Document:

exv10w1

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

 

 

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	 

-i-

 

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	 

-iv-

 

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	 

-v-

 

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

 

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

 

(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

 

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

 

               (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

 

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

 

          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.

7

 

          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.

8

 

          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

9

 

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

10

 

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;

11

 

               (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

12

 

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

13

 

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)

14

 

	 	 	 
	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)

15

 

	 	 	 
	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

 

	 	 	 
	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

19

 

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

21

 

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.

22

 

               (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

23

 

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

25

 

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.

26

 

               (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

27

 

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;

30

 

                    (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

31

 

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,

32

 

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

35

 

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;

36

 

                    (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

37

 

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

57

 

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.

58

 

     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:

59

 

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.

60

 

          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.

61

 

     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

62

 

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

63

 

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.

64

 

     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]

65

 

     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 	 

 

 

	 	 	 	 	 

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	%

 

 

“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.

 

 

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.

 

 

“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

 

 

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.

 

 

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

 

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

 

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.

3

 

EXHIBIT “D”

INITIAL BUDGET

1

 

EXHIBIT “E”

2012-2015 FORECAST BUDGETS

1

 

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.

1

 

	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;

2

 

	 	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.

3

 

EXHIBIT “G”

RESTRICTED TERRITORY

[Map of Downtown Long Beach To Be Attached]

1

 

SCHEDULE 1

CLOSING STATEMENT

[Attached]

1exv10w2

Exhibit 10.2

			
	 	 	 
	EXECUTION COPY
	 	Contract #1-26652287-3

AMENDMENT NUMBER 3

TO

YAHOO! PUBLISHER NETWORK AGREEMENT #1-26652287

     This Amendment #3 to the Yahoo! Publisher Network Agreement #1-26652287 (“Amendment
#3”) is entered into as of the latter date of either Yahoo! or Publisher’s signature below
(“Amendment #3 Effective Date”) and is made by and among Local.com Corporation
(“Publisher”) and Yahoo! Inc. (“Yahoo!”), and modifies the Yahoo! Publisher Network
Agreement #1-26652287 by and among the same parties effective as of August 25, 2010, as amended
(the “Agreement”).

     In consideration of mutual covenants and for such other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto, Publisher and
Yahoo! hereby agree as follows:

	1.	 	Part E of the “Deployment of Services on Publisher’s Offerings” section on page one (1) of
the Service Order to the Agreement is hereby deleted and replaced with the following
(additions shown in italics):

	 	E.	 	Applications

	 	1.	 	Link = Search Box; Results = Paid
Search Results; Publisher’s Offering = the following
Applications: (a) the SmartLinks plug-in application
and (b) Mobile Applications (as defined in the Software
Attachment).

	 	2.	 	Section 1 (Definitions) of Attachment F (Software Attachment) is hereby amended as follows:

	 	a.	 	The definition of “Application” in Section 1(a) is hereby deleted and replaced with the
following (additions shown in italics):

	 	(a)	 	Applications: Publisher’s or a Yahoo! approved
Affiliate’s software application(s) shown in the SO or
described elsewhere in the Agreement. Applications also include
Mobile Applications that are approved in writing by Yahoo!.

	 	b.	 	The following new definition is hereby added as Section 1(f):

	 	(f)	 	Mobile Applications: Software applications that
are made available to users for downloading and use on mobile
devices and that are approved in writing by Yahoo!.

	3.	 	The Agreement is amended to add the mockups attached to this Amendment #3.
	 
	4.	 	Miscellaneous.

	 	(a)	 	Except as expressly set forth herein, the terms and conditions of the Agreement are
unmodified and remain in full force and effect.
	 
	 	(b)	 	The Agreement is amended to provide that references in the Agreement to “this
Agreement” or “the Agreement” (including indirect references such as “hereunder”, “hereby”,
“herein” and “hereof”) shall be deemed references to the Agreement as amended hereby. All
capitalized defined terms used but not defined herein shall have the same meaning as set
forth in the Agreement.

Yahoo ! Confidential

1

 

			
	 	 	 
	EXECUTION COPY
	 	Contract #1-26652287-3

	 	(c)	 	This Amendment #3 may be executed in one or more counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall constitute
one and the same instrument. An electronically transmitted signature via pdf or facsimile
shall be deemed the equivalent to an original ink signature.
	 
	 	(d)	 	In the event of a conflict between any of the terms and conditions of the Agreement
and any of the terms and conditions of this Amendment #3, the terms and conditions of this
Amendment #3 shall control.

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment #3 as of the
Amendment #3 Effective Date.

	 	 	 	 	 	 	 	 	 	 	 

	LOCAL.COM CORPORATION	 	 	 	YAHOO! INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Rick Szatkowski
 

Name: Rick Szatkowski
	 	 
	 	By:
	 	/s/ David Sullivan
 

Name: David Sullivan
	 	 
	 

	 	Title: Sr. VP and GM, Network Properties
	 	 	 	 	 	Title: Vice President	 	 
	 

	 	Date: May 6, 2011
	 	 	 	 	 	Date: May 6, 2011	 	 

Yahoo ! Confidential

2

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