (vii) Unsecured Environmental Indemnity Agreement (EHP) dated
January 24, 2011 by EHP in favor of Maya Mortgage Lender; (viii) Unsecured
Environmental Indemnity Agreement (Borrower) dated January 24, 2011 by Queensbay
LLC in favor of Maya Mortgage Lender; (ix) Unsecured Environmental Indemnity
Agreement (Babaoff) dated January 24, 2011 by Kambiz Babaoff, an individual, and
Kambiz Babaoff, as trustee of the Babaoff Family Trust (2004 Restatement), in
favor of Maya Mortgage Lender; (x) Indemnity Agreement (Babaoff) dated
January 24, 2011 by Kambiz Babaoff, an individual, and Kambiz Babaoff, as
trustee of the Babaoff Family Trust (2004 Restatement), in favor of Maya
Mortgage Lender; and (xi) Indemnity Agreement (EHP) dated January 24, 2011 by
EHP in favor of Maya Mortgage Lender.
          1.24 Existing Loan Documents. “Existing Loan Documents” shall mean and
refer to the loan documents evidencing and relating to the Existing Loans.
          1.25 Existing Loans. “Existing Loans” means (i) the Maya Mortgage
Loan; and (ii) the Residence Mortgage Loan.
          1.26 Fiscal Year. “Fiscal Year” means the calendar year.
          1.27 Governmental Authority. “Governmental Authority” means any court,
tribunal, authority, agency, commission, official or other instrumentality of
the United States, or any state, county, city or other political subdivision,
arbitrator or any judicial or quasi-judicial tribunal of competent jurisdiction.
          1.28 Hotel. “Hotel” means the Residence Inn and/or the Hotel Maya, as
the context requires.
          1.29 Intangible Property. “Intangible Property” shall mean all
intangibles owned or used by the Company or its Subsidiaries in the ownership
and operation of the Hotels.

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          1.30 IRR. “IRR” means the annual percentage rate that when utilized to
calculate the present value of distributions made to a Member causes the present
value of such distributions to equal the present value of the Member’s Capital
Contributions. With respect to determining IRR, the following rules will be
applied:
               (a) The present value of a Member’s Capital Contribution made on
the Effective Date is the nominal amount of such capital;
               (b) A Member will be deemed to have received a specified IRR with
respect to any Capital Contributions only when that Member has received both a
return of such Capital Contributions calculated from the date made to the date
repaid plus a return on such Capital Contributions as determined pursuant to
Sections 8.2(c), (d) and (e);
               (c) For purposes of IRR calculations used herein, the annual
percentage rate shall mean a per annum rate using monthly compounding (i.e., an
annual stated IRR of, for example, 12%, shall mean 12% as an effective annual
rate arrived at by monthly compounding); and
               (d) Solely for purposes of IRR calculations used herein, all
items of contributions or inflows and all items of distributions or outflows
used in such calculations shall be deemed to have been received or distributed
on the last day of the calendar month in which they occur.
          1.31 Lenders. “Lenders” means, collectively, the Residence Mortgage
Lender and the Maya Mortgage Lender.
          1.32 Manager. “Manager” means EHP or any replacement or successor
Manager appointed in accordance with Section 9.2(b).
          1.33 Manager Party. “Manager Party” or “Manager Parties” means,
individually or collectively, Manager and any affiliate of Manager in which
either (i) Kambiz Babaoff; (ii) Michael Moskowitz; or (iii) an irrevocable trust
which Kambiz Babaoff or Michael Moskowitz is the trustee of: (A) own, in the
aggregate, directly or indirectly, at least fifty percent (50%) of the
membership interests; and (B) possess, directly or indirectly, the power to
direct or cause the direction of the day-to-day operations, management or
policies of such affiliate, or the power to veto major policy decisions of such
Person, whether through the ownership of voting securities, by agreement, or
otherwise.
          1.34 Managing Member. “Managing Member” means CW Member or any
replacement managing member appointed pursuant to Section 9.1(b).
          1.35 Maya Mortgage Lender. “Maya Mortgage Lender” means Torrey Pines
Bank, a California corporation.
          1.36 Maya Mortgage Loan. “Maya Mortgage Loan” means that certain
mortgage loan in the original principal amount of Fifteen Million Dollars
($15,000,000) made by Maya Mortgage Lender to Queensbay LLC and evidenced by
that certain Promissory Note dated January 24, 2011 and secured by that certain
Leasehold Deed of Trust, Security Agreement and

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Fixture Filing dated as of January 24, 2011 by Queensbay LLC, as trustor, and
Maya Mortgage Lender.
          1.37 Member. “Member” means any Person admitted to the Company as a
member in accordance with this Agreement, or a Person who has been admitted as a
member pursuant to Applicable Law. The Members of the Company and their
respective Participation Percentages shall be reflected on Exhibit “A” attached
hereto, as it may be amended from time to time.
          1.38 Member Nonrecourse Debt. “Member Nonrecourse Debt” has the
meaning ascribed to the term “partner nonrecourse debt” in Regulations
Section 1.704-2(b)(4).
          1.39 Member Nonrecourse Debt Minimum Gain. “Member Nonrecourse Debt
Minimum Gain” means an amount, with respect each Member Nonrecourse Debt, equal
to the Company Minimum Gain that would result if such Member Nonrecourse Debt
were treated as a Nonrecourse Liability, determined in accordance with
Regulations Section 1.704-2(i)(3).
          1.40 Member Nonrecourse Deductions. “Member Nonrecourse Deductions”
means items of Company loss, deduction or Section 705(a)(2)(B) of the Code
expenditures that are attributable to Member Nonrecourse Debt or to other
liabilities of the Company owed to or guaranteed by a Member to the extent that
no other Member bears the economic risk of loss.
          1.41 Membership Interest. “Membership Interest” means the interest of
a Member in the Company.
          1.42 Nonrecourse Deductions. “Nonrecourse Deductions” means the
Company deductions that are characterized as “nonrecourse deductions” pursuant
to Regulations Section 1.704-2(b)(1).
          1.43 Nonrecourse Liability. “Nonrecourse Liability” has the meaning
ascribed to such term pursuant to Regulations Section 1.704-2(b)(3).
          1.44 Original Members. “Original Members” means the former members of
the Company: Tikva Investments Associates, LLC, an Arizona limited liability
company; The Babaoff Family Trust (2004 Restatement); ENS Development, LLC, an
Arizona limited liability company (successor-in-interest to Ensemble
Investments, LLC, an Arizona limited liability company); QW Holdco; OSHAK, LLC,
a New York limited liability company; James H. Gray IRA; Ardie Tavangarian, an
individual; Sterling Capital, L.P., a California limited partnership; Zarabi
Family Trust UDT September 3, 1992; EHP; and Molayem Family Trust UDT
September 15, 1999.
          1.45 Participation Percentage. “Participation Percentage” of a Member
shall mean that percentage set forth opposite such Member’s name on Exhibit “A”,
as it may be amended from time to time.
          1.46 Passive Investment. “Passive Investment” shall mean any direct or
indirect investment where the investing Person does not possess, directly or
indirectly, the power to direct or cause the direction of the management or
policies of any Person, or the power to veto

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major policy decisions of such Person, whether through the ownership of voting
securities, by agreement, or otherwise.
          1.47 Permit. “Permit” means all licenses, permits, consents,
authorizations, approvals, certificates of occupancy, ratifications,
certifications, registrations, exemptions, variances, exceptions and similar
consents granted or issued by any Governmental Authority.
          1.48 Permitted Transferee. “Permitted Transferee” means (i) any
Member; (ii) any Affiliate of a Member; (iii) a trust under which the
distribution of the Membership Interest may be made only to beneficiaries who
are Affiliates of such Member; and/or (iv) a Person to whom a Member consummates
a Transfer subject to the terms and conditions of Section 10.3; provided,
however, that any Permitted Transferee shall be subject to the additional
condition that no Permitted Transferee shall be any Person who: (x) does not
have reasonably sufficient financial resources and liquidity to fulfill the
transferring Member’s obligations under this Agreement; or (y) is known in the
community as being of bad moral character, or has been convicted of a felony in
any state or Federal court, or (z) is an Affiliate of Persons who have been
convicted of a felony in any state or Federal court.
          1.49 Person. “Person” means an individual, corporation, firm,
partnership, limited liability company, trust or any other form of association
or entity.
          1.50 Preservation Costs. “Preservation Costs” means (i) all debt
service payments required under the Existing Loan Documents or pursuant to any
refinancing, taxes, assessments, water, sewer or other similar rents, utilities,
insurance premiums, Permit fees and charges, in each case which are regular,
reoccurring and not within the control of the Company, its Subsidiaries or the
Hotels; and (ii) expenditures necessary on an emergency basis to avoid material
damage to the Hotels or injury to persons or property, whether or not provided
for or within the amounts provided for in the Approved Annual Budget for the
Fiscal Year in question, as may reasonably be required to avoid or mitigate such
damage or injury.
          1.51 Profits and Losses. “Profit” and “Loss” means, for each Fiscal
Year of the Company (or other period for which Profit or Loss must be computed),
the Company’s taxable income or loss determined in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss), with the following
adjustments:
               (a) All items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in computing taxable income or loss;
               (b) Any tax-exempt income of the Company, not otherwise taken
into account in computing Profit or Loss, shall be included in computing taxable
income or loss;
               (c) Any expenditures of the Company described in
Section 705(a)(2)(B) of the Code (or treated as such pursuant to
Regulation Section 1.704-1(b)(2)(iv)(1)) and not otherwise taken into account in
computing Profit or Loss, shall be subtracted from taxable income or loss;

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               (d) In the event the Book Value of any Company asset is adjusted
pursuant to Section 1.6(b), Section 1.6(d) or Section 1.6(e), the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
Book Value of the asset) or an item of loss (if the adjustment decreases the
Book Value of the asset) from the disposition of such asset and shall be taken
into account for purposes of computing Profits or Losses;
               (e) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Book Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Book Value;
               (f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Section 734(b) of the Code is required, pursuant to
Regulations Section 1.704(b)(2)(iv)(m)(4), to be taken into account in
determining the Capital Account as a result of a distribution other than in
liquidation of a Membership Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) from the
disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses; and
               (g) Any items which are specially allocated pursuant to Exhibit
“C” shall not be taken into account in computing Profits or Losses.
          1.52 Property. “Property” means the Leasehold Estates, the Hotels, all
personal property owned by the Company or its Subsidiaries and/or otherwise
presently situated at the Hotels (other than those owned by any tenant of the
Hotels), the Intangible Property, and all other assets of the Company and its
Subsidiaries.
          1.53 Property Condition Reports. “Property Condition Reports” means,
collectively, (i) that certain Property Condition Assessment for the Doubletree
Maya dated April 26, 2011 and prepared by Marx/Okubo Associates, Inc.; and
(ii) that certain Property Condition Assessment for Residence Inn Long Beach
Downtown dated April 6, 2011 and prepared by Marx/Okubo Associates, Inc.
          1.54 Qualified Real Estate Investor. “Qualified Real Estate Investor”
means, as determined by Residence Mortgage Lender, a Person having (i) a minimum
net worth of Twenty Million Dollars ($20,000,000); (ii) real estate assets of
One Hundred Million Dollars ($100,000,000); and (iii) a minimum current cash
position of Three Million Dollars ($3,000,000); provided further, that such
Person shall also be free from any Bankruptcy, reorganization or insolvency
proceedings or any criminal charges or proceedings and shall not have been, at
the time of transfer or in the past, a litigant, plaintiff or defendant in any
suit brought against or by Residence Mortgage Lender.
          1.55 Refinance Requirements. “Refinance Requirements” means that such
financing or refinancing (i) would provide the Company or its Subsidiary with a
more favorable interest rate, amortization or other terms and conditions which
CW Member, acting in good faith, determines would be more favorable than the
terms and condition of the Existing Loan which is the subject of such
refinancing; or (ii) is required or determined by CW Member, acting in good

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faith, to avoid a default under the Existing Loan which is the subject of such
refinancing; provided, however, in each instance, in no event shall such
financing or refinancing satisfy the Refinance Requirements if it would
(x) require Ensemble Member or its constituent owners, members or directors to
provide a personal guaranty and/or (y) trigger liability under any of the Torrey
Pines Guarantees or the CIGNA Guarantee.
          1.56 Regulations. “Regulations” means the Income Tax Regulations
promulgated under the Code, including Temporary and Proposed Regulations, as
such Regulations may be amended from time to time, including corresponding
provisions of succeeding Regulations.
          1.57 Residence Mortgage Lender. “Residence Mortgage Lender” means
Connecticut General Life Insurance Company, a Connecticut corporation.
          1.58 Residence Mortgage Loan. “Residence Mortgage Loan” means that
certain mortgage loan in the original principal amount of Thirty-One Million
Eight Hundred Seventy-Five Thousand Dollars ($31,875,000) made by Residence
Mortgage Lender, to Portside LLC and evidenced by that certain Promissory Note
dated August 10, 2007 and secured by that certain Leasehold Deed of Trust,
Security Agreement with Assignment of Rents and Fixture Filing dated as of
August 10, 2007 by Portside LLC, as borrower, QW Land Holdings, LLC, as trustor,
Chicago Title Insurance Company, as trustee, and Residence Mortgage Lender.
          1.59 Restricted Territory. “Restricted Territory” means that area
depicted on Exhibit “G” attached hereto.
          1.60 Tax(es). “Tax” or “Taxes” means any income, gross or net
receipts, property, sales, use, capital gain, transfer, excise, license,
production, franchise, employment, social security, occupation, payroll,
registration, occupancy, transient occupancy, governmental pension or insurance,
withholding, royalty, severance, stamp or documentary, value added, or other
tax, charge, assessment, duty, levy, compulsory loan, business or occupation
(including any interest, additions to tax, or civil or criminal penalties
thereon) of the United States or any state or local jurisdiction therein, or of
any other nation or any jurisdiction therein.
          1.61 Tax Returns. “Tax Returns” means any report, form, return,
statement or other information (including any amendments) required to be
supplied to a Governmental Authority by a Person with respect to Taxes,
including information returns, any amendments thereof or schedule or attachment
thereto and any documents with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
          1.62 Torrey Pines Guarantees. “Torrey Pines Guarantees” means,
collectively, that certain (i) Guaranty (LBHP) dated January 24, 2011 by the
Company in favor of Maya Mortgage Lender; (ii) Unsecured Environmental Indemnity
Agreement (LBHP) dated January 24, 2011 by the Company in favor of Maya Mortgage
Lender; and (iii) Indemnity Agreement (LBHP) dated January 24, 2011 by the
Company in favor of Maya Mortgage Lender.
          1.63 Total Value. “Total Value” means, for purposes of Section 10.4, a
hypothetical amount representing the Offering Member’s good faith estimate (at
the time of

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delivering any Buy-Sell Notice) of the total cash value of the Company, after
liquidation of all assets and (i) payment or reservation for payment of all
liabilities to third parties (including, without limitation, all mortgage
indebtedness or other indebtedness of the Company); and taking into account
(ii) accruals and reserves related to such indebtedness, a statement of which
shall be included in the written estimate; and (iii) plus or minus, as the case
may be, net prorations for revenues, expenses and other items related to the
Company and its Subsidiaries, which prorations shall be determined in the manner
provided under the Contribution Agreement unless otherwise mutually agreed to by
the Members.
          1.64 Transfer. “Transfer” means any encumbrance, gift, assignment,
pledge, hypothecation, sale or other transfer, by operation of law or otherwise,
of all or any direct or indirect portion of a Membership Interest; provided,
however, any Transfer of all or any direct or indirect interest in CWI by the
respective direct and indirect owners in CWI shall not be deemed a Transfer for
purposes of this Agreement.
          1.65 Uniform System. “Uniform System” means the Uniform System of
Accounts for the Lodging Industry that is published by the Hotel Association of
New York City, Inc. and approved by the American Hotel & Motel Association, in
effect at the time in question (currently, the 10th Revised Edition, 2006).
          1.66 Unreturned Capital Contribution Account. “Unreturned Capital
Contribution Account” means, with respect to a Member, the Member’s Capital
Contributions less distributions made pursuant to Sections 8.1(b)(iii), 8.2(a)
and 8.2(b) that represent a return of capital (and not a return on capital).
          1.67 Working Capital Shortfall. “Working Capital Shortfall” means the
amount of additional working capital required for the sole purpose of funding
operating expenses pursuant to, and to the extent of such amounts as set forth
in, the Initial Budget or any subsequent Approved Annual Budget.
In addition, the following terms are defined in the Sections of this Agreement
that are referenced alongside the terms:

      Term   Section Reference for Definition
ABC
  Section 9.9
Acceptance Notice
  Section 10.3(b)
Act
  Recitals
Act of Sale/Finance
  Section 9.5(a)(i)
Additional Interest Purchase Price
  Section 6.6
Affiliate Agreement
  Section 9.3(d)
Agreement
  Preamble
Applicable Price
  Section 10.4(a)(iii)
Approved Annual Budget
  Section 9.3(a)(v)
Approved Contracts
  Section 9.3(a)(vii)
Articles of Organization
  Recitals
Audited Financial Request
  Section 12.3(a)

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      Term   Section Reference for Definition
Beach Bank
  Section 6.2(b)
Book Value
  Section 1.6
Business
  Section 4
Buy-Sell Notice
  Section 10.4(a)(iii)
Capital Account
  Section 7.1(a)
Cash Notice
  Section 6.3(a)
Claims
  Section 9.16(c)
Closing Date
  Section 10.4(a)(iii)
Company
  Recitals
Contributing Members
  Section 6.3(b)
Contribution Agreement
  Section 6.1
CW Election Period (Hotel Maya)
  Section 10.4(a)(i)
CW Election Period (Residence Inn)
  Section 10.4(b)(i)
CW Initial Contribution
  Section 6.1
CW Member
  Preamble
CW Member Law Firm
  Section 18.3
CW Member Parties
  Section 18.3
CW Member Purchase Default
  Section 9.1(b)
Deficiency
  Section 6.3(b)
Deficit Loan
  Section 6.3(c)
Deposit
  Section 10.4(a)(iii)
Discussion Period
  Section 9.13(a)(i)
DoubleTree
  Recitals
DoubleTree Franchise Agreement
  Recitals
DoubleTree PIP
  Section 9.12(a)(ii)
Effective Date
  Preamble
EHP
  Recitals
Ensemble Member
  Preamble
Ensemble Member Law Firm
  Section 18.2
Ensemble Member Parties
  Section 18.2
Ensemble Member Purchase Default
  Section 9.2(b)
Exchange Act
  Section 5.7
Forecast Budget
  Section 9.3(a)(iv)
Ground Lessor
  Recitals
Guarantee Obligation
  Section 9.11(c)
Hotel Maya
  Recitals
Hotel Maya ROFO
  Section 10.4(a)(ii)
Impasse
  Section 10.4(a)(i)
Indemnitee
  Section 9.16(e)
Indemnitor
  Section 9.16(e)
Indemnity Obligations
  Section 9.16(c)
Initial Budget
  Section 9.3(a)(iv)
LBH Holdco
  Recitals
Liquor Licenses
  Section 9.9
LiquorCo
  Section 9.9
Lock-Out Period
  Section 10.4(a)(i)

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      Term   Section Reference for Definition
Losses
  Section 9.16(c)
Major Decisions
  Section 9.4(a)
Managing Parties
  Section 9.16(a)
Mandatory Capital Contribution
  Section 6.3(a)
Marina Project
  Section 9.10
Marriott
  Recitals
Marriott Management Agreement
  Recitals
Maya Management Agreement
  Recitals
Maya Operating Lease
  Recitals
Member
  Preamble
Member Decisions
  Section 9.5
New Opportunity
  Section 20.1
Non-Contributing Member
  Section 6.3(b)
Offer
  Section 10.3(a)
Offered Interests
  Section 10.3(a)(i)
Offered Member
  Section 10.3(a)
Offered Price
  Section 10.3(b)
Offer Terms
  Section 10.4(a)(ii)
Offering Member
  Section 10.4
Operating Fee
  Section 9.3(c)
Operator
  Section 9.6(b)
Original LLC Agreement
  Recitals
Overpaying Guarantor
  Section 9.11(c)
Owner
  Section 9.6
Portside Ground Lease
  Recitals
Portside Land
  Recitals
Portside Leasehold Estate
  Recitals
Portside LLC
  Recitals
Post-Closing Reassessment Tax
  Section 9.15(a)
Proportionate Share of Liability
  Section 9.11(b)
Proposed Purchase Price
  Section 10.4(a)(ii)
Purchase Notice
  Section 10.4(a)(ii)
Queensbay Ground Lease
  Recitals
Queensbay Land
  Recitals
Queensbay Leasehold Estate
  Recitals
Queensbay LLC
  Recitals
QW Holdco
  Recitals
Re-Offer Election Period
  Section 10.4(a)(ii)
Re-Offer Purchase Notice
  Section 10.4(a)(ii)
Re-Offer Sale Notice
  Section 10.4(a)(ii)
Reassessment Tax Reserve
  Section 9.12(c)
REIT
  Section 5.5
Related Parties
  Section 9.16(c)
Required Amount
  Section 6.3(a)
Residence Reassessment Cap
  Section 9.15(a)
Residence Inn
  Recitals

16

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      Term   Section Reference for Definition
Residence Inn ROFO
  Section 10.4(b)(ii)
Responding Member
  Section 10.4(a)(iii)
Responding Member’s Purchase Price
  Section 10.4(a)(iii)
Response Notice
  Section 10.4(a)(iii)
Retained Liabilities and Obligations
  Section 9.12(a)
Retained Liability Reserve Funds
  Section 9.12(b)
ROFO Election Period
  Section 10.4(a)(ii)
ROFO Notice
  Section 10.4(a)(ii)
Sale Notice
  Section 10.3(a)
Securities Act
  Section 5.7
Selling Member
  Section 10.3(a)
SOX
  Section 5.7
Special Allocations
  Section 7.1(b)
Special Purpose Entity
  Section 9.16(d)
Subsidiary(ies)
  Section 4
Supplemental Taxes
  Section 9.12(a)(i)
Tax Matters Partner
  Section 12.4
Third Party Fees
  Section 10.4(d)
Third Party Purchaser
  Section 10.4(a)(ii)
Third Party Purchase Price
  Section 10.4(a)(ii)
TOT Shortfall Reserve
  Section 9.15(c)
TRS
  Recitals

