Document:

exv10w23

Exhibit 10.23

SERVICES AGREEMENT

     THIS SERVICES AGREEMENT (the “Agreement”) is made and entered into this ___ day of
                     (the “Effective Date”) by and between                     , a                     
limited liability company (the “Company”), and                     , a                     
professional limited liability company (“Services PLLC”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Purchase Agreement (the “Purchase Agreement”), dated
as of the date hereof, by and among Aurora Diagnostics, LLC (“Aurora”) and                     ,
Aurora acquired all of the issued and outstanding equity interests of the Company (the
“Acquisition”);

     WHEREAS, the Company’s predecessor,                     , was engaged in the business of providing
pathology services to physicians primarily in the State of                      (the “Business”),
and the physicians employed by Services PLLC desire to continue to provide medical professional
services in the specialty of pathology following the Acquisition on behalf of Services PLLC to the
Company in a manner consistent with applicable law;

     WHEREAS, the Company desires to engage Services PLLC to provide one or more physicians skilled
in pathology to furnish services to the Company as provided in this Agreement;

     WHEREAS, Services PLLC desires and is qualified to provide the services contemplated by this
Agreement to the Company through one or more of its Practice Physicians (as defined in Section
1.4(a)), each of whom will be licensed to practice medicine and prescribe drugs without
restriction in the State of                      and will be experienced in the operation of the Business;
and

     WHEREAS, Services PLLC will provide the services contemplated by this Agreement exclusively to
the Company;

     NOW, THEREFORE, in consideration of the premises set forth above and the mutual covenants and
agreements of the parties set forth in this Agreement, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:

ARTICLE I

ENGAGEMENT AND SERVICES

     1.1 Engagement. The Company hereby engages Services PLLC to provide, and Services
PLLC shall provide and cause the Practice Physicians to provide, services in the practice of
medicine in the specialty of pathology or in such other related fields in which the Company may be
engaged from time to time.

     1.2 Practice Management; Laboratory Director. In furtherance of its commitment under
Section 1.1 and without limiting the scope of services to be provided thereunder, Services
PLLC shall manage the provision of services from the Practice Physicians, including, but not
limited to:

          (a) developing and maintaining appropriate professional standards of the Company, including
the continuation or implementation of quality assurance procedures designed to ensure that patients
of the Company and Services PLLC receive the highest standard of care;

          (b) identifying and pursuing opportunities to expand the Business;

 

 

          (c) recruiting such additional medical service providers as necessary and appropriate;
provided, however, that the prior consent of the Company or its authorized representative shall be
obtained prior to the hiring or discharge of any employee of the Company or Services PLLC,
including any physician providing services to the Company on Services PLLC’s behalf;

          (d) coordinating and administering all leave for the Practice Physicians, including vacation
and continuing education, to ensure that provisions have been made to provide for appropriate
coverage of the Company’s and Services PLLC’s patients, customers and clients;

          (e) engaging in marketing activities designed to promote and develop the Business, as well as
administrative and compliance activities;

          (f) approximately annually or at such other times as may be reasonably requested by the
Company, providing a detailed report on the state of the Business, the Practice Physicians, and the
delivery of services hereunder;

          (g) conduct or provide medical peer review groups associated with the Business;

          (h) performing any other duties or requirements set by Aurora’s Chief Executive Officer or
Chief Operating Officer, all as reasonably directed by the Company or Aurora; and

          (i) providing the services of, and designating one Practice Physician (initially designated as
___________) to serve as, the Laboratory Director of the Company, whose responsibilities
shall be to carry out the responsibilities set forth in 42 CFR § 493.1407 and 42 CFR § 493.1445 and
oversee the delivery of services set forth in Section 1.1 and this Section 1.2.

     1.3 Standards of Practice.

          (a) At all times during the term of this Agreement, Services PLLC shall maintain, and shall
cause the Practice Physicians to maintain and adhere to, the written standards and professional
ethics of the Company and those of the medical profession.

          (b) Notwithstanding anything to the contrary contained herein, (i) the Practice Physicians
shall make any and all decisions pertaining or related to the practice of medicine, (ii) nothing
shall impair the independent medical judgment of any Practice Physician, and (iii) each Practice
Physician shall have final authority over all of such Practice Physician’s medical decisions.

     1.4 Practice Physicians; Qualifications and Licensure.

          (a) For purposes of this Agreement, the term “Practice Physician” means (i) any
physician who is employed by or otherwise affiliated with Services PLLC to provide physician
services to the Company; (ii) any physician performing services on behalf of the Company in
connection with the Business (whether as an employee, partner, member, shareholder, or independent
contractor of Services PLLC); or (iii) any other physician performing services on behalf of
Services PLLC hereunder (as may be approved by the Company).

          (b) Prior to the provision of any services hereunder by any individual Practice Physician,
Services PLLC shall cause such Practice Physician to enter into an employment agreement
with Services PLLC in a form mutually agreed upon by Aurora and Services PLLC. No Practice
Physician shall be retained or discharged by Services PLLC without the express, prior written
consent of Aurora or its authorized representative. In addition, should any event occur that,
under the term of any

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Practice Physician’s employment agreement, results in Services PLLC having
the right to terminate such Practice Physician for cause (as defined in the employment agreement),
Services PLLC shall promptly notify Aurora and act upon such information only with the express
consent of Aurora (which consent may be given orally or in writing).

          (c) Services PLLC shall cause each Practice Physician, at all times during the term of this
Agreement: (i) to be certified by the American Board of Pathology in anatomic and clinical
pathology; (ii) to maintain an unlimited and unrestricted license to practice medicine in the State
of                     ; (iii) to maintain appropriate medical staff membership and privileges at all
medical facilities presently served or serviced by such Practice Physician and use his or her
commercially reasonable efforts to gain and maintain appropriate medical staff membership and
privileges at any additional medical facilities identified by the Company or Aurora; (iv) to comply
with the                      Board of Medicine and the Company’s and Aurora’s continuing medical education
(“CME”) requirements; (v) to carry out the Practice Physicians’ responsibilities on a
professional, ethical and diligent basis in order to serve the best interests of the Company’s and
Services PLLC’s patients, customers and clients; and (vi) to comply with such other requirements as
the Chief Executive Officer or Chief Operating Officer of the Company or Aurora may hereinafter
reasonably require, including without limitation their rules, regulations, policies and procedures,
as in effect and communicated to Services PLLC in writing and as revised from time to time (the
“Rules and Regulations”).

     1.5 Conformity with Laws, Rules, Regulations and Policies. In performing its duties
under this Agreement, Services PLLC shall, and shall cause each Practice Physician to, comply with
(i) all applicable laws, rules and regulations, ordinances and standards of any governmental,
quasi-governmental or private authority having either mandatory or voluntary jurisdiction over
Services PLLC, the Company, any Practice Physician, or any medical facility for which Services PLLC
or any Practice Physician provides services, (ii) the written bylaws, rules and regulations,
policies and procedures of any such medical facility, including, without limitation, the
residential boundary requirements of such hospitals or medical facilities, and (iii) the Rules and
Regulations.

     1.6 Coverage. Services PLLC shall ensure that a sufficient number of Practice
Physicians are available to provide the services contemplated hereby at the offices of the Company
during its hours of operation. Services PLLC and the Company shall confer from time to time in
good faith concerning the appropriate level of physician coverage to provide medical director
services hereunder.

     1.7 Consultation and Cooperation. In connection with the delivery of all services
hereunder, Services PLLC shall, and shall cause the Practice Physicians to, consult in good faith
with the Company and Aurora with respect to any decisions regarding the Business. The Company and
Aurora shall be included in any meetings or discussions among Services PLLC and the Practice
Physicians that are reasonably likely to impact the Business.

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ARTICLE II

TERM AND TERMINATION

     2.1 Initial and Renewal Terms. This Agreement shall become effective as of the
Effective Date and shall remain in full force and effect until 12:00 p.m. midnight on the fiftieth
(50th) anniversary of the Effective Date (the “Initial Term”), unless earlier
terminated as provided in this Article II. This Agreement shall automatically renew for additional
successive terms of five (5) years each (the “Renewal
Terms”), unless either party gives written notice of non-renewal to the other party
not less than ninety (90) days prior to the expiration of the Initial Term or the then-current
Renewal Term, as applicable. If such notice is given, this Agreement shall expire as of the last
day of the Initial Term or the then-current Renewal Term, as applicable.

     2.2 Termination By Agreement. The Company and Services PLLC may agree in a writing
signed by both parties to terminate this Agreement at a time and date stipulated in such writing.

     2.3 Termination by Services PLLC for Cause. At any time after the                     
anniversary of the Effective Date, Services PLLC may terminate this Agreement upon written notice
to the Company, but only in the event of a knowing, material breach by the Company of any of its
obligations hereunder, provided that Services PLLC first provides written notice to the Company
describing the material breach with reasonable particularity and the breach remains uncured for
ninety (90) days after such notice.

     2.4 Termination by the Company for Cause. At any time after the                     
anniversary of the Effective Date, the Company may terminate this Agreement upon written notice to
Services PLLC, but only in the event of (i) a material breach by Services PLLC of any of its
obligations hereunder, provided that the Company first provides written notice to Services PLLC
describing the material breach with reasonable particularity and the breach remains uncured for
ninety (90) days after such notice, or (ii) any act or omission of Services PLLC or any Practice
Physician that the Company or Aurora reasonably believes will result in material detriment to the
operations of the Company or Aurora.

     2.5 Effect of Termination or Expiration. Upon and following the expiration of this
Agreement or its termination for any reason, Services PLLC shall not interfere with any efforts by
the Company or Aurora to contract with any other individual or entity for the provision of services
of the type provided hereunder. Expiration or termination of this Agreement shall not affect any
rights or obligations of the parties accruing hereunder through the date of expiration or
termination, including the Company’s obligation to compensate Services PLLC for services pro-rated
through such date, and such rights and obligations shall survive expiration or termination. In
addition, the provisions of Section 4.2 and Articles VI, VII, and
VIII shall survive expiration or termination of this Agreement.

     2.6 Liquidated Damages. Each of the Company and Services PLLC agree and acknowledge
that this Agreement may not be terminated, even for cause, until the                      anniversary of the
Effective Date. In lieu thereof, each agrees that, in the event of a breach of its obligations
hereunder, the breaching party shall pay to the other party hereto, (i) ___% of actual damages
incurred by the non-breaching party as a direct result of such breach, in the event of any willful,
wanton, or otherwise intentional breach of the breaching party’s obligations hereunder, or (ii) the
greater of (A) actual damages incurred by the non-breaching party as a direct result of such breach
and (B) $                    , in the event of any other material breach.

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ARTICLE III

COMPENSATION

     3.1 Compensation.

          (a) In consideration of the services, covenants, and agreements agreed to be performed by
Services PLLC during the Initial Term and any Renewal Term, the Company shall pay Services PLLC a
fee at the rate of                                          Dollars ($                    ) per year (the “Annual Base
Fee”), payable in substantially equal monthly installments in arrears on or before the
30th day of each month for services rendered during such month. The Company and
Services PLLC shall
meet from time to time, anticipated to be not less than annually, in order to discuss whether
any adjustment to the Annual Base Fee is necessary in order to maintain or grow the Business,
including the possible addition of Practice Physicians following the Effective Date, or to
otherwise reflect the fair market value of the services provided hereunder; provided, however, that
during the first                      years of this Agreement, the Annual Base Fee shall not be less an amount
sufficient to discharge any obligation payable by Services PLLC under the terms of its employment
agreements with Practice Physicians.

          (b) In connection with adjustments to the Annual Base Fee relating to periods beginning on or
after the                      of the Effective Time, the Company shall, prior to establishing the Annual
Base Fee, consult with each of the Owners so long as such individual(s) is employed by the Company
or a successor thereto.

          (c) No adjustment to the Annual Base Fee payable under this Agreement shall be effective
unless set forth in a writing signed by each of Services PLLC and the Company, which writing shall
be deemed an amendment to this Agreement.

     3.2 Reimbursement of Expenses.

          (a) Included in the compensation provided under Section 3.1 hereof are the expenses of
the type described below:

          (i) State and federal payroll taxes or self-employment taxes incurred by Services PLLC
or the Practice Physicians in connection with the employment of the Practice Physicians;

          (ii) Employee benefit plans provided to the Practice Physicians, including health
insurance, 401(k) plans or similar benefit programs;

          (iii) Premiums for professional and general liability insurance obtained by Services
PLLC in accordance with Article V of this Agreement;

          (iv) License fees, medical books and journals, registration fees for continuing medical
education, and membership dues in professional organizations; and

          (v) Any Practice Physician’s necessary travel, room, board and other expenses incurred in
connection with continuing medical education.

          (b) In addition to the compensation provided under Section 3.1 hereof, upon Services
PLLC’s submission of proper documentation, the Company will reimburse Services PLLC for any
Practice Physician’s reasonable business expenses if ordinary and necessary and incurred in
furtherance

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of the business
of the Company, subject to compliance with reimbursement policies from
time to time adopted by the Company or Aurora.

ARTICLE IV

STATUS OF PARTIES

     4.1 Tax Status. The Company and Services PLLC acknowledge and agree that the
relationship created under this Agreement between them is that of independent contractors and that
nothing in this Agreement shall be deemed to render either party the employer or employee of the
other, agent or principal of the other, or joint venturer or partner of the other. The parties
acknowledge and
agree that the Practice Physicians will be engaged by Services PLLC and will under no
circumstances be considered the employees of Aurora, the Company or any of their respective
affiliates. Services PLLC shall be responsible for all withholding, payroll, and similar taxes
related to its engagement of the Practice Physicians, and neither Services PLLC nor the Practice
Physicians shall be entitled to any benefits afforded to the employees of Aurora, the Company or
any of their respective affiliates, except as expressly provided hereunder. Services PLLC agrees
that (i) neither it nor any Practice Physician shall be treated as an employee of the Company for
federal tax purposes; (ii) the Company will not withhold on behalf of Services PLLC any sums for
income tax, unemployment insurance, Social Security, or any other withholding pursuant to any law
or requirement of any governmental body; (iii) all such taxes, payments, and withholdings, if any,
are the sole responsibility of Services PLLC; and (iv) Services PLLC will indemnify and hold the
Company and its affiliates harmless from any and all losses or liabilities arising with respect to
such benefits, taxes, payments, and withholdings, if any. If the United States Internal Revenue
Service (the “IRS”) should question or challenge the worker status of Services PLLC or the
Practice Physicians, then the parties agree that both Services PLLC and the Company and/or Aurora
shall have the right to participate in any discussion or negotiation occurring with the IRS,
irrespective of which party initiated such discussions or negotiations, and each party shall notify
the other in advance of any planned meeting or discussion. In such event, the Company and Services
PLLC shall work together in good faith to make any amendments to this Agreement in order to comply
with any IRS requirements.

     4.2 The Company’s Work Product. All operating procedures, protocols, information
systems, operating data, databases, reports, and other non-public proprietary business systems or
information owned by the Company or its affiliates shall be and remain the exclusive property of
the Company or its affiliates, as appropriate. If Services PLLC or any Practice Physician
modifies, enhances, or alters any such property, such modification, enhancement, or alteration will
be deemed a work-for-hire and shall be the property of the Company or one of its affiliates, as
appropriate. Services PLLC or any Practice Physician making such modification, enhancement or
alteration will execute all documents reasonably requested by the Company to vest fully in the
Company or one of its affiliates title to such modification, enhancement or alteration.

     4.3 Limitations on Authority. Except in the ordinary course of business or with the
prior written consent of the Company, Services PLLC has absolutely no authority to:

          (a) pledge the credit or assets of the Company (or any affiliate of the Company);

          (b) bind the Company (or any affiliate of the Company) under any contract, agreement, note,
mortgage or other instrument (other than routine purchase orders in the ordinary course of business
consistent with the Company’s practices);

          (c) release or discharge any debt due the Company (or any affiliate of the Company); or

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          (d) sell, mortgage, transfer or otherwise dispose of any of the Company’s assets (or any
assets of any affiliate of the Company).

     4.4 Trade Name License. During the Initial Term and any Renewal Term, the Company
hereby grants to Services PLLC a nonexclusive, royalty-free, fully paid up right and license to use
the name “                    ” in connection with the operation of the Business and the provision of
services hereunder. Services PLLC agrees and acknowledges that, promptly upon termination of this
Agreement, such license shall terminate and Services PLLC shall discontinue its use of the name
accordingly.

ARTICLE V

INSURANCE

     5.1 Services PLLC Insurance Coverage. Services PLLC shall purchase and maintain at
its expense, for itself and each of the Practice Physicians, professional and general liability
insurance, with an insurance company reasonably acceptable to the Company, with policy limits of at
least One Million Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000) in the
aggregate, including coverage for acts and omissions in rendering medical services to patients of
the Company or Services PLLC.

     5.2 Evidence of Coverage. Upon the execution of this Agreement and annually
thereafter or on reasonable request, Services PLLC shall provide the Company with certificates of
insurance or other reasonably satisfactory evidence of the insurance required to be maintained
under Section 5.1. Services PLLC shall notify the Company at least sixty (60) days prior
to the voluntary cancellation or termination of any such coverage and immediately upon receipt of
any notice of involuntary cancellation or termination of any such coverage.

     5.3 Tail Coverage. Upon the termination, resignation or other separation from
employment of any Practice Physician, Services PLLC shall consult with the Chief Operating Officer
of Aurora regarding whether to purchase malpractice insurance “tail” coverage, for the period of
the applicable statute of limitations, to provide coverage for the Practice Physician’s
professional acts prior to the date of termination.

ARTICLE VI

CONFIDENTIALITY, NONCOMPETITION

AND NONSOLICITATION COVENANT

     6.1 Non-Competition.

          (a) The parties acknowledge that: (A) the services of Services PLLC and the Practice
Physicians under this Agreement require special expertise and talent in the provision of pathology
services and that Services PLLC and the Practice Physicians will have substantial contact with
customers, suppliers, advertisers and patients of the Company and its affiliates; (B) pursuant to
this Agreement, Services PLLC and the Practice Physicians will be placed in a position of trust and
responsibility and will have access to a substantial amount of Proprietary Information (as defined
below) and that the Company is placing Services PLLC and the Practice Physicians in such position
and giving them access to such information in reliance upon Services PLLC’s and the Practice
Physicians’ agreements set forth in this Article VI; (C) the Company has a legitimate interest in
adequately protecting the goodwill of the Company; and (D) the Practice Physicians are capable of
obtaining gainful, lucrative and desirable employment that does not violate the restrictions
contained in this Agreement. Accordingly, in consideration of the compensation and benefits being
paid and to be paid by the Company to Services PLLC hereunder, Services PLLC agrees that, except
for the services and duties that Services PLLC and

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the Practice Physicians perform for or on behalf
of the Company pursuant to the terms of this Agreement, during the Restricted Period (as defined
below), Services PLLC shall not, and shall use commercially reasonable efforts to cause the
Practice Physicians not to, directly or indirectly:

          (i) engage in the provision of pathology or clinical laboratory services, including,
without limitation, related laboratory testing services, or manage, operate, maintain,
control, serve as an advisor, employee or consultant for, or otherwise provide management,
administrative or consulting services to, a pathology practice (collectively, the
“Services”) within the Restricted Territory (as define below);

          (ii) provide or otherwise facilitate the provision of the Services to or for any person
or Entity, including but not limited to a hospital, ambulatory surgery center, medical group
or physician, that has been a customer or client of the Company during the twenty-four (24)
month period preceding the date hereof (each, a “Customer”); or

          (iii) have any equity interest or other financial interest in any Entity that engages
in the provision of the Services within the Restricted Territory or which provides the
Services to or for any Customer.

          (b) As used in this Agreement, the term “Restricted Period” shall mean, with respect
to Services PLLC, at all times during the Initial Term or any Renewal Term and for a period of two
(2) years following the date of the termination of this Agreement for any reason. With respect to
any Practice Physician, the term “Restricted Period” shall have the meaning set forth in
such Practice Physician’s employment agreement, if any. The term “Entity” shall mean any
corporation, partnership, sole proprietorship, limited liability company, practice, business,
company, or other entity. The term “Restricted Territory” shall mean, as of any
measurement date, those counties in which the Company operates as of the Effective Date, together
with those counties where the Company provided any of the Services during the twelve (12) month
period preceding such measurement date.

     6.2 Non-Solicitation. Services PLLC further agrees that, during the Restricted
Period, Services PLLC will not, and shall cause the Practice Physicians not to, directly or
indirectly, (i) solicit the employment of any employee, agent or consultant of the Company or any
affiliate of the Company or induce any such employee, agent or consultant to terminate its
relationship with such party; (ii) solicit any Customer for the purpose of providing the Services
or on behalf of any Entity providing the Services; (iii) solicit, for the purpose of acquiring, any
prospective acquisition candidate of the Company or any of its affiliates, whether on Services
PLLC’s or any Practice Physician’s own behalf or on behalf of any competitor or potential
competitor, which candidate was involved in a meeting with the Company or any of its affiliates for
purposes relating to acquiring such candidate or for which the Company or any of its affiliates
made an acquisition analysis for purposes relating to acquiring such candidate; (iv) solicit any
payor contracts from any payor of the Company with whom Services PLLC or any Practice Physician had
material contact during the term of this Agreement, or otherwise interfere with the relationship
with any such payor; (v) solicit, induce, influence or otherwise interfere with any referral
sources of the Company or any affiliate of the Company, with whom Services PLLC or any Practice
Physician has had material contact during the term of this Agreement; or (vi) solicit, induce,
influence or interfere with any other person or entity with whom the Company has a business
relationship to discontinue, modify or reduce the extent of such relationship with the Company.

