EXHIBIT 10.5
ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) made and entered into as of this 19th
day of February, 2015 by and among Carey Financial, LLC, a Delaware limited
liability company (the “Dealer Manager”), Carey Watermark Investors 2
Incorporated, a Maryland corporation (the “Company”), and UMB Bank, N.A., as
escrow agent, a national banking association organized and existing under the
laws of the United States of America (the “Escrow Agent”).

RECITALS
WHEREAS, the Company proposes to offer and sell up to $1.4 billion of its shares
of common stock (the “Shares”) on a best efforts basis (excluding the shares of
its common stock to be offered and sold pursuant to the Company’s distribution
reinvestment and stock purchase plan), at an initial purchase price of $10.00
per Class A Share (the “Offering”) to investors pursuant to the Company’s
Registration Statement on Form S-11 (File No. 333-196681), as amended or
supplemented from time to time (the “Offering Document”).

WHEREAS, the Dealer Manager has been engaged by the Company to offer and sell
the Shares on a best efforts basis through a network of participating
broker-dealers (the “Dealers”).
WHEREAS, the Company has agreed that the subscription price paid by subscribers
for shares will be refunded promptly to such subscribers if at least $2.0
million (the “Minimum Offering”) has not been raised within six months from the
date the Offering Document is first declared effective by the Securities and
Exchange Commission (the "SEC"), or if the Company elects to extend the date to
a period no longer than one year from the date the Offering Document is first
declared effective by the SEC (the “Closing Date”).
WHEREAS, the Dealer Manager and the Company desire to establish an escrow
account (the “Escrow Account”), as further described herein in which funds
received from subscribers will, except as otherwise specified herein, be
deposited into an interest-bearing account entitled “Carey Watermark Investors 2
Incorporated” and the Company desires that UMB Bank, N.A. act as escrow agent to
the Escrow Account and Escrow Agent is willing to act in such capacity.
WHEREAS, deposits received from residents of the State of Pennsylvania (the
“Pennsylvania Subscribers”) will remain in the Escrow Account until the
conditions of Section 3 has been met.
WHEREAS, deposits received from residents of the State of Washington (the
“Washington Subscribers”) will remain in the Escrow Account until the conditions
of Section 4 has been met.

 
1
 

--------------------------------------------------------------------------------

WHEREAS, the Escrow Agent has engaged DST Systems, Inc. (the “Transfer Agent”)
to receive, examine for “good order” and facilitate subscriptions into the
Escrow Account as further described herein and to act as record keeper,
maintaining on behalf of the Escrow Agent the ownership records for the Escrow
Account. In so acting the Transfer Agent shall act solely in the capacity of
agent for the Escrow Agent and not in any capacity on behalf of the Company or
the Dealer Manager, nor shall they have any interest other than that provided in
this Agreement in assets in Transfer Agent’s possession as the agent of the
Escrow Agent.
WHEREAS, in order to subscribe for Shares during the Escrow Period (as defined
below), a subscriber must deliver an executed order form, a form of which is
included as Annex B to the Offering Document (the "Subscription Agreement") with
the full amount of its subscription: (i) by check made payable to the order of
UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated, in
U.S. dollars or (ii) by wire transfer of immediately available funds or
Automated Clearing House (ACH) in U.S. dollars.
AGREEMENT
NOW, THEREFORE, the Dealer Manager, the Company and Escrow Agent agree to the
terms of this Agreement as follows:
1. Establishment of Escrow Account; Escrow Period. On or prior to the
commencement of the offering of Shares pursuant to the Offering Document, the
Company shall establish the Escrow Account with the Escrow Agent, which shall be
entitled “UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2
Incorporated.” This Agreement shall be effective on the date on which the
Offering Document becomes effective. Except as otherwise set forth herein for
the Pennsylvania Subscribers and Washington Subscribers, the escrow period shall
commence upon the effectiveness of this Agreement and shall continue until the
earlier of (i) the date upon which the Escrow Agent receives confirmation from
the Company and the Dealer Manager that the Company has raised the Minimum
Offering, (ii) the Closing Date, or (iii) the termination of the Offering by the
Company prior to the receipt of the Minimum Offering (the “Escrow Period”).
2. Operation of the Escrow.
(a) Deposits in the Escrow Account. During the Escrow Period, persons
subscribing to purchase Shares will be instructed by the Company, the Dealer
Manager and the Dealers to make checks for subscriptions payable to the order of
“UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated”.
When a Dealer’s internal supervisory procedures are conducted at the site at
which the Subscription Agreement and check were initially received by a Dealer
from the subscriber, the Dealer shall transmit the Subscription Agreement and
check to the Escrow Agent by the end of the next business day following receipt
of the check and Subscription Agreement. When, pursuant to the Dealer’s internal
supervisory procedures, the Dealer’s final internal supervisory procedures are
conducted at a different location (the “Final Review Office”), the Dealer shall
transmit the check and Subscription Agreement to the Final Review Office by the
end of the next business day following the Dealer’s receipt of the Subscription
Agreement and check. The Final Review Office will, by the end of the next
business day following its receipt of the Subscription

