Exhibit 10.6





Exhibit 10.6




EXECUTION VERSION




INDEMNIFICATION AGREEMENT




THIS INDEMNIFICATION AGREEMENT is made and entered into this 15th day of September,
2010 (“Agreement”), by and between Carey Watermark Investors Incorporated, a Maryland corporation
(the “Company”), and CWA, LLC, an Illinois limited liability company (the “Subadvisor”).



WHEREAS, pursuant to that certain Advisory Agreement dated as of that date hereof (as amended
from time to time, the “Advisory Agreement”), among Carey Lodging Advisors, LLC, a Delaware limited
liability company (the “Advisor”), the Company and CWI OP, LP, a Delaware limited partnership, of
which the Company is a general partner (the “Operating Partnership,” and together with the Company,
the “REIT”), Advisor has agreed to perform certain services for the REIT, including the
identification, evaluation, negotiation, financing, purchase, asset management and disposition of
the REIT’s lodging and lodging related investments (collectively, the “Services”); and



WHEREAS, pursuant to that certain Subadvisory Agreement dated as of that date hereof (as
amended from time to time, the “Subadvisory Agreement”), between the Advisor and the Subadvisor,
the Subadvisor has agreed to assist the Advisor in performing the Services by providing to the
Subadvisor certain services and support and may, therefore, be subjected to claims, suits or
proceedings arising as a result of its service; and



WHEREAS, as an inducement to Subadvisor to continue to serve as such subadvisor, the Company
has agreed to indemnify and to advance expenses and costs incurred by the Subadvisor Indemnitees
(as defined below) in connection with any such claims, suits or proceedings, subject to certain
limitations set forth herein; and



WHEREAS, the parties by this Agreement desire to set forth their agreement regarding
indemnification and advance of expenses; and



NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and the Subadvisor do hereby covenant and agree as follows:




Section 1. Definitions. For purposes of this Agreement:



(a) “Affiliate” means any of the following: (i) any Person directly or indirectly owning,
controlling, or holding, with power to vote ten percent or more of the outstanding voting
securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held, with power to vote, by such other
Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control
with such other Person; (iv) any executive officer, director, trustee or general partner of such
other Person; or (v) any legal entity for which such Person acts as an executive officer, director,
trustee or general partner.


 


 









 





(b) “Person” means any individual, entity, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.



(c) “Subadvisor Indemnitees” means the Subadvisor, its Affiliates, and the directors,
officers, employees, agents and equity holders of the Subadvisor and its Affiliates.



Section 2. Services by Subadvisor. Pursuant to the Subadvisory Agreement, the
Subadvisor will serve as subadvisor to the Advisor. However, this Agreement shall not impose any
obligation on the Subadvisor or the Advisor to continue the Subadvisor’s service to the Advisor
beyond any period otherwise required by the Subadvisory Agreement.




Section 3. Limitations on Activities.



(a) Anything else in this Agreement to the contrary notwithstanding, the Subadvisor shall
refrain from taking any action which, in its sole judgment made in good faith, would (i) adversely
affect the status of the Company as a real estate investment trust or of the Operating Partnership
as a partnership for Federal income tax purposes, (ii) subject the Company or the Operating
Partnership to regulation under the Investment Company Act of 1940, as amended, or (iii) would
violate any law, rule, regulation or statement of policy of any governmental body or agency having
jurisdiction over the Company, its shares of common stock, par value $0.001, or any other
securities of the Company, or otherwise not be permitted by the Company’s Amended and Restated
Articles of Incorporation or Bylaws or agreement of limited partnership of the Operating
Partnership, except if such action shall be ordered by the Advisor, pursuant to an order by the
Board of Directors (the “Board”) of the Company. In such event the Subadvisor shall have no
liability for acting in accordance with the specific instructions of the Advisor so given.



(b) Notwithstanding the foregoing, the Company shall indemnify and hold harmless the
Subadvisor Indemnitees for any loss or liability suffered by them, and the Subadvisor Indemnitees
shall not be liable to the Company, the Operating Partnership or to the members of the Board or the
Company’s shareholders for any act or omission by the Subadvisor Indemnitees, if in each case the
following conditions are met:




(1) the Subadvisor Indemnitees have determined, in good faith, that the course
of conduct which caused the loss or liability was in the best interests of the
Company;




(2) the Subadvisor Indemnitees were acting on behalf of or performing services
for the Company; and




(3) such liability or loss was not the result of negligence or misconduct by
the Subadvisor Indemnitees.