     6.3 Enforcement. Services PLLC acknowledges and agrees that the restrictive covenants
herein are reasonable and valid in time and scope and in all other respects. The covenants set
forth in this Agreement shall be considered and construed as separate and independent covenants.
In recognition of the substantial nature of potential damages that the Company and Aurora would
incur as the result of

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Services PLLC’s breach of this Article VI, Services PLLC further agrees that
the Company shall be entitled to specific performance of this Article VI, and to injunctive and
other equitable relief; without necessity of posting bond; it being understood that the prevailing
party in any action brought by the Company or its affiliates to seek enforcement of the covenants
set forth herein shall be entitled to recover from the losing party all costs in connection with
such action, including without limitation, reasonable attorneys’ fees, expenses and costs incurred
with respect to trials, appeals and collections. Services
PLLC acknowledges that the enforcement of this covenant is not contrary to the public health,
safety, or welfare in that the population in the areas set forth herein is adequately served by
qualified pathologists. Further, Services PLLC acknowledges that the breach of this covenant by
Services PLLC or any Practice Physician will cause irreparable injury to the Company and Aurora.

     6.4 Confidentiality.

          (a) Acknowledgment. Services PLLC acknowledges and agrees that in the course of
rendering services on behalf of the Company and its clients, Services PLLC and the Practice
Physicians will have access to and will become acquainted with confidential and proprietary
information about the professional, business and financial affairs of the Company, its affiliates,
and its and their respective patients, clients and customers, and that Services PLLC and the
Practice Physicians may have contributed to or may in the future contribute to such information.
Services PLLC further recognizes that the Company is engaged in a highly competitive business, and
that the success of the Company in the marketplace and business depends upon its goodwill and
reputation for integrity, quality and dependability. Services PLLC recognizes that in order to
guard the legitimate interests of the Company, it is necessary for the Company to protect all such
confidential and proprietary information, goodwill and reputation.

          (b) Proprietary Information. In the course of Services PLLC’s service to the Company,
Services PLLC and the Practice Physicians will have access to confidential know-how, business
documents or information, marketing data, client lists and trade secrets that are confidential.
Such information shall hereinafter be called “Proprietary Information” and shall include
any and all items enumerated in the preceding sentence that come within the scope of the business
activities of the Company to which Services PLLC and the Practice Physicians have had or may have
access, whether previously existing, now existing or arising hereafter, whether or not conceived or
developed by others or by Services PLLC or any Practice Physician alone or with others during the
term of this Agreement or such Practice Physician’s employment with Services PLLC (as applicable),
and whether or not conceived or developed during regular working hours. “Proprietary Information”
shall not include any information that is in the public domain during the term of this Agreement or
becomes public thereafter, provided such information is not in the public domain as a consequence
of disclosure by Services PLLC or any Practice Physician in violation of this Agreement or his or
her employment agreement. This definition shall not limit any definition or protection of “trade
secrets” or any equivalent term under the Uniform Trade Secrets Act or any other state, local or
federal law.

          (c) Fiduciary Obligations. Services PLLC agrees and acknowledges that the Proprietary
Information is of critical importance to the Company and a violation of this Section 6.4
will seriously and irreparably impair and damage the Company’s business. Services PLLC therefore
agrees, during the term of this Agreement and at all times thereafter, to keep, and to use
commercially reasonable efforts to cause the Practice Physicians to keep, all Proprietary
Information strictly confidential.

          (d) Non-Disclosure. Except as required by law or order of any court or governmental
entity, in connection with the proper performance of Services PLLC’s duties hereunder, or as may be
reasonably necessary for Services PLLC or any Practice Physician to defend itself, himself or
herself in litigation by third parties or governmental or private payor audits, investigations and
claims

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against Services PLLC or any Practice Physician (provided that Services PLLC or such
Practice Physician and their counsel take all reasonable efforts to have such third party, court or
administrative agency maintain the confidentiality of such information), Services PLLC shall not,
and shall cause the Practice Physicians not to, during the term of this Agreement or such Practice
Physician’s employment (as applicable) and for three (3) years thereafter, disclose, directly or
indirectly (except as required by
law), any Proprietary Information to any person other than (a) the Company or Aurora and their
respective affiliates, (b) persons who are authorized employees of the Company or Aurora and their
affiliates and to whom such disclosure is necessary to the conduct of the Company’s business at the
time of such disclosure, (c) such other persons, including prospective investors or lenders, to
whom the Services PLLC has been instructed to make disclosure by the Company’s or Aurora’s Chief
Executive Officer or Chief Operating Officer or (d) Services PLLC’s or any Practice Physician’s
counsel, which counsel shall keep all Proprietary Information confidential. Upon any termination
of this Agreement, or upon request by the Company at another time, Services PLLC shall deliver, and
shall cause all Practice Physicians to deliver, to the Company, all notes, letters, documents,
tapes, discs, recorded data and records which may contain Proprietary Information which are then in
Services PLLC’s or any Practice Physician’s possession or control and shall not retain, use, or
make any copies, summaries or extracts thereof.

     6.5 Reformation. The Company and Services PLLC hereunder agree that it is their
intention that the covenants contained in this Article VI be enforced in accordance with their
terms to the maximum extent possible under applicable law. The Company and Services PLLC further
agree that if any portion of the foregoing covenants are found to be invalid or unenforceable by a
court of competent jurisdiction, the invalid or unreasonable term shall be redefined, or a new
enforceable term provided, such that the intent of the Company and Services PLLC in agreeing to the
provisions of this Agreement will not be impaired and the provision in question shall be
enforceable to the fullest extent of the applicable laws.

ARTICLE VII

CONFIDENTIALITY OF PATIENT RECORDS

     7.1 Patient Records.

          (a) To the extent permitted by applicable law, all medical records, charts, case histories,
x-rays, specimens, tissue samples and lab reports and analyses of or concerning patients of the
Company or Services PLLC (“Medical Records”) received by Services PLLC or any Practice
Physician shall be and remain the Company’s property. During the term of this Agreement and
thereafter, Services PLLC will comply with, and shall cause each Practice Physician to comply with,
all of the Rules and Regulations regarding confidentiality of the Medical Records. Services PLLC,
the Practice Physicians, and their respective counsel shall have the right to copies of such
Medical Records that are necessary for defense of litigation by third parties or governmental or
private payor audits, investigations and claims against them or are required for patients or third
party payors. Services PLLC shall assist the Company in implementing procedures to preserve the
confidentiality of the Medical Records and shall cooperate in compiling data regarding patient
treatment costs and outcomes.

          (b) Neither Services PLLC nor any Practice Physician shall disclose to any third party, except
where permitted or required by law or where such disclosure is expressly approved by the Company in
writing, any patient or medical record information regarding patients of the Company or Services
PLLC, and Services PLLC and the Practice Physicians shall comply with all federal and state laws
and regulations and with the policies of the Company and Aurora regarding the confidentiality of
such information. Each party acknowledges that in receiving or otherwise dealing with any records
or information from the other party about the Company’s or Services PLLC’s patients receiving
treatment for alcohol or drug abuse, each

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party is fully bound by the provisions of the federal
regulations governing Confidentiality of Alcohol and Drug Abuse Patient Records (42 C.F.R. Part 2,
as amended from time to time).

          (c) The Company and Services PLLC agree to comply with the applicable provisions of the
Administrative Simplification section of the Health Insurance Portability and Accountability Act of
1996, as codified at 42 U.S.C. §§1320d through d-8 (“HIPAA”), and the requirements of any
regulations promulgated thereunder including without limitation the federal privacy regulations as
contained in 45 C.F.R. Part 164 (the “Federal Privacy Regulations”) and the federal
security standards as contained in 45 C.F.R. Part 142 (the “Federal Security Regulations”).
The Company and Services PLLC agree not to use or further disclose any protected health
information, as defined in 45 C.F.R. Part 164.504, or individually identifiable health information,
as defined in 42 U.S.C. §1320d (collectively, the “Protected Health Information”),
concerning a patient other than as permitted by this Agreement and the requirements of HIPAA or
regulations promulgated under HIPAA, including without limitation the Federal Privacy Regulations
and the Federal Security Regulations. Services PLLC will assist the Company in implementing
appropriate safeguards to prevent the use or disclosure of a patient’s Protected Health Information
other than as provided for by this Agreement, and Services PLLC will abide by the policies and
procedures and the Notice of Privacy Practices adopted by the Company with respect to the Protected
Health Information of the Company’s and Services PLLC’s patients. Services PLLC will promptly
report to the Company any use or disclosure of any patient’s Protected Health Information not
provided for by this Agreement or in violation of HIPAA, the Federal Privacy Regulations, or the
Federal Security Regulations of which Services PLLC becomes aware. In the event Services PLLC,
with the Company’s approval, contracts with any agents to whom the Company provides a patient’s
Protected Health Information, Services PLLC shall include provisions in such agreements whereby
Services PLLC and such agent agree to the same restrictions and conditions that apply to Services
PLLC with respect to such patient’s Protected Health Information. Notwithstanding the foregoing, no
attorney-client, accountant-client, or other legal privilege shall be deemed waived by the Company,
Services PLLC, or any Practice Physician by virtue of this subsection.

ARTICLE VIII

MISCELLANEOUS

     8.1 Notices. Any notice sent in accordance with the provisions of this Section
8.1 shall be deemed to have been received (even if delivery is refused or unclaimed) on the
date that is: (i) the date of proper posting, if sent by certified U.S. mail or by express U.S.
mail or private overnight courier, or (ii) the date on which sent, if sent by facsimile
transmission, with confirmation and with the original sent by certified U.S. mail, addressed as
follows:

	 	 	 	 	 	 	 

	 

	 	Services PLLC:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	The Company or Aurora:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 

     Any party hereto may change its address specified for notices herein by designating a new
address by notice in accordance with this Section 8.1.

     8.2 Amendments. Subject to Section 8.4, this Agreement may be amended at any
time by mutual agreement of Services PLLC and the Company hereto, but any such amendment shall not
be operative or valid unless the same is reduced to writing and approved by the parties hereto.

- 11 -

 

     8.3 Assignability. Neither party may assign any of its rights or obligations under
this Agreement without the prior written consent of the other party; provided however, that the
Company may, without the consent of Services PLLC, assign or transfer this Agreement to an
affiliate of the Company or in connection with a sale of all or substantially all of the assets or
business of Aurora, merger or transfer of a majority of the ownership interests of Aurora.

     8.4 Contract Modifications; Severability.

          (a) Notwithstanding any other provision of this Agreement, if the governmental agencies (or
their representatives) which administer Medicare or Medicaid, or any other government third party
payor program, or any other federal, state or local government or agency passes, issues or
promulgates any law, rule, regulation, standard or interpretation at any time while this Agreement
is in effect which prohibits, restricts, limits or in any way adversely changes the method or
amount of reimbursement, compensation or payment for services rendered by Services PLLC (or the
Practice Physicians) under this Agreement, or which otherwise adversely affects either the
Company’s or Services PLLC’s rights or obligations hereunder, then the parties hereto shall,
promptly upon notice from either party, negotiate in good faith to amend this Agreement (taking
into account any legal and ethical obligations to the Company’s, Services PLLC’s or the Practice
Physicians’ patients) to provide for such reimbursement, compensation or payment for services in a
manner consistent with any prohibition, restriction, limitation and/or which takes into account any
adverse change in reimbursement, compensation or payment for physician services.

          (b) Subject to the provisions of subsection (a) of this Section 8.4, if any provision
of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws in
effect during the term of this Agreement, the legality, validity, or enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

     8.5 Headings. The headings of this Agreement are inserted for convenience only and
are not to be considered in construction of its provisions.

     8.6 Entire Agreement. This Agreement constitutes the full contract and agreement of
the parties with respect to its subject matter, superseding all prior or contemporaneous
agreements, either oral or written. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.

     8.7 Non-Waiver. The failure of either party to exercise any of its rights under this
Agreement for a breach thereof shall not be deemed to be a waiver of such rights or a waiver of any
subsequent breach.

     8.8 Governing Law; Dispute Resolution.

          (a) Notwithstanding the place where this Agreement may be executed by any of the parties
hereto, the parties expressly agree that all terms and conditions of this Agreement shall be
construed under and governed by the laws of the State of                      without giving effect to the
conflicts of laws principles thereof.

          (b) Except for obtaining a temporary restraining order or an injunction in accordance with
Section 8.8(g) below, any claim or controversy under or involving this Agreement shall be
finally settled by binding arbitration under the Commercial Arbitration Rules of the American
Arbitration Association, except as modified herein (the “Rules”).

- 12 -

 

          (c) If the parties are unable to resolve a dispute after ninety (90) days of efforts, the
Company, on one hand, and Services PLLC, on the other hand, shall, within ten (10) days of such
ninety (90)-day period, each select one arbitrator in accordance with the Rules. The two named
arbitrators shall then select a third arbitrator within fifteen (15) days of the selection of the
second arbitrator. If the two named arbitrators have not agreed on the third arbitrator within the
time limits specified above, then such appointment shall be made by the American Arbitration
Association in accordance with the Rules upon the written request of the Company or Services PLLC
within fifteen (15) days of such request. The arbitration hearing shall be held, if possible,
within ninety (90) days of the appointment of the third arbitrator, and the award shall be issued,
if possible, within thirty (30) days after the close of the hearing. Any such arbitration shall be
conducted in                      or such other site as is mutually agreed upon by the Company and Services
PLLC.

          (d) Any decision or award of the arbitrators shall be based solely on the terms of this
Agreement, applicable law, and the facts presented by the parties. The parties hereby waive any
rights of application or appeal to any court or tribunal of competent jurisdiction (including
without limitation the courts of the United States and the States of                     ) to the fullest
extent permitted by law in connection with any question of law arising in the course of the
arbitration or with respect to any award made. Notwithstanding the foregoing, by agreeing to
arbitration, the parties do not intend to deprive any court of its jurisdiction to issue a
pre-arbitral injunction, pre-arbitral attachment, or other order in aid of arbitration proceedings
and enforcement of any award. Without prejudice to such provisional remedies as may be available
under the jurisdiction of a court, the arbitrators shall have full authority to grant provisional
remedies and to direct the parties to request that any court modify or vacate any temporary or
preliminary relief issued by such court, and to award damages for the failure of any party to
respect the arbitrators’ order to that effect.

          (e) The decision or award of the arbitrators shall be the sole and exclusive remedy between
the parties regarding any and all issues presented to the arbitrator. The award shall be final and
binding upon the parties, and judgment upon any award may be entered in any court in the States of
                     or any other court of competent subject matter jurisdiction having jurisdiction
thereof. Each party hereby irrevocably consents to the personal jurisdiction of the courts in the
States of                     , solely for purposes of confirmation of, entry of judgment upon, and
enforcement of the arbitral award. Each party further hereby irrevocably waives and covenants not
to assert any defenses in any such proceeding based on any alleged defects in jurisdiction, venue,
or convenience of the forum.

          (f) Each party will, upon the written request of another party, provide the other with copies
of specific documents relevant to the issues raised by any claim or counterclaim. Any dispute
regarding discovery shall be determined by the arbitrator, whose determination shall be binding.

          (g) The parties shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any court having
jurisdiction, this being in addition to any other remedy to which they are entitled at law or in
equity.

          (h) Notwithstanding any other provision of law, and regardless of the prevailing party, each
party agrees to pay its own costs and expenses incurred in connection with any arbitration and
shall split equally the cost of the arbitrators.

     8.9 Third Party Beneficiaries. Services PLLC agrees that the Company’s affiliates
(including Aurora) are express and intended third party beneficiaries of this Agreement.

[Signatures on the Following Page]

- 13 -

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above
written to be effective as provided hereinabove.

	 	 	 	 	 	 	 

	 	 	THE COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	SERVICES PLLC:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:exv10w1

Exhibit 10.1

THE MEMBERSHIP INTERESTS DESCRIBED IN AND/OR REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH MEMBERSHIP INTERESTS MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS QUALIFIED OR REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL REASONAB
LY SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION
IS NOT REQUIRED. ANY TRANSFER OF THE UNITS IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS, AND CONDITIONS WHICH ARE SET FORTH HEREIN.

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

CWI-HRI FRENCH QUARTER HOTEL PROPERTY, LLC

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. DEFINITIONS
	 	 	2	 
	1.1 800 Canal Parties
	 	 	2	 
	1.2 Adjusted Capital Account
	 	 	2	 
	1.3 Affiliates
	 	 	2	 
	1.4 Air Rights Lease
	 	 	3	 
	1.5 Applicable Law
	 	 	3	 
	1.6 Architect Agreement
	 	 	3	 
	1.7 Asset Manager
	 	 	3	 
	1.8 Bankruptcy
	 	 	3	 
	1.9 Book Value
	 	 	3	 
	1.10 Canyon Completion Guaranty
	 	 	4	 
	1.11 Capital Contribution
	 	 	4	 
	1.12 Capital Transaction
	 	 	4	 
	1.13 Capital Transaction Proceeds
	 	 	4	 
	1.14 Cash Reserves
	 	 	5	 
	1.15 Code
	 	 	5	 
	1.16 Company Minimum Gain
	 	 	5	 
	1.17 Completion and Cost Overrun Guaranty
	 	 	5	 
	1.18 Construction Agreement
	 	 	5	 
	1.19 Construction Management Agreement
	 	 	5	 
	1.20 Cost Overrun
	 	 	5	 
	1.21 Cost Overrun Cap
	 	 	5	 
	1.22 Cost Overrun Guarantor
	 	 	5	 
	1.23 CPI
	 	 	6	 
	1.24 CWI
	 	 	6	 
	1.25 CW-OP
	 	 	6	 
	1.26 CW Parties
	 	 	6	 
	1.27 Depreciation
	 	 	6	 
	1.28 Distributable Cash from Operations
	 	 	6	 
	1.29 Distributable Cash from Subsidiary Operations
	 	 	6	 
	1.30 Excess Cost Overrun
	 	 	7	 
	1.31 Fiscal Year
	 	 	7	 
	1.32 Garage
	 	 	7	 
	1.33 Governmental Authority
	 	 	7	 
	1.34 Ground Leases
	 	 	7	 
	1.35 Guarantees
	 	 	7	 
	1.36 HRI
	 	 	7	 
	1.37 HRI
	 	 	7	 
	1.38 Historic Credits
	 	 	7	 
	1.39 Historic Tax Credit Proceeds
	 	 	7	 
	1.40 Hotel
	 	 	7	 
	1.41 Hotel Ground Lease
	 	 	7	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	1.42 Hyatt Franchise Agreement
	 	 	8	 
	1.43 IRR
	 	 	8	 
	1.44 Initial Participation Percentage
	 	 	8	 
	1.45 Intangible Property
	 	 	8	 
	1.46 Land
	 	 	8	 
	1.47 Lender
	 	 	8	 
	1.48 Loan
	 	 	8	 
	1.49 Loan Agreement
	 	 	9	 
	1.50 Loan Documents
	 	 	9	 
	1.51 Lock-Out Period
	 	 	9	 
	1.52 Managing Member
	 	 	9	 
	1.53 Member
	 	 	9	 
	1.54 Member Nonrecourse Debt
	 	 	9	 
	1.55 Member Nonrecourse Debt Minimum Gain
	 	 	9	 
	1.56 Member Nonrecourse Deductions
	 	 	9	 
	1.57 Membership Interest
	 	 	9	 
	1.58 Mercier Corner Lot Lease
	 	 	9	 
	1.59 Mercier Garage Lease
	 	 	9	 
	1.60 Non-Recourse Carve Out Guaranty
	 	 	10	 
	1.61 Nonrecourse Deductions
	 	 	10	 
	1.62 Nonrecourse Liability
	 	 	10	 
	1.63 Operating Shortfall Reserve Account
	 	 	10	 
	1.64 Parking Ground Lease
	 	 	10	 
	1.65 Participation Percentage
	 	 	10	 
	1.66 Passive Investment
	 	 	10	 
	1.67 Permit
	 	 	10	 
	1.68 Permitted Transferee
	 	 	10	 
	1.69 Person
	 	 	10	 
	1.70 Preservation Costs
	 	 	11	 
	1.71 Profits and Losses
	 	 	11	 
	1.72 Project Costs
	 	 	12	 
	1.73 Property
	 	 	12	 
	1.74 Qualified Transferee Requirements
	 	 	12	 
	1.75 Regulations
	 	 	12	 
	1.76 Restricted Territory
	 	 	12	 
	1.77 Salmen Lease
	 	 	12	 
	1.78 Servitude of Right of Use
	 	 	12	 
	1.79 Subsidiary
	 	 	12	 
	1.80 Tax(es)
	 	 	12	 
	1.81 Tax Returns
	 	 	13	 
	1.82 Total Value
	 	 	13	 
	1.83 Transfer
	 	 	13	 
	1.84 TRS SUB
	 	 	13	 

-ii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	1.85 Uniform System
	 	 	13	 
	1.86 Unreturned Capital Contribution Account
	 	 	13	 
	1.87 Working Capital Shortfall
	 	 	13	 
	2. FORMATION AND CONTINUATION OF LIMITED LIABILITY COMPANY
	 	 	16	 
	 