 
2
``

--------------------------------------------------------------------------------

Agreement and check, forward both the Subscription Agreement and check to the
Escrow Agent. If any Subscription Agreement solicited by the Dealer is rejected
by the Dealer Manager or the Company, then the Subscription Agreement and check
will be returned to the rejected subscriber within 10 business days from the
date of rejection. The Escrow Agent shall have no liability or responsibility
regarding a Dealer’s internal supervisory procedures. Completed subscription
agreements and checks in payment for the purchase price shall be remitted to the
P.O. Box designated for the receipt of such agreements and funds, and wires, or
Automated Clearing House (ACH) payments shall be transmitted directly to the
Escrow Account. The Escrow Agent shall cause the Transfer Agent to promptly
deliver all monies received in good order from subscribers (or from the Dealer
Manager or Dealers transmitting moneys and subscriptions from subscribers) for
the payment of Shares to the Escrow Agent for deposit in the Escrow Account.
Deposits shall be held in the Escrow Account until such funds are disbursed in
accordance with this Agreement. Prior to disbursement of the funds deposited in
the Escrow Account (the "Escrowed Funds"), such funds shall not be subject to
claims by creditors of the Company or any of its affiliates. If any of the
instruments of payment are returned to the Escrow Agent for nonpayment prior to
receipt of the Break Escrow Affidavit (as described below), the Escrow Agent
shall promptly notify the Transfer Agent and the Company in writing via mail,
email or facsimile of such nonpayment, and the Escrow Agent is authorized to
debit the Escrow Account in the amount of such returned payment and the Escrow
Agent shall cause the Transfer Agent to delete the appropriate account from the
records maintained by the Transfer Agent. The Escrow Agent shall cause the
Transfer Agent to maintain a written account of each sale, which account shall
set forth, among other things, the following information: (i) the subscriber’s
name and address, (ii) the subscriber’s social security number, (iii) the number
of Shares purchased by such subscriber, and (iv) the amount paid by such
subscriber for such Shares. During the Escrow Period neither the Company nor the
Dealer Manager will be entitled to any principal funds received into the Escrow
Account.
(b) Distribution of the Funds in the Escrow Account to Subscribers other than
Pennsylvania Subscribers and Washington Subscribers. If at any time on or prior
to the Closing Date, the Minimum Offering has been raised, then upon the
happening of such event, the funds in the Escrow Account shall remain in the
Escrow Account until the Escrow Agent receives written direction provided by the
Company and the Dealer Manager instructing the Escrow Agent to deliver such
funds as the Company shall direct (other than any funds received from
Pennsylvania Subscribers and Washington Subscribers which cannot be released
until the conditions of Sections 3 and 4, respectively, have been met) (“Initial
Closing”). An affidavit or certification from an officer of the Company and an
officer of the Dealer Manager to the Escrow Agent and Transfer Agent stating
that at least the Minimum Offering has been timely raised, shall constitute
sufficient evidence for the purpose of this Agreement that such event has
occurred (the “Break Escrow Affidavit”). The Affidavit shall indicate (i) the
date on which the Minimum Offering was raised and (ii) the actual total number
of Shares sold as of such date. Thereafter, the Escrow Agent shall release funds
and any interest or other income earned, based on the conditions of Section 5,
thereon from the Escrow Account as directed by the Company pursuant to written
instruction that the