     2. FORMATION AND CONTINUATION OF LIMITED LIABILITY COMPANY. The Company was
previously formed as a limited liability company pursuant to the provisions of
the Act and upon the filing of the Articles of Organization with the Secretary
of State of the State of California. The Members hereby amend and restate the
Original LLC Agreement by substituting this Agreement in its entirety for the
Original LLC Agreement and continuing the Company as a limited liability company
pursuant to the Act for the purposes and upon the terms and conditions set forth
in this Agreement. The rights and liabilities of all Members shall be as
provided under the Act, the Articles of Organization and this Agreement.
     3. NAME AND PLACE OF BUSINESS.
          3.1 Name. The name of the Company shall be “Long Beach Hotel
Properties, LLC”.
          3.2 Principal Place of Business. The principal office of the Company
shall be 207 East Westminster, Suite 200, Lake Forest, Illinois 60045. The
Company may also conduct business from offices located at 444 W. Ocean
Boulevard, Suite 1108, Long Beach, California 90802 or from any additional
places of business within or outside the State of California. Managing Member
may change the Company’s place of business at any time.
          3.3 Members. Unless and until substituted Members are admitted
pursuant to the terms of Section 10, CW Member and Ensemble Member shall be the
only Members of the

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Company until they cease to be Members in accordance with the provisions of the
Act, the Articles of Organization, or this Agreement. Except as otherwise
expressly provided herein, no Member may be removed as a Member of the Company
without such Member’s prior written approval.
     4. PURPOSE. The purpose of the Company shall be to (i) own all of Queensbay
LLC, Portside LLC and TRS (Queensbay LLC, Portside LLC and TRS are collectively
referred to herein as the “Subsidiaries” and individually as a “Subsidiary”);
(ii) indirectly own each of the Hotels and the proposed Marina Project
including, without limitation, the development thereof; and (iii) engage in any
and all general business activities related or incidental thereto permitted
under the Act (collectively, the “Business”). The Company shall not engage in
any other business or activity without the unanimous consent of the Members.
     5. TERM OF COMPANY; RECORDINGS; AGENT FOR SERVICE OF PROCESS.
          5.1 Term. The Company commenced as of the date that the Articles of
Organization were filed with the Secretary of State of the State of California
and shall continue until terminated as herein provided or by operation of law.
          5.2 Filings. Managing Member shall execute, deliver and file any
amendments to and/or restatements of the Articles of Organization as Managing
Member deems necessary and shall file any documents required for the Company to
qualify to do business in California and in any other jurisdiction in which the
Company may wish to conduct business. The existence of the Company as a separate
legal entity shall continue until cancellation of the Articles of Organization.
Managing Member shall cause appropriate fictitious business name and like
statements to be filed and published for the Company if and as required for the
proper conduct of the Business.
          5.3 Agent for Service of Process. The name and address of the agent
for service of process of the Company designated on the Articles of Organization
is CSC-Lawyers Incorporating Service, 2730 Gateway Oaks Drive, Suite 100,
Sacramento, California 95833, Attention: Vivien Mitchell. The agent for service
of process of the Company may be changed from time to time by Managing Member,
subject to Applicable Law.
          5.4 Considered a Partnership. The Members intend that, pursuant to the
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code and/or any
comparable provision of applicable state law, beginning as of the Effective
Date, the Company will be treated as a partnership for Federal, state and local
income tax purposes. Each Member agrees not to make or attempt to make an
election under Section 761 of the Code or to be excluded from the application of
Subchapter K or from the application of any comparable provisions of applicable
state law. The Company and the Members shall not elect classification of the
Company for Federal tax purposes as other than a partnership under Regulations
Section 301.7701-3 or for state and/or local tax purposes under such comparable
provisions of applicable state or local law.

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          5.5 Protection of REIT Status. The Members acknowledge that CW Member
is an Affiliate of CWI, which is a real estate investment trust (“REIT”), and
the Members agree to manage the Company (and any other entity in which the
Company owns an interest) in a manner (i) that enables CWI to qualify as a REIT
within the meaning of Section 856 of the Code; and (ii) that recognizes the
income, asset and operating requirements of the Code that are applicable to a
REIT under Sections 856 through 860 of the Code to the extent possible.
Therefore, the Company shall conduct its operations in accordance with the
following limitations:
               (a) The Business and affairs of the Company will be managed in a
manner that does not cause CWI to be disqualified as a REIT under the Code or
incur any amount of tax pursuant to Sections 857 or 4981 of the Code;
               (b) The Company and its Subsidiaries shall not render any
services to any lessee or sublessee or any customer thereof, either directly or
through an “independent contractor” within the meaning of Section 856(d)(3) of
the Code, if the rendering of such services would cause all or any part of the
rents received by the Company or its Subsidiaries to fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Code;
               (c) The Company and its Subsidiaries shall not directly or
indirectly own (taking into account the attribution rules referred to in
Section 856(d)(5) of the Code), in the aggregate ten percent (10%) or more of
the total number of shares of all classes of stock, ten percent (10%) or more of
the voting power of all classes of voting stock or ten percent (10%) or more of
the assets or net profits of any lessee or sublessee of all or any part of any
of the Property or other Company property, other than a lessee Subsidiary that
makes an election by filing IRS Form 8875 to be treated as a “taxable REIT
subsidiary” under Section 856(l)(1) of the Code;
               (d) No lease or sublease of any space at either Hotel or any
other Company or Subsidiary property shall provide for any rent based in whole
or in part on the “income or profits” derived by any lessee or sublessee from
such property within the meaning of Section 856(d)(2)(A) of the Code;
               (e) The Company and its Subsidiaries shall not own more than ten
percent (10%) of the total voting power or more than ten percent (10%) of the
total value of the outstanding securities of any one issuer (as determined for
purposes of Section 856(c)(4)(B) of the Code) other than securities of a
Subsidiary that makes an election by filing IRS Form 8875 to be treated as a
“taxable REIT subsidiary” under Section 856(l)(1) of the Code;
               (f) Any Subsidiary that is treated as a corporation under the
Code (other than a “real estate investment trust”) shall make an election by
filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under
Section 856(l)(1) of the Code;
               (g) Any Subsidiary that has made an election to be treated as a
“taxable REIT subsidiary” under the Code shall not directly or indirectly
operate a “lodging facility” or a “health care facility” as such terms are
defined in Section 856 of the Code but rather shall use, to operate any “lodging
facility,” an “eligible independent contractor” within the

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meaning of Section 856(d)(9)(A) of the Code (e.g., without limitation, such
contractor must be actively engaged in the trade or business of operating
“qualified lodging facilities” for Persons other that those that are related to
the Subsidiary, the Company or CWI), provided that, in the case of any “lodging
facility,” no gambling activities are conducted on the premises and no gambling
revenues are generated by the facility;
               (h) Neither the Company and its Subsidiaries, nor any Member
shall take any action (or fail to take any action permitted under this
Agreement) that would otherwise cause the Company’s gross income to consist of
more than one percent (1%) of income not described in Section 856(c)(2) of the
Code or more than ten percent (10%) of income not described in Section 856(c)(3)
of the Code, or cause any significant part of the Company assets to consist of
assets other than “real estate assets” within the meaning of
Section 856(c)(5)(B) of the Code;
               (i) The Company shall distribute to the Members during each
calendar year an amount of cash mutually agreed upon by the Members, but in no
event in an amount less than that which is necessary to comply with REIT
requirements, to be allocated to the Members with respect to such Fiscal Year
distributed at the times required to prevent the imposition of an excise tax
under Section 4981 of the Code; provided, however, that if each such Member’s
distributable share of any Distributable Cash from Operations and/or Capital
Transaction Proceeds and its distributable share of any funds maintained in the
Company reserves are insufficient to meet the aforesaid distribution requirement
with respect to such Member, then the Company shall have satisfied the foregoing
distribution requirement with respect to such Member upon distributing to it
such distributable share of Distributable Cash from Operations and/or Capital
Transaction Proceeds and funds maintained in the Company reserves. In no event
shall the Company be required to borrow funds, or any Member be required to
contribute funds to the Company, in order to permit the Company to satisfy the
foregoing distribution requirement. The foregoing provisions of this subsection
shall not, however, adversely affect the allocation of, or any Member’s
Participation Percentage in, Distributable Cash from Operations and/or Capital
Transaction Proceeds; or
               (j) The Company and its Subsidiaries shall not engage in any
“prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the
Code.
The Members acknowledge that the foregoing are the current guidelines applicable
to the qualification of real estate investment trusts. If any of the
requirements to qualify for “real estate investment trust” status are changed,
then upon CWI’s delivery of written notice to Manager describing such changes,
such changes shall be deemed incorporated herein, and this Section 5.5 shall be
deemed amended as necessary to incorporate such changed real estate investment
trust requirements.
          5.6 Dispute Resolution Regarding REIT Compliance. Notwithstanding
anything to the contrary set forth in Section 9.13 or elsewhere in this
Agreement, any dispute over whether an activity of the Company or the
Subsidiaries is in violation of Section 5.5 shall be determined in the sole and
absolute discretion of CW Member, provided that any additional out-of-pocket
expenses to the Company resulting therefrom will be borne by CW Member.

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          5.7 Sarbanes-Oxley Compliance. The Company and its Subsidiaries shall
take all actions necessary to comply with the requirements of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities Act”), the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the “Exchange Act”), and the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder
(“SOX”). Managing Member, Manager and any principal executive officer of the
Company and the principal financial officer of the Company shall make all
certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and
Sections 302 and 906 of SOX as applicable. For purposes of this Agreement,
“principal executive officer” and “principal financial officer” shall have the
meanings given to such terms in SOX. Neither the Company nor any of its
Subsidiaries has outstanding, or has arranged any outstanding, “extensions of
credit” to directors or executive officers within the meaning of Section 402 of
SOX. The costs and expenses of any actions taken pursuant to this Section 5.7
shall be borne by the Company or the Subsidiaries, as applicable, so long as
such actions are taken for the benefit of the Company or such Subsidiary and not
for the Members or their Affiliates (which costs and/or expenses shall be the
sole obligation of the such Member or its Affiliate).
     6. CONTRIBUTIONS AND LOANS.
          6.1 Initial Contributions. Pursuant to the terms and conditions of
that certain Contribution Agreement dated April 20, 2011, by and among CW
Member, the Original Members and the Company (the “Contribution Agreement”), CW
Member has made a Capital Contribution in the amount of Nineteen Million Seven
Hundred Ten Thousand Seven Hundred Forty Dollars ($19,710,740) to the Company
(the “CW Initial Contribution”) in exchange for a forty-nine percent (49%)
interest in the initial Company capital and an interest in the profits and
losses of the Company as described herein. None of CW Member’s cash Capital
Contribution will be distributed to any Member, in such Member’s capacity as a
Member. The Book Value of the Company’s assets shall be adjusted to reflect fair
market value and Ensemble Member’s Capital Account shall reflect its forty-nine
percent (49%) interest in such assets. Each Member’s initial Capital Account
balance shall be reflected on Exhibit “A”.
          6.2 Use of Funds. The CW Initial Contribution shall be used by the
Company in strict accordance with the statement of sources and uses attached
hereto as Schedule 1.
          6.3 Additional Contributions or Loans.
               (a) Except as provided in Section 6.1 and this Section 6.3, the
Members shall not be required to make any additional Capital Contributions or
loans to the Company in addition to the Initial Capital Contributions. If
Managing Member or Manager reasonably determine that the Members shall make
additional Capital Contributions to the Company to fund a Working Capital
Shortfall or a Preservation Cost of the Company or its Subsidiaries (each, a
“Mandatory Capital Contribution”), then such Mandatory Capital Contribution
shall be contributed by the Members in accordance with their respective
Participation Percentages. Managing Manager shall deliver a notice (a “Cash
Notice”) to each Member setting forth the amount of cash required from such
Member (a “Required Amount”). Within the twenty (20) day period following the
date of receipt by a Member of a Cash Notice, the Member shall contribute to the
Company its Required Amount. Notwithstanding the

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foregoing, prior to issuing a call for the Members to contribute Mandatory
Capital Contribution required for any Working Capital Shortfall or Preservation
Cost, the Members agree to meet and discuss (in good faith) whether any such
Working Capital Shortfall can be reasonably reduced or eliminated without
compromising the business of the Company. For avoidance of doubt, if the Members
cannot mutually agree on a reduction or elimination of any amount of such
Working Capital Shortfall and/or Preservation Cost, the Members shall
nevertheless advance the approved Mandatory Capital Contribution. Any dispute
over whether any amounts qualify as a Working Capital Shortfall or Preservation
Cost and/or any dispute over the amount either Member claims is required to
satisfy such Working Capital Shortfall or fund Preservation Costs shall be
determined in accordance with the procedures set forth in Section 9.13.
               (b) If within twenty (20) days after the date a Cash Notice is
given pursuant to Section 6.3(a), a Member (the “Non-Contributing Member”) shall
fail to advance all or any part of its Required Amount, the other Members (the
“Contributing Members”), within 10 days thereafter, may advance directly to the
Company as a loan to the Non-Contributing Member the portion of the Required
Amount not advanced by the Non-Contributing Member (the “Deficiency”), as
provided in Section 6.3(c) below. Unless they mutually agree otherwise, the
Contributing Members shall fund such loan pro rata in proportion to their
respective Participation Percentages. The remedy set forth in this Section 6.3
shall be the exclusive remedy of the Contributing Members for the
Non-Contributing Member’s failure to advance additional capital as required
under Section 6.3(a).
               (c) If the Contributing Members make a loan to the
Non-Contributing Member as provided in Section 6.3(b), the Deficiency shall be
delivered to the Company by the Contributing Members, shall be treated as an
additional Capital Contribution by the Non-Contributing Member of the Deficiency
and shall constitute a loan to the Non-Contributing Member (a “Deficit Loan”).
Each Deficit Loan shall bear interest at a variable rate determined on the 1st
day of each month equal to ten percent (10%) plus the Bank of America prime rate
in effect on the 1st day of each month (or such lesser amount as may then
represent the maximum legal interest rate for the Deficit Loan), compounded
monthly, and shall be repaid within ten (10) days following demand by the
Contributing Members upon the Non-Contributing Member, or until demand is made,
by payment directly by the Company to the Contributing Members of any
distributions otherwise due the Non-Contributing Member pursuant to the other
Sections of this Agreement; provided, however, that for Capital Account
maintenance purposes, such amount shall be deemed distributed to the
Non-Contributing Member (with a corresponding reduction to its Capital Account)
followed by the repayment by the Non-Contributing Member to the Contributing
Member. Any payments on a Deficit Loan shall be credited first to any interest
then due on the loan with the balance of such distributions to be credited
against the outstanding principal balance of such loan. Any Deficit Loan will be
recourse only to the Non-Contributing Member’s right to distributions pursuant
to this Agreement and must be repaid directly by the Company on behalf of the
Non-Contributing Member as set forth in this Section 6.3. For avoidance of
doubt, no Deficit Loan shall be considered a Capital Contribution by the
Contributing Member for purposes of this Agreement or increase such Contributing
Member’s Capital Account.

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               (d) Notwithstanding any of the foregoing, the Members agree that
in the event that CW Member makes a Deficit Loan, the Deficit Loan may be
structured in a manner that causes the REIT to comply with the requirements of
Section 5.5(e).
          6.4 Interest on Contributions. No interest shall be paid by the
Company on any Capital Contribution made by any Member to the Company.
          6.5 Return of Contributions. Except as otherwise provided in this
Agreement, no Member shall have the right to withdraw or reduce such Member’s
Capital Contribution or to receive any distributions, except as a result of
dissolution. No Member shall have the right to demand or receive property other
than cash in return for such Member’s Capital Contributions.
          6.6 Membership Interest Purchase Option. CW Member hereby agrees to
use good faith efforts to meet the requirements of a Qualified Real Estate
Investor and the Members acknowledge and agree that, at anytime after the date
CW Member receives written confirmation from Residence Mortgage Lender that CW
Member has met the requirements of a Qualified Real Estate Investor, CW Member
shall have the option (exercisable in CW Member’s sole and absolute discretion)
to acquire an additional one percent (1%) interest in the initial Company
capital and an interest in the profits and losses of the Company from Ensemble
Member for a purchase price equal to Four Hundred Two Thousand Dollars
($402,000) (the “Additional Interest Purchase Price”). The payment of the
Additional Interest Purchase Price shall be made by CW Member to the Company and
any subsequent disbursement by the Company shall be treated in the most tax
efficient manner as mutually determined by the Members (in their reasonable
discretion). In the event CW Member exercises its option to acquire such
additional one percent (1%) interest in the initial Company capital and an
interest in the profits and losses of the Company, the Company or Portside LLC
will be required to pay a fee imposed by Residence Mortgage Lender and the
Members hereby acknowledge and agree that such fees and/or costs shall be split
50:50 by the Members, provided that Ensemble Member shall have its fifty percent
(50%) share of any such fees and/or costs treated as a credit in the amount
thereto against the Additional Interest Purchase Price due and payable in
connection therewith.
     7. CAPITAL ACCOUNTS; ALLOCATION OF PROFITS AND LOSSES.
          7.1 Capital Accounts.
               (a) The Company shall maintain a separate capital account
(“Capital Account”) for each Member.
               (b) The Capital Account of each Member shall be maintained in
accordance with Sections 1.704-1(b) and 1.704-2 of the Regulations and shall be
interpreted and applied in a manner consistent with such Regulations and the
special allocations set forth in Sections (a) through (i) of Exhibit “C”
attached hereto shall apply (the “Special Allocations”).
               (c) Each Member’s Capital Account shall be adjusted in accordance
with the following provisions:
                    (i) To each Member’s Capital Account there shall be credited
(A) the amount of any cash Capital Contributions made, and the Book Value of any
property

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contributed (net of liabilities secured by such property), by such Member to the
Company, and (B) such Member’s allocable share of Profits and other items of
income and gain allocated to such Member; and
                    (ii) To each Member’s Capital Account there shall be debited
(A) the amount of cash and the Book Value of any Company property distributed to
such Member pursuant to any provision of this Agreement (net of any liabilities
secured by such property), and (B) such Member’s allocable share of Losses and
other items of income and gain allocated to such Member.
               (d) In the event of a Transfer of a Member’s Membership Interest,
or any portion thereof, in accordance with the terms of this Agreement, whether
or not the purchaser, assignee or successor-in-interest is then a Member, the
Person so acquiring such Member’s Membership Interest, or any portion thereof,
shall acquire the Capital Account, or any portion thereof, of the Member
formerly owning such Membership Interest, adjusted for distributions of
Distributable Cash from Operations and/or Capital Transaction Proceeds made
pursuant to Section 8 and allocations of Profits and Losses made pursuant to
Section 7.2.
          7.2 Allocation of Profits and Losses. After giving effect to the
Special Allocations set forth in Exhibit “C” attached hereto, Managing Member
shall cause the Company to allocate Profits and Losses in respect of each Fiscal
Year of the Company (and, in each case, each item of income, gain, loss,
deduction and tax preference, required to be taken into account by the Members
separately under Section 702(a) of the Code, which are included in the
computation of such Profits and Losses for such year) to the Members in a manner
such that the Capital Account of each Member is, as nearly as possible, equal
(proportionately) to the excess of:
               (a) the distributions that would be made to that Member pursuant
to Section 11.2(a)(iii) if:
                    (i) the Company were dissolved, its affairs wound up and its
assets sold for an amount of cash equal to their Book Values;
                    (ii) all liabilities of the Company were satisfied (limited
with respect to each non-recourse liability to the Book Value of the assets
securing such liability); and
                    (iii) the assets of the Company were distributed to the
Members in accordance with Section 11.2(a)(iii) immediately after making such
allocation; over
               (b) the sum of (i) the Member’s respective share of Company
Minimum Gain and Member Nonrecourse Debt Minimum Gain; and (ii) the amount, if
any, that such Member is obligated (or deemed obligated) to contribute, in its
capacity as a Member, to the Company, computed immediately prior to the
hypothetical sale of assets described in Section 7.2(a).
          7.3 Other Allocation Rules.