 


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(c) Notwithstanding the foregoing, the Subadvisor Indemnitees shall not be indemnified by the
Company or the Operating Partnership for any losses, liabilities or expenses
arising from or out of the alleged violation of federal or state securities laws unless one or
more of the following conditions are met:




(1) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee;




(2) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee; or




(3) a court of competent jurisdiction approves a settlement of the claims
against a particular indemnitee and finds that indemnification of the settlement and
the related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of Company were offered or sold as to indemnification
for violation of securities laws.



Section 4. Advance of Expenses. The Company and the Operating Partnership shall,
within ten (10) days after the receipt by the Company of a statement or statements from any
Subadvisor Indemnitee requesting such advance or advances from time to time, whether prior to or
after final disposition of any legal activities for which indemnification is being sought, advance
funds to the Subadvisor Indemnitees for legal expenses and other costs incurred as a result of any
legal action for which indemnification is being sought only if all of the following conditions are
satisfied:



(a) the legal action relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company;



(b) the Subadvisor Indemnitee has provided the Company or the Operating Partnership with a
written affirmation of his, her or its good faith belief that the standard of conduct necessary for
indemnification has been met;



(c) the legal action is initiated by a third party who is not a shareholder of the Company or
the legal action is initiated by a shareholder of the Company acting in his or her capacity as such
and a court of competent jurisdiction specifically approves such advancement; and



(d) the Subadvisor Indemnitee undertakes to repay the advanced funds to the Company, together
with the applicable legal rate of interest thereon, in cases in which such Subadvisor Indemnitee is
found not to be entitled to indemnification.



Section 5. Indemnification by the Company and the Operating Partnership. Neither the
Company nor the Operating Partnership shall indemnify any Subadvisor Indemnitee for any loss or
liability suffered by the Subadvisor Indemnitee, or hold the Subadvisor Indemnitee harmless for any
loss or liability suffered by the Company, except as permitted under Sections 3 and 4 hereof.


 


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Section 6. Indemnification by the Subadvisor. The Subadvisor shall indemnify and hold
harmless the Company and the Operating Partnership from liability, claims, damages, taxes or losses
and related expenses including attorneys’ fees, to the extent that such liability, claims, damages,
taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by
reason of the bad faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard
of the duties of any Subadvisor Indemnitee.




Section 7. Limitations on Indemnification.



(a) Anything else in this Agreement to the contrary notwithstanding, the Subadvisor
Indemnitees shall not be entitled to indemnification or be held harmless pursuant to Sections 3 and
4 hereof for any activity which the Subadvisor shall be required to indemnify or hold harmless the
Company pursuant to Section 6 hereof.



(b) Any amounts paid pursuant to Sections 3 and 4 hereof shall be recoverable or paid only out
the net assets of the Company and not from shareholders of the Company.



Section 8. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including, without limitation,
each portion of any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.



Section 9. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. One such counterpart signed by the party
against whom enforceability is sought shall be sufficient to evidence the existence of this
Agreement.



Section 10. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.



Section 11. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.


 


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Section 12. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall have been
directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:




	 	(a)	 	If to the Subadvisor, to:







CWA, LLC

c/o Watermark Capital Partners, LLC

207 East Westminster, Ste. 200

Lake Forest, IL 60045

Attn: Michael G. Medzigian




With a copy to:




Ungaretti & Harris LLP

70 West Madison Street

Suite 3500

Chicago, Illinois 60602

Attention: Richard A. Ungaretti, Esq. and Michael W. Black, Esq.




	 	(b)	 	If to the Company to:







Carey Watermark Investors Incorporated

c/o W. P. Carey & Co. LLC

50 Rockefeller Plaza

New York, New York 10020

Attn: General Counsel



or to such other address as may have been furnished to the Subadvisor by the Company or to the
Company by the Subadvisor, as the case may be.



Section 13. Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New York, without
regard to its conflicts of laws rules.



[SIGNATURE PAGE FOLLOWS]



 


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.



	 	 	 	 	 
	 	CAREY WATERMARK INVESTORS INCORPORATED

 	 
	 	By:  	/s/ Thomas E. Zacharias
 	(SEAL) 
	 	 	Name:  	Thomas E. Zacharias 	 
	 	 	Title:  	Director 	 



[Signature page to Subadvisor

Indemnification Agreement]




 


 









 







	 	 	 	 	 
	 	CWA, LLC
 	 
	 	By:  	Watermark Capital Partners, LLC, 

its Managing Member
 	 
	 	 	 	 	 
	 	By:  	     /s/ Michael G. Medzigian
 	 
	 	 	Name:  	Michael G. Medzigian 	 
	 	 	Title:  	Managing Member 	 



[Signature page to Subadvisor

Indemnification Agreement]