 
3
``

--------------------------------------------------------------------------------

Company shall provide to the Escrow Agent from time to time. Accrued and unpaid
interest on such Escrowed Funds shall be paid pursuant to Section 5 below.
(c) If the Escrow Agent has not received a Break Escrow Affidavit on or prior to
the Closing Date, the Escrow Agent shall cause the Transfer Agent to promptly
provide the Escrow Agent with the information needed to return the funds in the
Escrow Account, together with any remaining interest thereon, to each respective
subscriber, and the Escrow Agent shall promptly create and dispatch checks and
wires drawn on the Escrow Account to return the full amount of the funds
deposited in the Escrow Account, together with their pro rata share of any
remaining interest thereon, to the respective subscribers, and the Escrow Agent
shall notify the Company and the Dealer Manager of its distribution of the
funds. For the purposes of this Agreement “remaining interest” shall mean any
interest that remains in the Escrow Account after deducting the full amount of
the escrow fees and expenses which have been or are due under this Agreement or
have been paid hereunder. Any amounts previously paid hereunder will be
reimbursed by the Escrow Agent to such party after applying the interest to any
escrow fees and expenses that are or will be due under this Agreement as of the
Closing Date. The subscription payments returned to each subscriber shall be
free and clear of any and all claims of the Company or any of its creditors.
(d) After the Initial Closing, upon receipt by the Escrow Agent of instructions
signed by the Dealer Manager and the Company, the Escrow Agent shall release to
the Company the Escrowed Funds (other than any funds received from Pennsylvania
Subscribers and Washington Subscribers which cannot be released until the
conditions of Sections 3 and 4, respectively, have been met) in accordance with
such instructions. The Company shall give the Escrow Agent one business day oral
notification of the contents of such instructions. Accrued and unpaid interest
on such Escrowed Funds shall be paid pursuant to Section 5 below.
3. Distribution of the Funds from Pennsylvania Subscribers.
(a) Notwithstanding anything to the contrary herein, disbursements of funds
contributed by Pennsylvania Subscribers may only be distributed in compliance
with the provisions of this Section 3. Irrespective of any disbursement of funds
from the Escrow Account pursuant to Section 2 hereof, the Escrow Agent will
continue to place deposits from the Pennsylvania Subscribers into the Escrow
Account, until such time as the Company notifies the Escrow Agent in writing
that total subscriptions (including amounts previously disbursed as directed by
the Company and the amounts then held in the Escrow Account) equal or exceed
$70,000,000, whereupon the Escrow Agent shall disburse to the Company, at the
Company’s request, any funds from the Pennsylvania Subscribers received by the
Escrow Agent for accepted subscriptions, but not those funds of a subscriber
whose subscription has been rejected or rescinded of which the Escrow Agent has
been notified by the Company, or otherwise in accordance with the Company’s
written request.
(b) If the Company has not received total subscriptions of at least $70,000,000
within 120 days of the date the Company first receives a subscription from a
Pennsylvania Subscriber (the “Initial Escrow Period”), the Company shall notify
each Pennsylvania Subscriber of the right of Pennsylvania Subscribers to have
their investment returned to them. If, pursuant to such notice, a Pennsylvania
Subscriber requests the return of his or her subscription funds within ten (10)
days after receipt of the notification (the “Request Period”), the Escrow