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               (a) For purposes of determining Profits, Losses or any other
items allocable to any period, Profits, Losses and other items shall be
determined on a daily, monthly or other basis, as determined by Managing Member,
using any permissible method under Section 706 of the Code and the Regulations
thereunder.
               (b) Credits, or income resulting from the recapture of credits,
shall be allocated among the Members in accordance with the Code, Regulations
and Applicable Law.
               (c) Whenever items of income or loss of the Company allocable
hereunder consist of items of different character for tax purposes (i.e.,
ordinary income, long-term capital gain, depreciation recapture, interest
expense, etc.) the items of income or loss of the Company allocable to each
Member shall include, to the extent possible, its pro rata share of each such
item; provided, however, in making allocations of depreciation recapture under
Section 1245 or Section 1250 of the Code, or unrecaptured Section 1250 gain
under Section 1(h) of the Code, principles consistent with those of Regulations
Section 1.1245-1(e) shall be followed such that amounts treated as ordinary
income shall be allocated first to the Member that was allocated the related
ordinary deduction.
               (d) The Members are aware of the income tax consequences of the
allocations made by this Section 7 and Exhibit “C” attached hereto and hereby
agree to be bound by the provisions of this Section 7 and Exhibit “C” attached
hereto in reporting their shares of Company income and loss for income tax
purposes.
               (e) If the Book Value of any Company asset is adjusted as
provided in the definition thereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset shall, solely for Federal income tax
purposes and pursuant to Regulations Section 1.704-1(b), take account of any
variation between the adjusted basis of such asset for Federal income tax
purposes and its Book Value in the same manner as under Section 704(c) of the
Code and the Regulations thereunder.
               (f) The books of the Company shall be closed as of the Effective
Date in accordance with Section 706(d) of the Code, and consistent therewith:
(i) items of income, deduction, gain, loss and/or credit of the Company that are
recognized prior to the Effective Date shall be allocated among the Original
Members; and (ii) items of income, deduction, gain, loss and/or credit of the
Company that are recognized after the Effective Date shall be allocated among
the Members, pursuant to the terms of this Agreement.
          7.4 Tax Allocations.
               (a) Except as provided in Section 7.4(b), items of Company
income, gain, loss, deduction and credit shall be allocated, for Federal, state
and local income tax purposes, among the Members in accordance with the
allocation of such income, gain, losses, deductions and credits among the
Members under Section 7.2.
               (b) In accordance with Section 704(c) of the Code and the
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for

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Federal income tax purposes and its initial Book Value in accordance with such
method as selected by the Members. The Members and the Company acknowledge that
(i) CW Member has made to the Company a cash Capital Contribution in exchange
for an interest in the Company with terms described herein, and such interest
has an initial adjusted tax basis equal to their initial cash Capital
Contribution; (ii) the balance of the initial assets of the Company have an
adjusted tax basis that is less than Book Value; and (iii) it is the intent of
the Company and the Members that, to the extent practicable, CW Member shall be
allocated an amount of Depreciation and amortization for each taxable year of
the Company equal to the depreciation and amortization arising for Federal
income tax purposes in respect of such initial adjusted tax basis in such
undivided interest. To achieve the foregoing intent the Company shall use the
remedial method under Section 704(c) of the Code and the Regulations promulgated
thereunder.
     8. DISTRIBUTIONS.
          8.1 Distribution of Distributable Cash (Other than From Capital
Transactions).
               (a) The Company shall distribute all available Distributable Cash
from Operations in accordance with this Section 8.1. Unless otherwise authorized
by the Members, all Distributable Cash from Subsidiary Operations shall be
distributed from the applicable Subsidiary directly to the Company and shall be
deemed part of the Company’s Distributable Cash from Operations. The Company
shall cause, on a regular, reoccurring basis (but in no event less often than
quarterly), each Subsidiary to distribute all of its Distributable Cash from
Subsidiary Operations to the Company so it in turn can be distributed by the
Company to the Members in accordance with this Agreement.
               (b) Subject to Section 6.3(c) and Section 8.3, Distributable Cash
from Operations of the Company shall be distributed from time to time, but no
less frequently than quarterly to the Members as follows:
                    (i) First, to CW Member, until CW Member has received
cumulative distributions pursuant to this Section 8.1(b)(i) as to have earned a
cumulative annual return of nine and five-tenths percent (9.5%), compounded
annually, on the balance of CW Member’s Unreturned Capital Contribution Account,
taking into account prior distributions pursuant to this Section 8.1(b)(i);
                    (ii) Second, to Ensemble Member, until Ensemble Member has
received non-cumulative (non-compounded) distributions pursuant to this
Section 8.1(b)(ii) as to have earned a non-cumulative (non-compounded) annual
return of nine and five-tenths percent (9.5%) on the balance of Ensemble
Member’s Unreturned Capital Contribution Account, taking into account prior
distributions pursuant to this Section 8.1(b)(ii);
                    (iii) Third, to the Members, pro rata and pari passu in
proportion to the balance of each Member’s respective Unreturned Capital
Contribution Account until the balance of each Member’s respective Unreturned
Capital Contribution Account has been reduced to zero; and
                    (iv) Thereafter, to the Members, pro rata, in proportion to
their respective Participation Percentages.

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               (c) The Members intend that the Initial Budget and any subsequent
Approved Annual Budget shall include, as an expense item, such reasonable and
customary Company or Subsidiary reserves to be mutually agreed upon by the
Members from time to time, and the Members agree that distributions to the
Members according to this Agreement will not be made if such distributions have
the effect of impairing such Company and/or Subsidiary reserves. The amount of
the reserves for each Fiscal Year shall be suggested by Manager at the time that
it presents any draft budget each year to Managing Member, but the approval of
such reserves shall be a Member Decision (as defined below).
               (d) Notwithstanding any other provision to the contrary, upon the
approval of the Members, the Company may withhold from any amount otherwise
distributable to the Members any taxes payable by the Company with respect to
amounts allocable or distributable to any Member. Any amounts so withheld shall
be paid by the Company to the appropriate taxing authority and shall be treated
as amounts distributed to the Member.
          8.2 Distributions of Cash from Capital Transactions. Subject to
Section 6.3(c) and Section 8.3, Capital Transaction Proceeds shall be
distributed following a Capital Transaction, as follows:
               (a) First, one hundred percent (100%) to CW Member until such
time as its Unreturned Capital Contribution Account has been reduced to zero;
               (b) Second, one hundred percent (100%) to Ensemble Member until
such time as its Unreturned Capital Contribution Account has been reduced to
zero;
               (c) Third, one hundred percent (100%) to CW Member until CW
Member shall have received cumulative distributions (i.e., under Section 8.1
and/or this Section 8.2) so as to cause CW Member to have earned an eighteen
percent (18%) IRR with respect to the aggregate amount of CW Member’s Capital
Contribution;
               (d) Fourth, one hundred percent (100%) to Ensemble Member until
Ensemble Member shall have received cumulative distributions (i.e., under
Section 8.1 and/or this Section 8.2) so as to cause Ensemble Member to have
earned an eighteen percent (18%) IRR with respect to the aggregate amount of
Ensemble Member’s Capital Contribution;
               (e) Fifth, one hundred percent (100%) to the Members pro rata in
proportion to their respective Participation Percentages until CW Member shall
have received cumulative distributions (i.e., under Section 8.1 and/or this
Section 8.2) so as to cause CW Member to have earned a twenty percent (20%) IRR
with respect to the aggregate amount of CW Member’s Capital Contribution; and
               (f) Thereafter, seventy-five percent (75%) to the Members pro
rata in proportion to their respective Participation Percentages and twenty-five
percent (25%) to Ensemble Member.
          8.3 Offset. In the event that Ensemble Member owes CW Member any
amount in connection with a Claim under Section 9.16 (unless such Claim shall be
the subject of a bona fide dispute and, if disputed, upon the final
determination of the arbitrator in accordance

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with Section 9.13), in each instance at the time a distribution would be made to
Ensemble Member under Section 8.1 or Section 8.2, Managing Member may reduce the
amount of such distribution to Ensemble Member by the amount of such obligation
which offset shall be deemed to be a distribution to Ensemble Member followed by
a payment to CW Member by Ensemble Member.
          8.4 To Whom Distributions Are Made. Unless named in this Agreement or
unless admitted as a Member as provided in this Agreement, no Person shall be
considered a Member in the Company. Any distribution by the Company to the
Person shown on the Company records as a Member, or to such Member’s legal
representatives, or to a named assignee of the right to receive distributions,
shall acquit the Company and the Members of all liability to any other Person
who may be interested in such distribution by reason of an assignment by a
Member or for any other reason.
     9. MANAGEMENT.
          9.1 Managing Member.
               (a) Managing Member shall, subject to the limitations set forth
in Section 9.5, the Initial Budget or any subsequent Approved Annual Budget,
operate the business affairs of the Company, be empowered to set policy for and
to make all decisions in respect of the Company and to make all decisions
regarding those matters, and to perform any and all other acts or activities
incident thereto, subject to all limitations set forth herein. Managing Member
will devote such time, effort and skill to the Business of the Company as
Managing Member reasonably deems necessary. CW Member shall serve as Managing
Member until, subject to any consents required under the Existing Loan Documents
(which consents shall be obtained prior to and as a pre-condition of such
removal), its removal which shall only be permitted upon the earlier of (i) the
resignation or voluntary disassociation of Managing Member from the Company;
(ii) the judgment or final adjudication (in a procedure described in this
Section 9.1) of Managing Member as having committed fraud, willful misconduct,
theft or misappropriation of funds in the performance of (or failure to perform)
the obligations of Managing Member under this Agreement; or (iii) the filing by
Managing Member of a voluntary petition in Bankruptcy or the failure by Managing
Member to cause an involuntary filing of Bankruptcy against Managing Member to
be dismissed within one hundred twenty (120) days after the filing thereof;
(iv) the closing of any purchase of one hundred percent (100%) of CW Member’s
Membership Interest by Ensemble Member pursuant to and in accordance with
Section 10.4; or (v) following the delivery of a Response Notice by CW Member
pursuant to and in accordance with Section 10.4 whereupon CW Member elects to
purchase one hundred percent (100%) of Ensemble Member’s Membership Interest, CW
Member fails to complete the purchase on or before the Closing Date (other than
as a result of Ensemble Member’s default) (a “CW Member Purchase Default”).
Managing Member’s service may not be terminated in any other way.
Notwithstanding anything to the contrary set forth in this Agreement, except in
the event of fraud, gross negligence, willful misconduct, theft or
misappropriation of funds by Managing Member, Managing Member’s removal pursuant
to the terms and conditions of this Section 9.1 shall be the Members’ sole and
exclusive remedy and all other rights and remedies are hereby and irrevocably
waived by the Members. Upon the removal of CW Member as Managing Member pursuant
to any of clauses (i), (ii), (iii), (iv) or (v) of this Section 9.1, Ensemble
Member may either become Managing

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Member or may inform CW Member of its designated candidate for Managing Member
and provide CW Member with a written summary of such Person’s experience and
qualifications (which designated candidate shall then become Managing Member);
provided, however, in the event that Managing Member is removed as the result of
Ensemble Member’s purchase of CW Member’s Membership Interest pursuant to
Section 10.4 below or for a CW Member Purchase Default, CW Member shall have no
right to receive notice or a written summary of such candidate’s experience and
qualifications.
               (b) If Ensemble Member believes that Managing Member has
committed fraud, gross negligence, willful misconduct, theft or misappropriation
of funds in the performance of (or failure to perform) the obligations of
Managing Member under this Agreement, Ensemble Member may deliver written notice
to Managing Member setting forth in reasonable detail the basis for that
determination and, if CW Member does not resign as Managing Member, submit the
same to arbitration pursuant to Section 9.13. Upon a final decision or judgment
of the arbitrator(s) that Managing Member committed fraud, willful misconduct,
theft or misappropriation of funds in the performance of (or failure to perform)
the obligations of Managing Member under this Agreement, such Managing Member
shall be removed as Managing Member. During the period from the delivery of
written notice to Managing Member that Managing Member has committed fraud,
gross negligence, willful misconduct, theft or misappropriation of funds, until
the final determination of the arbitrator, the authority of Managing Member
shall be suspended, and the unanimous approval of the Members shall be required
for any payments or other actions to be taken by Managing Member hereunder.
          9.2 Manager.
               (a) Subject to the terms and conditions of this Agreement,
Manager shall manage the day-to-day affairs of the Subsidiaries, each in
substantial accordance with the Initial Budget and any subsequent Approved
Annual Budget, and all other acts or activities incidental thereto, subject to
all limitations set forth herein (including, but not limited to, Sections 9.3,
9.4 and 9.5 below).
               (b) Subject to the terms and conditions of this Agreement, EHP
shall serve as Manager of the Subsidiaries until its removal which shall only be
permitted upon the earlier of (i) the resignation or voluntary disassociation of
Manager from Ensemble Member; (ii) the judgment or final adjudication (in a
procedure described in this Section 9.2) of Manager or Ensemble Member as having
committed fraud, willful misconduct, theft or misappropriation of funds in the
performance of (or failure to perform) the obligations of Manager or Ensemble
Member under this Agreement; (iii) the filing by Manager or Ensemble Member of a
voluntary petition in Bankruptcy or the failure by Manager or Ensemble Member to
cause an involuntary filing of Bankruptcy against Manager or Ensemble Member to
be dismissed within one hundred twenty (120) days after the filing thereof;
(iv) the closing of any purchase of one hundred percent (100%) of Ensemble
Member’s Membership Interest by CW Member pursuant to and in accordance with
Section 10.4; or (v) following the delivery of a Response Notice by Ensemble
Member pursuant to and in accordance with Section 10.4 whereupon Ensemble Member
elects to purchase one hundred percent (100%) of CW Member’s Membership
Interest, Ensemble Member fails to complete the purchase on or before the
Closing Date (other than as a result of CW Member’s default) (an “Ensemble
Member Purchase Default”). Upon the removal of

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Ensemble Member as Manager pursuant to any of clauses (i), (ii), (iii), (iv) or
(v) of this Section 9.2, CW Member shall elect a successor Manager. Prior to
appointing any third party Manager, CW Member may either become Manager or may
inform Ensemble Member of its designated candidate for Manager and provide
Ensemble Member with a written summary of such Person’s experience and
qualifications (which designated candidate shall then become Manager); provided,
however, in the event that Manager is removed as the result of CW Member’s
purchase of Ensemble Member’s Membership Interest pursuant to Section 10.4 below
or for an Ensemble Member Purchase Default, Ensemble Member shall have no right
to receive notice or a written summary of such candidate’s experience and
qualifications. Notwithstanding anything to the contrary set forth in this
Agreement, except in the event of fraud, gross negligence, willful misconduct,
theft or misappropriation of funds by Manager or Ensemble Member, Manager’s
removal pursuant to the terms and conditions of this Section 9.2 shall be the
Members’ sole and exclusive remedy and all other rights and remedies are hereby
and irrevocably waived by the Members.
               (c) If CW Member believes that Manager has committed fraud, gross
negligence, willful misconduct, theft or misappropriation of funds in the
performance of (or failure to perform) the obligations of Manager under this
Agreement, CW Member may deliver written notice to Manager setting forth in
reasonable detail the basis for that determination and, if Ensemble Member does
not resign as Manager, submit the same to arbitration pursuant to Section 9.13.
Upon a final decision or judgment of the arbitrator(s) that Manager committed
fraud, gross negligence, willful misconduct, theft or misappropriation of funds
in the performance of (or failure to perform) the obligations of Manager under
this Agreement, such Manager shall be removed as “Manager”. During the period
from the delivery of written notice to Manager that Manager has committed fraud,
gross negligence, willful misconduct, theft or misappropriation of funds, until
the final determination of the arbitrator, the authority of Manager shall be
suspended, and the unanimous approval of the Members shall be required for any
payments or other actions to be taken by Manager hereunder.
          9.3 Duties and Responsibilities of Manager.
               (a) Except as set forth in Sections 9.4 and 9.5, or as otherwise
expressly provided in this Agreement and subject at all times to the limitations
of the Initial Budget or any subsequent Approved Annual Budget, Manager shall be
responsible for, and is hereby authorized to perform the following acts to the
extent necessary to carry out the business affairs of the Subsidiaries under
this Agreement:
                    (i) Protect and preserve the titles and interests of the
Subsidiaries with respect to any assets owned directly or indirectly by the
Company and the Subsidiaries including, without limitation, the Hotels;
                    (ii) Pay all property taxes and assessments, ground rents,
rents and other impositions applicable to the Hotels and/or such other assets
owned by the Subsidiaries;

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                    (iii) Execute and/or modify on behalf of any Subsidiary,
such Approved Contracts and other documents relating to the day-to-day ownership
and operation of the Hotels;
                    (iv) Each Fiscal Year, commencing with the Fiscal Year
beginning on January 1, 2012, prepare drafts of an annual business plan and
budget for the Company and the Subsidiaries, as applicable, containing an
operating and capital expenditure budget, a detailed marketing plan and other
items projected for the operation of the Company, the Hotel Maya and the
Residence Inn. Each draft budget shall be delivered to Managing Member (or the
Members, in the event that CW Member is removed as Managing Member) not later
than sixty (60) calendar days before the beginning of the Fiscal Year in
question. Managing Member (or the Members, in the event that CW Member is
removed as Managing Member) shall approve or disapprove such draft budget within
thirty (30) days after receipt thereof (which approval may be granted or
withheld in such Member’s sole and absolute discretion); provided, however, the
Members and Managing Member agree and acknowledge that, with respect to the
Residence Inn, such approval is subject to the terms and conditions of the
Marriott Management Agreement. Promptly after any disapproval by Managing
Member, Manager shall, as soon as possible, submit a revised draft budget to
Managing Member (or the Members, in the event that CW Member is removed as
Managing Member) addressing the portions thereof disapproved by Managing Member
(and the parties shall repeat the foregoing until a draft budget has been
approved by Managing Member). Once a draft budget is approved by Managing Member
(or the Members, in the event that CW Member is removed as Managing Member), it
shall be the “Approved Annual Budget” for the Company and/or such Subsidiary, as
applicable, for the Fiscal Year in question; provided, however, in the event
that Managing Member and Manager are unable to resolve any dispute with respect
to any item to which Managing Member has objected, Manager shall conduct
operations of the respective Subsidiary with respect to those categories that
are in dispute based on the lesser of the amount (i) set forth in such Fiscal
Year’s Forecast Budget (as defined below) or in the event of any dispute after
Fiscal Year 2015, the Approved Annual Budget for the immediately prior Fiscal
Year (plus a reasonable increase based on the CPI to allow for inflation, not to
exceed 3%); and (ii) the amount set forth in the applicable draft budget. Except
as otherwise permitted or required under the Maya Management Agreement and/or
the Marriott Management Agreement or as required for Preservation Costs actually
incurred by the Company or any Subsidiary, no modification of any item in or
aspect of the Approved Annual Budget shall be made without the approval of
Managing Member (or the Members, in the event that CW Member is removed as
Managing Member) (which approval may be granted or withheld in such Member’s
sole and absolute discretion) provided that any and all modifications to the
Initial Budget or any subsequent Approved Annual Budget shall require the prior
approval of Managing Member (or the Members, in the event that CW Member is
removed as Managing Member). For avoidance of doubt, any dispute over the
calculation of any amounts set forth in the Initial Budget or any Approved
Annual Budget shall be determined in accordance with the procedures set forth in
Section 9.13; provided, however, in the event that Managing Member and Manager
cannot mutually agree on a specific line item or group, neither Managing Member
nor Manager shall have the right to subject such dispute to arbitration under
Section 9.13 and the parties sole recourse shall be to revert back to the
applicable Forecast Budget or Approved Annual Budget for the immediately prior
Fiscal Year as set forth above. Notwithstanding the foregoing, the Members have
mutually agreed upon the initial operating budget (prepared on a monthly basis)
for the Company and each Subsidiary, including estimated

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receipts and expenses and other items projected for the operation of the
Company, the Hotel Maya and the Residence Inn, as more specifically set forth on
Exhibit “D” attached hereto (the “Initial Budget”). The Initial Budget shall
apply from the Effective Date through December 31, 2011. In addition, the
Members have mutually agreed upon the annual forecasts of the Company and each
Subsidiary, including an annual operating budget, and estimated receipts and
expenses and other items projected for the operation of the Company, the Hotel
Maya and the Residence Inn, as applicable, for Fiscal Years 2012, 2013, 2014 and
2015 each as more specifically set forth on Exhibit “E” attached hereto (each, a
“Forecast Budget”);
                    (v) Make payments approved under the Initial Budget or any
subsequent Approved Annual Budget; provided, however, all disbursements from the
accounts of the Subsidiaries shall require the written approval of an authorized
representative of Managing Member (except for disbursements specifically
provided for in the Initial Budget or any subsequent Approved Annual Budget);
provided further, that Manager shall automatically lose all signature rights at
any time upon Manager’s removal pursuant to and in accordance with Section 9.2
(and all such signature rights shall thereupon vest in the replacement Manager
or Managing Member, as applicable) and such signature rights of Manager may also
be suspended by Managing Member during any period (A) after the delivery of a
notice of failure to perform (as set forth in Section 9.2(c)) through the date a
final decision or judgment is rendered by the arbitrator (unless Manager is
removed, in which case, Manager shall automatically lose all signature rights);
or (B) in the event of an Ensemble Member Purchase Default. Each bank or other
institution with which any account of the Company is maintained shall
specifically recognize the right of Managing Member to add or delete the
signature rights of any of the Members. At the request of Managing Member,
Manager shall submit to Managing Member on a monthly basis a requisition form,
using the Initial Budget or any subsequent Approved Annual Budget as a guide,
specifically itemizing proposed expenditures for the succeeding month, together
with a report of the checks issued during the previous month;
                    (vi) Supervise the performance of and under (A) the Ground
Leases; (B) the DoubleTree Franchise Agreement; (C) the Existing Loan Documents
(and any subsequent indebtedness); (D) the Marriott Management Agreement; and
(E) any agreements or contracts approved as part of the Initial Budget and each
subsequent Approved Annual Budget (the “Approved Contracts”); provided, however,
that Manager shall take no action and shall have no rights to act on behalf of
Owner under the Maya Management Agreement as such rights are expressly reserved
by Managing Member pursuant to Section 9.6;
                    (vii) Obtain and maintain any and all requisite permits,
licenses or entitlements necessary for the operation of the Subsidiaries
(including, without limitation, for the ownership and operation of the Hotels,
all licenses required for the sale and services of alcoholic beverages) and
management and maintenance of the Hotels;
                    (viii) Perform all general and administrative services on
behalf of the Subsidiaries and in pursuance thereof maintain complete and
accurate books of each Subsidiary, showing all receipts and expenditures, assets
and liabilities, Profits and Losses and all other records necessary for
recording each Subsidiary’s business and affairs. The books of the Subsidiaries
shall be kept on the accrual basis in accordance with the Uniform System for
companies of similar size, type, quality and business operations as each
respective Subsidiary,

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and shall be open to inspection and examination by each Member at all reasonable
times. Manager shall, if required by any instruments to which the Company or the
respective Subsidiary is a party, cause audited financial statements of the
applicable Subsidiary’s financial condition as required by the applicable
instruments (the cost of which shall be paid by the Company);
                    (ix) Prepare financial statements of each Subsidiary and/or,
if requested by any Member, cause audited financial statements of each
Subsidiary to be prepared (the cost of which shall be paid by the Company),
including, without limitation, financial statements in compliance with the
requirements, procedures and terms applicable to the Company pursuant to and in
accordance with Section 12.3 (but applied to the respective Subsidiary); and
                    (x) Maintain insurance for the Subsidiaries in accordance
with Section 12.6. Manager shall obtain quotes for the insurance coverages
appropriate for the activities being conducted at the Hotels from time to time,
and prior to the expiration or renewal of any coverages then in effect, with the
intention that the insurance obtained and maintained shall be the most favorable
to the Subsidiaries, as reasonably determined by Managing Member.
               (b) Necessary Time. Manager will devote such time, effort and
skill to the business of the Subsidiaries (or to the business of the Subsidiary
owning each Hotel) as Manager reasonably deems necessary.
               (c) Operating Fee. In consideration of the services provided by
Manager, the Company shall pay to Manager an annual fee equal to Eighty-Four
Thousand Dollars ($84,000) (the “Operating Fee”) payable in equal monthly
installments due and owing to Manager on the tenth (10th) business day of each
month during the Fiscal Year, provided that, Manager shall receive no other
remuneration or reimbursement for costs and expenses incurred in the performance
of its duties as Manager, except as expressly permitted under Section 9.7 or as
due and owing to Operator under the Management Agreement. Manager shall have no
interest in any distributions, profits, losses or other economic interest in the
Company whatsoever. Notwithstanding the foregoing, in the event that EHP is
terminated or otherwise removed as Operator of the Hotel Maya, the Members agree
to meet and discuss in good faith the amount of the Operating Fee payable
hereunder and/or the scope of duties required of Manager thereafter.
               (d) Affiliate Transactions. In performing its obligations under
this Agreement, Manager from time to time may use the services of one or more
Manager Parties, provided that Manager shall fully disclose such affiliation to
or interest in such transaction to the Company and neither Manager nor any
Manager Parties shall be entitled to any additional fee, charge or other amount
payable other than the Operating Fee or any amounts due and owing to Operator
under the Management Agreement. Manager hereby covenants and agrees that in the
event Manager has entered into any Affiliate Agreement with a Manager Party,
that Manager shall promptly notify the Members of any change in the direct or
indirect ownership of such Manager Party; provided further, that in the event
that such transfer results in the applicable Person no longer qualifying as a
Manager Party, the respective Affiliate Agreement will immediately terminate
(without penalty) as of the date of such transfer.
          9.4 Approval by Managing Member.

