Common use of Protection of REIT Status Clause in Contracts

Protection of REIT Status. The Members acknowledge that CWI Member and OP2 Member are each Affiliates of a real estate investment trust (the “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 the REIT to qualify as a real estate investment trust 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 real estate investment trust 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 the REIT to be disqualified as a real estate investment trust 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 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 any 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) Any Subsidiary that is treated as a corporation under the Code (other than a “real estate investment trust”) shall make an election by filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under Section 856(l)(1) of the Code; (g) Any Subsidiary that has made an election to be treated as a “taxable REIT subsidiary” under the Code shall not directly or indirectly operate a “lodging facility” or a “health care facility” as such terms are defined in Section 856 of the Code but rather shall use, to operate any “lodging facility,” an “eligible independent contractor” within the 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 Company, its Members or any Subsidiary), provided that, in the case of any “lodging facility,” no gambling activities are conducted on the premises and no gambling revenues are generated by the facility; (h) Neither the Company and its Subsidiaries, nor any Member shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trust, 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 Net Distributable Cash 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 Net Distributable Cash 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, Net Distributable Cash 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, such changes shall be deemed incorporated herein, and this Section 2.10 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements.

Protection of REIT Status. The Members acknowledge that CWI Member and OP2 Member are each Affiliates is an Affiliate of Xxxxx Watermark, which is a real estate investment trust (the “REIT”), and the Members agree Managing Member agrees to manage the Company (and any other entity in which the Company owns an interest) in a manner (i) that enables the REIT Xxxxx Watermark to qualify as a real estate investment trust 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 real estate investment trust REIT under Sections 856 through 860 of the Code to the extent possible. In connection therewith, the Members acknowledge and agree to cooperate with Managing Member’s obligations hereunder and not take any action in contravention hereof. 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 the REIT Xxxxx Watermark to be disqualified as a real estate investment trust 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 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 the Hotel or any other Company or Subsidiary property shall provide for any rent based in whole or in part on the “income or profits” derived by any lessee or sublessee from such property within the meaning of Section 856(d)(2)(A) of the Code; (e) The Company and its Subsidiaries shall not own more than ten percent (10%) of the total voting power or more than ten percent (10%) of the total value of the outstanding securities of any one issuer (as determined for purposes of Section 856(c)(4)(B) of the Code) other than securities of a subsidiary, 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) Any 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) Any 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 CompanyTRS SUB, its Members the Company or any SubsidiaryXxxxx Watermark), 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 Company, its Subsidiaries, nor any Member shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trustREIT 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 Net Distributable Cash 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 Net Distributable Cash and/or Capital Transaction Proceeds and funds maintained in the Company reserves. In no event shall the Company be required to borrow funds, or nor shall 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, Net Distributable Cash and/or Capital Transaction Proceeds; or (j) The Company and its Subsidiaries shall not engage in any “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code. The Members acknowledge that the foregoing are the current guidelines applicable to the qualification of real estate investment trusts. If any of the requirements to qualify for “real estate investment trust” status are changed, then upon CWI’s delivery of written notice to AM (or Managing Member, if CWI ceases to be Managing Member) describing such changes, such changes shall be deemed incorporated herein, and this Section 2.10 5.5 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements.

Protection of REIT Status. The Members acknowledge that CWI Member and OP2 Member are each Affiliates is an Affiliate of CWI, which is a real estate investment trust (the “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 the REIT CWI to qualify as a real estate investment trust 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 real estate investment trust 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 the REIT CWI to be disqualified as a real estate investment trust 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 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 the Hotel or any other Company or Subsidiary property shall provide for any rent based in whole or in part on the “income or profits” derived by any lessee or sublessee from such property within the meaning of Section 856(d)(2)(A) of the Code; (e) The Company and its Subsidiaries shall not own more than ten percent (10%) of the total voting power or more than ten percent (10%) of the total value of the outstanding securities of any one issuer (as determined for purposes of Section 856(c)(4)(B) of the Code) other than securities of a subsidiary, 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) Any 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) Any 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 CompanyTRS SUB, its Members the Company or any SubsidiaryCWI), provided that, in the case of any “lodging facility,” no gambling activities are conducted on the premises and no gambling revenues are generated by the facility; (h) Neither the Company and its Subsidiaries, nor any Member shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trustREIT 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 Net Distributable Cash 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 Net Distributable Cash 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, Net Distributable Cash 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 EFL 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 2.10 5.5 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements.