 
4
``

--------------------------------------------------------------------------------

Agent shall promptly refund, including the prorata share of any interest earned
thereon, directly to each Pennsylvania Subscriber the funds deposited in the
Escrow Account on behalf of the Pennsylvania Subscriber.
(c) The funds of Pennsylvania Subscribers who do not request the return of their
funds within the Request Period shall remain in the Escrow Account for
successive 120-day escrow periods (each a “Successive Escrow Period”), each
commencing automatically upon the termination of the prior Successive Escrow
Period, and the Company and Escrow Agent shall follow the notification and
payment procedure set forth in Section 3(b) above with respect to the Initial
Escrow Period for each Successive Escrow Period, provided that any refunds made
to a Pennsylvania Subscriber after a Successive Escrow Period shall include a
pro rata share of any interest earned thereon after the Initial Escrow Period,
until the occurrence of the earliest of (i) the termination of the Offering,
(ii) the receipt and acceptance by the Company of total subscriptions that equal
or exceed $70,000,000 and the disbursement of the Escrow Account on the terms
specified in this Section 3, or (iii) all funds held in the Escrow Account that
were contributed by Pennsylvania Subscribers having been returned to the
Pennsylvania Subscribers in accordance with the provisions hereof.
If, upon termination of the Offering, the Company has not received and accepted
total subscriptions that equal or exceed $70,000,000, all funds in the Escrow
Account that were contributed by Pennsylvania Subscribers will be promptly
returned in full to such Pennsylvania Subscribers, together with their pro rata
share of any interest earned thereon pursuant to instructions made by the
Company, upon which the Escrow Agent may conclusively rely.
4. Distribution of the Funds from Washington Subscribers.
(a) Notwithstanding anything to the contrary herein, disbursements of funds
contributed by Washington Subscribers may only be distributed in compliance with
the provisions of this Section 4. Irrespective of any disbursement of funds from
the Escrow Account pursuant to Section 2 hereof, the Escrow Agent will continue
to place deposits from the Washington Subscribers into the Escrow Account, until
such time as the Company notifies the Escrow Agent in writing that total
subscriptions (including amounts previously disbursed as directed by the Company
and the amounts then held in the Escrow Account) equal or exceed $10,000,000,
whereupon the Escrow Agent shall disburse to the Company, at the Company’s
request, any funds from the Washington Subscribers received by the Escrow Agent
for accepted subscriptions, but not those funds of a subscriber whose
subscription has been rejected or rescinded of which the Escrow Agent has been
notified by the Company, or otherwise in accordance with the Company’s written
request.
If, upon termination of the Offering, the Company has not received and accepted
total subscriptions that equal or exceed $10,000,000, all funds in the Escrow
Account that were contributed by Washington Subscribers will be promptly
returned in full to such Washington Subscribers, together with their pro rata
share of any interest earned thereon pursuant to instructions made by the
Company, upon which the Escrow Agent may conclusively rely.

 
5
``

--------------------------------------------------------------------------------

5. Distribution of Escrow Interest. As soon as practical but no more than 45
days after the release of the funds to the Company pursuant to the conditions in
Sections 2, 3 and 4, the Escrow Agent shall calculate and distribute to each
subscriber whose subscription funds were held in the Escrow Account for at least
20 days its prorata share of interest based on the length of time its
subscription funds have been held in the Escrow Account. Escrow interest earned,
but not payable to subscribers pursuant to this Section, shall be paid to the
Company, as instructed by the Company in writing.
6. Funds in the Escrow Account. Upon receipt of funds from subscribers, the
Escrow Agent shall hold such funds in escrow pursuant to the terms of this
Agreement. All such funds held in the Escrow Account shall be invested in UMB
Money Market Special, a UMB interest-bearing account unless otherwise determined
by the Company. During the Escrow Period, subscriber funds shall not be invested
in anything other than short term investments in compliance with Rule 15c2-4 of
the Securities Exchange Act of 1934, as amended. The following are not
permissible investments: money market mutual funds, corporate debt or
securities, repurchase agreements, banker’s acceptance, commercial paper, and
municipal securities.
The Escrow Agent shall be entitled to sell or redeem any such investment as
necessary to make any distributions required under this Agreement and shall not
be liable or responsible for any loss resulting from any such sale or
redemption.
Income, if any, resulting from the investment of the funds in the Escrow Account
shall be distributed according to this Agreement.
The Escrow Agent shall provide to the Company monthly statements (or more
frequently as reasonably requested by the Company) on the account balance in the
Escrow Account and the activity in such accounts since the last report.
7. Tax Reporting. The Escrow Agent shall provide, in a timely manner,
subscribers with applicable Form 1099 for amounts paid pursuant to Section 5
above.
8. Duties of the Escrow Agent. The Escrow Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement, and no
implied duties or obligations shall be read into this Agreement against the
Escrow Agent. The Escrow Agent is not a party to, or bound by, any other
agreement among the other parties hereto with respect to the subject matter
hereof, and the Escrow Agent’s duties shall be determined solely by reference to
this Agreement. The Escrow Agent shall have no duty to enforce any obligation of
any person, other than as provided herein. The Escrow Agent shall be under no
liability to anyone by reason of any failure on the part of any party hereto or
any maker, endorser or other signatory of any document or any other person to
perform such person’s obligations under any such document.
9. Liability of the Escrow Agent; Indemnification. The Escrow Agent acts
hereunder as a depository only. The Escrow Agent is not responsible or liable in
any manner for the sufficiency, correctness, genuineness or validity of this
Agreement or with respect to the form of execution of the same. The Escrow Agent
shall not be liable for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith, and in the exercise of its
own best judgment, and may rely conclusively and shall be protected in acting
upon any order, notice,