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               (a) Notwithstanding Section 9.2, Manager may not take, or permit
any Person (including, without limitation, EHP, Marriott or DoubleTree) to take,
any of the following actions (the “Major Decisions”) on behalf of the
Subsidiaries without the prior written approval of Managing Member:
                    (i) Approve or consent to any binding agreements or
contracts (whether written or oral) regarding the Marina Project, including,
without limitation, any acquisitions, development plans, budgets or capital
improvements;
                    (ii) Except as set forth in the Initial Budget and any
subsequent Approved Annual Budget or as required pursuant to the Marriott
Management Agreement or the DoubleTree Franchise Agreement, retain or employ,
and coordinate the services of, any employees, supervisors, architects,
engineers, general contractor, property manager, attorneys and other persons
(but expressly excluding accountants) to carry out the business of the
Subsidiaries;
                    (iii) Except as set forth in the Initial Budget or any
subsequent Approved Annual Budget or as otherwise required pursuant to the terms
and conditions of the Marriott Management Agreement, enter into any contract in
the name of or for the benefit of the Subsidiaries (A) with liability to the
Company or any Subsidiary in excess of Five Thousand Dollars ($5,000) per annum
or (B) which is not terminable at will without penalty;
                    (iv) Acquire any real or personal property for the
Subsidiaries, except as expressly authorized to acquire pursuant to the Initial
Budget or any subsequent Approved Annual Budget or as otherwise required
pursuant to the terms and conditions of the Marriott Management Agreement (and
except for the sale or disposal of personal property in the ordinary course);
                    (v) Incur any indebtedness of the Subsidiaries or become
liable as an endorser, guarantor, surety or otherwise for any debt obligation or
undertaking of any other Person, except for: (A) unsecured indebtedness of any
kind other than trade debt under incurred under the following clause (B);
(B) trade debt incurred in the ordinary course of business not to exceed the
amounts set forth in the Initial Budget or any subsequent Approved Annual Budget
or, if not included therein, Ten Thousand Dollars ($10,000) with respect to any
individual expense or related group of expenses or Fifty Thousand Dollars
($50,000) in the aggregate of all such expenses in any Fiscal Year, and (C)
endorsements for deposit or collection of checks, drafts and similar instruments
received by the Company in the ordinary course of business;
                    (vi) Issue guaranties on behalf of the Subsidiaries in
connection with any Indebtedness;
                    (vii) Sell, transfer or otherwise dispose of any of the
assets of the Subsidiaries at any time, (A) except as expressly authorized
pursuant to the Initial Budget or any subsequent Approved Annual Budget, and
(B) except for the sale or disposal of personal property in the ordinary course
(i.e., at the end of such asset’s useful life);
                    (viii) Retain legal counsel for the Subsidiaries or the
Hotel in connection with any matter involving an uninsured claim;

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                    (ix) Initiate any litigation for more than Five Thousand
Dollars ($5,000) on behalf of the Subsidiaries or undertake any course of
defense in connection with any litigation brought against the Subsidiaries, or
settle any litigation concerning the Subsidiaries;
                    (x) Settle any insurance claim on behalf of the
Subsidiaries;
                    (xi) Engage the services of any Person, for a term in excess
of thirty (30) days, without a right to terminate (without penalty) upon not
more than thirty (30) days notice or, having previously engaged such Person with
the approval of Members, dismiss such Person;
                    (xii) Amend, modify or otherwise change the business of the
Subsidiaries;
                    (xiii) Except as otherwise required under the Marriott
Management Agreement or as required for Preservation Costs actually incurred by
any Subsidiary, amend, modify or otherwise change the Initial Budget, any
Approved Annual Budget or the Business of any Subsidiary or, except as expressly
permitted under this Agreement, incur any expense not set forth in the Initial
Budget or any Approved Annual Budget, as applicable;
                    (xiv) Approve or effectuate any program of insurance for the
Subsidiaries, the Hotels or any of the foregoing, or permit any policy of
insurance insuring the Hotels or any employees thereof or work performed thereat
to expire or lapse or the amount thereof to be reduced;
                    (xv) Cause the formation of any corporation or other
subsidiary entity owned or controlled by the Subsidiaries;
                    (xvi) Make investments in the name of the Subsidiaries or
with any Company funds;
                    (xvii) Commence or take any action in the name of, for or on
behalf of either Subsidiary relating in any way to a Bankruptcy;
                    (xviii) Dissolve or liquidate the Subsidiaries;
                    (xix) Admit an additional Member to the Subsidiaries;
                    (xx) Amend the Certificate of Formation for Queensbay LLC,
Articles of Organization for Portside LLC, that certain that certain Amended and
Restated Operating Agreement of Portside LLC dated October 1, 2007 and/or that
certain Second Amended and Restated Limited Liability Company Agreement of
Queensbay LLC dated November __, 2007; or
                    (xxi) Approve any insurance program.
               (b) Except as otherwise provided herein, any approval, consent,
agreement, or exercise of judgment or other determination to be made by Managing
Member, or

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the exercise of any option, may be made, given, withheld or conditioned in the
sole discretion of Managing Member.
          9.5 Approval by Members.
               (a) Notwithstanding anything to the contrary set forth herein,
neither Managing Member, Manager nor any of the Members may take any of the
following actions (the “Member Decisions”) without the prior unanimous approval
of the Members:
                    (i) Except as expressly permitted under Section 10.4, sell
or otherwise dispose of either one or both of the Hotels and/or finance or
refinance any debt secured by either one or both of the Hotels (an “Act of
Sale/Finance”);
                    (ii) Approve or consent to any binding agreements or
contracts (whether written or oral) regarding the Marina Project, including,
without limitation, any acquisitions, development plans, budgets or capital
improvements;
                    (iii) Acquire any real or personal property for the Company,
except as expressly authorized to acquire pursuant to the Initial Budget or any
subsequent Approved Annual Budget;
                    (iv) Incur any indebtedness of the Company or become liable
as an endorser, guarantor, surety or otherwise for any debt obligation or
undertaking of any other Person;
                    (v) Issue guaranties on behalf of the Company in connection
with any Indebtedness;
                    (vi) Sell, transfer or otherwise dispose of any of the
assets of the Company at any time, except as expressly authorized pursuant to
the Initial Budget or any subsequent Approved Annual Budget;
                    (vii) Initiate any litigation on behalf of the Company or
undertake any course of defense in connection with any litigation brought
against the Company, or settle any litigation concerning the Company;
                    (viii) Except as otherwise required for Preservation Costs
actually incurred by the Company, amend, modify or otherwise change the Initial
Budget, any Approved Annual Budget or the Business of the Company or, except as
expressly permitted under this Agreement, incur any expense not set forth in the
Initial Budget or any Approved Annual Budget, as applicable;
                    (ix) Cause the formation of any corporation or other
subsidiary entity owned or controlled by the Company;

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                    (x) Make investments in the name of the Company or with any
Company funds;
                    (xi) Commence or take any action in the name of, for or on
behalf of the Company relating in any way to a Bankruptcy;
                    (xii) Dissolve or liquidate the Company except as expressly
required or permitted pursuant to Section 11;
                    (xiii) Admit an additional Member to the Company except as
otherwise permitted pursuant to Section 10;
                    (xiv) Amend the Articles of Organization or this Agreement;
                    (xv) Settle any insurance claims; or
                    (xvi) Approve any insurance program.
               (b) Except as otherwise provided herein, any approval, consent,
agreement, or exercise of judgment or other determination to be made by the
Members, or the exercise of any option, may be made, given, withheld or
conditioned in the sole discretion of the Members.
          9.6 Hotel Maya. The Members hereby acknowledge and agree that,
notwithstanding the Major Decisions set forth in Section 9.4, so long as the
manager of the Hotel Maya (“Operator”) is EHP or any other Affiliate of Ensemble
Member, CW Member shall have the unilateral right to exercise the rights and/or
the taking of any action or the omission to take any action, and/or the
negotiation of any amendments, on behalf of the Company or its Subsidiaries as
“Owner” pursuant to and in accordance with the Maya Management Agreement
(subject to all limitations and obligations on the part of “Owner”) and to
enforce and/or terminate the Maya Management Agreement pursuant to the terms
thereof (including, without limitation, the unilateral right to extend the term
of the Management Agreement in accordance with Section 2.2 or terminate the
Management Agreement for Operator’s failure to meet the requirement of the
Performance Test (as defined in the Management Agreement)). Upon any termination
of the Maya Management Agreement, CW Member shall no longer have the right to
make unilateral decisions on behalf of the Company or its Subsidiaries as
“Owner” under the Maya Management Agreement and CW Member shall promptly select
a bona fide third party as a replacement Operator (which selection shall be made
by CW Member in its sole but reasonable discretion). For avoidance of doubt,
except as set forth in this Section 9.6, CW Manager may not take, or permit any
Person to take, any action or prevent any action from being taken on behalf of
the Company or its Subsidiaries as “Owner” under the Maya Management Agreement
that would otherwise require the prior unanimous approval of the Members as a
Member Decision under Section 9.5.
          9.7 Remuneration of Manager and the Members. Except as expressly
permitted under this Agreement, including, without limitation, (i) the Operating
Fee payable to Manager; (ii) such reasonable and customary out-of-pocket costs
as may be incurred by an Affiliate of either Member, as applicable, in
connection with performing accounting functions or

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otherwise maintaining the books and records of the Company pursuant to
Section 12; and (iii) the management fee and any and all other amounts payable
to Operator pursuant to the Maya Management Agreement, no Member shall be
entitled to any fees, commissions, payments or other remuneration for any
services rendered to or for the Company or be reimbursed for any overhead
expenses (including, without limitation, rent, utilities, property taxes,
insurance premiums, general administrative expenses, salaries or other
compensation to employees, etc.) of any Affiliate of such Member; provided,
however, that Managing Member, Manager, a Member, or an Affiliate of a Member
may be reimbursed for third-party out-of-pocket costs and expenses, at cost,
without mark-up or profit, reasonably incurred in connection with performing its
duties under this Agreement (which third-party cost shall include, but shall not
be limited to, reasonable travel expenses to be governed by a travel policy to
be agreed upon between the Members).
          9.8 Member Approval. No annual or regular meetings of the Members are
required to be held. However, if such meetings are held, such meetings shall be
noticed, held and conducted pursuant to the Act. In any instance in which the
approval of the Members is required under this Agreement, such approval may be
obtained in any manner permitted by the Act. Unless otherwise provided in this
Agreement, approval of the Members shall mean the unanimous written approval of
the Members.
          9.9 Liquor License. The determination to obtain those licenses,
consents or other approvals required by the State of California Department of
Alcoholic Beverage Control (the “ABC”) or otherwise that may be necessary for
the Company or its Subsidiaries to obtain a liquor license at the Hotels (the
“Liquor Licenses”) shall be a Member Decision; provided, however, CW Member may
elect at any time to transfer the Liquor Licenses from either or both of the
current holders of the Liquor License (e.g., EHP and Marriott) to the Company or
its Subsidiaries and cause the Company or its Subsidiaries to apply for the
Liquor Licenses by taking any and all actions and filing all necessary
applications and/or disclosure forms or other information required by the ABC in
connection with obtaining one or both of the Liquor Licenses; provided, further,
if (i) the application and/or disclosure process is impossible or creates an
unreasonable and/or impractical burden on the Members or their respective
constituent members, partners, shareholders or other direct and indirect owners
thereof (including, without limitation, requiring disclosures or applications
from any Person having a direct interest in the REIT and/or any executives or
board members of CWI); or (ii) the Company is unable to obtain or subsequently
loses any Liquor Licenses, or fails to obtain temporary licenses pending the
permanent transfer of the Liquor Licenses from the current Liquor License
licensees to the Company or its Subsidiaries which in any case arises because of
a Member’s or its Affiliate’s inability to obtain qualification or the necessary
licenses, consents or other approvals required by the ABC, then in either event,
the Members may elect to (A) abstain from acquiring the Liquor License and
transferring the same from the current Liquor License licensees; or (B) form a
wholly owned subsidiary or other affiliated ownership structure controlled by
one or more of the Members or their respective Affiliates (“LiquorCo”) that will
apply for and hold the Liquor License(s) in lieu of the Company. In the event
that the Members approve the formation of LiquorCo pursuant to clause (ii) of
the prior sentence, the Company will enter into an agreement with LiquorCo that
will permit the sale of liquor at the applicable Hotel, to the extent legally
permissible and on terms and conditions reasonably acceptable to the Members.

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          9.10 Marina Project. The Members acknowledge and agree that a portion
of the undeveloped Land could be used to develop, own and operate (including,
without limitation, sales and rental operations) a marina and attendant
facilities (the “Marina Project”). The election of whether or not to develop the
Marina Project shall be a Member Decision and any development budgets, plans and
specifications, or any other decisions in connection with the development,
ownership or operation of the Marina Project shall be a Member Decision unless
expressly agreed otherwise by the Members.
          9.11 Guarantees; Refinancing.
               (a) The Members acknowledge and agree that Ensemble Member will
assume all liability under the Torrey Pines Guarantees and Ensemble Member (and
not the Company, the Subsidiaries or CW Member) will be responsible for any and
all amounts due and otherwise owing by the Company thereunder, and Ensemble
Member hereby covenants and agrees to indemnify, defend and hold harmless the
Company and/or its Subsidiaries and CW Member from and against any Claims or
Losses resulting from the Torrey Pines Guarantees; provided, however, in the
event that Ensemble Member incurs any recourse liability under the Torrey Pines
Guarantees which is incurred as the direct result of CW Member’s unilateral act
in breach of this Agreement, Ensemble Member shall not be liable under this
Section 9.11(a) and CW Member agrees to indemnify, defend and hold harmless the
Company and/or its Subsidiaries and Ensemble Member from and against any Claims
or Losses resulting such breach.
               (b) The Members shall use commercially reasonable efforts to
refinance the Maya Mortgage Loan with a lender approved by the Members and upon
commercially reasonable terms and conditions, including, without limitation,
(i) interest rates and amortization equal to or better than that which exists
under the Maya Mortgage Loan; (ii) the DSCR on the loan in question (and any
approved secondary financing) is equal to or greater than 1.5:1.0 at the time of
such refinancing; (iii) the lender providing such refinancing is an
institutional lender; and (iv) neither the Company nor any Member or their
Affiliates are required to provide a recourse (excluding a non-recourse
carve-out) guarantee; provided, however, notwithstanding the foregoing, the
terms and conditions of the underlying loan documents in connection with any
such refinancing and any additional terms of refinancing shall be subject to the
review and approval of the Members (which approval may be granted or withheld be
either Member in their sole and absolute discretion). In the event the Company
does not refinance and the Company elects to extend the Maya Mortgage Loan,
Ensemble Member shall cause all of the Existing Guarantees to remain in full
force and effect for the term of any extension in connection with any
extension(s) of the maturity date of that certain Promissory Note dated
January 24, 2011 executed in connection with the Maya Mortgage Loan.
               (c) The Members acknowledge and agree that the Company may be
required, as a condition to obtaining financing, refinancing or other
indebtedness, to provide a guaranty of non-recourse obligations and/or other
issues generally guaranteed in connection with obtaining such financing,
refinancing or other indebtedness; provided, however, in no event shall either
Member or their respective Affiliates be required to execute any recourse
guarantees in connection therewith. Notwithstanding the foregoing, in the event
that the Company is required to provide a non-recourse carve-out guarantee as
contemplated in this Section 9.11, such guarantee shall be provided by Ensemble
Member and CW Member on a several basis, with each

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Member responsible for its pro rata share of the aggregate obligations under
such guarantee based upon each Member’s Participation Percentage; provided,
however, that if a lender requires a guaranty to be joint and several, each of
Ensemble Member’s and CW Member’s proportionate liability under such guarantee
(“Proportionate Share of Liability”) shall be in the same proportion as such
Member’s Participation Percentage (“Guarantee Obligation”), subject to
Section 9.11(c).
               (d) If either Ensemble Member or CW Member pays a Guarantee
Obligation in excess of its respective Proportionate Share of Liability (the
“Overpaying Guarantor”) because either (1) Ensemble Member or CW Member funds a
Guarantee Obligation pursuant to the applicable guarantee when such Member’s
actual obligation pursuant to this Section 9.11 is less than the amount paid, or
(2) one Member fails to fund its Proportionate Share of Liability under a
Guarantee Obligation, such Overpaying Guarantor shall be entitled to
reimbursement from the other guarantor in the amount of thereof.
               (e) Notwithstanding the foregoing, to the extent that payment of
a Guaranty Obligation is due to the fault of one Member or its Affiliate, the
guarantor on behalf of the Member or such Member’s Affiliate (i.e., Ensemble
Member on behalf of Manager) at fault shall be responsible to pay the percentage
of such Guarantee Obligation equal to the percentage of fault of the party at
fault.
          9.12 Pre-Existing Obligations of Ensemble Member.
               (a) Ensemble Member hereby represents, warrants and covenants
that the following liabilities and obligations (the “Retained Liabilities and
Obligations”) shall be retained and accrued by Ensemble Member and Ensemble
Member shall promptly and diligently execute the Retained Liabilities and
Obligations to completion and Ensemble Member hereby unconditionally and
irrevocably agrees to reimburse and, further, indemnifies, defends and holds CW
Member, the Company and its Subsidiaries harmless against any and all Claims
resulting from its failure to do so and/or if the Company and/or its
Subsidiaries undertakes to do the same:
                    (i) pay any and all reassessment taxes which become due and
owing by Queensbay LLC and/or Portside LLC in connection with the Hotel Maya and
the Residence Inn, respectively, which relate to periods prior to the Effective
Date (whether due and owing prior to the Effective Date or thereafter assessed
retroactively to the period prior to the Effective Date) (the “Supplemental
Taxes”);
                    (ii) provide an addressable fire alarm system in the Hotel
Maya guestrooms by completing the addition of new devices which communicate with
the existing primary fire alarm panel, all in accordance with terms of the
property improvement plan required under the DoubleTree Franchise Agreement (the
“DoubleTree PIP”), to be completed on or before the completion dates set forth
in the DoubleTree PIP, the estimated cost of which is approximately One Hundred
Fifty Thousand Dollars ($150,000);
                    (iii) parking lot repairs and maintenance at the Hotel Maya
including (A) providing a 1” overlay on specified parking lot areas;
(B) resurfacing the parking lot with one (1) coat of slurry seal; and
(C) restriping the parking lot, all in accordance with

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terms of the DoubleTree PIP and each to be completed on or before the completion
dates set forth in the DoubleTree PIP, the estimated cost of which is
approximately Sixty Thousand Dollars ($60,000);
                    (iv) renovation of the breakfast buffet at the Hotel Maya to
meet the requirements of the DoubleTree PIP, provided that such renovation
requirements may be satisfied by either (A) constructing a new breakfast buffet;
or (B) proving a modular and mobile breakfast buffet alternative which is
acceptable to DoubleTree, in either case, to be substantially completed on or
before the completion dates set forth in the DoubleTree PIP, the estimated cost
of which is approximately Fifteen Thousand Dollars ($15,000); and
                    (v) implement the new exterior signage program as required
under the DoubleTree Franchise Agreement to be substantially completed on or
before the completion dates set forth in the DoubleTree PIP, the estimated cost
of which is approximately Thirty-Five Thousand Dollars ($35,000).
               (b) On the Effective Date, Ensemble Member shall deposit the
amount of Two Hundred Sixty Thousand Dollars ($260,000) into the Company capital
expenditure reserve for the purpose of fulfilling the Retained Liabilities and
Obligations (excluding the Supplemental Taxes) (the “Retained Liability Reserve
Funds”). Ensemble Member shall have authority to make withdrawals from the
Retained Liability Reserve Funds to fund completion of the Retained Liabilities
and Obligations (excluding the Supplemental Taxes), provided that, if the
balance of the Retained Liability Reserve Funds is greater than the actual
assessment, such excess amount shall be refunded to Ensemble Members (and not to
the Company or CW Member), and alternatively, if the then current balance of the
Retained Liability Reserve Funds is less than the actual costs necessary to
complete the Retained Liabilities and Obligations (excluding the Supplemental
Taxes), such shortfall shall be paid by Ensemble Member (at Ensemble Member’s
sole cost and expense and not as a cost to or reimbursement from the Company or
CW Member). In the event that Ensemble Member fails to fulfill any of the
Retained Liabilities and Obligations by the milestone dates set forth above,
Managing Member shall deliver written notice of such failure to Ensemble Member
and Ensemble Member shall have ten (10) business days thereafter to satisfy the
applicable Retained Liability and Obligation or the Members hereby acknowledge
and agree that Managing Member shall have the right (but not the obligation) to
take any and all actions reasonably necessary to complete such Retained
Liability and Obligation on behalf of the Company and to make any and all draws
on the Retained Liability Reserve Funds (or seek direct reimbursement from
Ensemble Member) to pay for the costs thereof. The Retained Liability Reserve
Funds or any additional amounts directly funded by Ensemble Member in connection
with its fulfillment of the Retained Liabilities and Obligations shall not be
treated as an additional Capital Contribution by Ensemble Member.
               (c) Notwithstanding the foregoing, Ensemble Member has previously
established a separate reserve account as required by Marriott for the payment
of the Supplemental Taxes relating to Portside LLC or the Residence Inn (the
“Reassessment Tax Reserve”). In the event that the Company, Portside LLC or
Marriott receives a final assessment of the Supplemental Taxes due and owing on
the Residence Inn, such amounts required thereunder shall be paid with the funds
reserved in the Reassessment Tax Reserve, provided that, if the balance reserved
in the Reassessment Tax Reserve is greater than the actual assessment,

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such excess amount shall be refunded to Ensemble Member (and not to the
Company), and alternatively, if the balance reserved in the Reassessment Tax
Reserve is less than the actual assessment, such shortfall shall be paid by
Ensemble Member (at Ensemble Member’s sole cost and expense and not as a cost to
or reimbursement from the Company) and shall not be treated as an additional
Capital Contribution by Ensemble Member.
          9.13 Dispute Resolution.
               (a) In the event that the Members are unable to mutually agree on
any dispute which expressly provides for resolution under this Section 9.13,
such dispute shall be settled as follows:
                    (i) The Members shall work together in good faith and a
spirit of mutual cooperation to attempt to resolve the applicable arbitrable
dispute for a period of ten (10) business days after notice from one Member to
the other referencing this Section 9.13(a)(i) (the “Discussion Period”); and
                    (ii) If within such thirty (30) calendar days the Members
fail to resolve the applicable arbitrable dispute, then either Member may
promptly thereafter file an arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules, and upon the
issuance of a judgment on the award rendered by the arbitrator(s) thereunder,
such judgment may be entered in any court having jurisdiction thereof. All
arbitration proceedings and hearings shall occur in Los Angeles, California.
     For avoidance of doubt, any failure by Managing Member to approve a Major
Decision, or a failure by either Member to approve a Member Decision, shall not
constitute a dispute for which arbitration under this Section 9.13 is available.
               (b) Within ten (10) days after the commencement of arbitration,
the parties shall attempt to mutually agree upon a single person to act as
arbitrator. If the parties cannot agree on a single arbitrator within such ten
(10) day period, then, within twenty (20) days after the commencement of
arbitration, each party shall select one person to act as arbitrator and the two
selected shall select a third arbitrator within five (5) days of their
appointment. If the arbitrators selected by the parties are unable or fail to
agree upon the third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association. Should this selection procedure fail for any
reason, the arbitrators shall be appointed as provided in the Commercial
Arbitration Rules of the American Arbitration Association. The arbitrator(s)
selected should be competently knowledgeable in the subject matter of the
dispute.
               (c) The arbitrator(s) shall award reasonable attorneys’ fees and
expenses to the prevailing party. The arbitrator(s) shall make its/their
determination in accordance with the laws of the State of California. The
arbitrator(s) shall make specific, written findings of fact and conclusions of
law. The commencement of any arbitration proceedings shall in no event prohibit
or otherwise adversely affect the rights of any Member to initiate and close a
Transfer, right of first offer, buy-sell or any other rights under Section 10.