	 	 	 	 
	3. NAME AND PLACE OF BUSINESS
	 	 	16	 
	 
	 	 	 	 
	3.1 Name
	 	 	16	 
	3.2 Principal Place of Business
	 	 	16	 
	3.3 Members
	 	 	16	 
	4. PURPOSE
	 	 	16	 
	 
	 	 	 	 
	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
	 	 	17	 
	5.4 Considered a Partnership for Tax Purposes
	 	 	17	 
	5.5 Protection of REIT Status
	 	 	17	 
	5.6 Dispute Resolution Regarding REIT Compliance
	 	 	19	 
	5.7 Sarbanes-Oxley Compliance
	 	 	19	 
	5.8 Consent to Transaction; Incumbency
	 	 	20	 
	 
	 	 	 	 
	6. CONTRIBUTIONS AND LOANS
	 	 	21	 
	 
	 	 	 	 
	6.1 Initial Contributions
	 	 	21	 
	6.2 Use of Funds
	 	 	21	 
	6.3 Cost Overruns and Scope Changes
	 	 	21	 
	6.4 Additional Contributions or Loans
	 	 	23	 
	6.5 Interest on Contributions
	 	 	24	 
	6.6 Return of Contributions
	 	 	24	 
	 
	 	 	 	 
	7. CAPITAL ACCOUNTS; ALLOCATION OF PROFITS AND LOSSES
	 	 	25	 
	 
	 	 	 	 
	7.1 Capital Accounts
	 	 	25	 
	7.2 Allocation of Profits and Losses
	 	 	26	 
	7.3 Other Allocation Rules
	 	 	26	 
	7.4 Tax Allocations
	 	 	27	 
	 
	 	 	 	 
	8. DISTRIBUTIONS
	 	 	27	 
	 
	 	 	 	 
	8.1 Distribution of Distributable Cash (Other than From Capital Transactions
	 	 	27	 
	8.2 Distributions of Cash from Capital Transactions
	 	 	28	 

-iii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	8.3 Offset
	 	 	29	 
	8.4 To Whom Distributions Are Made
	 	 	29	 
	 
	 	 	 	 
	9. MANAGEMENT
	 	 	29	 
	 
	 	 	 	 
	9.1 Managing Member
	 	 	29	 
	9.2 Duties and Responsibilities of Managing Member
	 	 	31	 
	9.3 Actions by Managing Member
	 	 	34	 
	9.4 Approval by Members; Limitations of the Company
	 	 	35	 
	9.5 Hotel and Development Management
	 	 	39	 
	9.6 Remuneration of Members and their Affiliates
	 	 	40	 
	9.7 Member Approval
	 	 	40	 
	9.8 Liquor License
	 	 	40	 
	9.9 Guarantees; Refinancing
	 	 	41	 
	9.10 Dispute Resolution
	 	 	42	 
	9.11 Execution of Documents
	 	 	43	 
	9.12 Liability/Indemnification
	 	 	44	 
	 
	 	 	 	 
	10. RESTRICTIONS ON TRANSFER; NEW MEMBERS
	 	 	46	 
	 
	 	 	 	 
	10.1 Limitations on Transfers
	 	 	46	 
	10.2 Permitted Transfers
	 	 	46	 
	10.3 Right of First Refusal on Transfer
	 	 	46	 
	10.4 Buy/Sell
	 	 	47	 
	10.5 ROFO
	 	 	49	 
	10.6 Further Assurances
	 	 	50	 
	10.7 Representations and Warranties of the Members
	 	 	51	 
	10.8 No Dissolution
	 	 	51	 
	 
	 	 	 	 
	11. DISSOLUTION AND WINDING UP OF THE COMPANY
	 	 	53	 
	 
	 	 	 	 
	11.1 Dissolution of Company
	 	 	53	 
	11.2 Winding Up of the Company
	 	 	54	 
	 
	 	 	 	 
	12. BOOKS AND RECORDS; ACCOUNTS AND INSURANCE
	 	 	54	 
	 
	 	 	 	 
	12.1 Books of Account
	 	 	55	 
	12.2 Reports
	 	 	55	 
	12.3 Audited Financial Statements
	 	 	55	 
	12.4 Tax Returns; Tax Elections
	 	 	56	 
	12.5 Bank Accounts
	 	 	56	 
	12.6 Insurance
	 	 	57	 
	12.7 Accountants
	 	 	57	 

-iv-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	13. ADJUSTMENT OF BASIS ELECTION
	 	 	57	 
	 
	 	 	 	 
	14. Waiver Of Action For Partition
	 	 	57	 
	 
	 	 	 	 
	15. AMENDMENTS
	 	 	57	 
	 
	 	 	 	 
	16. EQUITABLE RELIEF
	 	 	57	 
	 
	 	 	 	 
	17. NOTICES
	 	 	58	 
	 
	 	 	 	 
	18. LEGAL REPRESENTATION
	 	 	59	 
	 
	 	 	 	 
	19. ATTORNEYS’ FEES
	 	 	60	 
	 
	 	 	 	 
	20. INDEPENDENT ACTIVITIES OF MEMBERS
	 	 	60	 
	 
	 	 	 	 
	21. INVESTMENT REPRESENTATIONS OF THE MEMBERS
	 	 	61	 
	 
	 	 	 	 
	22. MISCELLANEOUS
	 	 	63	 
	 
	 	 	 	 
	22.1 Governing Law
	 	 	63	 
	22.2 Severability
	 	 	63	 
	22.3 Further Assurances
	 	 	63	 
	22.4 Successors and Assigns
	 	 	63	 
	22.5 Number and Gender
	 	 	63	 
	22.6 Entire Agreement
	 	 	63	 
	22.7 Waiver
	 	 	63	 
	22.8 Counterparts
	 	 	63	 
	22.9 Interpretation
	 	 	63	 
	22.10 Parties in Interest
	 	 	63	 
	22.11 No Authority
	 	 	64	 

-v-

 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF CWI-HRI FRENCH QUARTER HOTEL PROPERTY, LLC

AGREEMENT

     THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF CWI-HRI FRENCH QUARTER HOTEL PROPERTY,
LLC (this “Agreement”) is made and entered into as of September 2, 2011 (the “Effective Date”), by
and between CWI NEW ORLEANS HOTEL, LLC, a Delaware limited liability company (“CWI Member”), and
GUITAR PARTNERS, LLC, a Louisiana limited liability company (“800 Canal Member”). CWI Member and
800 Canal Member are sometimes referred to collectively in this Agreement as the “Members” and
individually as a “Member”.

RECITALS

     A. CWI-HRI French Quarter Hotel Property, LLC, a Delaware limited liability company (the
“Company”) was formed as a limited liability company pursuant to and in accordance with the
Delaware Limited Liability Company Act (6 Del. C. §18-101, et seq.), as amended from time to time
(the “Act”) by causing the filing of the Certificate of Formation of the Company (the
“Certificate”) with the Secretary of State of the State of Delaware on July 27, 2011.

     B. The Company has been formed to own the Property and to operate, manage, finance, lease,
renovate and improve the structures, buildings and improvements on the Land, including, without
limitation the Hotel and the Garage.

     C. Simultaneously with the execution of this Agreement, Canal Street Development Corporation,
a Louisiana non-profit public benefit corporation (“CSDC Ground Lessor”), shall grant to the
Company a leasehold interest (the “CSDC Leasehold Estate”) in the underlying real property more
particularly described on Exhibit “B” attached hereto and made a part hereof (collectively, the
“CSDC Land”) pursuant to (i) the Hotel Ground Lease and (ii) the Parking Ground Lease; and Mercier
Realty & Investment Company, a Louisiana corporation (“Mercier Ground Lessor”) has granted to the
Company (as successor-in-interest to Historic Restoration, Incorporated, a Louisiana corporation
(“HRI”)) a leasehold interest (the “Mercier Leasehold Estate”) in the underlying real property more
particularly described on Exhibit “B” attached hereto and made a part hereof (the “Mercier Land”)
pursuant to the Mercier Lease (with the CSDC Leasehold Estate and the Mercier Leasehold Estate
together being the “Leasehold Estate”).

     D. Simultaneously with the execution of this Agreement, 800 Canal Member shall contribute the
Property to the Company pursuant to that certain Contribution Agreement, dated September 1, 2011
(the “Contribution Agreement”) among 800 Canal Street Limited Partnership, a Louisiana limited
partnership, 800 Canal Member and CWI Member.

     E. Simultaneously with the execution of this Agreement, the Company shall enter into that
certain Operating Lease Agreement, dated as of the date hereof (the “Operating Lease”), between the
Company, as operating lessor, and TRS SUB, as operating lessee, for the operation

1

 

and ownership of the Hotel and the Garage, operated pursuant to the terms and conditions of
that certain Hotel Management Agreement dated as of the date hereof (the “Hotel Management
Agreement”), by and between TRS SUB, as owner, and HRI Lodging, Incorporated, a Louisiana
corporation (“HRI Lodging”), as manager.

     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:

          1.1 800 Canal Parties. “800 Canal Parties” means, collectively, 800 Canal Member and
its respective Affiliates, members, partners, shareholders, other principals, directors or
officers.

          1.2 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.

          1.3 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 securities, by
agreement, or otherwise. Notwithstanding the foregoing, (a) HRI shall be deemed an “Affiliate” of
800 Canal Member for all purposes under this Agreement; and (b) W.P. Carey & Co., LLC, CWI and
Watermark Capital Partners, LLC or any entity managed or advised by W.P. Carey & Co., LLC, CWI or
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 CWI Member for all purposes under this Agreement.

2

 

          1.4 Air Rights Lease. “Air Rights Lease” means that certain Lease of Air Space dated
December 1, 1994 by the City of New Orleans to CSDC Ground Lessor, together with all amendments,
assignments, supplements and modifications thereto.

          1.5 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.

          1.6 Architect Agreement. “Architect Agreement” means that certain AIA Standard Form
of Agreement between Owner and Architect to be entered into at the Closing between the Company and
HCI Architecture, Inc. (a Professional Corporation), a Louisiana corporation.

          1.7 Asset Manager. “Asset Manager” means CWI Member, its successor and assign.

          1.8 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.

          1.9 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. The Members agree that
the initial Book Value of the Hotel contributed to the Company by 800 Canal Member pursuant to the
Contribution Agreement (defined below) for purposes of establishing the 800 Canal Initial
Contribution is Three Million Three Hundred Thousand Dollars ($3,300,000);

               (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

3

 

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;

               (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.

          1.10 Canyon Completion Guaranty. “Canyon Completion Guaranty” means that certain
Completion Guaranty dated as of the date hereof by HRI, A. Thomas Leonhard, Jr., Maurice Pres
Kabacoff and Edward Boettner, collectively, as guarantors, in favor of Lender.

          1.11 Capital Contribution. “Capital Contribution” means collectively, the CW Initial
Contribution, the 800 Canal 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.

          1.12 Capital Transaction. “Capital Transaction” means (a) the refinancing of the
Property; (b) 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); (c) the
dissolution of the Company; or (d) 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.

          1.13 Capital Transaction Proceeds. “Capital Transaction Proceeds” means all proceeds
from a Capital Transaction less the sum of (a) 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

4

 

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 (b) 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.

          1.14 Cash Reserves. “Cash Reserves” means such amounts as may be required pursuant to
the terms of the Hyatt Franchise Agreement, the Hotel Management Agreement and/or the Loan
Documents.

          1.15 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

          1.16 Company Minimum Gain. “Company Minimum Gain” has the meaning ascribed to the
term “partnership minimum gain,” in the Regulations Section 1.704-2(d).

          1.17 Completion and Cost Overrun Guaranty. “Completion and Cost Overrun Guaranty”
means that certain Completion and Cost Overrun Guaranty in the form of Exhibit “I” attached hereto
and made a part hereof, executed by HRI and delivered to the Company.

          1.18 Construction Agreement. “Construction Agreement” means that certain construction
contract dated as of the date hereof between the Company and Carl E. Woodward, LLC, a Louisiana
limited liability company dba Woodward Design+Build (“Woodward”), pursuant to which Woodard will
act as the general contractor for the renovation of the Hotel in accordance with the Hyatt PIP
(including, without limitation, oversight of HCI Architect).

          1.19 Construction Management Agreement. “Construction Management Agreement” means
that certain AIA Standard Form of Agreement Between Owner and Construction Manager as Advisor dated
as of the date hereof between the Company and HCI Construction, Incorporated, a Louisiana
corporation (“HCI”), a copy of which is attached hereto as Exhibit “J” and made a part hereof.

          1.20 Cost Overrun. “Cost Overrun” means all costs of construction and renovation of
the Property (including all “hard” and “soft” costs) in excess of the aggregate Project Costs.

          1.21 Cost Overrun Cap. “Cost Overrun Cap” means the aggregate sum of Five Hundred
Thousand Dollars ($500,000) which represents the maximum liability of 800 Canal Member or the Cost
Overrun Guarantor to the Company (excluding liability for 800 Canal Member’s proportionate share of
Member Loans made to fund Excess Cost Overruns) under the Completion and Cost Overrun Guaranty.
For avoidance of
doubt, any amount paid by 800 Canal Member or its Affiliates under the Canyon Completion
Guaranty shall apply to reduce the Cost Overrun Cap as provided for in the Completion and Cost
Overrun Guaranty.

          1.22 Cost Overrun Guarantor. “Cost Overrun Guarantor” means the guarantor under the
Completion and Cost Overrun Guaranty.

5

 

          1.23 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 Hotel is situated as determined by the relevant
Governmental Authority responsible for official economic statistics.

          1.24 CWI. “CWI” means Carey Watermark Investors Incorporated, a Delaware corporation.

          1.25 CW-OP. “CW-OP” means CWI OP, L.P., a Delaware limited partnership.

          1.26 CW Parties. “CW Parties” means, collectively, CWI Member and its Affiliates, and
each of their respective members, partners, shareholders, other principals, directors or officers.

          1.27 Depreciation. “Depreciation” means, with respect to any asset of the Company,
and/or the TRS SUB, 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 (a) 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 (b) 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.

          1.28 Distributable Cash from Operations. “Distributable Cash from Operations” shall
mean, for any Fiscal Year, or portion thereof, revenues of the Company derived from the operation
of the Property and 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 (a) operating and administrative expenses of the Company including, without limitation,
the Asset Management Fee, 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); (b) debt service and partnership
costs (as set forth in the Initial Budget or any subsequent Approved Annual Budget), including
all outstanding Member Loans; and (c) 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).

          1.29 Distributable Cash from Subsidiary Operations. “Distributable Cash from
Subsidiary Operations” shall mean, for any Fiscal Year, or portion thereof, revenues of the TRS SUB
derived from the operation of the Property and received in cash during such Fiscal Year, or portion
thereof, and reserves set aside out of revenues during prior periods and no longer needed

6

 

for the
TRS SUB’s business, less the sum of (a) operating and administrative expenses of the applicable
Subsidiary including, without limitation, the Asset Management Fee, 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);
(b) debt service and partnership costs (as set forth in the Initial Budget or any subsequent
Approved Annual Budget), including all outstanding Member Loans; and (c) 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).

          1.30 Excess Cost Overrun. “Excess Cost Overrun” means aggregate Cost Overruns in
excess of the Cost Overrun Cap.

          1.31 Fiscal Year. “Fiscal Year” means the calendar year.

          1.32 Garage. “Garage” means all the improvements, including, without limitation, the
parking garage located on the land covered by the Parking Ground Lease.

          1.33 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.

          1.34 Ground Leases. “Ground Leases” means, collectively, (a) the Hotel Ground Lease;
(b) the Parking Ground Lease; and (c) the Mercier Corner Lot Lease.

          1.35 Guarantees. “Guarantees” means, collectively, (a) the Completion and Cost
Overrun Guaranty; (b) the Non-Recourse Carve Out Guaranty; (c) the Canyon Completion Guaranty; and
(d) any other guaranties required from time to time by lenders to the Company.

          1.36 HCI Architect. “HCI Architect” means HCI Architecture, Incorporated (a
Professional Corporation).

          1.37 HRI. “HRI” means Historic Restoration Incorporated, a Louisiana corporation.

          1.38 Historic Credits. “Historic Credits” means the twenty-five percent (25%)
rehabilitation tax credits of the State of Louisiana as described in La. R.S. 47:6019.

          1.39 Historic Tax Credit Proceeds. “Historic Tax Credit Proceeds” means the proceeds
paid to and received by the Company for the sale and placement of the Historic Credits.

          1.40 Hotel. “Hotel” means the hotel currently known as the Chateau Bourbon, 800
Iberville Street, New Orleans, Louisiana 70112.

          1.41 Hotel Ground Lease. “Hotel Ground Lease” means that certain Eighth Amended and
Restated Hotel Lease Agreement dated as of the date hereof, between CSDC Ground Lessor and the
Company, together with all amendments, assignments, supplements and

7

 

modifications thereto
including, without limitation, the rights of CSDC Ground Lessor under the Air Rights Lease and the
Salmen Lease.

          1.42 Hyatt Franchise Agreement. “Hyatt Franchise Agreement” means that certain Hyatt
Hotel Franchise Agreement dated as of the date hereof between TRS SUB and Hyatt Franchising,
L.L.C., a Delaware limited liability company (“Hyatt”).

          1.43 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,
which shall be done using the XIRR function in Microsoft Office Excel, 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 8.1 and 8.2;

               (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, twelve percent
(12%), shall mean twelve percent (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.

          1.44 Initial Participation Percentage. “Initial Participation Percentage” means, with
respect to CWI Member, eighty percent (80%), and with respect to 800 Canal Member, twenty percent
(20%).

          1.45 Intangible Property. “Intangible Property” means all intangibles owned or used
by the Company or the TRS SUB in the ownership and operation of the Hotel and Garage.

          1.46 Land. “Land” means collectively, the CSDC Land and the Mercier Land.

          1.47 Lender. “Lender” means Canpartners Realty Holding Company IV LLC, a Delaware
limited liability company.

          1.48 Loan. “Loan” means that certain leasehold mortgage loan in the original
principal amount of Twenty-Two Million Eight Hundred Thousand Dollars ($22,800,000) made by Lender
to the Company and TRS SUB and evidenced by that certain Promissory Note dated as of the date
hereof by the Company for the benefit of Lender and secured by that certain Leasehold Mortgage and
Security Agreement, Assignment of Leases and Rents and Fixture

8

 

Filing dated as of the date hereof
between the Company and TRS SUB, as borrowers, and Lender.

          1.49 Loan Agreement. “Loan Agreement” means that certain Loan Agreement dated as of
the date hereof between the Company and TRS SUB, as borrowers, and Lender, as lender.

          1.50 Loan Documents. “Loan Documents” shall mean and refer to the loan documents
evidencing and relating to the Loan including, without limitation, the “Loan Documents” as defined
in the Loan Agreement.

          1.51 Lock-Out Period. “Lock-Out Period” means the period commencing on the Effective
Date and ending on December 31, 2012.

          1.52 Managing Member. “Managing Member” means CWI Member or any replacement managing
member appointed pursuant to Section 9.1(a).

          1.53 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.

          1.54 Member Nonrecourse Debt. “Member Nonrecourse Debt” has the meaning ascribed to
the term “partner nonrecourse debt” in Regulations Section 1.704-2(b)(4).

          1.55 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).

          1.56 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.

          1.57 Membership Interest. “Membership Interest” means the interest of a Member in the
Company.

          1.58 Mercier Corner Lot Lease. “Mercier Corner Lot Lease” means that certain Contract
of Lease effectively dated January 1, 1993 between Mercier Realty & Investment Company, a Louisiana
corporation, and the Company (as successor-in-interest to HRI), together with all amendments,
assignments, supplements and modifications thereto.

          1.59 Mercier Garage Lease. “Mercier Garage Lease” means that certain Lease dated
February 3, 1968 between Mercier Realty & Investment Company, a Louisiana corporation, and D.H.
Holmes Company, Ltd., together with all amendments, assignments, supplements and modifications
thereto.

9

 

          1.60 Non-Recourse Carve Out Guaranty. “Non-Recourse Carve Out Guaranty” means that
certain recourse liability guaranty executed by 800 Canal Member (or HRI, or another Affiliate of
800 Canal Member acceptable to Lender) in favor of Lender and any other recourse liability guaranty
executed by 800 Canal Member (or such Affiliate) or any Member (or such Member’s respective
Affiliate) in favor of a successor lender to the Company.

          1.61 Nonrecourse Deductions. “Nonrecourse Deductions” means the Company deductions
that are characterized as “nonrecourse deductions” pursuant to Regulations Section 1.704-2(b)(1).

          1.62 Nonrecourse Liability. “Nonrecourse Liability” has the meaning ascribed to such
term pursuant to Regulations Section 1.704-2(b)(3).

          1.63 Operating Shortfall Reserve Account. “Operating Shortfall Reserve Account” means
the reserve account established as of the date hereof by the Company in the amount shown on
Schedule 1.

          1.64 Parking Ground Lease. “Parking Ground Lease” means that certain Second Amended
and Restated Hotel Parking Lease Agreement dated as of the date hereof, between CSDC Ground Lessor
and the Company,
together with all amendments, assignments, supplements and modifications thereto including,
without limitation, the rights of CSDC Ground Lessor under the Mercier Garage Lease.

          1.65 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.

          1.66 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 major
policy decisions of such Person, whether through the ownership of voting securities, by agreement,
or otherwise.