 
6
``

--------------------------------------------------------------------------------

demand, certificate, opinion or advice of counsel (including counsel chosen by
the Escrow Agent), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be
signed or presented by the proper person(s). The Escrow Agent shall not be held
liable for any error in judgment made in good faith by an officer or employee of
either unless it shall be proved that the Escrow Agent was grossly negligent or
reckless in ascertaining the pertinent facts or acted intentionally in bad
faith. The Escrow Agent shall not be bound by any notice of demand, or any
waiver, modification, termination or rescission of this Agreement or any of the
terms hereof, unless evidenced by a writing delivered to the Escrow Agent signed
by the proper party or parties and, if the duties or rights of the Escrow Agent
are affected, unless it shall give its prior written consent thereto.
The Escrow Agent may consult legal counsel and shall exercise reasonable care in
the selection of such counsel, in the event of any dispute or question as to the
construction of any provisions hereof or its duties hereunder, and it shall
incur no liability and shall be fully protected in acting in accordance with the
reasonable opinion or instructions of such counsel.
The Escrow Agent shall not be responsible, may conclusively rely upon and shall
be protected, indemnified and held harmless by the Company, for the sufficiency
or accuracy of the form of, or the execution, validity, value or genuineness of
any document or property received, held or delivered by it hereunder, or of the
signature or endorsement thereon, or for any description therein; nor shall the
Escrow Agent be responsible or liable in any respect on account of the identity,
authority or rights of the persons executing or delivering or purporting to
execute or deliver any document, property or this Agreement.
In the event that either the Escrow Agent or the Transfer Agent shall become
involved in any arbitration or litigation relating to the funds in the Escrow
Account, each is authorized to comply with any decision reached through such
arbitration or litigation.
The Company hereby agrees to indemnify the Escrow Agent for, and to hold it
harmless against, any loss, liability or expense incurred in connection herewith
without gross negligence, recklessness or willful misconduct on the part of the
Escrow Agent, including without limitation legal or other fees arising out of or
in connection with its entering into this Agreement and carrying out its duties
hereunder, including without limitation the costs and expenses of defending
itself against any claim of liability in the premises or any action for
interpleader. The Escrow Agent shall not be under any obligation to institute or
defend any action, suit, or legal proceeding in connection herewith, unless
first indemnified and held harmless to its satisfaction in accordance with the
foregoing, except that the Escrow Agent shall not be indemnified against any
loss, liability or expense arising out of its own gross negligence, recklessness
or willful misconduct. Such indemnity shall survive the termination or discharge
of this Agreement or resignation of the Escrow Agent.
10. The Escrow Agent’s Fee. Escrow Agent shall be entitled to fees and expenses
for its regular services as Escrow Agent as set forth in Exhibit A.
Additionally, Escrow Agent is entitled to reasonable fees for extraordinary
services and reimbursement of any reasonable out of pocket and extraordinary
costs and expenses related to its obligations as Escrow Agent under this