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               (d) A party may apply to the arbitrator(s) seeking injunctive
relief until the arbitration award is rendered or the controversy is otherwise
resolved. A party also may, without waiving any remedy under this Agreement,
seek from any court having jurisdiction any interim or provisional relief that
is necessary to protect the rights or property of that party, pending the
establishment of the arbitration tribunal (or pending the arbitration tribunal’s
determination of the merits of the controversy).
               (e) Each party to this Agreement agrees that it may be joined as
an additional party to an arbitration involving other parties to this Agreement.
If more than one arbitration is begun under this Agreement and any party
contends that two or more arbitrations are substantially related and that the
issues should be heard in one proceeding, the arbitrator(s) selected in the
first-filed of such proceedings shall determine whether, in the interests of
justice and efficiency, the proceedings should be consolidated before those
arbitrator(s).
               (f) The filing of an arbitration proceeding by any Member shall
not at any time prohibit, limit or otherwise adversely affect the rights of
either Member to deliver a Buy-Sell Notice and exercise its rights under
Section 10.4.
          9.14 Execution of Documents. Except as otherwise expressly set forth
in this Agreement (including, but not limited to, Sections 9.4 and 9.5), each
check, contract, deed, lease, promissory note, deed of trust, escrow
instruction, bond, release or any other documents of any nature whatsoever, in
any way pertaining to a Subsidiary, or on behalf of the Subsidiary, shall be
signed by Manager, Managing Member or the person or persons designated from time
to time by either, provided that, the Members agree and acknowledge that CW
Member shall have the sole authority to take all actions and issue any such
documents and have signing authority on behalf of (i) Queensbay LLC, as
operating lessor, under the Maya Operating Lease; and (ii) upon the expiration,
termination or assignment of the Maya Operating Lease, Queensbay LLC or TRS (as
applicable), as owner, in connection with any and all matters under the Maya
Management Agreement. Manager and Managing Member shall have the authority (on
behalf of TRS) to sign all documents required to be signed under the Marriott
Management Agreement; provided, however, either such party must obtain the prior
written consent of the Members with respect to any Major Decisions or Member
Decisions.
          9.15 Other Ensemble Member Liability.
               (a) Ensemble Member shall have sole liability for, and the
obligation to pay as an out-of-pocket cost of Ensemble Member (with no
obligation of the Company or CW Member to pay such amounts and no such payment
by Ensemble Member shall be considered a Capital Contribution by Ensemble Member
for purposes of this Agreement or increase Ensemble Member’s Capital Account),
any and all state transfer taxes imposed on the Hotels as the result of the
transactions contemplated under the Contribution Agreement and the Members
acquisition of their respective Membership Interests under this Agreement.
               (b) The Company shall be responsible for the payment of any
reassessment taxes assessed against the Hotel Maya, the Residence Inn, Queensbay
LLC and/or Portside LLC applicable to the period of time from and after the
Effective Date, including any reassessment (i) resulting from repairs,
improvements and/or new construction at the Hotels; (ii)

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pursuant to Article 13A of the Constitution of the State of California, as the
result of the transactions contemplated under the Contribution Agreement and the
Members’ acquisition of their respective Membership Interest under this
Agreement (collectively, “Post-Closing Reassessment Taxes”); provided, however,
the Company’s obligations for such Post-Closing Reassessment Taxes which are
directly attributable to Portside LLC and/or the Residence Inn shall be capped
at Three Hundred Thousand Dollars ($300,000) (the “Residence Reassessment Cap”),
and the Members hereby acknowledge and agree that in the event that Post-Closing
Reassessment Taxes attributable thereto exceed the Residence Reassessment Cap,
that Ensemble Member shall have the sole obligation to timely pay any and all
amounts in excess of the Residence Reassessment Cap as an out-of-pocket cost of
Ensemble Member (with no obligation of the Company or CW Member to pay such
amounts and no such payment by Ensemble Member shall be considered a Capital
Contribution by Ensemble Member for purposes of this Agreement or increase
Ensemble Member’s Capital Account). For avoidance of doubt, Ensemble Member
shall pay any and all Supplemental Taxes pursuant to and in accordance with
Section 9.12(a) of this Agreement.
               (c) Concurrently with the execution of this Agreement, Ensemble
Member has deposited cash with the Company in the amount of One Hundred
Seventy-Five Thousand Dollars ($175,000) (the “TOT Shortfall Reserve”). The TOT
Shortfall Reserve shall be used as working capital by the Company and shall not
be treated as an additional Capital Contribution by Ensemble Member.
          9.16 Liability/Indemnification.
               (a) Managing Member and Manager, and their respective Affiliates,
and their respective partners, members, shareholders, other principals,
directors, officers, employees, agents and other representatives (collectively,
the “Managing Parties”) shall not be liable, responsible or accountable, in
damages or otherwise, to any Member or to the Company for any act performed by
them within the scope of the authority conferred upon them by this Agreement,
except for fraud, willful misconduct or gross negligence. The Company shall, out
of Company assets (but not the assets of any Members), indemnify and hold the
Managing Parties harmless for any act performed by them within the scope of the
authority conferred upon them, except for (i) fraud; (ii) willful misconduct;
(iii) gross negligence; or (iv) acts or omissions which are beyond the scope of
its authority hereunder (and which were taken without a good faith belief the
same were within such scope of authority hereunder). Except to the extent that
any Member incurs loss or damage caused by the act or omissions under clauses
(i) through (iv) above, the Company shall, out of Company assets (but not the
assets of any Members), indemnify and hold the Ensemble Parties and the CW
Parties harmless from and against any personal loss or damage incurred by them
arising from any act performed by them for and on behalf of the Company or any
Subsidiary or arising out of any business of the Company or any Subsidiary.
               (b) The representations and warranties set forth in Section 3.1.1
through and including Section 3.1.45 of the Contribution Agreement are hereby
incorporated by reference into this Agreement and Ensemble Member hereby
reaffirms and makes such representations and warranties to, and for the benefit
of, the Company and CW Member, as of the Effective Date; provided, however, CW
Member acknowledges that the representations and

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warranties set forth in Sections 3.1.19, 3.1.23, 3.1.31 and 3.1.33 through
3.1.45 shall only survive for a period of twelve (12) months after the Effective
Date.
               (c) Ensemble Member acknowledges, covenants and unconditionally,
absolutely and irrevocably agrees to appear, indemnify, protect, defend and hold
harmless, as well as reimburse, CW Member and its Affiliates and their
respective parents, Affiliates, shareholders, officers, directors, members,
partners, trustees, agents, representatives and employees (collectively, the
“Related Parties”) to the fullest extent provided by law, from and against, and
for, any and all liability, claims, acts, actions, causes of actions, claims for
relief, judgments, executions, counts, suits, proceedings, demands, lawsuits,
claims of indemnity, expenses, pre-litigation procedures, accounts, reckonings,
controversies, or any combination of the same, of any nature whatsoever, whether
at law or equity, whether arising out of, from or under foreign, Federal, state,
and/or local law, statute, ordinance, regulation, common law, or any other
source of law, whether sounding in contract or tort, or pursuant to statutory
remedy, brought by or otherwise commenced on behalf of any third party,
including, without limitation, the Lenders (collectively, “Claims”), and all
actual, out-of-pocket and/or, subject to the terms of this Agreement, economic
damages, liabilities, any amounts reasonably incurred to settle any Claims, and
losses (including, without limitation, reasonable attorneys’ fees and costs,
including litigation expenses incurred successfully defending allegations of
intentional misconduct) (collectively, “Losses”) (but in all cases without
duplication with respect to any and all payments made by or on behalf of
Ensemble Member or its Affiliate for a breach or default under the Contribution
Agreement) actually incurred by the Company, any Subsidiaries, CW Member, or any
Related Parties as a direct result of such Claims to the extent such Claims and
Losses resulted from (i) except as otherwise disclosed to CW Member on any
Exhibit or Schedule attached to the Contribution Agreement or as set forth in
the Property Condition Reports prepared on behalf of the Company, the events
giving rise to which occurred prior to the Effective Date; (ii) Ensemble’s
failure to timely pay the Supplemental Taxes or those amounts on account of the
Post-Closing Reassessment Taxes which are in excess of the Residence
Reassessment Cap and/or otherwise fulfill the Retained Liabilities and
Obligations; (iii) Ensemble’s failure to timely pay any documentary transfer tax
and/or other tax liability pursuant to Sections 9.12(a) or 9.15(a); and (iv) any
(x) breach or default of the representations and warranties incorporated by
reference in Section 9.16(b) above, or (y) failure of the Original Members (as
“Ensemble Members” under the Contribution Agreement) or Ensemble Member to
satisfy their respective indemnity and reimbursement obligations under the
Contribution Agreement and/or this Section 9.16, respectively, or (z) any other
breach or default of the Contribution Agreement (collectively, the “Indemnity
Obligations”); provided, however, that any and all obligations and liabilities
for recurring costs and expenses (e.g., utilities, taxes, insurance premiums and
other goods and services provided or delivered to the Hotels, the Company and/or
its Subsidiaries prior to the Effective Date) that are prorated under the
Contribution Agreement shall not be deemed Indemnity Obligations and shall be
treated as provided in the Contribution Agreement.
               (d) For avoidance of doubt, subsection (i) of the definition of
Indemnity Obligations is intended to create liability only with respect to those
liabilities of the Company and/or its Subsidiaries or to which the Company
and/or its Subsidiaries and/or CW Member or its Related Parties becomes subject
to that exist solely because the transaction was structured as an acquisition of
a Membership Interest in the Company instead of a purchase by a

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newly-created limited liability company comprised of Ensemble Member and CW
Member (“Special Purpose Entity”) of a one hundred percent (100%) fee interest
in the Hotels (subject to the Ground Leases, the Existing Loans and any and all
Approved Liabilities (as defined in the Contribution Agreement)) under, and on
an “as is, where is” basis, with no representations and warranties other than
the representations and warranties contained in, and as limited under,
Sections 3.1.19, 3.1.23, 3.1.31 and 3.1.33 through 3.1.45 of the Contribution
Agreement. For example, if a Claim is made against the Company and/or its
Subsidiaries before or after the Effective Date in connection with an alleged
physical assault of a hotel guest that occurred at the Hotel Maya prior to the
Effective Date, or if a Claim is made against the Company or Queensbay LLC
because of a contract entered into by Queensbay LLC prior to the Effective Date
that was not an Approved Liability (as defined in the Contribution Agreement)
(and whether or not resulting in a breach of the representations and warranties
set forth in the Contribution Agreement and incorporated by reference herein),
any and all Losses of the Company or its Subsidiaries (or indirectly incurred by
CW Member as a member of the Company) would be included in the Indemnity
Obligations, whether or not the occurrence of the physical assault or the
existence of the contract was known by the Company or its Subsidiaries as of the
Effective Date (and whether or not resulting in a breach of the representations
and warranties set forth in the Contribution Agreement and incorporated by
reference herein), since CW Member would not have incurred such Losses had it
acquired its interest in the Hotels as an asset instead of a Membership Interest
in the Company (i.e., since CW Member would not have been liable for assaults or
contracts entered into by a seller before the purchase of an asset except and
only to the extent CW Member would have expressly assumed those obligations and
liabilities). On the other hand, if a Claim is made against the Company and/or
its Subsidiaries as a result of the encroachment of the Hotel Maya onto adjacent
land or if a Claim is made against the Company or its Subsidiaries involving the
physical or environmental condition of the Hotel Maya, and so long as the
encroachment or condition did not result in a breach of any representations or
warranties set forth in the Contribution Agreement and incorporated by reference
herein, any and all Losses incurred by CW Member in connection therewith would
not be included in the Indemnity Obligations since CW Member would have incurred
such Losses even if it acquired a one hundred percent (100%) fee interest in the
Hotels as an asset instead of a Membership Interest in the Company (i.e., since
CW Member would have been liable for the condition of an asset in an “as is”
sale provided the same did not result in a breach of the representations and
warranties set forth in the Contribution Agreement and incorporated by reference
herein). Notwithstanding the foregoing, this Section 9.16(d) shall only apply to
the Indemnity Obligations and not to a mere breach and/or other default under
this Agreement. Except as expressly set forth in this Agreement or the
Contribution Agreement, in no event shall Ensemble Member have any
responsibility or liability for any tax consequences suffered or incurred by CW
Member and/or any of the Related Parties as a result of the structuring of CW
Member’s contribution as an acquisition of a membership interest rather than an
asset acquisition.
               (e) An indemnitee (an “Indemnitee”) who desires to make a Claim
against an indemnitor (an “Indemnitor”) under this Section 9.16 shall notify the
Indemnitor of the claim, demand, action or right of action which is the basis of
such Claim within twenty (20) calendar days of discovering such claim, and shall
give the Indemnitor a reasonable opportunity to participate in the defense
thereof. Failure to give such notice shall not affect the Indemnitor’s
obligations hereunder, except to the extent of any actual prejudice resulting
therefrom. Any cash distributions to which the Indemnitor would otherwise be
entitled under this Agreement shall be

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reduced by any amounts the Indemnitor is required to pay pursuant to this
Section 9.16, and instead shall be paid to the Indemnitee entitled to indemnity,
up to the full amount of the indemnity obligation.
               (f) Notwithstanding anything to the contrary set forth in the
Contribution Agreement or this Agreement, if any event gives rise to an
Indemnity Obligation (including, without limitation, any (i) breach or default
of the representations and warranties incorporated by reference in Section
9.16(b) above; or (ii) failure of the Original Members (as “Ensemble Members”
under the Contribution Agreement) or Ensemble Member to satisfy their respective
indemnity and reimbursement obligations under the Contribution Agreement and/or
this Section 9.16, respectively), CW Member shall have the right to exercise all
rights and remedies available at law or in equity with respect thereto
(including, without limitation, the right to recover actual, consequential or
other damages, the right to offset and retain for its own right and benefit any
and all amounts to be distributed, paid, reimbursed, and/or advanced to Ensemble
Member under this Agreement and/or the limited liability agreements under which
the Subsidiaries were formed; provided, however, notwithstanding anything to the
contrary in this Agreement or elsewhere, in no event shall either Member be
liable for any claim for opportunity costs resulting from the transactions set
forth in this Agreement (in avoidance of doubt, any Claim for Losses by CW
Member shall include any actual value of the Hotels that is permanently lost (to
the extent such Losses can be reasonably measured) as a result of any matters
for which Ensemble Members would be liable or CW Member would otherwise be
indemnified for under this Agreement).
     10. RESTRICTIONS ON TRANSFER; NEW MEMBERS.
          10.1 Limitations on Transfers. Except as set forth in Sections 10.2,
10.3 and 10.4, no Member shall for any reason, whether voluntarily,
involuntarily or by operation of law, Transfer all or any of such Member’s
Membership Interest, without the prior unanimous written consent of the Members.
Any Transfer not expressly permitted in this Agreement shall be null and void
and of no legal effect. A transferee of a Membership Interest shall have the
right to become a substitute Member only if (i) unanimous consent of the Members
is given; (ii) such Person executes an instrument satisfactory to Managing
Member accepting and adopting the terms and provisions of this Agreement; and
(iii) such Person pays any reasonable expenses in connection with such Person’s
admission as a substitute Member. The admission of a substitute Member shall not
release the Member who assigned the Membership Interest from any liability that
such Member may have to the Company.
          10.2 Permitted Transfers. Notwithstanding anything to the contrary set
forth in Section 10.1, the Members hereby consent to any Transfer to a Permitted
Transferee. For avoidance of doubt, with respect to CW Member, any encumbrance,
gift, assignment, pledge, hypothecation, sale or other transfer, by operation of
law or otherwise, of all or any direct or indirect interest in CWI by the
respective direct and/or indirect owner in CWI shall not be deemed a Transfer
under this Agreement and shall be permitted without the consent of any Member.
          10.3 Right of First Refusal on Transfer.

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               (a) Except for the case of a Transfer to a Permitted Transferee
and, with respect to CW Member, any Transfer by the direct or indirect owner in
CWI, a Member (the “Selling Member”), upon receiving a bona fide offer, whether
written or oral, by a third party to acquire all or any portion of such Selling
Member’s Membership Interest which the Selling Member is willing to accept, or
upon making a bona fide offer, whether written or oral, to a third party to
sell, Transfer or assign all or any of the Selling Member’s Membership Interest
(either of such types of offers is referred to herein as the “Offer”), shall
give written notice thereof (the “Sale Notice”) to the Company and the other
Member (the “Offered Member”). The Sale Notice shall specify:
                    (i) The portion of and identity of the Membership Interest
proposed to be Transferred (the “Offered Interest”);
                    (ii) The identity of the proposed transferee;
                    (iii) The consideration to be received for the Offered
Interest (including the value of any non-monetary consideration and the method
for determining such value); and
                    (iv) The terms and conditions upon which the Selling Member
intends to make the Transfer.
The Sale Notice shall be accompanied by a true and complete copy of the Offer,
if it is written, and shall constitute an offer by the Selling Member to
Transfer the Offered Interest to the Offered Member as more fully set forth
below.
               (b) The Offered Member shall have the right to purchase all (and
only all) of the Offered Interest at a price equal to the price (the “Offered
Price”), and upon such other terms set forth in the Offer. The Offered Member
may exercise its right to purchase only by giving written notice thereof to the
Selling Member (the “Acceptance Notice”), within thirty (30) days after the date
on which the Offered Member received the Sale Notice.
               (c) If the Offered Member does not accept the Offer by the end of
the thirty (30) day period, then notwithstanding this Section 10.3, the Selling
Member shall have the right, within six (6) months, to sell the Offered Interest
to another transferee, subject to the prior written consent of the other
Member(s) pursuant to Section 10.1 and the other requirements of Section 10.1,
on terms that are not materially less favorable than contained in the Offer. In
the event that the Offered Member elects to purchase the Offered Interest, the
Offered Member shall complete such purchase and pay the Offered Price no later
than ninety (90) days after Selling Member’s timely receipt of the Acceptance
Notice.
          10.4 Impasse; Forced Sale and Buy/Sell.
               (a) Hotel Maya.
                    (i) At any time after December 31, 2013 (the “Lock-Out
Period”), but before that date on which the Company receives written notice from
DoubleTree certifying that DoubleTree Buy/Sell Conditions have been satisfied in
full (such date hereinafter

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referred to as the “CW Election Period (Hotel Maya)”), in the event that the
Members are unable to agree on any proposed Act of Sale/Finance (an “Impasse”)
with respect to the Hotel Maya or the Maya Mortgage Loan (or any replacement
debt secured by the Hotel Maya), CW Member shall have the right, (A) subject to
the Hotel Maya ROFO (as defined below), to unilaterally elect sell the Hotel
Maya on behalf of the Company; or (B) subject to the Refinance Requirements,
unilaterally elect to finance or refinance the Maya Mortgage Loan (or any
replacement debt secured by the Hotel Maya). Notwithstanding anything to the
contrary set forth in this Agreement, CW Member and Ensemble Member agree to use
their respective good faith efforts to satisfy the DoubleTree Buy/Sell
Conditions as soon as reasonably possible.
                    (ii) In the event that CW Member exercises its rights under
this Section 10.4(a)(i) and intends to sell or otherwise dispose of the Hotel
Maya on behalf of the Company, then CW Member shall first give Ensemble Member
the opportunity to purchase the Hotel Maya (the “Hotel Maya ROFO”) by delivering
written notice of its intent to sell to Ensemble Member (the “ROFO Notice”).
Ensemble Member shall have the right, but not the obligation, to elect to
purchase the Hotel Maya by delivering written notice thereof (the “Purchase
Notice”) to CW Member within thirty (30) days (the “ROFO Election Period”) after
receipt by Ensemble Member of the ROFO Notice, which Purchase Notice shall
contain the specific terms and conditions upon which Ensemble Member would
purchase the Hotel Maya (the “Offer Terms”), including, without limitation,
Ensemble Member’s proposed gross purchase price (the “Proposed Purchase Price”)
and all customary representations, warranties, and indemnities to be made by the
Company and CW Member. In the event that Ensemble Member fails to timely notify
CW Member on or before the expiration of the ROFO Period or Ensemble Member
elects not to exercise the Hotel Maya ROFO, CW Member (on behalf of the Company
and/or Queensbay LLC) shall thereafter have the right to sell the Hotel Maya or
the Company’s interests in Queensbay LLC to any bona fide third-party (a “Third
Party Purchaser”) at any time within a six (6) month period following the
expiration of the ROFO Election Period; provided, however, that if the Third
Party Purchaser intends to pay a gross cash purchase price (the “Third Party
Purchase Price”) that is less than ninety-eight percent (98%) of the Proposed
Purchase Price, CW Member shall be obligated to re-offer the Hotel Maya to
Ensemble Member for the Third Party Purchase Price in writing (the “Re-Offer
Sale Notice”), in which case, Ensemble Member shall then have the right, but not
the obligation, to elect to purchase the Hotel Maya at the Third Party Purchase
Price by delivering, within ten (10) days (the “Re-Offer Election Period”) after
the receipt by Ensemble Member of the Re-Offer Sale Notice, (A) written notice
thereof to CW Member; and (B) a letter or other statement signed by a bank or
trust company confirming that Ensemble Member has deposited with such bank or
trust company the amount of Five Hundred Thousand Dollars ($500,000)
(collectively, the “Re-Offer Purchase Notice”). If Ensemble Member fails to
timely deliver the Re-Offer Purchase Notice within the Re-Offer Election Period,
then Ensemble Member shall be deemed to have declined its right to exercise the
Re-Offer Sale Notice and CW Member (on behalf of the Company and/or Queensbay
LLC) shall have the right to sell the Hotel Maya or the Company’s interests in
Queensbay LLC to the aforementioned Third Party Purchaser for the Third Party
Purchase Price or to any other bona fide third-party without the obligation to
re-offer the Hotel to Ensemble Member. In the event that Ensemble Member elects
to purchase the Hotel Maya pursuant to a ROFO Notice or Re-Offer Sale Notice, as
applicable, Ensemble Member shall complete such purchase and pay the Proposed
Price or Third Party Purchase Price, as applicable, no later than sixty
(60) days after CW Member’s timely receipt of the Purchase Notice or Re-Offer
Purchase Notice, as applicable.