          1.67 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.

          1.68 Permitted Transferee. “Permitted Transferee” means (a) any Member; (b) any
Affiliate of a Member; (c) a trust under which the distribution of the Membership Interest may be
made only to beneficiaries who are Affiliates of such Member; and/or (d) 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 such Person meets the
Qualified Transferee Requirements.

          1.69 Person. “Person” means an individual, corporation, firm, partnership, limited
liability company, trust or any other form of association or entity.

10

 

          1.70 Preservation Costs. “Preservation Costs” means (a) all debt service payments
required under the 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, the TRS SUB or the Hotel; and
(b) expenditures necessary on an emergency basis to avoid material damage to the Hotel or injury to
persons or property, whether or not provided for or within the amounts provided for in the Initial
Budget or any subsequent Approved Annual Budget for the Fiscal Year in question, as may reasonably
be required to avoid or mitigate such damage or injury.

          1.71 Profits and Losses. “Profits” and “Losses” 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) Any tax-exempt income of the Company, not otherwise taken into account in computing
taxable income or loss, shall be included in computing Profits or Losses;

               (b) 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)(l)) and not otherwise taken into account
in computing taxable income or loss, shall be subtracted from Profits or Losses;

               (c) In the event the Book Value of any Company asset is adjusted pursuant to Section 1.8(b),
Section 1.8(d) or Section 1.8(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;

               (d) 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;

               (e) In lieu of depreciation, amortization and other cost recover deductions taken into account
in computing such taxable income or loss, there shall be taken into account Depreciation for such
Fiscal Year or other period, computed in accordance with the definition of Depreciation herein;

               (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 1.704-1(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

11

 

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.

          1.72 Project Costs. “Project Costs” means the aggregate amount of costs and expenses
of construction and renovation of the Hotel equal to the sum of the following line items set forth
and described in the Redevelopment Budget: (a) “Total Development & Construction Soft Costs”; (b)
“Total FF&E”; (c) “Total Construction Costs”; and (d) “Owner’s Contingency”.

          1.73 Property. “Property” means the Leasehold Estate, the Servitude of Right of Use,
the Hotel, the Garage, all personal property owned by the Company or the TRS SUB and/or otherwise
presently situated at the Hotel or Garage (other than those owned by any tenant of the Hotel or
Garage), the Intangible Property, and all other assets of the Company and the TRS SUB.

          1.74 Qualified Transferee Requirements. “Qualified Transferee Requirements” means a
Person who: (i) has reasonably sufficient financial resources and liquidity to fulfill the
transferring Member’s obligations under this Agreement, (ii) is not known in the community as being
of bad moral character, and has not been convicted of a felony in any state or Federal court, and
(iii) is not an Affiliate of Persons who have been convicted of a felony in any state or Federal
court.

          1.75 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.

          1.76 Restricted Territory. “Restricted Territory” means that area depicted on Exhibit
“H” attached hereto.

          1.77 Salmen Lease. “Salmen Lease” means that certain Agreement of Lease dated October
10, 1980, between Salmen Company, a Louisiana partnership, as lessor, and CSDC Ground Lessor, as
lessee, as amended by that certain First Amendment to Lease Agreement dated September 15, 1993,
together with all amendments, assignments, supplements and modifications thereto.

          1.78 Servitude of Right of Use. “Servitude of Right of Use” means that certain
Servitude of Right of Use dated September 15, 1993, by CSDC Ground Lessor in favor of HRI, together
with all amendments, assignments, supplements and modifications thereto.

          1.79 Subsidiary. “Subsidiary” means any subsidiary of the Company, including, without
limitation, TRS SUB.

          1.80 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

12

 

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.

          1.81 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.

          1.82 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 delivering any
Buy-Sell Notice) of the total cash value of the
Company, after liquidation of all assets and (a) 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; (b) accruals and reserves related to such
indebtedness, a statement of which shall be included in the written estimate; and (c) plus or
minus, as the case may be, net prorations for revenues, expenses and other items related to the
Company and the TRS SUB, which prorations shall be determined in the manner provided under the
Contribution Agreement unless otherwise mutually agreed to by the Members.

          1.83 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.

          1.84 TRS SUB. “TRS SUB” means French Quarter Hotel Operator Inc., a Delaware
corporation.

          1.85 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).

          1.86 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 8.2(b) and 8.2(c) that represent a return of capital (and not a return on
capital).

          1.87 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.

13

 

In addition, the following terms are defined in the Sections of this Agreement that are referenced
alongside the terms:

	 	 	 
	Term	 	Section Reference for Definition
	800 Canal Member

	 	Preamble
	800 Canal Member Initial Contribution

	 	Section 6.1
	800 Canal Member Law Firm

	 	Section 18.2
	800 Canal Member Parties

	 	Section 18.2
	Acceptance Notice

	 	Section 10.3(b)
	Act

	 	Recital A
	Agreement

	 	Preamble
	Applicable Adjustment Percentage

	 	Section 6.3(b)
	Applicable Price

	 	Section 10.4(a)
	Approved Annual Budget

	 	Section 9.2(a)(iv)
	Approved Contracts

	 	Section 9.2(a)(vi)
	Asset Management Fee

	 	Section 9.2(c)
	ATC

	 	Section 9.8
	Audited Financial Request

	 	Section 12.3(a)
	Business

	 	Section 4
	Buy-Sell Notice

	 	Section 10.4(a)
	Buying Member

	 	Section 10.5
	Capital Account

	 	Section 7.1(a)
	Cash Notice

	 	Section 6.3(a)
	Certificate

	 	Recital A
	Claims

	 	Section 9.13(b)
	Closing Date

	 	Section 10.4(a)
	Closing Transactions

	 	Section 5.8(a)
	Company

	 	Recital A
	Contributing Members

	 	Section 6.3(b)
	Contribution Agreement

	 	Recital D
	Cost Overrun Demand

	 	Section 6.3(a)
	CSDC Ground Lessor

	 	Recital C
	CSDC Leasehold Estate

	 	Recital C
	CSDC Land

	 	Recital C
	CW Initial Contribution

	 	Section 6.1
	CWI Member

	 	Preamble
	CWI Member Law Firm

	 	Section 18.3
	CWI Member Parties

	 	Section 18.3
	CWI Member Purchase Default

	 	Section 9.1(a)
	CWI Scope Change

	 	Section 6.2(b)
	Debt

	 	Section 9.4(c)(vii)
	Deficiency Amount

	 	Section 6.3(b)
	Deficit Loan

	 	Section 6.3(c)
	Deposit

	 	Section 10.4(a)
	Dilution Multiplier

	 	Section 6.3(b)
	Discussion Period

	 	Section 9.10(a)(i)

14

 

	 	 	 
	Term	 	Section Reference for Definition
	Effective Date

	 	Preamble
	Exchange Act

	 	Section 5.7
	Forecast Budget

	 	Section 9.2(a)(iv)
	Guarantee Obligation

	 	Section 9.9(b)
	Guarantor

	 	Section 9.4(c)(x)
	Guaranty Triggering Event

	 	Section 9.9(a)
	HCI Architect

	 	Section 9.5
	Historic and Tax Credit Requirements

	 	Section 6.6
	Hotel Management Agreement

	 	Recital E
	HRI Lodging

	 	Recital E
	Hyatt

	 	Section 1.42
	Impasse

	 	Section 9.4(b)
	Indemnitee

	 	Section 9.13(c)
	Indemnitor

	 	Section 9.13(c)
	Indemnity Obligations

	 	Section 9.13(b)
	Initial Budget

	 	Section 9.2(a)(iv)
	Initial Capital Contributions

	 	Section 6.1
	Leasehold Estate

	 	Recital C
	Liquor Licenses

	 	Section 9.8
	LiquorCo

	 	Section 9.8
	Losses

	 	Section 9.13(b)
	Member Decisions

	 	Section 9.4(a)
	Managing Parties

	 	Section 9.13(a)
	Mandatory Capital Contribution

	 	Section 6.3(a)
	Member Decisions

	 	Section 9.4(a)
	Member Loan

	 	Section 6.3(a)
	Membership Interest Certificate

	 	Section 10.10(b)
	Mercier Ground Lessor

	 	Recital C
	Mercier Land

	 	Recital C
	Mercier Leasehold Estate

	 	Recital C
	New Opportunity

	 	Section 20.1
	Non-Contributing Member

	 	Section 6.3(b)
	Offer

	 	Section 10.3(a)
	Offered Interest

	 	Section 10.3(a)(i)
	Offered Member

	 	Section 10.3(a)
	Offered Price

	 	Section 10.3(b)
	Offering Member

	 	Section 10.4(a)
	Operating Lease

	 	Recital E
	Operator

	 	Section 9.5
	Overpaying Guarantor

	 	Section 9.9(c)
	Owner

	 	Section 9.5
	Prop Loan Guaranty

	 	Section 9.9(a)
	Prop Loan Guaranty Payment

	 	Section 9.9 (a)
	Proportionate Share of Liability

	 	Section 9.9(b)
	REIT

	 	Section 5.5
	ROFO Sale Notice

	 	Section 10.5

15

 

	 	 	 
	Term	 	Section Reference for Definition
	RTA Application

	 	Section 6.7
	Related Parties

	 	Section 9.13(b)
	Renovation Budget

	 	Section 6.2
	Required Amount

	 	Section 6.3(a)
	Responding Member

	 	Section 10.4(a)
	Responding Member’s Purchase Price

	 	Section 10.4(a)
	Response Notice

	 	Section 10.4(a)
	Restricted Activity Period

	 	Section 20.1
	Sale Member

	 	Section 10.5
	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)
	Tax Matters Partner

	 	Section 12.4
	UCC

	 	Section 10.10(a)
	Wyndham

	 	Section 5.8(a)
	Wyndham Franchise Agreement

	 	Section 5.8(a)

     2. FORMATION OF LIMITED LIABILITY COMPANY. The Company is formed as a limited
liability company pursuant to the provisions of the Act and upon the filing of the Certificate with
the Secretary of State of the State of Delaware. The rights and liabilities of all Members shall
be as provided under the Act, the Certificate and this Agreement.

     3. NAME AND PLACE OF BUSINESS.

          3.1 Name. The name of the Company shall be “CWI-HRI French Quarter Hotel Property,
LLC”.

          3.2 Principal Place of Business. The principal office of the Company shall be 207
East Westminster, Suite 200, Lake Forest, Illinois 60045. 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, CWI Member and 800 Canal Member shall be the only Members of the Company until they
cease to be Members in accordance with the provisions of the Act, the Certificate, 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 (a) own one hundred percent (100%)
of TRS SUB; (b) own, lease, finance, and renovate the Property; and (c) 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.

16

 

     5. TERM OF COMPANY; RECORDINGS; AGENT FOR SERVICE OF PROCESS.

          5.1 Term. The Company commenced as of the date that the Certificate was filed with
the Secretary of State of the State of Delaware 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 Certificate as Managing Member deems necessary and shall file any documents
required for the Company to qualify to do business in Louisiana 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 Certificate. 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 Certificate is Corporation Service Company, 2711
Centerville Road, Suite 400, City of Wilmington, County of New Castle, State of Delaware 19808.
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 for Tax Purposes. 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.

          5.5 Protection of REIT Status. The Members acknowledge that CWI 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 Section 856,
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

17

 

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 Garage 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, including, without limitation, the TRS SUB 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) The TRS SUB or any other 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) The TRS SUB or any other 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 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 than
those that are related to the TRS SUB, 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;

18

 

                    (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 made to the Members with respect to such Fiscal Year 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
Member’s 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 Member’s delivery of written notice to
800 Canal Member (or Managing Member, if CWI Member ceases to be Managing Member) 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 9.10 or elsewhere in this Agreement, any dispute over whether an
activity of the Company or the TRS SUB is in violation of Section 5.5 shall be determined in the
sole and absolute discretion of CWI Member, provided that any additional out-of-pocket expenses to
the Company resulting therefrom will be borne by CWI Member.

          5.7 Sarbanes-Oxley Compliance. The Company and the TRS SUB 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 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 the TRS SUB 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 TRS SUB, as applicable, so

19

 

long as such actions are taken for the benefit of the
Company or such TRS SUB and not for the Members or their Affiliates (which costs and/or expenses
shall be the sole obligation of such Member or its Affiliate).

          5.8 Consent to Transaction; Incumbency.

               (a) The Members hereby grant their respective approval, consent and authorization in
connection with (i) the execution, delivery and performance by the Company of the loan document
evidencing the PROP Loan and the Loan Documents, including, without limitation, that certain
Twenty-Two Million Eight Hundred Thousand Dollar ($22,800,000) Promissory Note dated as of the date
hereof for the benefit of Lender, the Loan Agreement and that certain Leasehold Mortgage and
Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of the date hereof
between the Company and Lender; (ii) the execution, delivery and performance by the Company of any
and all transfer documents in connection with 800 Canal Member’s contribution of those certain
assets, rights, obligations and liabilities in consideration for an ownership interest in the
Company; (iii) the execution, delivery and performance by the Company of the Ground Leases, the
Operating Lease and the Hotel Management Agreement; (iv) the execution, delivery and performance by
the Company of the Architect Agreement, the Construction Contract, the Construction Management
Agreement and all documents and/or agreements contemplated by or related to the redevelopment of
the Hotel; (v) the execution, delivery and performance by the Company of that certain Wyndham Hotel
Franchise Agreement dated as of the date hereof (the “Wyndham Franchise Agreement”) by and between
Wyndham Hotels and Resorts, LLC, a Delaware limited liability company (“Wyndham”) and the Company;
(vi) the execution, delivery and performance by the Company of that certain Addendum to Hyatt Hotel
Franchise Agreement dated as of the date hereof by and between Hyatt, CSDC Ground Lessor, the
Company and the TRS SUB; and (vii) the closing of the transactions contemplated by the Contribution
Agreement, including, without limitation, the CW Initial Contribution (as defined below) (clauses
(i) through (vii) collectively referred to hereafter as, the “Closing Transactions”). In
furtherance thereof, Managing Member, A. Thomas Leonhard, Jr., or Michael G. Medzigian, acting
singly or collectively, shall have the right to execute and deliver any and all documents in
connection with the closing of the Closing Transactions; provided, however, notwithstanding the
foregoing, the authority granted to A. Thomas Leonhard, Jr. hereunder shall automatically expire
and be void as of September 3, 2011 without affecting the efficacy and authorization of acts taken
by A. Thomas Leonhard, Jr. prior to September 3, 2011.

               (b) The Managing Member, A. Thomas Leonhard, Jr. or Michael G. Medzigian, acting singly or
collectively on behalf of the Company, are hereby authorized to execute and deliver on behalf of
the Company, and the Company may enter into, execute, deliver and perform the obligations of the
Company in connection with any or all of the Closing Transactions and all documents, agreements,
certificates, or financing statements contemplated thereby or related thereto, including, without
limitation, in the case of Managing Member or Michael G. Medzigian only, taking any and all steps
necessary or desirable to establish one or more bank accounts at such banks as necessary or
desirable in connection with the Closing Transactions, all without any further act, vote or
approval of any Member or other Person notwithstanding any other provision of this Agreement, the
Act or Applicable Law, rule or regulation. The foregoing authorization shall not be deemed a
restriction on the powers of the

20

 

Members
or  Managing Member to enter into other agreements on
behalf of the Company. Notwithstanding the foregoing, the authority granted to A. Thomas Leonhard,
Jr. hereunder shall automatically expire and be void as of September 3, 2011 without affecting the
efficacy and authorization of acts taken by A. Thomas Leonhard, Jr. prior to September 3, 2011.

     6. CONTRIBUTIONS AND LOANS.

          6.1 Initial Contributions. Pursuant to the terms and conditions of the Contribution
Agreement, (a) CWI Member has made a cash Capital Contribution in the amount of Twelve Million
Three Hundred Thousand Dollars ($12,300,000) to the Company (the “CW Initial Contribution”) in
exchange for an eighty percent (80%) Participation Percentage and an interest in the Profits and
Losses of the Company as described herein; and (b) 800 Canal Member has made a deemed Capital
Contribution of the Property to the Company with a deemed value of Three Million Dollars
($3,000,000) (the “800 Canal Member Initial Contribution” and together with the CW Initial
Contribution, the “Initial Capital Contributions”) in exchange for a twenty percent (20%)
Participation Percentage and an interest in the profits and losses of the Company as described
herein. None of CWI 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 (however the initial Book Value of the Property contributed by 800 Canal Member
is $3,000,000) and 800 Canal member’s Capital account shall reflect its twenty percent (20%)
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, which includes a
copy of the approved construction and renovation budget for the Hotel (the “Renovation Budget”)
which includes all “hard” and “soft” construction costs together with a line item for (a)
contingency costs required in connection therewith; (b) the Operating Shortfall Reserve Account;
and (c) working capital reserves. Funds held in the Operating Shortfall Reserve Account shall be
used only for the following purposes and in the following order of priority: (i) to fund any
Working Capital Shortfalls (including, without limitation, any shortfalls on debt service payments
required under the Loan); and (ii) to supplement Distributable Cash from Operations to the extent
necessary for CWI Member to receive its eight and five-tenths percent (8.5%) preferred return as
provided for in Section 8.1(b)(i).

          6.3 Cost Overruns and Scope Changes.

               (a) In the event that Cost Overruns are required in connection with the redevelopment and
conversion of the Hotel as contemplated by the Renovation Budget, Managing Member shall deliver
(and agrees that if Managing Member fails to deliver a Cost Overrun Demand to cover Excess Cost
Overruns within a reasonable period of time after a written request to do so from 800 Canal Member,
then 800 Canal Member can initiate such Cost Overrun Demand on the Members) written notice setting
forth the amount of cash required in connection therewith (a “Cost Overrun Demand”) to 800 Canal
Member or the Members, as applicable, and except for Cost Overruns associated with a CWI Scope
Change, (i) 800 Canal Member shall have the sole obligation to fund (as an out-of-pocket expense of
800 Canal Member and not as a Capital Contribution to the Company) such additional amounts for any
and

21

 

all Cost Overruns (a “800 Canal Cost Overrun Payment”), provided that 800 Canal Member’s
obligation to make such 800 Canal Cost Overrun Payment shall be limited to the Cost Overrun
Cap; or (ii) the Members shall fund, as a Member Loan to the Company (and not as an additional
Capital Contribution by the Members), any and all Excess Cost Overruns in accordance with their
respective Participation Percentage. Any 800 Canal Cost Overrun Payment made by 800 Canal Member
(excluding liability for 800 Canal Member’s proportionate share of any Excess Cost Overruns, which
will be funded by the 800 Canal Member as a Member Loan to the Company) under the Completion and
Cost Overrun Guaranty (including any amount paid by 800 Canal Member or its Affiliates under the
Canyon Completion Guaranty) shall be treated for all purposes hereunder as a Capital Contribution
by 800 Canal Member to the Company. Any such deemed additional Capital Contribution by 800 Canal
Member to the Company for 800 Canal Cost Overrun Payments will not adjust or impact the Members’
Participation Percentages. In the event Managing Member determines that 800 Canal Member and/or
Cost Overrun Guarantor has failed or will fail to fund on a timely basis a 800 Canal Cost Overrun
Payment (up to the Cost Overrun Cap) or a Member Loan to fund its proportionate share of any Excess
Cost Overruns, then CWI Member may (but shall have no obligation to) fund such unfunded Cost
Overrun or unfunded Member Loan (to cover Excess Cost Overruns) with a Deficit Loan to 800 Canal
Member in accordance with Section 6.4(c) below (“Cost Overrun Loan”), provided that, in addition to
the rights of any such Deficit Loan lender as set forth herein, CWI Member shall have the right to
offset HRI Lodging’s management fees under the Hotel Management Agreement and HCI under the
Construction Management Agreement against any amounts due and payable under any such Cost Overrun
Loan (including interest accrued thereon). In addition, if CWI Member fails to fund on a timely
basis in accordance herewith a Member Loan to fund its proportionate share of any Excess Cost
Overrun, then 800 Canal Member may (but shall have no obligation to) fund such unfunded Member Loan
(to cover Excess Cost Overruns) with a Cost Overrun Loan to CWI Member. All payments required under
this Section 6.3(a) shall be due and owing by the applicable Member(s), from time to time, within
fifteen (15) business days after receipt of the Cost Overrun Demand. Concurrently with the
execution of this Agreement, 800 Canal Member shall cause Cost Overrun Guarantor to execute the
Completion and Cost Overrun Guaranty.

               (b) In the event that CWI Member initiates and intends to implement any increase in the scope
of the Hotel renovation (including, without limitation, an increase in scope of the restaurant or
bar that increases the allowances in the Construction Agreement established for the restaurant and
bar renovation) as contemplated in the Construction Agreement as of the Effective Date (a “CWI
Scope Change”), then any such Cost Overruns in connection with such CWI Scope Change shall be paid
(i) first, from unallocated or unused funds budgeted for in the Renovation Budget, if any; (ii)
second, from Distributable Cash from Operations to the extent available; and (iii) thereafter, to
the extent additional amounts are required after applying the funds set forth in clauses (i)
through (ii), by CWI Member as an additional Capital Contribution to the Company. Notwithstanding
the foregoing, if CWI Member, acting in its role as Managing Member of the Company, initiates any
increase in scope which is (A) required of the Company to avoid a breach or default under the Hyatt
Franchise Agreement and/or the Loan Documents, (B) required on an emergency basis to avoid or
mitigate damage to the Property or injury to persons or property, (C) required of the Company for
any reason not within the Company’s ability to control or (D) as otherwise required to comply with
Applicable Law, such increase in scope shall not be deemed a “CWI Scope Change” for purposes of
this Agreement. For avoidance of doubt, in the event that 800 Canal Member requests any increase
in the scope

22

 

of the Hotel renovation, such proposed change shall be a Member Decision and if
approved, any
and all Cost Overruns in connection therewith shall be funded in accordance with the
procedures set forth in clause (ii) of Section 6.3(a) above.