Protection of REIT Status. The Members acknowledge that CWI Member and OP2 Member are each Affiliates is an Affiliate of CWI, which is a real estate investment trust (the “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 the REIT CWI to qualify as a real estate investment trust 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 real estate investment trust 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 the REIT CWI to be disqualified as a real estate investment trust 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 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) Any 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) Any 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 CompanyTRS SUB, its Members the Company or any SubsidiaryCWI), provided that, in the case of any “lodging facility,” no gambling activities are conducted on the premises and no gambling revenues are generated by the facility; (h) Neither the Company and its Subsidiaries, nor any Member shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trustREIT 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 Net 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 Net 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, Net 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 2.10 5.5 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements.

Protection of REIT Status. The Members acknowledge that CWI CW Member and OP2 Member are each Affiliates is an Affiliate of CWI, which is a real estate investment trust (the “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 the REIT CWI to qualify as a real estate investment trust 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 real estate investment trust 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 the REIT CWI to be disqualified as a real estate investment trust REIT under the Code or incur any amount of tax pursuant to Section 856, Sections 857 or 4981 of the Code; (b) The Company and its Subsidiaries shall not render any services to any lessee or sublessee or any customer thereof, either directly or through an “independent contractor” within the meaning of Section 856(d)(3) of the Code, if the rendering of such services would cause all or any part of the rents received by the Company or its Subsidiaries to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code; (c) The Company and its Subsidiaries shall not directly or indirectly own (taking into account the attribution rules referred to in Section 856(d)(5) of the Code), in the aggregate ten percent (10%) or more of the total number of shares of all classes of stock, ten percent (10%) or more of the voting power of all classes of voting stock or ten percent (10%) or more of the assets or net profits of any lessee or sublessee of all or any part of any of the Property or other Company property, other than a lessee Subsidiary that makes an election by filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under Section 856(l)(1) of the Code; (d) No lease or sublease of any space at either Hotel or any other Company or Subsidiary property shall provide for any rent based in whole or in part on the “income or profits” derived by any lessee or sublessee from such property within the meaning of Section 856(d)(2)(A) of the Code; (e) The Company and its Subsidiaries shall not own more than ten percent (10%) of the total voting power or more than ten percent (10%) of the total value of the outstanding securities of any one issuer (as determined for purposes of Section 856(c)(4)(B) of the Code) other than securities of a subsidiary, including, without limitation, the TRS SUB Subsidiary that makes an election by filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under Section 856(l)(1) of the Code; (f) Any Subsidiary that is treated as a corporation under the Code (other than a “real estate investment trust”) shall make an election by filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under Section 856(l)(1) of the Code; (g) Any Subsidiary that has made an election to be treated as a “taxable REIT subsidiary” under the Code shall not directly or indirectly operate a “lodging facility” or a “health care facility” as such terms are defined in Section 856 of the Code but rather shall use, to operate any “lodging facility,” an “eligible independent contractor” within the 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 that those that are related to the CompanySubsidiary, its Members the Company or any SubsidiaryCWI), provided that, in the case of any “lodging facility,” no gambling activities are conducted on the premises and no gambling revenues are generated by the facility; (h) Neither the Company and its Subsidiaries, nor any Member shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trustREIT requirements, to be made allocated to the Members with respect to such Fiscal Year distributed at the times required to prevent the imposition of an excise tax under Section 4981 of the Code; provided, however, that if each such Member’s distributable share of any Net 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 Net 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, Net Distributable Cash from Operations and/or Capital Transaction Proceeds; or (j) The Company and its Subsidiaries shall not engage in any “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code. The Members acknowledge that the foregoing are the current guidelines applicable to the qualification of real estate investment trusts. If any of the requirements to qualify for “real estate investment trust” status are changed, then upon CWI’s delivery of written notice to Manager describing such changes, such changes shall be deemed incorporated herein, and this Section 2.10 5.5 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements.