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                    (iii) From and after the expiration of the CW Election
Period (Hotel Maya), in the event of an Impasse over any Act of Sale/Finance
with respect to the Hotel Maya or the Maya Mortgage Loan, either Member (the
“Offering Member”) may, in its sole and absolute discretion, deliver written
notice (the “Buy-Sell Notice”) to the other Member (the “Responding Member”)
within forty-five (45) days following the end of the Discussion Period,
proposing a Total Value which would be the basis for calculating the applicable
price (“Applicable Price”) at which the Offering Member is willing to either
(i) sell to the other Member all of the Offering Member’s Membership Interest;
or (ii) purchase from the other Member all of the other Member’s Membership
Interest. The Buy-Sell Notice shall be accompanied by a letter or other
statement signed by a bank or trust company confirming that the Offering Member
has deposited with such bank or trust company the amount of Two Hundred Fifty
Thousand Dollars ($250,000) (the “Deposit”). The Responding Member shall have a
period of thirty (30) days after receipt of the Buy-Sell Notice in which to
elect, by written notice to the Offering Member (the “Response Notice”), to
either (A) purchase all of the Membership Interest of the Offering Member at the
Applicable Price or (B) sell all of the Responding Member’s Membership Interest
to the Offering Member at the purchase price that would be payable by the
Offering Member if the Responding Member elects to sell all of the Responding
Member’s Membership Interest to the Offering Member (the “Responding Member’s
Purchase Price”) based on the amount the Responding Member would receive if the
assets of the Company were sold for an amount equal to the Total Value, all
third party liabilities were repaid and the balance was paid and/or distributed
pursuant to Section 8.2; provided, however, notwithstanding the foregoing, the
Applicable Price or the Responding Member’s Purchase Price shall be adjusted as
set forth in Section 10.4(d) below. A Response Notice electing to purchase the
Offering Member’s Membership Interest shall include a letter or other statement
signed by a bank or trust company confirming that the Responding Member has
deposited with such bank or trust company the amount of Two Hundred Fifty
Thousand Dollars ($250,000); thereupon, the Deposit previously made by the
Offering Member shall be returned to the Offering Member by the bank or trust
company with which the Offering Member shall have deposited the Deposit. The
failure of the Responding Member to duly and timely give a Response Notice shall
constitute its election to sell all of its Membership Interest to the Offering
Member at the Applicable Price. Unless otherwise approved by the Members, such
purchase and sale shall be consummated within one hundred twenty (120) days
after the date Responding Member (1) delivers a Response Notice or, (2) if the
Responding Member fails to give the Offering Member a Response Notice in
accordance with this Section 10.4, is deemed to have elected to sell all of its
Membership Interest to the Offering Member (the “Closing Date”), and in either
such event the Members shall negotiate and work together in a spirit of good
faith and mutual cooperation to enter into the transfer documents, including a
deed, bill of sale and other such instruments of transfer as shall be reasonably
requested by the purchasing Member; provided, however, in the event that CW
Member is the purchasing Member, if by the originally scheduled Closing Date CW
Member has not obtained all approvals necessary to permit CW Member (or its
Affiliate) to assume the Portside Ground Lease, the Queensbay Ground Lease, the
DoubleTree Franchise Agreement, the Marriott Management Agreement, the Existing
Loan Documents and/or any other third-party consents or approvals required
thereto, then CW Member shall have the right to cause the originally scheduled
Closing Date to be extended for an additional ninety (90) day period by written
notice to Ensemble Member given not later than the originally scheduled Closing
Date. One hundred percent (100%) of the purchase price for the Membership
Interest

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being sold or purchased shall be payable at the Closing Date by wire transfer in
immediately available funds.
               (b) Residence Inn.
                    (i) At any time after the Lock-Out Period but before that
date which is the earlier of the (A) date the Company receives written notice
from the Residence Mortgage Lender certifying that CIGNA Buy/Sell Conditions
have been satisfied in full and/or waived by Residence Mortgage Lender; and (B)
date which the Residence Mortgage Loan has been refinanced or paid in full (such
date hereinafter referred to as the “CW Election Period (Residence Inn)”), in
the event of an Impasse over any Act of Sale/Finance with respect to the
Residence Inn or the Residence Mortgage Loan, CW Member shall have the right,
(A) subject to the Residence Inn ROFO (as defined below), to unilaterally elect
sell the Residence Inn on behalf of the Company; or (B) subject to the Refinance
Requirements, unilaterally elect to finance or refinance the Residence Mortgage
Loan. Notwithstanding anything to the contrary set forth in this Agreement, CW
Member and Ensemble Member agree to use their respective good faith efforts to
satisfy the CIGNA Buy/Sell Conditions as soon as reasonably possible.
                    (ii) Notwithstanding the foregoing, in the event that CW
Member exercises its rights under this Section 10.4(b)(i) and intends to sell or
otherwise dispose of the Residence Inn, then CW Member shall first give Ensemble
Member the opportunity to purchase the Residence Inn (the “Residence Inn ROFO”)
by delivering a ROFO Notice to Ensemble Member. Ensemble Member shall have the
right, but not the obligation, to elect to purchase the Residence Inn by
delivering the Purchase Notice to CW Member within the ROFO Election Period,
which Purchase Notice shall contain the Offer Terms upon which Ensemble Member
would purchase the Residence Inn, including, without limitation, the Proposed
Purchase Price and all customary representations, warranties, and indemnities to
be made by the Company and Ensemble Member. In the event that Ensemble Member
fails to timely notify CW Member on or before the expiration of the ROFO Period
or Ensemble Member elects not to exercise the Residence Inn ROFO, CW Member (on
behalf of the Company and/or Portside LLC) shall thereafter have the right to
sell the Residence Inn or the Company’s interests in Portside LLC to a Third
Party Purchaser at any time within a six (6) month period following the
expiration of the ROFO Election Period; provided, however, that if the Third
Party Purchaser intends to pay a gross cash purchase price that is less than
ninety-eight percent (98%) of the Proposed Purchase Price, CW Member shall be
obligated to re-offer the Residence Inn to Ensemble Member for the Third Party
Purchase Price via a Re-Offer Sale Notice, in which case, Ensemble Member shall
then have the right, but not the obligation, to elect to purchase the Residence
Inn at the Third Party Purchase Price by delivering, within the Re-Offer
Election Period, the Re-Offer Purchase Notice (including the requisite
confirmation that Ensemble Member has deposited with such bank or trust company
the amount of $500,000). If Ensemble Member fails to timely deliver the Re-Offer
Purchase Notice within the Re-Offer Election Period, then Ensemble Member shall
be deemed to have declined its right to exercise the Re-Offer Sale Notice and CW
Member (on behalf of the Company and/or Portside LLC) shall have the right to
sell the Residence Inn or the Company’s interests in Portside LLC to the
aforementioned Third Party Purchaser for the Third Party Purchase Price or to
any other bona fide third-party without the need to re-offer the Residence Inn
to Ensemble Member. In the event that Ensemble Member elects to purchase the
Residence Inn pursuant to a ROFO Notice or Re-Offer Sale Notice, as applicable,
Ensemble

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Member shall complete such purchase and pay the Proposed Price or Third Party
Purchase Price, as applicable, no later than sixty (60) days after CW Member’s
timely receipt of the Purchase Notice or Re-Offer Purchase Notice, as
applicable.
                    (iii) From and after the expiration of the CW Election
Period (Residence Inn), in the event of an Impasse over any Act of Sale/Finance
with respect to the Residence Inn, either Member may, in its sole and absolute
discretion, deliver a Buy-Sell Notice to the other Member within forty-five
(45) days following the end of the Discussion Period, proposing a Total Value
which would be the basis for calculating the Applicable Price at which the
Offering Member is willing to either (A) sell to the other Member all of the
Offering Member’s Membership Interest; or (B) purchase from the other Member all
of the other Member’s Membership Interest. The Buy-Sell Notice shall be
accompanied by a letter or other statement signed by a bank or trust company
confirming that the Offering Member has deposited with such bank or trust
company the Deposit. The Responding Member shall have a period of thirty
(30) days after receipt of the Buy-Sell Notice in which to elect, by delivering
the Response Notice, to either (1) purchase all of the Membership Interest of
the Offering Member at the Applicable Price or (2) sell all of the Responding
Member’s Membership Interest to the Offering Member at the Responding Member’s
Purchase Price based on the amount the Responding Member would receive if the
assets of the Company were sold for an amount equal to the Total Value, all
third party liabilities were repaid and the balance was paid and/or distributed
pursuant to Section 8.2; provided, however, notwithstanding the foregoing, the
Applicable Price or the Responding Member’s Purchase Price shall be adjusted as
set forth in Section 10.4(d) below. A Response Notice electing to purchase the
Offering Member’s Membership Interest shall include a letter or other statement
signed by a bank or trust company confirming that the Responding Member has
deposited with such bank or trust company the amount of Two Hundred Fifty
Thousand Dollars ($250,000); thereupon, the Deposit previously made by the
Offering Member shall be returned to the Offering Member by the bank or trust
company with which the Offering Member shall have deposited the Deposit. The
failure of the Responding Member to duly and timely give a Response Notice shall
constitute its election to sell all of its Membership Interest to the Offering
Member at the Applicable Price. Unless otherwise approved by the Members, such
purchase and sale shall be consummated on or before the Closing Date, and in
either such event the Members shall negotiate and work together in a spirit of
good faith and mutual cooperation to enter into the transfer documents,
including a deed, bill of sale and other such instruments of transfer as shall
be reasonably requested by the purchasing Member; provided, however, in the
event that CW Member is the purchasing Member, if by the originally scheduled
Closing Date CW Member has not obtained all approvals necessary to permit CW
Member (or its Affiliate) to assume the Portside Ground Lease, the Queensbay
Ground Lease, the DoubleTree Franchise Agreement, the Marriott Management
Agreement, the Existing Loan Documents and/or any other third-party consents or
approvals required thereto, then CW Member shall have the right to cause the
originally scheduled Closing Date to be extended for an additional ninety
(90) day period by written notice to Ensemble Member given not later than the
originally scheduled Closing Date. One hundred percent (100%) of the purchase
price for the Membership Interest being sold or purchased shall be payable at
the Closing Date by wire transfer in immediately available funds.
               (c) Notwithstanding any other provisions hereof to the contrary,
any purchasing Member shall not be required to close on the purchase of any
Membership Interest in

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accordance with this Section 10.4 unless the representations and warranties of
the selling Member as set forth in Section 10.6 shall be true and correct as of
the Closing Date, and the selling Member shall deliver a certificate to such
effect to the purchasing party dated as of the Closing Date; provided, however,
that it shall be made clear that as to the condition or prospects for the
Company, the selling Member is selling its Membership Interest on an “as-is,
where-is” basis. If the purchasing Member fails to complete the purchase on or
before the Closing Date (other than as a result of the selling Member’s
default), then (i) the Deposit deposited by the purchasing Member shall be
forfeited by the purchasing Member and shall be paid over to the selling Member
by the institution holding such Deposit; (ii) the selling Member shall have one
hundred twenty (120) days to elect to become the purchasing Member and purchase
the other Member’s Membership Interest at ninety percent (90%) of the Applicable
Price or the Responding Member’s Purchase Price (as applicable); and (iii) such
defaulting Member may be stripped of certain rights, powers and/or authority as
expressly set forth in this Agreement (including, without limitation, such
defaulting Member’s removal as Managing Member or Manager, as applicable). All
closings shall be conducted through an escrow agreement established by the
Members with a title insurer, and shall take place in Los Angeles, California.
Each Member shall pay one-half of the cost of escrow, together with all of its
attorneys fees incurred in connection with such buy-sell transaction. Either
Member purchasing an interest under this Section 10.4 may assign its rights, in
the whole or in part, to any Affiliate of such Member, provided that no
assignment shall relieve the purchasing party from any liability or obligation
with respect to such purchase.
               (d) The Members acknowledge and agree that in the event that CW
Member intends to exercise its right to purchase the Membership Interest of
Ensemble Member pursuant to this Section 10.4, that CW Member’s ability to
consummate such purchase may be subject to inequitable treatment with respect to
the Existing Loans, the Marriott Management Agreement and/or the DoubleTree
Franchise Agreement. Therefore, the Members agree that any and all fees,
penalties or other costs imposed by Lenders, Marriott or DoubleTree (including,
without limitation, that certain prepayment fee imposed by the Maya Mortgage
Lender) (collectively, the “Third Party Fees”) shall be split 50:50 by the
Members and fifty percent (50%) of any such Third Party Fees shall be credited
in the amount thereto against the Applicable Price or the Responding Member’s
Purchase Price, as applicable. For example, if the Applicable Price which CW
Member is obligated to pay is equal to Twenty Million Dollars ($20,000,000) and
the Third Party Fees attributable to CW Member in connection with such buy-sell
right are Five Hundred Thousand Dollars ($500,000), then the net purchase price
which CW Member would be required to pay Ensemble Member in satisfaction of its
purchase obligations under this Section 10.4 would be Nineteen Million Seven
Hundred Fifty Thousand Dollars ($19,750,000). For avoidance of doubt, Third
Party Fees expressly exclude all closing costs and expenses customary incurred
by either Member in connection with the closing of the purchase and sale
pursuant to this Section 10.4 (including, without limitation, attorney’s fees,
escrow costs, etc.).
          10.5 Further Assurances. It is the intent of the Members that, in the
event of any closing of a purchase of Membership Interest under this Section 10,
the selling or transferring Member shall fully convey, transfer and assign all
of its Membership Interest and any rights associated therewith. Each selling
Member agrees that, at any such closing and any time thereafter, upon request of
the purchasing Member, the selling Member shall execute,

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acknowledge and deliver to the purchasing Member and the Company such
assignments, conveyances, transfers and other instruments and documents, and
perform such other acts, as may be reasonably necessary to fully effect the
Transfer of the Membership Interest sold or otherwise being Transferred to such
Member. Any Member acquiring the Membership Interest of the other Member under
this Section 10 may designate its Affiliate to take the assignment of the
Membership Interest to be Transferred to such Member.
          10.6 Representations and Warranties of the Members. As of the date of
exercise of any rights, and as of the date of closing of any sale of any
Member’s Membership Interest pursuant to this Article 10, each of the Members
represents and warrants to the Company and the other Members with respect to
itself as follows:
               (a) Such Member is the lawful owner of and has the full right,
power and authority to sell, Transfer and deliver such Member’s Membership
Interest which it purports to own, and the sale, Transfer and delivery of such
Membership Interest in accordance therewith will Transfer good and marketable
title thereto free and clear of all liens, encumbrances, Claims or right of the
third parties of every kind and nature whatsoever, subject only to the
provisions of this Agreement;
               (b) The Membership Interest owned by such Member has been duly
authorized and is fully paid and non-assessable. There are no existing options,
warrants, calls or commitments on the part of any Member or other Person
relating to such Membership Interest. No voting agreements or restrictions of
any kind other than those set forth in this Agreement affect the rights of any
such Membership Interest or such Member;
               (c) Such Member has the right and power to enter into this
Agreement and this Agreement has been fully executed and delivered and
constitutes the valid and binding obligation of such Member. No consent of any
Person not a party to this Agreement and no consent of any Governmental
Authority is required to be obtained on the part of such Member in connection
with or resulting from the execution or performance of this Agreement; and
Any Member selling its Membership Interest under this Section 10 will deliver to
the other Member a certificate dated as of the Closing Date of the applicable
sale making the foregoing representations and warranties to such other Member as
of the applicable Closing Date.
          10.7 No Dissolution. If a Member completes a Transfer of all or any
part of its Membership Interest in the Company without complying with the
provisions of this Agreement, such action shall not cause or constitute a
dissolution of the Company.
     11. DISSOLUTION AND WINDING UP OF THE COMPANY.
          11.1 Dissolution of Company. The Company shall be dissolved and its
affairs wound up upon the happening of any of the following events:
               (a) The written agreement of all of the Members to dissolve the
Company;

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               (b) The occurrence of any event that makes it unlawful,
impossible or impractical to carry on the Business for a period of more than six
(6) months;
               (c) Entry of a judicial decree of dissolution pursuant to
Section 17351 of the Act; or
               (d) The sale of all or substantially all of the Company’s assets
unless such sale involves any deferred payment of the consideration for the
sale, in which case the Company shall not dissolve until the last day of the
calendar year during which the Company receives the balance of the deferred
payment.
          11.2 Winding Up of the Company.
               (a) Upon dissolution of the Company for any of the events
described in subparagraphs (a) through (d) of Section 11.1, the Members shall
wind up the affairs and liquidate the assets of the Company, in a manner
approved by the Members, as promptly as is consistent with obtaining the fair
value thereof, and the proceeds therefrom, to the extent sufficient therefor,
when and as received by the Company shall be utilized, paid or distributed in
the following order:
                    (i) First, to creditors, including Members and managers who
are creditors, to the extent otherwise permitted by law, in satisfaction of
liabilities of the Company (whether by payment or the making of reasonable
provision for payment thereof) other than liabilities for which reasonable
provision for payment has been made and liabilities for distribution to Members
under the Act;
                    (ii) Second, to establish Cash Reserves and other Company
reserves for known and unknown liabilities, provided that any remainder of such
withheld amounts shall be distributed to the Members as soon as practicable; and
                    (iii) Thereafter, the balance, if any, to the Members in
accordance with Section 8.2.
It is intended that the distributions set forth in this Section 11.2(a) comply
with the requirement of Regulations Section 1.704-1(b)(2)(ii)(b)(2) that
liquidating distributions be made in accordance with positive Capital Accounts.
However, if the balances in the Capital Accounts do not result in such
requirement being satisfied, no change in the amounts of distributions pursuant
to this Section 11.2 shall be made, but rather, items of income, gain, loss,
deduction and credit will be reallocated among the Members so as to cause the
balances in the Capital Accounts to be in the amounts necessary so that, to the
extent possible, such result is achieved.
               (b) If any Member has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Member shall have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered a
debt owed to the Company or to any other Person for any purpose whatsoever.