          6.4 Additional Contributions or Loans.

               (a) Except as provided in Section 6.1, Section 6.3 and this Section 6.4, the Members shall not
be required to make any additional Capital Contributions or loans to the Company in addition to the
Initial Capital Contributions and/or any Capital Contributions under Section 6.3. If Managing
Member reasonably determines that the Members shall make additional Capital Contributions or loans
to the Company to fund a Working Capital Shortfall (after first using funds from the Operating
Shortfall Reserve Account to cover such shortfall) or a Preservation Cost of the Company or the TRS
SUB (each, in the case of Working Capital Shortfalls, a “Mandatory Capital Contribution” and in the
case of Preservation Cost, a “Member Loan”), then such Mandatory Capital Contribution and Member
Loans shall be contributed or made, as applicable, 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.

               (b) If within twenty (20) days after the date a Cash Notice is given pursuant to Section
6.4(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 ten (10) days thereafter,
may elect, in their sole discretion either (i) to 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 Amount”), as provided in Section 6.4(c) below; or (ii) in the case of
Working Capital Shortfall, advance a Capital Contribution to the Company equal to the Deficiency
Amount, whereupon the Participation Percentage of the Members shall be recalculated to (A) increase
the Contributing Member(s)’ collective Participation Percentage by the Applicable Adjustment
Percentage (as defined below) and increasing their aggregate Capital Accounts by the product of the
Deficiency Amount and the Dilution Multiplier (as defined below), with such increases in
Participation Percentage and Capital Accounts to be allocated to the Contributing Members(s) pro
rata based on the portion of the Deficiency Amount owed to each Contributing Member, and (B) reduce
the Non-Contributing Member’s Participation Percentage by the Applicable Adjustment Percentage and
decrease its Capital Account by the product of the Deficiency Amount and the Dilution Multiplier.
The “Applicable Adjustment Percentage” shall mean the fraction, expressed as a percentage, in which
the numerator is an amount equal to the Dilution Multiplier times the Deficiency Amount, and the
denominator is the sum of the Member’s total Capital Contribution (taking into account any
additional Capital Contributions funded by the Contribution Member(s)). The “Dilution Multiplier”
shall mean 1.5. Any reduction in the Non-Contributing Member’s Participation Percentage and
increase in the Contributing Member(s) Participation Percentage in accordance with this Section
6.4(b) shall not affect the Members’ Initial Participation Percentages, and the Non-Contributing
Member and the Contributing Member(s) shall remain obligated to make any additional Capital
Contributions in accordance with their respective Initial Participation Percentages. Unless they
mutually agree otherwise, the

23

 

Contributing Members shall fund such loan pro rata in proportion to their respective Initial
Participation Percentages.

               (c) If the Contributing Members make a loan to the Non-Contributing Member as provided in
Section 6.4(b), the Deficiency Amount 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 Amount and shall constitute a loan to the Non-Contributing Member (a “Deficit
Loan”). Each Deficit Loan shall bear interest at the annual rate of eighteen percent (18%),
compounded annually, 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 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 6.4.
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.

               (d) Notwithstanding any of the foregoing, the Members agree that in the event that CWI 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) Each Member Loan shall bear interest at the annual rate equal to fifteen percent (15%),
compounded annually (but in no event to exceed the highest permissible legal rate of interest).
Member Loans, and all interest thereon, will be repaid in full prior to any distribution pursuant
to Section 8.1 and Section 8.2.

          6.5 Interest on Contributions. No interest shall be paid by the Company on any
Capital Contribution made by any Member to the Company.

          6.6 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.

          6.7 Historic Credits. The Hotel is located within the French Quarter and Downtown
Development District Cultural Products Districts established under the laws of the State of
Louisiana and the (a) preservation and maintenance of the Property in compliance with all local,
state and federal rules and regulations applicable to a “historic district” designation; (b)
qualification for the maximum historic rehabilitation tax credit under state law (the
foregoing being referred to as the “Historic and Tax Credit Requirements”); and (c) redevelopment
of the

24

 

Property in compliance with the foregoing, are all material to the operation of the Company
and the value of the Property. HCI shall be responsible under the Construction Management
Agreement to (i) cause completion of the rehabilitation of the Hotel and Property in compliance
with all such Historic and Tax Credit Requirements; and (ii) make such certifications as are
required in connection with the Historic and Tax Credit Requirements as may be necessary to be
delivered to any tax credit investor, historic preservation board or authority to insure delivery,
placement and sale of the Historic Credits and to maximize the Historic Tax Credit Proceeds.

          6.8 Restoration Tax Abatement Program. 800 Canal Member has filed with the Louisiana
Economic Development an advance notification form, any and all applications and/or such other
required addendum documentation in connection with the Hotel’s eligibility for the State of
Louisiana’s Restoration Tax Abatement Program (the “RTA Application”) and 800 Canal Member shall
use commercially reasonable efforts to obtain the approval of the Louisiana Department of Economic
Development of the RTA Application.

     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 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

25

 

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.

               (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

26

 

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.

          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 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) CWI 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,
CWI 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 TRS SUB 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),
the TRS SUB to distribute all of its Distributable Cash from TRS SUB Operations to

27

 

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 CWI Member, until CWI Member has received cumulative distributions pursuant to
this Section 8.1(b)(i) as to have earned a cumulative annual return of eight and five-tenths
percent (8.5%), compounded annually, on the balance of CWI Member’s Unreturned Capital Contribution
Account, taking into account prior distributions pursuant to this Section 8.1(b)(i);

                    (ii) Second, to 800 Canal Member, until 800 Canal 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 eight and five-tenths percent (8.5%) on the
balance of 800 Canal Member’s Unreturned Capital Contribution Account, taking into account prior
distributions pursuant to this Section 8.1(b)(ii); and

                    (iii) Thereafter, to the Members, pro rata, in proportion to their respective Participation
Percentages.

               (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 TRS SUB 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 TRS SUB reserves. The amount of the reserves for each Fiscal Year
shall be suggested by Managing Member at the time that it presents any draft budget each year to
the Members, but the approval of such reserves shall be a Member Decision (as defined below in
Section 9.4(a)).

               (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, to fund shortfalls of distributions of Distributable Cash to the Members pursuant
to Sections 8.1(b)(i) and 8.1(b)(ii), provided such distributions shall be made first with respect
to any shortfall under Section 8.1(b)(i) and then with respect to any shortfall under Section
8.1(b)(ii);

               (b) Second, one hundred percent (100%) to CWI Member until such time as its Unreturned Capital
Contribution Account has been reduced to zero;

28

 

               (c) Third, one hundred percent (100%) to 800 Canal Member until such time as its Unreturned
Capital Contribution Account has been reduced to zero;

               (d) Fourth, pro rata to CWI Member and 800 Canal Member until CWI Member and 800 Canal Member
have each received cumulative distributions (i.e., under Section 8.1 and this Section 8.2) so as to
cause CWI Member and 800 Canal Member to have earned an eighteen percent (18%) IRR with respect to
the aggregate amount of CWI Member’s Capital Contribution and 800 Canal Member’s Capital
Contribution, respectively; and

               (e) Thereafter, eighty percent (80%) to the Members pro rata in proportion to their respective
Participation Percentages and twenty percent (20%) to 800 Canal Member.

          8.3 Offset. In the event that 800 Canal Member owes CWI Member any amount in
connection with a Claim under Section 9.13 (unless such Claim shall be the subject of a bona fide
dispute and, if disputed, upon the final determination of the arbitrator in accordance with Section
9.10), such amount 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, N.A. 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. In each such instance at the time a distribution would be made
to 800 Canal Member under Section 8.1 or Section 8.2, Managing Member may reduce the amount of such
distribution to 800 Canal Member by the amount of such obligation which offset shall be deemed to
be a distribution to 800 Canal Member followed by a payment to CWI Member by 800 Canal Member. All
such offsets shall be credited first to any interest then due on the amounts owing, with the
balance of such distributions to be credited against the outstanding principal amount.

          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. Notwithstanding
any provision to the contrary contained in this Agreement, the Company shall not make a
distribution to a Member on account of its interest in the Company if such distribution would
violate the Act or any other applicable law.

     9. MANAGEMENT.

          9.1 Managing Member.

               (a) Managing Member shall, subject to the limitations set forth in Section 9.3 and 9.4,
establish 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. Managing Member will devote such

29

 

time, effort and skill to the Business of the Company as Managing Member reasonably deems
necessary. CWI Member shall serve as Managing Member until, subject to any consents required under
the 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 CWI Member’s Membership Interest by 800 Canal Member pursuant to and in accordance with Section
10.4; or (v) following the delivery of a Response Notice by CWI Member pursuant to and in
accordance with Section 10.4 whereupon CWI Member elects to purchase one hundred percent (100%) of
800 Canal Member’s Membership Interest, CWI Member fails to complete the purchase on or before the
Closing Date (other than as a result of 800 Canal Member’s default) (a “CWI 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 CWI Member as Managing Member pursuant to any of clauses (i),
(ii), (iii), (iv) or (v) of this Section 9.1, 800 Canal Member may either become Managing Member or
may inform CWI Member of its designated candidate for Managing Member and provide CWI 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 800 Canal Member’s purchase of CWI Member’s Membership Interest pursuant to Section
10.4 below or for a CWI Member Purchase Default, CWI Member shall have no right to receive notice
or a written summary of such candidate’s experience and qualifications.

               (b) If 800 Canal 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, 800 Canal Member may deliver
written notice to Managing Member setting forth in reasonable detail the basis for that
determination and, if CWI Member does not resign as Managing Member, submit the same to arbitration
pursuant to Section 9.10. 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.

30

 

          9.2 Duties and Responsibilities of Managing Member.

               (a) Except as set forth in Sections 9.3 and 9.4, or as otherwise expressly delegated by
Managing Member to the Operator pursuant to the terms of the Hotel Management Agreement or as
otherwise provided in this Agreement and subject at all times to the limitations of the Initial
Budget or any subsequent Approved Annual Budget, Managing Member 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 Company and the TRS SUB under this Agreement:

                    (i) Protect and preserve the titles and interests of the Company and the TRS SUB with respect
to any assets owned directly or indirectly by the Company and the TRS SUB including, without
limitation, the Hotel and the Garage;

                    (ii) Pay all property taxes and assessments, ground rents, rents and other impositions
applicable to the Hotel and Garage and/or such other assets owned by the Company and the TRS SUB;

                    (iii) Execute and/or modify on behalf of the Company and the TRS SUB, such Approved Contracts
and other documents relating to the day-to-day ownership and operation of the Hotel or the Garage;

                    (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 TRS SUB, 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 and the Garage. Each draft budget shall be
delivered to 800 Canal Member (or the Members, in the event that CWI Member is removed as Managing
Member) not later than sixty (60) calendar days before the beginning of the Fiscal Year in
question. 800 Canal Member shall have no right to approve the annual business plan and budget,
during any Fiscal Year in which HRI Lodging (or any other Affiliate of 800 Canal Member) is acting
as the Operator. During any Fiscal Year that HRI Lodging (or any other Affiliate of 800 Canal
Member) is not acting as the Operator, 800 Canal Member shall have the right to and shall approve
or disapprove such draft budget within thirty (30) days after receipt thereof (which approval shall
not be unreasonably withheld by 800 Canal Member). Promptly after any disapproval by 800 Canal
Member, Managing Member shall, as soon as possible, submit a revised draft budget to 800 Canal
Member addressing the portions thereof disapproved by 800 Canal Member (and the parties shall
repeat the foregoing until a draft budget has been approved by 800 Canal Member). In those Fiscal
Years in which 800 Canal Member has the right to approve the draft budget, once a draft budget is
approved by 800 Canal Member (or the Members, in the event that CWI Member is removed as Managing
Member), it shall be the “Approved Annual Budget” for the Company and/or the TRS SUB, as
applicable, for the Fiscal Year in question; provided, however, in the event that Managing Member
and 800 Canal Member are unable to resolve any
dispute with respect to any item to which 800 Canal Member has the right to object and has
objected, Managing Member shall conduct operations of the Company and the TRS SUB with respect to
those categories that are in dispute based on the greater of (i) the amount set forth the Approved
Annual Budget for the immediately prior Fiscal Year (plus a reasonable increase

31

 

based on the CPI to
allow for inflation, not to exceed three percent (3%)); and (ii) the amount set forth in the
applicable draft budget. Except as otherwise permitted or required under this Agreement, the Hyatt
Franchise Agreement, the Hotel Management Agreement or as required for Preservation Costs actually
incurred by the Company or the TRS SUB, 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 CWI Member is removed as Managing Member) (which approval may be granted or withheld in CWI
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 CWI 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
9.10; provided, however, in the event 800 Canal Member has an approval right hereunder and in the
event that Managing Member and 800 Canal Member cannot mutually agree on a specific line item or
group, neither Managing Member nor 800 Canal Member shall have the right to subject such dispute to
arbitration under Section 9.10 and the parties sole recourse shall be to revert back to the
applicable 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 the TRS SUB, including estimated receipts and
expenses and other items projected for the operation of the Company, the Hotel and the Garage 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 the TRS SUB, including an annual
operating budget, and estimated receipts and expenses and other items projected for the operation
of the Company, the Hotel and the Garage 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”).
Notwithstanding anything to the contrary contained herein, Managing Member may exceed any line item
in the Initial Budget and/or subsequent Approval Annual Budget by up to five percent (5%) of the
amount set forth in such line item and exceed the total Initial Budget and/or subsequent Approval
Annual Budget by up to but no more than ten percent (10%) in the aggregate, in each case without
the prior approval of 800 Canal Member (or any other Member);

                    (v) Make payments approved under the Initial Budget or any subsequent Approved Annual Budget.
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;

                    (vi) Supervise the performance of and under (A) the Ground Leases; (B) the Wyndham Franchise
Agreement and/or the Hyatt Franchise Agreement; (C) the loan documents evidencing the PROP Loan
and/or Loan Documents (and any subsequent indebtedness); (D) the Hotel Management Agreement; (E)
the Construction Management Agreement; (F) the Construction Agreement; (G) the Architect Agreement;
and (H) any
agreements or contracts approved as part of the Initial Budget and each subsequent Approved
Annual Budget (the “Approved Contracts”); provided, however, if CWI Member is removed as Managing
Member pursuant to the provisions hereof, then a successor Managing Member shall take no action and
shall have no rights to act on behalf of Owner under the Hotel Management

32

 

Agreement, Construction
Management Agreement or the Architect Agreement, if and as such rights are expressly reserved by
CWI Member pursuant to Section 9.5;

                    (vii) Obtain and maintain any and all requisite permits, licenses or entitlements necessary
for the operation of the Company and the TRS SUB (including, without limitation, for the ownership
and operation of the Hotel and the Garage, all licenses required for the sale and services of
alcoholic beverages) and management and maintenance of the Hotel and the Garage;

                    (viii) Perform all general and administrative services on behalf of the TRS SUB and in
pursuance thereof maintain complete and accurate books of the Company and the TRS SUB, showing all
receipts and expenditures, assets and liabilities, Profits and Losses and all other records
necessary for recording the Company’s and the TRS SUB’s business and affairs. The books of the
Company and the TRS SUB 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 Company and
the TRS SUB, and shall be open to inspection and examination by each Member at all reasonable
times. Managing Member shall, if required by any instruments to which the Company or the TRS SUB
is a party, cause audited financial statements of the Company and the TRS SUB’s financial condition
to be prepared as required by the applicable instruments (the cost of which shall be paid by the
Company);

                    (ix) Prepare financial statements of the Company and the TRS SUB and/or, if requested by any
Member, cause audited financial statements of the Company and the TRS SUB 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 Company and the TRS SUB); and

                    (x) Maintain insurance for the Company and the TRS SUB in accordance with Section 12.6.
Managing Member shall obtain quotes for the insurance coverages appropriate for the activities
being conducted at the Hotel and the Garage 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 Company and the TRS SUB, as reasonably determined by
Managing Member.

               (b) Necessary Time. Managing Member will devote such time, effort and skill to the
business of the Company and the TRS SUB (or to the business of the Company and the TRS SUB owning
the Hotel and the Garage) as Managing Member reasonably deems necessary.

               (c) Asset Management; Asset Management Fee. Asset Manager shall provide customary
asset management services to the Company related to the Hotel and the Garage. In consideration of
the services provided by Asset Manager, the Company shall pay Asset Manager an annual fee equal to Ninety Thousand Dollars ($90,000) (the “Asset Management
Fee”) payable in equal monthly installments due and owing to Asset Manager on the tenth (10th)
business day of each month during the Fiscal Year, provided that, Asset Manager shall receive no
other remuneration or reimbursement for costs and expenses incurred in the

33

 

performance of its
duties as Asset Manager, except as expressly permitted under Section 9.6 or as due and owing to
Operator under the Management Agreement. The Asset Management Fee shall be paid prior to any
distribution pursuant to Section 8.1 and Section 8.2; provided, however, that the Asset Management
Fee for each year shall be paid on a pro rata basis with the payment of any fee due to under the
Hotel Management Agreement for such year (based on the relative amounts then due and unpaid).

               (d) Affiliate Transactions. In performing its obligations under this Agreement,
Managing Member from time to time may use the services of one or more Affiliates, provided that
Managing Member shall fully disclose such affiliation to or interest in such transaction to the
Company and neither Managing Member nor any such Affiliates shall be entitled to any additional
fee, charge or other amount payable other than the Asset Management Fee. In the event Managing
Member has entered into any agreement with an Affiliate, Managing Member shall promptly notify the
Members of any change in the direct or indirect ownership of such Affiliate; provided further, that
in the event that such transfer results in the applicable Person no longer qualifying as an
Affiliate, the respective agreement with the Affiliate will immediately terminate (without penalty)
as of the date of such transfer.

          9.3 Actions by Managing Member.

               (a) In addition to the duties and responsibilities of Managing Member described in Section
9.2, Managing Member may take the following actions without the prior consent of 800 Canal Member:

                    (i) Subject to the ROFO described in Section 10.5, and from and after the Lock-Out Period,
sell or otherwise dispose of the Hotel or the Garage, provided that as a part of any such sale or
disposal Managing Member obtains the absolute release of the 800 Canal Parties from obligations or
liabilities first arising from and after closing of such sale under any Guarantees to which any 800
Canal Party is a party or to which any 800 Canal Party may be bound;

                    (ii) Approve or consent to any binding agreements or contracts (whether written or oral)
regarding the Hotel and the Garage, including, without limitation, any acquisitions, development
plans, budgets or capital improvements;

                    (iii) In accordance with the Initial Budget and any subsequent Approved Annual Budget or as
required pursuant to the Hotel Management Agreement or the Hyatt 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 Company and the TRS SUB;

                    (iv) In accordance with the Initial Budget or any subsequent Approved Annual Budget or as
otherwise required pursuant to the terms and conditions of the Hotel Management Agreement, enter
into any contract in the name of or for the benefit of the Company and/or the TRS SUB;

34

 

                    (v) Acquire any real or personal property for the Company or the TRS SUB, to the extent
expressly authorized pursuant to the Initial Budget or any subsequent Approved Annual Budget or as
otherwise required pursuant to the terms and conditions of the Hotel Management Agreement, and sell
or dispose any personal property in the ordinary course;

                    (vi) Incur any indebtedness of the Company or the TRS SUB or become liable as an endorser,
guarantor, surety or otherwise for any debt obligation or undertaking of any other Person, so long
as such indebtedness is: (A) unsecured indebtedness of any kind other than trade debt 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;

                    (vii) Sell, transfer or otherwise dispose of any of the assets of the Company or the TRS SUB
at any time, (A) so long as expressly authorized pursuant to the Initial Budget or any subsequent
Approved Annual Budget; or (B) so long as the sale or disposal of personal property is in the
ordinary course (i.e., at the end of such asset’s useful life);

                    (viii) Retain legal counsel for the Company and the TRS SUB, the Hotel or the Garage in
connection with any matter involving an uninsured claim;

                    (ix) Initiate any litigation of One Hundred Thousand Dollars ($100,000) or less on behalf of
the Company or the TRS SUB or undertake any course of defense in connection with any litigation
brought against the Company or the TRS SUB, or settle any litigation concerning the Company or the
TRS SUB;

                    (x) Settle any insurance claim on behalf of the Company or the TRS SUB;

                    (xi) Engage the services of any Person, so long as such engagement has a term no longer than
thirty (30) days, or a right to terminate (without penalty) upon not more than thirty (30) days
notice;

                    (xii) Approve or effectuate any program of insurance for the Company or the TRS SUB, the
Hotel, the Garage or any of the foregoing;

                    (xiii) Cause the formation of any corporation or other subsidiary entity owned or controlled
by the Company or the TRS SUB; and

                    (xiv) Make investments in the name of the Company or the TRS SUB or with any Company fund in
the ordinary course of business as permitted hereunder.