 
7
``

--------------------------------------------------------------------------------

Agreement, including, but not limited to, reasonable attorneys’ fees. All of the
Escrow Agent’s compensation, costs and expenses shall be paid by the Company.
11. Security Interests. No party to this Agreement shall grant a security
interest in any monies or other property deposited with the Escrow Agent under
this Agreement, or otherwise create a lien, encumbrance or other claim against
such monies or borrow against the same.
12. Dispute. In the event of any disagreement between the undersigned or the
person or persons named in the instructions contained in this Agreement, or any
other person, resulting in adverse claims and demands being made in connection
with or for any papers, money or property involved herein, or affected hereby,
the Escrow Agent shall be entitled to refuse to comply with any demand or claim,
as long as such disagreement shall continue, and in so refusing to make any
delivery or other disposition of any money, papers or property involved or
affected hereby, the Escrow Agent shall not be or become liable to the
undersigned or to any person named in such instructions for its refusal to
comply with such conflicting or adverse demands, and the Escrow Agent shall be
entitled to refuse and refrain to act until: (a) The rights of the adverse
claimants shall have been fully and finally adjudicated in a Court assuming and
having jurisdiction of the parties and money, papers and property involved
herein or affected hereby, or (b) All differences shall have been adjusted by
agreement and the Escrow Agent shall have been notified thereof in writing,
signed by all the interested parties.
13. Resignation of Escrow Agent. Escrow Agent may resign or be removed, at any
time, for any reason, by written notice of its resignation or removal to the
proper parties at their respective addresses as set forth herein, at least 60
days before the date specified for such resignation or removal to take effect;
upon the effective date of such resignation or removal:
(a) All cash and other payments and all other property then held by the Escrow
Agent hereunder shall be delivered by it to such successor escrow agent as may
be designated in writing by the Company, whereupon the Escrow Agent’s
obligations hereunder shall cease and terminate.
(b) If no such successor escrow agent has been designated by such date, all
obligations of the Escrow Agent hereunder shall, nevertheless, cease and
terminate, and the Escrow Agent’s sole responsibility thereafter shall be to
keep all property then held by it and to deliver the same to a person designated
in writing by the Company or in accordance with the directions of a final order
or judgment of a court of competent jurisdiction.
(c) Further, if no such successor escrow agent has been designated by such date,
the Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor agent; further the Escrow Agent may pay to any such
court all monies and property deposited with Escrow Agent under this Agreement.
 
14. Notices. All notices, demands and requests required or permitted to be given
under the provisions hereof must be in writing and shall be deemed to have been
sufficiently given, upon receipt, if (i) personally delivered, (ii) sent by
telecopy and confirmed by phone or (iii) mailed by registered or certified mail,
with return receipt requested, or by overnight courier with signature required,
delivered to the addresses set forth below, or to such other address as a party
shall have designated by notice in writing to the other parties in the manner
provided by this paragraph:

 
8
``

--------------------------------------------------------------------------------

 
 
 
 
(1) If to Company:
 
Carey Watermark Investors 2 Incorporated
 
 
Attn: Rebecca Reaves
 
 
50 Rockefeller Plaza
 
 
New York, New York 10020
Telephone: (212) 492-8983
Facsimile: (212) 492-8922
 
 
 
(2) If to the Escrow Agent:
 
UMB Bank, N.A.
 
 
1010 Grand Blvd., 4th Floor
 
 
Mail Stop: 1020409
 
 
Kansas City, Missouri 64106
 
 
Attention: Lara Stevens, Corporate Trust & Escrow Services
 
 
Telephone: (816) 860-3017
 
 
Facsimile: (816) 860-3029
 
 
(3) If to Dealer Manager:
 
Carey Financial, LLC
50 Rockefeller Plaza
New York, NY 10020
 
 
Attn: Mark Goldberg
Telephone (212) 492-1143
Facsimile: (2120 492-8922
 
 
 

 
15. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of New York without regard to the principles of
conflicts of law.
16. Binding Effect; Benefit. This Agreement shall be binding upon and inure to
the benefit of the permitted successors and assigns of the parties hereto.
17. Modification. This Agreement may be amended, modified or terminated at any
time by a writing executed by the Dealer Manager, the Company and the Escrow
Agent.
18. Assignability. This Agreement shall not be assigned by the Escrow Agent
without the Company’s prior written consent.
19. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument. Copies, telecopies, facsimiles,
electronic files and other reproductions of original executed documents shall be
deemed to be authentic and valid counterparts of such original documents for all
purposes, including the filing of any claim, action or suit in the appropriate
court of law.
20. Headings. The section headings contained in this Agreement are inserted for
convenience only, and shall not affect in any way, the meaning or interpretation
of this Agreement.