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               (c) Upon the approval of the Members, a pro rata portion of the
distributions that would otherwise be made to the Members pursuant to this
Section 11.2 may be distributed to a trust established for the benefit of the
Members for the purpose of liquidating Company assets, collecting amounts owed
to the Company and paying any contingent or unforeseen liabilities or
obligations of the Company arising out of or in connection with the Company. The
assets of any such trust shall be distributed to the Members from time to time,
in the reasonable discretion of Managing Member, in the same proportions as the
amount distributed to such trust by the Company would otherwise have been
distributed to the Members pursuant to this Agreement.
     12. BOOKS AND RECORDS; ACCOUNTS AND INSURANCE.
          12.1 Books of Account. The Members hereby designate Ensemble Member to
perform, or cause to be performed (at the Company’s cost but at no compensation
to Ensemble Member other than as specified in this Agreement), all general and
administrative services on behalf of the Company and in pursuance thereof shall
maintain complete and accurate books of the Company, showing the Membership
Interest of the Members, all receipts and expenditures, assets and liabilities,
Profits and Losses and all other records necessary for recording the Company’s
business and affairs, including the maintenance of a Capital Account for each
Member. The books of the Company shall be kept on the accrual basis in
accordance with the Uniform System for companies of similar size, type, quality
and business operations as the Company, and shall be open to inspection and
examination by each Member at all reasonable times. CW Member shall, if required
by any instruments to which the Company is a party, cause audited financial
statements of the Company’s financial condition as required by the applicable
instruments.
          12.2 Reports. Ensemble Member shall provide to each Member:
               (a) as promptly as practicable and in any event within ninety
(90) days after the end of each Fiscal Year, a balance sheet of the Company as
of the end of such year showing its net worth and containing a statement of each
Member’s Adjusted Capital Account, Capital Contributions and statements of
Profit and Loss, Distributable Cash from Operations, Capital Transaction
Proceeds and the sources and applications of funds of the Company for such year;
               (b) promptly upon receipt thereof, one copy of each other report
submitted to the Company by the Company’s accountants in connection with any
annual, interim or special audit made by them of the books or records of the
Company;
               (c) as promptly as possible following the end of each Fiscal Year
(but no later than March 31st of such Fiscal Year), a copy of the Company’s
Federal, state and local (if any) returns of income for said Fiscal Year, with
Schedule K-1 attached to the Federal return, prepared by the Company’s
accountants, together with a statement of such accountants showing the amount of
Profits, Losses, capital gain and other items allocable to each Member for
Federal, state and local income tax purposes; and

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               (d) from time to time and with reasonable promptness, such
further information in respect of the business, affairs and financial condition
of the Company as any of the Members may reasonably request.
          12.3 Audited Financial Statements.
               (a) If requested by any Member, the Company shall cause audited
financial statements of the Company to be prepared, including, without
limitation, financial statements in compliance with any or all requirements of
(i) Rule 3-05 of Regulation S-X of the Securities and Exchange Commission;
(ii) any other rule issued by the Securities and Exchange Commission and
applicable to CW Member; and (iii) any registration statement, report or
disclosure statement filed with the Securities and Exchange Commission by, or on
behalf of, a Member, in each instance prepared by an accounting firm selected by
CW Member, within one hundred twenty (120) days after Managing Member’s receipt
of written request therefor (“Audited Financial Request”). Such audited
statements shall be at the end of the applicable Fiscal Year, prepared in
accordance with the Uniform System (or as otherwise determined by CW Member) and
in accordance with all Applicable Laws of the United States and otherwise in
conformance with the Existing Loan Documents in which the Company is a borrower
thereto; provided, that in the event of any conflict between the terms of this
Section 12.3 and the Existing Loan Documents, the Existing Loan Documents shall
control. Such audited financial statements shall contain a statement of member
equity, a balance sheet as of the end of the Fiscal Year, statements of Profit
and Loss and cash flow, a statement of changes in the Capital Accounts and a
statement of changes in financial position for the Fiscal Year then ended, and
which shall be accompanied by a management letter from the accountant with
respect to internal controls of the Company.
               (b) The Company shall bear the cost of all audit(s) prepared as a
result of each Audited Financial Request for each such entity per Fiscal Year;
provided, however, in the event that any of the audits require incremental
third-party services to satisfy the requirements of clauses (i) through (iii) of
paragraph (a) above or any other requirement that relates to CWI’s status as a
REIT, CW Member shall solely bear the out-of-pocket costs thereof.
               (c) The Members acknowledge that CW Member, on behalf of the
Company and its Members, as applicable, has commenced an initial audit pursuant
to Rule 3-05 of Regulation S-X of the Securities and Exchange Commission prior
to the Effective Date and notwithstanding anything to the contrary set forth
herein, such costs and expenses in connection with such audit shall be a cost of
the Company.
               (d) The Members agree that CW Member shall have the right, in
lieu of any Audited Financial Request, to undertake alternative actions that
will satisfy any legal or regulatory requirements of a REIT and the Company
shall bear the cost thereof to the extent of what audited financial statements
would have cost.
          12.4 Tax Returns; Tax Elections. The Members hereby designate CW
Member as tax matters partner (the “Tax Matters Partner”) as defined in
Section 6231(a)(7) of the Code, and the Members will take such actions as may be
necessary, appropriate, or convenient to effect the designation of such Tax
Matters Partner. The Tax Matters Partner and the other Members

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shall use their best efforts to comply with the responsibilities outlined in
this section and in Section 6231 of the Code (including any Regulations
promulgated thereunder). CW Member shall cause to be prepared and shall timely
file all Company Tax Returns, shall cause each Subsidiary (whether via Manager
or the applicable Hotel manager) to prepare and timely file all Subsidiary Tax
Returns and shall furnish copies thereof to the Members promptly after the
filing thereof. CW Member shall cause each of the Company and the Subsidiaries
to retain a certified public accountant to prepare such Tax Returns and filings.
CW Member shall file all certificates, notices, statements or other instruments
required by law on behalf of the Company and shall cause each Subsidiary
(whether via Manager or the applicable Hotel manager) to file the same,
including all Federal, state and local Tax Returns. CW Member shall have the
right, in its sole and absolute discretion to change the taxable year or any
accounting method of the Company and/or its Subsidiaries, subject only to the
requirements of the Existing Loan Documents.
          12.5 Bank Accounts.
               (a) Each Member shall have fiduciary responsibility for the
safekeeping and use of all funds of the Company in its immediate possession or
control.
               (b) The funds of the Company shall not be commingled with the
funds of any other Person. In addition, neither Managing Member nor Manager
shall employ, or permit any other Person to employ, such funds in any manner
except for the benefit of the Company. Managing Member and/or Manager shall not
use or permit any other Person to use an account which contains funds of the
Company as any central disbursal account for other assets.
               (c) The bank accounts of the Company shall be maintained in such
banking institutions as are approved by the Members (which approval shall not be
unreasonably withheld, conditioned or delayed) and withdrawals shall be made
only in the regular course of Company business and as otherwise authorized in
this Agreement on such signature or signatures as the Members may determine.
               (d) All funds of the Company shall be invested in accordance with
the then applicable Approved Annual Budget.
          12.6 Insurance. The Company shall, and shall cause each Subsidiary to,
obtain and maintain in full force and effect throughout the term of this
Agreement insurance (i) of the types, coverages and amounts set forth on Exhibit
“F”; (ii) as may be prudent to carry on account of the activities of the Company
and Subsidiaries from time to time and which other owners of comparable business
operations obtain; and (iii) as may be required under any Existing Loan
Documents or other instruments to which the Company and/or any Subsidiary is a
party. Manager shall obtain and maintain all such insurance on behalf, and at
the expense of, the Company and Company Subsidiaries, as applicable. Manager
shall supply copies of each of the insurance policies obtained under this
Section 12.6 to the Company and the Members forthwith upon receipt of the same
and of each insurance certificate and premium receipt forthwith upon receiving
the same.
          12.7 Accountants. CW Member shall select the accountants for the
Company.

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     13. ADJUSTMENT OF BASIS ELECTION. In the event of a Transfer of any
Membership Interest in the Company, or in the event of a distribution of the
property of the Company to any Member hereto, either Member may, in its sole and
absolute discretion, file an election, in accordance with Section 754 of the
Code and applicable Treasury Regulations, to cause the basis of the Company’s
property to be adjusted for Federal income tax purposes, as provided in
Sections 734, 743 and 754 of the Code.
     14. WAIVER OF ACTION FOR PARTITION. Each of the Members hereby irrevocably
waives, during the term of the Company, any right such Member may have to
maintain any action for partition with respect to any property of the Company.
     15. AMENDMENTS. Amendments to this Agreement are a Member Decision and may
be made only if approved by the Members.
     16. EQUITABLE RELIEF. The rights granted to the parties hereunder are of a
special and unique kind and character, and if there is a breach by any party of
any material provision of this Agreement, the other parties would not have an
adequate remedy at law. Therefore, the rights of the parties under this
Agreement may be enforced by equitable relief as is provided under the laws of
the State of California.
     17. NOTICES. Any and all notices, approvals, requests, consents, waivers,
demands or other communications permitted or required to be made under this
Agreement shall be in writing, signed by the party giving such notice, request,
consent, waiver or demand and shall be delivered (i) personally; (ii) by
reputable overnight delivery service; (iii) by registered or certified mail,
return receipt requested; or (iv) by facsimile with time- and date-stamped
confirmation of receipt (provided, however, that a copy of such notice shall be
mailed in accordance with the foregoing clause (ii) promptly after the
transmission of such facsimile). All such notices, requests, consents, waivers
or demands shall be deemed delivered, as applicable:
               (a) on the first (1st) business day on or after the date of the
personal delivery;
               (b) on the first (1st) business day on or after the date of the
signed receipt for certified or registered mail;
               (c) on the next business day for overnight delivery service; or
               (d) on the first (1st) business day on or after the date of
receipt for facsimile.
Notices directed to a party shall be delivered to the parties at the address or
facsimile number as set forth below, or at such other address or facsimile
number as may be specified by written notice given in conformity with the terms
of this Section 17:
     If to Ensemble Member or the Company, then to:

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Ensemble Hotel Partners, LLC
444 West Ocean Blvd, Suite 1108
Long Beach, CA 90802
Attention: Kambiz Babaoff
Telephone No.: 562.436.1359
Email: kbabaoff@ensemble.net
     with copies to:
Elkins Kalt Weintraub Reuben Gartside LLP
1800 Century Park East, 7th Floor
Los Angeles, CA 90067
Attention: Scott Kalt
Telephone No.: 310.746.4402
Email: skalt@elkinskalt.com
     If to CW Member, then to:
c/o Carey Watermark Investors Incorporated
207 East Westminster, Suite 200
Lake Forest, IL 60045
Attention: Michael Medzigian
Telephone No.: 847.482.8600
Email: medzigian@watermarkcap.com
     with a copies to:
Paul, Hastings, Janofsky & Walker LLP
515 S. Flower Street, 25th Floor
Los Angeles, CA 90071
Attention: Rick S. Kirkbride
Telephone No.: 213.683.6261
Email: rickkirkbride@paulhastings.com
Any counsel designated above or any replacement counsel which may be designated
by CW Member or Ensemble Member by written notice to the other Member is hereby
authorized to give notices hereunder on behalf of its client.
     18. LEGAL REPRESENTATION.
          18.1 EACH MEMBER REPRESENTS AND WARRANTS THAT SUCH MEMBER HAS BEEN
ADVISED THAT SUCH MEMBER MAY BE REPRESENTED BY COUNSEL OF SUCH MEMBER’S OWN
CHOOSING IN THE PREPARATION AND ANALYSIS OF THIS AGREEMENT AND EACH MEMBER HAS
CONSENTED TO THE JOINT REPRESENTATION BY COUNSEL FOR ALL MEMBERS IN THE
PREPARATION OF THIS AGREEMENT. EACH MEMBER HAS READ THIS AGREEMENT WITH CARE AND
BELIEVES THAT SUCH MEMBER IS FULLY AWARE OF AND UNDERSTANDS THE CONTENTS THEREOF
AND THEIR LEGAL EFFECT.

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          18.2 Manager and each Member acknowledge that Elkins Kalt Weintraub
Reuben Gartside LLP (the “Ensemble Member Law Firm”) reviewed the drafts of this
Agreement, assisted in the initial formation of the Company and represented the
Company and its Subsidiaries in the acquisition of the Hotels. Manager and each
Member also acknowledge that the Ensemble Member Law Firm represented Queensbay
LLC, Portside LLC, each of the Original Members and/or their respective
Affiliates (collectively, the “Ensemble Member Parties”) in the negotiation of
this Agreement. Manager and each Member acknowledge and agree that while it may
benefit derivatively from the Ensemble Member Law Firm’s representation of the
Company at the request thereof or any Member (with respect to which all parties
hereto hereby expressly consent thereto), it is intended that the Ensemble
Member Law Firm not be conflicted from representing the Ensemble Member Parties
in connection with any dispute that may arise between the Ensemble Member
Parties and Manager or any other Member (or its Affiliates), and Manager and
each Member hereby waive any conflict of interest that such representation
presents. In addition, Manager and each Member, on behalf of itself and the
owner of any direct or indirect interest in Manager and/or such Member, waives
any conflict regarding the Ensemble Member Law Firm’s past or future
representation of the Ensemble Member Parties, and hereby consents to and
acknowledges that the Ensemble Member Law Firm will in the future represent the
Ensemble Member Parties, including, without limitation, in connection with any
representation which may present a potential or real conflict of interest with
Manager and each Member and/or the owner(s) of any direct or indirect interest
in Manager and/or such other Member(s). The foregoing shall not, however, limit
or affect the obligations of the Ensemble Member Law Firm to keep all
attorney/client communications confidential or otherwise to limit any other
ethical obligations of the Ensemble Member Law Firm to their clients.
          18.3 Manager and each Member also acknowledge that Paul, Hastings,
Janofsky & Walker LLP (the “CW Member Law Firm”), represented CW Member and/or
their Affiliates (collectively, the “CW Member Parties”) in the negotiation of
this Agreement. Manager and each Member acknowledge and agree that while it may
benefit derivatively from the CW Member Law Firm’s representation of the Company
at the request thereof or Manager or any Member (with respect to which all
parties hereto hereby expressly consent thereto), it is intended that the CW
Member Law Firm not be conflicted from representing the CW Member Parties in
connection with any dispute that may arise between the CW Member Parties and
Manager or any other Member (or its Affiliates), and Manager and each Member
hereby waive any conflict of interest that such representation presents. In
addition, Manager and each Member, on behalf of itself and the owner of any
direct or indirect interest in Manager and/or such Member, waives any conflict
regarding the CW Member Law Firm’s past or future representation of the CW
Member Parties, and hereby consents to and acknowledges that the CW Member Law
Firm will in the future represent the CW Member Parties, including, without
limitation, in connection with any representation which may present a potential
or real conflict of interest with Manager or each other Member and/or the
owner(s) of any direct or indirect interest in Manager or such other Member(s).
The foregoing shall not, however, limit or affect the obligations of the CW
Member Law Firm to keep all attorney/client communications confidential or
otherwise to limit any other ethical obligations of the CW Member Law Firm to
their clients.

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     19. ATTORNEYS’ FEES. Should any party hereto institute any action or
proceeding at law or in equity to enforce any provision hereof, including an
action for declaratory relief or for damages by reason of an alleged breach of
any provision of this Agreement, or otherwise in connection with this Agreement,
or any provision hereof, the prevailing party shall be entitled to recover from
the losing party or parties reasonable attorneys’ fees and costs for services
rendered to the prevailing party in such action or proceeding.
     20. INDEPENDENT ACTIVITIES OF MEMBERS.
          20.1 Ensemble Member covenants and agrees for itself and its
Affiliates that neither it nor any of its respective Affiliates shall own,
develop, acquire, finance, broker or otherwise invest in, independently or with
others, directly or indirectly, any hotel, condo-hotel, resort or other lodging
facility and/or a marina project within the Restricted Territory (each, a “New
Opportunity”) without first presenting and offering such New Opportunity to the
Company. Notwithstanding anything to the contrary in this Agreement, in the
event the Members do not mutually approve (which approval shall be in such
Member’s respective sole and absolute discretion) any such New Opportunity, then
Ensemble Member shall have the first opportunity (but not the obligation) to
pursue such New Opportunity in the manner that Ensemble Member recommended to
the Company, separate and apart from the Company, so long as Ensemble Member is
not the Member that withheld its approval of such New Opportunity when presented
to the Company. Neither Ensemble Member, EHP nor any of their respective
Affiliates may manage, operate, franchise (as franchisor), license (as licensor)
or market or represent (or provide any marketing services to or enter into any
marketing representation for), independently or with others, directly or
indirectly, any hotel, condo-hotel, resort or other transient lodging facility
and/or marina project within the Restricted Territory.
          20.2 CW Member and its Affiliates may engage or invest in,
independently or with others, any business activity of any type or description,
including, without limitation, those that might be the same as or similar to the
Company’s Business and that might be in direct or indirect competition with the
Company; provided, however, in the event that CW Member or its Affiliates
(specifically excluding CWI, W.P. Carey & Co., LLC and Watermark Capital
Partners, LLC or any entity managed or advised by CWI, W.P. Carey & Co., LLC
and/or Watermark Capital Partners LLC) manage, engage or invest in,
independently or with others, directly or indirectly, any hotel, condo-hotel,
resort or other lodging facility and/or a marina project within the Restricted
Territory, Ensemble Member shall have the option to exercise the buy-sell right
pursuant to and in accordance with Section 10.4; provided, further, that
notwithstanding the foregoing, nothing herein shall restrict CW Member and/or
its Affiliates from holding any Passive Investment of any kind or nature
including, without limitation, any Passive Investment in any hotels that might
be within the Restricted Territory and in direct or indirect competition with
the Hotels and Ensemble Member shall have no rights under Section 10.4 as the
result of such Passive Investment(s).
          20.3 Except as set forth in Sections 20.1 and 20.2, the Members,
Managing Member and Manager may engage in or possess an interest in other
business ventures of every nature and description, independently or with others,
including, but not limited to, the ownership, financing, leasing, operation,
management, syndication, brokerage and development of real property or any other
investment asset or venture, and neither the Company nor the other

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Members shall have, and each of them hereby expressly waives, relinquishes and
renounces any right by virtue of this Agreement in and to such independent
ventures or to the income or profits derived therefrom.
     21. INVESTMENT REPRESENTATIONS OF THE MEMBERS. Each Member, by executing
this Agreement, hereby acknowledges, covenants, represents and warrants to the
Company and the other Members, and each of them, as follows:
               (a) That such Member is over the age of twenty-one (21) years,
experienced in business affairs, and capable of evaluating the merits and risks
of this investment;
               (b) Each Member realizes that such Member’s investment in the
Company involves an element of substantial uncertainty as to the potential for
profitability of the business of the Company; and
               (c) Each Member understands that the Membership Interest in the
Company have not been registered with the Securities and Exchange Commission or
qualified with the California Department of Corporations or any other state
securities agency, in reliance upon exemptions therefrom which are predicated,
in part, upon the information previously provided by each of the Members and the
following representations:
                    (i) Each Member understands that in addition to the
restrictions imposed by applicable Federal and state securities laws, the right
to Transfer any Membership Interest is restricted by the terms of this
Agreement. No Transfer will be permitted if, in the opinion of counsel for the
Company, such Transfer will violate applicable Federal or state securities laws.
The burden and expense will be borne by a Member to satisfy the Company that all
of the conditions of transfer have been satisfied. In addition, even if a Member
meets all of these requirements, there is no present market for any Membership
Interest and none is anticipated to develop;
                    (ii) Each Member represents that such Member is acquiring
such Member’s Membership Interest in the Company for investment purposes and for
such Member’s own account, with no present intention of dividing the same with
others, or reselling or otherwise distributing such Membership Interest, and
such Member will not sell or otherwise dispose of such Membership Interest in
violation of the Securities Act of 1933, as amended, the California Corporations
Code, or regulations promulgated thereunder;
                    (iii) Each Member represents that such Member is capable of
bearing the economic risk of such Member’s investment in the Company (meaning
such Member can afford either a complete loss of the investment or hold it
indefinitely without materially adversely affecting such Member’s standard of
living, causing financial difficulties, or impairing such Member’s ability to
meet current needs and possible personal contingencies);
                    (iv) Each Member represents that such Member either has a
preexisting personal or business relationship with the other Members, or by
reason of such Member’s business or financial experience or the business or
financial experience of such Member’s professional advisors who are unaffiliated
with and not compensated by the any other

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Member, or any Affiliate or any selling agent of any other Member, has the
capacity to protect such Member’s Membership Interest in the Company;
                    (v) That prior to the execution hereof, each of the Members
had knowledge that the Persons listed upon Exhibit “A” would become members of
the Company upon their execution hereof, and each desires and consents to the
association of each of them as Members of this Company; and
                    (vi) Each Member recognizes that the Company is an existing
entity and therefore has a financial and operating history. For this reason and
others, purchase of a Membership Interest as an investment involves special
risks.
     22. MISCELLANEOUS.
          22.1 Governing Law. This Agreement shall, in all respects, be governed
by the laws of the State of California applicable to agreements executed and to
be wholly performed within the State of California.
          22.2 Severability. Nothing contained herein shall be construed so as
to require the commission of any act contrary to law, and wherever there is any
conflict between any provisions contained herein and any present or future
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail; but the provision of this
Agreement which is affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law.
          22.3 Further Assurances. Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and shall
do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder to carry out the intent of the
parties hereto.
          22.4 Successors and Assigns. All of the terms and provisions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
          22.5 Number and Gender. In this Agreement, the masculine, feminine or
neuter gender, and the singular or plural number, shall each be deemed to
include the others whenever the context so requires.
          22.6 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to its subject matter
and any and all prior agreements, understandings or representations with respect
to its subject matter are hereby terminated and canceled in their entirety and
are of no further force or effect.
          22.7 Waiver. A waiver of any provision of this Agreement shall be
valid only if it is in writing and signed by the party making the waiver. No
waiver by any party hereto of any breach of this Agreement or any provision
hereof shall be deemed to be a waiver of any preceding or succeeding breach of
the same or any other provision hereof.

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     22.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     22.9 Interpretation. The captions appearing at the commencement of the
sections hereof are descriptive only and for convenience in reference.
     22.10 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Members and their respective successors
and assigns, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third persons to any party to this Agreement,
nor shall any provision give any third Person any right of subrogation or action
over or against any party to this Agreement.
     22.11 No Authority. No Member shall have the duty to inquire into the
authority of another Member to act. All of the Members shall be presumed to have
the authority to execute this Agreement and to carry out any acts contemplated
hereby.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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     IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Limited Liability Company Operating Agreement on the date first hereinabove
mentioned.