Protection of REIT Status. The Members acknowledge that CWI Member and OP2 Member are each Affiliates is an Affiliate of Xxxxx Watermark Investors Incorporated, which is a real estate investment trust (the “REIT”), and the Members agree that, notwithstanding anything to manage the contrary in this Agreement, Managing Member shall (so long as CWI is Managing Member and, thereafter, CWI may) take or omit to take any action necessary (as determined by CWI in its sole but good faith discretion) to cause the Company (and any other entity in which the Company owns an interest) to be operated in a manner (i) that enables the REIT Xxxxx Watermark Investors Incorporated to qualify as a real estate investment trust 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 real estate investment trust 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:limitations (and any other limitations required by the Code or other applicable law): (a) The Business and affairs of the Company will be managed in a manner that does not cause the REIT Xxxxx Watermark Investors Incorporated to be disqualified as a real estate investment trust 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 lessee, sublessee, or any customer thereof, either directly or through an “independent contractor” within the meaning of Section 856(d)(3) of the Code, if the rendering of such services would cause all or any part of the rents received by the Company or its Subsidiaries to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code; (c) The Company and its Subsidiaries shall not directly or indirectly own (taking into account the attribution rules referred to in Section 856(d)(5) of the Code), in the aggregate ten percent (10%) or more of the total number of shares of all classes of stock, ten percent (10%) or more of the voting power of all classes of voting stock or ten percent (10%) or more of the assets or net profits of any lessee or sublessee of all or any part of any of the Property or other Company property, other than a lessee Subsidiary that makes an election by filing IRS Form 8875 to be treated as a “taxable REIT subsidiary” under Section 856(l)(1) of the Code; (d) No lease or sublease of any space at the Hotel or any other Company or Subsidiary property shall provide for any rent based in whole or in part on the “income or profits” derived by any lessee or sublessee from such property within the meaning of Section 856(d)(2)(A) of the CodeCode (other than rents based on gross receipts pursuant to the lease between TRS SUB and the Company); (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) Any 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) Any 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 Code, but rather shall use, to operate any “lodging facility,” contract with 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 CompanyTRS SUB, its Members the Company or any Subsidiary)CWI) to operate such facilities, 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, and CWI acknowledges as of the date hereof that FHR is an “eligible independent contractor” based on FHR’s representation in paragraph 12 of the HMA Side Letter; (h) Neither the Company and nor its Subsidiaries, nor any Member Subsidiaries shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than one percent (1%) of income not described in Section 856(c)(2) of the Code or more than ten percent (10%) of income not described in Section 856(c)(3) of the Code, or cause any significant part of the Company assets to consist of assets other than “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; (i) The Company shall distribute to the Members during each calendar year an amount of cash mutually agreed upon by the Members, but in no event in an amount less than that which is necessary to comply with the requirements of a real estate investment trustREIT 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 Net 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 Net Distributable Cash from Operations and/or Capital Transaction Proceeds and funds maintained in the Company reservesreserves (but in no event the Reserve). 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, Net 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 In the event that any change is required for compliance with the foregoing requirements of this Section 5.5 which requires the Company to incur a material increase in costs or necessitates certain assets and/or activities to be held or conducted through any subsidiary that is subject to income tax in respect of such asset (or activity that would not otherwise have been incurred had the Company held such asset or conducted such activity directly), the Company shall reimburse FHR for the amount of any such material increase in costs that FHR bears in connection with complying with this Section 5.5; provided, however, that the Members agree that the distributions of the Base Year Liability (as defined below) to FHR as required by and in accordance with Section 8.1(b)(i) shall satisfy the foregoing are reimbursement obligations of the Company in connection with the current guidelines applicable lease of the Hotel to the qualification of real estate investment trustsTRS SUB and all costs and expense incurred in connection therewith. If In addition, if any of the requirements to qualify for “real estate investment trust” status are changed, then upon CWI’s delivery of written notice to FHR (or Managing Member, if CWI ceases to be Managing Member) describing such changes, such changes shall be deemed incorporated herein, and this Section 2.10 5.5 shall be deemed amended as necessary to incorporate such changed real estate investment trust requirements; provided, however, in the event any such changes result in a (1) change in the state or federal income tax liability of the TRS SUB, the Members shall promptly adjust the Base Year Liability accordingly in good faith (and without reference to the terms and conditions of Section 8.1(b)(i) (i.e., the term requiring that for the three (3) consecutive years FHR’s proportionate share (based on its then current Participation Percentage) of the TRS SUB’s federal and state tax income liability is 110% or more of the Base Year Liability) and thereafter for all purposes under this Agreement, the Base Year Liability shall be such adjusted amount (subject to further adjustment as provided in this Agreement), or (2) material adverse economic effect on either of the Members or increase the obligations of FHR hereunder or under the Hotel Management Agreement which the Members cannot mitigate after using good faith efforts (which efforts shall specifically exclude other than de minimis out-of-pocket expenses or payments by either of such Members) to structure around such effects, either Member shall have the right to deliver the Buy-Sell Notice as provided in this Agreement (notwithstanding that such delivery and/or the closing of the transaction may take place during the Sale Lockout Period).