 
9
``

--------------------------------------------------------------------------------

21. Severability. This Agreement constitutes the entire agreement among the
parties and supersedes all prior and contemporaneous agreements and undertakings
of the parties in connection herewith. No failure or delay of the Escrow Agent
in exercising any right, power or remedy may be, or may be deemed to be, a
waiver thereof; nor may any single or partial exercise of any right, power or
remedy preclude any other or further exercise of any right, power or remedy. In
the event that any one or more of the provisions contained in this Agreement,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement.
22. Earnings Allocation; Tax Matters; Patriot Act Compliance; OFAC Search
Duties. The Company or its agent shall be responsible for all tax reporting
under this Agreement. The Company shall provide to Escrow Agent upon the
execution of this Agreement any documentation requested and any information
reasonably requested by the Escrow Agent to comply with the USA Patriot Act of
2001, as amended from time to time. The Escrow Agent, or its agent, shall
complete an Office of Foreign Asset Control ("OFAC") search, in compliance with
its policy and procedures, of each subscription check and shall inform the
Company if a subscription check fails the OFAC search. The Dealer Manager shall
provide a copy of each subscription check in order that the Escrow Agent, or its
agent, may perform such OFAC search.
23. Miscellaneous. This Agreement shall not be construed against the party
preparing it, and shall be construed without regard to the identity of the
person who drafted it or the party who caused it to be drafted and shall be
construed as if all parties had jointly prepared this Agreement and it shall be
deemed their joint work product, and each and every provision of this Agreement
shall be construed as though all of the parties hereto participated equally in
the drafting hereof; and any uncertainty or ambiguity shall not be interpreted
against any one party. As a result of the foregoing, any rule of construction
that a document is to be construed against the drafting party shall not be
applicable.
 
24. Termination of the Escrow Agreement. This Agreement, except for Sections 9
and 12 hereof, which shall continue in effect, shall terminate upon written
notice from the Company to the Escrow Agent. Unless otherwise provided, final
termination of this Agreement shall occur on the date that all funds held in the
Escrow Account are distributed either (a) to the Company or to subscribers and
the Company has informed the Escrow Agent in writing to close the Escrow Account
or (b) to a successor escrow agent upon written instructions from the Company.

25. Relationship of Parties. The Dealer Manager, the Company and the Escrow
Agent are unaffiliated parties, and this Agreement does not create any
partnership or joint venture among them.

 
10
``

--------------------------------------------------------------------------------

[SIGNATURE PAGES FOLLOW]

 
11
``

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by
their duly authorized representatives as of the date first written hereinabove:
 
DEALER MANAGER:

CAREY FINANCIAL, LLC

By: /s/ Mark Goldberg    
Name: Mark Goldberg
Title: President

COMPANY:

CAREY WATERMARK INVESTORS 2 INCORPORATED

By: /s/ Rebecca Reaves  
Name: Rebecca Reaves
Title: Executive Director

ESCROW AGENT:

UMB BANK, N.A.

By: /s/ Randy McPhail   
Name: Randy McPhail
Title: Senior Vice President

 

 
12
 

--------------------------------------------------------------------------------

EXHIBIT A
ESCROW FEES AND EXPENSES
 
 
 
 
 
 

Acceptance Fee
Review document, establish accounts, and            $3,250
Set up recon file/feeds with Transfer Agent

Annual Fee
Annual Escrow Agent                        $3,000

Transactional Fees
Outgoing Wire Transfer                    $15 each
Daily BAI File to DST                        $2.50 per Bus Day
Wire Ripping File to DST                    $10 per Bus Day
Web Exchange Access                        $15 per month
Overnight Delivery/Mailings                    $16.50 each
IRS Tax Reporting                        $10 per 1099

Acceptance fee will be payable at the initiation of the escrow. Annual Escrow
Agent fee and Transactional fees will be billed quarterly in arrears. Other fees
and expenses will be billed as incurred.
Fees specified are for the regular, routine services contemplated by the Escrow
Agreement, and any additional or extraordinary services, including, but not
limited to disbursements involving a dispute or arbitration, or administration
while a dispute, controversy or adverse claim is in existence, will be charged
based upon time required at the then standard hourly rate. In addition to the
specified fees, all expenses related to the administration of the Escrow
Agreement (other than normal overhead expenses of the regular staff) such as,
but not limited to, travel, postage, shipping, courier, telephone, facsimile,
supplies, legal fees, accounting fees, etc., will be reimbursable.

 
13
``