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          9.4 Approval by Members; Limitations of the Company.

               (a) Notwithstanding anything to the contrary set forth herein, neither Managing Member, nor
any of the Members may take any of the following actions (the “Member Decisions”) without the prior
unanimous approval of each of the Members:

                    (i) Acquire any real or personal property for the Company or the TRS SUB, except as expressly
authorized to acquire pursuant to the Initial Budget or any subsequent Approved Annual Budget;

                    (ii) Incur any indebtedness of the Company or the TRS SUB or become liable as an endorser,
guarantor, surety or otherwise for any debt obligation or undertaking of any other Person;

                    (iii) Issue guaranties on behalf of the Company or the TRS SUB in connection with any
indebtedness;

                    (iv) Commence or take any action in the name of, for or on behalf of either TRS SUB relating
in any way to a Bankruptcy;

                    (v) Dissolve or liquidate the TRS SUB;

                    (vi) Admit an additional shareholder to the TRS SUB;

                    (vii) Cause the formation of any corporation or other subsidiary entity owned or controlled by
the Company or the TRS SUB;

                    (viii) Make investments in the name of the Company or the TRS SUB or with any Company and/or
TRS SUB funds;

                    (ix) Commence or take any action in the name of, for or on behalf of the Company relating in
any way to a Bankruptcy;

                    (x) Dissolve or liquidate the Company except as expressly required or permitted pursuant to
Section 11;

                    (xi) Admit an additional Member to the Company except as otherwise permitted pursuant to
Section 10;

                    (xii) Amend the Certificate or this Agreement;

                    (xiii) Amend, modify or otherwise change the bylaws or the business of the TRS SUB;

                    (xiv) Undertake any intentional act or omit to take any action which creates or is likely to
create recourse liability under any outstanding Non-Recourse Carve Out Guaranty;

                    (xv) Except for CWI Scope Changes or as otherwise required by Hyatt under the Hyatt Franchise
Agreement or by Lender under the Loan Documents, and

36

 

subject to any further consent required from
Hyatt under the Hyatt Franchise Agreement and/or Lender under the Loan Documents, approve or
implement (A) any increase in the Renovation Budget, or (B) any change order to the Construction
Contract; or

                    (xvi) To the extent permitted under this Agreement or otherwise required under the Hotel
Management Agreement or as required for Preservation Costs actually incurred by the Company or TRS
SUB, amend, modify or otherwise change the Initial Budget, any Approved Annual Budget 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.

               (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. If the Members are
unable, after due consideration, to reach an agreement on any Member Decision described in this
Section 9.4, such failure shall constitute an “Impasse” hereunder.

               (c) This Section 9.4(c) is being adopted to comply with certain provisions necessary to
qualify the Company as a “special purpose” entity and in connection therewith, notwithstanding
anything to the contrary in this Agreement (other than Section 5.8) or in any other document
governing the formation, management or operation of the Company, until such time as the outstanding
principal balance of the Loan has been paid in full, the Members covenant and agree that the
Company has not and shall not:

                    (i) engage in any business or activity other than the acquisition, ownership, leasing,
renovation, improvement, operation and maintenance of the Property and activities incidental
thereto;

                    (ii) acquire or own any material asset other than (A) the Property, and (B) such incidental
personal property as may be necessary for the operation of the Property;

                    (iii) merge into or consolidate with any Person or dissolve, terminate or liquidate in whole
or in part, transfer or otherwise dispose of all or substantially all of its assets or change its
legal structure, without in each case Lender’s consent;

                    (iv) fail to preserve its existence as an entity duly organized, validly existing and in good
standing (if applicable) under the laws of the jurisdiction of its organization or formation, or
without the prior written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of this Agreement, the Certificate or similar organizational documents, as the case may
be;

                    (v) own any subsidiary other than the TRS SUB or make any investment in or acquire the
obligations or securities of any other Person without the consent of Lender;

                    (vi) commingle its assets with the assets of any of its managing members, Affiliates or of any
other Person;

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                    (vii) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than the Loan and the PROP Loan (as defined in the Loan Agreement), except
unsecured trade and operational debt, not more than forty-five (45) days old, incurred with trade
creditors in the ordinary course of its business of owning and operating the Property in such
amounts as are normal and reasonable under the circumstances and permitted under the Loan
Documents, provided that such debt is not evidenced by a note and is paid when due and provided in
any event the outstanding principal balance of such debt shall not exceed at any one time two
percent (2%) of the outstanding indebtedness (including, without limitation, interest, default
interest, late charges and other sums or monies) due and owing pursuant to the Loan Documents
(“Debt”);

                    (viii) fail to pay its debts and liabilities from its own assets;

                    (ix) fail to maintain its records, books of account and bank accounts separate and apart from
those of the general partners, members, principals and Affiliates of the Company, the Affiliates of
a general partner or member of the Company, and any other Person;

                    (x) enter into any contract or agreement with any general partner, member, principal or
Affiliate of the Company, any guarantor of all or a portion of the Debt (a “Guarantor”), or any
general partner, member, principal or Affiliate thereof, except as expressly permitted under the
Loan Documents and upon terms and conditions that are intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties other than any general
partner, member, principal or Affiliate of the Company or Guarantor, or any general partner,
member, principal or Affiliate thereof;

                    (xi) seek dissolution or winding up, in whole or in part;

                    (xii) fail to correct any known misunderstandings regarding the separate identity of the
Company;

                    (xiii) hold itself out to be responsible (or pledge its assets as security except as permitted
by the Loan Documents) for the debts of another Person;

                    (xiv) make any loans or advances to any third party, including any general partner, Member,
principal or Affiliate of the Company, or any general partner, member, principal or Affiliate
thereof;

                    (xv) fail to file its own Tax Returns or to use separate stationery, invoices and checks;

                    (xvi) agree to, enter into or consummate any transaction which would have the effect of
substantially consolidating the Company into or its parents or Affiliates under at law or equity;

                    (xvii) fail either to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name in order not (A) to mislead
others as to the entity with which such other party is transacting

38

 

business, or (B) to suggest that
the Company is responsible for the debts of any third party (including any general partner, member,
principal or Affiliate of the Company, or any general partner, member, principal or Affiliate
thereof);

                    (xviii) fail to allocate fairly and reasonably among the Company and any third party
(including, without limitation, any Guarantor) any overhead for shared office space;

                    (xix) fail to pay the salaries of its own employees and maintain a sufficient number of
employees for its contemplated business operations;

                    (xx) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations;

                    (xxi) file or consent to the filing of any petition, either voluntary or involuntary, to take
advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make
an assignment for the benefit of creditors; or

                    (xxii) share any common logo with or hold itself out as or be considered as a department or
division of (A) any general partner, principal, member or affiliate of the Company, (B) any
affiliate of a Member of the Company, or (C) any other Person.

          9.5 Hotel and Construction Management. The Members hereby acknowledge and agree that,
notwithstanding the Member Decisions set forth in Section 9.4, so long as (i) the manager of the
Hotel (the “Operator”) is HRI Lodging or any other Affiliate of 800 Canal Member; (ii) the
developer under the Construction Management Agreement is HCI or any other Affiliate of 800 Canal
Member; or (iii) the architect is HCI Architecture, Inc., a Louisiana professional corporation
(“HCI Architect”), CWI 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 the TRS SUB as “Owner” pursuant to and in accordance with the Hotel
Management Agreement, the Construction Management Agreement and the Architect Agreement,
respectively (subject to all limitations and obligations on the part of “Owner”) and to enforce
and/or terminate the Hotel Management Agreement, the Construction Management Agreement or the
Architect Agreement pursuant to the respective terms thereof (including, without limitation, the
unilateral right to extend the term of the Hotel Management Agreement in accordance with Section
2.2 or terminate the Hotel Management Agreement for Operator’s failure to meet the requirement of
the Performance Test (as defined in the Hotel Management Agreement)). Upon any termination of HRI Lodging as Operator, CWI Member shall no longer have
the right to make unilateral decisions on behalf of the Company or the TRS SUB as “Owner” under the
Hotel Management Agreement and CWI Member shall promptly select a bona fide third party as a
replacement Operator (which selection shall be made by CWI Member in its sole but reasonable
discretion). For avoidance of doubt, except as set forth in this Section 9.5, CWI Member may not
take, or permit any Person to take, any action or prevent any action from being taken on behalf of
the Company or the TRS SUB as “Owner” under the Hotel Management Agreement that would otherwise
require the prior unanimous approval of the Members as a Member Decision under Section 9.4.

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          9.6 Remuneration of Members and their Affiliates. Except as expressly permitted under
this Agreement, including, without limitation, (a) the Asset Management Fee payable to CWI Member
or its Affiliate; (b) 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
otherwise maintaining the books and records of the Company pursuant to Section 12; and (c) the fees
and any and all other amounts payable to (i) Operator pursuant to the Hotel Management Agreement,
(ii) HCI under the Construction Management Agreement and/or (iii) HCI Architect under the Architect
Agreement, no Member (or their Affiliate) 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, 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). Notwithstanding
anything to the contrary contained herein, to the extent any liability of 800 Canal Member to CWI
Member arises under the Contribution Agreement resulting from a breach by 800 Canal Member of any
of the covenants, representations and warranties contained therein (subject to the survival of such
representations and warranties as limited under Section 3.4 of the Contribution Agreement), or
arising under any of the indemnification provisions contained in the Contribution Agreement or any
of the other documents or agreements delivered pursuant thereto, and such liability is not paid or
reimbursed by 800 Canal Member to CWI Member in accordance therewith, then any and all fees payable
to 800 Canal Member and/or its Affiliates pursuant to the Hotel Management Agreement, Construction
Management Agreement and/or Construction Agreement shall be paid first and instead to CWI Member
until such time as any and all claims and liabilities of 800 Canal Member to CWI Member pursuant to
the Contribution Agreement are paid in full and none of 800 Canal Member nor any of its Affiliates
shall have any claim against the Company or CWI Member for the failure to pay any such fees earned
to 800 Canal Member or such Affiliate which is owed the same.

          9.7 Member Approval. No annual or regular meetings of the Members are required to be
held. 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.

          9.8 Liquor License. The determination to obtain those licenses, consents or other
approvals required by the State of Louisiana Office of Alcohol and Tobacco Control (the “ATC”) or
required by the City of New Orleans or otherwise that may be necessary for the Company or the TRS
SUB to obtain a liquor license at the Hotel (the “Liquor Licenses”) shall be a Member Decision;
provided, however, CWI Member may elect at any time to cause the Company or TRS SUB 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 ATC or the City of New Orleans in connection
with obtaining one or both of the Liquor Licenses; provided, further, if (a) the application and/or
disclosure process is impossible or creates an

40

 

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
(b) the Company is unable to obtain or subsequently loses any Liquor Licenses, 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 ATC, then in either event, the Members may
elect to (i) abstain from acquiring the Liquor License; or (ii) 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 (c) of the prior
sentence, the Company will enter into an agreement with LiquorCo that will permit the sale of
liquor at the Hotel, to the extent legally permissible and on terms and conditions reasonably
acceptable to the Members.

          9.9 Guarantees; Refinancing.

               (a) The Members acknowledge and agree that 800 Canal Member or its Affiliate has executed or
intends to execute and deliver that certain Grantee Statement of Assurances in connection with the
making of the PROP Loan to the Company (the “Prop Loan Guaranty”). The Members further acknowledge
and agree that 800 Canal Member or its Affiliate will execute and deliver the Canyon Completion
Guaranty and the Non-Recourse Carve Out Guaranty, each in favor of Lender, the Completion and Cost
Overrun Guaranty and, subject to this Section 9.9(a), 800 Canal Member or its Affiliate (and not
the Company, the TRS SUB or CWI Member (or any Affiliate of CWI Member)) will be responsible for
any and all amounts up to the Cost Overrun Cap due and otherwise owing by the Company thereunder as
more specifically provided for in Section 6.3(a). If 800 Canal Member is required to make any
payment under or pursuant to the Prop Loan Guaranty (each a “Prop Loan Guaranty Payment”), the
Members agree that each Member will make a Member Loan to the Company in an amount equal to its
proportionate share (based upon such Member’s Participation Percentages) of such Prop Loan Guaranty
Payment.

               (b) Subject to this Section 9.9(b), 800 Canal Member hereby covenants and agrees to indemnify,
defend and hold harmless the Company and/or the TRS SUB and CWI Member and CWI Member’s Affiliates
and their respective officers, directors,
principals, members and agents, from and against any Claims or Losses resulting from the
Canyon Completion Guaranty (up to the Cost Overrun Cap) and Non-Recourse Carve Out Guaranty in
favor of Lender, and Completion and Cost Overrun Guaranty (up to the Cost Overrun Cap); provided,
however, in the event that any 800 Canal Party incurs any recourse liability under the Guarantees
which is incurred as the direct result of CWI Member’s unilateral act in breach of this Agreement
(a “Guaranty Triggering Event”), 800 Canal Member shall not be liable under this Section 9.9(b) and
CWI Member agrees to indemnify, defend and hold harmless the Company and/or the TRS SUB and 800
Canal Member and its Affiliates from and against any Claims or Losses resulting from such Guaranty
Triggering Event.

               (c) The Members acknowledge and agree that the Company may be required, as a condition to
obtaining any future refinancing or other indebtedness, to provide a guaranty of non-recourse
obligations and/or other issues generally guaranteed in connection with

41

 

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 9.9(b), such guarantee shall be provided by 800
Canal Member or its Affiliate as approved by such lender at the time, on the same basis generally
as 800 Canal Member (or its Affiliate) executed the Non-Recourse Carve Out Guaranty; provided,
however, that if a lender requires a guaranty to be joint and several, each of 800 Canal Member’s
and CWI 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 this Section 9.9(b).

               (d) If either 800 Canal Member or CWI Member pays a Guarantee Obligation in excess of its
respective Proportionate Share of Liability (the “Overpaying Guarantor”) because either (i) 800
Canal Member or CWI Member funds a Guarantee Obligation pursuant to the applicable guarantee when
such Member’s actual obligation pursuant to this Section 9.9 is less than the amount paid, or (ii)
one (1) 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 (with the payment or lack of payment of a cost overrun
that exceeds the Cost Overrun Cap under one of the Guarantees itself not constituting a “fault” as
such term is used in this Section 9.9 (e)), the guarantor on behalf of the Member or such Member’s
Affiliate at fault shall be responsible to pay the percentage of such Guarantee Obligation equal to
the percentage of fault of the party at fault.

          9.10 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 9.10, 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
9.10(a)(i) (the “Discussion Period”); and

                    (ii) If within the Discussion Period 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 New Orleans, Louisiana.

     For avoidance of doubt, any failure by either Member to approve a Member Decision shall not
constitute a dispute for which arbitration under this Section 9.10 is available.

42

 

               (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, if a prevailing party, if any, can be reasonably identified. The arbitrator(s) shall make
its/their determination in accordance with the laws of the State of Louisiana (or Delaware, in the
case of decisions involving this Agreement and/or corporate laws generally). The arbitrator(s)
shall make specific, written findings of fact and conclusions of law.

               (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 (i) 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 or (ii) 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.

          9.11 Execution of Documents. Except as otherwise expressly set forth in this
Agreement (including, but not limited to, Sections 5.8, 9.3 and 9.4), each check, contract, deed or
act of sale or similar conveyance document, lease, promissory note, mortgage, escrow instruction,
bond, release or any other documents of any nature whatsoever, in any way pertaining to the Company
shall be signed by Managing Member or the person or persons designated from time to time by
Managing Member, provided that, the Members agree and acknowledge that CWI Member shall have the
sole authority to take all actions and issue any such documents and have signing authority on
behalf of “owner,” in connection with any and all matters under the Hotel Management Agreement,
Construction Management Agreement and/or the Architect Agreement. Managing Member shall have the
authority to sign all documents

43

 

required to be signed under the Hotel Management Agreement;
provided, however, except as set forth in Section 9.5, Managing Member must obtain the prior
written consent of the Members with respect to any Member Decisions.

          9.12 TRS SUB Directors.

               (a) The Members acknowledge that the initial directors of the TRS SUB are Michael Medzigian,
Michael Coolidge, A. Thomas Leonhard, Jr. and Steven Nance. Notwithstanding any other provision of
this Agreement, for so long as (a) CWI Member maintains an indirect ownership interest in the TRS
SUB, CWI Member shall have the right to appoint one-half of the number of directors of the TRS SUB
at every meeting of the stockholders of the TRS SUB, and on every action or approval by written
consent of the stockholders of the TRS SUB, the CWI Member shall have the right to cause the
Company to nominate one-half of the number of directors of the TRS SUB; and (b) 800 Canal Member
maintains an indirect ownership interest in the TRS SUB, 800 Canal Member shall have the right to
appoint one-half of the number of directors of the TRS SUB at every meeting of the stockholders of
the TRS SUB, and on every action or approval by written consent of the stockholders of the TRS SUB,
and the Company shall so nominate and vote (or cause to be voted) or provide consent (or cause
consent to be provided) with respect to its shares of stock in the TRS SUB for the nominees
designated in this Section 9.4(d). CWI Member and 800 Canal Member shall have the right to cause
the Company to vote to replace any of their respective representatives, in their sole and absolute
discretion, at any time by delivering written notice to the Managing Member setting forth the
identity of such replacement director, provided that each director of the TRS SUB shall hold office
until a successor is elected and qualified or until such appointed director resigns or is removed.
The Members and the Company shall not enter into any agreement, arrangement or understanding
inconsistent with the foregoing.

               (b) The Company shall vote or cause to be voted all of its shares of stock in the TRS SUB or
take any other action necessary for the removal of any member of the board of directors of the TRS
SUB upon the request of the Member then entitled to nominate such member to the board of directors
as set forth in Section 9.12(a) above, and for the election to the board of directors of an
individual designated by such Member in accordance with the provisions hereof. The Company shall
vote all of its shares of stock in the TRS SUB in such manner or take any other action as shall be
necessary or appropriate to ensure that any vacancy on the board of directors occurring for any reason shall be filled only in accordance with the
provisions of this Section 9.12(b).

          9.13 Liability/Indemnification.

               (a) Except as expressly provided otherwise in this Agreement, Managing Member, and its
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

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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 800 Canal 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 the TRS
SUB or arising out of any business of the Company or the TRS SUB.

               (b) 800 Canal Member acknowledges, covenants and unconditionally, absolutely and irrevocably
agrees to appear, indemnify, protect, defend and hold harmless, as well as reimburse, the Company,
CWI 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 Lender (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 800 Canal
Member or its Affiliate for a breach or default under the Contribution Agreement) actually incurred
by the Company, the TRS SUB, CWI Member, or any Related Parties as a direct result of such Claims
to the extent such Claims and Losses resulted from any breach or default by the 800 Canal Member
Affiliate of any terms and provisions of the Hotel Management Agreement, the Architect Agreement or
arising under or pursuant to the Non-Recourse Carve Out Guaranty (to the extent arising from these
acts or omissions of 800 Canal Member or its Affiliates), the Canyon Completion Guaranty or the
Completion and Cost Overrun Guaranty (up to the Cost Overrun Cap) (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 Hotel, the Garage, the Company and/or the TRS SUB 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.

               (c) An indemnitee (an “Indemnitee”) who desires to make a Claim against an indemnitor (an
“Indemnitor”) under this Section 9.13 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

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distributions to which
the Indemnitor would otherwise be entitled under this Agreement shall be reduced by any amounts the
Indemnitor is required to pay pursuant to this Section 9.13, and instead shall be paid to the
Indemnitee entitled to indemnity, up to the full amount of the indemnity obligation.

               (d) Notwithstanding anything to the contrary set forth in this Agreement, if any event gives
rise to an Indemnity Obligation, CWI 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 800
Canal Member under this Agreement and/or the bylaws under which the TRS SUB was 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 CWI Member shall include
any actual value of the Hotel and/or the Garage that is permanently lost (to the extent such Losses
can be reasonably measured) as a result of any matters for which 800 Canal Members would be liable
or CWI 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. To the fullest extent permitted by law, 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 CWI 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. Transfers made pursuant
to this Section 10.2 will not be subject to the Right of First Offer as set forth in Section 10.3.

          10.3 Right of First Refusal on Transfer.

               (a) Except for the case of a Transfer to a Permitted Transferee and, with respect to CWI
Member, any Transfer by the direct or indirect owner in CWI, a Member

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(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, 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. No transfer of an Offered Interest can be made to a transferee which does not,
in the reasonable judgments of the Offered Member, meet the Qualified Transferee Requirements.