            CW MEMBER:

CWI LONG BEACH HOTELS, LLC,
a Delaware limited liability company    

            By:   CWI OP, LP,
a Delaware limited partnership,
its sole member    

            By:   Carey Watermark Investors Incorporated,
a Delaware corporation,
its general partner    

            By:   /s/ Michael Medzigian         Name:   Michael Medzigian       
Title:   Chief Executive Officer   

            ENSEMBLE MEMBER:

LBHP-ENSEMBLE PARTNERS, LLC,
a California limited liability company    

            By:   Ensemble Hotel Partners, LLC,
a California limited liability company,
its managing member    

            By:   /s/ Kambiz Babaoff         Name:   Kambiz Babaoff       
Title:   Managing Director   

 

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EXHIBIT “A”
Member Information

                      Initial Capital     Initial   Name and Address of Member  
Account Balance     Participation Percentage  
CWI Long Beach Hotels, LLC
  $ 19,698,000       49 %
c/o Carey Watermark Investors Incorporated
               
207 East Westminster, Suite 200
               
Lake Forest, IL 60045
               
Attention: Michael Medzigian
               
 
               
LBHP-Ensemble Partners, LLC
  $ 20,502,000       51 %
c/o Ensemble Hotel Partners, LLC
               
444 West Ocean Blvd., Suite 1108
               
Long Beach, CA 90802
               
Attention: Kambiz Babaoff
               
 
               
 
             
TOTAL
  $ 40,200,000       100 %

 

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“EXHIBIT B-1”
700 QUEENSWAY DRIVE
THAT CERTAIN REAL PROPERTY LOCATED IN THE CITY OF LONG BEACH, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A:
PARCEL 1:
THAT CERTAIN PARCEL OF LAND CONTAINING APPROXIMATELY 402,259 SQUARE FEET,
SITUATE IN THE HARBOR DISTRICT OF THE CITY OF LONG BEACH, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT MONUMENT L B H D “A-11 AUX” AS RECORDED IN BOOK 81. PAGE 50,
RECORD OF SURVEYS OF SAID COUNTY; THENCE NORTH 923.69 FEET; THENCE EAST 1,300.31
FEET TO THE TRUE POINT OF BEGINNING, SAID POINT OF BEGINNING HAVING COORDINATES
NORTH 4,024,511.04, EAST 4,227,521.00 OF ZONE 7 OF THE CALIFORNIA COORDINATE
SYSTEM, THENCE SOUTH 24° 28’ 38” WEST 64.11 FEET; THENCE SOUTH 67° 39’ 40” EAST
26.83 FEET TO THE BEGINNING TO A TANGENT CURVE CONCAVE SOUTHWESTERLY AN HAVING A
RADIUS OF 46.00 FEET; THENCE EASTERLY ALONG SAID CURVE 49.59 FEET TO A TANGENT
LINE; THENCE SOUTH 5° 53’ 30’ EAST 26.35 FEET TO THE BEGINNING OF A TANGENT
CURVE CONCAVE WESTERLY AND HAVING A RADIUS OF 129.33 FEET; THENCE SOUTHERLY
ALONG SAID CURVE 77.44 FEET TO A TANGENT LINE; THENCE SOUTH 28° 24’ 50” WEST
65.03 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A
RADIUS OF 150.67 FEET; THENCE SOUTHERLY ALONG SAID CURVE 126.53 FEET TO A
TANGENT LINE; THENCE SOUTH 19° 42’ 07” EAST 444.54 FEET; THENCE SOUTH 63° 13’
04” EAST 486.41 FEET; THENCE SOUTH 65° 17’ 23” EAST 258.54 FEET; THENCE NORTH
24° 42’ 37” EAST 41.13 FEET; THENCE NORTH 52° 38’ 26” WEST 74.93 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 400.00
FEET; THENCE NORTHERLY ALONG SAID CURVE 367.50 FEET TO A TANGENT LINE; THENCE
NORTH 279.08 FEET; THENCE NORTH 52° 38’ 26” WEST 746.54 FEET TO THE TRUE POINT
OF BEGINNING.
ALSO EXCEPT ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCE AND ALL MINERALS AND
ALL MINERAL RIGHTS OF EVERY KIND AND CHARACTER IN, UNDER OR THAT MAY BE PRODUCED
AND SEVERED THEREFROM TOGETHER WITH ALL RIGHTS OF EVERY KIND AND DESCRIPTION
WHATSOEVER TO DRILL FOR, DEVELOP, TAKE, REMOVE AND SEVER THE SAME, OR ANY PART
THEREOF, FROM SAID PREMISES WITHOUT, HOWEVER, THE RIGHT OF SURFACE ENTRY.

 

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PARCEL 2:
THAT CERTAIN PARCEL CONTAINING APPROXIMATELY 130,687 SQUARE FEET, SITUATE IN THE
HARBOR DISTRICT OF THE CITY OF LONG BEACH, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT MONUMENT L B H D “A-11 AUX”, AS RECORDED IN BOOK 81, PAGE 50.
RECORD OF SURVEYS OF SAID COUNTY; THENCE SOUTH 132.70 FEET; THENCE EAST 2,128.52
FEET TO THE TRUE POINT OF BEGINNING, SAID POINT OF BEGINNING HAVING COORDINATES
NORTH 4,023,454.65, EAST 4,228,348.21 OF ZONE 7 OF THE CALIFORNIA COORDINATE
SYSTEM, THENCE NORTH 30° 45’ 52” EAST 374.77 FEET; THENCE NORTH 52° 38’ 26” WEST
483.77 FEET; THENCE SOUTH 291.29 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 358.00 FEET; THENCE SOUTHERLY ALONG
SAID CURVE 328.91 FEET TO THE BEGINNING OF A TANGENT LINE, THENCE SOUTH 52° 38’
26” EAST 65.50 FEET TO THE TRUE POINT OF BEGINNING.
ALSO EXCEPT ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND ALL MINERALS AND
ALL MINERAL RIGHTS OF EVERY KIND AND CHARACTER IN, UNDER OR THAT MAY BE PRODUCED
AND SAVED THEREFROM, TOGETHER WITH ALL RIGHTS OF EVERY KIND AND DESCRIPTION
WHATSOEVER TO DRILL FOR, DEVELOP, TAKE, REMOVE AND SEVER THE SAME, OR ANY PART
THEREOF, FROM SAID PREMISES WITHOUT, HOWEVER, THE RIGHT OF SURFACE ENTRY.
PARCEL B: (ADDITIONAL WATER PARCEL)
THAT CERTAIN PARCEL SITUATED IN THE HARBOR DISTRICT OF THE CITY OF LONG BEACH,
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
COMMENCING AT MONUMENT L B H D “A-11 AUX”, AS RECORDED IN BOOK 81, PAGE 50,
RECORD OF SURVEYS OF SAID COUNTY; THENCE SOUTH 132.70 FEET; THENCE EAST 2,128.52
FEET TO THE TRUE POINT OF BEGINNING, SAID POINT OF BEGINNING HAVING COORDINATES
NORTH 4,023,454.65, EAST 4,228,348.21 OF ZONE 7 OF THE CALIFORNIA COORDINATE
SYSTEM; THENCE NORTH 30° 45’ 52” EAST 374.77 FEET; THENCE SOUTH 52o 38’ 26” EAST
50.00 FEET; THENCE SOUTH 27o 00’ 07” WEST 378.46 FEET TO A LINE WHICH BEARS
SOUTH 52o 38’ 26” EAST AND WHICH PASSES THROUGH THE TRUE POINT OF BEGINNING;
THENCE NORTH 52o 38’ 26” WEST 75.00 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL C:
AN EASEMENT AND RIGHT OF WAY FOR ROADWAY PURPOSES, AS DISCLOSED BY SAID ROADWAY
EASEMENT AGREEMENT AND NOTICE OF CONSENT TO USE OF LAND, DATED AS OF NOVEMBER 7,
1975, RECORDED DECEMBER 2, 1975 AS INSTRUMENT NO. 3096 AND MODIFIED APRIL 4,
1986 AS INSTRUMENT NO. 86-422348, OF OFFICIAL RECORDS OF SAID COUNTY.

 

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“EXHIBIT B-2”
600 QUEENSWAY DRIVE
THAT CERTAIN REAL PROPERTY LOCATED IN THE CITY OF LONG BEACH, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL I:
THAT CERTAIN PARCEL OF LAND CONTAINING APPROXIMATELY 94,503 SQUARE FEET SITUATE
IN THE HARBOR DISTRICT OF THE CITY OF LONG BEACH, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT MONUMENT L.B.H.D. “A-11 AUX.”, AS RECORDED IN BOOK 81 PAGE 50 OF
RECORD OF SURVEYS OF SAID COUNTY; THENCE NORTH 980.50 FEET; THENCE EAST 1,216.30
FEET TO THE TRUE POINT OF BEGINNING, SAID POINT OF BEGINNING HAVING COORDINATES
NORTH 4,024,567.85; EAST 4,227,436.99 OF ZONE 7 OF THE CALIFORNIA COORDINATE
SYSTEM; THENCE NORTH 59 DEGREES 38 MINUTES 50 SECONDS WEST 344.79 FEET; THENCE
SOUTH 43 DEGREES 38 MINUTES 53 SECONDS WEST 309.58 FEET; THENCE SOUTH 63 DEGREES
01 MINUTES 50 SECONDS EAST 250.85 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE NORTHERLY AND HAVING A RADIUS OF 90.67 FEET; THENCE ALONG SAID CURVE,
136.44 FEET; THENCE NORTH 30 DEGREES 44 MINUTES 57 SECONDS EAST 22.21 FEET TO
THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHERLY AND HAVING A RADIUS OF 90.00
FEET; THENCE ALONG SAID CURVE, 128.16 FEET; THENCE SOUTH 67 DEGREES 39 MINUTES
40 SECONDS EAST 11.45 FEET; THENCE NORTH 24 DEGREES 28 MINUTES 38 SECONDS EAST
84.74 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL II:
THAT CERTAIN PARCEL OF LAND CONTAINING APPROXIMATELY 7,559 SQUARE FEET, SITUATE
IN THE HARBOR DISTRICT OF THE CITY OF LONG BEACH, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT MONUMENT L.B.H.D. “A-11 AUX.”, AS RECORDED IN BOOK 81 PAGE 50 OF
RECORD OF SURVEYS OF SAID COUNTY; THENCE NORTH 980.50 FEET; THENCE EAST 1,216.30
FEET TO THE TRUE POINT OF BEGINNING, SAID POINT OF BEGINNING HAVING COORDINATES
NORTH 4,024,567.85; EAST 4,227,436.99 OF ZONE 7 OF THE CALIFORNIA COORDINATE
SYSTEM; THENCE SOUTH 24 DEGREES 28 MINUTES 38 SECONDS WEST 84.74 FEET; THENCE
SOUTH 67 DEGREES 39 MINUTES 40 SECONDS EAST 100.07 FEET; THENCE NORTH 24 DEGREES
28 MINUTES 38 SECONDS EAST 64.11 FEET; THENCE NORTH 52 DEGREES 38 MINUTES 26

 

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SECONDS WEST 53.90 FEET; THENCE NORTH 59 DEGREES 38 MINUTES 50 SECONDS WEST
47.71 FEET TO THE TRUE POINT OF BEGINNING.
EXCLUDING ALL AIR RIGHTS ABOVE AN ELEVATION OF PLUS THIRTY (+30) FEET, MEAN
LOWER LOW WATER DATUM.

 

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EXHIBIT “C”
Special Allocations
     All capitalized terms used in this Exhibit shall have the meanings as set
forth in the Agreement.
     To conform further the allocation provisions of this Agreement to the
Regulations, the Members agree that the following special allocations rules
shall apply; provided, however, that in respect of any particular allocation the
following rules shall supersede the rules otherwise applicable under Section 7
of the Agreement and this Exhibit only to the extent necessary to cause such
allocation to be respected under the Regulations and the remaining portion of
such allocation shall not be affected. In the event of any inconsistency between
the Regulations and the provisions of the following Sections (a) through (j),
the Regulations shall govern.
          (a) Loss Limitation Rule. If any allocation of Losses for any Fiscal
Year otherwise provided in Section 7 of the Agreement or this Exhibit would (if
made) cause or increase a deficit balance in the Capital Account of a Member
(determined for this purpose by taking into account such Member’s share of
Distributable Cash from Operations and/or Capital Transaction Proceeds in
respect of such Fiscal Year and all other adjustments for such Fiscal Year
otherwise required under this Agreement) that exceeds the amount such Member is
obligated to restore to the Company pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c) or 1.704-1(b)(2)(ii)(d) or is deemed obligated to
restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5) less the amount of the items described
in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), the amount of
Losses otherwise allocable to such Member shall be reduced by the minimum amount
necessary to eliminate such deficit. Any amount of an allocation denied to a
Member under the first sentence of this paragraph (a) of this Exhibit shall be
reallocated to the Members whose allocations of Losses for such year (determined
under this Exhibit) are not affected by this paragraph, such reallocation to be
made pro rata in accordance with each Member’s Participation Percentage.
          (b) Minimum Gain Chargeback. If during any Fiscal Year there is a net
decrease in Company Minimum Gain and Member Nonrecourse Debt Minimum Gain (as
determined under Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1)), then
items of income and gain of the Company shall be allocated to each Member, for
such Fiscal Year (and, if necessary, subsequent periods) in proportion to, and
to the extent of, an amount equal to each Member’s share of the net decrease in
the Company Minimum Gain and Member Nonrecourse Debt Minimum Gain during such
Fiscal Year in accordance with Regulations Section 1.704-2(g)(2). This paragraph
(b) is intended to comply with the minimum gain chargeback requirement in such
Regulations Sections and shall be interpreted consistently therewith.
          (c) Qualified Income Offset. If a Member unexpectedly receives an
adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) (modified, as appropriate, by
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)) which causes or increases
a negative balance in such Member’s Capital Account (determined for this purpose
with the adjustments required under Section (a)), such Member will, to the
extent required by Regulations Section 1.704-1(b)(2)(ii)(d), be specially
allocated an amount of gross

1

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income and/or gain (consisting of a pro rata portion of each item of Company
income and gain for such Fiscal Year) sufficient to eliminate such negative
balance as quickly as possible; provided, however, that an allocation pursuant
to this paragraph (c) shall be made if and only to the extent that such Member
would have a deficit in its Capital Account (determined as aforesaid) after all
other allocations provided for in Section 7 of the Agreement and this Exhibit
have been tentatively made as if this paragraph (c) were not in this Agreement.
          (d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year
of the Company shall be specially allocated to the Members in proportion to
their respective Participation Percentage and otherwise as provided in
Regulations Section 1.704-2(e).
          (e) Member Nonrecourse Deductions. The Members Nonrecourse Deductions
for any Fiscal Year of the Company shall be specially allocated to the Member
that bears the economic risk of loss for such deductions within the meaning of
Regulations Sections 1.704-2(i)(1) and 1.752-2 and otherwise as provided in
Regulations Section 1.704-2(i).
          (f) Member Nonrecourse Debt Minimum Gain Chargeback. If during any
Fiscal Year of the Company there is a net decrease in Member Nonrecourse Debt
Minimum Gain, each Member with a share of such Member Nonrecourse Debt Minimum
Gain shall be allocated items of Company income and gain for such Fiscal Year
(and, if necessary, subsequent periods) in proportion to, and to the extent of,
an amount equal to such Member’s share of the net decrease in the Member
Nonrecourse Debt Minimum Gain determined in a manner consistent with the
provisions of Regulations Section 1.704-2(i)(4). This paragraph (f) is intended
to comply with the “partner nonrecourse debt minimum gain” chargeback
requirement of such Regulations Sections and shall be interpreted consistently
therewith.
          (g) Excess Nonrecourse Liabilities. Solely for purposes of determining
a Member’s proportionate share of the “excess nonrecourse liabilities” of the
Company within the meaning of Regulations Section 1.752-3(a)(3), each Member’s
interest in Company profits shall be such Member’s Participation Percentage.
          (h) Sections 732(d), 734(b) and 743(b) Adjustments. To the extent that
an adjustment to the adjusted tax basis of any Company asset pursuant to
Section 732(d), 734(b) or 743(b) of the Code is required under Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in adjusting Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
allocated to the Members in a manner that achieves the adjustments to their
respective Capital Accounts that are required to be made pursuant to such
Section of the Regulations.
          (i) Curative Allocations. The Special Allocations are intended to
comply with the requirements of the Regulations. It is the intent of the Members
that, to the extent possible, all Special Allocations shall be offset with other
Special Allocations or with Special Allocations of other items of Company
income, gain, loss or deduction pursuant to this Section (i). Therefore,
notwithstanding any other provision of Section 7 of the Agreement and this
Exhibit (other than the Special Allocations), Managing Member, with the Members’
approval, shall make such offsetting allocations of Company income, gain, loss
or deduction in whatever

2

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manner it reasonably determines is appropriate so that, after such offsetting
allocations are made, each Member’s Capital Account balance is, to the extent
possible, equal to the Capital Account balance which such Member would have had
if the Special Allocations were not part of this Agreement and all Company items
were allocated pursuant to Section 7 of the Agreement. In exercising its
discretion under this paragraph (i), Managing Member shall take into account
future Special Allocations under paragraphs (b) and (f) of this Exhibit that,
although not yet made, are likely to offset other Special Allocations previously
made under paragraph (d) and (e) of this Exhibit.
          (j) Change in Regulations. If any of the specific Regulations upon
which the Special Allocations provided for in this Exhibit are based are
hereafter changed or if new Regulations in the opinion of the reputable tax
counsel retained by the Company make it necessary to revise the foregoing
special allocation rules or provide further special allocation rules in order to
avoid a significant risk that a material portion of any allocation of Profits,
Losses or other tax attributes otherwise provided for in Section 7 of the
Agreement would be altered as a result of a challenge thereto by the IRS, the
Members agree to make such reasonable amendments to this Agreement as, in the
opinion of such counsel, are necessary or desirable, taking into account the
interests of the Members as a whole and all other relevant factors, to avoid or
reduce significantly such risk to the extent possible without materially
affecting the amounts distributable to any Member pursuant to this Agreement.

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EXHIBIT “D”
INITIAL BUDGET

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EXHIBIT “E”
2012-2015 FORECAST BUDGETS

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EXHIBIT “F”
INSURANCE REQUIREMENTS

1)   Commercial General Liability (CGL): $15,000,000 Per Occurrence (may be
satisfied with a combination of primary, umbrella and/or excess insurance
policies). The CGL insurance policy must include coverage for the following:

  a)   Coverage for Property Damage and Bodily Injury;     b)   Personal and
advertising injury;     c)   Employees as Insureds;     d)   Innkeeper’s and
Safe Deposit Box Liability insuring loss or damage to guests’ property (up to
statutory requirements) This can be satisfied by any combination of CGL or Crime
Coverage;     e)   Liquor Liability in an amount no less than $1,000,000 per
occurrence;     f)   Contractual Liability insuring liability arising out of
oral, written or incidental or incidental agreement, including, but not limited
to, hold harmless agreements and the Indemnity Agreement;     g)  
Premises/Operation insuring liability arising out of work performed on the
premises;     h)   Products and Completed Operations; and     i)   Pollution
liability — For claims arising out of heat, smoke or fumes from a hostile fire,
or smoke, fumes, vapor or soot that is used to heat, cool or dehumidify the
building or equipment that is used to heat or cool.

      There shall be an Additional Insured Endorsement on this policy (including
coverage for premises and products/completed operations) naming Carey Watermark
Investors, Inc. and any other entities as may be deemed appropriate. There shall
also be a Waiver of Subrogation in favor of Carey Watermark Investors, Inc. and
other entities as may be deemed appropriate.

2)   Workers’ compensation insurance in statutory amounts on all employees of
the Hotel and employer’s liability limits of $1,000,000.   3)   Employment
Practices Liability:

  a)   Per Claim Limit: $1,000,000     b)   Annual Aggregate $5,000,000

      Employment Practices Liability shall include third party liability for the
benefit of Carey Watermark Investors, Inc.

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4)   Comprehensive Auto Insurance in an amount no less than $1,000,000 Combined
Single Limit and shall include the following:

  a)   Coverage Symbol 1 — Any Auto; and     b)   Garagekeepers’ Liability, if
the hotel’s operations include parking operations, with a limit no less than
$1,000,000 to cover the average value of all automobiles that are in the hotel’s
care custody and control at any one time.

5)   Commercial Crime Insurance coverages and limits of insurance (per
occurrence) with the following limits:

  a)   Employee Dishonesty: $250,000     b)   Forgery & Alteration: $50.000    
c)   Money & Securities: $50,000     d)   Robbery & Safe Burglary of Property
other than money and securities $50,000     e)   Computer Fraud $50,000

Employee Dishonesty shall include an endorsement for third party liability for
the benefit of Carey Watermark Investors, Inc.

6)   Commercial Property Insurance in an amount equal to the full replacement
cost of the real and personal property. Coverage shall be written on a Special
Causes of Loss form with a deductible less than $50,000 unless a high hazard
deductible is applicable, etc. California Earthquake. Policy will include the
following coverages:

  a)   Agreed Amount Endorsement, if no endorsement confirmation that no
coinsurance or margin clause will apply;     b)   Named Windstorm, Applicable if
located in a High Hazard County;     c)   Earthquake , including the following
terms:

  a.   Coverage shall include Earthquake Sprinkler Leakage.     b.   Policy
shall carry a limit of not less than the Mean Loss or Scenario Expected Loss of
18% as identified in the most recent seismic report.     c.   Policy shall
contain no coinsurance clause.     d.   Replacement Cost Valuation to apply to
building and contents. Actual Loss Sustained shall apply to BI/EE.     e.  
Deductible shall not exceed 5% of the Total Insurable Value (TIV)     f.   The
above earthquake insurance requirements may be amended based on changes in
property characteristics, lender requirements, and market availability.

  d)   Law & Ordinance Coverage to an amount reasonable for the venue;     e)  
Flood, Applicable if located in a high hazard zone;     f)   Business Income for
loss of profits and necessary continuing expenses – 12 Months including a six
(6) month extended period of indemnity;

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  g)   Boiler and Machinery – Stand-alone policy may apply;     h)   Builder’s
Risk including “soft costs”, replacement cost of work performed and equipment
supplies and materials furnished. – Applicable during construction or during a
substantial alteration (General Contractor’s Stand-alone policy may apply);    
i)   Terrorism – Stand-alone policy may apply; and     j)   Mold Clean-up if
result of a covered cause of loss.

7)   Pollution Legal Liability – Including coverage for Mold with the following
limits:

  a)   Coverage A: $1,000,000 Each Claim – First Party Cleanup     b)   Coverage
B: $1,000,000 Each Claim – Third Party Liability $5,000,000 Policy Aggregate

8)   Such other insurance as may be customarily carried by other hotel operators
on hotels similar to this.

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EXHIBIT “G”
RESTRICTED TERRITORY
[Map of Downtown Long Beach To Be Attached]

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SCHEDULE 1
CLOSING STATEMENT
[Attached]

1