          10.4 Buy/Sell.

               (a) At any time after the Lock-Out Period and upon thirty (30) days following receipt of a
written request for the approval of any Member Decision, if an Impasse is continuing, 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”), 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

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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. 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 in
writing by the Members, such purchase and sale shall be consummated within ninety (90) 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 or act of sale, bill of
sale and other such instruments of transfer as shall be reasonably requested by the purchasing
Member. Furthermore, if Managing Member is the purchasing Member, Managing Member shall use
commercially reasonable efforts to obtain as part of the closing the absolute release of the 800
Canal Parties from any post-closing obligations or liabilities under all Guarantees to
which any 800 Canal Party is a party or to which any 800 Canal Party may be bound; provided,
however, if Managing Member is unable, despite commercially reasonable efforts, to obtain the
release of the 800 Canal Parties from post-closing obligations and liabilities under the Guarantees
to which any 800 Canal Party is a party, then Managing Member shall indemnify, defend and hold 800
Canal Parties harmless from and against any and all claims, liabilities and damages arising under
or related to any post-closing obligations or liabilities under all Guarantees and Managing Member
shall provide to 800 Canal Parties a guaranty, in form and substance reasonably acceptable to 800
Canal Member, executed by an Affiliate of CWI Member, reasonably acceptable to 800 Canal Member and
guarantying the indemnity obligations of Managing Member continued in this Section 10.6(a). In
addition, concurrent with the closing whereby Managing Member is the purchasing Member, Managing
Member may, without penalty, terminate the Hotel Management Agreement, effective as of the closing
date. Time is of the essence with respect to the closing of the sale contemplated herein on or
before expiration of such ninety (90) day period. One hundred percent (100%) of the purchase price
for the

48

 

Membership Interest being sold or purchased shall be payable at the Closing Date by wire
transfer in immediately available funds.

               (b) 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 accordance with this Section
10.4 unless the representations and warranties of the selling Member as set forth in Section 10.7
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 ninety (90) 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). All closings shall be conducted through an escrow agreement established by the Members
with a title insurer, and shall take place in New Orleans, Louisiana. 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.

          10.5 ROFO. If Managing Member wishes to cause the Company or the TRS SUB to sell the
Property pursuant to Section 9.3(a)(i), it shall first give a notice to the other Members
of its desire to sell the Property and of the price and terms on which it is willing to sell the
Property (the “ROFO Sale Notice”). If the other Member opposes the sale and wishes to purchase the
Property for the price and on the terms proposed by the Managing Member (the “Sale Member”) in the
ROFO Sale Notice, it shall so notify the Sale Member in writing within twenty (20) days after
receiving the ROFO Sale Notice, and thereafter the parties shall attempt in good faith, for the time period set forth below, to agree on any
additional terms of such sale to the buying member (“Buying Member”) which were not included in the
ROFO Sale Notice; provided, that the Members agree that such terms must include (a) an
acknowledgement that neither the Company nor the Sale Member shall be required to make any
representation with respect to the Property; (b) the obligation of the Buying Member to obtain the
absolute release of the Company and the Sale Member (and all Affiliates of the Sale Member) from
any post-closing obligations or liabilities under any Guarantees to which the Sale Member or its
Affiliates is a party or to which the Sale Member or its Affiliates may be bound; (c) an
undertaking by the Buying Member to release the Company and the Sale Member from any obligations or
liabilities in any way relating to the Property accruing from and after the closing with respect to
the Property, and an indemnity from a creditworthy Affiliate of the Buying Member, reasonably
acceptable to the Sale Member, pursuant to which the Company and the Sale Member are indemnified
and held harmless from and against any such post-closing obligations or liabilities; (d) an
undertaking by the Buying Member to release the Sale Member from any post-closing

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obligations or
liabilities under any cross-indemnity agreements to which either Member are parties; (e) an
undertaking by the Buying Member to make a five percent (5%) deposit upon the execution and
delivery of a mutually acceptable purchase contract, which shall be non-refundable if the Buying
Member breaches such purchase contract; and (f) a closing date not later than ninety (90) days
after the date of the Buying Member’s receipt of the ROFO Sale Notice. For twenty (20) days after
the Buying Member’s receipt of the ROFO Sale Notice, the parties shall negotiate in good faith to
execute and deliver a purchase contract containing all of the terms and conditions for such a sale
of the Property to the Buying Member. If for any reason (i) the Buying Member notifies the Sale
Member it does not wish to purchase the Property; (ii) the Buying Member fails to timely notify the
Sale Member that it wishes to purchase the Property at the price and on the terms required above;
(iii) the Buying Member timely notifies the Sale Member but a purchase contract is not executed and
delivered between the Buying Member and the owner of the Property within the twenty (20) day period
for any reason (including the inability of the parties to agree on any terms not set forth in the
ROFO Sale Notice); or (iv) said purchase contract is executed and delivered but the purchase and
sale of the Property does not close within ninety (90) days after Buying Member’s receipt of the
ROFO Sale Notice for any reason (other than a default by the owner of the Property which is not
caused by the Buying Member), then the Sale Member shall have the right, and to the extent
necessary the Buying Member hereby gives to the Sale Member a power of attorney, coupled with an
interest, to cause the owner of the Property, to enter into a binding agreement for the sale of the
Property and/or to cause the owner of the Property to sell the Property on the same or better terms
as set forth in the ROFO Sale Notice to an unaffiliated third party pursuant to this Section
10.5. However, if the Sale Member does not cause the owner of the Property to enter into a
binding agreement to sell the Property to an unaffiliated third party within one (1) year after the
Sale Member is permitted by the terms of this Section 10.5 to cause the owner of the
Property to enter into a binding agreement for the sale of the Property for a purchase price of at
least ninety percent (90%) of the purchase price set forth on the ROFO Sale Notice, then the Sale
Member shall be required to again comply with the provisions of this Section 10.5 prior to
causing the sale of Property pursuant to this Section 10.5. The Buying Member may
structure any purchase by it under this Section 10.5 of all or substantially all of the
assets of the Company as a purchase of the Sale Member’s Participation Percentage Interest by
paying the Sale Member on the closing date the same amount that it would have otherwise received upon the sale of the
Property under the purchase contract.

          10.6 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, 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.

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          10.7 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

               (d) 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.

          10.8 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 in and of itself not cause
or constitute a dissolution of the Company.

          10.9 Pledge Agreement. Notwithstanding anything to the contrary in this Agreement,
including, without limitation, Article 10, (a) each Member may pledge its Membership Interest
pursuant to that certain Accommodation Pledge Agreement (Membership Interests in Operating Lessor),
dated as of the date hereof (the “Pledge Agreement”), and (b) upon a foreclosure, sale or other
transfer of the Membership Interests pursuant to the Pledge Agreement, the holder of such limited
liability company interests shall, upon the execution of a counterpart to this Agreement,
automatically be admitted as a member of the Company upon such foreclosure, sale or other transfer,
with all of the rights and obligations of a Member hereunder. The Company acknowledges that the
pledge of the limited liability company interest in the Company made by a Member in connection with
the Pledge Agreement shall be a pledge not only of profits and losses of the Company, but also a
pledge of all rights and obligations of such Member. Upon a foreclosure, sale or other transfer of
the limited liability company interests of the Company pursuant to the Pledge Agreement, the
successor Member may transfer its interests in the Company, subject to this Article 10.
Notwithstanding any provision in the Act

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or any other provision contained herein to the contrary,
pursuant to the terms of the Pledge Agreement, each Member shall be permitted to pledge, and upon
any foreclosure of such pledge in connection with the admission of the Lender or its nominee as
member, to transfer to the Lender or such nominee its rights and powers to manage and control the
affairs of the Company in accordance with this Agreement. Sections 10.3 and 10.4 shall not apply
to the pledge or related foreclosure under the Pledge Agreement.

          10.10 Interests and Membership Interest Certificates.

               (a) Each limited liability company interest in the Company shall constitute and shall remain a
“security” within the meaning of, and governed by, (i) Article 8, including Section 8-102(a)(15),
of the Uniform Commercial Code as in effect from time to time in the States of Delaware and (ii)
the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law
Institute and the National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995. Notwithstanding any provision of this Agreement to
the contrary, to the extent that any provision of this Agreement is inconsistent with any
non-waivable provision of Article 8 of the Uniform Commercial Code as in effect in the State of
Delaware (6 Del C. § 8-101, et. seq.) (the “UCC”), such provision of Article 8 of the UCC shall be
controlling.

               (b) Membership Interest Certificates.

                    (i) Upon the issuance of limited liability company interests in the Company to any Person in
accordance with the provisions of this Agreement, without any further act, vote or approval of any
Member, director, officer or any Person, the Company may issue one or more non-negotiable
certificates in the name of such Person substantially in the form of Exhibit “F” hereto (a
“Membership Interest Certificate”), which evidences the ownership of the limited liability company
interests in the Company of such Person. Each such Membership Interest Certificate shall be
denominated in terms of the percentage of the limited
liability company interests in the Company evidenced by such Membership Interest Certificate
and shall be signed by the Managing Member or duly authorized agent on behalf of the Company.

                    (ii) Without any further act, vote or approval of any Member, director, officer or any Person,
the Company shall issue a new Membership Interest Certificate in place of any Membership Interest
Certificate previously issued if the holder of the limited liability company in the Company
represented by such Membership Interest Certificate, as reflected on the books and records of the
Company:

                         (1) makes proof by affidavit, in form and substance satisfactory to the Company, that such
previously issued Membership Interest Certificate has been lost, stolen or destroyed;

                         (2) requests the issuance of a new Membership Interest Certificate before the Company has
notice that such previously issued Membership Interest

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Certificate has been acquired by a purchaser
for value in good faith and without notice of an adverse claim;

                         (3) if requested by the Company, delivers to the Company a bond, in form and substance
satisfactory to the Company, with such surety or sureties as the Company may direct, to indemnify
the Company against any claim that may be made on account of the alleged loss, destruction or theft
of the previously issued Membership Interest Certificate; and

                         (4) satisfies any other reasonable requirements imposed by the Company.

                    (iii) Upon a Member’s transfer in accordance with the provisions of this Agreement of any or
all limited liability company interests in the Company represented by a Membership Interest
Certificate, the transferee of such limited liability company interests in the Company shall
deliver such Membership Interest Certificate to the Company for cancellation (executed by such
transferee on the reverse side thereof), and the Company shall thereupon issue a new Membership
Interest Certificate to such transferee for the percentage of limited liability company interests
in the Company being transferred and, if applicable, cause to be issued to such Member a new
Membership Interest Certificate for that percentage of limited liability company interests in the
Company that were represented by the canceled Membership Interest Certificate and that are not
being transferred.

               (c) The Company shall maintain books for the purpose of registering the transfer of limited
liability company interests. Notwithstanding any provision of this Agreement to the contrary, a
transfer of limited liability company interests requires delivery of an endorsed Membership
Interest Certificate and shall be effective upon registration of such transfer in the books 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;

               (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 18-802 of the Act;

               (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; or

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               (e) At the time there are no Members unless the Company is continued without dissolution in
accordance with the Act.

          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) 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.

               (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.

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     12. BOOKS AND RECORDS; ACCOUNTS AND INSURANCE.

          12.1 Books of Account. The Members hereby designate CWI Member to perform, or cause
to be performed (at the Company’s cost but at no compensation to CWI 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. CWI 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. CWI Member shall provide to 800 Canal 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

               (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 CWI 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 CWI Member, within one

55

 

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 CWI Member) and in accordance with all Applicable Laws of the United States and
otherwise in conformance with the 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 Loan
Documents, the 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, CWI Member shall solely bear the out-of-pocket costs thereof.

               (c) The Members acknowledge that CWI 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 CWI 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 CWI 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 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). CWI Member shall use its
reasonable best efforts to cause to be prepared and shall timely file all Company Tax Returns,
shall use its reasonable best efforts to cause the TRS SUB (whether via Managing Member or the
Operator) to prepare and timely file all TRS SUB Tax Returns and shall furnish copies thereof to
the Members promptly after the filing thereof. CWI Member shall cause each of the Company and the
TRS SUB to retain a certified public accountant to prepare such Tax Returns and filings. CWI
Member shall file all certificates, notices, statements or other instruments required by law on
behalf of the Company and shall cause the TRS SUB to file the same, including all Federal, state
and local Tax Returns. CWI 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 the TRS SUB, subject only to
the requirements of the Loan Documents.

          12.5 Bank Accounts.

56

 

               (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, Managing Member shall not employ, or permit any other Person to employ, such funds in any
manner except for the benefit of the Company. Managing Member 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 the TRS SUB 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 “G”; (ii) as may be prudent to carry on account of the
activities of the Company and TRS SUB from time to time and which other owners of comparable
business operations obtain; and (iii) as may be required under any Loan Documents or other
instruments to which the Company and/or the TRS SUB is a party. Managing Member shall obtain and
maintain all such insurance on behalf, and at the expense of, the Company and the TRS SUB, as
applicable. Managing Member 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. CWI Member shall select the accountants for the Company.

     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, Managing Member may, in its sole and absolute discretion, cause the Company to 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

57

 

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 Louisiana.

     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 800 Canal Member or the Company, then to:

c/o Historic Restoration, Incorporated

909 Pordras Street, Suite 3100

New Orleans, LA 70112

Attention: A. Thomas Leonhard, Jr.

Telephone No.: 504.566.0204

Email: tleonhard@hriproperties.com

     with copies to:

Elkins, P.L.C.

201 St. Charles Avenue, Suite 4400

New Orleans, LA 70170

Attention: Gary J. Elkins

Telephone No.: 504.529.3600

Email: gelkins@elkinsplc.com

     If to CWI Member, then to:

58

 

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 copy to:

Paul Hastings 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 CWI Member or
800 Canal 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.

          18.2 Each Member acknowledges that Elkins, P.L.C. (the “800 Canal Member Law Firm”) reviewed
the drafts of this Agreement, assisted in the initial formation of the Company and represented the
Company and the TRS SUB in the acquisition of the Hotel (collectively, the “800 Canal Member
Parties”). Each Member acknowledges and agrees that while it may benefit derivatively from the 800
Canal 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 800
Canal Member Law Firm not be conflicted from representing the 800 Canal Member Parties in
connection with any dispute that may arise between the 800 Canal Member Parties or any other Member
(or its Affiliates), and each Member hereby waive any conflict of interest that such representation
presents. In addition, each Member, on behalf of itself and the owner of any direct or indirect
interest in such Member, waives any conflict regarding the 800 Canal Member Law Firm’s past or
future representation of the 800 Canal Member Parties, and hereby consents to and acknowledges that
the 800 Canal Member Law Firm will in the future represent the 800 Canal Member Parties, including,
without limitation, in connection with any representation which may present a potential or real
conflict of interest with each Member and/or the owner(s) of any direct or indirect interest in
such other

59

 

Member(s). The foregoing shall not, however, limit or affect the obligations of the 800
Canal Member Law Firm to keep all attorney/client communications confidential or otherwise to limit
any other ethical obligations of the 800 Canal Member Law Firm to their clients.

          18.3 Each Member also acknowledges that Paul Hastings LLP (the “CWI Member Law Firm”),
represented CWI Member and/or their Affiliates (collectively, the “CWI Member Parties”) in the
negotiation of this Agreement. Each Member acknowledges and agrees that while it may benefit
derivatively from the CWI 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 CWI Member Law Firm not be conflicted from representing the CWI Member Parties in
connection with any dispute that may arise between the CWI Member Parties or any other Member (or
its Affiliates), and each Member hereby waive any conflict of interest that such representation
presents. In addition, and each Member, on behalf of itself and the owner of any direct or
indirect interest in such Member, waives any conflict regarding the CWI Member Law Firm’s past or
future representation of the CWI Member Parties, and hereby consents to and acknowledges that the
CWI Member Law Firm will in the future represent the CWI Member Parties, including, without
limitation, in connection with any representation which may present a potential or real conflict of
interest with each other Member and/or the owner(s) of any direct or indirect interest in such
other Member(s). The foregoing shall not, however, limit or affect the obligations of the CWI
Member Law Firm to keep all attorney/client communications confidential or otherwise to limit any
other ethical obligations of the CWI Member Law Firm to their clients.

     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 During the Restricted Activity Period, 800 Canal Member covenants and agrees for itself
and its Affiliates that neither it nor any of its respective Affiliates shall either (i) own,
develop, acquire, finance, broker or otherwise invest in, independently or with others, directly or
indirectly, or (ii) 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 which is both (a) within the Competitive Set (as defined in the Hotel
Management Agreement) or otherwise operated as a 4-diamond property (as determined by the AAA
Diamond Rating Process); and (b) located within the Restrictive Territory. As used herein,
“Restricted Activity Period” means, with respect to an ownership activity described in (i) above,
the period commencing on the Effective Date and ending five (5) years after the Effective Date; and
with respect to a management activity described in (ii) above, the period commencing on the
Effective Date and ending December 31, 2013. 800 Canal Member further covenants and agrees for
itself and its Affiliates that neither it nor any of its respective Affiliates shall at any time
during the Term, own, develop, acquire, finance, broker or

60

 

otherwise invest in, independently or with others, directly or indirectly, any hotel or, condo-hotel, resort or other lodging facility
(other than a three diamond level or four diamond level hotel or condo-hotel for which the
above-restriction applies) 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 by the
execution with 800 Canal or its Affiliates of a term sheet within thirty (30) days of receipt of
written notice of the New Opportunity, then 800 Canal Member and/or its Affiliates shall have the
first opportunity (but not the obligation) to pursue such New Opportunity in the manner that 800
Canal Member recommended to the Company, separate and apart from the Company, so long as 800 Canal
Member is not the Member that withheld its approval of such New Opportunity when presented to the
Company.

          20.2 CWI 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 CWI 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 within the Restricted
Territory, 800 Canal 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 CWI 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 Hotel and 800 Canal 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 or Managing Member 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 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;

61

 

               (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 Delaware Division 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 Delaware General Corporation Law, 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 Member, 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 other Member, or any Affiliate or any selling agent of the 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.

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     22. MISCELLANEOUS.

          22.1 Governing Law. This Agreement shall, in all respects, be governed by the laws of
the State of Delaware applicable to agreements executed and to be wholly performed within the State
of Delaware.

          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.

          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

63

 

to any party to this Agreement, nor shall any provision give any
third Person any right of subrogation or action over or against any party to this Agreement.

          22.11 No Authority. No Member shall have the duty to inquire into the authority of
another Member to act. All of the Members shall be presumed to have the authority to execute this
Agreement and to carry out any acts contemplated hereby.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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

	 	 	 	 	 
	 	CWI MEMBER:

CWI NEW ORLEANS HOTEL, LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ Michael G. Medzigian 	 
	 	 	Name:  	Michael G. Medzigian 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	800 CANAL MEMBER:

GUITAR PARTNERS, LLC

a Louisiana limited liability company

 	 
	 	  	 	 
	 	By: 	 Historic Restoration Incorporated, 	 
	 	 	a Louisiana corporation,
its manager 	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ A. Thomas Leonhard, Jr. 	 
	 	 	Name:  	A. Thomas Leonhard, Jr. 	 
	 	 	Title:  	Duly Authorized Agent 	 
	 

 

Signature Page to Limited
Liability Company Operating Agreement

 

EXHIBIT “A”

MEMBER INFORMATION

	 	 	 	 	 
	 	 	Initial Capital	 	Initial
	Name and Address of Member	 	Account Balance	 	Participation Percentage
	CWI New Orleans Hotel, LLC
	 	$12,300,000	 	80%
	c/o Carey Watermark Investors Incorporated 

207 East Westminster, Suite 200

Lake Forest, IL 60045

Attention: Michael Medzigian
	 	 	 	 
	 
	 	 	 	 
	Guitar Partners, LLC
	 	$3,000,000	 	20%
	c/o Historic Restoration, Incorporated

909 Pordras Street, Suite 3100

New Orleans, LA 70112

Attention: A. Thomas Leonhard, Jr.
	 	 	 	 
	 
	 	 	 	 
	TOTAL
	 	$15,300,000	 	100%

1

 

EXHIBIT “B”

LEGAL DESCRIPTION

TRACT I

Eighth Amendment and Restatement of Hotel Lease Agreement between Canal Street Development
Corporation and CWI-HRI French Quarter Hotel Property, LLC per Notice of Lease recorded
concurrently in the records of Orleans Parish, Louisiana, and affecting the following described
property (the “CSDC Lease”):

A CERTAIN PIECE OR PORTION OF GROUND, situated in the Second Municipal District,
City of New Orleans, in Square 67 and identified as Lot CSDC-1 on a plan of
resubdivision and survey of Gandolfo Kuhn & Associates, Dwg. No. J-171-1D dated June
21, 1993, approved by the City Planning Commission under Subdivision Docket No.
29/93, and registered as Declaration of Title Change on July 29, 1993 as COI #72907,
under N.A. No. 93-31513, and in accordance with a plan of survey by Gandolfo Kuhn,
L.L.C., dated May 17, 2011, revised August 15, 2011, and designated Job No. 620-23;
N-72-1, Sheet 1 of 3, said land is more particularly described as follows:

Commence at the northwestern corner of Bourbon and Canal Streets,
thence along the northerly right of way of Canal Street N52°44’02“W
a distance of 97 feet 1 inch to the point of beginning;

thence continuing along the northerly right of way line of Canal
Street N52°44’02“W a distance of 64 feet 11 inches to a point;

thence N37°24’37“E a distance of 128 feet 3-1/8ths inches to a
point;

thence N52°44’44“W a distance of 159 feet 10-1/8th inches to the
easterly right of way line of Dauphine Street;

thence along said easterly right of way line N37°18’46“E a distance
of 120 feet 3/8ths inch to a point;

thence S52°43’43“E a distance of 23 feet 5 inches to a point;

thence N37°21’17“E a distance of 72 feet 9-4/8ths inches to the
southerly right of way line of Iberville Street;

thence along said southerly right of way line S52°43’43“E a distance
of 297 feet 9-3/8ths inches to a point on the westerly right of way
line of Bourbon Street;

 

 

thence S37°14’50“W a distance of 193 feet 1-6/8ths inches to a
point;

thence N52°44’00“W a distance of 112 feet 3-3/8ths inches to a
point;

thence S37°14’50“W a distance of 42 feet 7-4/8ths inches to a point;

thence S52°44’00“E a distance of 47 feet 3-6/8ths inches to a point;

thence S37°14’50“W a distance of 21 feet 3-5/8ths inches to a point;

thence N52°41’45“W a distance of 32 feet 1-2/8ths inches to a point;

thence S37°14’50“W a distance of 63 feet 11-5/8ths inches to the
point of beginning.

Improvements thereon bear Municipal No. 815-819 Canal Street.

Note: The fee simple owner of Lot CSDC-1 is Canal Street Development Corporation.

TRACT II

Eighth Amendment And Restatement Of Hotel Lease Agreement between Canal Street Development
Corporation and CWI-HRI French Quarter Hotel Property, LLC per Notice of Lease recorded
concurrently in the records of Orleans Parish, Louisiana, and affecting the following described
property (the “CSDC Lease”):

That certain Agreement of Lease dated October 10, 1980, by and between Salmen
Company, a Louisiana partnership, as Lessor, and D. H. Holmes Company, Limited, as
Lessee, together with those certain covenants dated July 16, 1981, and July 23,
1981, as amended by First Amendment to Lease Agreement between Salmen Company and
Canal Street Development Corporation, dated September 15, 1993 a memorandum of which
was filed September 16, 1993, N.A. No. 93-39344, COI No. 75361 and covering property
known and designated as 811 Canal Street and affecting the following described
property:

A CERTAIN PIECE OR PORTION OF GROUND, situated in the Second
District of this City in Square No. 67, bounded by Canal, Bourbon,
Dauphine and Iberville Streets, designated as Lot No. 4 on a sketch
annexed to an act of sale by the syndic of the creditors of John
Kelly to James Armitage passed before Michel de Armas, N.P., in this
City, on the 22nd day of June 1815. In accordance

 

 

with a survey prepared by Gandolfo Kuhn, L.L.C., dated May 17, 2011,
revised August 15, 2011, and designated Job No. 620-23; N-72-1,
Sheet 1 of 3, Lot 4 is more particularly described as follows:

Commence at the northwest corner of Bourbon and
Canal Streets, thence along the northerly right of
way line of Canal Street, N52°44’02“W a distance of
65 feet to the point of beginning;

thence continue along said right of way line,
N52°44’02“W a distance of 32 feet 1 inch to a point;

thence N37°14’50“E a distance of 63 feet 11-5/8
inches to a point;

thence S52°41’45“E a distance of 32 feet 1-2/8
inches to a point;

thence S37°14’50“W a distance of 63 feet 11-3/8
inches to the point of beginning.

Improvements thereon bear the Municipal No. 811
Canal Street.

(the “Salmen Lease”).

Note: The fee simple owner is Bilten, L.L.C.

TRACT III

Eighth Amendment And Restatement Of Hotel Lease Agreement between Canal Street Development
Corporation and CWI-HRI French Quarter Hotel Property, LLC per Notice of Lease recorded
concurrently in the records of Orleans Parish, Louisiana, and affecting the following described
property (the “CSDC Lease”):

That certain Lease of Air Space by City of New Orleans to Canal Street Development
Corporation dated December 1, 1994, filed December 20, 1995 as COI No. 115464, N.A.
No. 95-55525 (the AAir Rights Lease@), and affecting that certain air
space above Bourbon Street, Iberville Street, Dauphine Street and Canal Street, more
particularly described in accordance with a survey of Gandolfo Kuhn, L.L.C., dated
May 17, 2011, revised August 15, 2011, and designated Job No. 620-23; N-72-1, Sheet
1 of 3, as follows:

Airspace Above Bourbon Street

 

 

A CERTAIN PIECE OR PORTION OF AIRSPACE, situated in the Second Municipal District,
City of New Orleans, State of Louisiana, between Canal Street and Iberville Street,
adjacent to Square 67, Lot CSDC-1, and more particularly described as follows:

Commence at the intersection of the westerly right of way line of Bourbon Street and
the southerly right of way line of Iberville Street;

Thence S37E14’50“W a distance of 193 feet, 1 6/8ths inches to a point;

Thence S52E44’00“E a distance of 6 feet to a point;

Thence N37E14’50“E a distance of 193 feet, 1 6/8ths inches to a point;

Thence N52E43’43“E a distance of 6 feet to the point of beginning.

Airspace Above Iberville Street

A CERTAIN PIECE OR PORTION OF AIRSPACE, situated in the Second Municipal District,
City of New Orleans, State of Louisiana, between Dauphine Street and Bourbon Street,
adjacent to Square 67, Lot CSDC-1, and more particularly described as follows:

Commence at the intersection of the easterly right of way line of Dauphine Street
and the southerly right of way line of Iberville Street;

Thence along the southerly right of way line of Iberville Street S52E43’43“E a
distance of 104 feet to the point of beginning;

Thence at a 90E angle in a northerly direction 4 feet to a point;

Thence at a 90E angle in an easterly direction 32 feet to a point;

Thence at a 90E angle in a southerly direction 4 feet to a point on the line common
to Lot CSDC-1;

Thence N52E43’43“W a distance of 32 feet to the point of beginning.

Airspace Above Dauphine Street

A CERTAIN PIECE OR PORTION OF AIRSPACE, situated in the Second Municipal District,
City of New Orleans, State of Louisiana, between Canal Street and Iberville Street,
adjacent to Square 67, Lot CSDC-1, and more particularly described as follows:

 

 

Commence at the intersection of the southerly right of way line of Iberville Street
and the easterly right of way line of Dauphine Street;

Thence along the easterly right of way line of Dauphine Street S37E18’46“W a
distance of 80 feet, 9 7/8ths inches to the point of beginning;

Thence S37E18’46“W a distance of 111 feet, 9 7/8ths inches to a point;

Thence N52E44’44“W a distance of 6 feet to a point;

Thence N37E18’46“E a distance of 111 feet, 9 7/8ths inches to a point;

Thence S52E44’44“E a distance of 6 feet to the point of beginning.

Airspace Above Canal Street

A CERTAIN PIECE OR PORTION OF AIRSPACE, situated in the Second Municipal District,
City of New Orleans, State of Louisiana, between Dauphine Street and Bourbon Street,
adjacent to Square 67, Lot CSDC-1, and more particularly described as follows:

Commence at the intersection of the northerly right of way line of Canal Street and
the westerly right of way line of Bourbon Street;

Thence N52E44’02“W a distance of 97 feet, 1 inch to the point of beginning;

Thence S37E14’50“W a distance of 6 feet to a point;

Thence N52E44’02“W a distance of 64 feet, 11 inches to a point;

Thence N37E24’37“E a distance of 6 feet to a point;

Thence S52E44’02“E a distance of 64 feet, 11 inches to the point of beginning.

Note: The fee simple owner is the City of New Orleans.

TRACT IV

Contract of Lease between Mercier Realty & Investment Company (“Mercier”) and HRI effective as of
January 1, 1993, a Memorandum of which was filed September 16, 1993, under N.A. No. 93-39340, COI
No. 75358, as assigned by Act of Assignment of Contractual Rights by HRI to 800 Canal Street
Limited Partnership (“800 Canal Street”) dated September 15, 1993, filed September 16, 1993, under
N.A. No. 93-39354, COI No. 75371, as assigned by
Contribution, Assignment and Assumption of Corner Lot Lease between 800 Canal Street Limited
Partnership and Guitar Partners, LLC, recorded concurrently in the records of Orleans Parish; as
further assigned by Contribution, Assignment and Assumption of Corner Lot Lease

 

 

between Guitar Partners, LLC, and CWI-HRI French Quarter Hotel Property, LLC, recorded concurrently in the records
of Orleans Parish (the AMercier Corner Lot Lease@), and affecting the following
described property:

A CERTAIN PIECE OR PORTION OF GROUND, situated in the Second District of the City of
New Orleans, in Square No. 67, bounded by Iberville (formerly Customhouse),
Dauphine, Bourbon and Canal Streets. In accordance with a survey of Gandolfo Kuhn,
L.L.C., dated May 17, 2011, revised August 15, 2011, and designated Job No. 620-23;
N-72-1, Sheet 1 of 3, said lot is more particularly described as follows:

Said lot forms the southeast corner of Dauphine and Iberville
Streets and measures 23 feet 5-5/8 inches front on Iberville; by a
width in the rear of 23 feet 5 inches; by a depth and front on
Dauphine Street of 72 feet 9-4/8 inches; with the same depth on the
opposite side.

Note: The fee simple owner is Mercier Realty and Investment Company.

TRACT V

Servitude of Right of Use by Canal Street Development Corporation in favor of Historic Restoration,
Incorporated, dated September 15, 1993, filed September 16, 1993, under N.A. No. 93-39353, COI No.
75370, as assigned by Act of Assignment of Contractual Rights by HRI to 800 Canal Street, dated
September 15, 1993, filed September 16, 1993, under N.A. No. 93-39354, COI No. 75371, as assigned
by Contribution, Assignment and Assumption of Hotel Lease, Hotel Parking Lease and Servitude
between 800 Canal Street Limited Partnership and Guitar Partners, LLC, recorded concurrently in the
records of Orleans Parish; as further assigned by Contribution, Assignment and Assumption of Hotel
Lease, Hotel Parking Lease and Servitude between Guitar Partners, LLC, and CWI-HRI French Quarter
Hotel Property, LLC, recorded concurrently in the records of Orleans Parish, and affecting Lot
CSDC-1, which is described above under Tract I.

TRACT VI

Second Amended and Restated Hotel Parking Lease between Canal Street Development Corporation and
CWI-HRI French Quarter Hotel Property, LLC, per Notice of Lease recorded concurrently in the
records of Orleans Parish, Louisiana (the “Hotel Parking Lease”), and affecting the following:

Lease between Mercier Realty and Investment Company, as Lessor, and D. H. Holmes
Co., Ltd., as Lessee, dated February 13, 1968, recorded in COB 693-C, folio 173-181,
as amended by Amendment to Lease and Servitude dated December 16, 1969, as further
amended by Amendment of Lease dated December 29, 1983, which was donated to Canal
Street Development Corporation by
Donation dated September 25, 1989, before John D. Ormond, N.P., filed under N.A. No.
817901, registered as COI No. 11115, COB 834, folio 249-267, and as further Amended
and Restated by Third Amendment and Restatement of Lease

 

 

effective as of September 25, 1989, a Memorandum of which is recorded as COI No. 55526, COB 880, folio 1-6,
under N.A. No. 934049, on July 28, 1992; as further amended by First Amendment to
Restatement of Lease and Servitude dated September 15, 1993, a Memorandum of which
was filed September 16, 1993, under N.A. No. 93-39342, COI No. 75359 (the “Garage
Lease”); and affecting the following described property:

LEASEHOLD PROPERTY

Nos. 200-202 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
and measuring thirty-one feet, eleven inches and five lines (31’11“5’’’) front on
Dauphine Street, by a depth and front on Iberville Street of Fifty-nine feet eight
inches and 2/8 lines (59’8“2/8’’’).

Nos. 204-206 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
having French measure, twenty-nine feet, six inches (29’6”) front on Dauphine
Street, by a depth of Fifty-two feet (52’) more or less between parallel lines.

No. 208 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
having French measure, twenty-nine feet, six inches (29’6”) front on Dauphine
Street, by a depth of one hundred and twenty Feet (120’), bounded on one side by the
property of J.M. Ovise and on the other side by that of Marie L. Chauvin.

No. 214 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
beginning at a distance of ninety-five feet (95’) from the corner of Iberville
Street, measuring thirty-two feet (32’) front on Dauphine Street, and having a depth
of one hundred and twenty-eight feet, four inches and four lines (128’4“4’’’) on the
side line towards Iberville Street, and a depth of one hundred and twenty-eight
feet, three inches and two lines (128’3’2’’’) on the side line
towards Bienville Street, between parallel lines, all as will more fully appear by
sketch of survey made by Edgar Pilie Surveyor, dated October 18, 1906, annexed to an
act of Exchange executed before William V. Lorber, Notary Public, in this

 

 

City, on December 24, 1906; said portion of ground was formerly occupied as an Engine House
No. 7.

Nos. 218-220 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
measuring in French measure, thirty feet (30’) front on Dauphine Street by one
hundred and twenty feet (120’) in depth, bounded on one side by property now or
formerly belonging to Pierre Soniat, and on the other side by property of the Eagle
Seven Fire Company, and in the rear by property now or formerly belonging to F.P.
Duccage.

No. 224 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
said lot measures in French measure, thirty feet (30’) front on Dauphine Street by
one hundred and twenty Feet (120’) in depth, bounded on the side nearest to
Bienville Street by property now or heretofore belonging to P. Foucher and on the
side nearest to Iberville Street, by property now or heretofore belonging to C.
Demmsilier.

No. 226 Dauphine Street

A CERTAIN LOT OF GROUND, situated in the Second District of the City of New Orleans,
in the Square No. 68 bounded by Dauphine, Bourbon, Iberville and Bienville Streets,
and measuring, in American Measure, twenty-one feet six inches (21’6”) front on
Dauphine Street, by one hundred and twenty-seven feet ten inches and five lines
(127’10“5’’’) in depth between parallel lines, agreeably to a plan made by Joseph
Pilie, Surveyor, on the 22nd, July 1844, and annexed to an act in the Office of
Charles V. Fouler, Notary, dated the 14th September, 1844. Said property being
bounded on the side towards Bienville Street by property now or late of Mrs.
Delachaise, and on the side towards Iberville Street by property now or late of
Soniat de Forest.

According to a plan of survey by Gandolfo Kuhn, L.L.C., dated May 17, 2011, revised
August 15, 2011, and designated Job No. 620-23; V-32-1, Sheet 2 of 3, the seven
parcels described above, taken together, measure as follows, to-wit:

Begin at the northeasterly intersection of Iberville and Dauphine Streets, Point A;

thence N37°18’46“E, 212 feet 3-3/8ths inches to Point B;

thence S52°50’07“E, 128 feet 2-5/8ths inches to Point C;

 

 

thence S37°05’53“W, 149 feet 1-2/8ths inches to Point D;

thence N52°43’43“W, 69 feet 1-1/8th inches to Point E;

thence S37°18’47“W, 63 feet 5 inches to Point F on the northerly right of way of
Iberville;

thence N52°43’43“W, 59 feet 8-2/8ths inches to Point A and the Point of Beginning.

Note: The fee simple owner is Mercier Realty and Investment Company.

SERVITUDE PROPERTY

I.

A CERTAIN PIECE OR PORTION OF GROUND, situated in the Second District of the City of New Orleans,
in Square No. 68, bounded by Iberville, Dauphine, Bienville and Bourbon Streets, which said piece
or portion of ground is more particularly described in accordance with a survey of Gandolfo Kuhn,
L.L.C., dated May 17, 2011, revised August 15, 2011, and designated Job No. 620-23; N-72-1, Sheet 1
of 3, and 620-23; V-32-1, Sheet 2 of 3 and measures as follows, to-wit:

     Commence at the northeasterly intersection of Dauphine and Iberville Streets,
thence S52°43’43“E, 59 feet 8-2/8ths inches to Point F and the Point of Beginning;

thence N37°18’47“E, 63 feet 5 inches to Point E;

thence S52°43’43“E, 69 feet 1-1/8ths inches to Point D;

thence N37°05’53“E, 149 feet 1-2/8ths inches to Point C;

thence S52°50’07“E, 16 feet to Point J;

thence S37°05’53“W, 212 feet 6-2/8ths inches to Point H on the northerly right of
way line of Iberville Street;

thence N52°43’43“W, 16 feet to Point G;

thence N52°43’43“W, 69 feet 4 inches to Point F and the Point of Beginning.

II.

     Servitude in favor of Mercier for encroachment of building appurtenant to
Leasehold Property onto Lot CSDC-3 for duration of the Garage Lease, pursuant to
terms and conditions of the Garage Lease.

III.

 

 

     The servient estate has been divided for purposes of reference into three
portions and each portion is labeled on the survey. Said portions are designated as
follows:

          (a) The “Ramp Portion”: That portion of the servient estate extending
vertically no more than fifteen (15) feet to the underside of the second floor of
Lessee’s property and designated as Ramp Portion.

          (b) The “Cottage Portion”: That area which measures approximately 69 feet 4
inches in width, fronting on Iberville Street, same width in the rear, by a depth of
15 feet between equal and parallel lines and extending vertically no more than ten
(10) feet to the underside of the second floor of Lessee’s property.

          (c) The “Remaining Portion”: That area measuring approximately 69 feet 4
inches in width, and beginning at 15 feet east of the easterly right of way line of
Iberville Street and measuring 48 feet 5 inches in depth between equal and parallel
lines.

Note: The fee simple owner of land burdened by the servitude is CSDC.

 

 

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 (as determined under Regulations Sections 1.704-2(b)(2)), 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 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 income and/or gain
(consisting of a pro rata portion of each item of Company income and gain

1

 

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 manner it reasonably determines
is appropriate so that, after such offsetting allocations are made,

2

 

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

[Attached]

1

 

EXHIBIT “F”

FORM OF MEMBERSHIP INTEREST CERTIFICATE

	 	 	 
	NUMBER	 	INTEREST
	*_[ ]_*

	 	*_[ %]_*
	 

	 	 

CWI-HRI FRENCH QUARTER HOTEL PROPERTY, LLC

A DELAWARE LIMITED LIABILITY COMPANY

     THIS CERTIFIES THAT [___________________________], is the owner of [___%] of the fully
paid and non-assessable limited liability company interests (the “Limited Liability Company
Interests”) in CWI-HRI French Quarter Hotel Property, LLC (the “Company”).

     THE RIGHTS, POWERS, PREFERENCES, RESTRICTIONS (INCLUDING TRANSFER RESTRICTIONS) AND
LIMITATIONS OF THE LIMITED LIABILITY COMPANY INTERESTS ARE SET FORTH IN, AND THIS CERTIFICATE AND
THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED HEREBY ARE ISSUED AND SHALL IN ALL RESPECTS BE
SUBJECT TO THE TERMS AND PROVISIONS OF, THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF THE
COMPANY, DATED AS OF SEPTEMBER 1, 2011, AS THE SAME MAY BE AMENDED OR RESTATED FROM TIME TO TIME
(THE “AGREEMENT”), A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED TO THE HOLDER ON REQUEST TO THE OPERATING MEMBER OF THE COMPANY. THE TRANSFER OF
THIS CERTIFICATE AND THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED HEREBY ARE RESTRICTED AS
DESCRIBED IN THE AGREEMENT.

     Capitalized terms used and not otherwise defined herein are used as defined in the Agreement.

     The limited liability company interests in the Company shall constitute “securities” within
the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section
8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8
of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law
Institute and the National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995.

     This Certificate shall be governed by, construed, interpreted and applied in accordance with
the laws of the State of Delaware (excluding any conflict of law rules thereof).

 

 

     IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by its duly
authorized signatory this ___ day of September, 2011.

	 	 	 	 	 
	 	CWI-HRI FRENCH QUARTER HOTEL PROPERTY, LLC,

a Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.

 

 

ASSIGNMENT OF LIMITED LIABILITY COMPANY INTEREST

     FOR VALUE RECEIVED, the undersigned (the “Assignor”) hereby assigns, conveys, sells
and transfers unto

	 	 	 

	 

	 	 
	(Please insert taxpayer identification
number of Assignee)

	 	(Please print name and address)

all rights and interest of the Assignor in CWI-HRI French Quarter Hotel Property, LLC represented
by the within Certificate and irrevocably constitutes and appoints ___________________________ as
its attorney-in-fact with full power of substitution in the premises to transfer the same on the
books of the Company.

	 	 	 	 	 

	Dated: ______________________________

	 	 	 	____________, LLC,
	 

	 	 	 	a__________limited liability company

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.

Signature Page To Membership Interest Certificate

 

 

EXHIBIT “G”

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. Deductible shall be
in an amount agreeable to CWI.
	 
	 	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
	 
	 	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.

French Quarter Hotel Operator, Inc. shall be included as a NAMED INSURED. 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	 	$3,000,000

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

 

 

	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
	 
	 	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. Deductible shall be in an amount agreeable to CWI Member.

	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 not more than $50,000 except for “catastrophic” coverages (i.e. flood, wind).
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
	 
	 	c)	 	Earthquake including sprinkler leakage — not applicable in
New Orleans
	 
	 	d)	 	Law & Ordinance Coverage to an amount reasonable for the
venue
	 
	 	e)	 	Flood with not less than $5,000,000 sublimit
	 
	 	f)	 	Business Income for loss of profits and necessary
continuing expenses — 12 Months including a six (6) month extended period of
indemnity.
	 
	 	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). Builders Risk coverage may be required as a
separate placement at the direction of Carey Watermark Investors.
	 
	 	i)	 	Terrorism — Stand-alone policy may apply

 

 

	 	j)	 	Mold Clean-up if result of a covered cause of loss

	7)	 	Such other insurance as may be customarily carried by other hotel operators on hotels similar
to this as required by Managing Member.

 

 

EXHIBIT “H”

RESTRICTED TERRITORY

[Attached]

 

 

EXHIBIT “I”

FORM OF COMPLETION AND COST OVERRUN GUARANTY 

[Attached]

 

 

EXHIBIT “J”

FORM OF CONSTRUCTION MANAGEMENT AGREEMENT 

[Attached]

 

 

SCHEDULE 1

SOURCES AND USES

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